Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the G-III Apparel Group Limited fourth quarter fiscal 2008 earnings conference call. (Operator Instructions) I would like to turn the conference to Mr. Neal Nackman, Chief Financial Officer of G-III Apparel Group. Please go ahead, sir.

Thank you. Good afternoon, everybody. Before we get started, I just wanted to remind you of the company’s Safe Harbor language. I’m sure you’re all familiar with it. Some statements made today on the call are forward-looking statements as that term is defined under the federal securities laws. Forward-looking statements are subject to risks, uncertainties, and factors which include but are not limited to reliance on licensed products, reliance on foreign manufacturers, the nature of the apparel industry, including changing customer demands and taste, seasonality, customer acceptance of new products, the impact of competitive products and pricing, dependence upon existing management, possible business disruptions [from the acquisitions], and general economic conditions, as well as other risks detailed in the company’s filings with the Securities and Exchange Commission. The company assumes no obligation to update information in this call. I will now turn the call over to our Chief Executive Officer, Morris Goldfarb.

Good afternoon and thank you for joining us to discuss our fourth quarter and full year results. With me today are Wayne Miller, our Chief Operating Officer, and Neal Nackman, our Chief Financial Officer. We had a solid fourth quarter and finished 2007 really on a strong note. As announced in February, we completed the acquisition of Andrew Marc, a transaction that provides us with a variety of strategic and operational benefits. While there is no question that the retail environment has been somewhat challenging and is expected to remain that way, we are pleased with our accomplishment in the fourth quarter and for all of fiscal 2008. Here are the highlights for the fourth quarter: sales increased approximately 30% to $129 million in the quarter. This growth was driven by a variety of programs with some of the standout performances from our Calvin Klein, Kenneth Cole and Guess businesses. Earnings per share came in above our internal plan at $0.06 for the quarter. We had some significant non-recurring items that lowered our reported earnings by approximately $0.09 during the fourth quarter and for the entire fiscal year as well. Neal will detail these for you in a few moments. Inventory at the end of the year was in good shape and we’re comfortable that we were properly positioned as we headed into 2008. For the full year, our highlights include: sales grew by approximately 22% to $519 million. This was a result of strong performances, particularly with our Calvin Klein businesses. We also had a great year with Kenneth Cole, Guess, and Cole Haan. Net income per diluted share for the year was $1.05, up from $0.94 last year. Adjusted for non-recurring items in both years, net income per diluted share for fiscal 2008 was $1.14, up from the…

Thank you, Morris. For the full year, we reported net sales of $518 million, an increase of 21.5% compared to last year’s $427 million. Net sales of licensed products increased 36% to $259 million, due primarily to outerwear increases in our Calvin Klein, Kenneth Cole, and Guess brands, and non-outerwear increases in the Calvin Klein brand. Sales of Calvin Klein suits and dresses more than doubled in the current fiscal year. In our previous fiscal year, Calvin Klein dresses started shipping in the third quarter and it was the first year of our Calvin Klein suits distribution. Non-licensed sales decreased slightly as customers move to branded programs and we did [not receive] certain private label programs. The current year includes the Jessica Howard acquisition results from the date of acquisition, May 24, 2007, and forward. The Andrew Marc acquisition was completed in February 2008 after our year-end and will be included in our fiscal 2009 results of operations. Net income for the year increased to $17.5 million from $13.2 million last year and net income per diluted share increased to $1.05 from $0.94 in the prior year. There were several non-recurring items that impacted both last year’s and this year’s financial performance. The current year’s fourth quarter and full fiscal 2008 results were affected by three different non-recurring items. First, we incurred a $3 million pretax charge in cost of sales equal to $0.11 per diluted share that reflects losses with respect to financing that the company guaranteed related to purchase commitments by one of our longstanding vendors. Our vendor had financial difficulties which caused us to make payments on the guarantee. This vendor is no longer in business and no other guarantees are currently outstanding. Secondly, as previously disclosed, we incurred a $720,000 pretax charge in cost of sales…

We are very pleased to put a strong finish on the year. In addition to continuing to produce solid rates of organic growth, we are very excited to have continued our acquisition strategy with the purchase of Andrew Marc. As we move forward into next year, we remain confident that our business will perform well even in these challenging times. I’d like to thank our shareholders for their support and operator, we’re now ready to take questions.

