<PAGE>
AVONDALE P.O. Box 50280 ALBERT L. BOSSIER, JR.
INDUSTRIES, New Orleans, LA 70150-0280 Chairman, President
INC. 504-436-2121 and Chief Executive Officer
(LOGO) AVONDALE
April 19, 1994
Dear Stockholder:
Proxy solicitation material from a group calling itself the 'Avondale
Shareholder Committee' has recently been filed with the Securities and Exchange
Commission proposing advisory shareholder votes asking the Company's Board of
Directors to consider changes to the Company's corporate governance structure.
You need to appreciate that this so-called 'committee' is controlled by
union organizers who your Company's Board of Directors and management believe
are motivated not by legitimate stockholder interests but rather by the desire
to advance union-related goals that are harmful to the interests of the
Company's stockholders and employees. Your Company's Board of Directors and
management strongly urge you NOT to sign any proxy card provided by this
committee. In addition, we ask you to sign, date and return the enclosed GREEN
proxy card with a vote AGAINST each of the proposals and FOR the two nominees
for director.
We have noted that included among the members of the committee are the
United Brotherhood of Carpenters and Joiners of America ('Union') and John
Meese, president of the Metal Trades Department, AFL-CIO. The Union, which is an
affiliate of the Metal Trades Department, and Mr. Meese became stockholders of
record of the Company on April 1, 1994, two business days prior to the record
date for the meeting, when they purchased a total of 150 shares of the Company's
common stock. We also have noted that the committee's proxy card has named in
addition to Mr. Meese, Ed Durkin (director of special programs for the Union)
and Phil Miller, a local union organizer, each of whom is a full-time union
professional and neither of whom are stockholders, as the proxy holders for the
annual meeting. It is our belief that this amounts to undeniable evidence that
the committee is union controlled.
In June 1993, an election was conducted to determine whether certain of the
Company's main shipyard's employees desired to be represented by the Metal
Trades Department of the AFL-CIO. The National Labor Relations Board is in the
process of determining the final outcome of the election.
The Company has opposed the unionization of the workforce at the main
shipyard because the Board of Directors and management believe unionization is
not in the best interests of the Company's employees or stockholders. The
Company's Board of Directors and management believe that the goals of the union,
through the committee, in conducting its proxy solicitation are to attempt to
discredit the Company's management and to attempt to weaken the Company's
resolve in opposing the unionization of certain of its employees. The Company is
just one of many companies that have recently been the target of this union
tactic of fostering proxy contests, which the Company's Board of Directors and
management believe is an inappropriate way to address labor matters.
The Company is currently the only major non-union shipyard in the United
States. The Company's Board of Directors and management believe that the
Company's competitive advantage is due in part to its non-union status and that
to give in to union pressure would be detrimental to stockholders' interests.
<PAGE>
The year 1993 marked a significant turning point for the Company as its
stock price more than tripled. In addition, during 1993 the Company successfully
secured shipbuilding contracts that increased its backlog from a low
during the year of approximately $495 million to over $2.2 billion (with
options) at year end, an increase of over 400%. The Company also successfully
negotiated with the U.S. Navy a $145 million settlement of the Company's
previously submitted Requests for Equitable Adjustment with respect to those
contracts that were a major reason for the Company's losses in recent years,
and reduced its indebtedness over the past 18 months by approximately $82
million. These actions substantially strengthened the Company's financial
condition and positioned the Company to take advantage of future business
opportunities.
The same management that the committee has charged with 'mismanagement' is
responsible for the positive developments in 1993 that will benefit the
stockholders and employees in the years ahead. Actions taken by the Company's
management will enable the Company to continue to sustain employment at
relatively high levels, as the Company was able to do during the difficult
period in the late 1980s and early 1990s when many other companies were
dramatically downsizing their workforce or going out of business entirely. The
Company encourages you to read the Company's 1993 Annual Report, which contains
information regarding the achievements of the Company's management and the
Company's prospects.
The Company's Board of Directors is fully informed regarding the ongoing
debate over the appropriate structure of the governance of American
corporations. The Board continually evaluates these concerns in fulfilling its
obligation to manage the Company in the best interests of its stockholders.
