Good day, everyone, and welcometo the Inter Parfums Third Quarter 2007 Conference Call. At this time, I wouldlike to inform you that this conference is being recorded and that allparticipants are currently in a listen-only mode. I would now like to turn theconference over to Mr. Russ Greenberg, Executive Vice President and CFO.Please, go ahead, sir.

Thank you. Good afternoon, andwelcome to our 2007 third quarter conference call. If you have not received acopy of the press release we issued yesterday afternoon, please contact LindaLatman of the Equity Group at 212-836-9609, and she will fax or e-mail a copyto you. Before proceeding further, I wantto remind listeners that this conference call may contain forward-lookingstatements, which involve known and unknown risks, uncertainties and otherfactors that may cause actual results to be materially different from projectedresults. These factors include, but are not limited to, the risks anduncertainties discussed under the headings Forward-Looking Statements and RiskFactors in Inter Parfums' annual report on Form 10-K for the fiscal year endedDecember 31st, 2006, and the reports Inter Parfums filed from time to time withthe Securities and Exchange Commission. Inter Parfums does not intend toand undertakes no duty to update the information discussed. As most of you know,when we refer to our European-based operations, we are primarily talking aboutsales of prestige brand name fragrances, which are conducted out of France.When we discuss our United States operations, we are referring to salesof specialty retail and mass market products. Moving on to our record thirdquarter financial results. As we reported, net sales rose to a record $102.3million, up 14% from $89.7 million in the same period last year. At comparableforeign currency exchange rates, third quarter net sales were 9% ahead of lastyear. Third quarter sales by ourEuropean-based operations were $88.1 million, up nearly 16% from $76.1 millionin the prior year's third quarter. The increase was due in great part to thelaunches of the Roxy and Paul Smith Rose fragrance lines, and the increasingcontribution of Van Cleef & Arpels fragrances. Shipments by our four majority ownedEuropean distribution subsidiaries, which had been in operation since mid-firstquarter, also factored into our European-based sales growth. US sales increased4%…

Thank you, Russ. I join Russ inthanking you for your participation on today's conference call. The roll out ofthe Gap collection of bath and body products that began in the spring is nowessentially completed, with final approximately 300 Gap stores shipped inOctober. Also the six Eaux de Toilettes thatdebuted this summer at Gap Body stores can now be found in about 650 Gap storeslocations. The newest item in Gap stores are called, Individuals, with our fivehigh end fragrances for both men and women, named and packaged to defineindividual personality, such as [the artist, the natural], the visionary, and theoriginal. These are the high end of thefragrances spectrum, in terms of [new] package and bottle design. At many Gapstores, you will also see that the icon fragrances, namely the ones up there beforewe took over the category have been transformed and refreshed by us. Gap storesare now able to offer its customers olfactory and price choices from body mist,at the lower end, Eau de Toilettes in the middle, and this line calledIndividuals at the higher end. In late summer, three new men'sfragrances called Bold, Spiked, and Mixed, were introduced in Gap adult stores.We created and introduced an expensive men’s grooming and skin care collection,as well. Perhaps some of you have seen the Banana Republic windows picturing thetwo additions to our Discover collection called, Malachite for women andCordovan for men. We have also added several scented candles for continuedsales and the limited autumn season addition. Similarly, we will have a newwinter seasonal candle in stores shortly. Of the previous seasons, a total ofsix different gift sets will be available for men and women. We have enjoyed avery productive collaboration with New York & Company. The aggressivetimeline was met and New York & Company's 570 stores will shortly displayand sell a line called…

(Operator Instructions). Yourfirst question comes from Linda Bolton Weiser with Oppenheimer.

Thank you. Can you just comment alittle bit Russ, you have been talking a little bit about the seasonality ofthe business and how that’s shifting given the big launch of the Burberryfragrance in the first quarter of ’08. Do you think that the seasonality willstill apply for ’08 or is that going to be changed because of the launch? Canyou just talk about that a little?

Yes, certainly. Historically, italways appeared that we were more seasonal than we actually were because manyof our product launches usually occur in the third and fourth quarter of theyear. With respect to Burberry’s launch in the first quarter certainly, it’sgoing to help first quarter sales. But keep in mind that you don’t launchglobally in every country simultaneously. You would normally start in certainkey countries and that’s why it certainly will affect sales, and then you willcontinue out into a more global launch of that product as the year goes on. So, all-in-all, yes, I think,it’s going to impact the first quarter a little bit. It’s certainly going to helpour comparisons in the first quarter. But I don’t think it’s going to have asignificant affects on what’s now moving towards a much more seasonal third andfourth quarter of the year, resulting from the distribution subsidiaries, aswell as, the specialty retail business.

Is the schedule for the Beatlaunch to be completed by the end of second quarter or will that continue eventhrough the second half?

