<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED FEBRUARY 25, 2000
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 33-68412
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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.
<TABLE>
<CAPTION>
<S> <C> <C>
Description As Of Shares Outstanding
-------------------- ------------- ------------------
Class A Common Stock April 3, 2000 11,718,184 Shares
Class B Common Stock April 3, 2000 978,939 Shares
</TABLE>
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<PAGE> 2
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION (UNAUDITED)
Item 1: Financial Statements
Condensed Consolidated Balance Sheets at August 27, 1999 and February 25, 2000........ 1
Condensed Consolidated Statements of Income for the Thirteen Weeks Ended
February 26, 1999 and February 25, 2000............................................... 2
Condensed Consolidated Statements of Income for the Twenty-Six Weeks Ended
February 26, 1999 and February 25, 2000............................................... 3
Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended
February 26, 1999 and February 25, 2000............................................... 4
Notes to Condensed Consolidated Financial Statements.................................. 5
Item 2: Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................ 8
Item 3: Quantitative and Qualitative Disclosures about Market Risk............................ 12
PART II - OTHER INFORMATION
Item 1: Legal Proceedings .................................................................... 13
Item 2: Changes in Securities and Use of Proceeds............................................. 13
Item 3: Defaults upon Senior Securities....................................................... 13
Item 4: Submission of Matters to a Vote of Security Holders................................... 13
Item 5: Other Information..................................................................... 13
Item 6: Exhibits and Reports on Form 8-K...................................................... 13
Signature ...................................................................................... 14
</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. 27, FEB. 25,
1999 2000
---------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash $ 8,545 $ 3,601
Accounts receivable, less allowance for doubtful accounts
of $2,615 in fiscal 1999 and $3,106 in fiscal 2000 49,948 49,351
Inventories 106,559 121,305
Prepaid expenses 1,070 1,859
---------- -----------
Total current assets 166,122 176,116
Property, plant and equipment
Land 8,510 8,510
Buildings 84,515 85,412
Machinery and equipment 469,274 478,542
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562,299 572,464
Less accumulated depreciation (306,318) (326,597)
---------- -----------
255,981 245,867
Other assets 17,629 20,999
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$ 439,732 $ 442,982
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 30,773 $ 30,536
Accrued compensation, benefits and related expenses 18,378 20,090
Other accrued expenses 22,366 20,588
Long-term debt due in one year 3,250 3,250
Income taxes payable 3,411 7,478
---------- -----------
Total current liabilities 78,178 81,942
Long-term debt 216,275 206,725
Deferred income taxes and other long-term liabilities 40,283 40,556
Shareholders' equity
Preferred stock
$.01 par value; 10,000 shares authorized -- --
Common stock
Class A, $.01 par value; 100,000 shares
authorized, 11,718 issued and outstanding 117 117
Class B, $.01 par value; 5,000 shares
authorized, 979 issued and outstanding 10 10
Capital in excess of par value 39,835 40,149
Retained earnings 65,034 73,483
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Total shareholders' equity 104,996 113,759
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$ 439,732 $ 442,982
========== ===========
</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
------------------------------
FEB. 26, FEB. 25,
1999 2000
--------- ----------
<S> <C> <C>
Net sales $ 206,509 $ 184,247
Operating costs and expenses
Cost of goods sold 180,049 149,493
Depreciation 10,352 10,501
Selling and administrative expenses 9,313 9,774
---------- ----------
Operating income 6,795 14,479
Interest expense 5,795 5,417
Discount and expenses on sale of receivables 1,419 1,278
Other expense (income), net 16 (30)
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Income (loss) before income taxes (435) 7,814
Provision for (benefit of) income taxes (115) 3,065
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Net income (loss) $ (320) $ 4,749
========== ==========
Per share data:
Net income (loss) - basic $ (.03) $ .37
========== ==========
Net income (loss) - diluted $ (.02) $ .37
========== ==========
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>
TWENTY-SIX WEEKS ENDED
------------------------------
FEB. 26, FEB. 25,
1999 2000
---------- ----------
<S> <C> <C>
Net sales $ 430,028 $ 387,120
Operating costs and expenses
Cost of goods sold 366,084 314,962
Depreciation 20,886 20,938
Selling and administrative expenses 20,142 19,698
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Operating income 22,916 31,522
Interest expense 11,449 10,704
Discount and expenses on sale of receivables 3,122 2,617
Other expense, net 279 128
---------- ----------
Income before income taxes 8,066 18,073
Provision for income taxes 3,160 7,085
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Net income $ 4,906 $ 10,988
========== ==========
Per share data:
Net income - basic $ .39 $ .87
========== ==========
Net income - diluted $ .38 $ .85
========== ==========
Dividends declared $ .20 $ .20
========== ==========
</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>
TWENTY-SIX WEEKS ENDED
-----------------------------
FEB. 26, FEB. 25,
1999 2000
---------- ----------
<S> <C> <C>
Operating activities
Net income $ 4,906 $ 10,988
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 21,076 21,221
Provision for deferred income taxes (1,262) (2,857)
Loss (gain) on sale of equipment 5 (8)
Changes in operating assets and liabilities 2,137 8,303
---------- ----------
Net cash provided by operating activities 26,862 37,647
Investing activities
Purchases of property, plant and equipment (26,988) (11,190)
Proceeds from sale of property, plant and equipment 901 373
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Net cash used in investing activities (26,087) (10,817)
Financing activities
Net borrowings (payments) on revolving line of credit
and long term debt 22,925 (9,550)
Sale of accounts receivable, net (25,000) (20,000)
Issuance of common stock -- 314
Dividends paid (2,535) (2,538)
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Net cash used in financing activities (4,610) (31,774)
Decrease in cash (3,835) (4,944)
Cash at beginning of period
9,259 8,545
---------- ----------
Cash at end of period $ 5,424 $ 3,601
========== ==========
</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)
FEBRUARY 25, 2000
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 27, 1999 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 27, 1999 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 twenty-six weeks ended February 25, 2000 are not necessarily indicative of
the results that may be expected for the fiscal year ending August 25, 2000.