(Operator Instructions) We will go first with Jim Duffy with Thomas Weisel.

Thank you. A question for you -- what do you consider to be the organic growth rate as you look back to the past year and for the quarter? And just help me understand how you get to that calculation.

You know, I think the acquisitions -- our historical acquisitions of Marvin Richards and Winlit, those are fully integrated. We certainly include those in the core growth. If you were to -- I guess the only thing that we would really exclude would be the [Storlo] acquisition, which was about $40 million of our volume this year. But without the [Storlo] we are probably looking at about a 12% core growth for this past year.

Okay. And then as you speak to the -- your channel partners, what are you hearing from them as they think about open-to-buy planning? They’ve been clear on conference calls with Wall Street that they are planning things more conservatively. How are they communicating that to you? Are they asking you to take more inventory risk? Any color commentary there would be helpful. Thanks.

Well, clearly we get the same information that you are reading and this will be a difficult environment. But if our order book is any indication of what the future is going to bring, our order book is up significantly. That includes both the organic and the new start-ups and acquisitions. What I believe retailers are doing, they are concentrating on their core vendors and eliminating some of the secondary and third tier vendors, so we are the beneficiary of all of that. Our performance last year was very good and in most cases, all the ones that are significant in my mind, our order book has increased rather than what we are reading out there today.

Remind at what stage you are at for the order book for outerwear.

Excuse me?

The order book for outerwear -- what stage are you in kind of --

I would say we are well ahead of last year, if that’s what you are asking. But we have in excess of 50% of the year booked, 50% of the planned year book and that, having just two months under our belt with a difficult environment, we applaud our associates for having accomplished that.

Very good. And as you look towards the acquired businesses, the run-rates that you’ve seen in the past year, do you think those could be achievable as you get into FY09 or is there some exposure there that some of the revenue that you may have acquired may not be -- may not repeat itself?

We believe that the run-rate should continue. All our indicators, everything that we’ve experienced lead us to believe we are just fine. We’ve made the appropriate decisions and we stand by them. If I had it to do all over again, it would be great. I would do the same processes all over again.

And then one more question for Neal and I’ll let someone else jump in; Neal, expenses which will be eliminated with the departure of the Sean John women’s sportswear business, what type of numbers are we talking about there?

We have not quantified that and their business again was pretty well integrated with the rest of ours, so -- there will certainly be some expense savings, Jim, but I think if you look at our company, we are always doing investment spending and I guess with the way we would look at it is that piece was our investment spend for last year, so we really -- no matter -- every year in the past we had something that [would have gotten] the investment spending. We sort of see that as our spend for last year.

Okay, very good. Thanks.

Next we’ll go to Eric Beder with Brean Murray. Eric Beder - Brean Murray, Carret & Co.: Good afternoon. Congratulations. Could you talk a little bit about the Calvin Klein active wear line? I know you guys did a soft rollout for spring. How deep are you looking to roll out for fall? Who is going to be taking this line for fall?

Well, pretty much department store has written the collection in limited doors. We are performing well at Lloyd and Taylor, at Dillard’s. We’re yet to ship Macy’s. We have a host of specialty store orders. We are concentrating on the sports specialty shops, some of the performance wear stores, and we are pleased with the distribution and the response. And clearly this is the first initiative that we’ve had with this product and certainly I’d be the first one to tell you that we’ve made some mistakes in maybe some fabric selection and maybe some design selection, but we’ve corrected it quickly. We had the opportunity to distribute to our retail partners that work closely with us and we believe this to be a huge business going forward. We are very aggressive on marketing the product. We’ve just decided on a marketing campaign and we see this as a big future for G-III, a big opportunity for the future for G-III. Eric Beder - Brean Murray, Carret & Co.: Do you plan on -- do you think you guys will ship to Macy’s for fall?

