<PAGE>   1
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                       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 NOVEMBER 29, 1996
                          -----------------

                                      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.


<TABLE>
<CAPTION>
     Description                     As Of                Shares Outstanding 
--------------------            ---------------           ------------------ 
<S>                             <C>                       <C>
Class A Common Stock            January 1, 1997           12,312,034  Shares 
Class B Common Stock            January 1, 1997              978,939  Shares 
</TABLE>

================================================================================
<PAGE>   2

                                  FORM  10-Q

                              TABLE OF CONTENTS


<TABLE>
PART  I  -  FINANCIAL INFORMATION (UNAUDITED)

<S>                                                                                                                     <C>
          Condensed Consolidated Balance Sheets at November 29, 1996 and August 30, 1996......................          1
                                                                                                              
          Condensed Consolidated Statements of Income for the Thirteen Weeks Ended                            
          November 29, 1996 and November 24, 1995.............................................................          2
                                                                                                              
          Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks Ended                        
          November 29, 1996 and November 24, 1995.............................................................          3
                                                                                                              
          Notes to Condensed Consolidated Financial Statements................................................          4
                                                                                                              
          Management's Discussion and Analysis of Financial Condition and Results of Operations...............          6
                                                                                                              
                                                                                                              
PART  II - OTHER INFORMATION                                                                                  
                                                                                                              
          Item 1:   Legal Proceedings..........................................................................         8
                                                                                                          
          Item 2:   Changes in Securities......................................................................         8
                                                                                                          
          Item 3:   Defaults upon Senior Securities............................................................         8
                                                                                                          
          Item 4:   Submission of Matters to a Vote of Security Holders........................................         8
                                                                                                          
          Item 5:   Other Information..........................................................................         8
                                                                                                          
          Item 6:   Exhibits and Reports on Form 8-K...........................................................         8
                                                                                                          
          Signature............................................................................................         9
</TABLE>  
          

<PAGE>   3


PART I.  FINANCIAL INFORMATION

                            AVONDALE INCORPORATED
              CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                             AUG. 30,    NOV. 29,
                                                               1996       1996
                                                            ---------  ---------
                         ASSETS
<S>                                                         <C>        <C>         
Current assets                                                                     
  Cash                                                      $   7,253  $   9,073   
  Accounts receivable, less allowance for doubtful                                 
     accounts of $4,920 in 1996 and $5,069 in 1997             84,428     86,200   
  Due from Triarc                                               7,250         --   
  Inventories                                                 127,698    137,368   
  Prepaid expenses                                              2,792      1,606   
                                                            ---------  ---------   
     Total current assets                                     229,421    234,247   
                                                                                   
Property, plant and equipment                                                      
  Land                                                          8,532      8,532   
  Buildings                                                    64,694     65,384   
  Machinery and equipment                                     357,406    361,003   
                                                            ---------  ---------   
                                                              430,632    434,919   
  Less accumulated depreciation                              (190,838)  (200,918)  
                                                            ---------  ---------   
                                                              239,794    234,001   
Other assets                                                   23,864     20,002   
                                                            ---------  ---------   
                                                                                   
                                                            $ 493,079  $ 488,250   
                                                            =========  =========   
<CAPTION>                                                                          
                                                                                   
                 LIABILITIES AND SHAREHOLDERS' EQUITY                              
                                                                                   
<S>                                                         <C>        <C>         
Current liabilities                                                                
  Accounts payable                                          $  47,045  $  51,371   
  Accrued compensation, benefits and related expenses          20,182     16,774   
  Other accrued expenses                                       26,530     21,029   
  Long-term debt due in one year                                3,250      3,250   
  Income taxes payable                                             88      1,153   
                                                            ---------  ---------   
     Total current liabilities                                 97,095     93,577   
                                                                                   
Long-term debt                                                299,850    299,775   
Deferred income taxes and other long-term liabilities          28,622     27,145   
Shareholders' equity                                                               
  Preferred Stock                                                                   
    $.01 par value; 10,000 shares authorized                       --         --   
  Common Stock                                                                      
    Class A, $.01 par value; 100,000 shares                                        
       authorized, 12,312 issued and outstanding                  123        123   
    Class B, $.01 par value; 5,000 shares                                          
       authorized, 979 issued and outstanding                      10         10   
  Capital in excess of par value                               41,844     41,844   
  Retained earnings                                            25,535     25,776   
                                                            ---------  ---------   
     Total shareholders' equity                                67,512     67,753   
                                                            ---------  ---------   
                                                            $ 493,079  $ 488,250   
                                                            =========  =========   
</TABLE>


           See notes to condensed consolidated financial statements.


