Welcome to today’s Colgate-Palmolive Company third quarter2007 earnings conference call. Today’scall is being recorded and is being simulcast live at www.colgate.com. Just as a reminder, there may be a slightdelay before the question-and-answer session begins due to the websimulcast. At this time for opening remarks I would like to turn thecall over to the Vice President of Investor Relations, Ms. Bina Thompson. Please go ahead.

Good morning, everybody. Before I get started with my remarks I think you all know one of ourcore values is continuous improvement at Colgate. We are trying to make our call moreefficient. So today we are going tolimit questions to one question per person and if you have a follow-up, we willask you to get back into the queue. Whenwe say one question, we don’t mean multi-part questions. We mean one question. Good morning and welcome to our third quarter earningsrelease conference call. With me thismorning are Ian Cook, president and CEO; Steve Patrick, CFO; DennisHickey, Corporate Controller; and Ed Filusch, Treasurer. We will discuss the results of the third quarter thismorning excluding charges relating to the 2004 restructuring program, $36.3million after-tax, and a $10 million non-cash after-tax pension charge underSFAS 88 as a result of lump sum payments of normal retirement benefitsassociated with a non-qualified retirement plan in the U.S.The reported GAAP results reconciliations to the results excluding therestructuring and pension charges are included in the press release and accompanyingfinancial statements, and are posted on the investor relations page of our website at www.colgate.com. Comments about expectations will also exclude restructuringcharges and during the Q&A we will answer any questions including orexcluding these items as you may wish. We are very pleased that the momentum of our first half hascontinued into the second half. Ourrestructuring and business building programs are on track, volume and salesgrowth have continued to be strong cross our divisions. Our ongoing Funding the Growth program aswell has contributed to a good growth profit increase along with a decrease inour fixed expenses. This has allowed usto continue to support our business with a double-digit advertising increase inevery region while growing the bottom line double-digit as well, as per ourplan. As you know, our gross margin increased…

Your first question comes from Connie Maneaty - BMO CapitalMarkets.

Given that you know what your shipments to Wal-Mart andCostco are, can you give us an indication of what your market share in toothpastein the U.S.would be on an all-outlet basis as opposed to just what we can see from Nielson?

Our market share on an all-outlet basis would be up similarto the Nielson share; would be slightly lower than that share but stillup. I think talking to the U.S.business in general, let me make a few remarks. We are really quite pleased with our performance in the U.S.this year. We have a business that’s upjust over 5% on a volume basis on top of a strong 7% last year. As I said on the last call, we are verypleased with our innovation stream on toothpaste with the Colgate TotalAdvanced Clean having one of the highest repeat rates we have ever seen. We are beginning to build trial on that withthe advertising and marketing programs that Bina mentioned, and seeing it inthe Nielson and the all-outlet share. And of course, we have adjusted ourpromotional activity which is just now beginning to impact themarketplace. I think going forward, what is pleasing in the U.S.when you look at the categories in which we do business, particularlytoothpaste, we see growth rates very much in line with historical levels, noslow down. We see private label at thelowest level in many years, under half a percentage point. So we feel very confident about the futuregrowth of both our toothpaste business and our U.S.company.

Your next question comes from Ali Dibadj - SanfordBernstein.

To continue on the U.S.theme, I wanted to understand the interaction between the top line, again beinga little lower than we would expect; I think your guidance was flat, as far asI understand, on volume at least and then the increase in operatingmargins. What is the interplay there? Howwould you describe that going forward? In particular, you mentioned that you were just now seeingsome of the impact of increased promotions that you are putting intoplace. Did you see that towards the backend of the quarter? How you should wethink about that going forward? So the interplay at the top line and company marginexpansion story here in North America.

I think the answer to that, Ali, is gross profit. We have seen in our U.S. business, as Binasaid, a combination of restructuring benefits, our trading up strategy, theColgate business planner and our traditional Funding the Growth programs, agross profit expansion in the United States substantially ahead of the worldaverage. While for the year, ouradvertising will be up double-digit and on a ratio to sales basis, that stillallows for the expansion in operating margins that you are referring to.

Your next question comes from Bill Schmitz - DeutscheBank.

Can you just give us an update on the restructuring savingsin the quarter and also the Colgate business planning savings? And also, what the outlook is for Colgatebusiness planning for the full year and next?

