<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED MAY 28, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO -----------------
---------------
COMMISSION FILE NUMBER 33-68412
---------------
AVONDALE INCORPORATED
(Exact name of registrant as specified in its charter)
GEORGIA 58-0477150
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
506 SOUTH BROAD STREET 30655
MONROE, GEORGIA (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (770) 267-2226
Former name, former address and former fiscal year, if changed since last
report: N/A
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Description As Of Shares Outstanding
- -------------------- ------------ -------------------
Class A Common Stock July 2, 1999 11,698,184 Shares
Class B Common Stock July 2, 1999 978,939 Shares
===============================================================================
<PAGE> 2
FORM 10-Q
---------
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
PART I - FINANCIAL INFORMATION (UNAUDITED)
Item 1: Financial Statements
Condensed Consolidated Balance Sheets at May 28, 1999 and August 28, 1998............. 1
Condensed Consolidated Statements of Income for the Thirteen Weeks Ended
May 28, 1999 and May 29, 1998......................................................... 2
Condensed Consolidated Statements of Income for the Thirty-nine Weeks Ended
May 28, 1999 and May 29, 1998........................................................ 3
Condensed Consolidated Statements of Cash Flows for the Thirty-nine Weeks Ended
May 28, 1999 and May 29, 1998........................................................ 4
Notes to Condensed Consolidated Financial Statements.................................. 5
Item 2: Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................ 7
Item 3: Quantitative and Qualitative Disclosures about Market Risk............................ 10
PART II - OTHER INFORMATION
Item 1: Legal Proceedings .................................................................... 11
Item 2: Changes in Securities and Use of Proceeds............................................. 11
Item 3: Defaults upon Senior Securities....................................................... 11
Item 4: Submission of Matters to a Vote of Security Holders................................... 11
Item 5: Other Information..................................................................... 11
Item 6: Exhibits and Reports on Form 8-K...................................................... 11
Signature ...................................................................................... 12
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AVONDALE INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AUG. 28, MAY 28,
1998 1999
--------- ---------
ASSETS
<S> <C> <C>
Current assets
Cash $ 9,259 $ 8,002
Accounts receivable, less allowance for doubtful accounts
of $2,533 in fiscal 1998 and $2,856 in fiscal 1999 62,497 40,807
Inventories 114,684 132,460
Prepaid expenses 742 1,531
--------- ---------
Total current assets 187,182 182,800
Property, plant and equipment
Land 8,510 8,510
Buildings 82,366 84,225
Machinery and equipment 430,629 467,383
--------- ---------
521,505 560,118
Less accumulated depreciation (267,791) (299,047)
--------- ---------
253,714 261,071
Other assets 22,686 18,809
--------- ---------
$ 463,582 $ 462,680
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 34,839 $ 32,897
Accrued compensation, benefits and related expenses 24,665 21,371
Other accrued expenses 18,970 15,099
Long-term debt due in one year 2,250 3,250
Income taxes payable 1,345 443
--------- ---------
Total current liabilities 82,069 73,060
Long-term debt 244,575 247,700
Deferred income taxes and other long-term liabilities 36,894 39,114
Shareholders' equity
Preferred stock
$.01 par value; 10,000 shares authorized -- --
Common stock
Class A, $.01 par value; 100,000 shares
authorized, 11,698 issued and outstanding 117 117
Class B, $.01 par value; 5,000 shares
authorized, 979 issued and outstanding 10 10
Capital in excess of par value 39,835 39,835
Retained earnings 60,082 62,844
--------- ---------
Total shareholders' equity 100,044 102,806
--------- ---------
$ 463,582 $ 462,680
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
1
<PAGE> 4
AVONDALE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
-------------------------
MAY 29, MAY 28,
1998 1999