                                       1

<PAGE>   4

                            AVONDALE INCORPORATED
           CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                         13 WEEKS ENDED
                                                      ---------------------
                                                      NOV. 24,     NOV. 29,
                                                        1995         1996  
                                                      --------     --------
<S>                                                   <C>          <C>        
Net sales                                             $128,949     $254,064   
                                                                              
Operating costs and expenses                                                  
  Cost of goods sold                                   108,960      218,303   
  Depreciation                                           6,228       10,279   
  Selling and administrative expenses                    6,725       11,470   
                                                      --------     --------   
     Operating income                                    7,036       14,012   
                                                                              
Interest expense                                         3,008        6,498   
Discount and expenses on sale of receivables                --        1,611   
Loss attributable to investment in Oneita                   --        3,690   
Other (income) expense, net                               (470)         258   
                                                      --------     --------   
  Income before income taxes                             4,498        1,955   
                                                                              
Provision for income taxes                               1,745          784   
                                                      --------     --------   
     Net income                                       $  2,753     $  1,171   
                                                      ========     ========   
Per share data:                                                               
     Net income                                       $    .25     $    .09   
                                                      ========     ========   
                                                                              
     Dividends declared                               $    .07     $    .07   
                                                      ========     ========   
                                                                              
Weighted average shares outstanding                     11,135       13,400   
                                                      ========     ========   
</TABLE>                                                                      



           See notes to condensed consolidated financial statements.

                                       2

<PAGE>   5

                            AVONDALE INCORPORATED
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                      13 WEEKS ENDED               
                                                                  -----------------------
                                                                  NOV. 24,       NOV. 29,        
                                                                    1995           1996          
                                                                  --------       --------
<S>                                                                <C>            <C>                  
Operating activities                                                                            
  Net income                                                       $2,753         $ 1,171       
  Adjustments to reconcile net income to net                                                    
      cash provided by operating activities:                                                    
        Depreciation and amortization                               6,239          10,348       
        Change in other assets                                       (507)          3,614       
        Provision for deferred income taxes                          (968)         (1,476)       
        Interest expense on payment-in-kind notes                   1,229              --       
        Gain on sale of equipment                                    (511)             (2)       
        Changes in operating assets and liabilities                  (868)         (6,526)       
                                                                   ------         -------       
                                                                                                
           Net cash provided by operating activities                7,367           7,129       
Investing activities                                                                            
  Purchases of property, plant and equipment                       (4,952)         (4,306)       
  Proceeds from sale of property, plant and equipment                 511               2       
                                                                   ------         -------       
                                                                                                
           Net cash used in investing activities                   (4,441)         (4,304)      
Financing activities                                                                            
     Net payments on revolving line of credit                      (2,150)            (75)      
     Dividends paid                                                  (775)           (930)      
                                                                                                
           Net cash used by  financing activities                  (2,925)         (1,005)      
                                                                   ------         -------       
                                                                                                
Increase in cash                                                        1           1,820       
                                                                                                
Cash at beginning of period                                         1,334           7,253       
                                                                   ------         -------       
                                                                                                
           Cash at end of period                                   $1,335         $ 9,073       
                                                                   ======         =======       
</TABLE>


           See notes to condensed consolidated financial statements.


                                       3
<PAGE>   6

                            AVONDALE INCORPORATED
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)
                              NOVEMBER 29, 1996



     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 30, 1996 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 30, 1996 Audited Consolidated Financial Statements.

     Effective September 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-lived
Assets and Long-Lived Assets to be Disposed Of." The adoption of this statement
had no impact on the Company's financial results.

     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 thirteen weeks ended November 29, 1996 are not necessarily indicative of
the results that may be expected for the fiscal year ending August 29, 1997.


     2.  Inventories:  Components of inventories are as follows (amounts in
thousands):

<TABLE>
<CAPTION>
                                                      AUG. 30,     NOV. 29,        
                                                        1996         1996         
                                                      --------     --------        
          <S>                                         <C>          <C>            
          Finished goods                              $ 35,746       42,575        
          Work in process                               56,826       57,647        
          Raw materials                                 26,817       30,959        
          Dyes and chemicals                             9,119        6,595        
                                                      --------     --------        
          Inventories at FIFO                          128,508      137,776        
                                                                                   
          Less allowance to reduce carrying value to                               
            LIFO basis                                  (7,725)      (7,525)        
                                                      --------     --------        
                                                       120,783      130,251        
          Supplies at average cost                       6,915        7,117        
                                                      --------     --------        
                                                                                   
                                                      $127,698     $137,368        
                                                      ========     ========        
</TABLE>



                                       4

<PAGE>   7
                            AVONDALE INCORPORATED
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CON.)
                                 (UNAUDITED)
                              NOVEMBER 29, 1996

     Valuation of the Company's inventories under the last-in, first-out (LIFO)
method at November 29, 1996  and the related impact on the statement of income
for the thirteen weeks then ended has been determined using estimated
quantities and costs as of the fiscal 1997 year-end. As a result, interim
amounts are subject to the final year-end LIFO valuation.