The Company's comprehensive income is equal to net income as reported.
2. Inventories: Components of inventories are as follows
(amounts in thousands):
<TABLE>
<CAPTION>
AUG. 27, FEB. 25,
1999 2000
--------- --------
<S> <C> <C>
Finished goods $ 28,519 $ 48,788
Work in process 44,541 42,224
Raw materials 20,907 17,508
Dyes and chemicals 5,537 5,854
-------- --------
Inventories at FIFO 99,504 114,374
Less allowance to reduce carrying value to
LIFO basis -- --
-------- --------
99,504 114,374
Supplies at average cost 7,055 6,931
-------- --------
$106,559 $121,305
======== ========
</TABLE>
5
<PAGE> 8
AVONDALE INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
FEBRUARY 25, 2000
Valuation of the Company's inventories under the last-in, first-out
(LIFO) method at February 25, 2000 and the related impact on the statement of
income for the twenty-six weeks then ended has been determined using estimated
quantities and costs as of the fiscal 2000 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 TWENTY-SIX WEEKS ENDED
-------------------------- ---------------------------
FEB. 26, FEB. 25, FEB. 26, FEB. 25,
1999 2000 1999 2000
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average shares outstanding -
Basic 12,677 12,695 12,677 12,687
Effect of employee stock options 279 182 279 186
------ ------ ------ ------
Weighted average shares outstanding -
diluted 12,956 12,877 12,956 12,873
====== ====== ====== ======
</TABLE>
4. Segment Information: Condensed segment information is as
follows (amounts in thousands):
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
-------------------------------
FEB. 26, FEB. 25,
1999 2000
-------- --------
<S> <C> <C>
Revenues:
Apparel fabrics $309,033 $280,922
Greige and specialty fabrics 35,130 38,216
Yarns 95,731 96,342
-------- --------
439,894 415,480
Less intersegment sales 9,866 28,360
-------- --------
Total $430,028 $387,120
======== ========
Income:
Apparel fabrics $ 34,823 $ 38,175
Greige and specialty fabrics 3,365 5,012
Yarns 1,160 5,454
Unallocated (16,432) (17,119)
-------- --------
Total operating income 22,916 31,522
Interest expense 11,449 10,704
Discount and expenses on sale of
receivables 3,122 2,617
Other expense, net 279 128
-------- --------
Income before income taxes $ 8,066 $ 18,073
======== ========
</TABLE>
6
<PAGE> 9
AVONDALE INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
FEBRUARY 25, 2000
5. 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 the Company's
future results of operations or financial condition.
For discussion of certain legal proceedings to which the Company is a
party, see Item 3 "Legal Proceedings" in the Company's Annual Report on Form
10-K for the fiscal year ended August 27, 1999 and Part II Other Information,
Item 1 "Legal Proceedings" in this quarterly report on Form 10-Q. 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
would have a material adverse effect on the Company's financial condition or
results of operations.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Thirteen Weeks Ended February 25, 2000 Compared to Thirteen Weeks Ended
February 26, 1999
NET SALES. Net sales decreased 10.8% to $184.2 million for the
thirteen weeks ended February 25, 2000 from $206.5 million for the thirteen
weeks ended February 26, 1999. Global supply of textile and apparel products
continued to exceed demand, creating highly competitive market conditions
worldwide. As a result, weak foreign economies continued to offer their textile
and apparel production to the U.S. market, driving prices down in the Company's
principle distribution channels. The Company expects these conditions to
continue for several months and adversely impact sales in the third and fourth
quarters of fiscal 2000.
OPERATING INCOME. Operating income increased 113.1% to $14.5 million
for the thirteen weeks ended February 25, 2000 from $6.8 million for the
thirteen weeks ended February 26, 1999. The Company responded to the intensely
competitive market conditions by increasing its consumption of internally
produced yarns and greige fabrics in the production of finished apparel fabrics
and thereby improved capacity utilization and sales rationalization. This
improvement in capacity utilization, more favorable raw material costs and unit
cost reductions achieved through plant management programs and capital
expenditure projects resulted in a 17.0% decline in cost of goods sold to
$149.5 million for the thirteen weeks ended February 25, 2000 from $180.0
million for the thirteen weeks ended February 26, 1999. Cost of goods sold as a
percentage of net sales decreased to 81.1% for the thirteen weeks ended
February 25, 2000 from 87.2% for the thirteen weeks ended February 26, 1999.
Selling and administrative expenses increased 5.0% to $9.8 million for
the thirteen weeks ended February 25, 2000 from $9.3 million for the thirteen
weeks ended February 26, 1999, primarily reflecting increased accrual of
certain associate benefits and performance based incentives corresponding to
the improvement in operating income for the period. Largely offsetting these
increased accruals were continued reductions of internal and external selling
expenses commensurate with the decline in the Company's sales. Selling and
administrative expenses as a percentage of net sales increased to 5.3% for the
thirteen weeks ended February 25, 2000 from 4.5% for the thirteen weeks ended
February 26, 1999.