The Company's employees and management have worked very hard to return the
Company to profitability and the prospects for a profitable future are bright.
The Company does not believe it is in the stockholders' or employees' best
interests to disrupt the Company's turnaround at the very time when both the
stockholders and employees are on the verge of reaping the rewards of these
efforts.
Once again, we urge you to sign, date and return the enclosed GREEN proxy
card with a vote AGAINST each of the committee proposals and FOR the two
nominees for director.
If you have already sent in the proxy card accompanying the Company's proxy
statement dated April 6, 1994 (the 'Original Proxy Statement'), we ask that you
send in the enclosed GREEN proxy card also, which will supersede the proxy card
you have already sent in. The latest dated proxy given by you will be the one
counted at the Company's annual meeting of stockholders on May 6, 1994 (the
'Meeting').
If you have already sent in the proxy card accompanying the Original Proxy
Statement, you granted discretionary authority to the persons named as proxies
therein to vote in their best judgment on matters that may properly come before
the Meeting and that the Company's Board did not know at the time of mailing
were to be presented at the Meeting. IF YOU DO NOT SUBSEQUENTLY SEND IN THE
GREEN PROXY CARD OR ANY OTHER PROXY CARD, THE PROXY HOLDERS WILL DEEM THAT YOU
DO NOT WISH TO REVOKE THE DISCRETIONARY AUTHORITY YOU GRANTED THEREIN AND WILL
VOTE YOUR SHARES AS YOU DIRECTED IN THE ELECTION OF DIRECTORS AND AGAINST THE
COMMITTEE PROPOSALS.
Sincerely,
THE BOARD OF DIRECTORS OF
AVONDALE INDUSTRIES, INC.
By: ALBERT L. BOSSIER, JR.
Albert L. Bossier, Jr.
Chairman, President &
Chief Executive Officer
2
<PAGE>
AVONDALE P.O. Box 50280 ALBERT L. BOSSIER, JR.
INDUSTRIES, New Orleans, LA 70150-0280 Chairman, President
INC. 504-436-2121 and Chief Executive Officer
(LOGO) AVONDALE
April 19, 1994
Dear ESOP Participant:
Proxy solicitation material from a group calling itself the 'Avondale
Shareholder Committee' has recently been filed with the Securities and Exchange
Commission proposing advisory shareholder votes asking the Company's Board of
Directors to consider changes to the Company's corporate governance structure.
You need to appreciate that this so-called 'committee' is controlled by
union organizers who your Company's Board of Directors and management believe
are motivated not by legitimate stockholder interests but rather by the desire
to advance union-related goals that are harmful to the interests of the
Company's stockholders and employees. Your Company's Board of Directors and
management strongly urge you NOT to vote in favor of any proposal advanced by
this committee. We ask you to sign, date and return any voting instruction form
you may receive with a vote AGAINST each of the committee proposals and FOR the
two nominees for director.
We have noted that included among the members of the committee are the
United Brotherhood of Carpenters and Joiners of America ('Union') and John
Meese, president of the Metal Trades Department, AFL-CIO. The Union, which is an
affiliate of the Metal Trades Department, and Mr. Meese became stockholders of
record of the Company on April 1, 1994, two business days prior to the record
date for the meeting, when they purchased a total of 150 shares of the Company's
common stock. We also have noted that the committee's proxy card has named in
addition to Mr. Meese, Ed Durkin (director of special programs for the Union)
and Phil Miller, a local union organizer, each of whom is a full-time union
professional and neither of whom are stockholders, as the proxy holders for the
annual meeting. It is our belief that this amounts to undeniable evidence that
the committee is union controlled.
In June 1993, an election was conducted to determine whether certain of the
Company's main shipyard's employees desired to be represented by the Metal
Trades Department of the AFL-CIO. The National Labor Relations Board is in the
process of determining the final outcome of the election.
