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Unifi Announces Developments In DuPont Arbitration

Unifi, Inc. today (October 7, 2002) announced that following the close of business on Friday, October 4, 2002, in response to a Pre-Hearing Order of the Arbitration Panel, the Company received information from E.I. DuPont De Nemours and Company ("DuPont") concerning the damages alleged in connection with the previously disclosed arbitration proceeding relating to their POY Manufacturing Alliance (the "Alliance"). DuPont has now alleged damages from its previous breach of contract claims and certain previously unasserted claims during the course of the Alliance from June 1, 2000 through September 30, 2002 of approximately $85 million.Of these damages, approximately $71 million relate to DuPont's contention that after creation of the Alliance, until and unless the Alliance assets are running at full capacity, Unifi should buy all of its external POY needs from DuPont, thus, taking business away from Unifi's other third party POY suppliers. Unifi does not agree that it was or is obligated to purchase these volumes of POY from DuPont. Had Unifi purchased these volumes of POY from DuPont, the Company believes that the prices it would have paid DuPont for such POY purchases would have been at or below the prices it actually paid to its other third party POY suppliers.The remaining damages asserted by DuPont relate to an alleged approximately $8 million issue regarding capacity utilization in the Alliance manufacturing facilities and approximately $6 million in interest.The Company continues to deny DuPont's allegations concerning its arbitration claims. Further, Unifi does not agree with DuPont's asserted damage calculations applicable in the event the Arbitration Panel were to find in DuPont's favor in the arbitration. However, the Company believes it appropriate to publicly disclose DuPont's asserted damages as the same are materially greater than the potential claims previously disclosed by the Company in its Form 10-K for the fiscal year ended June 30, 2002, that was filed with the Securities and Exchange Commission onSeptember 23, 2002. In its Form 10-K, the Company noted that based on DuPont's claims made to the date of filing the Form 10-K, DuPont's claims could amount to approximately $23 million.The Company continues to deny DuPont's allegations and intends to vigorously defend against DuPont's claims and pursue its counterclaims. However, the outcomes of these claims and counterclaims are uncertain at this time and any damages awarded to DuPont could be materially more or less than the amount asserted. The arbitration hearing in this matter is currently scheduled to begin November 1, 2002. The ultimate resolution of these matters could be material to Unifi's financial position, results of operations and cash flows.Copyright PR Newswire 2002




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