Good morning,ladies and gentlemen, and welcome to Newell Rubbermaid's third quarter 2007earnings conference call. (Operator Instructions) Today's call is being webcastlive atwww.NewellRubbermaid.com on theinvestor relation’s home page under events and presentations. Aslide presentation is also available for download. Adigital replay will beavailable two hours following thecall at 719-457-0820.Please provide theconference code of 1044327 to access thereplay. I will now turn thecall over to Mr. Ron Hardnock, Vice President of Investor Relations. Mr.Hardnock, you may begin.

Thank you and goodmorning. Before we begin, I would like to remind you that thestatements made inthis conference call that arenot historical innature areforward-looking statements. These statements arenot guarantees and actual results could differ materially from those expressedor implied. For alisting of major factors that could cause actual results to differ materiallyfrom those projected, please refer to our most recent quarterly report on Form10-Q including Exhibit 991. We will also bereferring to non-GAAP financial measures on this call. Areconciliation of these financial measures to themost directly comparable financial measures calculated inaccordance with GAAP is available under theinvestor relations section of our website atNewellRubbermaid.com. Let menow turn the call overto our President and CEO, Mark Ketchum.

Thank you Ron andgood morning everyone. Thank you for joining us on our third quarter 2007earnings call. I'm pleased to report itwas a strong quarter.More importantly, we've raised our 2007 EPS, gross margin expansion and cash flowforecast due to operating improvements and provided apositive outlook for 2008. As I've assertedpreviously, full year results arethe truest indicatorof how we're performing. Our upbeat expectations for 2007 and 2008 demonstrateour ability to growprofitably despite atougher economic environment. I'll talk more about this later inmy remarks. For thequarter total net sales were $1.7 billion, up 6.4% from last year and inline with the updatedguidance we provided on September 17th. Q3 2007 represents our eighthconsecutive quarter of organic growth, following three years of flat or negativegrowth. Gross marginsexpanded 190 basis points to 35.6% of sales, ahead of our guidance. Excludingcharges, third quarter earnings pershare were $0.66, compared to $0.46 inlast year's quarter. If you exclude one-time tax benefits inboth periods, normalized EPS was $0.52, a27% improvement over last year. Operating incomeof $237 million was up 18%. Pat will give you more detail on thequarter in hisremarks. Looking forward, our primary focus is on building atop-tier global innovation and branding company, capable of generating strongrevenue and profit growth year after year. As we progressthrough this transformation, we will seequarter-to-quarter fluctuations due to timing and other business factors. I trynot to overreact to these quarterly fluctuations. I'm focused on delivering ourannual plans and building our long-term capability. We areproud of the strongprogress we made in2006 and we're equally proud that we will meet or beat 2007 full year guidancethat we communicated atthe beginning of theyear. As you will hear ina few moments, weexpect to validate our turnaround with another annual installment of goodresults in 2008. We aredelivering 2007 and 2008 results consistent with thecommitments we made atour…

Thank you, Mark.I'll start with our third quarter income statement on anormalized earnings basis. Net sales for thequarter were $1.7 billion, up $101 million or 6.4% over ayear ago andconsistent with our revised guidance provided inthis September. Sales growth excluding foreign currency was 4.5%, marking the8th consecutive quarter of sales growth for thecompany. This quarter salesimprovement was driven by double-digit increase inthe home & familysegment, mid to single-digit increases inthe cleaning, organization& decor and office products segments, and alow single-digitincrease in tools& hardware. As Mark mentioned,third quarter sales benefited by about 1.5 from thetiming of sales in ouroffice products segment, and about 0.5 point shifted from quarter two relatingto the service levelissues in Europediscussed in our lastcall and about 1 point shifted from quarter four relating to thepre-buy in advance of thecompany's SAP go-live inNorth America. Year-to-date saleswere $4.8 million up 4.4% for last year, including about 1.5 point inforeign currency. Gross margin inthe quarter was $601million or 35.6% of net sales representing a190 basis point expansion versus 2006 and above thehigh end of our revised guidance of 125 to 175 basis points. Favorable mix,ongoing productivity initiatives and savings from project acceleration drove themajority of theyear-over-year improvement, while favorable mix drove theimprovement to our revised range provided inmid September. SG&A was $364million in thequarter, up $30 million to last year. Driving theincrease was strategic brand building investments inall of our segmentsand other strategic initiatives including SAPand shared services partially offset by savings incorporate overhead expenses. Reinvestment instrategic SG&A atour operating units is on track for both thequarter and for theyear. Operating income for thequarter was $237 million or 14% of sales, animprovement of $36 million or 18% for last year, driven by sales growth, grossmargin improvement partially offset by theincrease investment inSG&A. Year-to-dateoperating income was $621 million or 13% of…

