**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**










**FORM
      10-Q**










**x**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





**For
      the quarterly period ended September 27, 2008**





OR





**o**
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**


For
      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 o





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
      definition of “accelerated filer”, “large accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.




Large
                  accelerated filer ̈
              Accelerated
                  filer ̈
              Non-accelerated
                  filerx
              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 o No x





As
      of
      October 31, 2008, there were 22,588,830 shares of the registrant’s common stock,
      par value $0.01 per share, outstanding.







**INDEX**








**PAGE****PART
                I - FINANCIAL INFORMATION**Item
                1. Financial Statements (Unaudited)Condensed
                Consolidated Balance Sheets at September 27, 2008 and December 29,
                2007
            2Condensed
                Consolidated Statements of Income for the Three and Nine Months Ended
                September 27, 2008 and September 29, 2007
            3Condensed
                Consolidated Statements of Cash Flows for the Nine Months Ended September
                27, 2008 and September 29, 2007
            4Notes
                to the Condensed Consolidated Financial Statements
            5Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            12Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            21Item
                4. Controls and Procedures
            22**PART
                II - OTHER INFORMATION**Item1.
                Legal Proceedings
            23Item1A.
                Risk Factors
            23Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            23Item
                3. Defaults Upon Senior Securities
            23Item
                4. Submission of Matters to a Vote of Security Holders
            23Item
                5. Other Information
            24Item
                6. Exhibits
            25




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)***





**September 27, 2008**
            
            **December 29, 2007****Assets**Current
                assetsCash
                and cash equivalents
            
            $
            37,010
            
            $
            16,602Accounts
                receivable, net
            
            
            52,127
            
            
            45,775Inventories
            
            
            63,118
            
            
            69,041Deferred
                income taxes
            
            
            10,937
            
            
            11,015Prepaid
                expenses and other current assets
            
            
            9,668
            
            
            7,497Total
                current assets
            
            
            172,860
            
            
            149,930Property,
                plant and equipment, net
            
            
            18,660
            
            
            19,992Goodwill
            
            
            7,162
            
            
            7,884Intangible
                assets, net
            
            
            97,647
            
            
            98,518Other
                non-current assets
            
            
            3,575
            
            
            3,327Total
                assets
            
            $
            299,904
            
            $
            279,651**Liabilities
                and stockholders’ equity**Current
                liabilitiesCurrent
                portion of long-term debt
            
            $
            1,100
            
            $
            1,100Accounts
                payable
            
            
            32,210
            
            
            36,022Accrued
                expenses and other current liabilities
            
            
            20,982
            
            
            21,620Total
                current liabilities
            
            
            54,292
            
            
            58,742Long-term
                debt
            
            
            87,800
            
            
            88,625Deferred
                income taxes
            
            
            25,592
            
            
            21,718Other
                non-current liabilities
            
            
            9,746
            
            
            10,949Total
                liabilities
            
            
            177,430
            
            
            180,034Commitments
                and contingencies (Note 11)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; 23,488,357
                shares
                issued and 22,430,530 outstanding at September 27, 2008 and 23,488,357
                shares issued and 22,357,292 outstanding at December 29,
                2007
            
            
            235
            
            
            235Additional
                paid-in capital
            
            
            61,063
            
            
            60,919Retained
                earnings
            
            
            75,817
            
            
            53,526Accumulated
                other comprehensive income
            
            
            264
            
            
            872Treasury
                stock, at cost (1,057,827 shares at September 27, 2008 and 1,131,065
                shares at December 29, 2007)
            
            
            (14,905
            )
            
            (15,935
            )Total
                stockholders’ equity
            
            
            122,474
            
            
            99,617Total
                liabilities and stockholders’ equity
            
            $
            299,904
            
            $
            279,651




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 ended**
            
            **Nine months ended****September 27, 2008**
            
            **September 29, 2007**
            
            **September 27, 2008**
            
            **September 29, 2007**Net
                sales
            
            $
            112,586
            
            $
            100,189
            
            $
            318,755
            
            $
            326,382Cost
                of sales
            
            
            69,513
            
            
            59,784
            
            
            195,906
            
            
            199,539Gross
                profit
            
            
            43,073
            
            
            40,405
            
            
            122,849
            
            
            126,843Selling,
                general and administrative expenses
            
            
            27,880
            
            
            25,788
            
            
            81,575
            
            
            71,527Operating
                income
            
            
            15,193
            
            
            14,617
            
            
            41,274
            
            
            55,316Interest
                expense, net
            
            
            1,014
            
            
            1,454
            
            
            3,326
            
            
            7,721Income
                before provision for income taxes
            
            
            14,179
            
            
            13,163
            
            
            37,948
            
            
            47,595Income
                tax expense
            
            
            5,734
            
            
            5,384
            
            
            15,657
            
            
            19,742Net
                income
            
            $
            8,445
            
            $
            7,779
            
            $
            22,291
            
            $
            27,853Basic
                earnings per common share
            
            $
            0.38
            
            $
            0.34
            
            $
            1.00
            
            $
            1.21Diluted
                earnings per common share
            
            $
            0.36
            
            $
            0.32
            
            $
            0.95
            
            $
            1.15Basic
                weighted average number of shares outstanding
            
            
            22,428,698
            
            
            22,886,961
            
            
            22,386,561
            
            
            22,959,770Diluted
                weighted average number of shares outstanding
            
            
            23,461,633
            
            
            24,023,720
            
            
            23,443,488
            
            
            24,121,711





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)***





**Nine months ended****September 27, 2008**
            
            **September 29, 2007****Cash
                flows from operating activities**Net
                income
            
            $
            22,291
            
            $
            27,853Adjustments
                to reconcile net income to net cash from operating
                activitiesDepreciation
                and amortization
            
            
            2,690
            
            
            2,212Amortization
                of intangible assets
            
            
            871
            
            
            871Amortization
                of deferred financing costs
            
            
            142
            
            
            2,852Stock-based
                compensation
            
            
            1,117
            
            
            1,783Deferred
                income taxes
            
            
            3,874
            
            
            5,666Excess
                tax benefits related to stock-based compensation
            
            
            (60
            )
            
            (536
            )Pension
                plan curtailment gain
            
            
            -
            
            
            (6,099
            )Bad
                debt expense
            
            
            1,102
            
            
            -Net
                changes in operating assets and liabilitiesAccounts
                receivable
            
            
            (7,454
            )
            
            (8,697
            )Inventories
            
            
            5,923
            
            
            (10,687
            )Prepaid
                expenses and other current and non-current assets
            
            
            (235
            )
            
            (535
            )Accounts
                payable
            
            
            (3,812
            )
            
            14,977Accrued
                expenses and other current and non-current liabilities
            
            
            (976
            )
            
            3,085Income
                taxes payable
            
            
            (2,160
            )
            
            (466
            )Net
                cash from operating activities
            
            
            23,313
            
            
            32,279**Cash
                flows from investing activities**Capital
                expenditures
            
            
            (1,358
            )
            
            (4,499
            )Net
                cash from investing activities
            
            
            (1,358
            )
            
            (4,499
            )**Cash
                flows from financing activities**Term
                loan borrowings
            
            
            -
            
            
            100,000Term
                loan repayments
            
            
            (825
            )
            
            (120,275
            )Borrowings
                under revolving loan
            
            
            -
            
            
            5,000Repayments
                under revolving loan
            
            
            -
            
            
            (5,000
            )Proceeds
                from stock options exercised
            
            
            151
            
            
            347Excess
                tax benefits related to stock-based compensation
            
            
            60
            
            
            536Payments
                of employee withholding taxes related to equity awards
            
            
            (73
            )
            
            -Purchase
                of common stock for treasury
            
            
            -
            
            
            (7,010
            )Payments
                of capital lease obligations
            
            
            (135
            )
            
            (76
            )Deferred
                financing costs
            
            
            -
            
            
            (1,078
            )Net
                cash from financing activities
            
            
            (822
            )
            
            (27,556
            )Effects
                of exchange rate changes on cash
            
            
            (725
            )
            
            238Net
                increase in cash
            
            
            20,408
            
            
            462**Cash
                and cash equivalents**Beginning
                of period
            
            
            16,602
            
            
            14,617End
                of period
            
            $
            37,010
            
            $
            15,079**Supplementary
                disclosure of cash flow information**Cash
                paid during the periodInterest
            
            $
            3,760
            
            $
            5,962Income
                taxes
            
            $
            13,402
            
            $
            13,376**Supplemental
                schedule of non-cash investing and financing
                activities**Equipment
                acquired with capital lease obligations
            
            $
            -
            
            $
            470




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 licensing income).
      In
      addition, we operated 76 and 78 retail outlet stores as of September 27, 2008
      and September 29, 2007, respectively, 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
      September 27, 2008, the results of our operations for the three and nine-month
      periods ended September 27, 2008 and September 29, 2007, and cash flows for
      the
      nine months ended September 27, 2008 and September 29, 2007. These adjustments
      consist of normal recurring adjustments. Operating results for the three and
      nine-month periods ended September 27, 2008 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 December 29,
      2007
      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.