SEGMENT PERFORMANCE. Apparel fabrics sales decreased 10.0% to $132.8
million for the thirteen weeks ended February 25, 2000 from $147.6 million for
the thirteen weeks ended February 26, 1999. The decline in sales reflected a
5.1% decrease in yards sold and a 5.2% decrease in average selling prices. The
Company's unit shipments were adversely impacted during the thirteen weeks
ended February 25, 2000 as some major customers deferred delivery of fabric
orders, and imports of fabrics and apparel from Asia continued to add to the
supply imbalance. Declines in average selling prices were most significant for
denim fabrics, where market conditions are most competitive. Operating income
for apparel fabrics increased 8.4% to $16.2 million for the thirteen weeks
ended February 25, 2000 from $14.9 million for the thirteen weeks ended
February 26, 1999. The improvement in operating income was due to lower raw
material costs and continued reduction of manufacturing costs.
Greige and specialty fabrics sales increased 11.8% to $19.2 million
for the thirteen weeks ended February 25, 2000 from $17.2 million for the
thirteen weeks ended February 26, 1999. The increase in sales reflected a 17.4%
increase in units sold and a 4.8% decrease in average selling prices. Unit
sales of specialty fabrics experienced significant improvement during the
thirteen weeks ended February 25, 2000 while capacity utilization within the
greige fabrics operation benefited from increased production of yarns for
consumption within the apparel fabrics operation. Operating income for greige
and specialty fabrics increased 177.7% to $2.8 million for the thirteen weeks
ended February 25, 2000 from $1.0 million for the thirteen weeks ended February
26, 1999 reflecting higher unit sales, lower raw material costs and continued
reduction of manufacturing costs.
8
<PAGE> 11
RESULTS OF OPERATIONS (CONTINUED)
Yarns sales decreased 0.8% to $44.9 million for the thirteen weeks
ended February 25, 2000 from $45.3 million for the thirteen weeks ended
February 26, 1999, reflecting a 10.3% increase in pounds sold and a 10.1%
decrease in average selling prices. Although the Company's decision to
significantly increase its consumption of internally produced yarns within its
fabrics operations resulted in a decline in outside yarn sales, the improvement
in capacity utilization generated the 10.3% improvement in overall yarn volume.
Market pricing for sales yarns remained very competitive, reflecting continued
excess production capacity within the domestic industry and continued imports
of yarns and knitted apparel from Asia. Operating income for yarns increased to
$3.4 million for the thirteen weeks ended February 25, 2000 from a loss of $1.8
million for the thirteen weeks ended February 26, 1999. Operating income was
positively impacted by lower raw material costs and unit cost reductions
related to the improved capacity utilization.
Intersegment sales increased 259.6% percent to $12.7 million for the
thirteen weeks ended February 25, 2000 from $3.5 million for the thirteen weeks
ended February 26, 1999, primarily reflecting the significant increase in
consumption of internally produced yarns within the Company's fabrics
operations.
INTEREST EXPENSE, NET. Interest expense, net decreased 6.5% to $5.4
million for the thirteen weeks ended February 25, 2000 from $5.8 million for
the thirteen weeks ended February 26, 1999, reflecting the lower average
balance of borrowings outstanding during the thirteen weeks ended February 25,
2000.
DISCOUNT AND EXPENSES ON SALE OF RECEIVABLES. Discount and expenses on
sale of receivables were $1.3 million for the thirteen weeks ended February 25,
2000 compared to $1.4 million for the thirteen weeks ended February 26, 1999.
The decrease was primarily attributable to a net decrease in the amount of
accounts receivable sold under the securitization facility.
PROVISION FOR INCOME TAXES. Provision for income taxes increased to
$3.1 million for the thirteen weeks ended February 25, 2000 from a benefit of
$0.1 million for the thirteen weeks ended February 26, 1999, reflecting the
increase in income before income taxes. The Company's effective income tax rate
was 39.2% for the thirteen weeks ended February 25, 2000.
Twenty-Six Weeks Ended February 25, 2000 Compared to Twenty-Six Weeks Ended
February 26, 1999
NET SALES. Net sales decreased 10.0% to $387.1 million for the
twenty-six weeks ended February 25, 2000 from $430.0 million for the twenty-six
weeks ended February 26, 1999. Global supply of textile and apparel products
continued to exceed demand, creating highly competitive market conditions
worldwide. As a result, weak foreign economies continued to offer their textile
and apparel production to the U.S. market, driving prices down in the Company's
principle distribution channels. The Company expects these conditions to
continue for several months and adversely impact sales in the third and fourth
quarters of fiscal 2000.
OPERATING INCOME. Operating income increased 37.6% to $31.5 million
for the twenty-six weeks ended February 25, 2000 from $22.9 million for the
twenty-six weeks ended February 26, 1999. In response to the intensely
competitive market conditions, the Company significantly increased its
consumption of internally produced yarns and greige fabrics in the production
of finished apparel fabrics and thereby improved capacity utilization and sales
rationalization. This improvement in capacity utilization, more favorable raw
material costs and unit cost reductions achieved through plant management
programs and capital expenditure projects resulted in a 14.0% decline in cost
of goods sold to $315.0 million for the twenty-six weeks ended February 25,
2000 from $366.1 million for the twenty-six weeks ended February 26, 1999. Cost
of goods sold as a percentage of net sales decreased to 81.4% for the
twenty-six weeks ended February 25, 2000 from 85.1% for the twenty-six weeks
ended February 26, 1999.
9
<PAGE> 12
RESULTS OF OPERATIONS (CONTINUED)
Selling and administrative expenses decreased 2.2% to $19.7 million
for the twenty-six weeks ended February 25, 2000 from $20.1 million for the
twenty-six weeks ended February 26, 1999, primarily reflecting continued
efforts to reduce internal and external selling expenses commensurate with the
decline in the Company's sales. Selling and administrative expenses as a
percentage of net sales increased to 5.1% for the twenty-six weeks ended
February 25, 2000 from 4.7% for the twenty-six weeks ended February 26, 1999.