Thanks, Pat.Before closing thecall, I would like to thank allof our employees for once again delivering astrong quarter. And we also add aspecial thanks to all thepeople who worked sohard to deliver a verysuccessful SAPconversion in NorthAmerican Office Products. This was atruly outstanding job. Year-to-date, we've achieved 4.4% sales growth, 170basis points of gross margin expansion and a15% increase inoperating income. Our solid outlook for 2007 and 2008 is evidence that our newbusiness model is working. We can growsustainably even inweaker macroeconomic environments. We also continue to bea strong gross marginstory, reaping thebenefits of favorable product mix, ongoing productivity, and savings fromrestructuring. This robust grossmargin expansion will fund additional investments instrategic brand building and other capability building initiatives that areso critical to drivingtop-line sales growth and to supporting our long-term success. Our vision is to bea best inclass company. We areclearly making good progress. However, this is amarathon, not a sprintand it will takeseveral years to getthere. As we go forward, we will build upon themomentum we have gained thus far and maintain our focus on building brands thatmatter, achieving best total cost, leveraging thepower of one Newell Rubbermaid and fostering aglobal culture of innovation and excellence. As always, wethank all of ourshareholders for their continued support. And thanks, once again, for joiningtoday's call. I will now ask theoperator to open theline for questions.

(OperatorInstructions) Your first question comes from Budd Bugatch with Raymond James.

Good morning,Mark. Good morning, Pat, congratulations.

Thank you. Good morning Budd.

You talked about1.5% to 2% impact of themacroeconomic climate. I guess, that's about $100 million off of sales for nextyear, if I dothat properly. Can you drill down and tell us where you think that's impactingand how you get there?

It's primarily inour tools & hardware segment, because of theslowdown in housing.That, as you know, continues to getworse. That's where we seemost of that impact.

And tools & hardware,you're looking at --if we look atinternational, that's still growing well. Domestically, I would imaginecommercial is growing well, industrial is growing, okay. So, theimpact is in thehome side of that?

Yes itis. In fact, we said inthe past, this isstill correct, about 5% of our total Newell Rubbermaid business is affected by thehousing market, and again, thelargest part of that inTools & Hardware.

Okay. My follow-uphas to dowith raw materials for next year. I'm concerned, I'm seeing some inflation andobviously with oil where itis, tremendously worried about that. Can you go over your outlook for thatmaybe for the fourthquarter and for next year and how dowe monitor that?

Well, let's talkabout next year. We believe we're going to seemore pressure from raw materials in'08 than '07, and everybody is driven by resin costs. They area bit of amoving target at thispoint. But beyond that,we have shown theability the last threeyears to price and take price to offset raw material inflation in'05, '06, and '07, it's our intention to dothat again in 2008. Weare currently workingthrough those pricing decisions as we speak, as we go through our budgetingprocess. We can fill you inmore detail on our next call. But over any annual period or alonger period, we expect to beable to offset raw materials with price. Now, inthe short-term we haveto get our pricingactions in place andinflation happens when ithappens.

And resin is stillaround £700 million now, is that about right?

That's aboutright.

And you used tohave or a couple ofyears ago you hadinstalled an indexingmechanism for pricing on resin when itreally got to bechallenging. Is that still inplace or do you haveto go back to thecustomers?

Well, it's notwhat I'd call in placein that it'sautomatic, but we always have to go back to customers and that was thecase even before. But that's thebasic principle we'll continue to use. As Pat mentioned, thetiming of our pricing with many of our customers is either twice ayear or once a year. Soour ability to respond is not immediate inmany cases. But as Pat said, over any longperiod of time we still expect to beable to have raw material inflation and pricing offset.

And Pat, justlastly, is there anything on metals inraw materials, too?

Well we expectsome pressure on metals but about thesame as we saw this year.

Okay. Thank youvery much. Congratulations.

Thank you.

Your next questioncomes from Connie Maneaty with BMOCapital Markets.

Good morning.

Hi, Connie.

With your commentsabout the weakness inNorth American retail and housing and thestrength in theinternational business, is there any chance that North American, or U.S.sales in particular,decline in thefourth quarter and thesales growth that you doshow is allinternational?

