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Updated statement on the planned closure of the garment factory Thai Silp in Thailand

Herzogenaurach, 2 August 2007 - On July 20 we were informed about the planned closure of the garment factory Thai Silp South East Asia Import Export Co Ltd. The factory, which employs some 5,000 workers, is located in Bangkok, Thailand. According to an announcement from the Labour Minister and the factory owner the official shutdown will be effective on August 7 due to on-going financial crisis and unwillingness to seek financial restructuring. The government has informed the public that it will step in to ensure that employees will receive legal compensations.

In the following we would like to comment on our business relationship with this factory.

Thai Silp supplied the adidas Group with apparel products for international export up until January 2007. For the past 6 months, we have had no active relationship with this supplier.

In early July 2006, the adidas Group notified the supplier that we were terminating the business relationship, following the factory’s failure to notify us of a worker fatality. As part of our global supply chain monitoring programme we have strict rules regarding transparency and workplace safety and following our own investigation of the accident, and a review of past health and safety non-compliances, we concluded that Thai Silp lacked sufficient commitment to the adidas Group’s ‘Workplace Standards’ to remain our business partner.

The business relationship ended on January 7, 2007, after having provided a notice period of 6 months. Orders were progressively phased out over that period to enable the factory to secure new orders from other buyers. At no point during this time did the factory management advise us that they were facing financial difficulties.

We regret to see that the owner has decided to close down the factory indefinitely. After the official closure, we will distribute a letter asking all our existing suppliers to consider applications from previous Thai Silp’s worker as part of their general recruitment.