We certainly will. We will ship to Macy’s by summer. Eric Beder - Brean Murray, Carret & Co.: Okay, and I guess we can expect, just conceptually, this -- the Andrew Marc deal will basically make -- will heighten the seasonality this year virtually every quarter because of when you bought it; in terms of our modeling, that’s how we should be looking at this.

Yes. The highs are going to be higher and the lows are going to be lower. Eric Beder - Brean Murray, Carret & Co.: A deeper roller coaster, huh?

Well, the good piece of the business is our dress business is doing extremely well, so we have worked towards rounding out the seasonality and we’ve been successful in most of our endeavors. The miss that we responded was the Sean John piece, which I’d say we reacted appropriately. We shut it down with barely a year-and-a-half under our belts, saw that it was not right for us. The time for that sector of business wasn’t appropriate but had that worked, the rounding of seasonality would have gone even further. So we are pleased with where the company is going. I think the immediate hiccup that we look at for the -- you know, it’s not even a hiccup but it’s a way of life -- the first quarter is the quarter that we did not have a chance to even appropriately correct the seasonality of Andrew Marc to the extent that we are capable of. We’ve let go of quite a few people at Andrew Marc. We’ve consolidated offices. We’ve done a bit of that. That’s going to play very nicely going forward but the first quarter of ownership of the brand, we suffer for it and that’s planned. It’s not a surprise. There’s clearly an opportunity with that brand, as I’ve said earlier, to become a licensor rather than a licensee, and it would be a wonderful thing to begin to collect royalties. Eric Beder - Brean Murray, Carret & Co.: Do you think that the Andrew Marc brand, as you integrated into your network, will give you the opportunity for higher margins than, or margins I guess maybe equal or better than you are getting now because you don’t have to -- obviously you are not licensing this anymore? And in your more efficient -- in your manufacturing network?

Yes, both of those are examples of where we are going to enhance our margins. The fact that we use approximately 10% as the gauge of what we pay for licensing, so that’s -- that’s not in this model and the fact that this is a business that integrates very, very well into our core competency and you might remember, we used to be only a leather company and Andrew Marc is known for leather, at a much smaller scale, but we immediately identified opportunities in purchasing and quality control, all of that. Even distribution -- our distribution costs are significantly less than what Andrew Marc was. So this will be a high margin business for us. Eric Beder - Brean Murray, Carret & Co.: Two other quick questions -- what’s going on with Ellen Tracy? And what are you seeing in terms of inflation pressures on materials in China?

Ellen Tracy, that’s really a good question. I have seen some articles in the press that indicates that there -- the Windsong, I believe, is acquiring it. I’m not sure that the deal is done yet. I can’t get any clarity on that, quite honestly, and as far as how it relates to our business, it’s a wait-and-see. We are positioned where Liz Claiborne had mandated that we need the product positioned in and we are doing okay with it. It’s fine. It’s not a showstopper either way if it goes away, if it’s forced into another tier of distribution, we’re fine. If it stays where it is, we’re fine. There’s not a lot of expense attached to running that brand within our business, so we are curious but we are not concerned. And the other half of your question, I’m sorry -- Eric Beder - Brean Murray, Carret & Co.: Was in terms of what inflationary pressures are you seeing for leather and in China?

All our costs in China seem to be edging up. It’s costs, it’s environmental issues, it’s political issues -- all of it seems to be sensitive in China. But this is something that if we had this discussion a year ago, we would have given you pretty much the same headlines and our strategy, which we incorporated a year ago was to bring in our product as early as possible, as soon as we can identify the trends, the orders for the future. Bring the product in and get out of the way before the Olympics add additional burden to our business. So our inventory levels will be a little bit higher for the back-end of the second quarter and they are all -- the inventory is as solid as can be. It’s sold but in fact it will sit in our warehouses for possibly 30 to 45 days longer than normal and it’s a risk that is well worth it. We are sufficiently capitalized to handle it. We are very close to finishing our loan agreement and we’ll release that any day now and we basically have what we need to run our business -- more than we need to run our business in partly defense and partly offense mode as it relates to China. Eric Beder - Brean Murray, Carret & Co.: Thank you.