     3.  Investment in securities:   In January 1996, the Company purchased a
$7.5 million subordinated note due February 26, 1999, having convertible
features, from Oneita Industries, Inc. ("Oneita"). On August 27, 1996, the
Company converted the subordinated note plus accrued interest into 2,270,833
shares of common stock of Oneita, representing ownership of 24.8% of Oneita's
outstanding shares. This investment, which is accounted for under the equity
method, is included in Other assets in the Consolidated Balance Sheet.

     The following summarizes the results of operations reported by Oneita for
its fiscal quarter ended September 29, 1996, the first quarter reported by
Oneita subsequent to the Company's conversion of the subordinated note into
Oneita's common stock (amounts in thousands):

<TABLE>
<CAPTION>
     
                                    Three Months Ended
                                    September 28, 1996
                                    ------------------
     <S>                                <C>
     Net Sales                          $ 34,711
                                        ========
                                  
     Loss from Operations               $(16,615)
                                        ========
                                  
     Net Loss                           $(18,828)
                                        ========
</TABLE>

     During the thirteen weeks ended November 29, 1996, the Company recorded a
loss of $3.7 million attributable to its investment in Oneita. Such loss
represented the Company's pro rata share of the net loss incurred by Oneita
subsequent to the August 27, 1996 conversion of the Company's investment into
equity.

     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 position.

     The Company is also a party to litigation incidental to its business from
time to time. The Company is not currently a party to any litigation 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.




                                       5


<PAGE>   8

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

Thirteen Weeks Ended November 29, 1996 Compared to Thirteen Weeks Ended
November 24, 1995

     NET SALES. Net sales increased 97.0% to $254.1 million in fiscal 1997
from $129.0 million in fiscal 1996, primarily as a result of the Company's
acquisition of substantially all of the textile assets of Graniteville Company
("Graniteville") in April 1996.

     Apparel fabric sales increased 245.1% to $178.6 million in fiscal 1997
from $51.8 million in fiscal 1996. This increase in sales reflected a 289.6%
increase in yards sold, which was partially offset by a 11.4% decline in
average selling prices. The increase in yards sold was primarily attributable
to the acquisition of Graniteville in April 1996. The decline in average
selling prices resulted from the inclusion of net sales attributable to
Graniteville, which generally were at lower average selling prices than the
Company's other apparel fabric sales.

     Greige and specialty fabric sales increased 32.1% to $15.1 million in
fiscal 1997 from $11.4 million in fiscal 1996. This increase in sales was
primarily the result of an increase in yards sold due to the inclusion of net
sales attributable to Graniteville, which was acquired in April 1996.

     Yarn sales decreased 8.1% to $60.5 million in fiscal 1997 from $65.8
million in fiscal 1996. This decrease reflected a 3.5% decrease in pounds sold
and a 4.8% decrease in average selling prices. These decreases reflected weak
demand in the knitted apparel market and excess production capacity within the
yarn industry during the period.

     COST OF GOODS SOLD. Cost of goods sold increased 100.4% to $218.3 million
in fiscal 1997 from $109.0 million in fiscal 1996. Cost of goods sold as a
percentage of net sales increased to 85.9% in fiscal 1997 from 84.5% in fiscal
1996, primarily due to higher production costs of certain Graniteville
products. Raw material costs as a percentage of net sales decreased to 50.0% in
fiscal 1997 from 52.2% in fiscal 1996, while conversion costs as a percentage
of net sales increased to 35.9% in fiscal 1997 from 32.4% in fiscal 1996.

     SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses
increased 70.6% to $11.5 million in fiscal 1997 from $6.7 million in fiscal
1996, primarily due to additional expenses attributable to Graniteville.
Selling and administrative expenses as a percentage of net sales decreased to
4.5% in fiscal 1997 from 5.2% in fiscal 1996.

