SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





x
              
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      the quarterly period ended April 3, 2010OR ̈
              
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934For
      the transition period from ________________ to
      ________________





Commission
file number:  001-32568





MAIDENFORM
BRANDS, INC.


(Exact
name of registrant as specified in its charter)





Delaware
            
            06-1724014(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)485F
      US Hwy 1 South, Iselin, NJ
            
            08830(Address
      of principal executive offices)
            
            (Zip
      Code)





(732)
621-2500


(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


Yes x                                           No
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).


Yes  ̈                                           No   ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large
      accelerated filer  ̈
                Accelerated
      filer x
                Non-accelerated
      filer  ̈
                Smaller
      reporting company  ̈(Do
      not check if smallerreporting
      company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈No  x





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.





Class
              
              Outstanding
      at May 6, 2010Common
      Stock, $0.01 par value per share
              
              22,914,765
      shares





INDEX





PAGEPART
      I - FINANCIAL INFORMATIONItem 1. Financial Statements
      (Unaudited)Condensed Consolidated Balance
      Sheets at April 3, 2010 and January 2, 2010
                  
                  2Condensed Consolidated Statements
      of Income for the Three Months Ended April 3, 2010 and April 4,
      2009
                  
                  3Condensed Consolidated Statements
      of Cash Flows for the Three Months Ended April 3, 2010 and April 4,
      2009
                  
                  4Notes to the Condensed
      Consolidated Financial Statements
                  
                  5Item 2. Management’s Discussion
      and Analysis of Financial Condition and Results of
      Operations
                  
                  11Item 3. Quantitative and
      Qualitative Disclosures About Market Risk
                  
                  20Item 4. Controls and
      Procedures
                  
                  20PART II -
      OTHER INFORMATIONItem1. Legal
      Proceedings
                  
                  21Item1A.
      Risk Factors
                  
                  21Item 2. Unregistered Sales of
      Equity Securities and Use of Proceeds
                  
                  21Item 3. Defaults Upon Senior
      Securities
                  
                  21Item 4. (Removed and
      Reserved)
                  
                  21Item 5. Other
      Information
                  
                  21Item
      6. Exhibits
                  
                  21


1


PART I - FINANCIAL
INFORMATION





Item
1. Financial Statements (Unaudited)





MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(in
thousands, except share and per share amounts)


(unaudited)





April
      3,
                  
                  
                  January
      2,2010
                  
                  
                  2010AssetsCurrent
      assetsCash
      and cash equivalents
                  
                  $
                  22,787
                  
                  
                  $
                  89,159Accounts
      receivable, net
                  
                  
                  81,989
                  
                  
                  
                  42,951Inventories
                  
                  
                  86,795
                  
                  
                  
                  77,605Deferred
      income taxes
                  
                  
                  14,790
                  
                  
                  
                  14,790Prepaid
      expenses and other current assets
                  
                  
                  8,372
                  
                  
                  
                  7,878Total
      current assets
                  
                  
                  214,733
                  
                  
                  
                  232,383Property,
      plant and equipment, net
                  
                  
                  22,822
                  
                  
                  
                  22,228Goodwill
                  
                  
                  7,162
                  
                  
                  
                  7,162Intangible
      assets, net
                  
                  
                  94,476
                  
                  
                  
                  96,198Other
      non-current assets
                  
                  
                  711
                  
                  
                  
                  771Total
      assets
                  
                  $
                  339,904
                  
                  
                  $
                  358,742Liabilities
      and stockholders’ equityCurrent
      liabilitiesCurrent
      portion of long-term debt
                  
                  $
                  1,100
                  
                  
                  $
                  1,100Accounts
      payable
                  
                  
                  52,952
                  
                  
                  
                  43,473Accrued
      expenses and other current liabilities
                  
                  
                  29,800
                  
                  
                  
                  28,366Total
      current liabilities
                  
                  
                  83,852
                  
                  
                  
                  72,939Long-term
      debt
                  
                  
                  69,875
                  
                  
                  
                  86,150Deferred
      income taxes
                  
                  
                  25,682
                  
                  
                  
                  22,934Other
      non-current liabilities
                  
                  
                  9,899
                  
                  
                  
                  9,888Total
      liabilities
                  
                  
                  189,308
                  
                  
                  
                  191,911Commitments
      and contingencies (Note 10)Stockholders’
      equityPreferred
      stock -  $0.01 par value; 10,000,000 shares authorized and none
      issued and outstanding
                  
                  
                  -
                  
                  
                  
                  -Common
      stock - $0.01 par value; 100,000,000 shares authorized; 24,399,746 shares
      issued and 22,259,198 outstanding at April 3, 2010 and 23,981,108 shares
      issued and 23,341,444 outstanding at January 2, 2010
                  
                  
                  244
                  
                  
                  
                  240Additional
      paid-in capital
                  
                  
                  70,522
                  
                  
                  
                  66,574Retained
      earnings
                  
                  
                  123,159
                  
                  
                  
                  112,419Accumulated
      other comprehensive loss
                  
                  
                  (3,599
                  )
                  
                  
                  (3,385
                  )Treasury
      stock, at cost (2,140,548 shares at April 3, 2010 and 639,664 shares at
      January 2, 2010)
                  
                  
                  (39,730
                  )
                  
                  
                  (9,017
                  )Total
      stockholders’ equity
                  
                  
                  150,596
                  
                  
                  
                  166,831Total
      liabilities and stockholders’ equity
                  
                  $
                  339,904
                  
                  
                  $
                  358,742





The
accompanying notes are an integral part of these condensed consolidated
financial statements.


2





MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(in
thousands, except share and per share amounts)


(unaudited)





Three
      Months EndedApril
      3,
                          
                          
                          April
      4,2010
                          
                          
                          2009Net
      sales
                          
                          $
                          142,922
                          
                          
                          $
                          114,233Cost
      of sales
                          
                          
                          90,979
                          
                          
                          
                          77,711Gross
      profit
                          
                          
                          51,943
                          
                          
                          
                          36,522Selling,
      general and administrative expenses
                          
                          
                          31,221
                          
                          
                          
                          25,968Operating
      income
                          
                          
                          20,722
                          
                          
                          
                          10,554Interest
      expense, net
                          
                          
                          293
                          
                          
                          
                          668Income
      before provision for income taxes
                          
                          
                          20,429
                          
                          
                          
                          9,886Income
      tax expense
                          
                          
                          8,321
                          
                          
                          
                          3,893Net
      income
                          
                          $
                          12,108
                          
                          
                          $
                          5,993Basic
      earnings per common share
                          
                          $
                          0.52
                          
                          
                          $
                          0.27Diluted
      earnings per common share
                          
                          $
                          0.51
                          
                          
                          $
                          0.26Basic
      weighted average number of shares outstanding
                          
                          
                          23,186,722
                          
                          
                          
                          22,496,630Diluted
      weighted average number of shares outstanding
                          
                          
                          23,970,499
                          
                          
                          
                          23,388,542





The
accompanying notes are an integral part of these condensed consolidated
financial statements.


