Good morning, everyone. Thank you for joining us. We wouldlike to welcome you to Core-Mark Holding Company’s third quarter earningsinvestor conference call. (Operator Instructions) At this time, I would like toturn the call over to Ms. Milton Gray Draper, Director ofInvestor Relations. Please go ahead.

Thank you, Operator and welcome, everyone. I would now liketo read a statement about the use of forward-looking statements and othernon-GAAP financial measures during this call. Statements made in the course of this call that state thecompany’s or management’s hopes, beliefs, expectations or predictions of thefuture are forward-looking statements. Actual results may differ materiallyfrom those projections. Additional information concerning factors that couldcause actual results to differ materially from those in the forward-lookingstatements is contained in our SEC filings, including our Form 10-K and 10-Qand our press release. We undertake no obligation to update these forward-lookingstatements. We are holding this call to review our third quarter resultsand to answer any questions you might have. If you have additional follow-upquestions after the call, please give me a call at 650-589-9445. Joining me today is the Chief Executive Officer ofCore-Mark, Michael Walsh; and the Chief Financial Officer, Stacy Loretz-Congdon.Also in the room is Chris Miller, our Chief Accounting Officer. Our lineup for the call today is as follows: Mike Walsh willdiscuss the state of our business and our strategy going forward, followed byStacy Loretz-Congdon, who will review the financial results for the thirdquarter. We will then open up the call for your questions. Now I would like to turn the call over to your CEO, Mike Walsh.

Good morning, everyone. I hope that all of you got a chanceto see our MAPCO press release. We are very excited to be partnering with MAPCOto serve its 500-plus stores in the Southeast. We believe we won this businessbecause we listened to their needs and objectives and came up with creativeways to satisfy them. This is another example where our business model andmarketing strategies are resonating with convenience retailers. This contract, along with two other accounts that we haveadded to the roster this past month, and our expansion into Toronto,based on our agreement with [Cushtar], should increase revenues byapproximately 8% in 2008, holding everything else constant. We will begin delivering to these aforementioned newcustomers in early 2008. We have not completed our 2008 planning process so I’mnot prepared to give guidance revenue at this point, or revenue on guidance atthis point. However, given these events, I am sure you will agree that the nextyear is looking very strong for Core-Mark. While I am on the topic of guidance, it appears that we willfall short of our original 2007 guidance by about 2.6%. As our press releaseindicated, sales expectations for the year have been reduced, primarily due toweakness in carton sales. I remember being asked why we reiterated the guidancein August. At that time, I said we still had some balls in the air. In fact,there were three opportunities in play that I thought had a reasonable chanceof occurring that would have enabled us not only to meet but exceed theoriginal guidance. I didn’t want to lower expectations and then have to reversemyself. Now, two of these opportunities have basically been deferredby the customers and one we simply didn’t get. The two that have been deferredare still possibilities for 2008. I will be delving into sales trends for thequarter in a…

Thanks, Mike and good morning to everyone. I would now liketo take this opportunity to recap some of what Mike said and to provide alittle more detail on the financial results for the third quarter. Sales to our customers for the third quarter showed a slightdecrease of 0.3%, or approximately $4.5 million compared to the same quarterlast year. There are several factors to consider when reviewing revenue. First,we have a decline of about $72.8 million in revenues in the third quarter, dueto last year’s move by Imperial Tobacco, the largest Canadian cigarettemanufacturer, to deliver their own product directly to the stores. This will bethe last quarter where it will be necessary to track these sales and carve themout in order to compare apples-to-apples. More importantly, these lost sales were offset by realgrowth of approximately $68.3 million, or a 4.9% increase over base sales lastyear. This increase is net of both gains and losses to existing customers, inaddition to sales to new customers. The Pennsylvania division sales are not called outspecifically, since we enjoyed sales for the entire third quarter in bothyears. As Mike indicated, after adjusting for Imperial, cigarettesales dollars are up 3.4%; however, carton volume is down 2.8%. Despite thedecline in carton volumes, cigarette sales dollars were up because of increasesin product price, excise tax, foreign exchange rates, as well as a slight improvementin gross profits per carton. Non-cigarette sales increased 8.2%, assisted slightly byforeign exchange rates and more specifically, improvements in our fast food,general merchandise and snack categories. Included in our total net sales for the quarter isapproximately $14.5 million related to foreign currency exchange gains offsetby a $21.9 million decrease in excise taxes. Approximately $10 million of theforeign exchange gain is in the cigarette category and the excise tax declineis due primarily to the loss of Imperial’s…

(Operator Instructions) Our first question comes from[Blaine Marter] with [Lobe] Partners.

