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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 20, 1998
Avondale Incorporated
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(Exact name of registrant as specified in its charter)
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Georgia 33-68412 58-0477150
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(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
30655
506 South Broad Street ----------
Monroe, Georgia (Zip Code)
(Address of principal executive offices)
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Registrant's telephone number, including area code: (770) 267-2226
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Avondale Incorporated (the "Company") announced on October 20, 1998
that it reported sales of $1,056,103,000 for the fiscal year ended August 28,
1998, up less than 1% from fiscal 1997 sales of $1,049,474,000. Net income
increased 50% to $34,313,000 in fiscal 1998 from $22,937,000 in fiscal 1997.
G. Stephen Felker, Chairman, President and Chief Executive Officer
remarked that "the fiscal year ending on August 28, 1998 was a challenging year
in which the Company achieved good results in a difficult environment.
Throughout 1998, and continuing today, the markets served by the Company are
adequately supplied. That is to say that between Avondale and our competitors
there is more than enough product available to satisfy our customers' needs.
Competition is intense.
"Favorable trends, which included shifting of apparel production for
the American market from Asia to our own hemisphere, were reversed in the year.
The North American Free Trade Agreement (NAFTA) had diminished the economic
advantage of importing apparel products from Asia. However, currency
devaluations and a desperate need for liquidity fueled a "sell at any price"
mentality from East and Central Asia. While earlier in the year our hopes were
that the flow of heavily discounted textile product from Asia would subside as
inventories depleted, United States government aid programs are financing the
daily struggle of some Asian producers and are prolonging the market
disruption.
"Adding to the impact of Asia's economic troubles is the expansion of
production in our hemisphere, primarily within the United States and Mexico.
Domestic and Mexican competitors have built denim mills in Mexico as if demand
for the product were insatiable. Capacity utilization in the industry is poor.
"Having framed the environment in which Avondale conducted its 1998
fiscal year, we are very pleased with the Company's outstanding results for the
year. Sales were flat, up only 0.6% from $1,049,474,000 in fiscal 1997 to
$1,056,103,000 in fiscal 1998. Our focus was not so much on sales growth as on
cost reduction. While selling prices declined substantially during the 1998
fiscal year in all the Company's product areas, unit volume was up and both raw
material and operating costs were significantly reduced. Profits in fiscal 1998
increased 50% to $34,313,000 from $22,937,000 in fiscal 1997.
"Much of the cost reduction was the result of well planned and
executed capital expenditures of $66,335,000 in fiscal 1998 bringing total
capital expenditures for the past three years to approximately $132,000,000.
Operations continue to improve as well."
Earnings before interest, income taxes, depreciation and amortization
("EBITDA") were $126,618,000 for fiscal 1998, compared to $113,286,000 for
fiscal 1997. Utilizing this operating cash flow, the Company made capital
expenditures of $66,335,000 and reduced its debt by $4,500,000 in fiscal 1998.
A copy of the press release relating to the Company's results of
operations is attached hereto as Exhibit 99.1
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.1 Text of Press Release of Avondale Incorporated, dated
October 20, 1998.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 21, 1998 AVONDALE INCORPORATED
By: /s/ Jack R. Altherr, Jr.
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Jack R. Altherr, Jr.
Vice Chairman and
Chief Financial Officer
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INDEX TO EXHIBITS
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EXHIBIT NUMBER AND DESCRIPTION PAGE
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99.1 Text of Press Release of Avondale Incorporated, dated
October 20, 1998...................................................
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EXHIBIT 99.1
AVONDALE INCORPORATED REPORTS FISCAL YEAR RESULTS
MONROE, GEORGIA
Avondale Incorporated today reported sales of $1,056,103,000 for the
fiscal year ended August 28, 1998, up less than 1% from fiscal 1997 sales of
$1,049,474,000. Net income increased 50% to $34,313,000 in fiscal 1998 from
$22,937,000 in fiscal 1997.
G. Stephen Felker, Chairman, President and Chief Executive Officer
remarked that "the fiscal year ending on August 28, 1998 was a challenging year
in which the Company achieved good results in a difficult environment.
Throughout 1998, and continuing today, the markets served by the Company are
adequately supplied. That is to say that between Avondale and our competitors
there is more than enough product available to satisfy our customers' needs.
Competition is intense.
"Favorable trends, which included shifting of apparel production for
the American market from Asia to our own hemisphere, were reversed in the year.
The North American Free Trade Agreement (NAFTA) had diminished the economic
advantage of importing apparel products from Asia. However, currency
devaluations and a desperate need for liquidity fueled a "sell at any price"
mentality from East and Central Asia. While earlier in the year our hopes were
that the flow of heavily discounted textile product from Asia would subside as
inventories depleted, United States government aid programs are financing the
daily struggle of some Asian producers and are prolonging the market
disruption.
"Adding to the impact of Asia's economic troubles is the expansion of
production in our hemisphere, primarily within the United States and Mexico.
Domestic and Mexican competitors have built denim mills in Mexico as if demand
for the product were insatiable. Capacity utilization in the industry is poor.
"Having framed the environment in which Avondale conducted its 1998
fiscal year, we are very pleased with the Company's outstanding results for the
year. Sales were flat, up only 0.6% from $1,049,474,000 in fiscal 1997 to
$1,056,103,000 in fiscal 1998. Our focus was not so much on sales growth as on
cost reduction. While selling prices declined substantially during the 1998
fiscal year in all the Company's product areas, unit volume was up and both raw
material and operating costs were significantly reduced. Profits in fiscal 1998
increased 50% to $34,313,000 from $22,937,000 in fiscal 1997.
"Much of the cost reduction was the result of well planned and
executed capital expenditures of $66,335,000 in fiscal 1998 bringing total
capital expenditures for the past three years to approximately $132,000,000.
Operations continue to improve as well."
Earnings before interest, income taxes, depreciation and amortization
("EBITDA") were $126,618,000 for fiscal 1998, compared to $113,286,000 for
fiscal 1997. Utilizing this operating cash flow, the Company made capital
expenditures of $66,335,000 and reduced its debt by $4,500,000 in fiscal 1998.
Contact:
Craig S. Crockard
Corporate Vice President, Planning and Development
Avondale Mills, Inc.
900 Avondale Avenue
Sylacauga, AL 35150-1899
(256) 249-1340