It should be completed by the endof the second quarter.

Okay.

Meaning, it will be in all thecountries and all the doors that we plan on having the product sold. It will bein those doors by the end of the second quarter of 2008.

Okay. And can I just ask one question on the Gap and Banana Republicbusiness, it does seem like Gap continues to go through strategic changes and Ibelieve they recently restated their target consumer to be slightly older thanthe 18 to 24 year old, they were targeting previously. It seems to me that thatmay involve some changes in their strategy with regards to personal care,perhaps a revamping of the line or additions or deletions from the line. Isthere any light you can shed on that right at the current time?

Hi, Linda this Jean. I don’t seethe change in the core customer of Gap, having an impact on customer care. Wehave now created a journey destination for the Gap. We’ve more than 100 SKU.This is wide enough for a lot of consumers to find what they are looking for. We will continue of course, toedit. We will takeout certain smells and replace it by other, as we do in anyother business. But no, it’s too early to -- we just launched the line, theline officially is all the doors that we wanted to begin. We are not going tomake any adjustments further. We see how the business is going.

Am I mistaken, but I had thoughtoriginally, that the plan was to be in all Gap stores, where is now it seemslike the universe of stores is a little bit smaller and I thought the rolloutwould extend into '08 originally. Am I mistaken or has there been a change inthe plan?

There was no change in the plan.We never said that the rollout will extend till 2008. However, we said thatrollout will be done by the end of the year. But they offer, I would say 200 to250 stores that are the smallest store, the least performing store of the onethat, I heard will be renovated or also will be closed, that we have decidedmutually not to go in.

One thing, I’m going to add tothat too is Linda as we’ve always said throughout the 2007 the rollout whichbegan in Body Stores and then went into 500 additional adult locations, thatwas the extent of the launch for 2007. I do know that as a result of thesuccess of the individual line and the men's line that has been expanded andthat will go into over 200 additional locations, that is shipping in November.So, if anything, we are evaluating the product line and then proving thedistribution where these success is there.

We’ve added individuals and themen’s, which have been apparently very successful in the first couple of weeksof introduction during the holiday season, where we will feature it. It shouldbe a good way by the way, to see how we can, if we can do some business withthe rest of the channel.

The last thing, I’ll say on that,I believe that as a result of the launch the products are in about 780 differentdoors will be the end of the year, which is pretty much the universe of doorsthat you would want to be in that encompasses all of the AB and even some ofthe C doors at Gap.

Can you give us any…

Yeah, it’s a difficult thingbecause you have adjacent doors. Sometimes you are in multiple locations,sometimes you are in Gap Body stores, which is adjacent to Adult store, rightin the men and woman location. So, in terms of fixtures, we have many, manymore our fixtures than 600 or 700. Okay.

Okay. Thanks a lot.

Thank you, Linda.

Your next question comes fromNeely Tamminga with Piper Jaffray.

Hey, great. Good morning youguys. And we wish our best holiday wishes to you guys as well.

Thank you so much, Neely.

Just want to ask a few questions,in terms of inventory foreseen and just a couple of housekeeping items. I mighthave missed this in terms of lost in translation a little bit. But did youactually break out the dollar amount of the inventory over which of how, what’skind of normalized inventory and what’s the falling into stores inventory haveyou looked at it that way. So, we can kind of understand what the underlyinginventory is going on right now?

We have not evaluated ourinventory to those kind of details.

Can you speak about maybe, justconceptually a little bit? Not specific dollar amount? But I’m just wondering,would you then up only 20% or I’m just trying to figure out this?

That's a very difficult thing toanswer off the top of my head. You have to keep in mind, when Jean went throughlately of new product launches.

Yeah.

Going into play for 2008, eachand everyone is evaluated individually with respect to the inventory needs. So,to be very generic, it’s almost impossible. Because it’s really the sum ofmany, many moving parts. We have to maintain a certain amount of inventory forour specialty retail business to make sure that we are in stock on the items.And with respect to product launches there is a long lead time, with which tobring components in. In order to have those components, so they could bemanufactured, so that we have the finish goods on a timely basis to the launch. It’s very complicated and we workthere are many, many people involved and monitoring and maintaining those inventoryrecords. We have been doing it for 20 years now. We think we are pretty good atit. At the beginning of the year, we indicated that we will have a hugecommitment for inventory as this year goes on. And I think the numbers are justcoming in pretty much as we expected that they would continue to grow. The last thing I want to say onthat is the Burberry Brit launch, which is going to occur in January andFebruary of 2008, the inventory requirements that those have as of Septemberand will continue to have through December are substantial because of the sizeof the launch that is going to represent for our company.

That’s helpful, Russ.

I hope so. Thank you.