Mike, in your initial statements, you clearly sound a littlebit excited about your prospects for 2008, and so two questions about that;first on the revenue side, you said up 8% excluding -- leaving everything elseconstant. Well, if I don’t leave everything else constant, should I assume thatthe core business ex your recent contract wins has some amount of organicgrowth in them?

One would certainly think so. Those were two or three veryspecific opportunities that we got, but rest assured, we plan to grow thebusiness outside of those three opportunities.

Okay, terrific. And with the top line growth, can youachieve, at least holding the margins flat, such that that will carry intooperating income growth, if not maybe get a little leverage on the operatingside?

Well, yes we do. We will certainly be planning our year todo just that, as that’s the model. We grow our revenues, we hold our operatingexpenses to something less than our revenue growth and it has wonderful effectson the bottom line. So we are certainly planning to do that.

Okay, but between Canada and MAPCO, what is the mix going tobe in terms of cigarette versus food, non-food? Are those revenues going to beas efficient, if you will, on the gross margin side as just your normaleveryday business?

Fair enough. The Toronto division I think is separate fromwhat I would say about everything else in the business. The Toronto division isa start-up. We have basically one contract, an anchor tenant, if you will, with[Cushtar]. Now, we are going to be spending the first quarter pretty muchdevoted to having a smooth rollout so that all the stores are -- the service isgreat. The degree to which we are successful in Toronto, however,will depend upon our ability to grow independent sales and other chainbusiness. And as those sales come online, our profitability -- that’s when ourprofitability will start to be impacted favorably. The key to Toronto in my mind was not only being able topartner with Elaine Bouchard in this venture but it really positions us totake, to have the platform in Ontario where most of the population is, toservice the other national chains in Canada, like Esso and PetroCan and soforth. That really -- as those contracts come online and if we are successfulin -- and we’ll always have to compete for the business, but we are prettyoptimistic about our ability to compete because at that point, we become moreof a one solution for the big chains in Canada. But Toronto, and I think that question came up a call or twoago, Toronto is not going to add a lot to our profitability in 2008. However,putting that aside, I expect us to continue on the path of growing our marginsand growing our profitability not only with MAPCO and these other two accountsthat I won’t mention, but just the opportunities we have in growing VCI and thefresh. I just got back from a long trip, 8,000 miles last week and Ivisited a number of divisions and I came back really filled up with theenthusiasm and the prospects that I’m seeing from our divisions in the freshcategory. So I think 2008 is going to be a very good year for us.

Thank you very much.

Our next question comes from Richard Whitman from BenchmarkCapital.

Regarding the MAPCO business, that’s a division of DELEK, isit not?

Yes.

Is it not true that they are planning to take these 500stores to 750 stores?

Well, I don’t want to comment on behalf of [Ezra] and whattheir plans but certainly I think if you look at their history, they havedemonstrated an inquisitive attitude and I have no reason to believe that thatwon’t continue. We believe they are in that mode but that’s something Ican’t speak for him about.

Okay. I think they may have stated that publicly on theirwebsite, but okay. Second question, regarding the Ameristop bankruptcy and thefact that you have a personal guarantee, do you have any knowledge orinclination that in fact the principal behind it can honor that personalguarantee?

The answer to that is no, because I think we don’t know nowexactly what his personal debt would be but we are optimistic that there willbe something there. But I don’t think that at this time, we know what thedegree of recovery will be, but I can say we are pursuing it very aggressively.

Okay, fair enough. Third question, Mike, I’m going throughthe proxy, you know, if you ex out options, there really is very little insiderownership by management and the board. Is there any plan for management and theboard to buy some stock in the open market?

That is certainly a topic of conversation. It is sorestrictive in the time that you can buy stock and frankly, all of us are alittle bit paranoid about buying and selling stock in the world we live in. I don’t know if I can speak for the board but I think thatall of us would like to, but there’s these very narrow windows of what you cando and --

Well, but Mike, I mean, insider buying goes on all the timeand other executives or directors of companies don’t have a problem with it. Thewindows just revolve around your reporting periods, which means there’s a bigchunk of the year in which you can buy stock.

