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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 Quarterly Period Ended November 29, 2002

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



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AVONDALE INCORPORATED

(Exact name of registrant as specified in its charter)

|                                                                                |  |                                                
|------------------------------------------------------------------------------- |  | -----------------------------------------------
|Georgia
(State or other jurisdiction of
incorporation or organization)          |  | 58-0477150
(I.R.S. employer
identification no.)
|                                                                               
|506 South Broad Street
Monroe, Georgia
(Address of principal executive offices) |  | 30655
(Zip code)                               

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.

|                     |  |                 |  |                   
|-------------------- |  | --------------- |  | ------------------
|Description          |  | As Of           |  | Shares Outstanding
|                     |  |                 |  |                   
|Class A Common Stock |  | January 3, 2003 |  | 11,551,737 Shares 
|Class B Common Stock |  | January 3, 2003 |  | 978,939 Shares    





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TABLE OF CONTENTS



|                                 |                                                                                               |                                                                  |  |  |  |  |  | 
|-------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  | 
|PART I    FINANCIAL INFORMATION
|                                 | Item 1. Financial Statements                                                                 
|                                 |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)         
|                                 |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)     
|                                 |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|                                 | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                 | Item 3. Quantitative and Qualitative Disclosures about Market Risk.                          
|                                 | Item 4. Controls and Procedures.                                                             
|PART II  OTHER INFORMATION     
|                                 | Item 5. Other Information                                                                    
|                                 | Item 6. Exhibits and Reports on Form 8-K                                                     
|                                 | SIGNATURE                                                                                    
|                                 | CERTIFICATION                                                                                
|                                 | CERTIFICATION                                                                                



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##### Table of Contents



INDEX TO FORM 10-Q

AVONDALE INCORPORATED

|                                             |                              |  |                                                                                               |                                                                                                                      |  |           |   | 
|-------------------------------------------- | ---------------------------- |  | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- |  | --------- | - | 
|                                             |                              |  |                                                                                               |                                                                                                                      |  | Page     
|                                             |                              |  |                                                                                               |                                                                                                                      |  | Reference
|                                             |                              |  |                                                                                               |                                                                                                                      |  |          
|PART I    FINANCIAL INFORMATION (Unaudited) |                              |  |                                                                                               |                                                                                                                     
|                                             | Item 1: Financial Statements |  |                                                                                               |                                                                                                                      | 
|                                             |                              |  |                                                                                               | Condensed Consolidated Balance Sheets at August 30, 2002 and November 29, 2002                                       |  |           | 2 | 
|                                             |                              |  |                                                                                               | Condensed Consolidated Statements of Income for the Thirteen Weeks Ended
November 30, 2001 and November 29, 2002     |  |           | 3 | 
|                                             |                              |  |                                                                                               | Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks Ended
November 30, 2001 and November 29, 2002 |  |           | 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        |  
|                                             |                              |  | Item 4: Controls and Procedures                                                               |                                                                                                                      |  | 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        |  
|                                             |                              |  | Certifications                                                                                |                                                                                                                      |  | 15        |  





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PART I    FINANCIAL INFORMATION