I’d say a couple of morequestions and when were the related to foreseen, just wondering, just generallyspeaking, as you are having discussions with some of your vendors whether it’sbottles or all the different components trees just have you. You could have sensethat pricing is going up for '08. And are there things you can do to helpmitigate that pricing increases?

I think throughout our componentsthat we use there is only a certain components where you do see increases inprices. Certainly, the fact that oil has risen, to the extent that it has. Itcertainly has an impact on plastics and on glass and things of that sort. The one thing I will say thoughis that in our business, especially, in the mass market, we are verysusceptible to price increases. It’s a little bit less of a significance in theprestige products that we make. The cost of sales sort to fluctuate by apercent or two as resulting from prices, it’s probably the most that you areactually going to see. And that’s an environment. We do have a lot ofinflationary pressure, as a result of the oil situation.

But on the launches particularlythe Burberry launch for next year, is there a thought process of actuallymaking the initial pricing of the Burberry product higher than where you’vebeen in the past, to kind of makeup some of these prices?

No. We would not do that. Thecompetitive forces that exist in the retail marketplace will dictate the pricesthat Burberry’s can sell at or Lanvin can sell at or Paul Smith. When wecreate, we might make modifications in our manufacturing process in order tomitigate some incremental costs. But we are not going to just raise pricesbecause there is a small increase on source of goods.

Well, the positioning of Beat isnot because of the cost of goods. It's done based on what exists in the familyand we have a competition here. So, we rarely change prices because of the costof goods.

Okay. And just two more kind ofhousekeeping questions, Russ, then we can follow-up offline, if you want to onthese. But just wondering, in terms of gross margin from changing, distributinget cetera? Should we start to see something normalized here or how should, webe thinking about gross margins over the next couple of quarters?

Yeah. Do you sure, if you want toadd to it.

Yeah. I think, as we get into2008, you’ll see a little bit more normalization. What you basically have uphere is the fact that we are utilizing our own distribution subsidiaries, thosesubsidiaries the incremental sales are benefiting our margin. But the cost ofthose subsidiaries, were the servicing cost that we pay the existingdistributors are absorbing that benefit on the SG&A line. We’ve always said that theprofitability of the distribution side of the business is not going to betremendous. It’s not going to add to any great extent to the bottom line, butthe pieces are different. So, what we’re seeing is a two, three sometimes 4%benefit on the gross margin line and that is being absorbed as an increase onthe SG&A line. As we go into 2008, and as weanniversary this effect, we will get into a much more normalized situation withrespect to gross margin. The only other thing that I just want to add andagain, it’s a function of things that we’ve always said in the past and that isthat the prestige part of our business is the highest margin product. Thespecialty retail is right in the middle around that 50% and the mass market ison the lower end. So, gains like we had in thisparticular quarter where sales were up 16% on the European-based business, withprestige fragrance business versus 4% on US side you certainly going to see alittle bit of a benefit on the gross margin as a result of that product mix.

Okay, that’s actually veryhelpful Russ. And then just the easy question, what should we be lookingforward for tax rate?

On the tax rate that we achievedin the third quarter, which was around 34%, I think anywhere between 34% and35% is where we are going to be.

Okay, great. Thanks, good luck.And have a great holiday.

Thank you very much, Neely.

(Operator Instructions). Yournext question comes from Mimi Noel with Sidoti.

Hi, Jean. Hi, Russ.

Hello, Mimi.

Good afternoon.

I would first like to ask aboutthe G&A expense and royalty aside AMP aside distribution the added JV cost.Was there any surprising or material increases in your baseline G&A?

Is there any, no, I think that.

You had said in your preparedremarks that beyond royalty, beyond AMP the change in the overall G&A waslargely or not exclusively attributable to the JVs?

Right, because that does notexist in.

Okay.

I’m sorry. Those expenses did notexist in 2006.

Right.

And as I just mentioned to Neely,in analyzing the benefits of the gross margin, you get a two or three orsometimes even 4% gain because of the sales of the JV. Those selling expensesrelating for those sales are taken away. So, that your net profit is prettymuch a breakeven for the incremental revenues that you get on thosedistribution success.

Okay. I just wanted - just myangle was just I wanted to make sure that there weren't any increases that Ishould assume based on some of the expansion?

No, absolutely not. It's prettymuch as we've originally projected at least from our standpoint.

Okay. And then two or three morequestions. That legacy mass business before you went into the specialtycategory, it was a declining businesses, is that still the case. Can you tellme what the size is?

I can’t go with the details withrespective size. It is a relatively small part of our business.

Okay.

But as I have said in the past,and as we even said in the 10-Q this quarter, that business continues todecline.

Okay.

Once again, we haven’t made adecision to abandon it. There are certain benefits, we see from it. But wehaven’t been able to find a cure if you will, at least not yet. But we all areworking on it.

