Good afternoon and welcome to the Pitney Bowes third quarter2007 earnings conference call. (Operator Instructions) I would now like tointroduce your speakers for today’s conference call: Mr. Murray Martin, Presidentand Chief Executive Officer; Mr. Bruce Nolop, Executive Vice President andChief Financial Officer; and Mr. Charles McBride, Vice President, InvestorRelations. Mr. McBride will now begin the call with a Safe Harbor overview.

Thank you and good afternoon. Let me remind you that you canfind today’s earnings press release and the attached schedules on our websiteat www.pb.com/investorrelations. The forward-looking statements contained inthis presentation involve risks and uncertainties and are subject to changebased on various important factors, including changes in international ornational political or economic conditions, timely development and acceptance ofnew products, timing of potential acquisitions, mergers, or restructurings,getting product approval, successful entry into new markets, changes ininterest rates and changes in postal regulations, as more fully outlined in thecompany’s Form 10-K annual report filed with the Securities and ExchangeCommission. Additionally, if there are any non-GAAP measures discussedduring the call, such as adjusted earnings per share, earnings before interestand taxes, EBIT, free cash flow, and organic revenue, there will be areconciliation of those measures to GAAP measures located again at our websiteat www.pb.com/investorrelations. Now, our President and Chief Executive Officer, MurrayMartin, will start with an overview of the quarter. Murray.

Good afternoon. Thank you for joining us for theannouncement of our third quarter earnings. I will start with a broad overviewof what affected our performance and Bruce will follow with some additionalperspectives on our quarterly results and on our guidance for the fourthquarter. I will then conclude with a brief discussion of our action steps forthe near future and then open the lines for your questions. During the quarter, our revenue grew 5% compared with ourprevious guidance of 8% to 11%. Our adjusted earnings per share from continuingoperations was $0.63 compared with $0.66 in the third quarter of 2006. This wasbelow our guidance of $0.70 to $0.74. Our GAAP earnings per share from continuing operations was$0.58 compared with $0.64 for the same period last year. This is the first timein 28 quarters that we have performed below earnings expectations. We aredisappointed in this performance and I will talk about the factors which led tothese results. But before I do that, I want to make certain that we do notlose site of the positive trends we continued to see during the quarter. Ourenhanced management focus on free cash flow has delivered one of our strongestquarters ever, as we generated $239 million during the quarter. Also, as we saw last quarter, the software segment continuesto be one of our growth leaders. The ongoing demand for our array of solutionshighlights software’s growing importance in helping customers optimize theirMailstream investments. During the quarter, we combined Group 1 and MapInfo into oneorganization, bringing together our expertise in locations and addresses, andlaying the foundation for us to become the most comprehensive provider ofcustomer information for marketing and business transactions. Earlier this year, we named Mark Cattini, former CEO ofMapInfo, as head of our marketing services group. Since that time, we havebegun leveraging the synergies and increasing…

Our revenue for the quarter was $1.5 billion, which was a 5%increase from a year earlier. Foreign currency contributed about 2% andacquisitions contributed about 4%. Therefore, excluding the impact ofacquisitions and currency, our revenue declined by 1%. Our revenue overall in the U.S. grew by 2% while our revenueoutside the U.S. grew by 13%, although this was primarily due to currencytranslation. Our earnings before interest and taxes, or EBIT, declined by2% during the quarter to $278 million. Our EBIT margin for the quarter was18.4%, which was lower than the prior year’s margin of 19.8%. But on an organicbasis, our EBIT margin was 19.2%. The decline in our EBIT margin was dueprimarily to mix, as we had a lower average gross margin and a higher sellingand marketing expense ratio. However, on an organic basis, our general andadministrative expense ratio actually declined by 20 basis points. If we add back depreciation and amortization, our EBITDA forthe quarter was $374 million, which was very close to the $377 million ofEBITDA in last year’s third quarter. Our adjusted earnings per share for the quarter was $0.63per diluted share, which compares with $0.66 for the same period last year.Much of the year-over-year decline in our adjusted earnings per share was dueto higher interest expense. The higher interest expense reflects higher levelsof debt outstanding but also last year, we had interest income on a large cashbalance that resulted from the capital services divestiture. This cash balancecontributed about $5 million of interest income to last year’s third quarterresults. Our GAAP earnings per share for the quarter was $0.58. Thisincluded a $0.02 charge for aligning the MapInfo accounting with our proceduresfor software. In addition, we had two non-cash adjustments -- a $4 million netdecrease in our deferred taxes, primarily due to recent changes in German taxlaws, and a…