Yes, but that’s a -- it depends on what you know and whatyou don’t know, and it’s complicated. All I can tell you -- I really can’t --that’s not a topic I can discuss publicly.

All right. We’ll let that go. I’ll let someone else takeover now. Thank you.

Our next question comes from Jonathan Lichter with Sidoti& Company. Jonathan Lichter -Sidoti & Company: Was there any impact from the California fires?

No, not really. First of all, our first concern was ouremployees and our customers. None of our employees were materially affected bythat and the customer base seems to be holding pretty strong, so our businessout of Corona has not -- we’ve not seen much of a change because of the fires. Jonathan Lichter -Sidoti & Company: Okay, for 2008, are you assuming that the SCHIP legislationgets passed one way or the other?

I can only tell you what we read and the discussions we havewith the cigarette manufacturers and so forth. I mean, Bush is obviously veryadamantly opposed to it and I guess it’s -- I think the call is 50-50 as whatthe industry thinks and what you hear about congress, and a few swing votes andit could go -- I think congress is trying to work hard to come up with acompromise that Bush will accept, but so far they have not been able to. I think it is going to be very, very close -- too close tocall. Jonathan Lichter -Sidoti & Company: But in your assumptions for next year, are you assuming thatit does get passed or do you think it will be defeated?

Well, in our business plan, we have assumed that it will notpass. Jonathan Lichter -Sidoti & Company: That it will not pass. Okay, and lastly, what percentage ofyour distribution centers currently can handle fresh food?

We have -- we’re in part of a construction program and Ithink I reported to you that we’ll be 80% through with our getting all thedivisions with the necessary facilities to handle it, and we’re right onschedule with that. Eighty-percent of our divisions will have that capabilityby 12/31 of ’07. And the other -- the remaining divisions are coming on, Ithink we get three more in the first quarter. One division is predicated on alease expiration and looking at a new location and so forth. That last one maycome a little later but we are going to be essentially completed by mid-’08. Jonathan Lichter -Sidoti & Company: Thank you.

Our next question comes from Kevin Starke from Weeden & Company.Please state your question. Kevin Starke - Weeden& Company: Mike, about Ameristop, since there’s not a lot of publiclyavailable information about them, I’m left to ask you. It appears that they area 140-store chain that’s entirely franchised. Is that correct?

No, about half the stores are franchised. Kevin Starke - Weeden& Company: Okay, so the debtor in your case would be the parent and itscompany-owned stores, not the franchisee?

Yeah, the way it worked, the franchisees paid Ameristop andAmeristop paid us. Kevin Starke - Weeden& Company: Okay, so effectively sales to the entire Ameristop chainflowed through the parent one way or another?

Right. Kevin Starke - Weeden& Company: As did the receivables?

Right. Kevin Starke - Weeden& Company: Okay. That’s enough of that question then. You just cameback from NACS you said. Did you get any sense from your discussions thereabout what the organic growth rate is currently in the convenience storeindustry and how it might look in ’08?

First of all, the only factual information I have --anything I tell you would be anecdotal -- the only factual information I haveis the state of the industry report, and they are always a year late. You getthe 2006 numbers, which says in-store sales were up 8%. I didn’t sense anything just -- I didn’t ask that specificquestion of the folks that I bumped into, but I didn’t get a -- I thinkeverybody at NACS is groaning about gas margins and about the price of gas, butI didn’t get a lot of sense about in-store sales declining or anything likethat. Kevin Starke - Weeden& Company: The convenience industry has sort of a pock marked historywhen it comes or recessions. They did very badly, if I recall correctly, in the’92 recession but did reasonably well in the 2001 recession. How do you feelthey might do if we were to enter a recession in ’08? How do you think thatwould bear on Core-Mark's revenue?