Okay. And another question I had,I think when you were first renegotiating the Burberry license, another sort ofmakeup measure that you were considering was vendor consolidation, if Iremember correctly, is there any follow through or any update on that?

Vendor consolidation?

Right. Along your supply chain,am I remembering incorrectly?

No. We’ve said that we will beable to get some help from the suppliers. And I think that we’ve seen animprovement in cost of goods although over the last, I would say 12 to 18months. Actually so that we are using the same -- mostly we try to use the samesuppliers however, prestige for the specialty stores is helpful .

I see.

It is helping all divisions.

The only other thing, I want toadd to that is, you would have seen those benefits from the concessions that wegot from certain vendors and things like that. In fact, in 2005 because that'swhere, where we were hit with the incremental royalties and to mitigate if youremember correctly, what we are trying to do is to mitigate the incrementalexpenses in connection with that new license with Burberry and all of that kindof happened back in 2005.

Okay.

So, yeah, it continued a littlebit but most of that is [history].

Nothing more recent than that.And then, I do have one last question. It’s probably more for Jean, what canyou tell me, that's new or exciting about the Beat, relative to the latestfamily?

The Beat is quite an exceptionalproduct as we have enormous expectation on the Beat for a couple of reasons.Number one, it was a challenge to come back with something after BurberryLondon.

Okay.

As you remember, the first weekworldwide launch was the Burberry Brit and followed by London using the [plaid] printed either onthe bottle or printed on the fabric paper. So what I can tell you about theBeat , it’s a redefinition again of what Burberry stands for modern, heritage,very, very British, but very modern. From a price point of view, it’sat the high end of the family. We are going to -- the advertising is verystrong. We are going to have to get a TV enterprise in the UK. It’s stillyoung, not just for young customers. You’re going to see it very soon. We arelooking to launch it in the US.I will say, end of January, beginning of February.

Okay. And has there been anyinitial feedback from the retail end, have they gotten a sneak peek at theproduct?

We made a major presentation twoweeks ago.

Okay.

For our worldwide distributorsand then we had also from department stores were involved worldwide. The levelof excitement is very high. It was because for all of these department storeand distributors it always had [best] with Burberry. They were curious to seewhat we can do after Burberry London. I think they are happy.

Okay, that’s very helpful. Thankyou very much. And I will see you guys soon.

Thank you, Mimi.

Thank you, Mimi.

Your next comes from Linda BoltonWeiser with Oppenheimer.

Thank you. Just another questionon Burberry; can you quantify in any way how much the European sales in thequarter were up or down or whatever excluding the effect of the joint ventureformation?

Excluding the joint venture, no.We have disclosed that back to the third quarter, the Burberry business wasflat, and we indicated that it was flat because of the difficult comparisonwith the Londonlaunch that existed in 2006. We do not provide a breakdown with or without theJVs or anything like that.

So, excluding the formation ofthe joint venture, there was -- clearly the sales are down then for Burberry?

You are making an inference thatwe are not prepared to either say yes or no. It’s an inference that you aremaking. I think, we can only discuss what is disclosed and I just explainedexactly what was disclosed.

I’m just trying to think abouthow we should think about that franchise long-term. Should we think about 5% to10% growth in a year, where there is a major launch and then flat to down in ayear with no major launch?

No, what we’ve always said andwhat we attempt to do is on a year-by-year basis to grow internally, at a 10%rate. Can you do that on every single line, every single quarter, no. When youhave a comparison of no launch versus the launch of Burberry London last year,it makes for a difficult comparison and we are not surprised by the results. But as far as inferring whatsales were with or without the JVs, that the analysts are capable of doing thatthemselves.

Okay. And this is also on Burberry? Ididn’t hear all of Jean’s remarks, he was little faint in his volume levelthere. But do you anticipate that being less or more cannibalizing of the otherfragrances than Londonwas?

London has certaincannibalization on Brit, but I think Brit, London and Beat belong to newdirection, probably something modern, more of today, more iconic, more fashion,as opposed to Burberry Touch, Burberry Week End, Burberry Classic, which aremore heritage. We think that we are not expecting cannibalization between thenew Beat and the Burberry London and Burberry Brit. Because we think thedirection that the Burberry customers wants us to go into.

Okay. Great, thanks. It sounds like itsgoing to be good. Thanks.

Thank you.

Thank you, Linda.

Any other questions from thefloor?

There are no further questions. Iwill now turn the conference back over to management.

Thank you. And again thank youfor your participation on this conference call whether you are on live orlistening via our webcast. As always if there are additional questions, I’malways available by phone. Have a great day.

Ladies and gentlemen, thisconcludes our conference for today. Thank you all for participating and have anice day. All parties may now disconnect.