We do not believe that this year’s results are indicative ofthe growth and the value inherent in our Mailstream portfolio. As a result, weplan to accelerate some of our action plans to ensure better performance goingforward. First, we are looking at ways to accelerate ourinfrastructure improvements to lower our costs and deliver a better customerexperience. Second, we are planning to accelerate the transition strategies forour mailing products in the U.S., Canada and Europe, in light of the dynamic marketconditions resulting from the end of meter migration in North America, postalreform in the U.S., and market liberalization in Europe. Our mailing business is central to our equation fordelivering shareholder value. Our goal is to ensure that this business deliversconsistent earnings and cash flow even in the midst of increasing complexitywithin our markets. Third, we must improve our operating performance in Europe.As a first step at the end of the quarter, we appointed Neil Metviner asPresident of our mailing segment in Europe. Neil joined the company in 2000 andhas successfully transformed our global small business operations by creativelyexpanding our market reach to over 1 million small business customers whilelowering our cost structure. I have a great deal of confidence in his abilityto make an immediate and positive impact. Earlier in the quarter, we also appointed Ian Davidson ashead of production mail in Europe. I believe that Ian’s experience and marketknowledge will enhance our focus on production mail opportunities and lead toimproved profitability. Overall, we are examining all aspects of our operations andour investment strategies to ensure that we will deliver enhanced value to ourshareholders. I want to assure you that we will move swiftly to takeappropriate actions for the current market conditions. We plan to hold a special investor call on Thursday,November the 15th, to discuss our action plans with you. Now, we’ll take your questions.

Operator, can you open up the lines for questions, please?

(Operator Instructions) Our first question comes from theline of Jay Vleeschhouwer with Merrill Lynch.Please go ahead.

Thanks. Good afternoon. Murray, you mentioned that thebenefits from postal reform in the U.S. earlier in the year turned out to betemporary, concentrated in the second quarter. And that was notwithstandingyears of anticipation of these reforms and how it would benefit the business,so the question is why do you think it was so brief or concentrated? And thenext time such reforms occur in Europe or elsewhere, isit reasonable to assume that the benefit would again prove to be relativelytemporary? The second question concerns the strength you are seeing inmail services. Is there any reason to believe that in pre-sort or any otherpart of that business, that the current growth, which I assume is volumedriven, could prove to be temporary?

Thanks, Jay. First of all, on postal reform, there arelong-term benefits to postal reform and it really starts with marketstabilization and the benefits that the entire market will receive from havinga solid postal environment. Now, as we look at the benefits of postal reform, the firstis we are seeing and expect to continue to see positive benefits in our mailservices segment. We don’t see these as temporary benefits. The discountoffered to mailers is very good and the co-mingling of mail enables them toreceive those discounts. So we would expect more and more customers to look athow they can co-mingle their mail to receive those discounts, and we see thatas a positive going forward. As to your question on the second quarter, the secondquarter actually created a slight anomaly which was the introduction ofshape-based rating. That was not really something that was part of postalreform or anticipated in postal reform. It was something the postal service putin and it brought forward business but we don’t see it as having a long-termnegative effect. It changed the timing of when revenue will be recognized. We do believe that the other elements in postal reform andmarket liberalization around the world will have long-term positive effects,although we will see occasional anomalies.

In the software business, you mentioned that you’ve combinedMapInfo and Group 1. Do you foresee the benefit, or do you anticipate similarstructural changes across any of the other business units? Or is this unique tothe software business? And a couple of things you mentioned at the analyst meetingearlier in the year were first that the composition of the business now wouldlikely lead to more “variability” -- your word at the time. I assume what youare seeing goes beyond some of the revenue mix variability that you anticipatedearlier in the year, and you also talked about accelerated product development,if there’s something you could say on that.

