Good day, everyone and welcome to today’s Phillips-VanHeusen Corporation third quarter 2007 earnings release conference call. Today’scall is being recorded. This webcast and conference call is being recorded onbehalf of PVH and consists of copyrighted material. It may not be recorded,reproduced, retransmitted, rebroadcast, downloaded or otherwise used withoutPVH’s express written permission. Your participation in the question-and-answersession constitutes your consent to have any comments or statements you makeappear on any transcripts or broadcast of this call. The information made available on this webcast andconference call contains certain forward-looking statements which reflect PVH’sview of future events and financial performance as of December 3, 2007. Anysuch forward-looking statements are subject to risks and uncertaintiesindicated from time to time in the company’s SEC filings. Therefore, the company’sfuture results of operations could differ materially from historical results orcurrent expectations, as more fully discussed in our SEC filings. The company does not undertake any obligation to updatepublicly any forward-looking statement, including without limitation anyestimate regarding revenues or earnings. The information made available alsoincludes certain non-GAAP financial measures as defined under SEC rules. Areconciliation of these measures is included in the company’s earnings release,which can be found on the company’s website, www.pvh.com, and in the company’scurrent report on Form 8-K furnished to the SEC in advance of this webcast andcall. Now for opening remarks and introductions, I’d like to turnthe call over to Manny Chirico.