No, I don't think itwill come out that way. But again, theinternational businesses will beleading the way interms of their rate ofgrowth. But no, we'll still seesome growth in NorthAmerican total.

Okay. Also whenyou talk about this terminology, when you talk, saysales are sluggish orsales are weak, doesthat mean they declined?

Allit means is there'smore macroeconomic pressure. You're seeing some of that show up inthe fourth quarter.

No, but I meanwhen you say thatNorth American tool sales were weak or sluggish.

No, they were notdown in thequarter.

They were notdown. Okay. So youdon't have standard language where weak and sluggish means decline, right?

No.

Okay, great. Thankyou.

Your next questioncomes from Bill Schmitz with Deutsche Bank.

Hi, good morning.

Hi, Bill.

I know you're notgoing to talk about specific customers, but what gives you confidence that someof this destocking in theoffice supply channel abates thefirst quarter of next year? I know they have taken their inventory down from sixmonths ten years agodown to three and now it's down to amonth and a half ortwo. But than why doyou stay in themarketplace and what arethey telling you that you think that this is going to pick up inthe first quarter?

Well, first ofall, we track two things. One, we have some visibility into inventory levels atour customer's. And second, we also have on acustomer-by-customer basis visibility on point of sale. Our point of sale hasactually been up and as we have seen thetrends in inventorytakedown, we know that there's anendpoint to that. And sowe expect that good point of sale strength will start flowing through intoshipments. The otherthing I can tell you is that we've got astronger pipeline of new initiatives coming forward next year than we did thisyear. We purposely held back on newinitiatives this year sothat we could getthrough the SAPconversion in North America without interruptions. Obviously ifyou're trying to innovate and provide new products atthe same time you'retrying to go through achange like that, itjust adds a level ofcomplication that you want toavoid. We were morecautious in terms ofour rate of newproduct initiatives this year. Next year we'll open thefloodgates again.

Right. Thanks.Then just a follow-upon SAP. I know Stanford North Americawas the first one,what’s planned for next year interms of conversion?

We have onesegment go-live in North America again, our home & family segment. And right now it'santicipated to be inthe second quarter.

Okay. That's itfor 2008?

Yes.

Okay, great.Thanks so much. Pat, Ihope you're feeling better?

Thanks alot. I am.

We'll talk to yousoon.

Your next questioncomes from Linda Bolton Weiser with Oppenheimer.

Thank you. I guessI have a questionabout the cleaning andorganization profitability. It's very impressive given theraw material costpressures. I mean you have a15% operating margin now there. Can you discuss -- I'm picturing that thecleaning and organization versus home fashions areroughly equal. If you could shedsome light on that interms of profit margins and also inRubbermaid, can you comment is themargin improvement due to home products still improving or is itall of thepieces that areimproving profitability? And arehome products now where itneeds to be?

Okay. There area lot of questions.Let me try and giveyou an overview ofthat. We don't report on specific portions of thebusiness within there, but I can tell you that, for instance, Rubbermaid commercialhas always been atthe strong end ofthat, of the rangewithin that business segment, and theRubbermaid home products, I've shared that with you before, is theone area that's been below investment grade. We talked aboutthat when we talked about what businesses still needed to befixed, if you will, using thedefinitions the companywas using a couple ofyears ago. But I also told you that Rubbermaid home had made agreat first installment, had gone from negative to positive profitability lastyear. That they weremaking another biginstallment this year and that itwould be fully fixedby the endof '08and they areon that track. They aremaking terrific progress byredesigning their products and redesigning their overhead and better utilizingour factories and anumber of other thingsthat they are doing toreally continue to getthemselves into abest-cost position. They arewell on their way tohaving investment grade economics themselves and then allthe portions of thatbusiness would.

Just one othercomment, all of ourbusiness segments now have operating margins inthe lowto mid-teens ranging from roughly 13% to 15%. Thecompany's operating margins will approach 13% this year, probably inthe 12.8% kind ofrange. The gapis that we have some corporate expenses don't getallocated back. They areall operating now inthat 13% to slightly above 15% range for theyear.

Just as afollow-up, I think people arealways thinking about your category versus thecategories like Procter & Gamble. I mean what's thevery long-term margin potential of durable goods categories versus consumables?Do you have any viewon that, Mark?