First of all, let me touch back and I’ll try and rememberthe question, and if I don’t get it all, pop back. On Group 1 and MapInfo, the consolidation of that hasbrought together our software capabilities around addressing and locationintelligence and we see that as enhancing the segment substantially. And havingthat synergy we believe will be of long-term benefits to our customers and tothe entire Mailstream. The ability to be more precise in determining an addressalso will enhance marketing and trans-promo as it begins to expand and peoplelook to take transactions to promotional mail. So we see that as having acontinuing effect. At the same time, we are looking at and examining allportions of our business to see which items fit best together to provide us themost synergistic benefits and the best results, not only for our customers butreturn as well. One of those is in U.S. mailing, where we have broughttogether small business and our mid-sized business and put them together sothat we have one end-to-end view of the customer and we have a way of seeingthe customer from small to large. That has allowed us to bring theinfrastructure together in one place so that we can deal with the customerexperience while we at the same time look at reducing the cost of delivering anenhanced experience. So we are continuing to look at all pieces of the businessto see what synergies are available, not just from a cost side but from acustomer experience as well. As to products, we are continuing to focus on certain areasof products that we believe will give us a good return. We are doing that inour software segment, which you are seeing some of the results of today. We’vebeen doing that in our DMT space as we’ve become the clear market leader intechnology and advanced productivity systems around the world, and we have doneit historically in our mailing business, where we have a fleet now of unitsthat can upgrade their rates capability as the postal service makes change. Andthis is one of the major things in postal reform -- the post is going to wantmore flexibility on rates and we have a large fleet that is easily adaptable,and this is significantly different than others in the market. We will look at how we can enhance this to take advantage ofmany of the new functionality that the postal service will be rolling out overthe next 12 to 24 months to enhance the value for our customers.

And our next question comes from the line of Matt Troy withCitigroup. Please go ahead.

A question; given a quarter that was very un-Pitney like, Iknow it’s difficult for you on that end, certainly for everyone on this end, Iwas just curious -- when did you first get a sense that the quarter wasstructurally beneath your expectations? Why weren’t you able to updateinvestors sooner, given the magnitude of the miss? And I realize this could bejust a perfect storm of several items coming together, but I wanted to get adirectional sense of the items you listed, what were the major drivers of theshortfall? Were some more impactful than others? When did you get a sense thatthis quarter and your outlook for 4Q would be structurally beneath that whichyou previously articulated?

Matt, as I mentioned, and as we’ve discussed, the resultsfor a quarter tend to come in in the last week, in the last days, and that’sparticularly true of our software business and of our lease trade-up business.And this is when we had expected to see a positive swing going forward. Now, we saw at that point that there were some challenges.We still expected to be towards the bottom end of the range, but we did notexpect to be where we have come out. I think you were exactly correct in the --all of these items coming together at one time. To give you an idea as to your question about are some morethan others, basically the first three represented about 90% and they are aboutevenly split at about 30% each. That, just to reiterate, that was about 30%that was defined around the weakness that we saw in the economy and we did notexpect those results to show up as they did, particularly in the financesector, where we had some shutdowns of procurement that occurred at the end ofthe quarter. Secondly, the U.S. mailing segment, that was about 30% andas I mentioned, we expected that to arrive at the end of the month ofSeptember, and international was about 30% and then the PBMS was about 10%.

Okay. If I could maybe ask, and I’m sure you’ll share ingreater details your plans at the November call, but some of the actions youspoke of in reaction to what you are seeing now in this business were internalfacing. I was just curious, from a longer term perspective, the concern wouldbe that you build these better technologies and these better services and thisbetter hardware to accommodate for a much more dynamic requirement in apost-postal reform era. How do we get comfortable that you are going to be ableto be compensated from your customers for that investment, in light of thecurrent quarter results and some of the weakness? That ultimately, you will getan adequate return, you will be able to seek price -- what are some of theexternal facing strategies you are pursuing to make sure that you can recoupthis investment to make your technology and product more valuable and viable?