3





MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)





Three
      Months EndedApril
      3,
                  
                  
                  April
      4,2010
                  
                  
                  2009Cash
      flows from operating activitiesNet
      income
                  
                  $
                  12,108
                  
                  
                  $
                  5,993Adjustments
      to reconcile net income to net cash from operating
      activitiesDepreciation
      and amortization
                  
                  
                  753
                  
                  
                  
                  912Amortization
      of intangible assets
                  
                  
                  290
                  
                  
                  
                  290Amortization
      of deferred financing costs
                  
                  
                  46
                  
                  
                  
                  46Stock-based
      compensation
                  
                  
                  648
                  
                  
                  
                  443Deferred
      income taxes
                  
                  
                  2,862
                  
                  
                  
                  316Excess
      tax benefits related to stock-based compensation
                  
                  
                  (3,212
                  )
                  
                  
                  (13
                  )Bad
      debt expense
                  
                  
                  39
                  
                  
                  
                  209Other
      non-cash items
                  
                  
                  1,458
                  
                  
                  
                  -Net
      changes in operating assets and liabilitiesAccounts
      receivable
                  
                  
                  (39,250
                  )
                  
                  
                  (24,526
                  )Inventories
                  
                  
                  (9,196
                  )
                  
                  
                  (4,242
                  )Prepaid
      expenses and other current and  non-current
    assets
                  
                  
                  (470
                  )
                  
                  
                  (228
                  )Accounts
      payable
                  
                  
                  9,484
                  
                  
                  
                  (57
                  )Accrued
      expenses and other current and non-current liabilities
                  
                  
                  1,420
                  
                  
                  
                  1,064Income
      taxes payable
                  
                  
                  2,563
                  
                  
                  
                  3,393Net
      cash used in operating activities
                  
                  
                  (20,457
                  )
                  
                  
                  (16,400
                  )Cash
      flows from investing activitiesCapital
      expenditures
                  
                  
                  (1,347
                  )
                  
                  
                  (445
                  )Net
      cash used in investing activities
                  
                  
                  (1,347
                  )
                  
                  
                  (445
                  )Cash
      flows from financing activitiesTerm
      loan repayments
                  
                  
                  (16,275
                  )
                  
                  
                  (275
                  )Proceeds
      from stock options exercised
                  
                  
                  1,489
                  
                  
                  
                  11Excess
      tax benefits related to stock-based compensation
                  
                  
                  3,212
                  
                  
                  
                  13Payments
      of employee withholding taxes related to equity awards
                  
                  
                  (549
                  )
                  
                  
                  (2
                  )Purchase
      of common stock for treasury
                  
                  
                  (32,352
                  )
                  
                  
                  -Payments
      of capital lease obligations
                  
                  
                  (23
                  )
                  
                  
                  (50
                  )Net
      cash used in financing activities
                  
                  
                  (44,498
                  )
                  
                  
                  (303
                  )Effects
      of exchange rate changes on cash
                  
                  
                  (70
                  )
                  
                  
                  (21
                  )Net
      decrease in cash
                  
                  
                  (66,372
                  )
                  
                  
                  (17,169
                  )Cash
      and cash equivalentsBeginning
      of period
                  
                  
                  89,159
                  
                  
                  
                  43,463End
      of period
                  
                  $
                  22,787
                  
                  
                  $
                  26,294Supplementary
      disclosure of cash flow informationCash
      paid during the periodInterest
                  
                  $
                  290
                  
                  
                  $
                  968Income
      taxes
                  
                  $
                  2,986
                  
                  
                  $
                  59Supplemental
      schedule of non-cash investing and financing activitiesTreasury
      stock issued related to equity award activity
                  
                  $
                  2,187
                  
                  
                  $
                  74





The
accompanying notes are an integral part of these condensed consolidated
financial statements.


4


MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(in
thousands, except share and per share amounts)


(unaudited)





1.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Basis
of Presentation


Maidenform
Brands, Inc. and its subsidiaries (the “Company,” “we,” “us” or
“our”) design, source and market an extensive range of intimate apparel
products, including bras, panties and shapewear. We sell through multiple
distribution channels including department stores and national chain stores,
mass merchants (including warehouse clubs), and other (including specialty
retailers, off-price retailers, foreign distributors and licensees). In
addition, we operated 75 and 77 retail outlet stores as of April 3, 2010 and
April 4, 2009, and sell products on our websites.





In our
opinion, the accompanying unaudited condensed consolidated financial statements
contain all adjustments necessary to state fairly our financial position at
April 3, 2010, the results of our operations for the three months ended April 3,
2010 and April 4, 2009, and cash flows for the three months ended April 3, 2010
and April 4, 2009. These adjustments consist of normal recurring adjustments.
Operating results for the three months ended April 3, 2010 are not necessarily
indicative of the results that may be expected for any other future interim
period or for a full fiscal year. The condensed consolidated balance sheet at
January 2, 2010 has been derived from our audited consolidated financial
statements at that date, but does not include all disclosures required by
accounting principles generally accepted in the United States of America
(“GAAP”).





These
condensed consolidated financial statements have been prepared in accordance
with Article 10 of Regulation S-X promulgated by the Securities and Exchange
Commission (“SEC”). Accordingly, certain information and disclosures normally
included in financial statements prepared in accordance with GAAP have been
condensed or omitted pursuant to the rules and regulations of the SEC. The
financial statements included herein should be read in conjunction with our
Annual Report on Form 10-K for the year ended January 2, 2010.





We
consider all highly liquid investments that have original maturities of three
months or less to be cash equivalents. Cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses are reflected at fair value
because of the short-term maturity of these instruments. The carrying amount of
long-term debt at April 3, 2010 and January 2, 2010 approximates fair value as a
result of the variable interest rates being accrued and paid on the majority of
our debt.





2.
            DEBT





April
      3,
                    
                    
                    January
      2,2010
                    
                    
                    2010Long-term
      debtTerm
      loan facility
                    
                    $
                    70,975
                    
                    
                    $
                    87,250Current
      maturities of long-term debt
                    
                    
                    1,100
                    
                    
                    
                    1,100Non-current
      portion of long-term debt
                    
                    $
                    69,875
                    
                    
                    $
                    86,150





At April
3, 2010, we had $70,975 outstanding under our term loan, and $0 outstanding
under our revolving loan with approximately $49,095 available for borrowings,
after giving effect to $905 of outstanding letters of credit. We use the letters
of credit as collateral for our workers’ compensation insurance programs and
bonds issued on our behalf to secure our obligation to pay customs duties.
Principal payments on the term loan are payable in quarterly installments of
$275 with all remaining amounts due on the maturity date. We are permitted to
voluntarily prepay all or part of the principal balance of the term loan with
such prepayments applied to scheduled principal payments in inverse order of
their maturity. In addition, subject to specified exceptions and limitations and
reinvesting options, partial prepayments of outstanding loans may be required
with the proceeds of asset sales, sales of equity and debt securities, and with
certain insurance and condemnation proceeds.


5


MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(in
thousands, except share and per share amounts)


(unaudited)





Payments
due on long-term debt during each of the five years subsequent to April 3, 2010,
are as follows:





Balance
      of fiscal 2010
                  
                  $
                  825In
      fiscal 2011
                  
                  
                  1,100In
      fiscal 2012
                  
                  
                  1,100In
      fiscal 2013
                  
                  
                  1,100In
      fiscal 2014
                  
                  
                  66,850Thereafter
                  
                  
                  -





3.
            BENEFIT
      PLANS AND POSTRETIREMENT PLANS





We
sponsor a defined benefit pension plan covering substantially all eligible
employees not covered by union plans. We also maintain post-retirement medical
benefit plans for certain eligible retirees for which post-retirement benefit
expense on a quarterly basis has been insignificant. The defined benefit pension
plan was frozen for current participants and closed to new entrants since
January 1, 2007.





The
components of net periodic benefit cost charged to operations are as
follows:





Three
      Months EndedApril
      3,
                    
                    
                    April
      4,2010
                    
                    
                    2009Interest
      cost
                    
                    $
                    291
                    
                    
                    $
                    280Expected
      return on plan assets
                    
                    
                    (345
                    )
                    
                    
                    (286
                    )Amortization
      of net loss
                    
                    
                    43
                    
                    
                    
                    68Total
                    
                    $
                    (11
                    )
                    
                    $
                    62





4.
            STOCKHOLDERS’
      EQUITY




AccumulatedCommon
                    
                    
                    Treasury
                    
                    
                    Additional
                    
                    
                    
                    
                    
                    Other
                    
                    
                    TotalStock
                    
                    
                    Stock
                    
                    
                    Paid-in
                    
                    
                    Retained
                    
                    
                    Comprehensive
                    
                    
                    Stockholders'Shares
                    
                    
                    $
                    
                    
                    Shares
                    
                    
                    $
                    
                    
                    Capital
                    
                    
                    Earnings
                    
                    
                    Loss
                    
                    
                    EquityBalance
      at January 2, 2010
                    
                    
                    23,981,108
                    
                    
                    $
                    240
                    
                    
                    
                    (639,664
                    )
                    
                    $
                    (9,017
                    )
                    
                    $
                    66,574
                    
                    
                    $
                    112,419
                    
                    
                    $
                    (3,385
                    )
                    
                    $
                    166,831Stock-based
      compensation
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    648
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    648Purchase
      of common stock for treasury
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,593,675
                    )
                    
                    
                    (32,352
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (32,352
                    )Equity
      award activity
                    