These
      condensed consolidated financial statements have been prepared in accordance
      with Article 10 of Regulation S-X promulgated by the Securities and Exchange
      Commission. Accordingly, certain information and disclosures normally included
      in financial statements prepared in accordance with accounting principles
      generally accepted in the United States of America have been condensed or
      omitted pursuant to the rules and regulations of the Securities and Exchange
      Commission. The financial statements included herein should be read in
      conjunction with our Annual Report on Form 10-K for the year ended December
      29,
      2007.





**2.**  **GOODWILL**





There
      were no acquisitions, dispositions or impairments of goodwill during the
      nine-month period ended September 27, 2008. Changes in the carrying amount
      of
      goodwill, by segment, are as follows :




**Wholesale**
            
            **Retail**
            
            **Total**Balance
                as of December 29, 2007
            
            $
            7,435
            
            $
            449
            
            $
            7,884Adjustment
            
            
            (681
            )
            
            (41
            )
            
            (722
            )Balance
                as of September 27, 2008
            
            $
            6,754
            
            $
            408
            
            $
            7,162




This
      adjustment represents the reversal of Financial Accounting Standards Board
      (FASB) Interpretation No. 48 (FIN No. 48), “Accounting for Uncertainty in Income
      Taxes,” reserves for unrecognized tax benefits no longer required as a result of
      the expiration of statute of limitations.




**3.**  **DEBT**





**September 27, 2008**
            
            **December 29, 2007****Long-term
                debt**Term
                loan facility
            
            $
            88,900
            
            $
            89,725Current
                maturities of long-term debt
            
            
            1,100
            
            
            1,100Non-current
                portion of long-term debt
            
            $
            87,800
            
            $
            88,625




At
      September 27, 2008, we had $88,900 outstanding under our term loan, and $0
      outstanding with approximately $48,145 available for borrowings under our
      revolving loan, after giving effect to $1,855 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 September
      27,
      2008, are as follows:





Balance
                of fiscal 2008
            
            $
            275In
                fiscal 2009
            
            
            1,100In
                fiscal 2010
            
            
            1,100In
                fiscal 2011
            
            
            1,100In
                fiscal 2012
            
            
            1,100Thereafter
            
            
            84,225




**4.**  **FAIR
      VALUE MEASUREMENTS**





In
      September 2006, the Financial Accounting Standards Board (FASB) issued Statement
      of Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements"
      (SFAS No. 157), which defines fair value, establishes a framework for measuring
      fair value, and expands disclosures about fair value measurements. In February
      2008, the FASB issued FASB Staff Position (FSP) No. 157-1, “Application of FASB
      Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
      That Address Fair Value Measurements for Purposes of Lease Classification or
      Measurement under Statement 13” (FSP No. 157-1) and FSP No. 157-2, “Effective
      Date of FASB Statement No. 157” (FSP No. 157-2). FSP No. 157-1 amends SFAS No.
      157 to remove certain leasing transactions from its scope. FSP No. 157-2 allows
      a one-year deferral of adoption of SFAS No. 157 for nonfinancial assets and
      nonfinancial liabilities that are recognized or disclosed at fair value in
      the
      financial statements on a nonrecurring basis. This FSP defers the effective
      date
      of SFAS No. 157 to fiscal years beginning after November 15, 2008 for items
      within the scope of FSP No. 157-2. Our significant nonfinancial assets and
      liabilities that could be impacted by the deferral include assets and
      liabilities initially measured at fair value in connection with an acquisition
      and our intangible assets and goodwill are tested annually for impairment.
      We
      are currently evaluating the impact, if any, that FSP No. 157-2 will have on
      our
      consolidated statements of financial position, results of operations and cash
      flows.





Effective
      December 30, 2007, we adopted SFAS No. 157. The fair value hierarchy for
      disclosure of fair value measurements under SFAS No. 157 is as
      follows:





Level
      1 -
      Quoted prices in active markets for identical assets or liabilities


Level
      2 -
      Quoted prices for similar assets and liabilities in active markets or
      significant inputs that are observable


Level
      3 -
      Significant inputs that are unobservable (for example cash flow modeling inputs
      based on assumptions)





The
      following table summarizes liabilities measured at fair value on a recurring
      basis at September 27, 2008, as required by SFAS No. 157:





**Level
                1**
            
            **Level
                2**
            
            **Level
                3****Liabilities**Interest
                rate swap
            
            $
            -
            
            $
            432
            
            $
            -




Effective
      July 30, 2007, we entered into an interest rate swap agreement to receive
      floating interest and pay fixed interest. This interest rate swap agreement
      is
      designated as a cash flow hedge of the variable interest payments on a portion
      of our variable rate term loan debt. The interest rate swap agreement matures
      on
      December 31, 2009. At September 27, 2008, $30,000 of our outstanding term loan
      debt was hedged under this agreement.





The
      fair
      value is determined using inputs that use as their basis readily observable
      market data that are actively quoted and can be validated through external
      sources.


6


**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***




**5.**  **BENEFIT
      PLANS AND POSTRETIREMENT PLANS**




We
      sponsor a defined benefit pension plan covering substantially all eligible
      employees not covered by union plans. Effective January 1, 2007, the defined
      benefit pension plan was frozen for current participants and closed to new
      entrants. In connection with the freeze, we recorded a non-cash curtailment
      gain. If we choose to terminate the pension plan, we will recognize a one-time
      settlement loss or gain depending on the funded status at the time of
      termination. There is no requirement to terminate the plan. We also maintain
      postretirement medical benefit plans for certain eligible retirees for which
      postretirement benefit expense on a quarterly basis is
      insignificant.





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





**Three months ended**
            
            **Nine months ended****September 27, 2008**
            
            **September 29, 2007**
            
            **September 27, 2008**
            
            **September 29, 2007**Interest
                cost
            
            $
            277
            
            $
            272
            
            $
            831
            
            $
            816Expected
                return on plan assets
            
            
            (413
            )
            
            (381
            )
            
            (1,239
            )
            
            (1,143
            )Net
                periodic benefit income
            
            
            (136
            )
            
            (109
            )
            
            (408
            )
            
            (327
            )Curtailment
                gain
            
            
            -
            
            
            -
            
            
            -
            
            
            (6,099
            )Total
            
            $
            (136
            )
            $
            (109
            )
            $
            (408
            )
            $
            (6,426
            )




**6.**  **STOCKHOLDERS’
      EQUITY**




**Accumulated****Common**
            
            **Treasury**
            
            **Additional**
            
            
            
            **other**
            
            **Total****stock**
            
            **stock**
            
            **paid-in**
            
            **Retained**
            
            **comprehensive**
            
            **stockholders'****Shares**
            
            $
            
            **Shares**
            
            $
            
            **capital**
            
            **earnings**
            
            **income**
            
            **equity****Balance
                at December 29, 2007**
            
            
            23,488,357
            
            $
            235
            
            
            (1,131,065
            )
            $
            (15,935
            )
            $
            60,919
            
            $
            53,526
            
            $
            872
            
            $
            99,617Stock-based
                compensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,117
            
            
            
            
            
            
            
            
            1,117Equity
                award activity
            
            
            
            
            
            
            
            
            73,238
            
            
            1,030
            
            
            (973
            )
            
