Good afternoon. My name is Mary, and I’ll be your conferenceoperator today. At this time, I would like to welcome everyone to the WarnacoGroup Incorporated Third Quarter 2007 Earnings Conference Call. All lines havebeen placed on mute to prevent any background noise. After the speakers remarksthere will be a question-and-answer period. (Operator Instructions) Thank you. It is now my pleasure to turn the floor over toyour host, Vice President of Investor Relations, Ms. Deborah Abraham. Ma'am,you may begin.

Thank you. Thank you everyone for your patience. We apologizefor the delay. We had a little technical glitch with the wire service thisafternoon. We’re going to begin with a business overview by Joe Gromek, WarnacoPresident and CEO, Larry Rutkowski, our CFO will briefly review financials andour Group President who will take you through some segment highlights. And thenfollowing our comment we’ll give you an opportunity to ask questions. Today's comments are based on Warnaco's as adjusted results,which exclude the results of the designer swim brand to be discontinued, aswell as, restructuring expenses. The company believes it’s important for usersof the company’s financial statements to be need aware of the adjustedfinancial information, as these measures are use by management to evaluate theoperating performance of the company’s continuing basis on a comparable basis. A reconciliation of actual results to the as adjusted resultis available in the schedule the company today's press release, which can befound on the website at www.warnaco.com.We also remind you that as in the past our Group President will discusssegment-operating results excluding the allocation of shared services expenses.These allocation amounts can be found in the tables attached to our earningsrelease put out this morning -- this afternoon, as well as, our Form 10-Q. Finally, today's call may include comments concerning theWarnaco Group's business outlook and may contain forward-looking statements.Any forward-looking statements and all other statements that maybe made on thiscall that are not based on historical fact are subject to risk anduncertainties, actual results may differ materially. Information concerning a fact -- a number of factors thatcould cause actual results to differ materially from the information that willbe discussed is available in Warnaco's filings with the SEC including Warnaco'sForm 8-K furnished today. Now, let me turn the call over to Warnaco’s President andCEO, Joe Gromek.

Thanks, Deborah. Good afternoon. We are very pleased withour third quarter results, which reflect continued positive momentum in ourglobal business, strong response to our product offerings worldwide and thebenefits associated with the greater concentration of international anddirect-to-consumer revenues. Top line revenues were up over 13% and operating incomeincreased 28%. A 200 basis point increase in gross margin this quarter helpdrive a double-digit operating margin. In the third quarter, we continue to execute on a keystrategic initiatives namely maximizing the opportunities of our Calvin Kleinbrands, growing our direct to consumer business and expanding globally. We continue to capitalize on the international appeal andpotential of our powerful Calvin Klein properties. For the quarter, CalvinKlein worldwide revenues grew 23%, well above the targeted annual goal of 15%. We benefited from the growth in the Calvin Klein businessboth domestically and abroad, as well as, through the direct-to-consumerchannels. We continue to believe we can double our $1.2 billion Calvin Kleinbusiness over the next four to five years, expanding and optimizing thispowerful portfolio. We also grew the direct-to-consumer channel, our ownedretail revenues accounted for 18% of total company revenues. Our retailbusiness continue to yield strong returns during the quarter with four wallcontribution margin in excess of 20%. Retail revenues increased 32% and as we expanded the storebase and increased productivity. At the end of Q3, we operated almost 700points of retail distribution and now expect to exceed the targeted 50,000square foot increase in retail space this year. Our international business continues to out perform,revenues increased 26% and for the first time accounted for more than half ofthe company's total business. The revenue growth was particularly strong inEurope and Asia increasing 37% and 24% respectively. The developed markets inEurope and Asia continue to record significant gains in revenues andproductivity. We are excited by the progress in developing markets aswell, where we continue to register strong growth expanding the global CalvinKlein footprint. In China we are looking at 60% year-over-year revenue gainsand the business in Russia and Eastern Europe will nearly double in 2007. After looking critically at our business, we determined thatour financial resources and management focus are best spent on those brandsthat provide the greatest long-term growth opportunities. Therefore in the third quarter we announce the restructuringof the swimwear business, we completed the transfer of the Mexicanmanufacturing operations and are making good progress under disposition of thedesigner swim brands. We are also in the process of exploring strategicalternative for the Lejaby business. Looking ahead, we feel good about our business. While thedomestic environment is challenging over 50% of our revenues and a majority ofour profits are generated outside the US. The diversified global businessmodel, our unique profile and powerful brands are contributing to the strongperformance. The positive momentum of the past several quarters hascontinued into Q4 and we believe that fiscal 2007 will represent a year ofsignificant growth for Warnaco and enhance value for our shareholders. Now, let me turn the call over to Larry to review thenumbers.