     INTEREST EXPENSE, NET. Interest expense, net increased 116.1% to $6.5
million in fiscal 1997 from $3.0 million in fiscal 1996. This increase
reflected a higher level of outstanding borrowings during fiscal 1997 as a
result of the acquisition of Graniteville.

     DISCOUNT AND EXPENSES ON SALE OF RECEIVABLES. Discount and expenses on
sale of receivables were $1.6 million for fiscal 1997, which related to the
receivables securitization facility established by the Company in April 1996.

     LOSS ATTRIBUTABLE TO INVESTMENT IN ONEITA. Based upon Oneita's
expectations of continued operating losses for its first and second quarters of
1997, the Company anticipates recording additional losses attributable to its
investment in Oneita during fiscal 1997. The carrying value of this investment
at November 29, 1996 was less than the New York Stock Exchange quoted market
value.





                                       6


<PAGE>   9

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CON.)


RESULTS OF OPERATIONS (CON.)

     PROVISION FOR INCOME TAXES. Provision for income taxes decreased 55.1% to
$0.8 million for fiscal 1997 from $1.7 million for fiscal 1996. The Company's
effective tax rate was 40.1% in fiscal 1997 compared to 38.8% in fiscal 1996.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided by operating activities was $7.1 million for the
thirteen weeks ended November 29, 1996. Principal working capital changes
included a $5.5 million decrease in Accounts Receivable, a $9.7 million
increase in Inventories, and a $4.6 million decrease in Accounts Payable and
Accrued Expenses. The Company's investing activities included $4.3 million in
capital improvements relating to the ongoing modernization of the Company's
manufacturing facilities. Net cash used in financing activities aggregated $1.0
million, including $930,000 used to pay dividends on outstanding capital stock.

     At November 29, 1996, the Company had borrowings of $161.0 million
outstanding under its revolving line of credit and $64.0 million of borrowing
availability thereunder.

     Management estimates that capital expenditures for fiscal 1997 will be
approximately $40.0 million, and that such amounts will be used primarily to
upgrade weaving equipment and 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. The Company will also continue to consider other options available to
it in connection with future working capital and capital expenditure needs,
including the issuance of additional debt and equity securities.




                                       7


<PAGE>   10

                             AVONDALE INCORPORATED


PART II - OTHER INFORMATION

<TABLE>
<S>     <C>
Item 1  Legal Proceedings

        None

Item 2  Changes in Securities

        None

Item 3  Defaults upon Senior Securities

        None

Item 4  Submission of Matters to a Vote of Security Holders

        (a) The Company held its Annual Meeting of Shareholders on November 13, 1996.

        (b) Eight directors were elected at the Annual Meeting to serve until the Annual Meeting of 
            Shareholders in 1997. The names of these Directors are as follows:

            G. Stephen Felker            
            Jack R. Altherr, Jr.         
            Dale J. Boden                
            Robert B. Calhoun            
            Kenneth H. Callaway          
            Harry C. Howard              
            C. Linden Longino, Jr.       
            John P. Stevens              

        (c) The Company had outstanding shares of Class A Common Stock and Class B Common
            Stock having an aggregate of 31,890,814 votes entitled to be cast at the Annual Meeting. 
            Of such aggregate outstanding votes, 42,630 votes were not present at the Annual 
            Meeting in person or by proxy. The remaining outstanding 31,848,184 votes were present 
            at the Annual Meeting in person or by proxy and voted For the 8 directors that were 
            elected at the Annual Meeting. There were no abstentions or broker non-votes and no 
            votes were withheld.

Item 5  Other Information
        
        None
        
Item 6  Exhibits and Reports on Form 8-K
        
        (a) Exhibits
        
        27. Financial Data Schedule (for SEC use only).
        
        (b) Reports on Form 8-K
        
            1. On October 18, 1996, the Company filed a current report on Form 8-K regarding 
               the Company's position relative to "forward looking statements" and certain safe 
               harbors provided in the Securities Act of 1933 and the Securities Exchange Act 
               of 1934.
        
            2. On October 18, 1996, the Company filed a current report on Form 8-K regarding 
               its press release for the fiscal year ended August 30, 1996.
        

</TABLE>


                                       8
<PAGE>   11

                                   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/ G. STEPHEN FELKER      
                               ------------------------------------------------
                               G. Stephen Felker    
                               Chairman, President, and Chief Executive Officer
       

                                                                             
                           By: /s/ JACK R. ALTHERR, JR.
                               ------------------------------------------------
                               Jack R. Altherr, Jr.
                               Vice Chairman and Chief Financial Officer





Date: January 8, 1997





                                       9