(Operator Instructions) Next we’ll go with Jody Kane with Sidoti & Company. Jody Kane - Sidoti & Company: Can you talk a little bit about exactly what type of product line the Calvin Klein active wear segment that you are introducing?

Well, the product is a concentration of product that is yoga wear, it’s performance tennis wear, biking -- it’s any form of athletic wear that you can find. It will be functional outerwear and it will be pretty much the product that a woman might put on in the morning, go to a yoga class, and then shop all day long with it and get ready in the afternoon for dinner or wherever she’s going. So it’s the -- the fabrics are all technologically advanced. We are working in the finest factories in Asia and our design team comes out of this sector, so it’s product your wives would very well identify with. Jody Kane - Sidoti & Company: And that’s being sold into your existing doors and then opening up doors in the sports -- sports equipment sector?

Well, the existing doors would be the department stores, yes. The department stores love having the Calvin Klein brand in different departments, so the reception that we’ve got was very aggressive and the specialty stores are buying it as well, so we -- we’re very comfortable with the growth of this business. Jody Kane - Sidoti & Company: And the specialty stores, that’s all new business or new channels for you?

Yes, it’s a new channel. It’s sport specialty stores. It’s the -- you know, the gyms may be buying it, the ski shops and bike shops and tennis wear shops all buy it, so we’ve identified a new constituency that will support the brand. Jody Kane - Sidoti & Company: All right, great. And then can you walk us through your assumptions for first quarter guidance? Because I’m looking at sales up 71% year over year but then a larger loss. I would have thought you would have got a little more expense leverage, even though there’s more expenses. But the fact that your sales have gone up, you would think that you would at least get some more expense leverage.

I can just give you a couple of pieces of guidance on that, Jody. In terms of gross margin, we will have -- you know, what’s really impacting and driving that Q1 is the additional dress business, so our gross margins will see some lift. But on the expense side, keep in mind that we did not have the [Storlo] business at all in that -- I’m sorry, the Jessica Howard industrial cotton business we did not have at all in the first quarter, so those are incremental expenses associated with [a lot of that sales]. And then in addition to that, the Andrew Marc acquisition is the other big driver of the expenses, so that’s why you’re not seeing that expense leverage. Jody Kane - Sidoti & Company: All right, and are there any sort of one-time or integration or purchase accounting costs or anything associated that will be leveraged out over the next couple of quarters, and even into next quarter, Q1 -- next year Q1?

No, essentially not the -- when we deal with a purchase, we have to get valuations done and do our accounting associated with that, so there’s always an amortization issue as far as what will be amortized and which assets [we’ve got] to identify, but there’s no -- other than the amortization, there would be no other special types of purchases charges.

But as Morris said earlier, we just completed this acquisition in the beginning of February and we are working very hard at scaling down and right-sizing their business, integrating where we can integrate, so -- although we weren’t able to impact our Q1 from an expense standpoint with Andrew Marc, we will impact Q2 and forward. Jody Kane - Sidoti & Company: All right, great. And you guys are not providing full-year guidance, right? Anymore?

We’re not. Historically we haven’t but clearly we believe we are in the middle of a very good year. Our order book is strong. All the indicators lead us to believe that when we are ready and we can get our arms wrapped around Andrew Marc and several of the other pieces, we believe that you won’t be disappointed. Jody Kane - Sidoti & Company: All right, great. Thanks.

And next we’ll go to Lee [Bacchus] with Buckingham Capital.

First, congratulations, Morris, on a great quarter.

Thank you, Lee, but I have two guys here that want to take credit for it as well.