            
            
            
            
            
            
            57**Comprehensive
                income**Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            22,291
            
            
            
            
            
            22,291Changes
                during the period
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (608
            )
            
            (608
            )Total
                comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            21,683**Balance
                at September 27, 2008**
            
            
            23,488,357
            
            $
            235
            
            
            (1,057,827
            )
            $
            (14,905
            )
            $
            61,063
            
            $
            75,817
            
            $
            264
            
            $
            122,474




7


**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***




**7** **.**  **COMPREHENSIVE
      INCOME**




The
      changes in comprehensive income are as follows:




**Three months ended**
            
            **Nine months ended****September 27, 2008**
            
            **September 29, 2007**
            
            **September 27, 2008**
            
            **September 29, 2007**Net
                income
            
            $
            8,445
            
            $
            7,779
            
            $
            22,291
            
            $
            27,853Foreign
                currency translation adjustments (a)
            
            
            (593
            )
            
            53
            
            
            (725
            )
            
            238Pension
                plan curtailment, net of tax
            
            
            -
            
            
            -
            
            
            -
            
            
            146Interest
                rate swap, net of tax
            
            
            118
            
            
            (221
            )
            
            117
            
            
            (374
            )Comprehensive
                income
            
            $
            7,970
            
            $
            7,611
            
            $
            21,683
            
            $
            27,863




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





**8.**  **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 and nine-month
      periods ended September 27, 2008 was 40.4% and 41.3%, respectively, as compared
      to an effective income tax rate for the three and nine-month periods ended
      September 29, 2007 of 40.9% and 41.5%, respectively.





**9.**  **SEGMENT
      INFORMATION**




We
      report
      segment information in accordance with the provisions of SFAS No. 131,
‘‘Disclosures about Segments of an Enterprise and Related Information,’’ which
      requires segment information to be disclosed based on a ‘‘management approach.’’
The management approach refers to the internal reporting that we use for making
      operating decisions and assessing the performance of reportable segments. SFAS
      No. 131 also requires disclosure about products and services, geographic areas
      and major customers. For purposes of complying with SFAS No. 131, 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. Licensing 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 or units sourced to support each segment’s net sales. Intersegment sales
      and transfers are recorded at cost and treated as a transfer of
      inventory.


8


**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 ended**
            
            **Nine
                months ended****September 27, 2008**
            
            **September 29, 2007**
            
            **September 27, 2008**
            
            **September 29, 2007**Net
                salesWholesale
            
            $
            94,902
            
            $
            82,476
            
            $
            275,075
            
            $
            284,634Retail
            
            
            17,684
            
            
            17,713
            
            
            43,680
            
            
            41,748Total
            
            $
            112,586
            
            $
            100,189
            
            $
            318,755
            
            $
            326,382Operating
                incomeWholesale
            
            $
            12,282
            
            $
            11,899
            
            $
            37,626
            
            $
            52,615Retail
            
            
            2,911
            
            
            2,718
            
            
            3,648
            
            
            2,701Operating
                income
            
            
            15,193
            
            
            14,617
            
            
            41,274
            
            
            55,316Interest
                expense, net
            
            
            1,014
            
            
            1,454
            
            
            3,326
            
            
            7,721Income
                before provision for income taxes
            
            $
            14,179
            
            $
            13,163
            
            $
            37,948
            
            $
            47,595Depreciation
                and amortizationWholesale
            
            $
            869
            
            $
            703
            
            $
            2,595
            
            $
            2,018Retail
            
            
            311
            
            
            346
            
            
            966
            
            
            1,065Total
            
            $
            1,180
            
            $
            1,049
            
            $
            3,561
            
            $
            3,083Net
                sales by geographic areaUnited
                States
            
            $
            100,953
            
            $
            90,354
            
            $
            288,514
            
            $
            299,024International
                (a)
            
            
            11,633
            
            
            9,835
            
            
            30,241
            
            
            27,358Total
            
            $
            112,586
            
            $
            100,189
            
            $
            318,755
            
            $
            326,382Intercompany
                sales from Wholesale to Retail
            
            $
            4,086
            
            $
            4,193
            
            $
            9,997
            
            $
            10,333**September 27, 2008**
            
            
            **December 29, 2007**Identifiable
                assetsWholesale
            
            $
            273,743
            
            $
            253,160Retail
            
            
            26,161
            
            
            26,491Total
            
            $
            299,904
            
            $
            279,651





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





At
      September 27, 2008 and December 29, 2007, our five largest uncollaterized
      receivables represented approximately 61% and 63% of total accounts receivable,
      respectively.


9


**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***




For
      the
      three-month period ended September 27, 2008, three customers in the Wholesale
      segment each accounted for more than 10% of our consolidated net sales as
      compared to two customers in the Wholesale segment for the three-month period
      ended September 29, 2007. For the nine-month periods ended September 27, 2008
      and September 29, 2007, three customers in the Wholesale segment each accounted
      for more than 10% of our consolidated net sales.




**10.**  **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 ended**
            
            **Nine months ended****September 27, 2008**
            
            **September 29, 2007**
            
            **September 27, 2008**
            
            **September 29, 2007**Net
                income
            
            $
            8,445
            
            $
            7,779
            
            $
            22,291
            
            $
            27,853Weighted
                average number of common and common equivalent shares
                outstanding:Basic
                number of common shares outstanding
            
            
            22,428,698
            
            
            22,886,961
            
            
            22,386,561
            
            
            22,959,770Impact
                of dilutive securities
            
            
            1,032,935
            
            
            1,136,759
            
            
            1,056,927
            
            
            1,161,941Dilutive
                number of common and common equivalent shares outstanding
            
            
            23,461,633
            
            
            24,023,720
            
            
            23,443,488
            
            
            24,121,711Basic
                earnings per common share
            
            $
            0.38
            
            $
            0.34
            
            $
            1.00
            
            $
            1.21Diluted
                earnings per common share
            
            $
            0.36
            
            $
            0.32
            
            $
            0.95
            
            $
            1.15





For
      the
      three and nine-month periods ended September 27, 2008, approximately 728,000
      and
      636,000 equity awards, respectively, were not included in the computation of
      diluted earnings per share because of their anti-dilutive effect. For the three
      and nine-month periods ended September 29, 2007, approximately 615,000 and
      230,000 equity awards, respectively, were not included in the computation of
      diluted earnings per share because of their anti-dilutive effect.





**11.**  **COMMITMENTS
      AND CONTINGENCIES**




**Purchase
      commitments**




In
      the
      normal course of business, we enter into purchase commitments for both finished
      goods and raw materials. At September 27, 2008, we had purchase commitments
      of
      $68,002 and believe that we have adequate reserves for 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.




10


**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***




**12.**  **ACCRUED
      EXPENSES AND OTHER CURRENT LIABILITIES**





**September 27, 2008**
            
            **December 29, 2007**Accrued
                wages, incentive compensation, payroll taxes and related
                benefits
            
            $
            7,368
            
            $
            9,868Accrued
                professional fees
            
            
            1,970
            
            
            1,242Federal,
                state and local taxes payable
            
            
            -
            
            
            27Accrued
                customs duty
            
            
            2,584
            
            
            3,132Accrued
                other
            
            
            9,060
            
            
            7,351$
            20,982
            
            $
            21,620





Other
      accrued expenses and current liabilities include, among other items, accrued
      interest, inventory return accrual, severance and accrued freight.





