AVONDALE INDUSTRIES, INC. today announced the Navy exercised a contract modification

NEW ORLEANS, LOUISIANA -- AVONDALE INDUSTRIES, INC. (NASDAQ/NMS – AVDL) today announced the Navy exercised a contract modification, valued at $78 million, authorizing Avondale to start procurement of long-lead time materials for the construction of an additional LPD ship. Funding for the full construction of the ship is expected to total approximately $400 million and is included in the President’s budget for fiscal year 1999. This ship represents the second LPD vessel awarded to the Avondale Alliance, a shipbuilding team consisting of Avondale as the prime contractor, Bath Iron Works Corporation (a subsidiary of General Dynamics), Raytheon Systems Company (a subsidiary of Raytheon Company) and Intergraph Corporation. The Avondale Alliance was awarded the contract in 1996 for the initial ship in the LPD program, the Navy’s next generation of amphibious assault ships.

The first LPD ship is currently in the engineering and design phase. Construction is scheduled to begin in 1999 with delivery set for 2002. Avondale’s peak production on the LPD program is projected to involve the employment by the Company of approximately 4,000 individuals.

Avondale was informed of the award by its Congressional delegation including House Appropriations Committee Chairman Bob Livingston (R-LA) whose committee funded this contract modification. Other area lawmakers including U.S. Representatives William Jefferson (D-LA) and Billy Tauzin (R-LA) voted for this funding on the House floor.

Albert L. Bossier, Jr., Chairman and Chief Executive Officer, remarked, "The LPD program is a critical part of Avondale’s long-term strategic plan. Current Navy plans call for the construction of 12 LPD ships with 8 of the 12 scheduled for construction at Avondale. These 8 ships alone will represent approximately $4 billion of potential sales for the Company between now and the year 2008 when the final vessel is scheduled for completion."

Avondale Industries, Inc., headquartered in metro New Orleans designs, builds and overhauls both military and commercial vessels.