                    
                    418,638
                    
                    
                    
                    4
                    
                    
                    
                    92,791
                    
                    
                    
                    1,639
                    
                    
                    
                    3,300
                    
                    
                    
                    (1,368
                    )
                    
                    
                    
                    
                    
                    
                    3,575Comprehensive
      incomeNet
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    12,108
                    
                    
                    
                    
                    
                    
                    
                    12,108Changes
      during the period
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (214
                    )
                    
                    
                    (214
                    )Total
      comprehensive income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    11,894Balance
      at April 3, 2010
                    
                    
                    24,399,746
                    
                    
                    $
                    244
                    
                    
                    
                    (2,140,548
                    )
                    
                    $
                    (39,730
                    )
                    
                    $
                    70,522
                    
                    
                    $
                    123,159
                    
                    
                    $
                    (3,599
                    )
                    
                    $
                    150,596


6





MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(in
thousands, except share and per share amounts)


(unaudited)





5.
            STOCK
      REPURCHASE PROGRAM





In
February 2010, the Board of Directors increased our stock repurchase program by
an additional $37,526, increasing the amount then  available under the
plan to $50,000.  We are authorized to make repurchases from time to
time pursuant to existing rules and regulations and other parameters
approved by the Board of Directors.  On March 16, 2010, we repurchased
$32,352 of common stock at an average price per share of $20.30. Our credit
facility was amended to permit the increased stock repurchase, subject to
certain restrictions and limitations set forth in the amendment to our credit
facility.





6.
            COMPREHENSIVE
      INCOME





The
changes in comprehensive income are as follows:


Three
      Months EndedApril
      3,
                    
                    
                    April
      4,2010
                    
                    
                    2009Net
      income
                    
                    $
                    12,108
                    
                    
                    $
                    5,993Foreign
      currency translation adjustments (a)
                    
                    
                    (240
                    )
                    
                    
                    (247
                    )Interest
      rate swap, net of tax (b)
                    
                    
                    -
                    
                    
                    
                    108Pension
      related assets or liabilities, net of tax (c)
                    
                    
                    26
                    
                    
                    
                    -Comprehensive
      income
                    
                    $
                    11,894
                    
                    
                    $
                    5,854




(a)
            No
      tax benefit has been provided on the foreign currency translation
      adjustment due to management’s decision to reinvest the earnings of our
      foreign subsidiaries indefinitely.


(b)
            Deferred
      income tax assets (liabilities) of $0 and ($72) provided for the
      three-month periods ended April 3, 2010 and April 4, 2009,
      respectively.


(c)
            Deferred
      income tax assets (liabilities) of $17 and $0 provided for the three-month
      periods ended April 3, 2010 and April 4, 2009,
    respectively.





7.
            INCOME
      TAXES





We review
our annual effective tax rate on a quarterly basis and we make necessary changes
if information or events warrant such changes. The annual effective tax rate is
forecasted quarterly using actual historical information and forward-looking
estimates. The estimated annual effective tax rate may fluctuate due to changes
in forecasted annual operating income; changes to the valuation allowance for
deferred tax assets (such changes would be recorded discretely in the quarter in
which they occurred); changes to actual or forecasted permanent book to tax
differences (non-deductible expenses); impacts from future tax settlements with
state, federal or foreign tax authorities (such changes would be recorded
discretely in the quarter in which they occurred); or impacts from tax law
changes (to the extent such changes effect our deferred tax assets/liabilities,
these changes would generally be recorded discretely in the quarter in which
they occurred). Our effective income tax rate for the three-month period ended
April 3, 2010 was 40.7% as compared to an effective income tax rate for the
three-month period ended April 4, 2009 of 39.4%. This increase in the effective
income tax rate was a result of non-deductable expenses in connection with the
sale of our common stock by one of our stockholders.





8.
            SEGMENT
      INFORMATION





We
identified our two reportable segments as ‘‘wholesale’’ and ‘‘retail.’’ Our
wholesale sales are to department stores, national chain stores, mass merchants
(including warehouse clubs), specialty retailers, off-price retailers, and third
party distributors servicing similar customers in foreign countries, while our
retail segment reflects our operations from our retail outlet stores and
internet operations. Royalty income is also included in our wholesale segment.
Within our reportable segments, wholesale includes corporate-related assets.
Each segment’s results include the costs directly related to the segment’s net
sales and all other costs allocated based on the relationship to consolidated
net sales to support each segment’s net sales. Intersegment sales and transfers
are recorded at cost and treated as a transfer of inventory.


7


MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(in
thousands, except share and per share amounts)


(unaudited)





Information
on segments and reconciliation to income before provision for income taxes, are
as follows:





Three
      Months EndedApril
      3,
                      
                      
                      April
      4,2010
                      
                      
                      2009Net
      salesWholesale
                      
                      $
                      131,634
                      
                      
                      $
                      103,328Retail
                      
                      
                      11,288
                      
                      
                      
                      10,905Total
                      
                      $
                      142,922
                      
                      
                      $
                      114,233Operating
      incomeWholesale
                      
                      $
                      21,280
                      
                      
                      $
                      11,353Retail
                      
                      
                      (558
                      )
                      
                      
                      (799
                      )Operating
      income
                      
                      
                      20,722
                      
                      
                      
                      10,554Interest
      expense, net
                      
                      
                      293
                      
                      
                      
                      668Income
      before provision for income taxes
                      
                      $
                      20,429
                      
                      
                      $
                      9,886Depreciation
      and amortizationWholesale
                      
                      $
                      781
                      
                      
                      $
                      932Retail
                      
                      
                      262
                      
                      
                      
                      270Total
                      
                      $
                      1,043
                      
                      
                      $
                      1,202Net
      sales by geographic areaUnited
      States
                      
                      $
                      132,560
                      
                      
                      $
                      107,198International
      (a)
                      
                      
                      10,362
                      
                      
                      
                      7,035Total
                      
                      $
                      142,922
                      
                      
                      $
                      114,233Intercompany
      sales from wholesale to retail
                      
                      $
                      2,990
                      
                      
                      $
                      3,393





April
      3,
                    
                    
                    January
      2,2010
                    
                    
                    2010Total
      assetsWholesale
                    
                    $
                    315,095
                    
                    
                    $
                    333,096Retail
                    
                    
                    24,809
                    
                    
                    
                    25,646Total
                    
                    $
                    339,904
                    
                    
                    $
                    358,742





(a)
International net sales are identified as international based on the location of
the customer.





At April
3, 2010 and January 2, 2010, our five largest uncollateralized receivables
represented approximately 66% and 60%, respectively, of total accounts
receivable.





For the
three-month periods ended April 3, 2010 and April 4, 2009, we had two customers,
Kohl’s and Wal-Mart, that each accounted for more than 10% of our consolidated
net sales.


8


MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(in
thousands, except share and per share amounts)


(unaudited)





9.
            EARNINGS
      PER SHARE




The
following is a reconciliation of basic number of common shares outstanding to
diluted common and common equivalent shares outstanding:




Three
      Months EndedApril
      3,
                                
                                
                                April
      4,2010
                                
                                
                                2009Net
      income
                                
                                $
                                12,108
                                
                                
                                $
                                5,993Weighted
      average number of common and common equivalent shares
      outstanding:Basic
      number of common shares outstanding
                                
                                
                                23,186,722
                                
                                
                                
                                22,496,630Impact
      of dilutive securities
                                
                                
                                783,777
                                
                                
                                
                                891,912Dilutive
      number of common and common  equivalent shares
      outstanding
                                
                                
                                23,970,499
                                
                                
                                
                                23,388,542Basic
      earnings per common share
                                
                                $
                                0.52
                                
                                
                                $
                                0.27Diluted
      earnings per common share
                                
                                $
                                0.51
                                
                                
                                $
                                0.26





For the
three-month periods ended April 3, 2010 and April 4, 2009, approximately 125,000
and 853,000 equity awards, respectively, were not included in the computation of
diluted earnings per share because of their anti-dilutive effect.





10.
            COMMITMENTS AND
      CONTINGENCIES




Purchase
commitments




In the
normal course of business, we enter into purchase commitments for both finished
goods and raw materials. At April 3, 2010, we had purchase commitments of
$87,611 and believe that we have adequate reserves for any expected losses
arising from all purchase commitments.