The Company has opposed the unionization of the workforce at the main
shipyard because the Board of Directors and management believe unionization is
not in the best interests of the Company's employees or stockholders. The
Company's Board of Directors and management believe that the goals of the union,
through the committee, in conducting its proxy solicitation are to attempt to
discredit the Company's management and to attempt to weaken the Company's
resolve in opposing the unionization of certain of its employees. The Company is
just one of many companies that have recently been the target of this union
tactic of fostering proxy contests, which the Company's Board of Directors and
management believe is an inappropriate way to address labor matters.
The Company is currently the only major non-union shipyard in the United
States. The Company's Board of Directors and management believe that the
Company's competitive advantage is due in part to its non-union status and that
to give in to union pressure would be detrimental to stockholders' interests.
The year 1993 marked a significant turning point for the Company as its
stock price more than tripled. In addition, during 1993 the Company successfully
secured shipbuilding contracts that increased its backlog from a low during the
year of approximately $495 million to over $2.2 billion
<PAGE>
(with options) at year end, an increase of over 400%. The Company also
successfully negotiated with the U.S. Navy a $145 million settlement of the
Company's previously submitted Requests for Equitable Adjustment with respect to
those contracts that were a major reason for the Company's losses in recent
years, and reduced its indebtedness over the past 18 months by approximately $82
million. These actions substantially strengthened the Company's financial
condition and positioned the Company to take advantage of future business
opportunities.
The same management that the committee has charged with 'mismanagement' is
responsible for the positive developments in 1993 that will benefit the
stockholders and employees in the years ahead. Actions taken by the Company's
management will enable the Company to continue to sustain employment at
relatively high levels, as the Company was able to do during the difficult
period in the late 1980s and early 1990s when many other companies were
dramatically downsizing their workforce or going out of business entirely. The
Company encourages you to read the Company's 1993 Annual Report, which contains
information regarding the achievements of the Company's management and the
Company's prospects.
The Company's Board of Directors is fully informed regarding the ongoing
debate over the appropriate structure of the governance of American
corporations. The Board continually evaluates these concerns in fulfilling its
obligation to manage the Company in the best interests of its stockholders.
The Company's employees and management have worked very hard to return the
Company to profitability and the prospects for a profitable future are bright.
The Company does not believe it is in the stockholders' or employees' best
interests to disrupt the Company's turnaround at the very time when both the
stockholders and employees are on the verge of reaping the rewards of these
efforts.
Once again, we urge you to sign, date and return any voting instruction form
you may receive with a vote AGAINST each of the committee proposals and FOR the
two nominees for director.
Sincerely,
THE BOARD OF DIRECTORS OF
AVONDALE INDUSTRIES, INC.
By: ALBERT L. BOSSIER, JR.
Albert L. Bossier, Jr.
Chairman, President &
Chief Executive Officer
2
<PAGE>
AVONDALE INDUSTRIES, INC.
PROXY SUPPLEMENT
TO PROXY STATEMENT DATED APRIL 6, 1994
April 19, 1994
Avondale Industries, Inc. (the 'Company') is providing the enclosed material
to you in response to materials filed with the Securities and Exchange
Commission (the 'SEC') by a group calling itself the 'Avondale Shareholder
Committee,' which the Company's Board of Directors and management believe is
controlled by union interests. This committee has stated its intention to
introduce the six proposals reproduced below at the Company's annual meeting of
stockholders on May 6, 1994 (the 'Meeting'). In addition to voting FOR the two
nominees for director, the Company strongly urges that you vote AGAINST these
committee proposals on the enclosed GREEN proxy card for the reasons set out in
the enclosed letter.
You should have already received the Company's proxy statement dated April
6, 1994 (the 'Original Proxy Statement') pursuant to which the Company's Board
of Directors solicited your vote in favor of the election of two director
nominees at the Meeting. These materials were mailed to you prior to the date
the committee filed its materials with the SEC and therefore they do not refer
to the committee's proposals. The purpose of these supplemental proxy materials
is to solicit your vote against the committee proposals and for the two nominees
for directors.
Enclosed is a GREEN proxy card on which you should indicate your vote on the
election of directors and the committee proposals. THE COMPANY'S BOARD OF
DIRECTORS AND MANAGEMENT STRONGLY URGE YOU TO SIGN, DATE AND RETURN THE GREEN
PROXY CARD WITH A VOTE FOR THE TWO NOMINEES FOR DIRECTOR AND A VOTE AGAINST EACH
OF THE COMMITTEE PROPOSALS.