SEGMENT PERFORMANCE. Apparel fabrics sales decreased 9.1% to $280.9
million for the twenty-six weeks ended February 25, 2000 from $309.0 million
for the twenty-six weeks ended February 26, 1999. The decline in sales
reflected a 3.3% decrease in yards sold and a 6.1% decrease in average selling
prices. The Company's unit shipments were adversely impacted during the
twenty-six weeks ended February 25, 2000 as some major customers deferred
delivery of fabric orders, and imports of fabrics and apparel from Asia
continued to add to the supply imbalance. Declines in average selling prices
were experienced across the board, but particularly for denim fabrics where
market conditions are most competitive. Operating income for apparel fabrics
increased 9.6% to $38.2 million for the twenty-six weeks ended February 25,
2000 from $34.8 million for the twenty-six weeks ended February 26, 1999. The
improvement in operating income was largely due to lower unit costs achieved
through improved capacity utilization, plant management programs and capital
expenditure projects.
Greige and specialty fabrics sales increased 8.8% to $38.2 million for
the twenty-six weeks ended February 25, 2000 from $35.1 million for the
twenty-six weeks ended February 26, 1999. The increase in sales reflected a
10.4% increase in units sold and a 1.4% decrease in average selling prices.
Unit sales of specialty fabrics experienced significant improvement during the
twenty-six weeks ended February 25, 2000 while capacity utilization within the
greige fabrics operation benefited from increased production of yarns for
consumption within the apparel fabrics operation. Operating income for greige
and specialty fabrics increased 49.0% to $5.0 million for the twenty-six weeks
ended February 25, 2000 from $3.4 million for the twenty-six weeks ended
February 26, 1999, reflecting higher unit sales, lower raw material costs and
continued reduction of manufacturing costs.
Yarns sales increased 0.6% to $96.3 million for the twenty-six weeks
ended February 25, 2000 from $95.7 million for the twenty-six weeks ended
February 26, 1999, reflecting a 10.6% increase in pounds sold and a 9.0%
decrease in average selling prices. Although the Company's decision to
significantly increase its consumption of internally produced yarns within its
fabrics operations resulted in a decline in outside yarn sales, the improvement
in capacity utilization generated the 10.6% improvement in overall yarn volume.
Market pricing for sales yarns remained very competitive, reflecting continued
excess production capacity within the domestic industry and continued imports
of yarns and knitted apparel from Asia. Operating income for yarns increased to
$5.5 million for the twenty-six weeks ended February 25, 2000 from $1.2 million
for the twenty-six weeks ended February 26, 1999. Operating income was
positively impacted by lower raw material costs and unit cost reductions
related to the improved capacity utilization.
Intersegment sales increased 187.5% percent to $28.4 million for the
twenty-six weeks ended February 25, 2000 from $9.9 million for the twenty-six
weeks ended February 26, 1999, primarily reflecting the significant increase in
consumption of internally produced yarns within the Company's fabrics
operations.
INTEREST EXPENSE, NET. Interest expense, net decreased 6.5% to $10.7
million for the twenty-six weeks ended February 25, 2000 from $11.4 million for
the twenty-six weeks ended February 26, 1999, reflecting the lower average
balance of borrowings outstanding during the twenty-six weeks ended February
25, 2000.
DISCOUNT AND EXPENSES ON SALE OF RECEIVABLES. Discount and expenses on
sale of receivables were $2.6 million for the twenty-six weeks ended February
25, 2000 compared to $3.1 million for the twenty-six weeks ended February 26,
1999. The decrease was primarily attributable to a net decrease in the amount
of accounts receivable sold under the securitization facility.
PROVISION FOR INCOME TAXES. Provision for income taxes increased to
$7.1 million for the twenty-six weeks ended February 25, 2000 from $3.2 million
for the twenty-six weeks ended February 26, 1999, reflecting the increase in
income before income taxes. The Company's effective income tax rate was 39.2%
for the twenty-six weeks ended February 25, 2000 and for the twenty-six weeks
ended February 26, 1999.
10
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $37.6 million for the
twenty-six weeks ended February 25, 2000. Principal working capital changes
included a $20.6 million decrease in accounts receivable and a $14.8 million
increase in inventories. Investing activities were predominantly equipment
purchases and plant improvements of $11.2 million made in connection with the
ongoing modernization of the Company's manufacturing facilities. Financing
activities included a $9.6 million net payment under the revolving line of
credit, payment of $2.5 million in dividends on outstanding common stock and
payment of $20.0 million due to the decrease in accounts receivable sold under
the securitization facility.
At February 25, 2000, the Company had borrowings of $77.7 million
outstanding under its revolving line of credit and $122.3 million of borrowing
availability thereunder.
The Company's capital expenditures, aggregating $11.2 million for the
twenty-six weeks ended February 25, 2000, were primarily used to fund the
modernization of a fabric finishing facility in South Carolina and other
equipment purchases. Management estimates that capital expenditures for the
balance of fiscal 2000 will be approximately $35.0 million, and that such
amounts will be used primarily to continue the improvement of fabric finishing
and to purchase yarn spinning equipment.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which establishes accounting and reporting standards requiring
that every derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either an
asset or liability measured at its fair value, and changes in the derivative's
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. The Company plans to adopt Statement No. 133 in the first
quarter of fiscal 2001. Management does not believe the adoption of this
statement will have a material effect on the consolidated financial statements
of the Company.