Litigation





We are
party to various legal actions arising in the ordinary course of business. Based
on information presently available to us, we believe that we have adequate legal
defenses, reserves or insurance coverage for these actions and that the ultimate
outcome of these actions will not have a material adverse effect on our
condensed consolidated statements of financial position, results of operations
or cash flows.





9


MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


(in
thousands, except share and per share amounts)


(unaudited)





11.
            ACCRUED
      EXPENSES AND OTHER CURRENT
LIABILITIES





April
      3,
                    
                    
                    January
      2,2010
                    
                    
                    2010Accrued
      wages, incentive compensation, payroll taxes and related
      benefits
                    
                    $
                    9,119
                    
                    
                    $
                    11,926Accrued
      customs duty
                    
                    
                    3,470
                    
                    
                    
                    2,276Accrued
      other
                    
                    
                    17,211
                    
                    
                    
                    14,164$
                    29,800
                    
                    
                    $
                    28,366





Other
accrued expenses and current liabilities include, among other items, income tax
payable, freight, accrued severance, trade promotion, and professional
fees.





12.
            RECENTLY
      ISSUED ACCOUNTING STANDARDS





In
February 2010, the Financial Accounting Standards Board (“FASB”) issued an
amendment to the guidance on subsequent events to eliminate the requirement for
public companies to disclose the date through which subsequent events have been
evaluated. We will continue to evaluate subsequent events through the date of
the issuance of our financial statements, however, consistent with the guidance,
this date will no longer be disclosed. The guidance became effective upon
issuance and the adoption had no impact on our condensed consolidated financial
statements.





In
January 2010, the FASB issued guidance to amend the disclosure requirements
related to recurring and nonrecurring fair value measurements. The guidance
requires disclosure of transfers of assets and liabilities between Level 1 and
Level 2 of the fair value measurement hierarchy, including the reasons and the
timing of the transfers and information on purchases, sales, issuance, and
settlements on a gross basis in the reconciliation of the assets and liabilities
measured under Level 3 of the fair value measurement hierarchy. The adoption of
this guidance is effective for interim and annual reporting periods beginning
after December 15, 2009. We have adopted this guidance in the financial
statements presented herein, which did not impact our consolidated financial
position or results of operations.


10




Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations




You
should read the following discussion and analysis in conjunction with our
financial statements and related notes included elsewhere in this report. This
report contains forward-looking statements relating to future events and our
future performance within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including, without limitation, statements regarding our expectations,
beliefs, intentions or future strategies that are signified by the words “anticipates,”
“believes,” “estimates,” “expects,” “intends,” “plans,” “potential,” “predicts,”
“projects” or similar words or phrases, although not all forward-looking
statements contain such identifying words. All forward-looking statements
included in this report are based on information available to us on the date
hereof. It is routine for our internal projections and expectations to change as
the year or each quarter in the year progress, and therefore it should be
clearly understood that the internal projections and beliefs upon which we base
our expectations may change prior to the end of each quarter or the year.
Although these expectations may change, we assume no obligation to update or
revise publicly any forward-looking statements whether as a result of new
information, future events or otherwise. Actual events or results may differ
materially from those contained in the projections or forward-looking
statements. Factors that could cause or contribute to such differences include
those discussed below and elsewhere in this report, particularly in the section
captioned “PART II – OTHER INFORMATION, Item 1A – Risk Factors.”





Management
Overview




We are a
global intimate apparel company with a portfolio of established, well-known
brands, top-selling products and an iconic heritage.  We design,
source and market an extensive range of intimate apparel products, including
bras, panties and shapewear. We sell through multiple distribution channels,
including department stores and national chain stores, mass merchants (including
warehouse clubs), other (including specialty retailers, off-price retailers,
foreign distributors and licensees), our company-operated outlet stores and our
websites.





We sell
our products under some of the most recognized brands in the intimate apparel
industry. Our Maidenform®,Control It!®,
Flexees®,
Lilyette®,
Luleh®,
Rendezvous®and Subtract® products
are sold in department stores and national chain stores. Our Bodymates®,Inspirations®,Self
Expressions®and
Sweet Nothings®products
are distributed through mass merchants. These mass merchant brands leverage our
product technology, but are separate brands with distinctly different
logos.  In addition to our owned brands, we also supply private brands
to certain department stores and national chain stores, mass merchants and
retailers.





Trends
in our business





We
operate in two segments, wholesale and retail. Our wholesale segment includes
both our domestic and international wholesale markets. Our retail segment
includes our company-operated outlet stores, shapewear kiosks and our
websites.





We have
identified many near-term opportunities for growth and operational improvements,
as well as challenges, including general macro-economic conditions that may
affect our customers and our business. In particular, management believes that
there are many factors influencing the intimate apparel industry, including but
not limited to: consistent demand for foundation garments, consumer demand for
innovative and leading brands, sourcing and supply chain efficiencies, continued
growth of the mass merchant channel, pressure from retailers brought about by
the consolidation in the retail industry, increases in the cost of the raw
materials used in intimate apparel products and uncertainty surrounding import
restrictions.





We
believe we are well-positioned to capitalize on or address these trends by,
among other things:





·
            continuing
      to launch innovative products;


·
            increasing
      our presence in department stores and national chain stores through the
      use of Maidenform, Control It!, Flexees, Lilyette, Luleh, Rendezvous,
      Subtract and private brands;


·
            expanding
      distribution of our Donna Karan®
      and DKNY®
      licensed brands;


·
            expanding
      shapewear awareness;


·
            increasing
      our presence in the mass merchant channel through the use of our
      Bodymates, Inspirations, Self Expressions, Sweet Nothings, private brands
      and other brands for new customers;


·
            expanding
      our international presence;


·
            Increasing
      consumer identification with our brands through further marketing
      investments;


·
            marketing,
      rather than manufacturing our
brands;


·
            making
      selective acquisitions, entering into license agreements, and developing
      and marketing new products that will complement our existing products or
      distribution channels; and


·
            merchandising,
      marketing and selling private brand products to selected
      retailers.


11


Wholesale
segment





The
following trends are among the key variables that will affect our wholesale
segment:





Department stores and national chain
stores.The department stores and national chain stores are where we
generally sell the Maidenform, Control It!, Flexees and Lilyette brands. We plan
to continue to invest in increasing our net sales with department store
customers, which we believe is important to our long-term positioning in the
channel.  The rate of our future net sales growth with department
stores could be moderated by the reduction in both the number of department
store customers and the number of doors (distinct locations operated by a
particular retailer) operated by these customers. We have grown our market share
significantly in the past several years with national chain stores. We have
customers located outside the United States that purchase our Maidenform,
Flexees and Lilyette brands. The majority of these net sales are included in the
department stores and national chain stores channel. In 2009, we have added new
customers, such as Bloomingdale’s and Nordstrom, within this channel as a result
of our license agreement for the Donna Karan® and
DKNY® brands.
This agreement grants us the rights to design, source and market a full
collection of Donna Karan® and
DKNY® women’s
intimate apparel products.





Mass merchants.The mass
merchant channel includes both mass merchants and warehouse clubs. We intend to
improve our penetration with mass merchants through the use of our brands
Bodymates, Inspirations, Self Expressions, Sweet Nothings, and private brands.
We have experienced significant growth in this channel over the past several
years and expect to achieve additional growth in the future as we are able to
increase both the floor space and number of doors in which our products are
sold. We expect that both our net sales to this channel, and our net sales to
this channel as a percentage of our total net sales, are likely to increase over
time. The volume and mix of net sales of our brands and of private label in the
mass merchant channel can vary from period to period based upon strategic
changes that our customers may implement from time to time. Net sales to
customers in the mass merchant channel that are located outside the United
States are included in this channel.





Other.Net sales from other
channels include sales to specialty retailers, off-price retailers, foreign
distributors and royalty income from licensees. We supply private brands to
specialty retailers as opportunities present themselves and we continually
evaluate this channel for opportunities. The volume and mix of net sales of
private label in the other channel can vary significantly from period to period
based upon new product introductions.