Thank you very much. Good morning, everyone. First of all, Iwould just like to apologize for the confusion we had with the conference callnumber. I think that’s all been resolved. We have over 115 people on the callso I think obviously the word got out about the misprint in the press release. I would just like to say joining me on the call is AllenSirkin our President and Chief Operating Officer; Mike Shaffer, our ChiefFinancial Officer; and Pam Hootkin, our Senior Vice President, Treasurer, andDirector of Investor Relations. Focusing in on the quarter, given the challenging retailenvironment that we’re dealing with and some of the macroeconomic issues thatwere also challenges we’re dealing with, we were quite pleased with the resultsfor the third quarter. Let me try to get into each of our businessesindividually. I’ll start with Calvin Klein. Our licensing business posted a 25% increase in royaltyrevenues in the third quarter and just about a 30% increase in operatingearnings. Just to start with, I guess the highlight fort the quarter for CalvinKlein was the Calvin Klein week at Macy’s. It was a major success, both from amarketing point of view and from the perspective of driving regular pricedselling through the Macy’s doors. Our Macy’s business during that period oftime across the board was up about 10% and that was in a pretty difficultenvironment when it was unseasonably warm weather, so clearly we felt that itwas a major success for us, both from a brand perspective and from aperspective of driving business. Looking at our individual businesses, our fragrance businesscontinued to post strong growth. We had a 30% increase in the third quarter.That continued to be driven by the strength of the Euphoria franchise. Thatbusiness, both men’s and women’s, continues to grow. It’s up high double digitsin the mid-teens range. Our CKIN2U business, which launched in the spring of 2007,continued its strong growth, particularly internationally. The CK brand internationallyis really a key stone for us from a branded point of view. That business thisyear overall should approach between $130 million and $140 million in wholesalesales for our licensee, Coty, and the launch of Calvin Klein MAN was verypositive in the United States. We started shipping that product in September.It was launched in Macy’s beginning with the Calvin Klein week and selling hasbeen very strong through October and as we roll into the holiday season, thatbrand continues to do very -- that launch continues to do very well for us. So overall, fragrance a big business for us, continues togrow very, very well. Moving to Warnaco, our underwear business posted a 30%increase in royalties for the quarter. Strong growth with the launch of the newsteel product, coupled with just an amazing marketing campaign featuring [DjimonHounsou]. That business continues to do very well for us. We’ve gotten greatreviews for the product as well as the marketing associated with the steellaunch. There continues to be very strong growth on the women’s sidewith our perfectly fit bra business. That business continues to grow bothdomestically and international. Business grew in the U.S. just about 20% andinternational, the business grew about 40%. The international growth was fueledby new product but also fueled by the continued opening of Calvin Kleinunderwear stores around the world, particularly throughout Asia. Our jeans business was really driven by the internationalcomponent of that. Our international jeans business overall was up about 20%.The U.S. business was relatively flat. It was up 2% for the third quarter butthe jeans business internationally, particularly Asia and as well Europe, upabout 20%. Very strong business there, also a continuation of opening doorsthroughout Europe and Asia under the Calvin Klein jeans overall banner. In outerwear, we’ve had a very strong outerwear business inthe U.S. Business is up about 25%. Our performance continues to be very strong.We are one of the top performers in the outerwear category, particularly atMacy’s. Women’s suits and dress business continues to grow extremelywell and continues to be a real highlight for us. So overall, we were verysatisfied with the Calvin Klein business growing 25% overall on the top lineand about 30% on the bottom line. The only business that continues to struggle for us from alicensing point of view is our women’s sportswear business. We’re starting tosee some better sell-throughs there and some better positioning but still notanywhere reaching our goals and targets for that business and we think it’s anopportunity as we look out over the next 24 months that that business continuesto be repositioned and grown. Moving to our operating businesses, our combined retail andwholesale business has posted a 22% sales increase and a 16% increase inoperating earnings. Let me start with our heritage business dress shirts. Dressshirts had a very strong quarter both from a sales and a margin point of view.The business continues to run ahead of sales plans and our average unit retailsare considerably higher than last year, which helps to improve our overallmargins and has increased the overall profitability of the business. The business as we go into the fourth quarter of this year,the dress shirt business continues to perform very strongly and marginscontinue to hold up very positively. At the neckwear division, our Superba acquisition isexceeding all of our expectations. The business is running well ahead of all ofour initial plans. We believe that the acquisition will have earnings accretionfor the year of about $10 million pretax. That’s worth $0.10 to about $0.11 ashare and is significantly higher than our original expectations and evenhigher than the updated guidance we gave in the second quarter. So we reallyfeel good about how that business is integrated in. We’re seeing very strongselling. We continue to improve the margin through sourcing moves that we makewithin the company, so we are very happy with that, where that business, thesynergies with dress shirts has come across. On the Calvin Klein businesses that we run ourselves, on themen’s sportswear side, that business continues to perform exceedingly well.We’re running well ahead of last year and are on plan for the fourth quarter.At department stores, Calvin continues to be one of the best performing men’scollection sportswear businesses when you measure it on a sales per square footbasis and a maintain gross margin business. So that business continues to exceed our plans, continues todeliver. We’re in well over 500 doors. I think it’s 550 doors today and wecontinue to garner square footage in existing large doors that we maintain, sowe are very happy with the performance of that business. Our Calvin Klein retail outlet business had a very strongquarter. Comps in the Calvin Klein business were up just about 10% for thethird quarter. That trend continues, being up for the fourth quarter and early-- for the month of November, our comps in the Calvin Klein business are upabout 8%, so we feel very good about the Calvin Klein retail businesses.Margins are running ahead of plan, profitability running ahead of plan -- verypositive about that. And one of the businesses that we launched in the thirdquarter of this year, the IZOD women’s business has gotten off to a very goodstart. The business will ship over $30 million in the second half of this yearand we’re estimating next year that sales will be in excess of $60 million as wego into the year. Besides experiencing very strong sell-ins, we are havinggood sell-throughs. In this difficult retail environment, our sell-throughshave been good and have been on plan, so that business is really exceeding theinitial estimates that we put on it and we feel good about how it goes into2008. The two businesses that are really being more impacted to usby the overall environment are our moderate sportswear business and ourheritage outlet businesses, and I think it clearly from a competitive set pointof view, both of those business categories are outperforming the competition.Our moderate brands, Van Heusen, Arrow, and Bass and to a much limited extent,significant IZOD are being impacted by the difficult environment in the thirdquarter. In the third quarter, the unseasonably warm weather inSeptember and October impacted our wholesale sportswear businesses. From amargin point of view, we saw some price compression and promotion and we dealtwith that. It also impacted us from a -- in our retail stores from a comp storepoint of view, given the trends that we had been experiencing. Our comp storesin our heritage business for the third quarter were down about 2%. Overall, ourcomps for the third quarter were up 1% combined with Calvin Klein but ourheritage business was down about 2%. Gross margins overall from both wholesale and retail whenyou look at our businesses, was down about 200 basis points overall and that’sreally dealing with the environment and the promotional selling that’s inplace. As we turn into the fourth quarter for these two businesses, we’replanning -- our business and the estimates that we put together are planningfor an aggressive fourth quarter promotional environment. We’ve had themarkdowns in our plan. We feel very comfortable with that. Our allowances arein our plan. We feel very comfortable with that, so we feel we arewell-positioned from an inventory point of view and we are well-positioned fromappropriate markdown allowances and markdowns at retail that we need to take. Our inventory is exceedingly clean. We are very comfortablewith our inventory position at the end of the third quarter. If you look at ourbusinesses and take out the new businesses, coupled with the calendar shift,our inventories are right on plan, exactly where they need to be and we feelvery good about the inventories. From a marketing point of view as we go into the fourthquarter, we continue to spend our marketing budgets. Our marketing budgets forthe year are up on a dollar basis somewhat and on a percentage of sales basisare down slightly, but overall our advertising expense budgets for the year areup about $3 million to $5 million in total for the year and that’s off of a very high base in 2006. So we continue to invest in our brand. It was a realintensification in marketing in the third quarter and that intensification willcontinue into the fourth quarter for all our brands, our own brands, CalvinKlein, IZOD, Van Heusen and Arrow. Looking at the fourth quarter, we are very comfortable withthe guidance we gave the street. We have factored in what we believe is morethan sufficient markdowns to deal with the promotional environment that we’redealing with, so we’re very comfortable that we’ll deliver our guidance. Webelieve it’s conservative and that we’re in good position to deliver the fourthquarter. 2008, if I could just touch on it, Michael quantifies someof this in more detail, but we are planning the first half flat. The bigdrivers of that are we’re planning the environment in a conservative fashion,as you look at retail in general, as we come out. So we’re taking a cautiousview on the economy and the consumer as we go into the first half of next year. We’re also being impacted by start-up costs in ourTimberland business and our IZOD -- in our Calvin Klein specialty business. Ourstart-up costs for the year are flat overall and about $8 million to $8.5million. But this year, 2007 our start-up costs were all back-ended, meaningthird and fourth quarter. Within 2008, we’re planning for $8 million ofstart-up costs in the first half of the year against just about zero for 2007last year. So from a time point of view at start-up, that’s worth about$8 million in the first half coupled with a conservative view of the retailenvironment and the consumer. In the second half, we’re being -- we feel good about thesecond half and we’re planning for growth in excess of 20% on the bottom line.Some of the contributing factors that give us confidence to do that is thetiming of the start-up costs of about $8 million coming out of the second half,moving into the first half. The new businesses that we are launching, Timberland,IZOD, women’s, Calvin Klein Specialty in the second half of next year they beginto contribute more significantly to the profitability of the company andactually begin to instead of being a negative drain actually become a positiveforce for us. We’ve also had the benefit of the stock buy-back program,which the way it’s being planned is more second half weighted as we’re planningfor the buy-back to occur ratably over the next 12 months as opposed to beingeither front-end loaded, so clearly there are more benefits on the second halfof the year than it will in the first half of the year. And then finally, we are assuming a somewhat better overallretail consumer environment as we turn into the third and fourth quarter ofnext year. Our comps for the first half of the year are being planned flat toup 1% and our comps for the second half of the year are being planned up 2% to3%. So when you look at it from that point of view, I think we are hopeful thatwe’ll see an up-tick with the consumer. We’re also planning our gross marginsmore conservatively in the first half, given the environment and more flattishtowards the second half of next year. With that, I’m going to turn it over to Mike Shaffer toquantify some of what I just reported. Michael A. Shaffer: Thanks, Manny. As Manny said, we’re pleased with our thirdquarter results. EBIT to the third quarter increased approximately 21% over theprior year to $102.3 million. This EBIT improvement was driven by strong EBITgrowth in our Calvin Klein licensing segment, with 29%, as well as stronggrowth in dress shirts, Calvin Klein men’s sportswear, and our new IZOD women’ssportswear and neckwear businesses. Our EBIT margins for the quarter are under pressure anddeclined 20 basis points to the prior year. This decrease was the result ofgross margin rate declines in our wholesale sportswear and our outlet retaildivision as a result of lackluster retail environment Manny earlier described. Also contributing to the operating margin decline for thequarter was the shift of $10 million in advertising expenses from the fourthquarter to the third quarter. The advertising shift was most evident in theCalvin Klein licensing segment where we had very strong revenues and earningsgrowth with 29% over the prior year but operating margins remained flat. Revenues for the third quarter were $696 million, a 23%increase over the prior year. The calendar shift impact as a result of theextra week in 2006 impacted the quarter favorably. If we exclude the calendarshift our revenue increase was 16% for the quarter. Revenues for the quarter were favorably impacted by strongsales in Calvin Klein licensing, dress shirts, Calvin Klein men’s sportswearand our new IZOD women’s sportswear and neckwear businesses. Earnings per share increased 18% to $1.05 per share andwe’re $0.02 ahead of the consensus estimate and $0.02 ahead of the top end ofour previous guidance. From a balance sheet perspective, we ended the quarter witha healthy balance sheet. We have $337 million of cash on hand at the end of thethird quarter and are projecting year-end cash to be over $450 million prior toany impact from the announced stock buy-back program. Our inventories for the quarter were on plan and 18% greaterthan the prior year. Half of the inventory increase or about 9% was driven byour new businesses. The balance of the increase, or the other 9%, is related tothe impact of the calendar shift, primarily on our outlet store divisions. Thecalendar shift caused the month to end up for October to be one week later,ending this year November 4th versus last year October 29th, and one weekcloser to peak Christmas selling. This resulted in a planned increase to theprior year in our outlet store inventories. If you strip out the new businessesand the calendar shift, our inventories are flat on a comparative basis. We are projecting fourth quarter earnings of $0.51 to $0.53per share, which is 9% to 13% greater than the prior year EPS. Our revenues forthe fourth quarter are estimated to be $600 million, or an increase ofapproximately 8% before adjusting for the calendar shift, or 23% afteradjusting for the calendar shift. For the year, we’re raising our 2007 earnings per shareguidance to $3.16 to $3.18, which represents an increase of about 21% over theprior year, with corresponding revenues estimated at about $2.44 billion, or anincrease of about 17%. Our fourth quarter and full year 2007 earnings guidance doesnot reflect any impact from our authorization to buy back 200 million of ourcommon stock. The stock buy-back was approved on November 30th and is validthrough the end of fiscal 2008. Looking out beyond this year to 2008, we’re projectingearnings to grow 12% to 16% to a range of $3.55 to $3.65, with correspondingrevenue increases of 7% to 8%. Included in our guidance for 2008 is the impact from ourstock buy-back authorization, which reflects $2 million to $3 million weightedaverage common shares being purchased. In addition, our start-up costs for our new businesses,Calvin Klein specialty and Timberland sportswear, will approach $7 million to$8 million in 2008, approximately flat to the net start-up costs in 2007.However, 2008 start-up costs will be incurred in the first half of the year.This means that our first half start-up costs for 2008 will be $7.5 milliongreater than 2007. And with that, we’ll turn it over for questions.