Let me remind you of the total program, Bill and then cometo your specific questions. Totalprogram now on an after-tax basis has the charges at 675 to 775 and the savingsat 300 to 350, which you will be very well aware of. In terms of the restructuring savings, after-tax in thisquarter around $23 million; for the year we expect between $90 million and $95 millionthis year, and of course the balance about $100 million to $105 million in2008. Restructuring is on track. All of the major programs are well-managed,and the savings as I’ve just outlined. Colgate business planning, turning to that again, continuesto be very much on plan. As I said thelast time, we will have the full Colgate business planning solution supportedby the SAP software in about two-thirds of our company’s sales by the end ofthis year. It will be in over 70% of thesales as we enter next year. We havedone many of these so-called deep dive analytic programs in ten of our majormarkets, accounting for 50% of our trade spending. This year you will recall, Bill, we said thatwe thought the savings from CBP would be around $50 million. It turns out the savings are coming in nearer$75 million than the $50 million. Youwill recall also that we said that we expected $100 million of savings fromColgate business planning in 2008. Weare still sticking with that, although perhaps a little bit more optimisticgiven the performance this year.

We will take our next question from Bill Chapell - SunTrust.

Kind of simplistic question but in the past you said that everydollar change in oil is a penny to EPS. If I look at the $20 move over the past three months does the math notstill work that way? Is restructuringjust fully offsetting that? When you look at double-digit EPS growth next yearis it just lower double-digits versus higher double-digits?

Let me go through the gross profit, if I can find it. Bill, if I take the third quarter, just to dothe traditional roll forward that we do just to put it in perspective,obviously last year the gross profit was 56.5%, now 57.3% this year, or up 80basis points. Essentially we faced aheadwind of about 2.1 percentage points of material prices, which was acombination of our traditional Funding the Growth savings, restructuring andthen the pricing mix benefit, which can trace to CBP offset that and more tothe tune of the 80 basis points difference. So as we look going forward, we remain based on thebudgeting activity we have conducted thus far, we remain confident of the 75 to125 basis points expansion increase in our gross profit for next year. On the average, we are looking at about $75 a barrel for oil. That will see our raw and packing materialcosts up between 5% and 6%, but with all of the programs we have inrestructuring, Funding the Growth and CBP we see ourselves offsetting that andstill being within the 75 to 125 basis points increase that we have talked to.So that’s getting it right down to the planning level. I think as we have evolved our discussion on oil, we havesaid that about one-third of our business is directly affected, about one-third;half and about one-third not really affected. So from a detailed modeling point of view we feel quite confident withthat projection next year. I would add one thing. That when we had previously talked of this,it was oil up by $2, is a penny of EPS.

Your next question comes from Lauren Lieberman - LehmanBrothers.

I think I didn’t really catch all that, actually. So as I understood it, you are budgeting oilat $75 right now for ‘08.

On the average, yes.

Can you go through the more specific components of grossmargin? Could you give us the big bucketof raw material costs being a minus two-tenths?

Right.

Usually we get a Funding the Growth bucket, a price promotionbucket and so on.

Happy to give you that, Lauren. Start with the same 56.5 lastyear. From a material price, as you say,negative 2.1; Funding the Growth, positive 1.4; Restructuring, positive .6, and then pricing half a point; mix, etcetera,0.3.

We will take our next question from Wendy Nicholson -Citi.

My question has to do with Latin Americaprofit margins. It seems like so many ofthe other regions are seeing huge margin increases but that’s a region where wehave seen margins go down two quarters in a row. I’m just wondering, is thatbecause that region is so incredibly profitable to begin with and there has notbeen that much restructuring there, we should sort of expect margins to flattenout, or is there something going on from a competitive standpoint that you areneeding to spend more in that region?

Nothing from a competitive point of view, Wendy, that is outof the ordinary. I think as we discussedon the last call, we are seeing a very robust market growth dynamics and we areinvesting to grow this business. So theadvertising is up and part of that is related to the timing of activity behindwhich we are putting that advertising. Ithink from an operating margin point of view, we are going to see the operatingmargin back up again next year; at least that’s our estimate.

We will take our next question from Justin Hott - BearStearns.

Ian, as you think about the categories you have done anamazing job the last couple of years in oral care, delivering great results andthe organization really sounds like it is hitting on all cylinders. When you think about where you want to go, do you feel theorganization is better equipped now to expand into other categories, whether ornot you need that growth that you have built a better organization now with allthese initiatives? If you want to go,you would be stronger company for doing it and be better equipped to do it?

I don’t know what you mean by other categories, Justin. If you mean new categories?