On Q1, when you look at Q1, if you just ex out the extra charges for Andrew Marc and the other start-up businesses, just look at the -- your ongoing businesses, what would the Q1 quarter look like?

Well, we would have still improved to the launches that we had previously, which is really what happened last first quarter as well, so our shift to non-seasonal, the off-seasonal businesses were starting to happen and the Andrew Marc is just going -- is really the only difference. Really we continue to see that kind of improvement.

So the other businesses will be improving in Q1, even in this environment?

Yes, Lee, they would and I don’t know if you were on the call, I think our last conference call, I think it was maybe Eric Beder who asked a question and I think I responded with not far from now, we’ll be profitable in the first quarter. And that was pre-acquisition, pre some of this stuff. And I really kind of stand firm. We are feeling good about the future of that business. So you will see an improvement as time goes on and the reason that we are not having a better first quarter is all good -- it’s growth, it’s timing, but if you annualize it, I think we do all the right things.

When do you think you will be in a position to give full year guidance?

Certainly by next quarter, by the second quarter certainly you’ll have it.

Okay. Thank you.

Next we’ll take a question from John [Curti] with Principal.

Good afternoon. I have some questions on the Andrew Marc business. How much of your year-end cash did you use to fund the acquisition and how much debt did you incur?

We used a significant portion of our cash on hand at the time. It would be -- just so that you have a sense of where our cash position was, last year we raised about $51 million in both private equity offering as well as a public offering, so from a cash standpoint, we really essentially have been raising the money that we’ve used to do both the Jessica Howard acquisition as well as the Andrew Marc acquisition.

We virtually have no long-term debt on our books. This is even post acquisition.

Okay. Of the approximately $80 million in revenues that the business generated last year under the old ownership, was some of that licensing revenue and if so, how much?

Virtually nothing was licensing revenue. Part of it was licensed revenue because they in fact do license Dockers and Levis, so a portion of the top line really came out of licensed revenue.

All right. And are there any parts of their business that you are scaling out of that would end up reducing that $80 million revenue number?

Well, simply timing and evaluating what we have, add some sensitivity and change of management sometimes interrupts the top line when the retailer is not certainly where the brand is going. So our plan is to reduce the top line of clearly the Andrew Marc, Marc New York business by some -- you know, 10% to 15%, just on that piece of it and now the Dockers/Levis piece. That, as it happens, will grow. So the net net is that we’ll be down less than 10% in top line in that division, but much more profitable.

And then what was your CapEx for the year just ended and what do you anticipate for the upcoming year?

That CapEx last year was about $1.5 million and I would tell you again, if you look at the history, we’ve run between $1.5 million and $2.5 million, so I would say that that’s what you could probably anticipate from us for next year.

Thank you very much, gentlemen.

We’ll go next to Todd Slater with Lazard Capital Markets.

Good afternoon. It’s actually Jennifer for Todd. First, congratulations on a good quarter and second, I saw the Calvin Klein performance wear at my yoga studio and it looks great. Congratulations. Can you give us an update on Exsto?

Exsto is -- actually, it’s moving along. We’ve reduced our headcount. We integrated the division into our sports license area. Now it’s being run by a young man, Eric Shapiro, that’s been with us for about 10 years, understands the culture of our company and understands Wal-Mart. Wal-Mart is one of his largest accounts in sports, so he’s in Bentonville very regularly. And we’ve seem to have gotten our arms wrapped around what the business is. It will be profitable this year. It’s not of the scale that hope it will be a couple of years from now but the good news is we’ve stabilized it and we are growing it. Our boys business should grow in door count. We are currently in 250 doors and we believe that for fall, we should be in closer to 400 doors. So we are pleased with where the brand is going, not with where it is.

Okay, great. And then how many doors are suits in right now?

About 350 to 400, approximately.

Okay, so most doors?

Excuse me?

Okay. Sorry, thanks. And then what percent of sales was outerwear this year?

About 80% this year.

Okay and then, do you expect that -- with the acquisition of Andrew Marc, do you expect that to increase a little bit?