Thanks, Joe. For the quarter on an as adjusted basis, netrevenues rose 13% to $473 million and gross profit margin increased 200 basispoints to 43%. SG&A as a percent of net revenues rose slightly to just over31%, driven by the mix of international interactive consumer business, as wellas, $2 million of incremental marketing expense. Operating income increased 28% to $51 million, compared to$40 million in the prior year quarter. Our effective tax rate in the quarterexcluding the impacts of restructuring and discontinued operations was 27%,compared to 22% in the prior year quarter. As a reminder, last year's tax rate substantially benefitedfrom the previously disclosed Netherlands taxing authority. Income fromcontinuing operations was $31 million or $0.67 per diluted share, compared to$28 million or $0.59 per diluted share in the prior-year quarter. Our business continues to generate significant cash. As ofSeptember 29, 2007, cash and cash equivalents were $189 million, compared to$113 million at September 30, 2006. During the nine-month period endingSeptember 29, 2007, the company used approximately $31 million to repurchasecommon stock understand our share repurchase program. As a result of the restructuring process, we didn'trepurchase any shares in the third quarter. We continue to have authorizationto repurchase approximately three million shares. While reported year-over-yearinventory was down 6% due to discontinued operations on a comparable basisinventory was up 10%, while revenues rose 13% in the quarter. Now, turning to our outlook for the year. Based on thecontinuing positive momentum in our business we are raising our guidance. Forfiscal 2007 on an adjusted basis, which excludes the designer swimwearoperations to be discontinued and restructuring expense. We now expect revenues to grow 11% to 12% over comparable2006 levels and we expect income per diluted share from continuing operationsin the range of $2.10 to $2.18 assuming minimal pension expense. Now, let me turn the call over to Helen to review intimateapparel and swimwear.

Thanks, Larry. Positive results continued in the thirdquarter for the Intimate Apparel Group led by an impressive 27% increase inCalvin Klein underwear, total revenue was up 19%. Sourcing initiative and strong retail performance across allsegments contributed to nearly 400 basis points improvement in gross margin. Asa result, operating income yielded a 21% margin, which is a 35% increase. The launch of Calvin Klein Steel has exceeded all of ourexpectations. Retail sales are well above what we planned and we are chasingproduction to keep up with demand. This is a perfect example of the impact ofcompelling product supported by strong marketing and in-store display and willservice the model for future launch. The success of Calvin Klein Steel fueled Calvin Kleinunderwear to deliver one of its highest revenue quarters in history.Consistently, strong performance around the world generated double-digitrevenue increases in every geography and in wholesale and direct-to-consumer.We continue to gain market share increases in both men's and women's, and webelieve there are still considerable room for growth. Our strong revenue results translated to improveprofitability with an operating income increase of over 36%. It was a greatquarter for Calvin Klein underwear. With continued emphasis on deliveringinnovative product and marketing supported by the most recognized designerbrand name worldwide, we expect double-digit growth to continue in upcomingyears. We are also pleased with the results in our core intimatebrands. Both Olga and Warner's are enjoying market share gains with very strongresults from new styles and expanded distribution of Warner's into J.C. Penney. While revenue was down slightly due to reduced-off price inclub volume, shipments to full price customers were up as was operating income.Key metrics are all headed in the right direction and we have got positivemomentum as we move forward into 2008. Turning to swimwear, we announced previously that we willdivest or exit all swimwear brands except Speedo and Calvin Klein. That plan isbeing executed and progressing nicely. For Speedo and Calvin Klein thirdquarter results were below the prior year but were as expected. The third quarter is generally a low shipping period forswimwear and as a result is not particularly significant. Revenue for thequarter was down roughly 12% versus last year. This is due to reduction inSpeedo shipments to club, which is mostly a timing ship of our girl's swimseasonal set. Gross margin was negatively impacted for the quarter due toinventory charges, as well as, under utilization in our manufacturing operations. The transition of our manufacturing facility to a thirdparty is complete and it is expected to provide benefit in 2008. We've alsoright size to swimmer swear division to reflect our focus on Speedo and CalvinKlein. We are in the early stages of developing our long-rangeplan; I am impressed with the quality of the team and the enthusiasm for theSpeedo brand and optimism of our potential. Let me turn the call over to Frank to discuss sportswear.