Well, I guess Idon't want to pick asingle number, because as you know, we've got such amix of products that what our actual mix is would affect that. We have talkedabout driving our gross margin towards 40 and driving our net margin towards15, and I think that's agood near-term target. I would hope that three years from now that will beclose to reality and you'll beasking what's next. Obviously there will have to besomething next.

Okay. Thanks alot.

Okay. We'll gonext to Chris Ferrara with Merrill Lynch.

Hi, guys. I waswondering if you can talk about what probably thebigger concern is for your stock inthe marketplace, whathappens if we do seea recession. Is thereany way you can try to quantify insome way what you'd seefor a commercial orindustrial construction if we saw aU.S. recession and what kind of share gains from aquantitative perspective you'd need inyour tool business to offset that and to still beable to put up flat to lowsingle-digits growth?

We haven't modeledthat, so we're notplanning for theworst. We're planning for what we think is reasonable and that would bekind of planning for theworst. I guess theother thing I'd tell you itthat that's why it's soimportant that we use thetotal portfolio we have atour disposal and that portfolio is both within that business. Sowithin that business, as you know, within our tools business there'sresidential, there's commercial, there's industrial. Within that business thereis U.S. andthere is international. And sotrying to really use thestrongest parts of themix at any one point intime to drive the businessis what we're focused on doing. And then obviouslyas a company we'retrying to use thetotal mix of Newell Rubbermaid, sothat if there are weaknessesthere that we can offset someplace else.

Sois it fair to sayyou guys expect continued residential construction weakness but you don'texpect a recession inthe U.S.?

I would saythe 1.5% to 2% fdrag that we talked about before would not anticipate afull-blown recession, no.

Got it. And then Ijust want to ask about on theQ4 guidance, it lookslike your implied SG&A reinvestment would beroughly $40 million bucks, which is big, right? Itwould be up 300 basispoints over two years ago. Is that right? Is that theright way to calculate it? I guess where would alot of that incremental becoming from given how high therun rate hasbeen?

I think it'sactually a littlelower than that in thefourth quarter. I think our SG&A is up about $70 million through Septemberand we're saying $95 to $100 million for theyear. So we'relooking, unless my math is wrong, more like $25 to $30 million of reinvestment inthe quarter.

Got it. Then it'sbeen my math that is wrong. Just gross margin, try to mix as adriver of gross margin, it's not something I guess we've spent aton of time, that you guys spend aton of time talking about. I know it's probably hard to forecast inthe near-term. But itseems to be somethingyou've called out more and more often. Can you just give alittle color on where that's coming from? I understand new products aregenerally higher margin. But is itthat simple that your pipeline hasbeen more robust or arethere other things inplay?

Really itis a couple of things.It's one, the firstone you just said. We've talked about this before. But any time we launch newproducts or get inthe near neighborcategories, our expectation from aplanning standpoint, we're not 100% but we have avery, very good batting average here. But theexpectation is that thenew products improve thefleet average gross margin. Sothat's one thing, as we drive innovation and getin near neighborcategories we're constantly seeing that as anopportunity to build our margin. Theother thing is that as we spend more money on consumer demand creation, we canspend itdisproportionately again on theparts of our line-up. Sowithin any given product segment or business unit, they have parts of theirline-up that arebetter gross margin than others and we're, again, focusing more of our brandbuilding marketing spending on theparts of the line-upthat are bettermargins. Soboth building that mix by what we advertised market as well as by launchingproducts and launching inthe categories thathave better margins is probably thetwo key things.

Thank you verymuch.

Your next questioncomes from JoeAltobello with CIBC World Markets.

Thanks, hi, guys. Good morning.

Thank you.

Our first questionis on office products. I think you said on your 2Q call market, Pat, I forgetwhich one is that thedelayed shipments plus thepull forward from 4Q to 3Q would add about $30 to $40 million of sales inthe quarter. Itlooked like it wasabout $20 to $25 million of animpact in thequarter. How much of that was less of apull forward than you thought and how much was less of arecapture of the $15million in sales isthat didn't go out in2Q?

Virtually allof the difference wasless of a pullforward.

Okay. Fair enough.Then secondly, and this is maybe alittle bit picky, but I think inyour analyst day inFebruary, you had talked about gross margins being up 125 to 175 basis pointsboth this year and next year. This year obviously you doslightly better than that. Next year you're saying atleast 100 bps. Is that achange or is thatjust me that being alittle bit picky there?