(Operator Instructions) We’ll take our first question fromJeff Edelman with UBS. Jeffrey B. Edelman -UBS: Thank you. Good morning. A question on the guidance, Mike; thefirst half will have more of a hit than the fourth quarter -- is this becauseof the seasonality of the retail business being much less profitable in thequarter getting hit with weak comps? Or is there something else we should thinkabout in terms of potential build-up of inventory and then liquidation? Michael A. Shaffer: There’s no build-up of inventory on liquidation. As Iexplained, our inventories are -- Manny talked about it too -- our inventoriesare very clean and really on plan with increases reflecting just the newbusinesses as well as this calendar shift issue. There’s no build-up.

The only other thing I’d say is our comp store performancelast year through the first and second quarter, we were up 4% to 5%, so we areup against much more difficult comparisons in the first half of the year andyou are absolutely right. From a profitability point of view, as you wouldexpect, first quarter February to April, retail is not a major contributor ofprofitability so it does put some more pressure on it when you -- how you planthe comp. Jeffrey B. Edelman -UBS: Okay, and just one short follow-up; in terms of your ownproduction planning process, have you cut back on receipts for the first partof the year or are you just expecting to flow that normally?

Well, no. We would expect -- we’re going to flow accordingto our sales projections and expectations. There’s no issue there that we arein any way having to over-produce in any way, shape or form, so we are verycomfortable with our production flow. We’ve gotten projections -- we haveprojections from our retail partners. We’ve got orders and projections on EDIand refill goods and they are clearly being cautious as they go into the firstquarter next year. Even if they are planning for sales increases, they aretrying to do it on the same or less inventory so that’s part of the challengethat I think the whole industry is dealing with and trying to manage that. Sowe’re doing that, trying to improve overall inventory turns but at retail andwe’re also managing our inventories and managing our gross margin as we goforward. So that’s all factored in. I think at the end of the year,you’ll see our inventories up 5% to 6% at the end of the year and that will betotally in line with whatever our sales increases are being planned for thefirst half of the year, given some of the new businesses that we are in thefirst half of the year versus last year. Jeffrey B. Edelman -UBS: Great. Thank you.

Our next question comes from Jennifer Black with JenniferBlack & Associates. Jennifer Black -Jennifer Black & Associates: Congratulations on a great quarter in a tough environment. Iwondered if you could give us a little bit more color on the outlet businessoverall. You guys are really veterans in the business and I’ve heard that thereare retailers discounting that have never discounted before in that channel.And then I wondered if you could give us an update on the opening of CalvinKlein outlet stores. Thanks.

Sure. I guess the outlet environment, the outlet environmentas I said, our comps in the third quarter were flattish. I’ll give you a realoverview. I’ll take you through the period of time. I think that’s the best wayto do it because it will give you a sense. Our comps, if you look -- the month of August, our compswere up about 2.5%. September and October combined were negative. When you putit all together, our comps for the period were up 1%. As we came out of the third quarter and moved into November,the first three weeks of November we were feeling very good about our businessoverall. The business is up about -- comps were up about 2%. The weather turnedbeginning in November, the cold weather came in. We seemed to get more than ourfair share of the business and the traffic. As we got into the Black Friday/Thanksgiving Day weekend, Ithink a couple of things occurred. Black Friday was good. We made our plan. Wehad a good Black Friday. Saturday and Sunday, we missed plan and we actuallyran negative comps. I think if you look at what happened in the environmentoutside the outlet environment, I think clearly some of the large retailers,the big box retailers, department store retailers, the mid-tier retailers, allof those really, they took their advertising voice and they really hit homewith the consumer. I think a number of them in mid-November had re-estimatedtheir earnings and really put more promotional markdowns into the selling mixand they really went after the business at Black Friday, and I think they wonthe share of voice for that holiday period and I think they drove traffic tothe malls and to the big box retailers. And I think it had somewhat of anegative affect on the outlet environment in general. Our business came back post the Black Friday period and wewere having a nice business. I think everybody that runs outdoor retail gothurt over this last weekend, given the weather and the storms that we dealtwith but we feel pretty good as we turn towards home. I gave you that whole background more or less to say it’sbeen a little schizophrenic, it’s been up and down, unsettled. The one thing Ican say, the environment is very promotional and it’s not just an outletenvironment. An outlet is really a function of what happens around you but Ithink if you look at traditional retail and the big box retailers, a number ofthem are very promotional and in order to drive traffic and drive units, ourfirst priority as we go into this fourth quarter is to come out clean as we gointo 2008. And I think we’ve more than provided for the markdowns we need inorder to get us there. We’re very comfortable with the fourth quarter estimate.We have plenty of room if the comps are a little softer that we can stilldeliver the year, given the gross margin and the promotional markdowns that weput into our plan, so we’re comfortable we can deliver against the results inthe fourth quarter. Overall, I think you said the Calvin Klein retail openings-- Jennifer Black -Jennifer Black & Associates: The outlet.

On the outlet side, that continues. We opened about sevenstores this year. That’s on plan, on target. Those stores, Calvin Kleincontinues to outperform across the board. The new openings are exceeding ourplans. The Calvin Klein comps are exceeding our plans and their profitabilityso it’s all very positive at Calvin Klein. Jennifer Black -Jennifer Black & Associates: Okay, one last question, Manny; in the outlet business, didyou see any great weakness in certain areas of the country?

You know, I guess Florida continues -- and this is nothingnew -- Florida continues to be a region that’s challenged. With theThanksgiving week, the Midwest was hit negatively, driven by I think it was allweather between snowstorms, unbelievably cold weather compared to the prioryear, which was unseasonably warm. So all of that put together, that’s whatwe’re seeing geographically. But I want to be honest with you -- with theexception of Florida, which has been consistently an under-performing area, thegeographic spins month to month, week to week have been pretty volatile aswell. Northeast is great and then it backs off. California has been great andthen it will have a couple of bad days. It’s very unsettled in general butthat’s the best I can do from a geographic point of view. Jennifer Black -Jennifer Black & Associates: Thank you very much. Very helpful and good luck.

