Net income for the second quarter of 1998 rose 20% to $7.7 million versus $6.4 million in the year-earlier period. Sales for the three months ended June 30, 1998 totaled $178.5 million versus $145.8 million in the year-earlier period, an increase of 22%. For the first six months of 1998, Avondale reported net income of $15.0 million, or $1.04 per share, compared with $12.7 million, or $0.87 per share, a year ago. Sales for the first half of 1998 totaled $363.1 million compared with $285.3 million in the year-earlier period.

"The improvement in net income for the second quarter further demonstrates the positive momentum in our operations," remarked Albert L. Bossier, Jr., Chairman and Chief Executive Officer. "Our current backlog of contracts totals approximately $3.1 billion, including unexercised options for additional vessels. A key priority for us is the completion of this work on a timely basis while continuing to provide sound returns on our invested resources. The majority of our shipyard’s production activity is focused on the six vessels Avondale is constructing in the Navy's Strategic Sealift series and on the two 125,000 DWT Jones Act crude oil carriers for ARCO Marine. We are also continuing the design phase of the program for building the initial vessel in the Navy's major LPD-17 program. We were very pleased with the Navy's decision shortly after the close of the quarter to exercise a contract modification, valued at $78 million, authorizing us to begin procurement of long lead-time materials for construction of the second LPD vessel in what is planned to be a series of 12 ships. Avondale would build 8 LPD vessels if contracts for all 12 vessels were awarded to our alliance. A highlight of the second quarter related to this program was the dedication of the University of New Orleans - Avondale Maritime Technology Center of Excellence. Most of the design work on the LPD-17 contract is being conducted in this new state of the art facility. Serving as the prime contractor on the LPD-17 program represents an important milestone for Avondale."

Thomas M. Kitchen, Corporate Vice President and Chief Financial Officer, added, "Maintaining a strong financial position is essential for Avondale to capitalize on the future opportunities to build both military and commercial vessels. Nevertheless, during the second quarter, we completed the repurchase of 1,250,000 shares of the Company’s common stock through a public auction. This tender underscores the Company’s commitment to increasing shareholder value. We are pleased that our financial position has enabled us to execute this repurchase and are confident that this investment will prove to be a positive one for Avondale. Also, during the second quarter, Avondale announced plans to open a new steel fabrication facility in Tallulah, Louisiana, to be leased from the Port of Madison Parish. This approximately $2 million investment will enable us to outfit the 100,000 square foot plant with equipment for fabricating steel sub-assemblies. The Company will continue to evaluate other investment opportunities, particularly productivity and technology-focused capital expenditures, which will enhance our overall efficiency and provide opportunities for growth."

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

Cautionary Statement for Purposes of "Safe Harbor" Provisions of the Private Securities litigation Reform Act of 1995

Certain statements, other than statements of historical fact, contained herein are forward-looking statements. These forward-looking statements are generally accompanied by such terms and phrases as "anticipates," "estimates," "expects," "believes," "should," "projects," or "scheduled," or similar statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause the Company’s results to differ materially from the results discussed in such forward-looking statements include the Company’s reliance on U.S. Navy contracts, including its ability to replenish its backlog by securing additional contracts from the U.S. Navy, profit recognition on government contracts, the outcome of the Company’s litigation involving efforts to unionize the Company’s production workers, and the competitive impact of a resolution of the litigation in favor of the union, the importance of obtaining commercial contracts, the Company’s ability to complete its contracts within its cost estimates, intense competition for government and commercial contracts and labor, regulatory and other risks in the shipbuilding and marine construction industries. All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements in this paragraph.