Avondale, Louisiana -- Avondale Industries, Inc., and American Heavy LiftShipping Company (AHL) on February 7, 1995, announced the execution of a $143,865,000contract for the construction of four U.S. flag product carriers that will comply with thedouble-hull requirements of the Oil Pollution Act of 1990 (OPA 90). The contract was madepossible when AHL's application for a U.S. Government guarantee under Title XI of theMerchant Marine Act of 1936 was approved by the Department of Transportation, MaritimeAdministration (MARAD). The guarantee will be in the amount of $139.4 Million and will beused as the basis for AHL's financing of the project, which has an approximate total valueof $160 Million. Construction is scheduled to commence in mid-1995, and is scheduled forcompletion with redelivery of the last ship in mid-1997. The MARAD Title XI loan guaranteeprogram was essential to the contract between Avondale and AHL. Avondale and AHL, of NewOrleans, worked together on a design for the new ships for more than two years.Construction of the new tankers, which will have a 36,000-ton capacity each, will beaccomplished by replacing the existing forebodies with Avondale-built double-hullforebodies. The existing ships will be cut just forward of the engine room bulkhead, thenthe new forebodies will be attached to the existing sterns. Extensive stern enhancementsand a new addition to the existing house are also included in the work scope. The workwill be performed in Avondale's drydock. "It's a cost-effective way of providing environmentally-safe tankers," saidRon McAlear, Vice President of Avondale's Advanced Programs and Marketing group. In 1994, Avondale reached a technology-transfer agreement with Astilleros EspanolesS.A. Much of Avondale's future work will be based on productivity improvement ideaslearned from the Madrid-based, state-owned builder of commercial ships. Avondale announced in November 1994 that MARAD had approved its application for a TitleXI guarantee of $15.9 Million, which would be utilized to help fund a $18.2 Millionsignificant plant modernization and expansion at the Company's Shipyards Division inAvondale, Louisiana. The effort was designed to streamline Avondale's production methodsand to facilitate the completion of its existing backlog of contracts. In addition, themodernization effort is intended to improve Avondale's productivity and enhance itscompetitiveness for domestic and international shipbuilding opportunities. The federalguarantee was made possible by a provision of the administration'sshipbuilding-revitalization push enacted in 1993. It authorized backing of capitalinvestments in U.S. shipyards. The modernization plan enabled the shipyard to provide acompetitive price for the AHL project. At the time McAlear said, "We hope that this will make us much more competitiveand that we will get orders for a number of large commercial vessels. This (themodernization program) will be focused mainly on our steel production line. Steel is themain work of a shipyard. We will be centrally locating all of that kind of work: cutting,forming, shaping, and welding. This is mainly to build those modules (Avondale uses amodular construction technique) a lot quicker." The vessels will be the first U.S. flag product carriers constructed in the UnitedStates in eight years, and the double-hull design will provide environmentally safe oiltransportation. At its peak the project will support 950 new and existing jobs. Avondale's revenues for 1994 totaled $475.8 Million, compared with $456.7 Million in1993. Revenues for the fourth quarter of 1994 totaled $130.6 Million versus $103.3 Millionfor the same quarter of 1993. Remarked Avondale's President, chairman, and Chief Executive Officer Albert L. Bossier,"Avondale's results for both the fourth quarter and full year reflect significantbottom-line improvement in the Company's operations." The Company was profitableduring each quarter of the year, and the cumulative total clearly affirms the initiativeswe have undertaken to strengthen Avondale's financial position and restore margins. Thecurrent firm backlog of more than $1.5 Billion is an all-time high for Avondale. The Navyalso holds options to award three additional Sealift vessels to the Company, which wouldincrease that backlog to over $2 Billion. "In addition to gaining positive momentum in revenues from this rebound in ourshipbuilding activity, we received a substantial benefit in 1994 from the reductionachieved in long-term debt. We also achieved notable progress in raising operatingefficiency through a consistent effort to contain costs and improve productivity. We arefirmly committed to maintain these programs to enhance Avondale's competitive leadershipwhich, in turn, increases the opportunities for future growth." Avondale Industries, Inc., headquartered in New Orleans, is one of the nation's leadingmarine fabricators. In addition to its shipbuilding operations, the Company specializes inboat construction and is a major repair contractor for commercial and Navy ships. It isalso involved in the modular construction of plants and components for a variety ofland-based industries.