We’ll take our next question from Emily Shanks with LehmanBrothers.

Good morning. Just a couple of questions; I wanted to see ifyou could speak specifically to the new Calvin Klein specialty retail stores,not the outlet ones -- how the performance has been and then in terms of theplans for next year, what the number of store openings are that you aretargeting.

Sure. Just to remind everybody, our plan is to open fivestores in the fourth quarter this year. Two stores have opened. They’ve beenopened less than approximately 10 days, the two stores. We are very happy withthe way the stores look, very happy the way the product has been presented. Onestore is in a new center in Partridge Creek, Michigan. One store is in a newwing in the Lennox Mall. We’re very happy with the way the stores haveinitially started off but again, it’s a handful of data on information. The other three stores this year will open probably rightbefore Christmas, as they’ve been delayed with construction issues and permitissues but more or less, that’s really not causing us much of an issue. And the plan for next year is to probably open five storesand that plan is unchanged at this point in time. And just to remind everybody,the Calvin Klein specialty stores are a test. They are both a test from amarketing point of view and a test from a sales/profitability point of view. Weare really positioning these stores as showcases for our white label productsso that we can really present to the consumer in some of the best real estatein America the Calvin Klein brand, and we’ll see what the opportunity for thatstore might be down the road over the next four to five years but it’s a verylong-term, focused strategy.

Great. Thank you. That’s all extremely helpful. And mysecond question is really around SG&A. It looks like you did quite a nicejob this quarter controlling it. I wondered if you could just give us a littlebit of detail around that, as well as just help us understand a bit of thecommentary and the guidance around the fact that while $10 million was shiftedfrom 4Q into 3Q, ad spend is going to be up year over year in the fourthquarter. We just want to make sure we understand that.

Sure. Michael will talk about SG&A and I’ll talk aboutthe advertising. The advertising spend for the year is up about $4 million,2007 versus 2006. For the fourth quarter, given the calendar shift that thefirst week of November moved, given what happened with -- given that last yearwe really intensified so excessively the fourth quarter, from the beginning ofthe year we’ve been saying that we’re going to spread the advertising moreratably, particularly over the third and fourth quarter. So the biggest impactwas our third quarter advertising spend is up about $10 million over last yearand we expect our fourth quarter advertising spend to be down somewhere between$8 million to $10 million, but overall up 4. And then I’ll turn it to Mike. Michael A. Shaffer: There are a couple of things going on in SG&A. As Mannymentioned and you mentioned, the move of the advertising from the fourthquarter to the third quarter is one piece. Two, we’re growing our wholesalebusinesses at a faster rate than our retail businesses and it does affect ourSG&A in [power] segment and overall for the company. We’re expecting abouta 30 -- a 40 to 50 point decline on SG&A for the year related to this shiftinto the wholesale because of the faster growth in the wholesale businesses. And lastly overall, with the tough economic environment wehave made some adjustments an we pull back wherever we can and we continue tolook for ways to pull back on SG&A and maximize our cash.

Great. That’s what we were looking for. And then actually ifI could squeeze in just one quick one; can you give us what D&A was for thequarter? Michael A. Shaffer: Sure. For the quarter, we were about $11.5 million.

Great. Thank you.

Our next question comes from Sean Naughton with PiperJaffray.

Good morning. I have a quick question for you on how youplan -- how you are planning the sportswear segment, both from the moderatesportswear and then also on the Calvin Klein side for 2008.

Let me start with Calvin Klein. On the Calvin Klein side ofthe business, we continue to grow square footage. That’s a combination of somenew doors but it’s also growing the square footage of the business. We’replanning for the Calvin Klein business to continue to grow somewhere in the 10%to 15% range on the top line, probably closer to 15% next year on the top line,so that business will continue to grow. We’re planning it aggressively andthere’s really no pulling back on that at all. We haven’t been impacted on theopen to buy side or whatever, so a lot of my comments about how we’re managingsome of the orders and flows really deals much more with our more moderatebusinesses. When you look at our more moderate businesses, our Arrowbusiness in particular, we’re really planning that business in the first halfof next year to actually be down slightly. We’re really managing inventoriesand managing gross margins and managing our markdown allowances. We want to getmore out of the inventory that we put into there and drive more regular pricedselling and less promotion and one way to do that is to manage the in-flow andthe overall profitability of business. So we’re being much more focused. We want to increase our average unit retails at the door andincrease the overall profitability of that business. In a similar vein with VanHeusen and to a much lesser extent, IZOD men’s, again given the environment andwhere we are, we’re being very cautious as we flow inventory into the wholesalechannel of distribution and we’re really trying to manage that business andmanage our gross margins and manage our markdown allowances. So given that we’re being more cautious than we would be inother years with that business as we turn into 2008 to try and improve theoverall profitability of the business by -- profitability percentages by reallyimproving the model and improving sell-throughs.

That’s great color. Thank you. And then a question on internationalfrom the licensing side; do you expect more of your Calvin Klein licensinggrowth to come from obviously the international with Warnaco and potentially Cotywith the fragrance side as well. Do you see that -- how fast do you see thatbusiness potentially growing? I think it’s about mid-50% of the Calvin Kleinrevenue today on the licensing side. And then additionally, are there any otherbrand opportunities for licensing going forward?

On Calvin Klein, you’re absolutely right. Our business isabout 50% North American based, 50% internationally based -- Europe, Asia,South America. When you look at the business, we’ve been surprised with howincredibly strong the U.S. Calvin Klein business has been. We would have saidthat we would have expected the international business because there’s justmore growth opportunity there, not the -- the brand you would say is not asdeveloped outside the U.S. as it is in the U.S. We would have said that therewas more opportunity. That hasn’t been the case through the third quarter of2007. The growth has been pretty consistent between international and domestic. But as we plan 2008, we’re planning for the growth to be alittle bit more aggressive coming internationally, about 60% of our growth comingfrom international growth and about 40% of our growth coming from U.S. growthof the business. A lot of that additional growth that we are talking about isreally being driven by new markets -- India, China, some of the Asiandeveloping markets, the Middle East, where the Calvin Klein brand is verywell-known, under-developed and really has got a good foothold in those marketsand seems to really be growing very well. So that’s a sense of where we’re coming from on aninternational point of view. When you look at some of the new product launches,when we look at Calvin Klein, next year we’ll be launching significantly thecosmetic business. It’s a very soft launch internationally in the fourthquarter of this year but really a more significant launch next year. In the U.S., a big piece of that launch next year withcosmetics will be with Sephora and internationally with Sephora and country bycountry, we’ve seen very strong growth and we feel very positive about theinitial results that we’ve seen from the cosmetic launch. On the fragrance side of the business, I can’t speak to itbecause it hasn’t been announced and whatever, but we have some significant newlaunches occurring with fragrance. We’ll have two new launches, or re-launchesof current fragrances, two new launches, two major campaigns going forward nextyear that we think will keep the momentum in the business. Now, when you look at the Coty business the last two years,fragrance has grown between 20% and 30% a year on a very large business. We’rein no way planning for that business to continue at that trend. It’s been --it’s exceeded our plans and it would be imprudent to plan for that kind ofgrowth going forward. We’re looking for Coty in particular 5% to 7% growth overallwith that category. Could that be a little conservative? Yes but overall, wethink it’s prudent given the phenomenal growth that we’ve experienced with Coty. With our jeans and underwear business, Warnaco, particularlyinternationally, continues to be very aggressive about that business, openingstores, both underwear and jean stores, and continuing to developunder-developed markets in Europe, in Northern Europe, and in Asia. So thatbusiness we think will continue to grow in the mid-teens range overall. So wefeel good about that business as we go forward next year. So overall, we are planning top line growth in the CalvinKlein business next year of 8% to 10% and that should drive 15% to 18% earningsgrowth for the year.