Well, I think there are a number of things there. Numberone, as I was discussing, in software, we have combined assets to ensure thatwe can enhance the customer experience which delivers significantly more value.I was just with a customer this week and we were going over the results of theanalysis of their mail with the new tools that are coming available and therewere millions of dollars of benefit for that particular customer. And that customerwas saying can you look at the rest of my facilities to see how much morebenefit we can get? So I believe that as these new technologies roll out, theyare measurable and clearly definable benefits for the customer that willjustify the expense. As we move into the more traditional mailing products, thepostal service is expanding through the balance of this year and 2008 full-facescanning and they will be putting in the ability to read the barcodes off themeters and this will then enable us to really take advantage of specialservices that have had limited capability up until now and that will provide anexpanding benefit from our customers. So I really believe that these two areas will make asignificant difference for us and we have built these products so that theyhave got some upgradeability in the field to handle variances that the postalservice has. I think those are the items that will really generate themaximum potential benefit and we are quite confident that our customers willrealize measurable benefit.

And will they pay for it?

Yes, we believe they’ll pay for it. The customer I was withthe other day, I said to him so there’s a lot of money here on the table. Whatabout the price? And he said “the ROI is more than sufficient”, so as anexample from a customer, he saw no issues on the ROI that was presented.

Last question, in terms of the share repurchase program,could you just give us an update in terms of, Bruce, where you are with thatand in light of what the stock is going to do in the morning, might you beopportunistic in seeking expanded authorization from the board? What kind ofcapacity do you have there?

We’ve, as of end of quarter, bought in $280 million worth ofstock and we are going to be looking at whether to increase the authorization.But that’s something that we will look at between now and November 15th and wewill update you about what our plans are in that regard.

Did you have though a number in terms of remaining capacityyet unused?

Authorization is $160 million.

Of which you’ve used how much?

No, that’s how much is remaining.

Okay. All right. Thank you.

We have current authority and the question is whether toincrease that.

Okay. Thank you.

And our next question comes from the line of Carol Sabbagha with Lehman Brothers. Please go ahead.

Carol, it would be largely outside of management services,and it would show up in areas like supplies orders. We also think on themailing side that it affects equipment and in particular, production mail,which is the large equipment, and then software. So it’s roughly -- if we hadto characterize it, Carol, we’d say maybe half was equipment, 25% supplies, and25% software.

Okay, and the half in equipment, you would say mostly inproduction equipment or also in mailing equipment?

Both. And the other thing I would mention too, Carol, is itdidn’t affect revenue but we did have some incremental costs related to thefinancial services sector, particularly in the mortgage area. We had a couplemillion dollars of write-offs related to that sector.

And those would have shown up in PBMS -- in managementservices?

No, they’d show up in U.S. mailing.

In U.S. mailing, okay.

Yes, so that’s what I’m saying, that mailing is morediversified than management services, but it still has a very large presence inthat sector.

And if you looked at U.S. mailing and you looked at therevenue, 3% down, what part -- what did equipment sales do within U.S. mailingand what did the other components, if you can just give us a general feel?Because I would have thought that 75% to 80% would be recurring, so itshouldn’t see wild swings like this.

No, in the U.S. mailing segment, it’s the swing numbers, itwould show up as the equipment sales and they were clearly off. In contrast,second quarter they were significantly up, so just on a quarter-by-quarterswing, and then you also see it in the rental line as well. And then you see itin international mailing as well.

And then --

The other point is that supplies is something that you dosee effects from the economy and just the amount of postage volume that’sflowing through, but even more importantly, just people sometimes postpone thereplenishment of supplies.

Although your supplies number looked pretty good. Maybe notas strong as the first half, but nothing --

I would say if you broke it down between international andU.S., you would have seen that international was very strong in supplies butU.S. was down considerably quarter over quarter.