--------- ---------
<S> <C> <C>
Net sales $ 271,286 $ 221,601
Operating costs and expenses
Cost of goods sold 225,649 192,015
Depreciation 9,848 10,971
Selling and administrative expenses 13,047 8,619
Facility restructuring 2,699 --
--------- ---------
Operating income 20,043 9,996
Interest expense 6,111 6,061
Discount and expenses on sale of receivables 1,688 1,177
Other expense, net (10) 179
--------- ---------
Income before income taxes 12,254 2,579
Provision for income taxes 4,420 920
--------- ---------
Net income $ 7,834 $ 1,659
========= =========
Per share data:
Net income - basic $ .60 $ .13
========= =========
Net income - diluted $ .59 $ .13
========= =========
Dividends declared $ .10 $ .10
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE> 5
AVONDALE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
-------------------------
MAY 29, MAY 28,
1998 1999
--------- ---------
<S> <C> <C>
Net sales $ 790,352 $ 651,629
Operating costs and expenses
Cost of goods sold 661,740 558,100
Depreciation 29,511 31,857
Selling and administrative expenses 35,774 28,761
Facility restructuring 2,699 --
--------- ---------
Operating income 60,628 32,911
Interest expense
17,482 17,510
Discount and expenses on sale of receivables 5,534 4,299
Other expense, net 213 457
--------- ---------
Income before income taxes 37,399 10,645
Provision for income taxes 14,480 4,080
--------- ---------
Net income $ 22,919 $ 6,565
========= =========
Per share data:
Net income - basic $ 1.73 $ .52
========= =========
Net income - diluted $ 1.71 $ .51
========= =========
Dividends declared $ .30 $ .30
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 6
AVONDALE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
-------------------------
MAY 29, MAY 28,
1998 1999
--------- ---------
<S> <C> <C>
Operating activities
Net income $ 22,919 $ 6,565
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 29,805 32,129
Facility restructuring 2,699 --
Provision for (benefit of) deferred income taxes 1,530 (1,396)
Loss on sale of equipment 305 777
Changes in operating assets and liabilities (25,620) 16,728
--------- ---------
Net cash provided by operating activities 31,638 54,803
Investing activities
Purchases of property, plant and equipment (47,152) (40,580)
Proceeds from sale of property, plant and equipment 43 1,198
--------- ---------
Net cash used in investing activities (47,109) (39,382)
Financing activities
Net borrowings on revolving line of credit and long term debt 20,450 4,125
Increase (decrease) in accounts receivable sold 9,000 (17,000)
Purchase and retirement of treasury stock (15,380) --
Dividends paid (3,981) (3,803)
--------- ---------
Net cash provided by (used in) financing activities 10,089 (16,678)
Decrease in cash (5,382) (1,257)
Cash at beginning of period 8,517 9,259
--------- ---------
Cash at end of period $ 3,135 $ 8,002
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 7
AVONDALE INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MAY 28, 1999
1. Basis of Presentation: The accompanying unaudited condensed
consolidated financial statements include the accounts of Avondale Incorporated
and its wholly owned subsidiaries, Avondale Mills, Inc. and Avondale Receivables
Company (collectively, the "Company"). These statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The August 28, 1998 balance sheet has been derived from
the audited financial statements at that date. The accounting policies and basis
of presentation followed by the Company are presented in Note 1 to the August
28, 1998 Audited Consolidated Financial Statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation. Operating results for the
thirty-nine weeks ended May 28, 1999 are not necessarily indicative of the
results that may be expected for the fiscal year ending August 27, 1999.
During the first quarter of fiscal 1999, the Company adopted Statement
of Financial Accounting Standard No. 130 "Reporting Comprehensive Income" (FAS
130), which requires the reporting and display of net income plus other
comprehensive income items such as unrealized gains and losses on securities or
foreign currency translation adjustments. The adoption of FAS 130 did not have a
material impact on the presentation of the Company's condensed consolidated
financial statements, as the Company does not have any material other
comprehensive income to report.