Great. Thanks and best of luck for the balance of the year.

Our next question comes from Robert Drbul with LehmanBrothers.

Good morning. Two questions for you; the first one is aroundyour ’08 assumptions, what do you think are the biggest risks to your initialpreliminary expectations for ’08, Manny? Where do you think you could have somerisk in those assumptions?

Well, I guess -- let me stop before I fall into a trap. Letme start by saying I think there’s as much opportunity as I think there isrisk. I think we’ve taken a very prudent outlook on 2008. We’re trying not toblow smoke up -- we’re trying not to give anybody a story so we’re trying toreally call it the way we see it. So we think there’s as much opportunity asrisk. I think it would be disingenuous to say that I think thebiggest risk is the overall environment that we are dealing with. It is a --it’s unsettled. It’s hard to read right now because it’s happening so fast andthe numbers are moving so quickly. Each day is very significant so it’s hard toget a read on it. I think the fact that there is an extra weekend in December,it only amounts to an extra day or so but there is an extra weekend. I thinkthe Christmas season or Christmas shopping is even going to come later than itdid last year. So I think with all that factored in, that’s my concernabout -- as we go into 2008, is the consumer. I feel very comfortable with theway we’re planning the business, how we’re managing the business, that we’vegiven guidance that we feel we can reach and exceed as we go forward, but thebiggest risk is the consumer and the environment.

And then with the decision to authorize a share repurchaseprogram, can you address the M&A environment a bit in terms ofopportunities or lack of opportunities in terms of where you are seeing thingstoday and the expectations as you go forward?

Let me address this in two ways; we’re going to end the yearwith at least -- we’re going to end the year with $450 million in cash. If youwere to take out the full impact of the stock buy-back, $200 million, we’regoing to end the year with in excess of $250 million in cash, un-barred againstour revolving credit facility, which would give us another $200 million ofborrowing capacity. So somewhere we have the capabilities based on our balancesheet to do an acquisition without having to talk to a bank and just write acheck of somewhere in the neighborhood of $400 million to $450 million. We feel in addition, I guess when you look at theenvironment today of doing acquisitions, sellers, both private and public,haven’t come to terms with the valuations that their companies are trading attoday. If a private company, whatever the brand or the business might be, wastold by a banker in June that his business was worth 10 times EBITDA, and todaythat business is worth 6.5 times, he is not a seller today. And what webasically see is the pipeline, there’s not a lot of deals out there. There’snot a lot of attractive acquisitions, particularly if you’re not willing to payhuge premiums for the business. When we looked at it, we thought the best use of our capitalgiven that acquisition environment, given where we are, and given our stockprice, which I guess like every CEO I think is significantly undervalued, wethink the best use of our capital is to buy back our own stock and to use itfor that. So that’s how we feel about it.

Great. Thank you. Good luck.

Our next question comes from David Glick with BuckinghamResearch Group. David J. Glick -Buckingham Research Group: Good morning. Mike, I was wondering if you could get into alittle more detail helping us break down the second half of ’08, because on thesurface, it looks like a mid-20s growth. I think it’s a much more conservativeplan than it appears. I was wondering if you can give us a little moregranularity, breaking down what’s your growth rate to the extent you can,obviously, in the organic businesses, the businesses that are going to becomeaccretive that you are investing in in the first half of the year, you know,the impact of the buy-back and the impact of the lower investment spending. It seems like it’s maybe very low double digit organicgrowth when you strip out the buy-back and the decline in investment spending,so it doesn’t seem like it’s -- you know, they are assumptions that are tooaggressive but I’m wondering if you could help us through that. Am I looking atthat correctly? And if you could provide a little more detail.

I think you basically asked the question and answered it, soit was helpful from that point. I’ll turn it over to Mike in two seconds. Imean, look, we are one of the first companies to give a view of 2008 so theamount of granularity, I’ve tried to do that. Michael will give you some senseon it but everything that you said is absolutely true. The second half looksmore aggressive than I think it really is when you back out the start-up, butI’ll make Mike take all that into -- Michael A. Shaffer: Just to highlight some of the points that you alreadybrought up, the start-up costs in the first half next year, we basically don’thave start-up costs in the second half so that’s worth about $0.09 to $0.10. Inaddition to that, we’ve got the new businesses, the IZOD women’s and theTimberland business, which should start to contribute towards the -- in thesecond half. And in addition to that, we have the impact of the sharerepurchase, which if you do the math is somewhere around $0.07 to $0.11 andwith that, it’s going to be much -- it’s all basically weighted towards thesecond half of the year. David J. Glick -Buckingham Research Group: So it sounds like half of the growth is coming out of thingsthat are obviously very controllable.

I think if you look at the -- I guess if you do the math, onaverage we’re saying a 25% growth rate for the second half of the year. If youback out the start-up costs, if you back out the impact of the stock buy-back,if you back out the new businesses, I think the you are really looking at thebusinesses that -- the other businesses, the Calvin Klein licensing businessesand the dress shirts, neckwear business and our sportswear businesses, reallygrowing somewhere in the neighborhood of 10% to 11%. So I think it’s much more in line -- very much in line withwhere our growth has historically been and where we’ve been, so it’s nothingthat we feel uncomfortable with as we look out to it. The sheer numbers of it I can understand somebody says well,they’re planning 25% growth but when you pull out some of the special items,the start-up costs, the new businesses starting to contribute and eliminating lossesthis year, the fact that the stock buy-back is significantly more second halfweighted and that we are just planning that somewhat the environment will getmore ratable and we’ll be up against much more reasonable comps in the secondhalf of the year. The first half, the first two quarters, our comp storeincreases in our own stores were up about -- between 4% and 6%, depending onthe quarter. And our department store business was also much moreaggressive, probably driven somewhat promotionally but again much moreaggressively, so we’ll have a much easier comparison as we go into the secondhalf of the year from a sales point of view. So it gives us some comfort thatwe think we’re looking at it the right way and that we’re not being overlyaggressive in the second half of the year. David J. Glick -Buckingham Research Group: Thanks for that color and detail. I appreciate that. Andjust to follow-up on the buy-back, given the current valuation, why wouldn’tyou be more aggressive than what you’ve set out in your plan? And have you orwould you consider doing an accelerated stock repurchase, which would obviouslygive shareholders the benefit much more quickly?