Okay, and then you I think, Murray, mentioned when you weretalking about U.S. mailing that you thought the end-of-meter migration had animpact. Is that right and did --

Yes. If I could just touch on meter migration, we’ve gotabout 49,000 metersleft in migration between 2007 and 2008, and what we have seen, which wasreally a surprise to us, is the migration rate on meters has dropped by about50%. So customers that we would expect to migrate are migrating at about halfthe speed that we expected them to, which says they are pushing out towards theend of migration and what we are now expecting is that customers that wouldnormally have upgraded later earlier are saying “I’ve got until the end of2008, beginning of 2009. I have no urgency to move forward” and that would beboth in the owned and in the leased fleet. The owned in particular is definitelyin delay from where they were. So we expect we will only see about half of the volumebetween now and the end of ’08 that we had expected.

In the last migration cycle, I think what happened aftermigration was over was that revenues came under pressure because a lot of newequipment orders were pulled in during migration. Is that something thathappened here? This one was stretched out a lot longer and it seemed likepeople migrated during their natural lease terms.

I think there are two things there. One is the secondquarter, if we talk about the second quarter and what happened is people werein one of two positions. They either had equipment nearing the end of lease,which they traded out prematurely to get the new equipment. That created apull-forward and it therefore lowered the trade-up potential over the followingperiods. The second item is people that added components to theirexisting piece of equipment and this allowed them to take advantage of thepricing in proportion, but they then, as they are nearing the end of theirlease, where they would normally trade up pre the end of their lease, are nowstaying longer in the lease because they did have an equipment upgrade. Andthis was something we had not considered as we had looked at the upgrade cycle,is that those people would also shift their repurchase to a later point intime. This was also a major piece. So there’s the migration effect that I was talking about,which is at a slower rate, but then you have the second quarter effect, whichpulled forward and shifted some of the timing. As those pieces of equipmentcome to end of lease, they will still be in a renewal cycle. The other thing that we’ve analyzed over the last week is aswe’ve gotten deeper into the lease cycles, we can see what the potentialopportunity is for upgrade and we can now more clearly see what has been pulledforward and what is available in the coming years. And we will talk to you inmore detail about that as we confirm it on our November the 15th call.

And how quickly do you think, given all the information thatyou have, how quickly do you think the U.S. mailing can get back on track tocall it low single digit, flattish low single digit growth?

We are forecasting through the fourth quarter that thecurrent conditions will still be there and then on our November 15th call, wewill give you the 2008 looking forward as to exactly where we see not just U.S.mailing but all of the different components of the business.

And then, one last quick question; your revenue guidance forfourth quarter is within sort of what we had been forecasting, but obviouslythe EPS is much below. Is it that maybe we were off in the components of whatwas growing? Maybe we had U.S. mailing -- is it just the product mix that iscausing that I guess is the question.

I think it’s almost all mix, I’m guessing, in what thedifference is, and also too that you have more of the revenue growth probablyfrom currency and acquisitions than you originally thought. So that’s made adifference. For example, we bought a company called Asterion, which youmay have seen, which is going to add to our revenue but -- so overall, I mean,we’re looking fourth quarter organically to be roughly flat and so that’sprobably the difference between the --

Okay. Thank you very much.

(Operator Instructions) And next we’ll go to the line of ShannonCross with Cross Research. Please go ahead.

Good afternoon. A couple of questions; the first one,looking at the issues that are hitting you from a revenue standpoint, Bruce,can you talk a little bit -- I mean, the first concern everybody is going tohave in looking at this obviously is the economy. And I’m just curious as tohow much, when you look at it, is truly the economy weakness in FMB, pull-backof lease renewals, all of that, and how much do you think is -- I don’t know,one-time or more related to the mail meter migration -- just any more clarityyou can give on that I think would be helpful. Because I know I got severalcomments and questions from clients right after they saw the numbers as to --