We may
selectively target strategic acquisitions, licensing opportunities or brand
start-ups to grow our consumer base and would utilize the acquired companies and
licenses to complement our current products, channels and geographic scope. We
believe that acquisitions and licenses can enhance our product offerings to
retailers and provide growth opportunities. We believe we can leverage our core
competencies such as product development, brand management, logistics and
marketing to create significant value from the acquired businesses and licenses.
In May 2008, we entered into a new women’s intimate apparel license agreement
for the Donna Karan® and
DKNY® brands
and we launched the brand in the first quarter of 2009.





Retail
segment





We
believe our retail sales volume is driven by our ability to service our existing
consumers and obtain new consumers, as well as overall general macro-economic
conditions that can affect our consumers and ultimately their levels of overall
spending and choice of retail channel for their purchases. Additionally,
identifying optimal retail outlet locations, favorable leasing arrangements, and
improving our store productivity are factors important to growing our retail
segment’s net sales. We also sell our products through our websites, www.maidenform.comand www.maidenform.co.uk.Although we currently do
not generate a significant amount of net sales as a percentage of total Company
net sales through these sites, we do expect it to continue to grow.





Our
objectives in our retail segment are to continue to increase the productivity of
our portfolio of stores through effective merchandising and focused advertising,
as well as selectively closing less productive locations and potentially opening
new stores in more productive locations. Even in those situations where we
selectively close less productive outlet stores and do not open a new store in
that region, we believe those consumers still purchase many of our Maidenform
brands from our other outlet stores, our websites or our wholesale segment
customers that carry these brands. Historically, we have primarily sold excess
and, to a lesser extent, obsolete inventories through our outlet stores at a
higher margin than that achieved through other liquidation
alternatives.


12


Definitions





In
reviewing our operating performance, we evaluate both the wholesale and retail
segments by focusing on each segment’s operating income, cash flows from
operations and inventory turns.





Net sales. Our net sales are
derived from two operating segments, wholesale and retail. Net sales from our
wholesale segment are recognized when the customer takes possession and are
recorded net of cooperative advertising allowances, sales returns, sales
discounts, and markdown allowances provided to our customers. Net sales in our
retail segment are recognized at the time the customer takes possession of the
merchandise at the point-of-sale in our stores and for our internet sales, net
sales are recognized when the products are shipped and title passes to the
customer.





Cost of sales. We outsource
all manufacturing of the products we sell and, therefore, the principal elements
of our cost of sales are for finished goods inventories purchased from our
sourced vendors. Included in cost of sales and affecting our overall gross
margins are freight expenses from the manufacturers to our distribution centers
in situations where such expenses are charged separately. Also included in cost
of sales is the cost of warehousing, labor and overhead related to receiving and
warehousing at our distribution centers, and depreciation of assets related to
our receiving and warehousing in our distribution centers. Direct labor, cost of
fabrics, as well as raw materials for fabrics, are the primary components
driving the overall cost of our sourced finished goods inventories from our
sourcing vendors.





Selling, general and administrative
expenses (SG&A).Our SG&A includes all of our marketing, product
development, selling, distribution and general and administrative expenses for
both the wholesale and retail segments (which include our retail outlet store
payroll and related benefits). General and administrative expenses include
management payroll, benefits, travel, information systems, accounting,
distribution, rent, insurance and legal costs. Additionally, depreciation
related to the shipping function in our distribution centers and our corporate
office assets such as furniture, fixtures, and equipment, as well as
amortization of intellectual property, are included in SG&A.





Income taxes.We account for
income taxes using the liability method, which recognizes the amount of income
tax payable or refundable for the current year and recognizes deferred tax
liabilities and assets for the future tax consequences of the events that have
been recognized in the financial statements or tax returns. For those uncertain
tax positions where it is “more likely than not” that a tax benefit will be
sustained, we have recorded the tax benefit. For those income tax positions
where it is not “more likely than not” that a tax benefit will be sustained, no
tax benefit has been recognized. Where applicable, associated interest and
penalties are recorded. We routinely evaluate all deferred tax assets to
determine the likelihood of their realization and record a valuation allowance
if it is “more likely than not” that a deferred tax asset will not be realized.
For more information, see notes to the condensed consolidated financial
statements included elsewhere in this Quarterly Report on Form
10-Q.





Net
operating loss carryforwards (“NOLs”) enable a company to apply NOLs incurred
during a current period against a future period's profits in order to reduce
cash tax liabilities in those future periods. In periods when a company is
generating operating losses, its NOLs will increase. The tax effect of the NOLs
is recorded as a deferred tax asset. If the company does not believe that it is
“more likely than not” that it will be able to utilize the NOLs, it records a
valuation allowance against the deferred tax asset. Additionally,
Section 382 of the Internal Revenue Code (“Section 382”) imposes
limitations on a corporation's ability to utilize its NOLs if it experiences an
“ownership change.” In general terms, an ownership change results from
transactions increasing the ownership of certain existing stockholders and, or,
new stockholders in the stock of a corporation by more than 50 percentage
points during a three year testing period. Any unused annual limitation may be
carried over to later years, and the amount of the limitation may, under certain
circumstances, be increased to reflect both recognized and deemed recognized
“built-in gains” that occur during the sixty-month period after the ownership
change. Our NOLs are subject to Section 382 limitations. At January 2, 2010, we
had approximately $29.0 million of federal and state NOLs available for
utilization in the years from 2010 through 2023.


13


Results of
Operations





Three
      Months EndedApril
      3,
                    
                    
                    April
      4,2010
                    
                    
                    2009OPERATING
      DATA: (in millions)Wholesale
      sales
                    
                    $
                    131.6
                    
                    
                    $
                    103.3Retail
      sales
                    
                    
                    11.3
                    
                    
                    
                    10.9Net
      sales
                    
                    
                    142.9
                    
                    
                    
                    114.2Cost
      of sales
                    
                    
                    91.0
                    
                    
                    
                    77.7Gross
      profit
                    
                    
                    51.9
                    
                    
                    
                    36.5Selling,
      general and administrative expenses
                    
                    
                    31.2
                    
                    
                    
                    25.9Operating
      income
                    
                    $
                    20.7
                    
                    
                    $
                    10.6





As
      a Percentage of Net SalesThree
      Months EndedApril
      3,
                    
                    
                    April
      4,2010
                    
                    
                    2009OPERATING
      DATA:Wholesale
      sales
                    
                    
                    92.1
                    %
                    
                    
                    90.5
                    %Retail
      sales
                    
                    
                    7.9
                    
                    
                    
                    9.5Net
      sales
                    
                    
                    100.0
                    
                    
                    
                    100.0Cost
      of sales
                    
                    
                    63.7
                    
                    
                    
                    68.0Gross
      profit
                    
                    
                    36.3
                    
                    
                    
                    32.0Selling,
      general and administrative expenses
                    
                    
                    21.8
                    
                    
                    
                    22.7Operating
      income
                    
                    
                    14.5
                    %
                    
                    
                    9.3
                    %




Our net
sales are derived from two segments, wholesale and retail. Our net sales within
the wholesale segment are grouped by channel, based upon the brands we sell and
the customers to whom we sell, as follows: (1) department stores and national
chain stores, (2) mass merchants and (3) other.





Our
department stores and national chain stores channel primarily consists of sales
of our Maidenform, Control It!, Flexees, Lilyette, Luleh, Rendezvous, Subtract
and private brands on a worldwide basis to customers within this category.
Within the mass merchant channel, we sell brands such as Bodymates,
Inspirations, Self Expressions, Sweet Nothings and private brands that are
primarily dedicated to specific customers. These brands are all sold on a
worldwide basis to mass merchants and, to a lesser degree, warehouse clubs. Our
remaining sales are grouped within a channel designated as other and include
private brand products sold to specialty retailers and all brand sales to
off-price retail stores. In addition, we include licensing income as well as
sales to foreign distributors in our other channel.