I think we will be aggressive. At these price points, atthese stock levels that [require] [inaudible], but at these levels, we will beaggressive buying the stock, whatever that means. I don’t want to commit eitherway how we might do that but clearly we have the ability to do whatever we’dlike to do from a stock buy-back point of view. David J. Glick -Buckingham Research Group: Great.

-- more aggressive, then [inaudible] benefit. David J. Glick -Buckingham Research Group: Thanks very much and good luck, guys.

Our next question comes from Omar Saad with Credit Suisse.

Thanks. Manny, can you give us a little bit of color interms of what your economic assumptions are for next year for the environment?I don’t know if you’re looking for a soft landing or a soft landing on the backhalf of if you’re really baking in a near full-blown recession. And then, could you contrast that with your sense of howyour retail partners are looking at their businesses for next year and howthey’re planning their businesses for next year?

I think we are very consistent with our retail partners. Ithink that the general feeling is that it’s -- look, I’m not an economist, soI’m not going to -- it’s going to be a soft landing, it’s going to be a hardlanding and I’m not sure I’m smart enough to really do that. What I think we have focused on as a company is reallymanaging inventory, managing the flow, trying to control what we can control --SG&A and the inventory. So what that translates into is a much slower growthin volume for the first half of the year. I can’t tell you that we’ve got arecession built into our model. We don’t. What we have is that it’s going to bea much more cautious environment and given the way our retail partners aremanaging their inventory, which I think is very prudent, they are being veryprudent about how they are buying inventory and flowing it and I think we all-- we are all -- if business were to get better, I think we all know how tochase inventory and chase business. This time last year, we were much more aggressive aboutbuying inventory, positioning ourselves and we really were positioningourselves to go after growth above and beyond what our plan might be, becausewe felt it was there. I think that was the way -- I think most people felt thatway. I think now, you’d be crazy to buy above what your salesexpectations are, so we are being very cautious as we buy inventory and we arebuying what we have commitments for and we are not taking much of a riskanywhere, and the only place we are being a little bit more aggressive oninventory is in our Calvin Klein business, because we know that there’smomentum behind [that business]. I hope that answers the question.

Yes, no, thank you. And then I wanted to follow-up on acomment you made in the prepared remarks -- the Calvin Klein business obviouslyis performing well. You mentioned that dress shirts are performing well andthat the average prices are actually going up. When you look at your portfolioand the exposure across channels into different types of customers, whetherit’s lower income customers or higher income customers, how do you feel aboutwhere your portfolio is positioned and do you see differences in the spendingpatterns and your expectations for spending patterns across the differentbrands within the different price points?

Okay, I guess -- look, the Calvin Klein business is verystrong. That’s a statement. I can’t tell you how much of that is driven by justthe strength of the brand and how well we’ve executed and how much of that isbecause that higher end consumer spending. I’ve seen reports that talk that the higher end consumer isunder some pressure as well. I can’t give you a direct answer to that. What Ican say is I think in this environment, I’m much more comfortable running aportfolio of brands as opposed to a single brand and I am much more comfortablethat we attack each of those channels of distribution. I think clearly given the price of gas, what’s going on inthe world, consumer confidence, I think the more moderate consumer is undermore pressure. The opening price point consumer in all channels ofdistribution, be it Nordstrom’s, Macy’s, JCPenney, Kohl’s, all the way down --I think that opening price point is under more pressure. I think private label is extremely well-positioned andpromotional and if you compete with private label, even if you are 10% higheror whatever, you are feeling more of the pressure. And I think that’s why someof our more open price point brands, like Van Heusen and Arrow, are feelingmore pressure and more of the pressure of price compression. IZOD, which is more in the middle and more upper, is notfeeling that same pressure. It’s dealing with the environment but it doesn’tsee the same pressure. And Calvin Klein seems to be dealing very well againstits competitor set. So that’s how we break out our brands and it’s a verysimilar story in dress shirts and neckwear, where we truly run anywhere from 15to 20 labels from all the way at the top with Valentino in neckwear to Calvindress shirts, Kenneth Cole -- it’s across the board and there’s winners andlosers but we feel the way we have the inventory managed and how we areattacking each channel of distribution, that business, which is much more of areplenishment business, is not having as significant pressure on gross margins.I hope that answers that question.

Thank you.

Our next question comes from Lee Backus with Buckingham Capital. Lee Backus -Buckingham Research Group: Just first on the stock buy-back, when are you able to startbuying back the stock?

Technically, we can’t -- although it was approved, becauseof blackouts and whatever, we probably can’t start buying until the end of thisweek some time. And that’s when we would start considering it. Lee Backus -Buckingham Research Group: Is there anything that would preclude you buying back thevast majority of your stock buy-back by the end of this year?

No, except the vagaries in the market. There are rules andregulations. You can’t exceed X percentage of your shares, the trade -- so aslong as it can be done efficiently, and there’s a lot of ways to deal with thatif we so chose to be that aggressive, there’s no reason why we couldn’t be. Andat these price levels, I think we would be very aggressive. Lee Backus -Buckingham Research Group: And also, looking at the royalty revenue in an economicallytough environment, I would expect there would be less volatility on the royaltyrevenue line, which is a pretty significant share of your earnings.

I think on two levels, that’s a really good callout. On twolevels, is that you don’t have the gross margin exposure. I mean, if there’sselling pressure, which there might or might not be, we’re not anticipatingthat, particularly internationally, which is half of the business, but if yousell the product in, the nice thing about the licensing business is you getpaid on sell in. You don’t get paid on gross margin and it’s the licensee’sresponsibility to manage their inventory and manage their exposure. So it’ssignificantly less volatile from a gross margin point of view and it’ssignificantly less volatile from a revenue point of view. We’ve always talked about revenue growth with Calvin Kleinlicensing of 9% to 11%, and given the overall environment, we’re talking about8% to 10%, so clearly it’s got minimal or no impact on it and it should notimpact that business, and that represents about 40 -- the licensing by itselfrepresents about 40% of our overall profitability. Lee Backus -Buckingham Research Group: Thank you.

Our next question comes from Jeff Mintz with Wedbush Morgan.

Thanks very much. A couple of questions on the newbusinesses.

Jeff, could you speak up?

Sure, not a problem. A couple of questions on the newbusinesses. On the IZOD women’s business, how many doors was that in for falland what are you planning in terms of growth, both for spring and fall nextyear?

We’re in a little bit over 200 doors for fall 2007. Thosedoors will grow next year -- over time, those doors will grow to 400 doors. Ithink next year, right now we are planning about a 100 door expansion. It couldexceed that as the business continues to crawl out but I think the best way tolook at it is we did about $30 million for the second half of this year. Rightnow, we’re calling that we’ll do in excess of 60, probably closer to 65, sothere could be some potential upside if we continue to perform like we areperforming right now.

Great. And then on the Timberland business, which you arelaunching in the second half, what size business are you looking for there interms of revenues? Is $30 million there as well kind of a decent first seasonnumber?