2. Inventories: Components of inventories are as follows (amounts in
thousands):
<TABLE>
<CAPTION>
AUG. 28, MAY 28,
1998 1999
--------- ---------
<S> <C> <C>
Finished goods $ 28,744 $ 42,204
Work in process 49,434 50,815
Raw materials 23,279 27,084
Dyes and chemicals 6,084 5,690
--------- ---------
Inventories at FIFO 107,541 125,793
Less allowance to reduce carrying value to
LIFO basis -- --
--------- ---------
107,541 125,793
Supplies at average cost 7,143 6,667
--------- ---------
$ 114,684 $ 132,460
========= =========
</TABLE>
5
<PAGE> 8
AVONDALE INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
(UNAUDITED)
MAY 28, 1999
Valuation of the Company's inventories under the last-in, first-out
(LIFO) method at May 28, 1999 and the related impact on the statement of income
for the thirty-nine weeks then ended has been determined using estimated
quantities and costs as of the fiscal 1999 year-end. As a result, interim
amounts are subject to the final year-end LIFO valuation.
3. Earnings Per Share: Earnings per share is calculated by dividing the
reported net income for the period by the appropriate weighted average number of
shares of common stock outstanding, as shown below (amounts in thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
--------------------- -----------------------
May 29, May 28, May 29, May 28,
1998 1999 1998 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Weighted average shares outstanding -
Basic 13,145 12,677 13,228 12,677
Effect of employee stock options 224 279 194 279
------ ------ ------ ------
Weighted average shares outstanding -
diluted 13,369 12,956 13,422 12,956
====== ====== ====== ======
</TABLE>
4. Contingencies: The Company is involved in certain environmental
matters and claims. The Company has provided reserves to cover management's
estimates of the cost of investigating, monitoring and remediating these and
other environmental conditions. If more costly remediation measures are
necessary than those believed to be probable based on current facts and
circumstances, actual costs may exceed the reserves provided. However, based on
the information currently available, management does not believe that the
outcome of these matters will have a material adverse effect on its future
results of operations or financial condition.
For discussion of certain legal proceedings in a case filed in the
Circuit Court of Jefferson County, Alabama against the Alabama Power Company,
Russell Corporation, the Company and certain other parties, see Item 3 "Legal
Proceedings" in the Company's Annual Report on Form 10-K for the fiscal year
ended August 28, 1998 and Part II - Other Information, Item 1 "Legal
Proceedings" in the Company's Quarterly Report on Form 10-Q for the period ended
November 27, 1998.
The Company is also a party to other litigation incidental to its
business from time to time. The Company is not currently a party to any
litigation other than as referenced above, that management, in consultation with
legal counsel, believes, if determined adversely to the Company, would have a
material adverse effect on the Company's financial condition or results of
operations.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Thirteen Weeks Ended May 28, 1999 Compared to Thirteen Weeks Ended May 29, 1998
NET SALES. Net sales decreased 18.3% to $221.6 million for the thirteen
weeks ended May 28, 1999 from $271.3 million for the thirteen weeks ended May
29, 1998.
Apparel fabric sales decreased 12.6% to $160.6 million for the thirteen
weeks ended May 28, 1999 from $183.7 million for the thirteen weeks ended May
29, 1998. This decrease in sales was the result of a 6.6% decrease in yards sold
and a 6.4% decline in average selling prices. The decline in yards sold and
average selling prices reflected continued weakness in demand for basic indigo
denim fabrics and excess denim production capacity worldwide due to soft
international consumer demand. These declines were partially offset by strong
fashion demand for khaki and other pant-weight cotton fabrics.
Greige and specialty fabric sales decreased 19.5% to $14.6 million for
the thirteen weeks ended May 28, 1999 from $18.1 million for the thirteen weeks
ended May 29, 1998. This decrease reflected a 10.2% decrease in units sold and a
10.4% decrease in average selling prices for those units. The decrease in units
sold and average selling prices was primarily the result of softening demand for
greige and specialty fabrics in the apparel, tent and marine products
industries.
Yarn sales decreased 33.2% to $46.4 million for the thirteen weeks
ended May 28, 1999 from $69.5 million for the thirteen weeks ended May 29, 1998.