Thanks, Helen. The Sportswear Group registered anotherquarter of solid performance. Revenues increased 40% to $265 million, grossprofit gained 250 basis points to 46.2% and operating margin was down slightlyat 16% of net revenue based on planned increases and SG&A to support infrastructureand store expansion. Starting with the Chaps brand. Net revenues declined $5million to $45 million due primarily to compression of department store salesin Canada and the timing of club sales in Mexico. Although, we experienced the decline in revenue, ouroperating income improved from 11% last year to 14% this year driven by a 240basis point increase in gross profit. The operating improvement reflects theteam's focus on presenting trend right product and incorporating the estheticsand quality inherent to the Chaps brand and insuring inventory levels are inline with sales. Despite the effect that the warm weather has had onretailer's traffic in comp store sales. Our sell throughs for the quarter wereat or above last year's levels resulting in decreased markdowns and turns. We continue to focus on product presentation, competitiveprice positioning and aggressive marketing for the remainder of the year, as wedrive towards annual double-digit margins. Now turning to the Calvin Klein Jeans sportswear worldwide,where revenues increased 21% to $220 million with operating margin of 16%.Revenue in the Americas increased by 9%, while operating income grew to 21% ofnet revenue, a 100 basis point improvement over the prior year. The department store channel was exceptionally strong in thequarter offset by a decrease of shipments to the club channel. Our new fallassortments are experiencing very positive sell throughs in both the tops andJeans segment, and I believe we are well positioned for the holiday sellingperiod. The European and Asian marketplaces had a powerful quarterrecording revenues of $138 million, a 30% year-over-year increase withoperating margins of 14%. All aspects of the European and Asian businesseswholesale and retail, men's and women's along with accessories and CKsportswear posted positive revenue gains. Operating income in Europe and Asia increased by $1 millionin the quarter, as operating income results were impacted by the investmentnecessary to support our retail expansion and the timing of certainadministrative costs primarily related to a one-time SOX compliance expense. .:

That concludes our prepared remarks. Operator, would youplease begin the question-and-answer session?

(Operator Instructions) Our first question comes from SeanNaughton from Piper Jaffray. Please go ahead.

Hi. How are you guys doing today?

Great, Sean.

First of all, congratulations on a nice quarter in Q3. Ijust have a couple of quick questions. One is around Europe, it sounds likeEurope and Asia are both doing very, very well. Can you break down further are you comfortable with sayinganything specifically with how you are doing in specific geographies within anyone of those groups?

Certainly. Sean, I think we indicated that our Europeanbusiness is up 36% and the Asian business was mid-20s and we were seeing thegrowth in Calvin Klein underwear and in Calvin Klein Jeans. So both businessesreally had just phenomenal results in the third quarter.

Yes. Is there anything specifically with any geography orlike, are you seeing any better traction within Spain or UK, etcetera thatstuff?

Yes. The Spanish market is hot for us for some time, I thinkour premiere customer there El Corte Ingles is experienced excellentsell-throughs and expansion of all the Calvin Klein properties that we have. We've also seen, pretty positive results in Italy and on theJeans side, they see an explosion going on in Eastern Europe specificallyRussia.

That sounds really good like Eastern Europe and Russia bothsounded strong. And then specifically on the intimates business you mentionedthat some of the improvements in gross margin came from sourcing. Could you just talk a little bit about the specific sourcinginitiatives you guys have in placed I know that you've have obviously divestedthe part of the piece that was Speedo or you have an agreement with Mexico. Butis there anything else, could you talk a little bit more about the sourcinginitiatives with an intimates?

Well, I think there sourcing initiatives are right acrossthe board. Not just with intimates. And as you know we took over the -- ourglobal sourcing operations about 18 months to 20 months ago and from a thirdparty and that has provided us with several points of margin opportunity and wecontinue to work in centers of excellence around the globe to provide us withsuperior product and competitive pricing and I think our team has done aexcellent job. Specifically intimates if you have a comment, Helen please jumpin.