Three
      Months EndedApril
      3,
                  
                  
                  April
      4,
                  
                  
                  $
                  
                  
                  %2010
                  
                  
                  2009
      (1)
                  
                  
                  change
                  
                  
                  change(in
      millions)Department
      stores and national chain stores
                  
                  $
                  57.3
                  
                  
                  $
                  43.3
                  
                  
                  $
                  14.0
                  
                  
                  
                  32.3
                  %Mass
      merchants
                  
                  
                  45.4
                  
                  
                  
                  39.5
                  
                  
                  
                  5.9
                  
                  
                  
                  14.9Other
                  
                  
                  28.9
                  
                  
                  
                  20.5
                  
                  
                  
                  8.4
                  
                  
                  
                  41.0Total
      wholesale
                  
                  
                  131.6
                  
                  
                  
                  103.3
                  
                  
                  
                  28.3
                  
                  
                  
                  27.4Retail
                  
                  
                  11.3
                  
                  
                  
                  10.9
                  
                  
                  
                  0.4
                  
                  
                  
                  3.7Total
      consolidated net sales
                  
                  $
                  142.9
                  
                  
                  $
                  114.2
                  
                  
                  $
                  28.7
                  
                  
                  
                  25.1
                  %





(1) Prior
period amounts in this table have been reclassified to conform to the current
year presentation.


14





In
addition, our mix of products sold worldwide between bras, shapewear, and
panties for the three-month periods ended April 3, 2010 and April 4, 2009,
respectively, is summarized below:





Three Months EndedApril
      3,
                  
                  
                  April
      4,2010
                  
                  
                  2009Bras
                  
                  
                  62
                  %
                  
                  
                  65
                  %Shapewear
                  
                  
                  34
                  
                  
                  
                  29Panties
                  
                  
                  4
                  
                  
                  
                  6100
                  %
                  
                  
                  100
                  %





Net
sales




Consolidated
net sales increased by $28.7 million, or 25.1%, from $114.2 million for the
three months ended April 4, 2009 to $142.9 million for the three months ended
April 3, 2010.





Wholesale
segment net sales increased by $28.3 million, or 27.4%, from $103.3 million for
the three months ended April 4, 2009 to $131.6 million for the three months
ended April 3, 2010. Total international net sales, which are included in the
wholesale segment, increased by $3.4 million, or 48.6%, from $7.0 million for
the three months ended April 4, 2009 to $10.4 million for the three months ended
April 3, 2010. International sales benefited from increased sales in Russia,
Germany and Spain, and favorable currency exchange rates.  Our
department stores and national chain stores channel net sales increased by $14.0
million, or 32.3%, from $43.3 million for the three months ended April 4, 2009
to $57.3 million for the three months ended April 3, 2010. The increase in this
channel was due to the solid performance of our bra and shapewear businesses
resulting from replenishment orders to support consumer spending and new product
introductions.  Our mass merchant channel net sales increased by $5.9
million, or 14.9%, from $39.5 million for the three months ended April 4, 2009
to $45.4 million for the three months ended April 3, 2010. This increase was
primarily a result of strong sales growth in our Sweet Nothings brand shapewear
and bra categories, and the introduction of shapewear products under our Self
Expressions brand.  Partially offsetting this increase was a reduction
in sales of our Bodymates brand resulting from a 2009 program that did not
repeat in 2010. Other channel net sales, which include sales to specialty
retailers, off-price retailers, foreign distributors and licensing income,
increased by $8.4 million, or 41.0%, from $20.5 million for the three months
ended April 4, 2009 to $28.9 million for the three months ended April 3, 2010.
This increase was due primarily from increased program business with off-price
retailers, partially offset by lower sales to a specialty retailer.





Net sales
in our retail segment increased by $0.4 million, or 3.7%, from $10.9 million for
the three months ended April 4, 2009 to $11.3 million for the three months ended
April 3, 2010, due in part from increased customer traffic with solid
performances from our bra and shapewear businesses.  Same store sales,
defined as sales from stores open more than one year, for the three months ended
April 3, 2010 increased 6.3%. Our internet sales decreased by $0.1 million, or
7.7%, from $1.3 million for the three months ended April 4, 2009 to $1.2 million
for the three months ended April 3, 2010.





Gross
profit




Consolidated
gross profit increased by $15.4 million, or 42.2%, from $36.5 million for the
three months ended April 4, 2009 to $51.9 million for the three months ended
April 3, 2010. As a percentage of net sales, consolidated gross margins
increased by 430 basis points from 32.0% for the three months ended April 4,
2009 to 36.3% for the three months ended April 3, 2010.





Gross
profit as a percentage of net sales for the wholesale segment increased by 500
basis points from 29.3% for the three months ended April 4, 2009 to 34.3% for
the three months ended April 3, 2010. This increase was primarily driven by the
mix of customers and products, decreased promotional activity, and the benefit
from product cost reduction efforts.





Gross
profit as a percentage of net sales for the retail segment increased by 240
basis points from 56.9% for the three months ended April 4, 2009 to 59.3% for
the three months ended April 3, 2010.  This increase was driven by a
change in the overall product mix.


15


Selling,
general and administrative expenses (“SG&A”)




Consolidated
SG&A increased by $5.3 million, or 20.5%, from $25.9 million for the three
months ended April 4, 2009 to $31.2 million for the three months ended April 3,
2010. However, as a percentage of net sales, SG&A decreased from 22.7% for
the three months ended April 4, 2009 to 21.8% for the three months ended April
3, 2010.





SG&A
for our wholesale segment, which includes corporate-related expenses, increased
by $5.0 million, or 26.5%, from $18.9 million for the three months ended April
4, 2009 to $23.9 million for the three months ended April 3, 2010. However, as a
percentage of net sales, wholesale segment SG&A decreased from 18.3% for the
three months ended April 4, 2009 to 18.1% for the three months ended April 3,
2010. The increase of $5.0 million is primarily a result of increased payroll
and related benefits associated with incentive compensation, 2010 merit
increases, which we did not incur in 2009, the filling of new positions to
support our initiatives, and the impairment of an intangible asset for which we
determined had no future benefit.  Retail SG&A increased by $0.3
million, or 4.3%, from $7.0 million for the three months ended April 4, 2009 to
$7.3 million for the three months ended April 3, 2010.





Operating
income




Our
consolidated operating income increased by $10.1 million, or 95.3%, from $10.6
million for the three months ended April 4, 2009 to $20.7 million for the three
months ended April 3, 2010.





For the
foregoing reasons, operating income for the wholesale segment increased by $9.9
million, or 86.8%, from $11.4 million for the three months ended April 4, 2009
to $21.3 million for the three months ended April 3, 2010. Also, for the reasons
discussed above, operating income for the retail segment increased by $0.2
million, or 25.0%, from a loss of $0.8 million for the three months ended April
4, 2009 to a loss of $0.6 million for the three months ended April 3,
2010.





Interest
expense, net




Interest
expense, net, decreased by $0.4 million, or 57.1%, from $0.7 million for the
three months ended April 4, 2009 to $0.3 million for the three months ended
April 3, 2010 as we benefited primarily from lower average interest rates and
lower average debt outstanding for the current quarter when compared to the same
period last year.





Income
tax expense




We review
our annual effective tax rate on a quarterly basis and we make necessary changes
if information or events warrant such changes. The annual effective tax rate is
forecasted quarterly using actual historical information and forward-looking
estimates. The estimated annual effective tax rate may fluctuate due to changes
in forecasted annual operating income; changes to the valuation allowance for
deferred tax assets (such changes would be recorded discretely in the quarter in
which they occurred); changes to actual or forecasted permanent book to tax
differences; impacts from future tax settlements with state, federal or foreign
tax authorities (such changes would be recorded discretely in the quarter in
which they occurred); or impacts from tax law changes (to the extent such
changes affect our deferred tax assets/liabilities, these changes would
generally be recorded discretely in the quarter in which they occurred). Our
effective income tax rate for the three months ended April 3, 2010 was 40.7% as
compared to an effective income tax rate for the three months ended April 4,
2009 of 39.4%. This increase in the effective income tax rate in the three-month
period ended April 3, 2010 was largely a result of non-deductable expenses in
connection with the sale of our common stock by one of our
stockholders.





Net
income




For the
foregoing reasons, our net income increased by $6.1 million, or 101.7%, from
$6.0 million for the three months ended April 4, 2009 to $12.1 million for the
three months ended April 3, 2010.





Liquidity and Capital
Resources




Operating activities. Cash
flows used in operating activities were $20.5 million for the three months ended
April 3, 2010 compared to cash flows used in operating activities of $16.4
million for the three months ended April 4, 2009. This change was primarily
driven by the use of cash from operations resulting from changes in working
capital, partially offset by an increase in net income.  The increase
in accounts receivable was due to higher sales during the quarter, which were
somewhat offset by higher cash collections. The increase in accounts payable and
inventory was the result of new product introductions and supply chain
management.