**13.**  **RECENTLY
      ISSUED ACCOUNTING STANDARDS**





In
      February 2008, the FASB issued FSP No. 157-2, which delays the effective date
      of
      SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for
      items that are recognized or disclosed at fair value in the financial statements
      on a recurring basis (at least annually). Nonfinancial assets and nonfinancial
      liabilities would include all assets and liabilities other than those meeting
      the definition of a financial asset or financial liability as defined in
      paragraph 6 of SFAS No. 159, "The Fair Value Option for Financial Assets and
      Financial Liabilities." FSP No. 157-2 defers the effective date of SFAS No.
      157
      to fiscal years beginning after November 15, 2008, and interim periods within
      those fiscal years for items within the scope of FSP No. 157-2. We are currently
      evaluating the impact, if any, that FSP No. 157-2 will have on our consolidated
      statements of financial position, results of operations and cash
      flows.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities, Including an Amendment of SFAS
      No.
      115”. SFAS No. 159 permits companies to choose to measure many financial
      instruments and certain other items at fair value. It also establishes
      presentation and disclosure requirements designed to facilitate comparisons
      between companies that choose different measurement attributes for similar
      types
      of assets and liabilities. SFAS No. 159 requires companies to provide additional
      information that will help investors and other users of financial statements
      to
      more easily understand the effect of a company’s choice to use fair value on its
      earnings. It also requires entities to display the fair value of those assets
      and liabilities for which a company has chosen to use fair value on the face
      of
      the balance sheet. We adopted this statement as of December 30, 2007 and elected
      not to apply the fair value option to any of our financial
      instruments.





In
      March
      2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
      and Hedging Activities". SFAS No. 161 enhances the disclosure requirements
      for
      derivative instruments and hedging activities. This Standard is effective
      beginning in our 2009 fiscal year. Since SFAS No. 161 requires only additional
      disclosures concerning derivatives and hedging activities, adoption of SFAS
      No.
      161 will not affect our consolidated statements of financial position, results
      of operations or cash flows.




11


**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 are under no
      obligation to inform you if they do. 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 licensing income), 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 ® , Flexees ® ,
      Lilyette ® ,
      Control
      It TM ,
      Rendezvous ® ,
      Subtract ® , Luleh TM and
      private brands are sold in department stores and national chain stores. Our
      Sweet Nothings ® ,
      Bodymates ® ,
      Self
      Expressions ® ,
      Inspirations TM ,
      as well
      as private brands are distributed through mass merchants. These other brands
      leverage our product technology, but are separate brands with distinctly
      different logos. In addition to our owned brands, we also supply private brand
      products to selected 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 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 products 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:





•
            increasing
                consumer identification with our brands through further marketing
                investments;


•
            continuing
                to launch innovative products;


•
            increasing
                our presence in department stores and national chain stores through
                the
                use of Maidenform®,
                Flexees®,
                Lilyette®,Control
                ItTM,
                Rendezvous®,
                Subtract®,
                LulehTMand private brands;


•
            adding
                new higher end distribution with our new women’s intimate apparel license
                agreement for the Donna Karan®and DKNY®brands
                that will commence in 2009;


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


•
            expanding
                our international presence;


•
            being
                a marketer rather than a manufacturer of our
                brands;


•
            making
                selective acquisitions, entering into licenses, and developing products
                and marketing that will complement our existing products or distribution
                channels; and


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


12





*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 ® ,
      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. There has been a trend toward consolidation of department stores and
      national chain stores. We expect the rate of our future net sales growth with
      department stores and national chain stores to be moderated by the reduction
      in
      both the number of department store and national chain store customers and
      the
      number of doors (distinct locations operated by a particular retailer) operated
      by these customers. We have grown both our market share and our net sales
      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. Commencing 2009, we expect to add new customers
      within this channel as a result of our new women’s intimate apparel license
      agreement for the Donna Karan ® and
      DKNY ® brands.





*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 Sweet
      Nothings ® ,
      Bodymates ® ,
      Self
      Expressions ® ,
      Inspirations TM ,
      as well
      as private brands. We have experienced significant growth in this channel over
      the past several years and expect to achieve significant 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.* Our
      net
      sales from this channel, which include sales to specialty retailers and to
      off-price retailers, have historically been a relatively small component of
      our
      overall net sales. We participate in private brands in the specialty retailer
      area as opportunities present themselves. We continually evaluate this channel
      for opportunities. Licensing income is included in this channel as well as
      sales
      to foreign distributors.





We
      will
      selectively target strategic acquisitions, or licensing opportunities or a
      brand
      start-up to grow our consumer base and would utilize the acquired companies
      or
      licenses to complement the products, channels and geographic reach of our
      existing portfolio. We believe that acquisitions or licensing opportunities
      could enhance our product offerings to retailers and provide potential growth.
      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 or licenses. On May 6, 2008, we entered into a new women’s
      intimate apparel license agreement for the Donna Karan ® and
      DKNY ® brands.





*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.com* and *www.maidenform.co.uk* *.* Although
      we currently do not generate a significant amount of 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.




13





***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. Our net
      sales in the wholesale segment 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 include all of our marketing, selling, distribution and general and
      administrative expenses for both the wholesale and retail segments (which
      include our retail outlet store payroll and related benefits), and rent expense.
      General and administrative expenses include management payroll, benefits,
      travel, information systems, accounting, distribution, insurance and legal.
      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 net operating
      losses 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. Upon emergence from bankruptcy in 1999, our NOLs were subject to
      Section 382 limitations. As a result of the acquisition in 2004, we
      experienced a change in control as defined by Section 382. As a result of
      this ownership change, the utilization of our NOLs was subject to a new annual
      limitation under Section 382. Subsequent to the acquisition in 2004, sales
      of our shares by others, including the initial public offering in July 2005,
      have resulted in additional changes in control for the purpose of Section 382;
      however, the annual limitation of our NOLs has not changed. At December 29,
      2007, we had approximately $49.2 million of federal and state NOLs available
      for
      utilization in the years from 2008 through 2023.


14


**Results
      of Operations**





**Three months ended**
            
            **Nine months ended****September 27, 2008**
            
            **September 29, 2007**
            
            **September 27, 2008**
            
            **September 29, 2007****OPERATING
                DATA: (in millions)**Wholesale
                sales
            
            $
            94.9
            
            $
            82.5
            
            $
            275.1
            
            $
            284.7Retail
                sales
            
            
            17.7
            
            
            17.7
            
            
            43.7
            
            
            41.7Net
                sales
            
            
            112.6
            
            
            100.2
            
            
            318.8
            
            
            326.4Cost
                of sales
            
            
            69.6
            
            
            59.8
            
            
            196.0
            
            
            199.6Gross
                profit
            
            
            43.0
            
            
            40.4
            
            
            122.8
            
            
            126.8Selling,
                general and administrative expenses
            
            
            27.8
            
            
            25.8
            
            
            81.5
            
            
            71.5Operating
                income
            
            $
            15.2
            
            $
            14.6
            
            $
            41.3
            
            $
            55.3




**As a percentage of net sales****Three months ended**
            
            **Nine months ended****September 27, 2008**
            
            **September 29, 2007**
            
            **September 27, 2008**
            
            **September 29, 2007****OPERATING
                DATA:**Wholesale
                sales
            
            
            84.3
            %
            
            82.3
            %
            
            86.3
            %
            
            87.2
            %Retail
                sales
            
            
            15.7
            
            
            17.7
            
            
            13.7
            
            
            12.8Net
                sales
            
            
            100.0
            
            
            100.0
            
            
            100.0
            
            
            100.0Cost
                of sales
            
            
            61.8
            
            
            59.7
            
            
            61.5
            
            
            61.2Gross
                profit
            
            
            38.2
            
            
            40.3
            
            
            38.5
            
            
            38.8Selling,
                general and administrative expenses
            
            
            24.7
            
            
            25.7
            
            
            25.5
            
            
            21.9Operating
                income
            
            
            13.5
            %
            
            14.6
            %
            
            13.0
            %
            
            16.9
            %




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 ® ,
      Flexees ® ,
      Lilyette ® ,
      Control
      It TM ,
      Rendezvous ® ,
      Subtract ® ,  Luleh TM and
      private brands on a worldwide basis to customers within this category. Within
      the mass merchant channel, we sell brands such as Sweet Nothings ® ,
      Bodymates ® ,
      Self
      Expressions ® ,
      Inspirations TM 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.





Our
      retail segment consists of outlet stores and internet sales. We had 76 outlet
      stores as of September 27, 2008 compared to 78 outlet stores as of September
      29,
      2007.