On Calvin Klein underwear in particular I would mention thatwith our taking the sourcing it helps in creating our own office in Hong Kong.It's really giving us the visibility and the ability to roll up globalrequirements, which has helped us negotiate lower price points on some reallybig volume items. So that's one key area that has helped us.

Okay. And then finally last question about the swimbusiness. It sounded like it was a little bit down versus last year but itsounds like that was part of the plan. Do you guys have anything specific thatyou are thinking about for -- the Olympics coming up next year anything aboutthe point of sale or anything fixed range, you guys plan on doing thecapitalize on that opportunity?

Yes. I’ll let Helen take that one because last week I had anopportunity with Helen to view what's going on in Los Angeles in the collectionthat they put together, so Helen please take him through that.

We have a lot of plans throughout in the Olympics theycertainly think the merchandise here in '09 will be a great jumping off point,which actually kicks off with the Olympics. We've developed in storemerchandising and secondary out post displays featuring Michael Phelps in avery big way. And so we've got totally compelling fixed range and point ofsale materials that were offered to the retailers in addition to some greatproducts for all channels of distribution. So I really think that the Olympics will be a great kickoffpoint and we intent to maximize or optimize that opportunity as our associationwith the Olympics. So I think will be in good shape, we are very excited aboutit.

I think one of the key factors that Helen mentioned wasacross multiple channels of distribution. So there will be an Olympic offeringfor each of the channel that we trade in, you know, that Speedo trades rightacross the board.

Yes. Great. Thanks so much. Appreciate your time.

Thanks.

Our next question is from Todd Slater from Lazard CapitalMarkets. Please go ahead.

Hi. This is actually [Jennifer Davis] in for Todd andcongratulations on a great quarter?

Thanks, Jennifer.

I have a quick question based on guidance and I haven't hada chance to come through all the additional schedules in the press release yet.But have you gone back or could you go back and restate Q1 and Q2 on an applesto apples basis so we can get to the full year number and adjusted results oris it in there?

Yes. Jennifer, Jennifer, actually schedule eight shows thediscontinued operations, as well as what we expect to be discontinued in thefirst half of '08, by quarter, first, second and third both for '07 and '06.

Okay.

And should provide you that road map.

But you have gone back and backed out the discontinuedoperations from Q1 and Q2 of '07?

Yes. We have given you the details on that schedule.

Okay. Thank you. And then, I was wondering if you could talka little about the structure of your international locations, are most of themlicensed locations and how are they set up?

Actually, you know, they are owned locations and primarilyand where we still have some distribution rights, we tend to claw those backover time. One of the unique qualities of the Warnaco operation todayinternationally, is we do have a global platform. We are set up by region and by country, we have countrymanagers which handle multiple brands for us and I think this is candidly thebeauty of our operation today and affords us the opportunity of leveraging thetalent in the organization across brands and customer relationships as well.

Our next question comes from Brad Stephens from MorganKeegan. Please go ahead.

Hi. Good afternoon. Joe, you talked about wanting to doubleyour CK revenues through the next four or five years, which will take you Iguess from a projected to $1.2 billion again at this year this today $2.4billion or $2.5 billion, over that period which would imply $250 million to$350 million a year of revenue growth or that be straight line or we back inloaded, how should we think about that?

Well, I think Brad, we've suggested for some time that 15%revenue growth for Calvin Klein properties would be a good benchmark for us.

Okay. And can you go little bit further and break that downfor us. Jeans versus underwear domestic versus international and then maybesquare foot as growth how does think about that in your retail locations goingforward?

Okay. The first part is pretty easy. The domestic businessis a low single-digit increase the international business is as mid teens plusincrease. From a product standpoint, I think both like -- I think the CalvinKlein jeans business is where we initially saw the great opportunity. Having said that, Calvin underwear has just had a phenomenalrun over the last three years. So we see both doing quite nicely. By geography, Europe I think is surprising us with itsstrength, you know, our businesses in, I think, as we indicated, our businessin China has grown by 60% this year and we expect Russia to and Eastern Europeto double in '07 and we think we are just scratching the surface in thisregard.

And square footage at retail, 50,000 square foot a year?