Item 1. Financial Statements

AVONDALE INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |             |          |          |         | 
|----------------------------------------------------- | --------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | -------------------- | --------------------------------------------------------------------------------- | -------- | -------- | ------- | ----------- | -------- | -------- | ------- | 
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |             |          | Nov. 29,
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          | Aug. 30, |         | 2002       
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          | 2002     |         | (unaudited)
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     |                                                                                                                  |                      | ASSETS                                                                            |          |          |         |             |          |          |         | 
|Current Assets                                        |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     | Cash                                                                                                             |                      | $                                                                                 | 2,261    |          |         | $           | 445      |         
|                                                      |                                                     | Accounts receivable, less allowance for doubtful accounts
of $2,199 at Aug. 30, 2002 and $2,299 at Nov. 29, 2002 |                      |                                                                                   | 43,305   |          |         |             | 30,400   |         
|                                                      |                                                     | Inventories                                                                                                      |                      |                                                                                   | 86,946   |          |         |             | 90,861   |         
|                                                      |                                                     | Prepaid expenses                                                                                                 |                      |                                                                                   | 385      |          |         |             | 951      |         
|                                                      |                                                     | Income taxes refundable                                                                                          |                      |                                                                                   | 6,550    |          |         |             | 4,852    |         
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     |                                                                                                                  | Total current assets |                                                                                   |          | 139,447  |         |             |          | 127,509  |        
|Assets held for sale                                  |                                                     |                                                                                                                  | 3,645                |                                                                                   |          |          | 3,645   |            
|Property, plant and equipment                         |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     | Land                                                                                                             |                      |                                                                                   | 6,634    |          |         |             | 6,634    |         
|                                                      |                                                     | Buildings                                                                                                        |                      |                                                                                   | 81,823   |          |         |             | 81,864   |         
|                                                      |                                                     | Machinery and equipment                                                                                          |                      |                                                                                   | 526,897  |          |         |             | 529,268  |         
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     |                                                                                                                  | 615,354              |                                                                                   |          |          | 617,766 |            
|                                                      |                                                     | Less accumulated depreciation                                                                                    |                      |                                                                                   | (369,728 | )        |         |             | (379,543 | )       
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     |                                                                                                                  | 245,626              |                                                                                   |          |          | 238,223 |            
|Other assets                                          |                                                     |                                                                                                                  | 5,146                |                                                                                   |          |          | 4,672   |            
|Goodwill                                              |                                                     |                                                                                                                  | 2,951                |                                                                                   |          |          | 2,951   |            
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     | $                                                                                                                | 396,815              |                                                                                   |          | $        | 377,000 |            
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     |                                                                                                                  |                      | LIABILITIES AND SHAREHOLDERS EQUITY                                              |          |          |         |             |          |          |         | 
|Current liabilities                                   |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      | Accounts payable                                    |                                                                                                                  | $                    | 29,993                                                                            |          |          | $       | 28,131      |         
|                                                      | Accrued compensation, benefits and related expenses |                                                                                                                  |                      | 10,369                                                                            |          |          |         | 11,524      |         
|                                                      | Accrued interest                                    |                                                                                                                  |                      | 4,576                                                                             |          |          |         | 1,332       |         
|                                                      | Other accrued expenses                              |                                                                                                                  |                      | 10,207                                                                            |          |          |         | 7,406       |         
|                                                      | Long-term debt due in one year                      |                                                                                                                  |                      | 2,523                                                                             |          |          |         | 3,604       |         
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     |                                                                                                                  |                      | Total current liabilities                                                         |          |          | 57,668  |             |          |          | 51,997  | 
|Long-term debt                                        |                                                     |                                                                                                                  | 167,477              |                                                                                   |          |          | 153,721 |            
|Deferred income taxes and other long-term liabilities |                                                     |                                                                                                                  | 41,415               |                                                                                   |          |          | 40,773  |            
|Shareholders equity                                  |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     | Preferred stock                                                                                                  |                      |                                                                                   |          |          |         |             |          |         
|                                                      |                                                     |                                                                                                                  |                      | $.01 par value; 10,000 shares authorized                                          |          |          |        |             |          |          |        | 
|                                                      |                                                     | Common stock                                                                                                     |                      |                                                                                   |          |          |         |             |          |         
|                                                      |                                                     |                                                                                                                  |                      | Class A, $.01 par value; 100,000 shares
authorized, 11,552 issued and outstanding |          |          | 115     |             |          |          | 115     | 
|                                                      |                                                     |                                                                                                                  |                      | Class B, $.01 par value; 5,000 shares
authorized, 979 issued and outstanding      |          |          | 10      |             |          |          | 10      | 
|                                                      |                                                     | Capital in excess of par value                                                                                   |                      |                                                                                   | 39,669   |          |         |             | 39,669   |         
|                                                      |                                                     | Accumulated other comprehensive loss                                                                             |                      |                                                                                   | (889     | )        |         |             | (791     | )       
|                                                      |                                                     | Retained earnings                                                                                                |                      |                                                                                   | 91,350   |          |         |             | 91,506   |         
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     |                                                                                                                  |                      | Total shareholders equity                                                        |          |          | 130,255 |             |          |          | 130,509 | 
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            
|                                                      |                                                     | $                                                                                                                | 396,815              |                                                                                   |          | $        | 377,000 |            
|                                                      |                                                     |                                                                                                                  |                      |                                                                                   |          |          |         |            

The accompanying notes are an integral part of these condensed
consolidated financial statements.