15




**Three
                        months ended**
                    
                    **Nine
                        months ended****September 27,**
                    
                    **September 29,**
                    
                    **$**
                    
                    **%**
                    
                    **September 27,**
                    
                    **September 29,**
                    
                    **$**
                    
                    **%****2008**
                    
                    **2007**
                    
                    **change**
                    
                    **change**
                    
                    **2008**
                    
                    **2007**
                    
                    **change**
                    
                    **change****(in
                        millions)**
                    
                    **(in
                        millions)**Department
                        stores and national chain stores
                    
                    $
                    57.3
                    
                    $
                    51.8
                    
                    $
                    5.5
                    
                    
                    10.6
                    %
                    $
                    163.1
                    
                    $
                    173.5
                    
                    $
                    (10.4
                    )
                    
                    (6.0
                    )%Mass
                        merchants
                    
                    
                    28.4
                    
                    
                    20.4
                    
                    
                    8.0
                    
                    
                    39.2
                    
                    
                    87.2
                    
                    
                    74.5
                    
                    
                    12.7
                    
                    
                    17.0Other
                    
                    
                    9.2
                    
                    
                    10.3
                    
                    
                    (1.1
                    )
                    
                    (10.7
                    )
                    
                    24.8
                    
                    
                    36.7
                    
                    
                    (11.9
                    )
                    
                    (32.4
                    )Total
                        wholesale
                    
                    
                    94.9
                    
                    
                    82.5
                    
                    
                    12.4
                    
                    
                    15.0
                    
                    
                    275.1
                    
                    
                    284.7
                    
                    
                    (9.6
                    )
                    
                    (3.4
                    )Retail
                    
                    
                    17.7
                    
                    
                    17.7
                    
                    
                    -
                    
                    
                    -
                    
                    
                    43.7
                    
                    
                    41.7
                    
                    
                    2.0
                    
                    
                    4.8Total
                        consolidated net sales
                    
                    $
                    112.6
                    
                    $
                    100.2
                    
                    $
                    12.4
                    
                    
                    12.4
                    %
                    $
                    318.8
                    
                    $
                    326.4
                    
                    $
                    (7.6
                    )
                    
                    (2.3
                    )%
 
 In
        addition, our mix of products sold between bras, shapewear, and panties in
        the
        wholesale segment for the three and nine-month periods ended September 27,
        2008
        and September 29, 2007, respectively, is summarized below:
 
 **Three months ended**
              
              **Nine months ended****September 27, 2008**
              
              **September 29, 2007 (1)**
              
              **September 27, 2008**
              
              **September 29, 2007 (1)**Bras
              
              
              58%
              
              
              64%
              
              
              64%
              
              
              71%Shapewear
              
              
              33
              
              
              27
              
              
              29
              
              
              22Panties
              
              
              9
              
              
              9
              
              
              7
              
              
              7100%
              
              
              100%
              
              
              100%
              
              
              100%
 
 (1)
        Prior
        period amounts in this table have been reclassified to conform to the current
        year presentation.
  ***Net
        Sales***
  Consolidated
        net sales increased by $12.4 million, or 12.4%, from $100.2 million for the
        three months ended September 29, 2007 to $112.6 million for the three months
        ended September 27, 2008. Consolidated net sales decreased by $7.6 million,
        or
        2.3%, from $326.4 million for the nine months ended September 29, 2007 to
        $318.8
        million for the nine months ended September 27, 2008.
 
 Wholesale
        segment net sales increased by $12.4 million, or 15.0%, from $82.5 million
        for
        the three months ended September 29, 2007 to $94.9 million for the three
        months
        ended September 27, 2008. Total international net sales, which are included
        in
        the wholesale segment, increased by $1.7 million, or 17.2%, from $9.9 million
        for the three months ended September 29, 2007 to $11.6 million for the three
        months ended September 27, 2008, primarily from product assortment expansion,
        in
        addition to increased sales levels in countries such as Canada, Russia, Sweden
        and Mexico which more than offset sales softness in the United Kingdom. Our
        department stores and national chain stores channel net sales increased by
        $5.5
        million, or 10.6%, from $51.8 million for the three months ended September
        29,
        2007 to $57.3 million for the three months ended September 27, 2008. This
        increase was primarily related to the previously announced net sales shift
        of
        approximately $6.0 million from the second quarter to early in the third
        quarter
        of 2008. Despite the unfavorable economic environment which affected certain
        product replenishment orders from customers in this channel we experienced
        solid
        performance in our Flexees ® shapewear
        brand driven by our new Ultimate Instant Slimmer ® Collection
        and Control It TM ,
        an
        expanded style assortment of our Lilyette ® full-figure brand and ongoing replenishment from the launch of our
        Luleh TM Brand
        which was not in the prior year. Our mass merchant channel net sales increased
        by $8.0 million, or 39.2%, from $20.4 million for the three months ended
        September 29, 2007 to $28.4 million for the three months ended September
        27,
        2008. This increase was driven by the expansion of our Sweet
        Nothings ® brand in
        the shapewear category, a new branded seamless shapewear program and ongoing
        replenishment from the launch of our Inspirations TM brand
        which was not in the prior year. Other channel net sales, which include sales
        to
        specialty retailers, off-price retailers, foreign distributors and licensing
        income, decreased by $1.1 million, or 10.7%, from $10.3 million for the three
        months ended September 29, 2007 to $9.2 million for the three months ended
        September 27, 2008. This decrease was due primarily to lower sales to off-price
        and specialty retailers.
  16
 
 Wholesale
        segment net sales decreased by $9.6 million, or 3.4%, from $284.7 million
        for
        the nine months ended September 29, 2007 to $275.1 million for the nine months
        ended September 27, 2008. International net sales increased $2.8 million,
        or
        10.2%, from $27.4 million for the nine months ended September 29, 2007 to
        $30.2
        million for the nine months ended September 27, 2008. The growth in
        international net sales was largely driven by increased sales levels in
        countries such as Canada, Germany, and the Benelux and Scandinavian countries.
        Partially offsetting these increases in net sales was a decrease in net sales
        to
        the United Kingdom. The decrease in our wholesale segment net sales for the
        nine
        months ended September 27, 2008 was the result of lower net sales in our
        department stores and national chain stores and other channels, the impact
        of
        which was partially reduced by increased net sales in our mass merchant channel.
        Department stores and national chain stores channel net sales decreased by
        $10.4
        million, or 6.0%, from $173.5 million for the nine months ended September
        29,
        2007 to $163.1 million for the nine months ended September 27, 2008 driven
        by
        the unfavorable economic environment which affected certain product
        replenishment orders from customers. This was somewhat offset by expanded
        distribution of our brands previously mentioned above. Our other channel
        net
        sales decreased by $11.9 million, or 32.4%, from $36.7 million for the nine
        months ended September 29, 2007 to $24.8 million for the nine months ended
        September 27, 2008. This
        decrease was due primarily to a non-recurring private brand program with
        a
        specialty retailer that occurred in the first quarter of 2007 and lower sales
        to
        an off-price retailer. Our
        mass
        merchant channel net sales increased by $12.7 million, or 17.0%, from $74.5
        million for the nine months ended September 29, 2007 to $87.2 million for
        the
        nine months ended September 27, 2008 benefiting from the launch of a new
        brand,
        penetration in the shapewear category, and the addition of new programs,
        as
        mentioned above.
 
 Net
        sales
        in our retail segment remained unchanged at $17.7 million for the three months
        ended September 27, 2008 when compared to the three months ended September
        29,
        2007. Net sales in our retail segment increased $2.0 million, or 4.8%, from
        $41.7 million for the nine months ended September 29, 2007 to $43.7 million
        for
        the nine months ended September 27, 2008. We had 76 outlet stores as of
        September 27, 2008 compared to 78 outlet stores as of September 29, 2007.
        Same
        stores sales, defined as sales from stores open for more than one year, for
        the
        three-month period ended September 27, 2008 decreased 3.3% due largely to
        reduced customer traffic. For the nine-month period ended September 27, 2008,
        same stores sales increased 1.5%. This increase is a result of strong product
        performers, including Lilyette ® bras and
        Flexees ® .
        Specific initiatives to drive store productivity included focused in-store
        marketing efforts and maximization of selling floor space to higher performing
        categories. Our internet sales increased by $0.5 million, or 50.0%, from
        $1.0
        million for the three months ended September 29, 2007 to $1.5 million for
        the
        three months ended September 27, 2008. Our internet sales increased by $1.0
        million, or 34.5%, from $2.9 million for the nine months ended September
        29,
        2007 to $3.9 million for the nine months ended September 27, 2008.
 