This decrease reflected a 24.3% decrease in pounds sold and a 11.8% decrease in
average selling prices. The decrease in pounds sold was partly the result of the
Company's decision to significantly increase the consumption of internally
produced yarn within the Company's weaving facilities, thereby reducing
dependence on outside yarn sourcing. Market demand and pricing for sales yarns
also remained very competitive, reflecting continued excess production capacity
within the industry and increased imports of yarn and knitted apparel from Asia.
COST OF GOODS SOLD. Cost of goods sold decreased 14.9% to $192.0
million for the thirteen weeks ended May 28, 1999 from $225.6 million for the
thirteen weeks ended May 29, 1998. Cost of goods sold as a percentage of net
sales increased to 86.7% for the thirteen weeks ended May 28, 1999 from 83.2%
for the thirteen weeks ended May 29, 1998. The Company has continued efforts to
reduce unit costs through strategic capital expenditure projects. However,
reduced capacity utilization and a corresponding reduction in absorption of
fixed manufacturing costs resulted in increased unit costs during the thirteen
weeks ended May 28, 1999.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses decreased 33.9% to $8.6 million for the thirteen weeks ended May 28,
1999 from $13.0 million for the thirteen weeks ended May 29, 1998. This decrease
reflects continued expense reduction efforts, and reduced charges for certain
associate benefits and performance based incentives corresponding with the
reduced results of operations of the Company for the period. Selling and
administrative expenses as a percentage of net sales decreased to 3.9% for the
thirteen weeks ended May 28, 1999 from 4.8% for the thirteen weeks ended May 29,
1998.
INTEREST EXPENSE, NET. Interest expense, net remained constant at $6.1
million for the thirteen weeks ended May 28, 1999 and May 29, 1998.
7
<PAGE> 10
RESULTS OF OPERATIONS (CONT.)
DISCOUNT AND EXPENSES ON SALE OF RECEIVABLES. Discount and expenses on
sale of receivables were $1.2 million for the thirteen weeks ended May 28, 1999
compared to $1.7 million for the thirteen weeks ended May 29, 1998. This
decrease was primarily attributable to a net decrease in the amount of
receivables sold under the facility.
PROVISION FOR INCOME TAXES. Provision for income taxes decreased to
$0.9 million for the thirteen weeks ended May 28, 1999 from $4.4 million for the
thirteen weeks ended May 29, 1998. The Company's effective tax rate was 35.7%
for the thirteen weeks ended May 28, 1999 compared to 36.1% for the thirteen
weeks ended May 29, 1998.
Thirty-nine Weeks Ended May 28, 1999 Compared to Thirty-nine Weeks Ended May 29,
1998
NET SALES. Net sales decreased 17.6% to $651.6 million for the
thirty-nine weeks ended May 28, 1999 from $790.4 million for the thirty-nine
weeks ended May 29, 1998.
Apparel fabric sales decreased 10.4% to $469.6 million for the
thirty-nine weeks ended May 28, 1999 from $524.0 million for the thirty-nine
weeks ended May 29, 1998. This decrease in sales was the result of a 5.7%
decrease in yards sold and a 5.0% decline in average selling prices. The decline
in yards sold and average selling prices reflected continued weakness in demand
for basic indigo denim fabrics and excess denim production capacity worldwide
due to soft international consumer demand. Workwear fabrics also experienced
some softness in demand due to the generally mild winter in many parts of the
country. These declines were partially offset by strong fashion demand for khaki
and other pant-weight cotton fabrics.
Greige and specialty fabric sales decreased 17.2% to $43.8 million for
the thirty-nine weeks ended May 28, 1999 from $52.8 million for the thirty-nine
weeks ended May 29, 1998. This decrease reflected a 9.7% decrease in units sold
and an 8.3% decrease in average selling prices for those units. The decrease in
units sold and average selling prices was primarily the result of softening
demand for greige and specialty fabrics in the apparel, tent and marine products
industries.