Interesting question. It’s the question -- I was on ageneral panel with a few other CEOs, a discussion panel in the general assemblyon Thursday morning and that very question was asked of all of us, and all ofus responded by the industry -- if you are going to be in an industry, I wouldrather be in the convenience industry during a recession than most otherindustries, mainly because people, they’ll stop buying refrigerators and carsbut the bananas, the smokes, the Snicker bars, the fresh product, things likethat -- people are going to be slow to curtail those purchases. I think the consensus of the panel was that the industry isrecession resistant but not recession proof, that it will affect us butprobably not as much as it would affect other people. Now, my own personal experience with Core-Mark is that Ithink even during the periods of recession, I think we did very well, mainlybecause our opportunity is we have such a small market share that we can offsetthat by continuing to grow market share. So I don’t -- I’m not really concerned and would not usethat as much of an excuse if we get into a recession. Kevin Starke - Weeden& Company: The ’91 recession, the problem with the convenience storeindustry was generally that it was overbuilt and over-levered and that gascompanies had come up and entered into too much head-to-head competition withthe incumbents, like Southland’s. Do you get any sense of whether we’reoverbuilt and over-levered today?

No, I do not have that same sense. I remember quite well thecredit crunch that went on in -- actually, there was a bit of a credit crunchin 2000. The industry, there was a credit tightening but -- and I’m sure -- andit did affect some people, there’s no question about it. But people that arestrong and they have good marketing programs and the -- they are going to besuccessful and I think Core-Mark is going to be successful if that same thingoccurs. However, I did not get a sense from people at NACS about asimilar kind of issue regarding credit or -- like I said, everybody is harpingabout gas prices. That is by far, and credit card fees -- those are the two bigtopics. Kevin Starke - Weeden& Company: Thank you.

Our next question comes from Blaine Marter from LobePartners.

Mike, you’re on the Board of the company?

Yes.

And you guys have executed the business fairly well sinceyou came public again, except for the unfortunate Imperial Tobacco loss. Yourstock is about where it was -- I mean, really there’s been no upwardappreciation, yet you guys continue to do a good job. You picked up Kline,which seems like a favorable acquisition for the company. You are growingorganically. What in your mind do you think it will take for the marketto recognize your efforts, number one? And number two, is the board prepared todo something to make the market recognize, be it maybe sell the company? Andnumber three, are you doing anything to get more research coverage on yourcompany?

I agree with your observations. I think if you track whatwe’ve done over the last three years that the price doesn’t exactly reflectthat. There’s not a lot I can do about it. I think the market obviously -- Ithink a lot of companies have been hurt in the last month, given the overalldecline in the market. The market is bouncing around quite a bit. We have bouncedaround. I mean, we went way up in the first six months, then way down, and thenup pretty good and then just recently kind of back down again. And through thatwhole period of time, I think our performance has been pretty steady eddy, so Ithink it has more to do with our investor base looking at various investmentopportunities and moving in and out, and I think that is not reflective of whatthe company is doing. So the only thing I can do is to continue on this course. Ido believe at some point in time that as we make acquisitions, continue to makeacquisitions, continue with our VCI, and continue to grow our margins, I thinkit’s going to attract investors that see this and value this and will actaccordingly. Now, as far as looking at our strategic options, which we’vetalked about many times, I will just say to you that the board is activelylooking at all of our strategic options. They are not passive about this. Theyare looking and I don’t know what’s going to happen with the capital structureor the ownership structure of the company going forward, but if opportunitiescome along I think the board is going to look at that, as they have and willcontinue to do so. But obviously that’s not something I can talk to in detail,but rest assured we understand -- I think we see the same thing you guys seeand if the right opportunity comes along, the board is going to act in the bestinterest of all of you guys. That I am absolutely confident in. And as far as the -- what was the last part of his question?

Are you trying to get more research analyst coverage foryour company?

Yes. Milton, do you want to opine on that?

We continue to try to get additional coverage that’sappropriate to our story and until I get the commitment from the various peoplethat we are in discussions with, I think it is probably not appropriate for meto benchmark that. But yes, we understand that that will help. In addition, we’ve done a lot of marketing this past yearwhich I think has helped, and we’ll do additional -- more marketing next year.So we think the combination of those two will get our story out and hopefullythis market will respond accordingly.

Fair enough. Thanks a lot.

At this time, I am showing no further questions.

Okay, well, thank you for your interest and if you have anyfollow-up questions, don’t hesitate to give us a call.

Thank you, ladies and gentlemen. This concludes today’sconference. Thank you for participating. You may now disconnect.