Sure. I would say this -- as we’ve always noted, two things;one is that we are generally resistant to the economy but we are not immune,and just to reiterate what Murray said, is that we estimate that perhaps 30% ofthe shortfall was attributable to the economy, so it’s still -- it’s asignificant item but it’s not the majority. And secondly is we tend to be not a leading indicator but acoincident indicator, and we really saw the impact toward the end of the quarter.We didn’t see it through the first two months. And at that time, we were seeinga few things but nothing that would indicate the kind of economic decline. And we’re just, again, being a coincident company and insome ways a barometer of what the economy is doing, we see it continuing and weare forecasting the fourth quarter to have that slower results. And as I mentioned, we are seeing it in a lot of ways butsome of the places that we look particularly, such as large equipment orders,we’re seeing the companies are clearly watching their procurement and in manycases shutting down new proposals. So again, we can’t be a long-termforecaster, but we will tell you right now we are definitely seeing the effectsin the economy in our business and it is at least having the 30% of ourshortfall effect through the fourth quarter, and probably greater on apercentage basis fourth quarter than third, and that’s why you may see evensome widening compared to what we did year over year.

And then, can you talk a bit about your international EBITmargins, pressures you’ve seen there? You know, ways that maybe you can addressthem going forward? I’m sure a lot of this will come out in November but justanymore clarity you can give us on the weakness in international EBIT?

There are two things in international and I break theinternational numbers as basically 50-50. About half of the miss ininternational has to do with the uncertainty and the delays in the postalliberalization and the effect of the strike by Royal Mail in the U.K.,which is our largest volume area and the highest margin in Europe. So that’s sort of one half. On the other side, I think halfof it is clearly operational. It is up to us to get it fixed and take that costout. It’s cost that we did not anticipate and we expect it to be gone by now,and it is not. And that had to do with our outsourcing of back offices acrossEurope and that included our order to cash component. And we have not seen thosebenefits realized as expected in totality. We are seeing the benefit but we arecarrying increased expense to ensure that the benefits get there, so to me itnets out as we aren’t seeing the benefit. We have put actions in place thatwill get us there but I’m very disappointed in our lack of being able todeliver that on time. I think that will change the markets, the margin that you’rereferring to significantly as that clears itself out.

Okay, and then just, not to beat this to death but I’m justcurious, Bruce, if you could talk a little bit about supplies. You talked aboutit being under pressure in the U.S. Just from a -- maybe if you look back overthe last several quarters trend-wise, because again, I think it does have to goback to the number of transactions and how much people are using their mail[meter], which ultimately gets back to the economy, can you talk a little bitabout trends you’ve seen in terms of supplies growth? And then, if there’s beenany change since the end of the quarter -- looking for a silver lining here.

Sure. In terms of supplies, they have been growingorganically at double digits. Now, in the U.S., that would be low singledigits. And that is something that was just a change that occurred relativelyquickly, so in other words, it was not a gradual change. It was really a stepfunction between second and third quarter. We don’t see any change to that and it’s related primarilyin our mailing line, not the new supply area. So it is -- some effect due topostage but we believe that the economy clearly is affecting that as well.

Okay, great. Well, thank you very much.

And next we’ll go to the line of Josh Golden with J.P.Morgan. Please go ahead.

Good evening. A question for you regarding the balancesheet; given what the share price may do and the future outlook that you areforecasting, could you talk to me about the integrity of the balance sheet? Areyou willing to leverage it up? What type of share repurchases are you willingto do? Are you willing to take on additional debt to defend the share price?

I would say that we do anticipate that we will have anopportunity to buy in shares at what we believe will be an attractive price.And we will be looking at what kind of strategies make sense. Again, we haveauthorization now and we’ll be looking at it. But one thing I would say is our cash flow remains verystrong, and so the fact that we’ve increased our guidance for free cash flowindicates that we can buy in more shares without having an impact on the creditratios and balance sheet.

Are there any type of credit ratios that you are looking totarget within a range?