If you have already sent in the proxy card accompanying the Original Proxy
Statement, we ask that you send in the enclosed GREEN proxy card also, which
will supersede the proxy card you have already sent in. The latest dated proxy
given by you will be the one counted at the Meeting.
If you have already sent in the proxy card accompanying the Original Proxy
Statement, you granted discretionary authority to the persons named as proxies
therein to vote in their best judgment on matters that may properly come before
the Meeting and that the Company's Board did not know at the time of mailing
were to be presented at the Meeting. IF YOU DO NOT SUBSEQUENTLY SEND IN THE
GREEN PROXY CARD OR ANY OTHER PROXY CARD, THE PROXY HOLDERS WILL DEEM THAT YOU
DO NOT WISH TO REVOKE THE DISCRETIONARY AUTHORITY YOU GRANTED THEREIN AND WILL
VOTE YOUR SHARES AS YOU DIRECTED IN THE ELECTION OF DIRECTORS AND AGAINST THE
COMMITTEE PROPOSALS.
If a quorum is present, directors will be elected by plurality vote and, in
order to be adopted, the committee proposals must receive the affirmative vote
of a majority of the shares of common stock present or represented at the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
THOMAS M. KITCHEN
Thomas M. Kitchen
Secretary
Avondale, Louisiana
April 19, 1994
<PAGE>
Set forth below are the proposals that the committee has stated it intends
to introduce at the Meeting. THE COMPANY'S BOARD OF DIRECTORS AND MANAGEMENT
STRONGLY URGE YOU TO SIGN, DATE AND RETURN THE GREEN PROXY CARD WITH A VOTE FOR
THE TWO NOMINEES FOR DIRECTOR AND A VOTE AGAINST EACH OF THE COMMITTEE
PROPOSALS.
COMMITTEE PROPOSALS
COMMITTEE RESOLUTION NO. 1: INDEPENDENT BOARD OF DIRECTORS
BE IT RESOLVED, that the shareholders of Avondale Industries, Inc.
('Company') hereby urge that the Company's Board of Directors take the steps
necessary to amend the Company's by-laws, effective after the 1994 annual
meeting of shareholders, to provide that the Board of Directors shall consist of
a majority of Independent Directors. The by-law change shall be done in a manner
which does not affect the unexpired terms of previously elected directors. For
these purposes, the definition of Independent Director shall mean a director
who:
* has not been employed by the Company or an affiliate in an executive
capacity within the last five years;
* was not, and is not a member of a corporation or firm that is one of the
Company's paid advisers or consultants;
* is not employed by a significant customer, supplier or provider of
professional services;
* has no personal services contract with the Company;
* is not employed by a foundation or university that receives significant
grants or endowments from the Company;
* is not a relative of the management of the Company;
* is not a director of a company on which Avondale Industries' Chairman or
Chief Executive Officer is also a board member; and
* is not a shareholder who has signed shareholder agreements legally
binding him or her to vote with management.
COMMITTEE RESOLUTION NO. 2: NOMINATING COMMITTEE
BE IT RESOLVED, that the shareholders of the Company urge the Board of
Directors to establish a Nominating Committee of the Board in conformity with
Company by-laws. The Nominating Committee shall identify and recommend for
nomination candidates to stand for election to the Board of Directors. The
Committee shall be composed entirely of members who:
* have not been employed by the Company or an affiliate in an executive
capacity within the last five years;
* are not a member of another company or firm that is one of the Company's
paid advisers, consultants or a significant customer or supplier of the
Company;
* have no personal services contract with the Company;
* are not employed by a foundation or university that receives significant
grants or endowments from the Company;
* are not a relative of the management of the Company;
* are not a board member or employee of another company whose board
includes directors or employees of the Company; and
* are not a shareholder who has signed shareholder agreements legally
binding him to vote with management.
2
<PAGE>
The Nominating Committee's responsibilities shall include establishing
procedures for the nomination process and developing for Board approval the
criteria for nomination. These procedures and criteria should be described in
that portion of the Company's proxy statement covering the election of
directors.