Yarn sales decreased 35.3% to $138.3 million for the thirty-nine weeks
ended May 28, 1999 from $213.6 million for the thirty-nine weeks ended May 29,
1998. This decrease reflected a 26.6% decrease in pounds sold and an 11.8%
decrease in average selling prices. The decrease in pounds sold was partly the
result of the Company's decision to significantly increase the consumption of
internally produced yarn within the Company's weaving facilities, thereby
reducing dependence on outside yarn sourcing. Market demand and pricing for
sales yarns also remained very competitive, reflecting continued excess
production capacity within the industry and increased imports of yarn and
knitted apparel from Asia.
COST OF GOODS SOLD. Cost of goods sold decreased 15.7% to $558.1
million for the thirty-nine weeks ended May 28, 1999 from $661.7 million for the
thirty-nine weeks ended May 29, 1998. Cost of goods sold as a percentage of net
sales increased to 85.6% for the thirty-nine weeks ended May 28, 1999 from 83.7%
for the thirty-nine weeks ended May 29, 1998. The Company has continued efforts
to reduce unit costs through strategic capital expenditure projects. However,
reduced capacity utilization and a corresponding reduction in absorption of
fixed manufacturing costs resulted in increased unit costs during the
thirty-nine weeks ended May 28, 1999.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses decreased 19.6% to $28.8 million for the thirty-nine weeks ended May
28, 1999 from $35.8 million for the thirty-nine weeks ended May 29, 1998. This
decrease reflects continued expense reduction efforts, and reduced charges for
certain associate benefits and performance based incentives corresponding with
the reduced results of operations of the Company during the period. Selling and
administrative expenses as a percentage of net sales decreased to 4.4% for the
thirty-nine weeks
8
<PAGE> 11
RESULTS OF OPERATIONS (CONT.)
ended May 28, 1999 from 4.5% for the thirty-nine weeks ended May 29, 1998.
INTEREST EXPENSE, NET. Interest expense, net remained constant at $17.5
million for the thirty-nine weeks ended May 28, 1999 and May 29, 1998.
DISCOUNT AND EXPENSES ON SALE OF RECEIVABLES. Discount and expenses on
sale of receivables were $4.3 million for the thirty-nine weeks ended May 28,
1999 compared to $5.5 million for the thirty-nine weeks ended May 29, 1998. This
decrease was primarily attributable to a net decrease in the amount of
receivables sold under the facility.
PROVISION FOR INCOME TAXES. Provision for income taxes decreased to
$4.1 million for the thirty-nine weeks ended May 28, 1999 from $14.5 million for
the thirty-nine weeks ended May 29, 1998. The Company's effective tax rate was
38.3% for the thirty-nine weeks ended May 28, 1999 compared to 38.7% for the
thirty-nine weeks ended May 29, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $54.8 million for the
thirty-nine weeks ended May 28, 1999. Principal working capital changes included
a $38.7 million decrease in Accounts Receivable, a $17.8 million increase in
Inventories, and a $9.1 million decrease in Accounts Payable and Accrued
Expenses. Investing activities were predominantly equipment purchases and plant
improvements of $40.6 million made in connection with the on-going modernization
of the Company's manufacturing facilities. Financing activities included a $4.1
million net advance under the revolving line of credit, payment of $3.8 million
in dividends on outstanding common stock, and a $17.0 million decrease in
Accounts Receivable sold under the securitization facility.
At May 28, 1999, the Company had borrowings of $116.5 million
outstanding under its revolving line of credit and $83.5 million of borrowing
availability thereunder.
The Company's capital expenditures, aggregating $40.6 million for the
thirty-nine weeks ended May 28, 1999, were used to fund the expansion and
modernization of weaving and finishing facilities in South Carolina and other
equipment purchases. Management estimates that capital expenditures for the
balance of fiscal 1999 will be approximately $9.5 million, and that such amounts
will be used primarily to improve fabric finishing facilities.
Management believes that cash generated from operations, together with
borrowings available under its revolving line of credit and proceeds received in
connection with sales of trade receivables, will be sufficient to meet the
Company's working capital and capital expenditure needs in the foreseeable
future.