We talked more like 25 right now. It could be better thanthat. We’ll know better -- we have market week in January, a lot of things haveto flush out. It’s a little premature for me to talk more specifically aboutthat. The brand has got its issues from just a positioning point of view but wethink it’s got -- it seems to be very, very well received by the market and Ithink they are really looking for somebody to take the brand and really growwith it. And the right product in the department store channel of distributionand specialty store business, we think it’s a real opportunity for us. Will it all come in Fall 2008? [I don’t know] but we feelgood about everything that we said against our expectations that we’ve set upfor ourselves, so we think we can do better than how we’ve laid it out and we feelgood about the business.

Okay. Thanks for that. And then just on a CapEx plan for2008, can you talk at all about what’s going to go into it and if you can, giveus some kind of a range for where the number might be on that?

I think we are going to be somewhere between $95 million and$110 million. Mike just wrote me a note and that’s a little bit below where wewere this year.

Great. Thanks very much and good luck.

Our next question comes from Brad Stephens with MorganKeegan. Brad A. Stephens -Morgan Keegan: Good morning. Next year, I think historically you’ve talkedabout roughly 250 basis points of margin expansion in the CK royalty business,and approaching 50%, which by my math you’ll be somewhere in the 49% to 50%next year. So longer term, where do you think that business can go?

I think clearly over -- just bear with me one second. Ithink we are going to end this year pretty close to 49%. I think your target ofadding 100 to 200 basis points next year is reasonable and I think long term,as long as the top line grows in that 9% to 11% range, we should be able toleverage against the expenses so the bottom line should grow 17% to 20% if itgrows 9% to 11%. So I think that converts to about 150 basis points a year andit’s just a question of what the size would be. I think that -- I would imagine around 55% over the nextthree years, 2008, 2009, and 2010 would be our goal to get close to that. Brad A. Stephens -Morgan Keegan: All right. On the gross margin this quarter, I think it wasdown like 215 bps, and if you strip out the licensing it’s down 260. Given thelaunch of IZOD women’s, I assume that had a negative drag on it, given it’s awholesale product. So can you break down the 260 between channel and betweenmarkdowns?

Sure. Just bear with me -- it’s more than just IZOD women.Our wholesale businesses -- neckwear, as well as its doing, and IZOD women’s inparticular, wholesale businesses by their nature run lower gross margins andhigher SG&A -- and lower SG&A expenses. Our wholesale businesses carrya higher operating income margin than our retail business overall, probably byabout 200 basis points. So our wholesale businesses are overall more profitablejust by the models we run and the businesses we run. So I think if you look at the 260 basis points, probablyalmost half of it has to do with just mix of business and the wholesale retail.Probably about 150 basis points has to do with the fact of more promotionalenvironment, more markdowns and where it’s coming. We have the fourth quarter planned down also somewhere inthe neighborhood of 150 to 200 basis points for the gross margin, going in withthe understanding that it’s just going to be more promotional and there will bemore markdowns required, both at wholesale and retail. If it’s better thanthat, which I think is a distinct possibility, we’ll deliver against that. Brad A. Stephens -Morgan Keegan: All right. Thanks. Good luck.

Our next question comes from Brian McGough with MorganStanley. Brian McGough -Morgan Stanley: Thanks for taking my call. Just kind of a big -- somethingfor you, Manny, more big picture; really, we’ve seen a bunch of examples wherein other licensing agreements, when times get tough like we have right now, yousee a licensee that pulls back on brand investment and they print a biggermargin than they probably should. Would you just talk for a minute just abouthow you control your brand and how especially in times like these, you canensure that your partners are investing in an appropriate way to drive resultsin ’08 and ’09?

That’s a great question. Our contracts require anadvertising spend. It’s required advertising spend, be it 3% to 4% of sales. Wefactor that in. We also have a plan that is committed to up front. The other thing is, we control the advertising spend, so ifthere’s -- it’s not a question of their spending the money; it’s a question ofwe spend the money and the only exception to that really is of significance isfragrance, where we control the total creative function and we control totallywhere the goods will be -- where the media is being spent. So everything has tobe approved by us but they actually spend the money. We have not seen -- the only place where there was latitudeon the part of the licensee about the levels that have been spent is really inour fragrance business, where they are spending significantly more than thecontractual requirements of the business. I think they are spending close to$80 million to $90 million on the marketing of the Calvin Klein fragrancesaround the world and I think by contract, it’s a percentage of sales that wouldprobably translate closer to $30 million, $35 million. So clearly the model works for them, the growth is there.They continue to invest in those businesses and we haven’t seen any of ourlicensees come to us to try to pull back any of their marketing spend. Brian McGough -Morgan Stanley: Is there any kind of oversight that you have overnon-marketing spend SG&A, whether it be design, merchandising, or any otherkind of cost that it might take to plow a business forward?

Each of the businesses on a non -- beside media spend andwhat goes on which are required by contract, each of the contracts, of ourlicensing contracts have design requirements in them that require a separatedesign studio for the brand, a separate showroom for the brand, separate -- ifthere’s fashion shows, how those have to be run, all of the stores that arearound the world as of the end of this fiscal year, will be operating, ourlicensees will be operating 400 Calvin Klein stores around the world --sportswear, jeans, underwear and accessories. All of those stores are designedand approved by Calvin Klein, both from a design point of view, a presentationpoint of view, and a location point of view. So our contracts, our licensing agreements and our licensingvendors, because of the strength of the brand, really give us tremendouscontrol over the marketing and presentation of product around the world, andI’d like to -- hopefully you feel the same way but I would like to think thatover the last three years, we’ve significantly increased our marketing spend,we’ve significant invested in the design and presentation of our product aroundthe world and I think it shows in the results and I don’t see any reason whythat will back off one iota next year or in the future. Brian McGough -Morgan Stanley: Yeah, it’s hard to argue with that one. Anyway, thanks andbest of luck.

Our next question comes from Clark [Orski] with KTPInvestment Advisors.

Just a quick question on the guidance for next year; whattax rate are you using? Michael A. Shaffer: We’re somewhere between 36.5% and 37% in 2008.

Okay, and can you tell me for the third quarter what thegross interest expense was? Michael A. Shaffer: Sure. For the third quarter, our gross interest expense wasabout $8 million.

Thanks a lot.

Our next question comes from David Berman with BermanCapital.

I was just wondering, you guys were talking about thebuy-back earlier. Obviously from a shareholder standpoint, it’s much better forus if you buy back shares personally, and I was wondering why you wouldn’t bedoing that, since you sound so -- you want to be so aggressive with thecompany’s money, I was wondering if on a personal level, you’ll be doing that.

We’ve been in a blackout period now for four weeks, orthree-and-a-half weeks. About five weeks ago, I personally bought stock. Ican’t speak to anyone and I’m not going to speak for anyone else in thecompany. I personally bought stock. I continue to own stock. I have restrictedstock in the company. I have stock options in the company. A substantial amountof my personal net worth is tied up in the company’s stock in one shape or for,so I think -- hopefully that speaks for itself but clearly during the thirdquarter, I was purchasing stock --

Yeah, but with the stock down $4 or $5 now, I mean, itobviously must be more appealing to you.