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AVONDALE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)

|                                              |                                     |   |                      |         |          |   |         |         | 
|--------------------------------------------- | ----------------------------------- | - | -------------------- | ------- | -------- | - | ------- | ------- | 
|                                              |                                     |   | Thirteen Weeks Ended
|                                              |                                     |   |                     
|                                              |                                     |   | Nov. 30,             |         | Nov. 29,
|                                              |                                     |   | 2001                 |         | 2002    
|                                              |                                     |   |                      |         |         
|Net sales                                     |                                     | $ | 149,074              |         |          | $ | 167,182 |        
|Operating costs and expenses                  |                                     |   |                      |         |          |   |         |        
|                                              | Cost of goods sold                  |   |                      | 130,915 |          |   |         | 141,088 | 
|                                              | Depreciation                        |   |                      | 11,790  |          |   |         | 10,867  | 
|                                              | Selling and administrative expenses |   |                      | 7,449   |          |   |         | 7,705   | 
|                                              | Facility restructuring charges      |   |                      | 6,500   |          |   |         |        | 
|                                              |                                     |   |                      |         |          |   |         |        
|                                              | Operating income (loss)             |   |                      | (7,580  | )        |   |         | 7,522   | 
|Interest expense, net                         |                                     |   | 5,314                |         |          |   | 4,527   |        
|Discount and expenses on sales of receivables |                                     |   | 571                  |         |          |   | 712     |        
|Other, net                                    |                                     |   | (1                   | )       |          |   | 9       |        
|                                              |                                     |   |                      |         |          |   |         |        
|                                              | Income (loss) before income taxes   |   |                      | (13,464 | )        |   |         | 2,274   | 
|Provision for (benefit of) income taxes       |                                     |   | (5,065               | )       |          |   | 865     |        
|                                              |                                     |   |                      |         |          |   |         |        
|                                              | Net income (loss)                   |   | $                    | (8,399  | )        |   | $       | 1,409   | 
|                                              |                                     |   |                      |         |          |   |         |        
|Per share data:                               |                                     |   |                      |         |          |   |         |        
|                                              | Net income (loss)-basic             |   | $                    | (.67    | )        |   | $       | .11     | 
|                                              |                                     |   |                      |         |          |   |         |        
|                                              | Net income (loss)-diluted           |   | $                    | (.67    | )        |   | $       | .11     | 
|                                              |                                     |   |                      |         |          |   |         |        
|                                              | Dividends declared                  |   | $                    | .10     |          |   | $       | .10     | 
|                                              |                                     |   |                      |         |          |   |         |        

The accompanying notes are an integral part of these condensed
consolidated financial statements.

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AVONDALE INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)

|                            |                                                                                          |                                                                  |                                           |         |                      |         |          |         |        |         |  
|--------------------------- | ---------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------- | ------- | -------------------- | ------- | -------- | ------- | ------ | ------- | -
|                            |                                                                                          |                                                                  |                                           |         | Thirteen Weeks Ended
|                            |                                                                                          |                                                                  |                                           |         |                     
|                            |                                                                                          |                                                                  |                                           |         | Nov. 30,             |         | Nov. 29,
|                            |                                                                                          |                                                                  |                                           |         | 2001                 |         | 2002    
|                            |                                                                                          |                                                                  |                                           |         |                      |         |         
|Operating activities        |                                                                                          |                                                                  |                                           |         |                      |         |          |        
|                            | Net income (loss)                                                                        |                                                                  | $                                         | (8,399  | )                    |         | $        | 1,409   |       
|                            | Adjustments to reconcile net income (loss) to net
cash provided by operating activities: |                                                                  |                                           |         |                      |         |          |         |       
|                            |                                                                                          | Depreciation and amortization                                    |                                           |         | 11,944               |         |          |         | 10,919 |        
|                            |                                                                                          | Benefit of deferred income taxes                                 |                                           |         | (2,724               | )       |          |         | (393   | )      
|                            |                                                                                          | Loss on disposal of equipment and facility restructuring charges |                                           |         | 4,710                |         |          |         |       |        
|                            |                                                                                          | Sale of accounts receivable, net                                 |                                           |         | (8,500               | )       |          |         | (7,771 | )      
|                            |                                                                                          | Changes in operating assets and liabilities                      |                                           |         | 24,903               |         |          |         | 11,412 |        
|                            |                                                                                          |                                                                  |                                           |         |                      |         |          |        
|                            |                                                                                          |                                                                  | Net cash provided by operating activities |         |                      | 21,934  |          |         |        | 15,576  |  
|Investing activities        |                                                                                          |                                                                  |                                           |         |                      |         |          |        
|                            | Purchases of property, plant and equipment                                               |                                                                  |                                           | (4,987  | )                    |         |          | (3,464  | )     
|                            | Proceeds from sale of property, plant and equipment                                      |                                                                  |                                           | 210     |                      |         |          |        |       
|                            |                                                                                          |                                                                  |                                           |         |                      |         |          |        
|                            |                                                                                          |                                                                  | Net cash used in investing activities     |         |                      | (4,777  | )        |         |        | (3,464  | )
|Financing activities        |                                                                                          |                                                                  |                                           |         |                      |         |          |        
|                            | Net payments on revolving line of credit                                                 |                                                                  |                                           | (16,525 | )                    |         |          | (12,675 | )     
|                            | Dividends paid                                                                           |                                                                  |                                           | (1,253  | )                    |         |          | (1,253  | )     
|                            |                                                                                          |                                                                  |                                           |         |                      |         |          |        
|                            |                                                                                          |                                                                  | Net cash used in financing activities     |         |                      | (17,778 | )        |         |        | (13,928 | )
|                            |                                                                                          |                                                                  |                                           |         |                      |         |          |        
|Decrease in cash            |                                                                                          |                                                                  | (621                                      | )       |                      |         | (1,816   | )      
|Cash at beginning of period |                                                                                          |                                                                  | 2,969                                     |         |                      |         | 2,261    |        
|                            |                                                                                          |                                                                  |                                           |         |                      |         |          |        
|Cash at end of period       |                                                                                          | $                                                                | 2,348                                     |         |                      | $       | 445      |        
|                            |                                                                                          |                                                                  |                                           |         |                      |         |          |        