We dosay inexcess. Part of thereason there is we have to go through our budget process. And we talked about ita little bit early onanswer to Budd's question. Got abit of a moving targeton oil and resin costright now, which we're trying to zero that in. Also our pricing action isrequired also. We're very comfortable to bein excess of 100 and we'llgive you more detail on thenext call.

And theproject acceleration savings obviously being pulled forward alittle bit.

But $10 milliongot pulled from '08 in'07, which is a goodthing. We've accelerated those savings, sobut that's small, about $10 million. We had said $50 million in'07, $70 in‘08; we're now saying $60.

Okay, great.Thanks.

Your next questioncomes from Connie Maneaty with BMOCapital Markets.

Hi. I just have afollow-up. Could you talk about what's been going on inthe internationaltools with thecommercialization of these industrial band saws? Can you give us alittle bit of detail and also what you call that group of employees that goesto the work site, and howthey all operate?

Yes. Well, they arefield activation specialists. That is theway to think about them. And what they areis the people thatreally understand and can work with theend user to demonstrate. What we're doing, I would describe most simply, asadding feet on thestreet. What that means,you've got to bring these people in, you got to train them on our products, howthey work, why they arebetter, make them experts on going into amanufacturing site and showing them how if they replace their existing bandsaws, with our band saws, they will getproductivity advantages and eventually costper cut advantages. Sothat's what we're doing. But as we addthose people, train them up, send them out inthe field; they cannow cover several more accounts than we could cover before. We're getting deeppenetration into geographies where we already existed and we're getting furtherinto new geography, for instance, Eastern Europe.

Wait, which partof the internationalbusiness segment is growing thefastest?

Actually both Europeand Latin America grew double-digits for us. They grewabout the same.

Great. Thank you.

Your next questioncomes from Linda Bolton Weiser with Oppenheimer.

Yes. Can you justclarify if the specialtax item in thequarter was cash or non-cash?

It's non-cash for theyear. Eventually itwill be cash.

Right, yes. Okay.Thank you.

Your last questioncomes from Chris Ferrara with Merrill Lynch.

Hi, again. Justwanted to talk about theproductivity. I know you guys have, you targeted 2.5% of improvement. Can youjust clarify what kind of productivity you seejust as far as base productivity goes and what's related to Newell OpEx andproject acceleration? What is sort ofyour target? Should we just look atrestructuring savings going forward as theprimary productivity savings number? Or what would bein addition to that?

This year it's abig contributor,Project Acceleration is about $60 million, as we said, maybe a$50 million of that was from thegross margin line, Ron, is that right? $10 million inSG&A. So roughly alittle more than half of our productivity this year is coming from project acceleration. As we moveto a more sourcingtype of model, I think we talked about this before. Only about half of our production will comethrough our own facilities. Sowe'll get less fromour own OpEx and our own facilities going forward. On thehorizon, though, is working with our supply base and training them inthe same techniques weuse in our ownfacilities and get theagreements in placethat we share in theproductivity that they generate. Thesecond, I'd say, untapped area is distribution and transportation. As you know,we're going through areorganization of that whole network and taking about half of theDCs out of thenetwork. That's a bigdriver going forward also.

Got it. Then doyou guys, back onto gross margin, themix impact. Do youguys forecast in aspecific mix improvement number inyour gross margin targets or is itsomething that you sort of leave as potential upside?

It's business bybusiness. But there is some baked into our model going forward, yes, and inour estimates.

Got it. Thanks alot.

If we were unableto get to yourquestion during this call, please call Newell Rubbermaid investor relations at770-407-3994. Today's call will beavailable on the web atwww.newellrubbermaid.com and on digital replay at719-457-0820 with aconference code of 1044327 starting two hours following theconclusion of today's call and ending November 8th. This concludes today'sconference. You may disconnect.

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THEINFORMATION CONTAINED HERE IS ATEXTUAL REPRESENTATION OF THEAPPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIOPRESENTATION, AND WHILE EFFORTS AREMADE TO PROVIDE ANACCURATE TRANSCRIPTION, THERE MAY BEMATERIAL ERRORS, OMISSIONS, OR INACCURACIES INTHE REPORTING OF THESUBSTANCE OF THE AUDIOPRESENTATIONS. IN NOWAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHERDECISIONS MADE BASED UPON THEINFORMATION PROVIDED ON THIS WEB SITE OR INANY TRANSCRIPT. USERS AREADVISED TO REVIEW THEAPPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THEAPPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHERDECISIONS. If you have anyadditional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com.Thank you!