 ***Gross
        Profit***
  Consolidated
        gross profit increased by $2.6 million, or 6.4%, from $40.4 million for the
        three months ended September 29, 2007 to $43.0 million for the three months
        ended September 27, 2008. As a percentage of net sales, consolidated gross
        margins decreased by 210 basis points from 40.3% for the three months ended
        September 29, 2007 to 38.2% for the three months ended September 27, 2008.
        Consolidated gross profit decreased by $4.0 million, or 3.2%, from $126.8
        million during the nine months ended September 29, 2007 to $122.8 million
        for
        the nine months ended September 27, 2008. As a percentage of net sales, gross
        profit decreased by 30 basis points from 38.8% for the nine months ended
        September 29, 2007 to 38.5% for the nine months ended September 27, 2008.
  Gross
        profit as a percentage of net sales for the wholesale segment decreased by
        230
        basis points from 36.7% for the three months ended September 29, 2007 to
        34.4%
        for the three months ended September 27, 2008. This decrease was primarily
        driven by both customer and product mix, which included fewer sales in the
        department stores and national chain stores channel combined with higher
        sales
        in the mass merchant channel. Partially offsetting this change in channel
        mix
        was cost improvements from our sourcing initiatives such as product cost
        re-engineering actions and inbound freight initiatives. Gross profit as a
        percentage of net sales for the wholesale segment was 36.2% for the nine
        months
        ended September 29, 2007 as compared to 35.4% for the nine months ended
        September 27, 2008. This decrease of 80 basis points is primarily a result
        of
        the reasons mentioned above.
  Gross
        profit for the retail segment was 58.8% for the three months ended September
        27,
        2008 as compared to 57.1% for the three months ended September 29, 2007,
        and
        58.1% for the nine months ended September 27, 2008 as compared to 56.6% for
        the
        nine months ended September 29, 2007. This increase for the three and nine
        months ended September 27, 2008 was largely driven by a change in the overall
        product mix and by cost improvements from our sourcing initiatives.
 
 ***Selling,
        General and Administrative Expenses (SG&A)***
  Consolidated
        SG&A increased by $2.0 million, or 7.8%, from $25.8 million for the three
        months ended September 29, 2007 to $27.8 million for the three months ended
        September 27, 2008. However, as a percentage of net sales, SG&A decreased
        from 25.7% for the three months ended September 29, 2007 to 24.7% for the
        three
        months ended September 27, 2008.
  17
 
 SG&A
        for our wholesale segment, which includes corporate-related expenses, increased
        by $1.9 million, or 10.3%, from $18.4 million for the three months ended
        September 29, 2007 to $20.3 million for the three months ended September
        27,
        2008. However, as a percentage of net sales, wholesale segment SG&A
        decreased from 22.3% for the three months ended September 29, 2007 to 21.4%
        for
        the three months ended September 27, 2008. The increase of $1.9 million is
        primarily a result of $1.5 million of start-up costs associated with developing
        and implementing the new women’s intimate apparel license agreement for the
        Donna Karan ® and
        DKNY ® brands,
        higher bad debt expense of $1.1 million associated with customer bankruptcies,
        and increased advertising of $0.9 million to support new product launches
        and
        branding. Partially offsetting these increases was a decrease in professional
        fees of $0.6 million along with other costs reductions as we continue to
        manage
        our expenses. Retail SG&A increased by $0.1 million, or 1.4%, from $7.4
        million for the three months ended September 29, 2007 to $7.5 million for
        the
        three months ended September 27, 2008.
  Consolidated
        SG&A increased by $10.0 million, or 14.0%, from $71.5 million for the nine
        months ended September 29, 2007 to $81.5 million for the nine months ended
        September 27, 2008. As a percentage of net sales, SG&A increased from 21.9%
        for the nine months ended September 29, 2007 to 25.5% for the nine months
        ended
        September 27, 2008. Consolidated SG&A for the nine months ended September
        29, 2007 included a non-cash pension curtailment gain of $6.1 million as
        discussed below.
 
 SG&A
        for our wholesale segment, which includes the pension curtailment gain in
        2007,
        increased by $9.1 million, or 18.0%, from $50.6 million for the nine months
        ended September 29, 2007 to $59.7 million for the nine months ended September
        27, 2008. Our
        pension plan was frozen effective January 1, 2007 for current employee
        participants and closed to new entrants. In connection with this freeze,
        we
        recognized a non-cash curtailment gain of $6.1 million and reported this
        gain in
        our wholesale segment SG&A in the first quarter 2007. Wholesale segment
        SG&A, excluding this curtailment gain, increased by $3.0 million, or 5.3%,
        to $59.7 million for the nine months ended September 27, 2008. A s
        a percentage of net sales, excluding this curtailment gain, wholesale segment
        SG&A increased from 19.9% for the nine months ended September 29, 2007 to
        21.7% for the nine months ended September 27, 2008. The
        increase of $3.0 million is primarily a result of $1.7 million of start-up
        costs
        associated with developing and implementing the new women’s intimate apparel
        license agreement for the Donna Karan ® and
        DKNY ® brands,
        increased advertising of $1.6 million to support new product launches and
        branding, and higher bad debt expense of $1.1 million associated with customer
        bankruptcies. Partially offsetting these increases was a decrease in
        professional fees of $1.2 million. Retail
        SG&A increased by $0.9 million, or 4.3%, from $20.9 million for the nine
        months ended September 29, 2007 to $21.8 million for the nine months ended
        September 27, 2008 as a result of increased sales and increased occupancy
        costs.
 
 ***Operating
        Income***
  Our
        consolidated operating income increased by $0.6 million, or 4.1%, from $14.6
        million for the three months ended September 29, 2007 to $15.2 million for
        the
        three months ended September 27, 2008. Our consolidated operating income
        decreased by $14.0 million, or 25.3%, from $55.3 million for the nine months
        ended September 29, 2007 to $41.3 million for the nine months ended September
        27, 2008. Excluding the curtailment gain mentioned above, operating income
        for
        the nine months ended September 27, 2008 decreased $7.9 million, or 16.1%,
        to
        $41.3 million.
 
 For
        the
        foregoing reasons, operating income for the wholesale segment increased by
        $0.4
        million, or 3.4%, from $11.9 million for the three months ended September
        29,
        2007 to $12.3 million for the three months ended September 27, 2008. Operating
        income for the wholesale segment decreased by $14.9 million, or 28.3%, from
        $52.6 million during the nine months ended September 29, 2007 to $37.7 million
        during the nine months ended September 27, 2008. Excluding the curtailment
        gain
        mentioned above, operating income for the nine months ended September 27,
        2008
        decreased $8.8 million, or 18.9%, to $37.7 million.
 
 Also,
        for
        the reasons discussed above, operating income for the retail segment increased
        by $0.2 million, or 7.4%, from $2.7 million for the three months ended September
        29, 2007 to $2.9 million for the three months ended September 27, 2008. The
        retail segment’s operating income increased by $0.9 million from $2.7 million
        during the nine months ended September 29, 2007 to $3.6 million for the nine
        months ended September 27, 2008.
 
 ***Interest
        Expense, Net***
  Interest
        expense, net, decreased by $0.4 million, or 28.6%, from $1.4 million for
        the
        three months ended September 29, 2007 to $1.0 million for the three months
        ended
        September 27, 2008 reflecting the benefit of lower average debt outstanding
        and
        a lower average interest rate for the current quarter when compared to the
        same
        period last year. The average balance of total debt outstanding decreased
        from
        $92.1 million for the three months ended September 29, 2007 to $88.9 million
        for
        the three months ended September 27, 2008, and the average interest rate
        during
        the three months ended September 29, 2007 was 6.6% as compared to an average
        interest rate of 4.6% during the three months ended September 27,
        2008.
  18
 
 Interest
        expense, net, decreased $4.4 million, or 57.1%, from $7.7 million for the
        nine
        months ended September 29, 2007 to $3.3 million for the nine months ended
        September 27, 2008. The decrease was a combination of the expensing of deferred
        financing costs of $2.4 million during the second quarter of 2007, as a result
        of refinancing our credit facility during that quarter, in addition to the
        reasons discussed above. The average balance of total debt outstanding decreased
        from $103.2 million for the nine months ended September 29, 2007 to $89.2
        million for the nine months ended September 27, 2008. The average interest
        rate
        during the nine months ended September 29, 2007 was 6.7% as compared to an
        average interest rate of 5.1% during the nine months ended September 27,
        2008.
 
