NEWS UPDATE

NEWS UPDATE

FEBRUARY 28, 2006 --

Euro Footwear Trade Still Concerned About Anti-Dumping Duties

According to press reports, the European Commission has concluded its preliminary investigation into alleged dumping of Chinese and Vietnamese leather footwear on the European market and has proposed high anti-dumping duties on these shoes.

The Federation of the European Sporting Goods Industry (FESI) continues to be seriously concerned by the impact of such measures on Europe's consumers. Consumers will end up paying the antidumping duty, as shoe prices will increase by 25%, with a negative impact on overall buying behaviour.

FESI continues to be concerned by the impact of such measures on Europe's consumers, importers and retailers, though the Commission's proposal to limit the scope of the duties by excluding Special Technology Athletic Footwear (STAF) is a reasonable step in the right direction.

"The exclusion of STAF from the product scope of the investigation is the obvious response to the lack of EU production of such shoes and a sign that EU trade commissioner Peter Mandelson is making a genuine effort to minimize the harmful effects of anti-dumping," said FESI president Horst Widmann (Puma).

"STAF is a well established category of sport footwear which has been excluded from quota restrictions and anti-dumping measures for over a decade. However, the investigation continues to cover products that lack any justification for being included," he added.

"The investigation continues to cover many other sports shoes that are not produced in Europe and which pose no threat to European shoe makers, only the threat of lost jobs in the retail sector and higher prices for Europe's consumers," he added. "These measures are against the interests of the European economy," Widmann said.

The same reasons that convinced the Commission to put forward STAF exclusion in its December '05 proposal apply to all other footwear imported by FESI members. There is virtually no European production of such shoes and imports from China have remained stable over the last few years in volume and price, FESI said.

The nearly undifferentiated treatment of Vietnam and China is also unjustified, in FESI's view. EU leather footwear imports from Vietnam have actually declined during '05 while the average unit price has increased.

"Clearly Vietnam and China should not be lumped together in this case," said Karl Sedlmeyer, VP of FESI. "Antidumping measures will be a serious set-back to Vietnam's development prospects. There are no winners from these measures as they stand. Jobs will be lost in Vietnam, China and Europe."

Of the two billion pairs of shoes sold in Europe each year, more than a billion is imported from China and Vietnam. Shutting these countries out of the European market would double or even triple the price of shoes on the high street overnight, FESI stated.

The definition of "Special Technology for Athletic Footwear," as agreed and incorporated into the EU customs code in '94, is footwear designed for use in sporting activities with a single- or multi-layered sole, and special technical features, such as cushioning systems, midsoles etc.

Footwear represents Vietnam's third biggest export. The European sporting goods industry sources 40% of its leather shoe imports from Vietnam, making it the most important source ahead of China (36%), Indonesia (17%) and Thailand (6%).

EU imports of Chinese leather shoes increased by 335% in January-October '05 as compared to the same period in '04. This is the kind of natural growth rate to be expected with the lifting of quota restrictions in January '05. Imports of footwear with leather uppers from Vietnam fell 5.8%.

The European sporting goods industry represented by FESI directly and indirectly employs 643,000 workers in the EU with turnover of over EUR 40 billion in economic activity in '04. FESI members include: Adidas, Asics, Diadora, Fila, Lotto, Nike, Puma, Reebok and national sports industry federations from across the EU.

Brooks Hires Ex-Nike Exec To Head Footwear Merchandising

Mark Nenow joined Brooks as VP/global footwear merchandising.

Nenow arrives with more than 20 years of industry experience and a decorated track record both in and out of the office. Nenow recently served as global footwear product director for Nike’s ACG footwear division. Before assuming that position in 1996, he held various product line management and marketing positions for Nike’s Running, Trail Running, Distance Running, and Track & Field divisions.

Preceding his extensive tenure at Nike, Nenow spent three years with Asics as a category business planner in the Running division, and earlier a sports marketing and promotions manager for its Running, Racing and Track & Field division.

His running career includes World and American Records in the 10,000 meters.

Nenow's principal area of focus includes managing global merchandising and business planning of all Brooks’ footwear from the product brief stage through introduction into the marketplace.

“Mark is an exceptional addition to our Brooks team on so many levels,” said Jim Weber, president and CEO of Brooks. “With his professional background and personal running accomplishments, he’ll give us unique insight and seasoned guidance toward global planning, development and merchandising of our entire performance running footwear collection.”