Yes. Well, we initially established 50,000 square feet for2007 and that was going to be an approximately 20% increase on our 250,000square feet. For '08 right now we are planning on 80,000 square feet and youknow, I think we have an opportunity to even beat that number. So we would like to continue to grow at a minimum of 20% andif the real estate is available and the opportunities exist, we believe thatthis is an excellent -- use of the cash on hand and we will continue to pursuethis aggressively.

Fantastic. Best of luck.

Thank you.

(Operator Instructions) And our next question comes fromGretchen Hoggey from JP Morgan. Please go ahead.

Hi. Thanks for taking my question. Just wanted to ask haveyou met most of your holiday shipments at this point, do you think you read yeton the holiday season, how it is going?

Well Gretchen, we shipped a bit more in October then wetypically ship, so we are pretty pleased about that. So and we are beginning tosee the results of some of those shipments. I remember half of our business isdone outside of the United States and a lot of it is done at retail. As of now, there are not many surprises I think that, youknow, we are seeing positive results in most quadrants and the domesticbusiness is still running better than we expected considering everything we arehearing about the economy. Our brands are performing at a higher level I mustsay and internationally we continue to do very well, so we are optimistic aboutQ4.

Okay. Great. And are you finished with your holidayshipments at this point?

Well, we have a good deal of inventory to ship in Novemberand December, you might say that December shipping is on the spring side of thebusiness and November, the combination of replenishment product and some newgoods and some of the introduction of the introduction of swimwear of Speedo.So, we'll continue to ship through the balance of Q4.

Okay. And just to confirm you are not thinking that theretailers are more conservative than last year from your standpoint?

I think they are very conservative but fortunately ourbrands are performing and the Calvin Klein brand is doing well domestically aswell as internationally. It's hitting the ball out of the park, so we arepleased with that. And I think as you heard from my colleagues, the Chapsbusiness performed well both Olga and Warner's and intimates have performedwell, so again we continue to be optimistic.

Okay. Great. Thank you very much.

Our next question comes from Clark Orsky from KDP InvestmentAdvisors. Please go ahead.

Yes. Larry just a quick question, do you have thedepreciation and amortization for this quarter and the last year's period on anadjusted basis?

Yes. Larry just a quick question, do you have thedepreciation and amortization for this quarter and the last year's period on anadjusted basis?

The depreciation and amortization for nine months today isjust over $50 million. The in terms of the overall amortization I think to dateis $10 million nine months to date. Let me give you amortization for thequarter is just under $3 million amounting. In terms of look-forward, you can -- we disclosed in ourfilings that next year amortization should be at about $9.5 million. Anddepreciation on a normalized quarter would run $9 million a quarter at thispoint. Does that help answer you Clark?

Yes. That's great. And what’s revolver availability at theend of this quarter?

Yes. That's great. And what’s revolver availability at theend of this quarter?

The revolver availability as I recall is approximately $200million today in the ballpark.

Okay. Great. Thank you.

Okay. Great. Thank you.

Sure.

Our next question is coming from Susan Sansbury from MillerTabak. Please go ahead.

Hi. Thanks very much. I have two questions. Joe, when youmentioned the -- if you will, the backlog the shipment number between Novemberand December or the December inventory going for spring '08. How did the retailers or can you share with us. How theretailers ordered for spring '08? That's an open-ended question. But I mean, doyou think that they are continuing to be very, very cautious and do you expectsome follow-on orders as we get into '08 or because we know they are being,they are trying to sit on inventory as the year closes out?

Yes. Susan, from our vantage point, first, they purchasedthe spring goods from us four, five months ago.

Okay.

So I think the environment was different, we had nosurprises at that time. You know, our brand were performing well, the productswere reviewed by merchandising teams that came in and valued the productofferings as appropriately as they saw them. And we believe that our products are trend right and ourperformance at retail around the globe was pretty positive and therefore, Ithink we got our fair share of what we would expect and so no surprises.

Okay. It sounds silly in this environment but your abilityto chase goods?

It is very difficult to chase goods. You know, we arelooking at a supply time that’s, given transportation, raw materials andeverything. If we had raw materials sitting in a factory, we might be able todo something within 60 days if the raw material are not sitting there it wouldtake us much longer.

Thanks. And then a question with respect to the sharerepurchase program. I guess it depends on the timing of these restructuring ordivestiture initiatives. Is there a time frame? Can you -- are you at libertyat this point, it's only been a month since you announced these but do you havea better idea when some of these initiatives will be completed?