FORWARD LOOKING STATEMENTS
Statements herein regarding the Company's anticipated capital
expenditures and anticipated performance in future periods constitute forward
looking statements within the meaning of the Securities Act of 1993 and
Securities Act of 1934. Such statements are subject to certain risks and
uncertainties that could cause actual amounts to differ materially from those
projected. With respect to anticipated capital expenditures, management has
made certain assumptions regarding, among other things, maintenance of existing
facilities and equipment, availability and desirability of new, technologically
advanced equipment, installation and start up times, cost estimates and
continued availability of financial resources. The estimated amount of capital
expenditures is subject to certain risks, including, among other things, the
risk that unexpected capital expenditures will be required and unexpected costs
and expenses will be incurred. Statements herein regarding the Company's
performance in future periods are subject to risks relating to, among other
things, the cyclical and competitive nature of the textile industry in general,
pressures on sales prices due to competitive and economic conditions,
deterioration of relationships with, or loss of, significant customers,
availability, sourcing and pricing of cotton and other raw materials,
technological advancements, employee relations, continued availability of
financial resources, difficulties integrating acquired businesses and possible
changes in governmental policies affecting raw material costs. Management
believes these forward looking statements are reasonable; however, undue
reliance should not be placed on such forward looking statements, which are
based on current expectations.
11
<PAGE> 14
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>
TWENTY-SIX WEEKS ENDED
------------------------------
FEB. 26, FEB. 25,
1999 2000
-------- --------
<S> <C> <C>
Net income ...................................... $ 4,906 $ 10,988
Interest expense ................................ 11,449 10,704
Discount and expenses on sale of receivables .... 3,122 2,617
Provision for income taxes ...................... 3,160 7,085
Depreciation and amortization ................... 21,076 21,221
Net change in allowance to reduce carrying
value of inventory to LIFO basis ........... -- --
-------- --------
EBITDA .......................................... $ 43,713 $ 52,615
======== ========
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For discussion of certain market risks related to the Company see Part
II, Item 7a. "Quantitative and Qualitative Disclosures about Market Risk" in
the Company's Annual Report on Form 10-K for fiscal year ended August 27, 1999.
12
<PAGE> 15
AVONDALE INCORPORATED
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On January 13, 2000, a case was filed in the Circuit Court of
Jefferson County, Alabama by Larry and Cynthia Locke and the owners of
fourteen other residences in the Raintree subdivision of Lake Martin,
against Russell Corporation, Alabama Power and the Company. 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 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.
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
3.3 Amended and Restated By-laws of Avondale Incorporated,
adopted as of January 17, 2000.
27. Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
13
<PAGE> 16
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: April 5, 2000
-------------
14
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED BYLAWS
OF
AVONDALE INCORPORATED
Adopted as of January 17, 2000
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place, either within or
without the State of Georgia, on such date, and at such time, as the Board of
Directors may by resolution provide, or if the Board of Directors fails to
provide, then such meeting shall be held at the principal office of the
Corporation at 10:00 a.m., on the fourth Friday of the fourth calendar month
after the end of the Corporation's fiscal year, if not a legal holiday under
the laws of the State of Georgia, and if a legal holiday, on the next
succeeding business day. The Board of Directors may specify by resolution prior
to any special meeting of shareholders held within the year that such meeting
shall be in lieu of the annual meeting, provided that in any such case the
notice of the meeting shall so state.
Section 2. Special Meetings. Special meetings of the shareholders may
be called by a majority of the Board of Directors, by the Chairman of the Board
of Directors, by the Chief Executive Officer or by the Corporation upon the
written request (which request shall set forth the purpose or purposes of the
meeting) of the shareholders of record (see Section 6(b) of Article I of these
Bylaws) of outstanding shares representing more than 50% of the votes entitled
to be cast on any issue proposed to be considered at the proposed special
meeting. In the event such meeting is called by the Board of Directors, by the
Chairman of the Board of Directors or by the Chief Executive Officer, such
meeting may be held at such place, either within or without the State of
Georgia, as is stated in the call and notice thereof. If such meeting is called
at the request of shareholders as provided in this Section 2, then such meeting
shall be held at such place within the State of Georgia as is stated in the
notice thereof.
Section 3. Notice of Meetings. A written or printed notice stating the
place, day and hour of the meeting, and in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered or
mailed by the Secretary of the Corporation to each holder of record of stock of
the Corporation at the time entitled to vote, at his address as it appears upon
the records of the Corporation, not less than 10 nor more than 60 days prior to
such meeting. If the Secretary fails to give such notice within 20 days after
the call of a meeting, the person calling or requesting such meeting, or any
person designated by them, may give such notice.
<PAGE> 2
Notice of such meeting may be waived in writing by any shareholder. Notice of
any adjourned meeting of the shareholders shall not be required if the time and
place to which the meeting is adjourned are announced at the meeting at which
the adjournment is taken, unless the Board of Directors sets a new record date
for such meeting in which case notice shall be given in the manner provided in
this Section 3.
Section 4. Quorum and Shareholder Vote. A quorum for action on any
subject matter at any annual or special meeting of shareholders shall exist
when the holders of shares entitled to vote a majority of the votes entitled to
be cast on such subject matter are represented in person or by proxy at such
meeting. If a quorum is present, the affirmative vote of such number of shares
as is required by the Georgia Business Corporation Code (as in effect at the
time the vote is taken) for approval of the subject matter being voted upon
shall be the act of the shareholders, unless a greater vote is required by the
Articles of Incorporation or these Bylaws. If a quorum is not present, a
meeting of shareholders may be adjourned from time to time by the vote of
shares having a majority of the votes of the shares represented at such
meeting, until a quorum is present. When a quorum is present at the reconvening
of any adjourned meeting, and if the requirements of Section 3 of this Article
I have been observed, then any business may be transacted at such reconvened
meeting in the same manner and to the same extent as it might have been
transacted at the meeting as originally noticed.