The accompanying notes are an integral part of these condensed
consolidated financial statements.

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AVONDALE INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
November 29, 2002

1.     Basis of Presentation: The accompanying unaudited condensed
consolidated financial statements include the accounts of Avondale Incorporated
and its wholly owned subsidiary, Avondale Mills, Inc. (Avondale Mills) and,
prior to its dissolution on August 30, 2002, Avondale Receivables Company, a
special purpose subsidiary of Avondale Mills, (collectively, the Company).
All significant intercompany accounts and transactions have been eliminated.
Certain prior year financial statement amounts have been reclassified to
conform to the current years presentation. The August 30, 2002 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, 2002 Audited Consolidated Financial
Statements.

On August 30, 2002, Avondale Funding LLC (Funding), a special purpose
subsidiary of Avondale Mills, was established to replace Avondale Receivables
Corporation and provide financing through the sale of accounts receivable
generated by the Company. The Company accounts for its investment in Avondale
Funding, LLC using the equity method of accounting.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.

These statements have been prepared in accordance with accounting
principles generally accepted in the United States for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements.

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, 2002 are not necessarily indicative of
the results that may be expected for the fiscal year ending August 29, 2003.

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

|                                                                     |  |          |        |          |  |   |        | 
|-------------------------------------------------------------------- |  | -------- | ------ | -------- |  | - | ------ | 
|                                                                     |  | Aug. 30, |        | Nov. 29,
|                                                                     |  | 2002     |        | 2002    
|                                                                     |  |          |        |         
|Finished goods                                                       |  | $        | 27,013 |          |  | $ | 29,941 | 
|Work in process                                                      |  |          | 33,586 |          |  |   | 32,718 | 
|Raw materials                                                        |  |          | 9,042  |          |  |   | 11,301 | 
|Dyes and chemicals                                                   |  |          | 6,163  |          |  |   | 5,610  | 
|                                                                     |  |          |        |          |  |   |        | 
|Inventories at FIFO                                                  |  |          | 75,804 |          |  |   | 79,570 | 
|Adjustment of carrying value to LIFO basis,
net of market adjustment |  |          | 4,900  |          |  |   | 4,750  | 
|                                                                     |  |          |        |          |  |   |        | 
|                                                                     |  |          | 80,704 |          |  |   | 84,320 | 
|Supplies at average cost                                             |  |          | 6,242  |          |  |   | 6,541  | 
|                                                                     |  |          |        |          |  |   |        | 
|                                                                     |  | $        | 86,946 |          |  | $ | 90,861 | 
|                                                                     |  |          |        |          |  |   |        | 

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AVONDALE INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
November 29, 2002

The Companys inventories at November 29, 2002 under the last-in,
first-out (LIFO) method and the related impact on the statement of income for
the thirteen weeks then ended have been recorded using estimated quantities and
costs as of August 29, 2003, the end of fiscal 2003. As a result, these interim
amounts are subject to the final LIFO calculations for fiscal 2003.