Well, Susan, the good news is we ended with $189 millions incash at the end of the third quarter and as we said our priorities continue tobe invest in the business and the combination of debt pay down and sharerepurchase. And as you know, we were precluded in the third quarterbecause we had information of the restructuring that was not available to thestreet. So now with that change, we can definitely look at and I think we saidthat we anticipate the 3 million shares over the next several or roughly threeto four years.

Okay. So, but, are you in any way restricted from purchasingthe shares by the -- and the agreements you have with Financo etcetera in termsof implementing these initiatives to divest?

Susan, the restrictions were in the third quarter when wehad information that was not, that was material that our investors were notaware of.

Okay. So the restrictions are off at this point?

That's correct.

Okay. And debt repayment, if you had to prioritize, well Iguess never mind. All right. I appreciate it. Thanks ever so much. Greatquarter.

Thanks.

Our next question comes from David Glick from BuckinghamResearch. Please go ahead.

Thank you. Good afternoon. Congratulations to the team on anexcellent quarter. I wondered, if I could just get a little bit of helpunderstanding Q3 versus Q4, obviously it's tough for us to estimate, quarterlyearnings from -- due to club time and club shipments. And we've all done ourbest effort to restate the last year's numbers given the structuring you'veannounced. Could you walk us through why Q4 would be down relative tolast year, if we've in fact restated it correctly as the timing in clubshipments are you being conservative? Just can we have your thoughts about Q4of all, since your last announcement and if you just help us to understand onthe year-over-year basis that will be helpful?

David, I'll give you generalization and pass it over toLarry. Remember last year, we were heavily back loaded to the second half ofthe year and specifically Q4, I think the good news for us right now is thatwe've been able to in fact live with the more normalized shipping pattern andit's a much more comfortable place to be. Larry you want to…

Sure.

Comment on the specifics, please.

Yes. Dave as Joe indicated in the fourth quarter last yearwe were heavily loaded especially with the club shipments, which we've beensaying all year we shipped earlier in the year. As I said, in the second quarter earnings conference call,we also had a increased marketing spend and that will be -- diligently willshow in -- our expect to show an increase the marketing spend in the fourthquarter year-over-year. And I think also, David. The other two important things, oneis that the tax differential is worth, yes, a roughly $0.05 to $0.06, that'sbecause we got the favorable ruling last year from the Dutch authorities, whichwas spread in the -- over the last half of the year, equally in the third andfourth quarter. So, that tax benefit will help us. Plus the -- I am actuallyhurts us this year and helped us last quarters. And in terms of the last pieceis you know, that the fourth quarter as reported will be adjusted down by about$0.05 to $0.06. And given the discontinued operation that we've announced inexcluding the restructuring expense.

And that should be for example, was profitable the lastfourth quarter?

Exactly. Pulling out the Lejaby profitability, pulling outsome of the designer swim set, actually were profitable in the fourth quarterand those adjustments.

Okay. Great. And how would you characterize your outlook nowfor Q4 you still have obviously, a couple of months ahead of you and would yousay that your outlook, you still feel it's conservative or you feel like thisis a realistic outlook for the balance of the year?

We think we provided you with prudent information at thispoint.

Okay. And then, one last question about next year you'vegiven us some color on how we should think about the revenue growth rate butexpand to the total company beyond just Calvin Klein. Should we think of -- your international business as kind ofup load it, low double-digits on the top line in domestic couple of load singlefor more of the kind of 6% to 7% outlook, is that a reasonable expectationgoing forward or not?

David, I think we will be prepared to talk about '08 at thecall -- at the end of the year. So, I wouldn't jump the gun on this one at thispoint in time.

Okay. Great. Thanks a lot. Congratulations and good luck.

Thank you.

Ladies and gentlemen, there appear to be no more questionsat this time. I would like to turn the floor back over to Mr. Gromek for anyclosing comments.

Thank you very much for joining us. Sorry, about thetechnical difficulties that we had earlier and the delay this evenings. And welook forward to speaking with you in a few months and providing you with ouryear-end results. Have a good evening.

Thank you everyone. This does conclude today's conferencecall. You may disconnect your lines at this time. And please have a wonderfulday.