 ***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 and nine-month periods ended September
        27, 2008 was 40.4% and 41.3%, respectively, as compared to an effective income
        tax rate for the three and nine-month periods ended September 29, 2007 of
        40.9%
        and 41.5%, respectively.
 
 Because
        of NOLs available to offset income taxes payable, our cash income taxes to
        be
        paid will be at a rate lower than our effective income tax rate.
 
 ***Net
        Income***
  For
        the
        foregoing reasons, our net income increased by $0.7 million, or 9.0%, from
        $7.8
        million for the three months ended September 29, 2007 to $8.5 million for
        the
        three months ended September 27, 2008. Our net income decreased by $5.6 million,
        or 20.1%, from $27.9 million for the nine months ended September 29, 2007
        to
        $22.3 million for the nine months ended September 27, 2008. Excluding the
        curtailment gain and the expensing of the deferred financing costs mentioned
        above, net income for the nine-month period ended September 27, 2008 decreased
        $3.4 million, or 13.2%, when compared to the same period last year.
  **Liquidity
        and Capital Resources**
  *Operating
        activities.* Cash
        flows provided by operating activities were $23.3 million for the nine months
        ended September 27, 2008 compared to cash flows provided by operating activities
        of $32.3 million for the nine months ended September 29, 2007. This change
        was
        primarily driven by lower net income in addition to a net unfavorable change
        in
        working capital. Inventories for the nine months ended September 27, 2008
        decreased $5.9 million compared to an increase of $10.7 million for the nine
        months ended September 29, 2007. Accounts payable for the nine months ended
        September 27, 2008 decreased $3.8 million compared to an increase of $15.0
        million for the nine months ended September 29, 2007. The decrease in inventory
        and accounts payable at September 27, 2008 was primarily a result of supply
        chain management and the timing of cash payments.
  *Investing
        activities.* Cash
        flows used in investing activities were $1.4 million for the nine months
        ended
        September 27, 2008 compared to $4.5 million for the nine months ended September
        29, 2007. The use of cash for investing activities for the nine months ended
        September 27, 2008, was primarily due to construction expenditures at our
        second
        distribution center and the build-out of the Donna Karan ® and
        DKNY ® showroom
        and other renovations in our New York City showroom. The use of cash for
        investing activities for the nine months ended September 29, 2007, was primarily
        due to information technology upgrades and construction expenditures related
        to
        the relocation of our corporate headquarters.
 
 *Financing
        activities.* Cash
        flows used in financing activities were $0.8 million for the nine months
        ended
        September 27, 2008 compared to cash flows used in financing activities of
        $27.6
        million for the nine months ended September 29, 2007. The decrease in use
        of
        cash for financing activities was primarily due to no voluntary prepayments
        made
        on our long-term debt in addition to no purchase of common stock during the
        current period when compared to the comparable period last year.
 
 At
        September 27, 2008, we had $88.9 million outstanding under our term loan,
        and $0
        outstanding with approximately $48.1 million available for borrowings under
        our
        revolving loan, after giving effect to $1.9 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 September 27, 2008.
  19
 
 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.
  **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. 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 September 27, 2008 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 of****fiscal**
              
              **In fiscal**
              
              **In fiscal**
              
              **In fiscal**
              
              **In fiscal****(in millions)**
              
              **2008**
              
              **2009**
              
              **2010**
              
              **2011**
              
              **2012**
              
              **Thereafter**
              
              **Total**Long-term debt
              
              $
              0.3
              
              $
              1.1
              
              $
              1.1
              
              $
              1.1
              
              $
              1.1
              
              $
              84.2
              
              $
              88.9Interest
                  on long-term debt (1)
              
              
              1.4
              
              
              5.0
              
              
              4.9
              
              
              4.9
              
              
              4.8
              
              
              6.9
              
              
              27.9Obligations
                  under capital lease (2)
              
              
              0.1
              
              
              0.3
              
              
              0.2
              
              
              0.1
              
              
              0.1
              
              
              -
              
              
              0.8Operating
                  leases
              
              
              1.8
              
              
              5.4
              
              
              4.5
              
              
              3.7
              
              
              3.0
              
              
              8.1
              
              
              26.5Total
                  financial obligations
              
              
              3.6
              
              
              11.8
              
              
              10.7
              
              
              9.8
              
              
              9.0
              
              
              99.2
              
              
              144.1Other
                  contractual obligations (3)
              
              
              0.7
              
              
              2.8
              
              
              4.7
              
              
              3.2
              
              
              5.2
              
              
              19.1
              
              
              35.7Purchase
                  obligations (4)
              
              
              29.8
              
              
              38.2
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              68.0Total
                  financial obligations and commitments
              
              $
              34.1
              
              $
              52.8
              
              $
              15.4
              
              $
              13.0
              
              $
              14.2
              
              $
              118.3
              
              $
              247.8
 
 *(1)
        The interest rate assumed for the variable portion of long-term debt was
        the
        rate in effect at September 27, 2008.*
 *(2)
        Includes amounts classified as interest expense and SG&A.*
 *(3)
        Includes amounts classified as royalties, advertising and marketing
        obligations.*
 *(4)
        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 postretirement benefit obligations included in other
        non-current liabilities and a pension plan obligation included in other
        non-current assets.
 
 As
        of
        September 27, 2008, our total liabilities for unrecognized tax benefits and
        related interest and penalties amounted to $7.4 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 September 27,
        2008
        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.
  20
  **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 December 29, 2007.
 
 ***Recently
        Issued Accounting Standards***
 
 In
        February 2008, the Financial Accounting Standards Board (FASB) issued FASB
        Staff
        Position (FSP) No. 157-2 (FSP No. 157-2), which delays the effective date
        of
        Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value
        Measurements,” for nonfinancial assets and nonfinancial liabilities, except for
        items that are recognized or disclosed at fair value in the financial statements
        on a recurring basis (at least annually). Nonfinancial assets and nonfinancial
        liabilities would include all assets and liabilities other than those meeting
        the definition of a financial asset or financial liability as defined in
        paragraph 6 of SFAS No. 159, "The Fair Value Option for Financial Assets
        and
        Financial Liabilities." FSP No. 157-2 defers the effective date of SFAS No.
        157
        to fiscal years beginning after November 15, 2008, and interim periods within
        those fiscal years for items within the scope of FSP No. 157-2. We are currently
        evaluating the impact, if any, that FSP No. 157-2 will have on our consolidated
        statements of financial position, results of operations and cash
        flows.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities, Including an Amendment of SFAS
        No.
        115.” SFAS No. 159 permits companies to choose to measure many financial
        instruments and certain other items at fair value. It also establishes
        presentation and disclosure requirements designed to facilitate comparisons
        between companies that choose different measurement attributes for similar
        types
        of assets and liabilities. SFAS No. 159 requires companies to provide additional
        information that will help investors and other users of financial statements
        to
        more easily understand the effect of a company’s choice to use fair value on its
        earnings. It also requires entities to display the fair value of those assets
        and liabilities for which a company has chosen to use fair value on the face
        of
        the balance sheet. We adopted this statement as of December 30, 2007 and
        elected
        not to apply the fair value option to any of our financial
        instruments.
 
 In
        March
        2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
        and Hedging Activities". SFAS No. 161 enhances the disclosure requirements
        for
        derivative instruments and hedging activities. This Standard is effective
        beginning in our 2009 fiscal year. Since SFAS No. 161 requires only additional
        disclosures concerning derivatives and hedging activities, adoption of SFAS
        No.
        161 will not affect our consolidated statements of financial position, results
        of operations or cash flows.
 