3.     Earnings Per Share: Earnings per share is calculated by dividing the
reported net income (loss) for the period by the appropriate weighted average
number of shares of common stock outstanding, as shown below (amounts in
thousands):

|                                              |  |                      |        |          |  |  |        | 
|--------------------------------------------- |  | -------------------- | ------ | -------- |  |  | ------ | 
|                                              |  | Thirteen Weeks Ended
|                                              |  |                     
|                                              |  | Nov. 30,             |        | Nov. 29,
|                                              |  | 2001                 |        | 2002    
|                                              |  |                      |        |         
|Weighted average shares outstanding  basic   |  |                      | 12,536 |          |  |  | 12,531 | 
|Effect of employee stock options              |  |                      |       |          |  |  | 98     | 
|                                              |  |                      |        |          |  |  |        | 
|Weighted average shares outstanding  diluted |  |                      | 12,536 |          |  |  | 12,629 | 
|                                              |  |                      |        |          |  |  |        | 

4.     Segment Information: Condensed segment information is as follows
(amounts in thousands):

|               |                                              |                                   |         |                      |         |          |         |         |         | 
|-------------- | -------------------------------------------- | --------------------------------- | ------- | -------------------- | ------- | -------- | ------- | ------- | ------- | 
|               |                                              |                                   |         | Thirteen Weeks Ended
|               |                                              |                                   |         |                     
|               |                                              |                                   |         | Nov. 30,             |         | Nov. 29,
|               |                                              |                                   |         | 2001                 |         | 2002    
|               |                                              |                                   |         |                      |         |         
|Revenues:      |                                              |                                   |         |                      |         |          |         |        
|               | Apparel fabrics                              |                                   | $       | 120,906              |         |          | $       | 142,522 |        
|               | Yarns                                        |                                   |         | 45,242               |         |          |         | 47,696  |        
|               | Other                                        |                                   |         | 15,796               |         |          |         | 16,911  |        
|               |                                              |                                   |         |                      |         |          |         |        
|               |                                              |                                   | 181,944 |                      |         |          | 207,129 |        
|               | Less intersegment sales                      |                                   |         | 32,870               |         |          |         | 39,947  |        
|               |                                              |                                   |         |                      |         |          |         |        
|               |                                              | Total                             |         | $                    | 149,074 |          |         | $       | 167,182 | 
|               |                                              |                                   |         |                      |         |          |         |        
|Income (loss): |                                              |                                   |         |                      |         |          |         |        
|               | Apparel fabrics                              |                                   | $       | 5,649                |         |          | $       | 11,609  |        
|               | Yarns                                        |                                   |         | (2,706               | )       |          |         | 1,551   |        
|               | Other                                        |                                   |         | 195                  |         |          |         | 593     |        
|               | Facility restructuring charges               |                                   |         | (6,500               | )       |          |         |        |        
|               | Unallocated                                  |                                   |         | (4,218               | )       |          |         | (6,231  | )      
|               |                                              |                                   |         |                      |         |          |         |        
|               |                                              | Total operating income (loss)     |         |                      | (7,580  | )        |         |         | 7,522   | 
|               | Interest expense, net                        |                                   |         | 5,314                |         |          |         | 4,527   |        
|               | Discount and expenses on sale of receivables |                                   |         | 571                  |         |          |         | 712     |        
|               | Other expense (income), net                  |                                   |         | (1                   | )       |          |         | 9       |        
|               |                                              |                                   |         |                      |         |          |         |        
|               |                                              | Income (loss) before income taxes |         | $                    | (13,464 | )        |         | $       | 2,274   | 
|               |                                              |                                   |         |                      |         |          |         |        

6



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##### Table of Contents



AVONDALE INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
November 29, 2002

5.     Comprehensive income: Comprehensive income includes unrealized gains
and losses in the fair value of certain derivative instruments which qualify
for hedge accounting. A reconciliation of net income to comprehensive income
is as follows (amounts in thousands):

|                                                                 |  |                      |        |          |  |   |       | 
|---------------------------------------------------------------- |  | -------------------- | ------ | -------- |  | - | ----- | 
|                                                                 |  | Thirteen Weeks Ended
|                                                                 |  |                     
|                                                                 |  | Nov. 30,             |        | Nov. 29,
|                                                                 |  | 2001                 |        | 2002    
|                                                                 |  |                      |        |         
|Net income (loss)                                                |  | $                    | (8,399 | )        |  | $ | 1,409 | 
|Change in fair value of interest rate swaps, net of
income taxes |  |                      | (353   | )        |  |   | 98    | 
|                                                                 |  |                      |        |          |  |   |       | 
|Comprehensive income (loss)                                      |  | $                    | (8,752 | )        |  | $ | 1,507 | 
|                                                                 |  |                      |        |          |  |   |       | 

6.     New Accounting Pronouncements: The Company adopted the provisions of
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assets, effective August 31, 2002, and ceased amortization of
goodwill on that date. The Company completed the transitional goodwill
impairment test as required by Statement No. 142 during the thirteen weeks
ended November 29, 2002 and determined that no impairment of goodwill should be
recorded. In accordance with the provisions of Statement No. 142, the adoption
of this accounting policy is reflected prospectively. Had the Company accounted
for goodwill in accordance with this policy in fiscal 2002, the net loss for
the thirteen weeks ended November 30, 2001 would have been ($8.3) million or
($.66) per share-basic and ($.66) per share-diluted.