New categories.

New categories to Colgate, the answer is we don’t see a needfor that. We believe that if you look atthe oral care, personal care, pet nutrition and home care categories that wehave boundaries for ourselves. There are very good growth and profit expansionopportunities remaining. We continue, ona global basis, to take advantage of that going forward. I continue to feel that the focus we have on being expertsat understanding the consumers, the professionals that recommend our productsand the customers that we sell to in those categories, being more expert byfocusing there, gives us an executional focus and advantage, which we canbenefit from for many years to come.

We will take our next question from Alex Patterson -RCM.

Ian, I wanted to get a sense, the reinvestment spending youhave been doing into the operations structural stuff, you have talked about thedevelopments and then part of the original restructuring was the development ofsales and feet on the street in developing markets. Are we seeing a lot of that playing into howthe SG&A is coming out this year and, if so, how does that look going outinto ‘08 and ‘09?

Well, if you look at the SG&A and break down the componentelements, obviously advertising is up. Overhead with logistics in is flat. Fixed cost with logistics out is actually down slightly on a ratiobasis. But that still does includeexactly as you say, more resources on the ground, particularly in thedeveloping markets. Going forward, I think we would expect to see our percentageoverhead, excluding logistics down next year, as we get the full benefit of therestructuring. That still includes theinvestment in the incremental resources thatwe did indeed say we were going to do.

We will take our next question from John Faucher - JP Morgan.

Quick question, looking at your guidance for next year on aregional basis, it looks like emerging markets you expect another strong yeargoing out there. Is there anywhere whereyou would say over the last couple quarters you ever seen either marketaccelerating or decelerating in terms of markets we should keep an eye out forover the next 12 months. Thanks.

I would say nothing of any significance, John. Perhaps mostof the press and media coverage these days is about, you know, the U.S.and whether or not there will be a slowdown and will that slowdown be arecession? Pleasingly, at least in thebusinesses that are important to us, we do not see from a consumer point ofview, a slowdown in the purchasing of our products, particularly in thepersonal and oral care categories; maybe a tad of slowdown in some of thehousehold product categories. As I said earlier, perhaps most encouragingly, year on yearwe are seeing no increase in private labels. So no other countries around the world to call out neither particularlytroubling nor positive, and in the U.S.quite pleased with how our categories are performing.

We will take our next question from Amy Chasen - GoldmanSachs.

I’m still not clear on why North American volume came in aslow as it did relative to your going in expectations? Was it a particular category, was it aparticular channel? Can you just kind offlush that out for us a little bit more?

Yes, I think as we said, Amy, and I did answer this earlierwe have been pleased with our U.S.business over this year. 5.5% for thenine months. We expect that to continuenext year. We are beginning to see thebenefits of the new products we have launched and the increased consumerpromotion that we said we would put behind that business. Our oral care business is up double-digit in the U.S.and importantly, the month of October is off to a very nice start in our United States business. So we feel good about that. If you focus on the number of the quarter,perhaps some channel effect as we began to put our promotional activity inplace; but confident about going forward.

What do you mean by channel effects?

The timing of getting promotionals executed in all thedifferent trade channels leaving some to grow more aggressively than others.

When you say that your oral care business was updouble-digit, can you tell us what was down? What was the weaker category, because something was obviously muchweaker?

The weaker category was home care which is exactly in linewith our strategic priorities, as you know. It is oral care, pet nutrition, personal care and home care.

Which channels were weaker?

I am not going to go into the specifics of each of thechannels, Amy.

Your next question comes from Chris Ferrara - Merrill Lynch.

A repeat question for every quarter, I guess. The fact that the overall advertising didn’tgo up as a percentage of sales this quarter I understand it was in line withwhat your expectations were, but does it give anymore insight how you view thatoverall 12% going forward?

The 12% continues to be our target, Chris. As I said a little bit earlier on the call,we expect for this year our advertising to be up double-digit and north of 11%as a ratio to sales. Our preliminary look at our 2008 budgeting stance, althoughnot final, shows continued double-digit it increase in our advertising andcontinued progress towards the 12% goal we have established for ourselves. So that continues to be very much our gameplan.

We will take our next question from Alice Longley -Buckingham Research.

Is it reasonable to expect with the oil prices doing whatthey are doing, that Hill’s will be taking further pricing for next year?