In addition to aforementioned career moves, Nenow served as an athlete contract consultant to athletic footwear and apparel companies including Nike, Puma and Asics, as well as to other notable consumer product companies such as Levi Straus, Pepsi, IBM and Kodak. Nenow also worked in various running specialty retail stores through the years.

CamelBak Products Hires CEO

CamelBak, the hydration systems pioneer, hired J. Marty O'Donohue to lead the company.

CamelBak's new CEO, who holds both an undergraduate history/economics degree and MBA from Stanford University, spent the past 15 years as CEO of Marinco, the leading manufacturer and marketer of specialty electrical components for both the pleasure boat market and the "harsh environment" industrial markets. At Marinco, O'Donohue grew the company from $5 million to $70 million, repositioned and expanded the brand into the industrial market and introduced a "lean" culture throughout the company in a way that brought consistent operating efficiencies and quality.

"Marty knows how to build a team and deliver the products and services that define a dominant brand," said Dan Miller, COB, CamelBak and an operating partner at Bear Stearns Merchant Banking, the parent company of CamelBak. "He'll take CamelBak from a being a respected leader in hydration into a world class brand that exceeds customer expectations."

CamelBak board member Sally McCoy, a partner at investment banking firm Silver Steep Partners, also took an active role in the CEO search.

"We interviewed some great candidates, but when we met Marty, everything just clicked," she said. "His combination of experience and personality is just what CamelBak needs to realize its potential as a brand."

O'Donohue replaces Glenn Gross, who announced his retirement in '05.

Kirk Richardson Named New President Of Keen Footwear

Kirk Richardson, a longtime Nike executive of 27 years and former GM of Nike Outdoor business group has been named as President of Keen.

Richardson replaces Jim Van Dine. Van Dine, who has made the personal decision not to move with Keen to Portland. OR, where the company will be making its new home this April. The company is currently based in Alameda, CA.

Van Dine, a longtime resident of Alameda, called the move a “difficult decision,” but he remains “supportive and extremely optimistic' about the future of the company. Van Dine said, “I am proud of all that we have achieved at Keen in the past three years and have confidence that the company will continue to enjoy great success.”

Richardson, 52, is an Oregon native and lifelong outdoor enthusiast, climber, runner, and alpinist, with extensive experience in the footwear and apparel industry. His career at Nike started in Sales and over time he has held several leadership positions within Nike footwear and apparel product marketing, including the GM of Nike Outdoor business. He has also held several international marketing and merchandising positions in both Europe and Japan.

“The future of the Keen brand is extremely promising,” Richardson said.

“Keen has quickly established itself as not only an innovative outdoor and casual brand, but a brand with a social conscience. I look forward to contributing to the company's growth and expansion, while maintaining its social and environmental efforts.”

Richardson is on the Board of both the Conservation Alliance, which operates under the mantra “Outdoor Industry giving back to the outdoors” and the Oregon Natural Desert Association, an organization committed to saving the natural deserts of Oregon.

Other recent appointments to the Keen Executive Team include Kris Hamper as CFO, Bobbie Parisi, VP of Marketing and Kelly Wallrich as Director of Design and Development.

Nike Suing Adidas For Patent Infringement

Nike filed a legal complaint against Adidas-Salomon in the US District Court for the Eastern District of Texas. The complaint identifies several top Adidas products that allegedly infringe upon Nike’s patented SHOX cushioning technology. The district court is one of a few across the country known for handling intellectual property and patent infringement cases quickly. Adidas said on Friday afternoon that it was currently examining the complaint and could not comment.

These infringing products include shoes using Adidas’ a3 cushioning system, including the new Kevin Garnett signature shoe and its Adidas_1 footwear.

The Nike patent protects technical columnar design features of the Shox system that maximize stability and performance of the shoe. Despite Nike’s patent protection, Adidas has built shoes that use Nike's technology, it is charged.

"Nike is widely recognizedBrooks Hires Ex-Nike Exec To Head Footwear Merchandising for its product innovation in footwear and athletic products and we invest heavily to provide performance products to our consumers. It is deeply frustrating and inappropriate when companies borrow or refashion such technologies as their own without making similar investments,” said Eric Sprunk, VP/global footwear.

During last week’s World Shoe Association Show in Las Vegas, Nike served complaints on two other companies infringing on Nike’s intellectual property and patents. Those companies, Air Max Import and Export Inc. and Romeo and Juliette had previously come to Nike’s attention regarding violations of Nike’s patent rights.

Copies of the full complaints in any of the above matters can be downloaded from www.nikebiz.com.