The ratio that we look at that tends to have the mostlegitimacy to the ratings agencies is EBITDA to debt, or debt to EBITDA toreverse it, and we look at it at roughly three times, and that what equates tothe rating agencies look at a more complex formula that separates out ourfinance receivables. But that tends to be our rule of thumb, three times. The other thing is we tend to look at returning cash toshareholders to the extent we get free cash flow. And if you look at what we’vedone over the last five years, we’ve returned all of our cash to shareholders,either as dividends or share repurchase. And we have done that withoutjeopardizing the basic credit statistics. In other words, even though we’veadded debt to finance acquisitions, that ratio of debt-to-EBITDA has been verysolid during that period.

Sure, that’s fair enough. So it is reasonable to assume thatthere won’t be in the future much of a deviation outside of that three timesdebt-to-EBITDA?

All I can say is that that’s the current targets, and asMurray said, we’re going to be looking at strategies that make sense to delivershareholder value. I don’t want to rule anything out but as of today, that isour intent.

Thank you.

And our next question comes from the line of Chris Whitmorewith Deutsche Bank. Please go ahead.

Thanks very much. I wanted to get a little more clarity onthe weakness you’re seeing in the U.S. capital spending environment. How muchof that was isolated within the financial vertical versus other end markets?Could you provide any color beyond what you’re seeing in financials?

I would say that in our case, that we are seeing it mostlyin the financial services vertical and there are a few others that had impact.For example, retail, people that are exposed to the home market, that would beanother area. But it just wasn’t enough of a factor to quantify for you, but Iwould say that in general, Pitney Bowes is very diversified across the economyand that’s one of our strengths. But on the other hand, again, we’re not immune so as you seeweakness in different sectors of the economy, that will affect our sales lineand our incremental revenue as opposed to our base revenue.

How much is the large financials, or the U.S.financials as a percentage of total revenue currently?

We estimate that overall for our revenue, it’s roughly 25%of our revenue would come from financial services industry.

Secondly, your business model has been shifting a bit fromrental related revenue to supplies related revenue, and this quarter suggeststhe supplies line is a bit more sensitive to the economy than perhaps therental line. So has the company’s cyclicality changed at all as the businesshas shifted more to a supplies base recurring revenue stream as opposed to arental base model?

There’s a slight change in the model towards supplies, butkeep in mind that much of the supplies is really related to the basic postagemeter, so in many ways it will be relatively constant, although you do havethese quarter-over-quarter issues. And I’d say that the business model, if you are looking forhow it’s changing, it’s probably more toward software as a percent of revenuehas come in, and even there though that we’re really emphasizing a maintenancestream as well as the sales stream.

Last question; it looks like receivables were up over 20%year on year. You mentioned the organic business --

Right. On an organic basis -- yeah, they were a source ofcash. They were actually -- we generated cash from receivables, so what you areseeing is really two things, primarily; currency and then the addition ofacquisition.

Have you seen any changes in bad debt expense ordelinquencies?

Well, as I mentioned, we definitely saw it related to themortgage industry and we are generally though looking at bad debt, the trendhas been favorable and we’ve not seen anything that would contradict what hasbeen a very favorable trend.

Okay. Thanks a lot.

Next we’ll go to the line of Vincent Lim with Goldman Sachs.Please go ahead.

This is Vincent on behalf of Julio. I think most of myquestions have been answered; just one really quick follow-up questionregarding the financial services vertical. Since you brought up mortgage wasone area of weakness that you saw, is there any other pocket within thefinancial services vertical, whether it’s commercial banks, broker dealers,capital markets, that you can point us to?

I’d say no. When we talk about it, it’s just more generalacross it and I think it’s hard to pinpoint but we have exposure to all of thelarge financial institutions. So just think about people that do large amountsof mailings.

Got it. Thanks.

And our final question in queue comes from the line of MattTroy with Citigroup. Please go ahead.

I think I’m done. Thanks.

(Operator Instructions) And there are no additionalquestions at this time.

Thank you all for your questions and spending the time withus this evening. As I said earlier, we are looking to and will always continueto be focused on enhancing return to our shareholders. Over the last 50 years,we’ve delivered over 12.5% total return to our shareholders and we intend tocontinue that trend into the long-term. We look forward to discussing with you on November the 15thmore specific actions that we’ll be taking to enhance our value. Thank you andhave a good evening.

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