 **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 and nine-month periods ended September 27, 2008, $10.4 million
        and
        $26.4 million, respectively, of our total net sales were in currencies other
        than the U.S. dollar. During the three and nine-month periods ended September
        27, 2008, our net sales were favorably impacted by $0.5 million and $2.4
        million, respectively, due to foreign 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.* Interest
        rate risk is managed through a combination of variable and fixed rate debt.
        Our
        objective is to maintain a cost-effective mix that we deem appropriate and
        we
        have entered into an interest rate swap agreement to maintain this balance.
        At
        September 27, 2008, our debt portfolio was composed of variable-rate debt
        of
        which we hedge approximately 34% to a fixed rate. 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, nor
        do
        we 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. Any raw material
        price increase would increase our cost of sales and decrease our profitability
        unless we are able to pass our higher costs on to our customers.
  21
 
 *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, with the participation of our Chief Executive Officer and Chief
        Financial Officer, has 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 September
        27, 2008 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 September 27, 2008, identified in connection with
        the
        evaluation thereof by our management, including our Chief Executive Officer
        and
        Chief Financial Officer, that has materially affected, or is reasonably likely
        to materially affect, our internal control over financial reporting.
  22
  **PART
        II - OTHER INFORMATION**
 
 **Item
        1. Legal Proceedings**
 We
        are
        not currently a party to any material legal proceedings. We are subject to
        various claims and legal actions arising from time-to-time in the ordinary
        course of business. While it is possible that our cash flows and results
        of
        operations in a particular quarter or year could be materially affected,
        it is
        our opinion that these matters will not have a material impact on our
        consolidated financial position or ongoing results of operations and cash
        flows.
 
 **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
        11,
        2008.
  There
        are
        no material changes to the risk factors described in the Form 10-K, filed
        on
        March 11, 2008.
  **Item
        2. Unregistered Sales of Equity Securities and Use of
        Proceeds**
 
 (a)
        None.
 (b)
        None.
 (c)
        None.
 
 **Item
        3. Defaults Upon Senior Securities**
 None.
 
 **Item
        4. Submission of Matters to a Vote of Security Holders**
 None.
  23
  **Item
        5. Other Information**
 Amendment
        to 2005 Annual Performance Bonus Plan
 
 On
        October 30, 2008, the Compensation Committee (the “Compensation Committee”) of
        the Board of Directors (the “Board”) of the Company authorized and approved an
        amendment to the Company’s 2005 Annual Performance Bonus Plan (the “Bonus
        Plan”). The amendment modified the payment provision in the Bonus Plan in a
        manner intended to provide that all payments made under the Bonus Plan will
        be
        exempt from Section 409A of the Internal Revenue Code of 1986, as amended.
        The
        amendment generally affects the timing, but not the amount, of compensation
        that
        could be received under the Bonus Plan.
 
 The
        foregoing summary of the amendment to the Bonus Plan is qualified in its
        entirety by reference to the full text of such amendment which is filed as
        Exhibit 10.1 hereto and incorporated herein by reference.
 
 Amendment
        to Amended and Restated By-Laws of the Company
 
 On
        October 30, 2008, the Board authorized the amendment and restatement of the
        Company’s Amended and Restated By-Laws, as amended and restated to date (the
“By-Laws”), to, among other things:
 
 1.
        Amend
        Article II, Section 12 of the By-Laws to, among other things, (a) revise
        the
        deadlines for stockholders to submit notice of director nominations and other
        business to generally provide that notices of stockholder-proposed business
        and
        director nominations must be submitted at least 90 days but not more than
        120
        days prior to the first anniversary date of the prior year’s annual meeting; (b)
        expressly provide that the procedures set forth in Section 12 apply to all
        stockholder nominations and other proposals of business and that such procedures
        are the exclusive means for a stockholder to propose such business and director
        nominations (other than proposals governed by Rule 14a-8 under the Exchange
        Act,
        which provides its own procedural requirements); (c) clearly distinguish
        the
        requirements of Section 12 from those relating to stockholder proposals that
        are
        required by Rule 14a-8 to be included in the Company’s proxy statement; (d)
        expand the required disclosure in the stockholder’s advance notice to include,
        among other things, all ownership interests, such as derivatives, hedged
        positions and other economic and voting interests, as well as specified
        information about director nominees and other business; and (e) provide that
        a
        stockholder making a director nomination or other proposal of business at
        an
        annual meeting of stockholders pursuant to the procedures set forth in Section
        12 must be a stockholder of record not only at the time of giving the required
        notice, but also at the time of the annual meeting;
 
 2.
        Add a
        new Section 13 to Article II of the By-Laws, which provides that a nominee
        for
        election or reelection as a director of the Company must deliver to the
        Secretary of the Company a written questionnaire with respect to his or her
        background and qualification of such person and the background of any other
        person or entity on whose behalf his or her nomination is being made, together
        with a written representation and agreement as to certain matters;
        and.
 
 3.
        Amend
        Article VIII to (a) provide for the mandatory indemnification of persons
        who
        serve as a director or officer of the Company or who, at the request of the
        Company, serve as a director or officer or in certain other specified capacities
        of an affiliate of the Company or other entity; (b) provide for advancement
        of
        expenses to such indemnified persons; (c) provide that such provisions
        constitute a contract between the Company and the indemnified person; and
        (d)
        clarify that the right to indemnification and advancement of expenses shall
        not
        be eliminated or reduced by any amendment or repeal of the Company’s By-Laws for
        any proceeding arising out of, or related to, any acts or omissions occurring
        prior to such amendment or repeal.
 
 The
        Board
        also adopted minor, clarifying amendments to other sections of the By-Laws
        and
        restated them in their entirety as the Company’s Second Amended and Restated
        By-Laws.
 
 As
        a
        result of the amendments related to the advance notice provisions described
        in
        paragraph (2) above and based on the Company’s 2008 annual meeting date of May
        22, 2008, any stockholder who intends to nominate a director candidate or
        present other business (not including a proposal submitted for inclusion
        in the
        Company’s proxy materials pursuant to Rule 14a-8 promulgated under the Exchange
        Act) at the 2009 Annual Meeting of Stockholders of the Company (the “2009 Annual
        Meeting”) must deliver a notice to the Company’s Secretary at the principal
        executive offices of the Company no earlier than the close of business on
        January 22, 2009 and no later than the close of business on February 21,
        2009,
        provided that the 2009 Annual Meeting. is held no more than 30 days before
        and
        no more than 60 days after May 22, 2009. The notice must comply with the
        applicable requirements of the By-Laws as attached hereto as Exhibit
        3.1.
 
 Stockholder
        proposals submitted pursuant to Rule 14a-8 promulgated under the Exchange
        Act
        must be received by the Company on or before December 23, 2008 in order to
        be
        considered for inclusion in the proxy statement relating to the 2009 Annual
        Meeting.
 
 The
        foregoing summary of the amendments to the By-Laws is qualified in its entirety
        by reference to the full text of the Second Amended and Restated By-Laws,
        which
        are filed as Exhibit 3.1 hereto and incorporated herein by
        reference.
  24
 
 **Item
        6. Exhibits**
 The
        following exhibits are filed as part of this Quarterly Report on Form
        10-Q:
 
 3.1
              
              Second
                  Amended and Restated By-Laws of Maidenform Brands, Inc.10.1
              
              Amendment
                  No. 1 to Maidenform Brands, Inc. 2005 Annual Performance Bonus
                  Plan31.1
              
              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
                  200231.2
              
              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
                  200232.1
              
              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
                  200232.2
              
              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
  25
  **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:
                  November 5, 2008
              By:
              /s/
                  Christopher W. ViethName:
                  Christopher W. ViethTitle: Executive Vice President, Chief Operating Officer and
                Chief Financial Officer (principal financial and accounting
                officer)
  26
  **EXHIBIT INDEX**
 
 3.1
              
              Second Amended and
                  Restated By-Laws of Maidenform Brands, Inc.10.1
              
              Amendment
                  No. 1 to Maidenform Brands, Inc. 2005 Annual Performance Bonus
                  Plan31.1
              
              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
                  200231.2
              
              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
                  200232.1
              
              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
                  200232.2
              
              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
  27