Section 5. Proxies. A shareholder may vote either in person or by
proxy duly executed in writing by the shareholder. Unless written notice to the
contrary is delivered to the Corporation by the shareholder, a proxy for any
meeting shall be valid for any reconvention of any adjourned meeting.
Section 6. Fixing Record Date.
(a) Except as provided in paragraph (b) of this Section
6, for the purpose of determining shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors shall have
the power to fix a date, not more than 70 days prior to the date on which the
particular action requiring a determination of shareholders is to be taken, as
the record date for any such determination of shareholders. A record date for
the determination of shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof shall not be set less than
10 days prior to such meeting.
(b) (i) In order that the Corporation may determine the
shareholders entitled to request a special meeting of the shareholders or a
special meeting in lieu of the annual meeting of the shareholders pursuant to
Section 2 of Article I hereof, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which date shall not
be more than 10 days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. Any shareholder of record seeking to
have the shareholders request such a special meeting shall, by written notice
to the Secretary, request the Board of Directors to fix a record date. The
Board of Directors shall, within 10 business days after the date on which such
a
2
<PAGE> 3
request is received, adopt a resolution fixing the record date. If no record
date has been fixed by the Board of Directors within 10 business days after the
date on which such a request is received, the record date for determining
shareholders entitled to request such a special meeting shall be the first day
on which a signed written request setting forth the request to fix a record
date is delivered to the Corporation by delivery to its principal place of
business, or any officer or agent of the Corporation having custody of the
books in which proceedings of meetings of shareholders are recorded.
(ii) Every written request for a special meeting
shall bear the date of signature of each shareholder who signs the request and
no such request shall be effective to request such a meeting unless, within 70
days after the record date established in accordance with paragraph (b) (i) of
this Section, written requests signed by a sufficient number of record holders
as of such record date to request a special meeting in accordance with Section
2 of Article I hereof are delivered to the Corporation in the manner prescribed
in paragraph (b) (i) of this Section.
Section 7. Notice of Shareholder Business. At an annual meeting of the
shareholders, only such business shall be conducted as shall have been brought
before the meeting (a) by or at the direction of the Board of Directors or (b)
by any shareholder of the Corporation who complies with the notice procedures
set forth in this Section 7 and only to the extent that such business is
appropriate for shareholder action under the provisions of the Georgia Business
Corporation Code. For business to be properly brought before an annual meeting
by a shareholder, the shareholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a shareholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation, not later than the close of business on the 10th
day following the day on which such notice of the date of the annual meeting
was mailed. A shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name
and address, as they appear on the Corporation's books, of the shareholder
proposing such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the shareholder, and (d) any material interest
of the shareholder in such business. Notwithstanding anything in the Bylaws to
the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 7. At an annual
meeting, the Chairman shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this Section 7, and if he should so determine, he shall
so declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
Section 8. Notice of Shareholder Nominees. Only persons who are
nominated in accordance with the procedures set forth in this Section 8 shall
be eligible for election as Directors. Nominations of persons for election to
the Board of Directors of the Corporation may be made at a meeting of
shareholders (a) by or at the direction of the Board of Directors or (b) by any
shareholder of the Corporation entitled to vote for the election of Directors
at the meeting who compiles with the notice procedures set forth in this
Section 8. Such nominations, other than those made by or at the direction of
the Board of Directors, shall be made pursuant to timely
3
<PAGE> 4
notice in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed. Such shareholder's notice shall set forth (a) as to
each person whom the shareholder proposes to nominate for election or
reelection as a Director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of Directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended; and (b) as to the shareholder
giving the notice (i) the name and address, as they appear on the Corporation's
books, of such shareholder and (ii) the class and number of shares of the
Corporation which are beneficially owned by such shareholder. No person shall
be eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth in the Bylaws. The Chairman shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedures prescribed by the Bylaws, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
Section 9. Inspection Rights. Any holder of two percent (2%) or less
of the outstanding shares of common stock of the Corporation shall not be
entitled to exercise the right to inspection enumerated in Section 14-2-1602(c)
of the Georgia Business Corporation Code.
ARTICLE II
DIRECTORS
Section 1. Powers of Directors. The Board of Directors shall be
responsible for the management of the business of the Corporation and, subject
to any restrictions imposed by law, by the Articles of Incorporation, or by
these Bylaws, may exercise all the powers of the Corporation.
Section 2. Number of Directors. The number of directors constituting
the entire Board of Directors shall be not less than one (1) nor more than
fifteen (15), and the exact number shall be fixed from time to time by the
Board of Directors; provided, however, that the number of directors
constituting the entire Board shall be eight (8) until otherwise changed by the
Board of Directors or by the shareholders at any annual or special meeting. No
decrease in the number of directors shall shorten the term of any director at
the time in office. Directors need not be residents of the State of Georgia;
provided, however, that, each director must either (i) beneficially own,
directly or indirectly, shares of capital stock of the Corporation, or (ii)
have investment or voting power with respect to shares of capital stock of the
Corporation.
Section 3. Meetings of the Directors. The Board of Directors shall
meet each year immediately following the annual meeting of shareholders, and
the Board may by resolution provide for the time and place of other regular
meetings. Special meetings of the Directors may be called by the Chairman of
the Board, by the Chief Executive Officer, or by a majority of the Directors.