COMMITTEE RESOLUTION NO. 3: CONFIDENTIAL PROXY VOTING
BE IT RESOLVED, that the shareholders of the Company urge that our Board of
Directors take the necessary steps to adopt and implement a policy of
confidential voting at all meetings of Company shareholders. The policy should
include the following provisions:
1. that the voting of all proxies, consents and authorizations be secret,
and that no such document shall be available for examination, nor shall
the vote or identity of any shareholder be disclosed, except to the
extent necessary to meet the legal requirements, if any, of the Company's
state of incorporation; and
2. that the receipt, certification and tabulation of such votes shall be
performed by independent election inspectors.
COMMITTEE RESOLUTION NO. 4: BOARD DECLASSIFICATION
BE IT RESOLVED, that the shareholders of the Company urge that the Board of
Directors take the necessary steps, in compliance with the Company's by-laws, to
declassify the Board of Directors for the purposes of director elections. The
Board declassification shall be done in a manner that does not affect the
unexpired terms of directors previously elected.
COMMITTEE RESOLUTION NO. 5: CUMULATIVE VOTING
BE IT RESOLVED, that the shareholders of the Company urge our Board of
Directors to take the necessary steps, in accordance with Louisiana state law
and Company by-laws, to adopt and implement a policy of cumulative voting for
all elections of directors.
COMMITTEE RESOLUTION NO. 6: RECONSTITUTION OF COMPENSATION COMMITTEE
BE IT RESOLVED, that the shareholders of the Company urge the Board of
Directors to take the steps necessary to amend the by-laws of the Company to
provide a Board Compensation Committee composed entirely of directors who:
* have not been employed by the Company or an affiliate in an executive
capacity within the last five years;
* are not a member of another company or firm that is one of the Company's
paid advisers, consultants or a significant customer or supplier of the
Company; and
* have no personal services contract with the Company.
Further, the Compensation Committee members should be selected by the entire
Board.
3
<PAGE>
AVONDALE INDUSTRIES, INC.
POST OFFICE BOX 50280
AVONDALE, LOUISIANA 70150
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AVONDALE
INDUSTRIES, INC.
This undersigned hereby appoints Bruce L. Hicks and Joseph W. Mangin, Jr.,
or either of them, as proxies, each with full power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all
shares of common stock of Avondale Industries, Inc. held of record by the
undersigned on April 5, 1994 at the annual meeting of stockholders to be held
on May 6, 1994, or any adjournment thereof.
COMPANY PROPOSALS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR BOTH OF THE NOMINEES LISTED BELOW:
Election of Directors
/ / FOR both nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for both nominees
below) listed below
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME LISTED BELOW.
Albert L. Bossier, Jr. Hugh A. Thompson
COMMITTEE PROPOSALS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST COMMITTEE PROPOSALS 1
THROUGH 6, BY CHECKING THE BOX MARKED 'AGAINST.'
1. Independent Board Resolution
/ / AGAINST / / FOR / / ABSTAIN
2. Nominating Committee Resolution
/ / AGAINST / / FOR / / ABSTAIN
3. Confidential Proxy Voting Resolution
/ / AGAINST / / FOR / / ABSTAIN
4. Board of Directors Declassification Resolution
/ / AGAINST / / FOR / / ABSTAIN
5. Cumulative Voting Resolution
/ / AGAINST / / FOR / / ABSTAIN
6. Reconstitution of Compensation Committee Resolution
/ / AGAINST / / FOR / / ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR BOTH OF THE DIRECTOR NOMINEES NAMED ABOVE AND AGAINST
PROPOSALS 1 THROUGH 6. THE PROXY HOLDERS NAMED ABOVE WILL VOTE IN THEIR
DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY REVOKES ANY PRIOR PROXY HERETOFORE GIVEN TO ANY PERSON
OR PERSONS.
DATE ______________, 1994
_______________________________________
Signature of Shareholder
_______________________________________
Additional Signature, if held jointly
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH. IF A CORPORATION,
PLEASE SIGN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF
A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP
NAME BY AUTHORIZED PERSON.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