9
<PAGE> 12
OTHER DATA
EBITDA, which is presented not as an alternative measure of operating
results or cash flow from operations (as determined in accordance with generally
accepted accounting principles) but because it is a widely accepted financial
indicator of the ability to incur and service debt, is calculated by the Company
as follows (amounts in thousands):
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
-----------------------
MAY 29, MAY 28,
1998 1999
-------- -------
<S> <C> <C>
Net income $ 22,919 $ 6,565
Interest expense 17,482 17,510
Discount and expenses on sale of receivables 5,534 4,299
Provision for income taxes 14,480 4,080
Depreciation and amortization 29,805 32,129
Facility restructuring 2,699 --
Net change in allowance to reduce carrying
value of inventory to LIFO basis (1,050) --
-------- -------
EBITDA $ 91,869 $64,583
======== =======
</TABLE>
EBITDA as calculated by the Company is not necessarily comparable with
similarly-titled measures presented by other companies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
For discussion of certain market risks related to the Company see Part I,
Item 7a. "Quantitative and Qualitative Disclosures about Market Risk" in the
Company's Annual Report on Form 10-K for fiscal year ended August 28, 1998.
10
<PAGE> 13
AVONDALE INCORPORATED
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On February 23, 1999, a case was filed in the Circuit Court of
Jefferson County, Alabama by Chris and Regina Christian
against Russell Corporation, Russell Lands, Inc., Alabama
Power, the Company and certain other parties. The complaint
alleges that the Company, among others, negligently and/or
wantonly caused or permitted the discharge and disposal of
sewage sludge and contaminates into the lake adjacent to the
plaintiffs' property, which allegedly interfered with the
plaintiffs' use of the property. As a result of these alleged
actions, the plaintiffs claim that the value of their property
has been diminished and that they suffered mental anguish,
bodily injury and other pecuniary loss. The complaint seeks
compensatory and punitive damages in an undisclosed amount.
The Company intends to vigorously defend this case and
believes that it has a number of defenses available to it.
While the outcome of this case cannot be predicted with
certainty, based upon currently available information, the
Company does not believe that it will have a material adverse
effect on the Company's financial condition or results of
operations.
For discussion of certain other legal proceedings related to
the Company see Part II-Other Information, Item 1 "Legal
Proceedings" in the Company's Quarterly Report on Form 10-Q
for the period ended November 27, 1998.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule - Thirty-nine weeks ended
May 28, 1999.
(b) Reports on Form 8-K
None
11
<PAGE> 14
SIGNATURE
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 thereunto duly authorized.
AVONDALE INCORPORATED
By: /S/ JACK R. ALTHERR, JR.
-----------------------------------------
Jack R. Altherr, Jr.
Vice Chairman and Chief Financial Officer
Date: July 9, 1999
-------------
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AVONDALE INCORPORATED FOR THE
THIRTY-NINE WEEKS ENDED MAY 28, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-27-1999
<PERIOD-END> MAY-28-1999
<CASH> 8,002
<SECURITIES> 0
<RECEIVABLES> 40,807
<ALLOWANCES> 2,856
<INVENTORY> 132,460
<CURRENT-ASSETS> 182,800
<PP&E> 560,118
<DEPRECIATION> (299,047)
<TOTAL-ASSETS> 462,680
<CURRENT-LIABILITIES> 73,060
<BONDS> 247,700
0
0
<COMMON> 127
<OTHER-SE> 102,679
<TOTAL-LIABILITY-AND-EQUITY> 462,680
<SALES> 651,629
<TOTAL-REVENUES> 651,629
<CGS> 558,100
<TOTAL-COSTS> 618,718
<OTHER-EXPENSES> 4,756
<LOSS-PROVISION> 962
<INTEREST-EXPENSE> 17,510
<INCOME-PRETAX> 10,645
<INCOME-TAX> 4,080
<INCOME-CONTINUING> 6,565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,565
<EPS-BASIC> .52
<EPS-DILUTED> .51
</TABLE>