4
<PAGE> 5
Section 4. Notice of Meetings. Notice of each meeting of the Directors
shall be given by the Secretary by mailing the same at least ten days before
the meeting or by telephone, facsimile transmission, telegraph or cablegram or
in person at least two days before the meeting, to each Director, except that
no notice need be given of regular meetings fixed by the resolution of the
Board or of the meeting of the Board held at the place of and immediately
following the annual meeting of the shareholders. Any Director may waive
notice, either before or after the meeting, and shall be deemed to have waived
notice if he is present at the meeting.
Section 5. Action of Directors Without a Meeting. Any action required
by law to be taken at a meeting of the Board of Directors, or any action which
may be taken at a meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if written consent, setting forth the
action so taken, shall be signed by all the Directors, or all the members of
the committee, as the case may be, and be filed with the minutes of the
proceedings of the Board or the committee. Such consent shall have the same
force and effect as a unanimous vote of the Board or the committee, as the case
may be.
Section 6. Committees. The Board of Directors may, in its discretion,
appoint committees, each consisting of one or more Directors, which shall have
and may exercise such delegated powers as shall be conferred on or authorized
by the resolutions appointing them, except that no such committee may: (1)
approve or propose to shareholders action that the Georgia Business Corporation
Code requires to be approved by shareholders, (2) fill vacancies on the Board
of Directors or any of its committees, (3) amend the Articles of Incorporation
of the Corporation pursuant to Section 14-2-1002 of the Georgia Business
Corporation Code, (4) adopt, amend or repeal these Bylaws, or (5) approve a
plan of merger not requiring shareholder approval. A majority of any such
committee may determine its action, fix the time and place of its meetings, and
determine its rules of procedure. Each committee shall keep minutes of its
proceedings and actions and shall report regularly to the Board of Directors.
The Board of Directors shall have power at any time to fill vacancies in,
change the membership of, or discharge any such committee.
Section 7. Compensation. The Board of Directors shall have the
authority to determine from time to time the amount of compensation that shall
be paid to its members for attendance at meetings of, or service on, the Board
of Directors or any committee of the Board. The Board of Directors also shall
have the power to reimburse Directors for reasonable expenses of attendance at
Directors' meetings and committee meetings.
Section 8. Removal. Any or all directors may be removed from office at
any time with or without cause.
Section 9. Vacancies. A vacancy occurring in the Board of Directors by
reason of the removal of a Director by the shareholders shall be filled by the
shareholders, or, if authorized by the shareholders, by the remaining
Directors. Any other vacancy occurring in the Board of Directors may be filled
by the affirmative vote of a majority of the remaining Directors though less
than a quorum of the Board of Directors, or by the sole remaining Director, as
the case may be, or, if the vacancy is not so filled, or if no director
remains, by the shareholders. A Director elected to fill a vacancy shall serve
for the unexpired term of his predecessor in office.
5
<PAGE> 6
Section 10. Telephone Conference Meetings. Unless the Articles of
Incorporation otherwise provide, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board or committee by means of telephone conference or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section 10 shall constitute presence in person at such meeting.
ARTICLE III
OFFICERS
Section 1. Officers. The officers of the Corporation shall be elected
by the Board of Directors and shall consist of a Chairman of the Board of
Directors, a Chief Executive Officer, a Secretary and such other additional
officers with such titles as the Board of Directors may establish. Each officer
shall hold office for the term for which such officer has been elected or until
such officer's successor is elected and qualified, or until such officer's
earlier resignation, removal from office, or death. Any two or more offices may
be held by the same person; provided, however, that the offices of Chairman of
the Board of Directors and Secretary shall not be held by the same person.
Section 2. Chairman of the Board. The Chairman of the Board of
Directors shall be the chief executive officer of the Corporation and shall,
under the direction of the Board of Directors, have responsibility for the
general direction of the business, policies and affairs of the Corporation. He
shall preside at all meetings of the shareholders and all meetings of the Board
of Directors and shall have such other duties as the Board of Directors shall
from time to time prescribe.
Section 3. Secretary. The Secretary shall keep the minutes of the
meetings of the shareholders and the Board of Directors and shall have custody
of and attest the seal of the Corporation.
Section 4. Other Duties and Authorities. Each officer, employee and
agent shall have such other duties and authorities as may be conferred on them
by the Board of Directors or by the Chief Executive Officer.
Section 5. Removal. Any officer may be removed at any time by the
Board of Directors. A contract of employment for a definite term shall not
prevent the removal of any officer, but this provision shall not prevent the
making of a contract of employment with any officer and shall have no effect
upon any cause of action that any officer may have as a result of removal in
breach of a contract of employment.
Section 6. Compensation. The salaries of the officers shall be fixed
from time to time by the Board of Directors. No officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
6
<PAGE> 7
ARTICLE IV
DEPOSITORIES, SIGNATURE AND SEAL
Section 1. Depositories. All funds of the Corporation shall be
deposited in the name of the Corporation in such depository or depositories as
the Board may designate and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents as the Board may from
time to time authorize.
Section 2. Contracts. All contracts and other instruments shall be
signed on behalf of the Corporation by the Chairman of the Board of Directors
or by such other officer, officers, agent or agents, as the Board from time to
time may by resolution provide or as the Chairman of the Board of Directors may
designate from time to time.
Section 3. Seal. The corporate seal of the Corporation shall be as
follows:
The seal may be manually affixed to any document or may be
lithographed or otherwise printed on any document with the same force and
effect as if it had been affixed manually. The signature of the Secretary or
any Assistant Secretary shall attest the seal and may be a facsimile if and to
the extent permitted by law.