16


Investing activities. Cash
flows used in investing activities were $1.3 million for the three months ended
April 3, 2010 compared to $0.4 million for the three months ended April 4,
2009.  Cash flows used in investing activities for the three months
ended April 3, 2010 and April 4, 2009 were for capital
expenditures.  This increase in capital expenditures was primarily due
to information technology upgrades, including the implementation of an
enterprise resource planning system and our e-commerce website.





Financing activities. Cash
flows used in financing activities were $44.5 million for the three months ended
April 3, 2010 compared to cash flows used in financing activities of $0.3
million for the three months ended April 4, 2009. The increase in cash flows
used in financing activities was primarily due to the $32.4 million repurchase
of our common stock under our stock repurchase plan and the $16.0 million
prepayment on our long-term debt.





In
February 2010, the Board of Directors increased our stock repurchase program by
an additional $37.5 million, increasing the amount then available under the plan
to $50.0 million.  We are authorized to make repurchases from time to
time as market conditions warrant and pursuant to other parameters set by our
Board of Directors. On March 16, 2010, we repurchased $32.4 million of common
stock at an average price per share of $20.30.  Our credit facility
was amended to permit the increased stock repurchase, subject to certain
restrictions and limitations set forth in the amendment to our credit
facility.





At April
3, 2010 we had $71.0 million outstanding under our term loan, and $0 outstanding
under our revolving loan with approximately $49.1 million available for
borrowings, after giving effect to $0.9 million of outstanding letters of
credit. Principal payments on the term loan are payable in quarterly
installments of $0.3 million with all remaining amounts due on the maturity
date. We are permitted to voluntarily prepay all or part of the principal
balance of the term loan with such prepayments applied to scheduled principal
payments in inverse order of their maturity. We were in compliance with all debt
covenants at April 3, 2010.





Below is
a summary of our actual performance under these financial
covenants:





April 3, 2010
                            Covenant
                          
                          January 2, 2010
                            CovenantActual
      fixed charge coverage ratio (a)
                          1.57
      : 1.00
                          
                          3.16
      : 1.00Minimum
      ratio required (a)
                          1.25
      : 1.00
                          
                          1.25
      : 1.00Actual
      fixed charge coverage ratio (b)
                          1.18
      : 1.00
                          
                          N/AMinimum
      ratio required (b)
                          0.85
      : 1.00
                          
                          N/AActual
      leverage ratio
                          0.74
      : 1.00
                          
                          0.00
      : 1.00Maximum
      ratio permitted
                          4.00
      : 1.00
                          
                          4.00
      : 1.00Actual
      consolidated capital expenditures
                          $1,347
                          
                          $5,894Maximum
      permitted
                          $14,106
                          
                          $15,000





The
global economic downturn and the continued volatility in the financial markets
could have a material adverse effect on our business. Further deterioration in
the financial markets could lead to business disruptions for certain of our
suppliers, contract manufacturers or trade customers and consequently, could
disrupt our business. However, we believe that our existing cash balances and
available borrowings under our revolving loan, along with our future cash flow
from operations, will enable us to meet our liquidity needs and capital
expenditure requirements for the foreseeable future.




17


Contractual Obligations,
Commitments and Off-Balance Sheet Arrangements




We have
various contractual obligations which are recorded as liabilities in our
condensed consolidated financial statements. Other items, such as certain
purchase commitments and other executory contracts, are not recognized as
liabilities in our condensed consolidated financial statements but are required
to be disclosed. For example, we are contractually committed to make certain
minimum lease payments for the use of property under operating lease
agreements.





The
following table summarizes our significant contractual obligations and
commercial commitments at April 3, 2010 and the future periods in which such
obligations are expected to be settled in cash. In addition, the table below
reflects the timing of principal and interest payments on outstanding
borrowings.





Balance offiscal
                      
                      
                      In
      fiscal
                      
                      
                      In
      fiscal
                      
                      
                      In
      fiscal
                      
                      
                      In
      fiscal(in
      millions)
                      
                      2010
                      
                      
                      2011
                      
                      
                      2012
                      
                      
                      2013
                      
                      
                      2014
                      
                      
                      Thereafter
                      
                      
                      TotalLong-term
      debt
                      
                      $
                      0.8
                      
                      
                      $
                      1.1
                      
                      
                      $
                      1.1
                      
                      
                      $
                      1.1
                      
                      
                      $
                      66.9
                      
                      
                      $
                      -
                      
                      
                      $
                      71.0Interest
      on long-term debt (1)
                      
                      
                      0.7
                      
                      
                      
                      0.9
                      
                      
                      
                      0.9
                      
                      
                      
                      0.8
                      
                      
                      
                      0.4
                      
                      
                      
                      -
                      
                      
                      
                      3.7Obligations
      under capital lease (2)
                      
                      
                      0.1
                      
                      
                      
                      0.1
                      
                      
                      
                      0.1
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      0.3Operating
      leases (3)
                      
                      
                      6.1
                      
                      
                      
                      6.8
                      
                      
                      
                      5.9
                      
                      
                      
                      4.3
                      
                      
                      
                      2.9
                      
                      
                      
                      4.8
                      
                      
                      
                      30.8Total
      financial obligations
                      
                      
                      7.7
                      
                      
                      
                      8.9
                      
                      
                      
                      8.0
                      
                      
                      
                      6.2
                      
                      
                      
                      70.2
                      
                      
                      
                      4.8
                      
                      
                      
                      105.8Other
      contractual obligations (4)
                      
                      
                      3.9
                      
                      
                      
                      3.2
                      
                      
                      
                      5.2
                      
                      
                      
                      5.8
                      
                      
                      
                      8.3
                      
                      
                      
                      5.0
                      
                      
                      
                      31.4Purchase
      obligations (5)
                      
                      
                      87.6
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      87.6Total
      financial obligations and commitments
                      
                      $
                      99.2
                      
                      
                      $
                      12.1
                      
                      
                      $
                      13.2
                      
                      
                      $
                      12.0
                      
                      
                      $
                      78.5
                      
                      
                      $
                      9.8
                      
                      
                      $
                      224.8





(1)
The interest rate assumed for the variable portion of long-term debt was the
rate in effect at April 3, 2010.


(2)
Includes amounts classified as interest expense and SG&A under capital
leases.


(3)
The operating leases included in the above table consist of minimum rent
payments and do not include contingent rent based upon sales volume, or variable
costs such as maintenance, insurance or taxes.


(4)
Includes amounts classified as royalties, advertising and marketing
obligations.


(5)
Unconditional purchase obligations are defined as agreements to purchase goods
that are enforceable and legally binding on us and that specify all significant
terms, including fixed or minimum quantities to be purchased; fixed, minimum, or
variable price provisions; and the approximate timing of the transaction. The
purchase obligations category above relates to commitments for inventory and raw
material purchases. Amounts reflected in our condensed consolidated balance
sheets in accounts payable or other current liabilities are excluded from the
table above.





In
addition to the total contractual obligations and commitments included in the
table above, we have pension and post-retirement benefit obligations included in
other non-current liabilities of $3.2 million and $0.7 million, respectively at
April 3, 2010.





As of
April 3, 2010, our total liabilities for unrecognized tax benefits and related
interest and penalties amounted to $4.3 million (before federal and, if
applicable, state effect). Liabilities for unrecognized tax benefits have not
been included in the schedule of cash contractual obligations because we cannot
make a reasonable, reliable estimate of the amount and period of related future
payments of these liabilities.




Off-Balance Sheet Arrangements.Our most significant off-balance sheet financing arrangements as of April
3, 2010 are non-cancelable operating lease agreements, primarily for our
company-operated outlet stores, our company headquarters and our leased
distribution centers located in Shannon, Ireland and Fayetteville, North
Carolina. We do not participate in any off-balance sheet arrangements involving
unconsolidated subsidiaries that provide financing or potentially expose us to
unrecorded financial obligations.