Effective August 31, 2002, the Company adopted the provisions of
Statements of Financial Accounting Standard No. 141  Business Combinations,
No. 143  Accounting for Asset Retirement Obligations, No. 144  Impairment or
Disposal of Long-lived Assets, No. 145  Rescission of Statements No. 4, 44,
and 64, Amendment of Statement No. 13, and Technical Corrections, and No. 146 -
Accounting for Costs Associated with Exit or Disposal Activities. The adoption
of these Statements had no impact on the condensed consolidated financial
statements.

7.     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 30, 2002. 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 that management, in consultation with
legal counsel, believes would have a material adverse effect on the Companys
financial condition or results of operations.

8.     Facility restructuring: In response to the highly competitive market
conditions and continued oversupply of open-end yarns, during the thirteen
weeks ended November 30, 2001, the Company recorded facility restructuring
charges and other non-operating costs of approximately $5.3 million in
connection with the closing of two separate open-end yarn manufacturing
facilities located in North Carolina. Additionally, the Company implemented
reductions in certain manufacturing overhead costs and selling, general and
administrative expenses in September 2001. In conjunction with these actions
and the two plant closings, the Company recorded expense of approximately $1.2
million during the thirteen weeks ended November 30, 2001 related to the
termination of approximately 70 associates holding manufacturing, marketing and
administrative positions.

7



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##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

CRITICAL ACCOUNTING POLICIES

The Companys analysis and discussion of its financial condition and
results of operations are based upon its consolidated financial statements that
have been prepared in accordance with generally accepted accounting principles
for interim financial information in the United States (GAAP). The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as of the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.

The Company evaluates these estimates and assumptions on an ongoing basis,
including but not limited to those affecting inventories, allowances for
doubtful accounts, assets held for sale, long-lived assets, income taxes
payable and deferred income taxes, deferred compensation, associate and post
retirement benefits, and contingencies. Estimates and assumptions are based on
historical and other factors believed to be reasonable under the circumstances.
The results of these estimates and assumptions may form the basis of the
carrying value of certain assets and liabilities. Actual results, under
conditions and circumstances different from those assumed, may differ from
these estimates and assumptions.

The Company believes the following accounting policies are critical to the
presentation and understanding of its financial condition and the results of
its operations and involve the more significant judgments and estimates
utilized in the preparation of its consolidated financial statements:

Accounts Receivable and Credit Risks:The Company extends credit lines to
its customers in the normal course of business and performs ongoing evaluations
of the financial condition of its customers. In general, collateral is not
required to support such credit lines and the related receivables. The Company
establishes allowances for doubtful accounts based upon factors surrounding the
financial condition and credit risk of specific customers, historical payment
trends and other information.

The Company generates funds through the sale of accounts receivable, at a
discount and without recourse, to a special purpose subsidiary established to
facilitate the acquisition and subsequent resale of certain accounts receivable
to an independent issuer of receivables-backed commercial paper. The discount
rate on the accounts receivable purchased from the Company is established
periodically by the subsidiary based on the fair market value of the
receivables. The Company includes in accounts receivable in its consolidated
balance sheets the portion of accounts receivable sold to the subsidiary which
have not been resold to the commercial paper issuer.

Inventories:Inventories are stated at the lower of cost or market value.
Except for certain supply inventories valued on an average cost basis, the
costs of the Companys inventories are determined on a last-in, first-out
(LIFO) basis. Under LIFO, current material and conversion costs are charged
to cost of goods sold while inventories are valued using costs incurred in the
initial and subsequent fiscal years following election of the LIFO method. In
periods of declining prices, LIFO values may exceed current replacement market
values and require downward adjustment. Estimates, including the estimated
costs to complete work in process inventories and the estimated realizable
values of all inventories, are used in determining the lower of LIFO cost and
market. During periods when current costs or inventory quantities fluctuate
significantly, use of the LIFO method may yield cost of goods sold that differs
significantly from that which would result under other inventory methods.