NIKE, INC., Plaintiff, v. ADIDAS SALOMON NORTH AMERICA, INC., ADIDAS AMERICA INC. D

B/A ADIDAS INTERNATIONAL, and ADIDAS PROMOTIONAL RETAIL OPERATIONS INC. (pdf, 116kb)

NIKE, INC., Plaintiff, vs. ROMEO & JULIETTE, INC., Defendant. (pdf, 78kb)

NIKE, INC., Plaintiff, vs. AIR-MAX IMPORT & EXPORT, INC., D/B/A AIR-MAX, AND LAM SIU FUNG Defendants. (pdf, 16kb)

Adidas Mulls Over Response To Nike Suit

Adidas-Salomon AG has just received confirmation that the complaint was filed at the court in the US, the company said on Friday.

Adidas is committed to leading the industry when it comes to innovation. We respect our competitor's intellectual property just as we demand that others respect ours and we defend ourselves vigorously against meritless lawsuits," the company said.

"We are currently examining the content of Nike's complaint with our legal advisers and therefore we cannot comment on the specifics of the lawsuit at this stage."

Former Puma Exec Lee Stock Passed Away

Lee Stock, former president of Puma USA, died of cancer on February 18 in Sarasota. He was born in New York in '17. His academic career was interrupted when he dropped out of City College to help support his family.

Starting at the age of 19 he worked for many years as General Manager of ATSCO, (Athletic Trainers Supply Co.) and eventually became VP of Beconta, a major sporting goods distributor whose lines included Puma, Nordica, Spalding Footwear and Volkl. During this period, he also married, had two sons and served in the Navy.

He became VP and then resident of Puma USA when Puma's distibution was taken over by Germany. He retired in '85. During his years at Puma, he represented the company at the Olympic Games in Tokyo, Mexico City and Munich, and traveled extensively in the Far East and Europe to monitor quality control, design and distribution. Among his innovations was the use of Velcro in sneakers.

One of his more memorable moments occurred in a meeting of the Athletic Footwear Committee of SGMA. The latter had run an athletic footwear and apparel show in Chicago a few months earlier. It was a bomb, but SGMA insisted on running a second show in the coming year. Stock managed to get an SGMA staffer to admit the show was being run to make money for SGMA. Hearing this, Stock said: "If you need money, raise my dues." Paying more in dues would be cheaper than setting up a booth, he said.

He worked closely and had warm personal relationships with many athletes including Joe Namath, Reggie Jackson, Martina Navratilova and Walt Frazier, for each of whom he specially designed sneakers.

After his retirement, Mr. Stock resumed his college studies, earning his undergraduate diploma and a Masters Degree in American History from the State University of New York.

He also engaged in his many artistic and academic interests as well as swimming and jogging, and began sculpting, a hobby which he pursued with enthusiasm for the rest of his life. While living in New York, he served on the Institutional Review Board of Columbia Presbyterian Hospital and was on the Board of the Westchester School for Special Children.

After retiring, Stock spent time in the Ukraine, Morocco and Panama under the aegis of the US Government as a consultant for the International Executive Service Corps, assisting the development of the emerging shoe industries in those countries.

He moved to Sarasota, Florida in '95 with his second wife, Elinor Wharton. He served on the Transition Committee of the Turtle Rock Homeowners Association and then on the community's Board of Governors. He also served as a volunteer in the library of Sarasota Memorial Hospital and on the hospital's Institutional Review Board.

During this period he explored oriental watercolor painting, began piano studies and learned to play the dulcimer. Once in Florida, he took great pleasure in gardening and growing fruit trees.

He is survived by his wife, Elinor Wharton of Sarasota, a son, Wayne, and daughter-in-law, Louise, and grandson, Lawrence, and two great-grandchildren.

Throughout his life, while pursuing his many and varied interests, he acquired an extensive and devoted group of friends. A warm and modest man known for his sense of humor, his love of children and his zest for learning and for life, Stock will be missed by all who knew him.

SHORTS

New Balance Athletic Shoe Inc., through its charitable grant foundation, has contributed $1 million to Habitat for Humanity to assist Gulf Coast residents who lost homes to destructive tropical storms last summer. Habitat for Humanity began work in September pre-building house frames at remote sites for delivery to affected areas in Louisiana, Texas, Mississippi and Alabama. Construction is now set to start this spring, the organization said.

Boston-based New Balance, which also operates production facilities in Lawrence, Mass., previously donated $1 million of its products to hurricane relief.

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January 30, 2005
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