18


Critical Accounting Policies
and Estimates




Our
discussion and analysis of our financial condition and results of operations is
based upon our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues, expenses, and related disclosure of contingent assets and liabilities.
We base our estimates on historical experience and on various other assumptions
that we believe are reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. A summary
of our significant accounting policies and a description of accounting policies
that we believe are most critical may be found in the Management’s Discussion
and Analysis of Financial Condition and Results of Operations included in our
Annual Report on Form 10-K for the year ended January 2, 2010.





Recently Issued Accounting
Standards


In
February 2010, the Financial Accounting Standards Board (FASB) issued an
amendment to the guidance on subsequent events to eliminate the requirement for
public companies to disclose the date through which subsequent events have been
evaluated. We will continue to evaluate subsequent events through the date of
the issuance of our financial statements, however, consistent with the guidance,
this date will no longer be disclosed. The guidance became effective upon
issuance and the adoption had no impact on our consolidated financial
statements.





In
January 2010, the FASB issued guidance to amend the disclosure requirements
related to recurring and nonrecurring fair value measurements. The guidance
requires disclosure of transfers of assets and liabilities between Level 1 and
Level 2 of the fair value measurement hierarchy, including the reasons and the
timing of the transfers and information on purchases, sales, issuance, and
settlements on a gross basis in the reconciliation of the assets and liabilities
measured under Level 3 of the fair value measurement hierarchy. The adoption of
this guidance is effective for interim and annual reporting periods beginning
after December 15, 2009. We have adopted this guidance in the financial
statements presented herein, which did not impact our consolidated financial
position or results of operations.


19





Item
3. Quantitative and Qualitative Disclosures about Market Risk





Foreign Currency Risk.We do
not believe that we have significant foreign currency transactional exposures.
For the three-month period ended April 3, 2010, $10.4 million of our total net
sales were in currencies other than the U.S. dollar. During the three-month
period ended April 3, 2010, our net sales were favorably impacted by $0.9
million due to fluctuations in foreign currency exchange rates. Most of our
purchases are denominated in U.S. dollars. The impact of a 10% unfavorable
change in the exchange rate of the U.S. dollar against the prevailing market
rates of the foreign currencies in which we have transactional exposures would
be immaterial.





Interest Rate Risk.From
time to time, we manage our interest rate risk through the use of interest rate
swaps. Our existing swap contract matured on December 31, 2009. At April 3,
2010, our debt portfolio was composed of variable-rate debt, with no portion
hedged. With respect to our variable-rate debt, a 1% change in interest rates
would be immaterial.





Commodity Price Risk.We are
subject primarily to commodity price risk arising from fluctuations in the
market prices of raw materials used in the garments purchased from our sourcing
vendors, if they pass along these increased costs. During the past five years,
there has been no significant impact from commodity price fluctuations, and we
do not currently use derivative instruments in the management of these risks. On
a going-forward basis, fluctuations in crude oil prices or petroleum based
product prices may also influence the prices of the related items such as
chemicals, dyestuffs, man-made fibers and foam, and transportation costs. Raw
material price increases could increase our cost of sales and decrease our
profitability unless we are able to pass our higher costs on to our
customers.





Inflation Risk.We are
affected by inflation and changing prices from our suppliers primarily through
the cost of raw materials, increased operating costs and expenses, and
fluctuations in interest rates. The effects of inflation on our net sales and
operations have not been material in recent years. We do not believe that
inflation risk is material to our business or our consolidated financial
position, results of operations or cash flows. In the future, volatile crude oil
and gasoline prices may impact our product and freight costs, consumer
confidence and disposable income.





Seasonality.We have not
experienced any significant seasonal fluctuations in our net sales or our
profitability.





Item
4. Controls and Procedures





(a) Evaluation of Disclosure
Controls and Procedures.





Our
management, including the Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our “disclosure controls and procedures,” (as
defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the
period covered by this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of such date, our
disclosure controls and procedures were effective as of April 3, 2010 to ensure
that the information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and to ensure that
information is accumulated and communicated to our management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.





(b) Changes
in Internal Controls over Financial Reporting.





There was
no change in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) during
our fiscal quarter ending April 3, 2010, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.


20


PART II - OTHER
INFORMATION





Item
1. Legal Proceedings


On March
2, 2010, we filed suit against Times Three Clothier, LLC ("Times Three") in the
federal court for the Southern District of New York, seeking a declaratory
judgment that our Flexees Fat Free Tank does not infringe a design patent held
by Times Three. We believe that the ultimate outcome of this pending lawsuit and
claim will not have a material adverse affect on our consolidated financial
position or results of operations taken as a whole. Due to their inherent
uncertainty, however, there can be no assurance of the ultimate outcome of
current or future litigation, proceedings, investigations, or claims or their
effect.





From time
to time, we are subject to various claims and legal actions arising from time to
time in the ordinary course of business.





Item
1A. Risk Factors


Risks
that could have a negative impact on our business, results of operations and
financial condition include: our growth cannot be assured and any growth may be
unprofitable; potential fluctuations in our results of operations or rate of
growth; our dependence on a limited number of customers; we have larger
competitors with greater resources; retail trends in the intimate apparel
industry, including consolidation and continued growth in the development of
private brands, resulting in downward pressure on prices, reduced floor space
and other harmful changes; failure to anticipate, identify or promptly react to
changing trends, styles, or consumer preferences; our leverage could adversely
affect our financial condition; external events may disrupt our supply chain,
result in increased cost of goods or an inability to deliver our products;
events which result in difficulty in procuring or producing products on a
cost-effective basis; increases in the prices of raw materials; changing
international trade regulation, including as it relates to the imposition or
elimination of quotas on imports of textiles and apparel; foreign currency
exposure; the sufficiency of cash to fund operations and capital expenditures;
and the influence of adverse changes in general economic conditions. This list
is intended to identify only certain of the principal factors that could have a
material and adverse impact on our business, results of operations and financial
condition.  A more detailed description of each of these and other
important risk factors can be found under the caption “Risk Factors” in our most
recent Form 10-K, filed with the Securities and Exchange Commission on March 10,
2010.




There are
no material changes to the risk factors described in the Form 10-K filed on
March 10, 2010.




Item
2. Unregistered Sales of Equity Securities and Use of Proceeds





(a)
None.


(b)
None.


(c)
Issuer purchases of equity securities.





Total
      number
                              
                              
                              Maximumof
      shares
                              
                              
                              dollarTotal
                              
                              
                              
                              
                              
                              repurchased
                              
                              
                              value
      of sharesnumber
                              
                              
                              Average
                              
                              
                              as
      part of publicly
                              
                              
                              that
      may yet beof
      shares
                              
                              
                              price
      paid
                              
                              
                              announced
                              
                              
                              repurchased
      underPeriod
                              
                              repurchased
                              
                              
                              per share
                              
                              
                              program (1)
                              
                              
                              the program (1)March
      7, 2010 - April 3, 2010
                              
                              
                              1,593,675
                              
                              
                              $
                              20.30
                              
                              
                              
                              1,593,675
                              
                              
                              $
                              17,648,397





(1)
            In
      February 2010, the Board of Directors increased our stock repurchase
      program by an additional $37.5 million, increasing the amount then
      available under the plan to $50.0 million.  We are authorized to
      make repurchases from time to time as market conditions warrant and
      pursuant to other parameters set by our Board of
  Directors.





Item
3. Defaults Upon Senior Securities


None.





Item
4. (Removed and Reserved)





Item
5. Other Information


None.





Item
6. Exhibits


The
following exhibits are filed as part of this Quarterly Report on Form
10-Q:


21





31.1
            Certification by Chief Executive
      Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of
  2002





31.2
            Certification by Chief Financial
      Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of
  2002





32.1
            Certification by Chief Executive
      Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002





32.2
            Certification by Chief Financial
      Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002


22


SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





MAIDENFORM BRANDS,
      INC.
                  (Registrant)Date:
      May 11, 2010
                By:
                /s/ Christopher W. ViethName:
      Christopher W. ViethTitle:
      Executive Vice President, Chief Operating Officer and
                  Chief
      Financial Officer (principal financial
officer)


23


EXHIBIT
INDEX


31.1
            Certification by Chief Executive
      Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of
  2002





31.2
            Certification by Chief Financial
      Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of
  2002





32.1
            Certification by Chief Executive
      Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002





32.2
            Certification by Chief Financial
      Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002




24