Long-Lived Assets:The Company periodically reviews the values assigned to
long-lived assets, such as property, plant and equipment, assets held for sale
and goodwill. The associated depreciation and amortization periods are
reviewed on an annual basis. Estimated recoverability of long-lived asset
values is based on anticipated undiscounted cash flows from operations, or in
the case of assets held for sale, the lower of historical carrying amount or
estimated net realizable value. Management periodically reviews the values
assigned to these assets and if additional information becomes available which
indicates a decline in value, makes adjustments in that period.

Revenue Recognition:The Company records revenues principally when
products are shipped to customers. Consistent with recognized practice in the
textile industry, the Company also records revenues to a lesser extent
throughout the fiscal year on a bill and hold basis, invoicing goods that have
been produced, packaged and made ready for shipment. These goods are
effectively segregated from inventory which is available for sale, the risks of
ownership of the goods have passed to the customer, and the remittance terms
and collection experience on the related invoicing is consistent with all other
sales by the Company.

8



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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 30, 2002. The Company is not currently a
party to litigation that management, in consultation with legal counsel,
believes would have a material adverse effect on the Companys future results
of operations or financial condition.

RESULTS OF OPERATIONS

Thirteen Weeks Ended November 29, 2002 Compared to Thirteen Weeks Ended
November 30, 2001

Net Sales.Net sales increased 12.1% to $167.2 million for the thirteen
weeks ended November 29, 2002 from $149.1 million for the thirteen weeks ended
November 30, 2001. The increase in net sales primarily reflected improvement
in apparel fabric unit volume as the production curtailments experienced in the
thirteen weeks ended November 30, 2001 were avoided and inventory levels were
tightly controlled. However, selling prices remained very competitive as
domestic retail sales of apparel continued to reflect weak consumer demand and
a general decline in consumer confidence. In addition, the strength of the U.S.
dollar in comparison to the currencies of many Asian countries continues to
promote the importation of goods from those countries by U.S. retailers,
exacerbating the already highly competitive market conditions resulting from
the imbalance of global supply and demand for textile and apparel products. The
Company expects these conditions to continue into the second quarter of fiscal
2003.

Operating Income.Operating income increased to $7.5 million for the
thirteen weeks ended November 29, 2002, reflecting improved unit cost
absorption and operating efficiencies resulting from the increase in unit
volume as well as lower raw material costs, compared to an operating loss of
($7.6) million for the thirteen weeks ended November 30, 2001, which included
facility restructuring charges of $6.5 million. The Company also continued to
benefit from its ability to produce and internally consume yarns and greige
fabrics in the production of its finished apparel fabrics, thereby maintaining
higher overall capacity utilization. Cost of goods sold increased 7.8% to
$141.1 million for the thirteen weeks ended November 29, 2002 from $130.9
million for the thirteen weeks ended November 30, 2001. Cost of goods sold as
a percentage of net sales decreased to 84.4% for the thirteen weeks ended
November 29, 2002 from 87.8% for the thirteen weeks ended November 30, 2001.

Selling and administrative expenses increased 4.1% to $7.7 million for the
thirteen weeks ended November 29, 2002 from $7.4 million for the thirteen weeks
ended November 30, 2001, reflecting an increase in certain associate benefits
and performance based incentives corresponding to the improvement in operating
income. Selling and administrative expenses as a percentage of net sales
declined to 4.6% for the thirteen weeks ended November 29, 2002 from 5.0% for
the thirteen weeks ended November 30, 2001.

Segment Performance.Apparel fabric sales increased 17.9% to $142.5
million for the thirteen weeks ended November 29, 2002 from $120.9 million for
the thirteen weeks ended November 30, 2001. The improvement in apparel fabric
sales reflected a 19.4% increase in yards sold, while average selling prices
declined 1.3% for the respective periods. Operating income for apparel fabrics
increased 107.1% to $11.6 million for the thirteen weeks ended November 29,
2002 from $5.6 million for the thirteen weeks ended November 30, 2001,
primarily due to the improved unit volume and lower raw material costs.

Yarn sales, including intracompany sales to the fabric operations,
increased 5.5% to $47.7 million for the thirteen weeks ended November 29, 2002
from $45.2 million for the thirteen weeks ended November 30, 2001, reflecting a
10.6% increase in pounds sold and a 4.7% decrease in average selling price.
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. The yarn operations produced an
operating income of $1.6 million for the thirteen weeks ended November 29, 2002
compared to an operating loss of ($2.7) million for the thirteen weeks ended
November 30, 2001, primarily as a result of the improved unit volume and lower
raw material and conversion costs.