ARTICLE V
STOCK TRANSFERS
Section 1. Form and Execution of Certificates. The certificates of
shares of capital stock of the Corporation shall be in such form as may be
approved by the Board of Directors and shall be signed by the Chairman of the
Board of Directors or another officer and
7
<PAGE> 8
by the Secretary or any Assistant Secretary, provided that any such certificate
may be signed by the facsimile signature of either or both of such officers
imprinted thereon if the same is countersigned by a transfer agent of the
Corporation, and provided further that certificates bearing the facsimile of
the signature of such officers imprinted thereon shall be valid in all respects
as if such person or persons were still in office, even though such officer or
officers shall have died or otherwise ceased to be officers.
Section 2. Transfers of Shares. Shares of stock in the Corporation
shall be transferable only on the books of the Corporation by proper transfer
signed by the holder of record thereof or by a person duly authorized to sign
for such holder of record. The Corporation or its transfer agent or agents
shall be authorized to refuse any transfer unless and until it is furnished
such evidence as it may reasonably require showing that the requested transfer
is proper.
Section 3. Lost, Destroyed or Stolen Certificates. Where the holder of
record of a share or shares of stock of the Corporation claims that the
certificate representing said share or shares has been lost, destroyed or
wrongfully taken, such holder of record may request a replacement certificate
before the Corporation has notice that the certificate has been acquired by a
bona fide purchaser, file with the Corporation a sufficient indemnity bond, and
furnish evidence of such loss, destruction or wrongful taking satisfactory to
the Corporation, in the reasonable exercise of its discretion. Each officer of
the Corporation shall be authorized to take and authorize any actions required
by the Corporation with respect to such lost, destroyed or stolen certificate,
including determining the sufficiency and necessity of an indemnity bond and
the sufficiency of the evidence of loss, destruction or wrongful taking, and to
effect the issuance of a replacement certificate upon satisfaction of such
officer as to the adequacy of the foregoing.
Section 4. Transfer Agent and Registrar. The Board may (but shall not
be required to) appoint a transfer agent or agents and a registrar or
registrars to transfers, and may require that all stock certificates bear the
signature of such transfer agent or of such transfer agent and registrar.
ARTICLE VI
INDEMNIFICATION
Section 1. Mandatory Indemnification. The Corporation shall indemnify,
to the fullest extent permitted under the Georgia Business Corporation Code,
any individual made a party to a proceeding (as defined in the Georgia Business
Corporation Code) because he is or was a director or officer of the Corporation
or any of its subsidiaries, against liability (as defined in the Georgia
Business Corporation Code), incurred in the proceeding, if he acted in a manner
he believed in good faith to be in or not opposed to the best interests of the
Corporation and, in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful.
8
<PAGE> 9
Section 2. Advances for Expenses. The Corporation shall pay for or
reimburse the reasonable expenses incurred by a director or officer of the
Corporation or any of its subsidiaries who is a party to a proceeding, in
advance of the final disposition of a proceeding if:
(a) Such person furnishes the Corporation a written affirmation of
his good faith belief that he has met the standard of conduct set forth in
Section 1 above, as applicable; and
(b) Such person furnishes the Corporation a written undertaking,
executed personally on his behalf to repay any advances if it is ultimately
determined that he is not entitled to indemnification.
The written undertaking required by paragraph (b) above must be an
unlimited general obligation of such person but need not be secured and may be
accepted without reference to financial ability to make repayment.
Section 3. Permissive Indemnification. The Corporation shall have the
power to indemnify and advance expenses to the fullest extent permitted by the
Georgia Business Corporation Code to a director, officer, employee or agent who
is made a party to a proceeding because he is or was a director, officer,
employee or agent of the Corporation.
Section 4. Indemnification Not Exclusive. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of
its final disposition conferred in this Article VI shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, provision of the Articles of Incorporation, provision of these Bylaws,
agreement, vote of shareholders or disinterested directors or otherwise.
Section 5. Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VI shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE VII
AMENDMENT OF BYLAWS
These Bylaws may be altered, amended, repealed or new Bylaws adopted
by the Board of Directors by the affirmative vote of a majority of all
directors then holding office, but any bylaws adopted by the Board of Directors
may be altered, amended, repealed, or any new bylaws adopted, by the
shareholders at an annual or special meeting of shareholders, when notice of
any such proposed alteration, amendment, repeal or addition shall have been
given in the notice of such meeting. The shareholders may prescribe that any
bylaw or bylaws adopted by them shall not be altered, amended or repealed by
the Board of Directors.
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF AVONDALE INC. FOR THE QUARTER ENDED
FEBRUARY 25, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-25-2000
<PERIOD-END> FEB-25-2000
<CASH> 3,601
<SECURITIES> 0
<RECEIVABLES> 49,351
<ALLOWANCES> 3,106
<INVENTORY> 121,305
<CURRENT-ASSETS> 176,116
<PP&E> 572,464
<DEPRECIATION> 326,597
<TOTAL-ASSETS> 442,982
<CURRENT-LIABILITIES> 81,942
<BONDS> 206,725
0
0
<COMMON> 127
<OTHER-SE> 113,632
<TOTAL-LIABILITY-AND-EQUITY> 442,982
<SALES> 387,120
<TOTAL-REVENUES> 387,120
<CGS> 314,962
<TOTAL-COSTS> 355,598
<OTHER-EXPENSES> 2,745
<LOSS-PROVISION> 679
<INTEREST-EXPENSE> 10,704
<INCOME-PRETAX> 18,073
<INCOME-TAX> 7,085
<INCOME-CONTINUING> 10,988
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,988
<EPS-BASIC> .87
<EPS-DILUTED> .85
</TABLE>