It certainly is more appealing to me and I will considerthat as I consider everything else.

Thank you. And as far as the balance sheet is concerned, Iwas just wondering if you could explain to me -- I’m sorry I don’t have the Qhere in front of me, so I’m just trying to understand. You’ve got an equalamount of assets, cash of $300 million plus, and debt of $400 million. Can youjust -- so the net of it is -- while the net of it is a slight amount of debt,about $60 million, the net of it is $4 million interest expense becauseobviously interest expense is going to be greater than your interest income. SoI was wondering why you have that structured like that.

I guess two things -- I’m not sure if your question isasking me are we under-levered or over-levered.

No, no, just -- well, first there are two things. That isone question but the other question is why is there cash -- why do you havecash when you have so much debt? Why not pay the -- I mean, is it long-termdebt? Is it sort of ten year stuff that you’ve got -- what is it?

Okay, let me take a step back. The debt is ten-year debt andeight-year debt, first a seven-year debt. The first call data on the debt isfor a chunk, a piece of it, about $150 million, is 2008 and than another 150 isquickly thereafter. So nothing is callable today by us. Secondly, the debt was put in place and we significantlylevered up the company to buy Calvin Klein four years ago, so the debt was putin place under that, so we de-levered the balance sheet, put it in position,and we’re looking at the capital structure. So our first move to really adjustthe capital structure was to have a $200 million stock buy-back. As thatcompletes and we look at our capital structure, I’ve been very consistent. Ourfirst priority is to continue to invest in acquisitions. There don’t seem to beany in the foreseeable future and by that I mean the next six to nine months.

But if you increased the debt by $200 million, aren’t yourestricting yourself from acquisitions that might come along and might be a bitbigger?

No, I guess -- hopefully, I thought I answered this before,is this will -- you know, our balance sheet is significantly under-levered. Sopoint one is if there is a very large acquisition, $1 billion or $2 billion,clearly the capital markets are available to us to go to both from a debt pointof view, because we are significantly under-leveraged and we think we have alot of flexibility to do a deal. As far as a deal like a bolt-on acquisition, like we didwith Arrow, which was about a $75 million acquisition, Superba, which is about$125 million all-in acquisition, IZOD, which was about $150 million acquisition-- those kinds of acquisitions we can definitely do and continue to do as cash.We can continue to do licensing arrangements. So we will actually, without any additional cash flow cominginto the company, and if we were to [pro forma] and take the whole $200 millionout, we would be left with $250 million in cash and a borrowing capacityagainst our revolving credit facility, which is totally unutilized from aborrowing point of view of about another $200 million to $250 million. So we think over the next 12 months, we’ve got capacity todo an acquisition of $400 million to $500 million without having to go to thecredit markets, without having to go to any of --

Right, and still do your $200 million buy-back, correct?

And have the $200 million buy-back complete, and this timenext year, as we said we would continually do, we’ll look at our capitalstructures again --

So to Lee’s question from earlier, when do you think you’llbe finished with your buy-back?

I think it’s -- who knows. We’ve committed to get it donewithin the next 12 to 15 months, to get it done by December 2008. The onlything that would stop us from doing that would be an acquisition that wouldcome up in the very near term that would be very appealing to us. Absent that, I think given these price positions, I can’tsay it anymore aggressively, at these price points, I think we’re going to beaggressive buyers of the stock --

In this environment, quite a few retailers are waiting, justgiven that they want to see if the environment improves. You’re not worriedabout that?

From a stock point of view? No, I guess a couple of things.I think our capital structure is very strong. Even with -- however anyone looksat the financial performance, on every level our growth this year, earnings pershare is over 20%. Next year even, we’re -- where we are trying to be prudentand conservative, we’re still looking at growth that’s around 15%. So given our prospects, given our capital structure, I thinkit’s appropriate for us to be somewhat aggressive with our capital structureand --

Right, and the last question related to that is that you arelooking at $3.60 for next year, and that’s taking into account the reduction ofshares to 2 million shares. What does that -- how much of the $3.60 is from theaccretion from the buy-back?

I think we are talking about 6 to 11 -- the estimate that’sin the numbers, $0.06 to $0.11 a share.

Six to eleven cents a share?

Absent that, probably the organic growth of the business is10% to 12%.

Right, and the 2 million to 3 million shares would be, Iguess if you take 3 million shares at today’s price, you are looking at -- it’sabout $120 million worth, so you are just assuming $120 million worth of --

No, I’m not. I guess the way the earnings per sharecalculation works, it’s a weighted average so if you complete it ratably andyou buy back all $200 million dollars worth of the stock, ratably over the next12 months, it’s the average of what’s outstanding --

No, that I understand but I’m curious -- okay then, inanother way, on a full-year basis, what is it? Is it $0.12, the accretion on afull-year basis?

Assuming that it would be 3 million shares, it’s $0.11.Assuming that it was 2 million shares, it would be $0.07. Four million shareswould be $0.15. And it’s all about what price we buy it back, when we buy itand how aggressively we buy it.

Yeah, I understand. But it’s actually interesting that it’shelping you to [dispute] over $0.11 or $0.12 a share on a permanent basis,correct?

Yes.

But yet if you play it as a one-time dividend, you’d begetting $2.15. So wouldn’t that be better for shareholders to get $2.15 than toget $0.10, $0.12 of earnings accretion?

I think $0.10 to $0.12 is a partial year. A full year wouldbe $0.15 accretion at a multiple, depending whatever multiple you decide touse. It’s really a question of how you think the stock performance. We believein the performance and we think it’s better for our shareholders to increasetheir ownership in the company by taking shares off the market and we thinkthat has a longer term benefit than a one-time payment of capital back to --

Right, no it’s an interesting discussion because I guess atan 11 multiple, which is what you are at today, $0.15 is $1.65 on present valueand the dividend would be $2.15.

That is an interesting calculation. Six months ago at a 20%multiple, which we were trading at, I think you get a lot different --

Right, a very different answer. That’s right. Exactly.

I don’t think we can -- the vagaries in the market, I don’tthink we consider ourselves a 10 or 11 times --

No, no, I’m understanding you but an investor couldcertainly get the $2.14 per se and put it back into the company, if that’s howyou felt. And then you’d get that appreciation of multiple in any case.

So I guess taking what you said, the management team of thiscompany feels very comfortable about the growth prospects, the long-term growthprospects of the company. We think it’s much better to invest that money inshare buy-back than a one-time dividend that goes away.

Well, it doesn’t go away. It goes into the pockets of allthe shareholders.

Yes, it’s a one-time, and then it doesn’t continue -- that’snot a permanent benefit. It’s a one-time benefit so we think it’s moreefficient to do it that way.

Thank you very much. I appreciate you taking the time to gothrough that. Thanks a lot.

Thank you.

We have no further questions at this time. I would like toturn the conference back over for any additional or closing remarks.

Well, thank you very much. We look forward to speaking withyou on our fourth quarter earnings release, probably in the end of March andhave a very nice day. Take care.