The Hill’s cost pressures of course stem from agriculturalcommittee cost increases which can indeed be the bio-fuel and therefore, atleast indirectly oil-related. You areexactly right, Alice, as you knowthis year we took pricing in the first quarter of the year around 4% on ourHill’s business and have announced for the fourth quarter of this year, furtherpricing to the tune of between 6% and 8%, depending on the line ofproducts. That’s here in the U.S.and of course we are doing that internationally as well; the intention ofcourse being to rebuild the Hill’s gross profit through the fourth quarter andinto next year.

And you have heavy shipping costs for Hill’s as well. Right?

Yes.

Are there any other categories where you think you shouldtake pricing?

We are reviewing that on a category-by-category basis. We have pricing factored into our preliminarybudget position between a percentage point and percentage and a half. And obviously where we see the need as youwork through each of the commodities and the raw material impacts, which oftentimesare lagged, as you know, Alice,where we need to we will take pricing.

Your next question comes from Linda Bolton Weiser -Oppenheimer.

Could you talk a little bit about what you have done withthe Tom’s of Maine brand sinceyou acquired it? I believe the natural dentist might be a new entrant innatural toothpaste after being in natural mouth rinses; do you think that’s athreat to the Tom’s of Mainebusiness? Could you talk a little about that.

We are really pleased with the Tom’s business havingacquired it. A couple of comments to make. The business was up in the third quarter strong double-digits, I think reflecting the increased marketingsupport we have put behind the business and the distribution we are buildingwith the business. The market share actually is continuing to trend upwardshistorically from a Nielson point of view running at around 1.4%, 1.5%, now upto 1.7% and growing. As I mentioned onthe call the last time, we had very clear expansion plans for this business inthe developed world starting with the UK,moving through Western Europe and obviously down toAustral-Asia. So good expansion plans in place, and I think given thescale of opportunity in naturals, I don’t see a particular new entry as athreat. I think there is room for Tom’sto continue to grow quite healthily.

Your next question comes from Alex Patterson - RCM.

Any way you can put more illumination some of the newproduct pipeline? You have suggested it as being more robust than normal as weget into the beginning of ‘08?

I would offer no illumination, Alex, other than to say wehave organized ourselves to continue what we have always believed is a healthyflow of relevant innovation. We havethat this year. I think you will see as next year unfolds,some interesting innovation come into the business that will be consumerrelevant and continue to build our top line and our market shares.

But in aggregate are you suggesting it’s more than we haveseen previously or about in line with what ‘07 showed?

I would say it will be what it will be. I’m not calling a sharp uptick. It will be what it will be.

Your next question comes from Lauren Lieberman - LehmanBrothers.

I was hoping you could also touch on operating marginexpansion in the Greater Asia/Africa business because that was the other realstandout in addition to North America and I would thinkthat the investment spending there would have been also going up prettysignificantly. So just major drivers ofmargin expansion in that business.

The expansion traces largely to the gross profit again,Lauren. While we don’t quote the specifics of the gross profit expansion, wehave in Asia seen a fairly meaningful increase in ourgross profit, which again like the U.S.,as you perhaps would expect given the operating margin expansion is ahead ofthe world, or ahead of the world average. That is at the same time as we have continued to increase ouradvertising support behind growing those businesses at a double-digit level.

Is it a mixed shift that’s happening within the businessthat’s the biggest driver of the gross margin there or is it restructuringsavings are disproportionately impacting that business?

It is a combination of all the things I talk about,Lauren. It is the trading up strategythat Bina mentioned that works very successfully for us, the Total example in Latin America equally applies to Asia, so it ismix. It is trading up. It is Funding the Growth. It is Colgate business planning and it’srestructuring.

Your next question comes from Connie Maneaty - BMO CapitalMarkets.

I do have a follow-up question and it relates to what otherpeople have been asking about. Theregional development of profit margins, I mean, given that they were up sostrongly in North America and Asia/Africa this year does it make sense thatnext year because of the projects in place we would see that sort of jump inthe regions where there was not that kind of expansion this year?

Connie, we have not tended to give forward guidance inoperating margins. I would say that wecontinue to feel very comfortable with the expansion in gross profit that Italked to between the 75 and 125 basis points. That would translate through the divisions in terms of the commercialpriorities and flow its way to the bottom line.

At this time we have no further questions. Iwould like to turn the conference back to Ms. Thompson for any additional orclosing remarks.

I will turn it to Ian for the closing remarks.

Thank you very much for joining the call and your questionsand support. We look forward to comingback and continuing the dialogue as we close the year. Thank you.