Yeah, I think that that’s right.

Actually, our business should probably remain to the same proportion because our dress business is growing rapidly. We have anticipated growth in sports license junior business, and our suit business should grow. So it should be pretty much the same and there’s still the possibility of taking some of the components or the extensions that Andrew Marc affords us and doing coats, suits, active wear -- all the categories that we are doing well, you know, they can fall under that Andrew Marc umbrella as well.

Okay and then what kind of -- you had mentioned that you’d like to get if you -- or you look forward to becoming a licensor rather than a licensee, so what kind of -- what were you thinking, like bags and --

Well, we do bags, currently. It’s not a very big business and if the appropriate opportunity came up, we’d consider licensing that category. There is small leather goods that’s perfect for the brand. We’ve had discussions with people in eyewear. We’ve had discussions -- people have come to us and asked us about sportswear, so we are -- you know, we are working at choosing, I guess to the extent that we can, best-in-class to take on the responsibility of doing product that is outside of our core competency.

Okay, great. Thanks a lot.

We’ll go with Dan [Schwartzbauer] with Buckingham Capital.

Morris, congratulations to you and everyone, the whole team there. This is one of the long calls you are having. Anyway, you made a comment that people won’t be disappointed, the on-order book is great with the year. I just want to make sure I understood that properly. Right now the consensus estimate for the year is $1.27. Is that what you meant? People should be pleased with the way things are going, fully understanding that that is the number that’s in there for the year?

My comment is -- you can -- I guess you can take it assuming that I do have the knowledge of what the consensus is. I can be clear on our order book, I can be clear on our anticipated growth, and I need to be a little bit general in nature. As you know, we run a conservative business. We are not known to disappoint but we are cautious as to the timing of our releases and I could speak a little bit clearer in the second quarter if you give me that grace.

No, no, you have the grace but I just wanted to make sure that you were aware where the analysts were right now, when you made that, which is fine, which is terrific. I guess this is the year of the coat, the dress, the leather, and everything seems to be going your way in fashion.

It’s not by accident. You, Dan, and many of the people on this call, have had the experience of walking through this facility and individually meeting with the leaders that run this business and it’s their choices, their hard work, their competencies that bring us to where we are. That’s clearly strategic. It’s not an accident.

My congratulations to all of you guys. Thank you.

And we’ll take a follow-up from Jody Kane with Sidoti & Company. Okay, his line has been disconnected. We’ll go with Jim Duffy with Thomas Weisel.

Thanks. Quick question as we look to the margin structure going forward. It seems we’re seeing an increase in the percentage of higher gross margin businesses, which should have a beneficial impact on your overall gross margin -- is that a correct assumption?

Yeah, I think that’s right, Jim.

And then perhaps you give some of it back on SG&A investments for future growth initiatives?

Right, I think in the short-term, that’s definitely [what we’re] looking for.

And looking at the businesses as they stand, assuming no future acquisitions, when would you expect an inflection point on being free cash flow positive for the business?

Well, we look at our free cash flow as positive now. [We’re getting [inaudible] $17.5] million in net income, we had about $5 million of depreciation in that number, so we generate about $20 million. We do have earn-outs with some of the -- with one of the acquisitions that only goes for another year but -- and then of course, we’re not a highly capital intensive business. So we feel the business is going with a decent amount of cash flow right now.

Even if you account for adjustments in working capital?

You know, I think -- when we look at [fueling] the business as well as growing acquisitions, I think that we do -- you know, we look at our bank lines and we do use our bank lines for seasonal needs and we’ve used a mixture of both bank and outside financing to fund acquisitions in addition to working capital.

All right. Maybe we’ll get into it in more detail offline. Thanks very much.

It appears there are no further questions at this time. I would like to turn the conference back over to you, Mr. Goldfarb, for any additional or closing remarks.

Thank you all for participating and have a great afternoon.

And this does conclude today’s presentation. We thank you for your participation. You may now disconnect.