Other sales, which include sales of greige and specialty fabrics and
revenues from the Companys trucking operation, increased 7.0% to $16.9 million
for the thirteen weeks ended November 29, 2002 from $15.8 million for the
thirteen weeks ended November 30, 2001. The increase in other sales was
primarily attributable to increased

9



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##### Table of Contents



intracompany sales of greige fabrics to the apparel fabric operations.
Operating income from other sales increased 200.0% to $0.6 million for the
thirteen weeks ended November 29, 2002 from $0.2 million for the thirteen weeks
ended November 30, 2001, primarily due to improved unit volume and lower raw
material costs.

Inter-segment sales increased 21.6% to $40.0 million for the thirteen
weeks ended November 29, 2002 from $32.9 million for the thirteen weeks ended
November 30, 2001, primarily reflecting the increase in consumption of
internally produced yarns and greige fabrics within the Companys apparel
fabrics operation.

Unallocated amounts included in operating income reflect general and
administrative expenses, certain associate benefits and performance based
incentives, and adjustments of the carrying value of inventories to LIFO basis,
net of market adjustments.

Interest Expense, Net.Net interest expense decreased 15.1% to $4.5
million for the thirteen weeks ended November 29, 2002 from $5.3 million for
the thirteen weeks ended November 30, 2001. The decrease was primarily the
result of a lower average balance of borrowings outstanding during the thirteen
weeks ended November 29, 2002.

Discount and Expenses on Sale of Receivables.Discount and expenses on
sales of receivables were $0.7 million for the thirteen weeks ended November
29, 2002 compared to $0.6 million for the thirteen weeks ended November 30,
2001. This increase was attributable to a net increase in the amount of
accounts receivable sold, reflecting the overall increase in net sales of the
Company.

Provision for (Benefit of) Income Taxes.An income tax provision of $0.9
million was recorded for the thirteen weeks ended November 29, 2002, reflecting
the Companys return to profitability, compared to a benefit of income taxes of
($5.1) million for the thirteen weeks ended November 30, 2001.

Facility Restructuring.In response to the highly competitive market
conditions and continued oversupply of open-end yarns, during the thirteen
weeks ended November 30, 2001, the Company recorded facility restructuring
charges and other non-operating costs of approximately $5.3 million in
connection with the closing of two separate open-end yarn manufacturing
facilities located in North Carolina. Additionally, the Company implemented
reductions in certain manufacturing overhead costs and selling, general and
administrative expenses in September 2001. In conjunction with these actions
and the two plant closings, the Company recorded expense of approximately $1.2
million during the thirteen weeks ended November 30, 2001 related to the
termination of approximately 70 associates holding manufacturing, marketing and
administrative positions.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $15.6 million for the
thirteen weeks ended November 29, 2002. Principal working capital changes
included a $20.7 million decrease in accounts receivable, a $7.8 million
decrease in accounts receivable sold under the securitization facility, a $3.9
million increase in inventories, and a $6.8 million decrease in accounts
payable and accrued expenses. Investing activities were predominantly equipment
purchases and related costs of $3.5 million made in connection with the ongoing
maintenance of the Companys manufacturing facilities. Financing activities
included a $12.7 million net decrease in borrowings under the revolving credit
facility and payment of $1.3 million in dividends on outstanding common stock.

At November 29, 2002, the Company had borrowings of $12.3 million
outstanding under its revolving line of credit and $85.8 million of borrowing
availability thereunder.

The Companys capital expenditures, aggregating $3.5 million for the
thirteen weeks ended November 29, 2002, were used primarily to complete routine
maintenance projects. Management estimates that capital expenditures for the
balance of fiscal 2003 will be approximately $15 million.

The receivables securitization facility is the Companys only off-balance
sheet financing arrangement. The Company generates funds through the sale of
accounts receivable to Funding, whose sole business purpose is the ongoing
acquisition and resale of specified trade receivables generated by the Company.
Funding retains no interest in the investment in the accounts receivable sold
to an independent issuer of receivables-backed commercial paper, and has not
experienced any gains or losses on the sale of the investment in accounts
receivable. The Company believes minimal counter party risk exists due to the
financial strength of the independent issuer of the commercial paper.

10



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##### Table of Contents



The table below summarizes the Companys outstanding contractual
obligations as of November 29, 2002, and the effect such obligations are
expected to have on liquidity and cash flow in future periods (amounts in
thousands).

|                             |       |       |                        |                  |  |             |        |             |  |         |         |         |  |   |       |       |  |   |       |   | 
|---------------------------- | ----- | ----- | ---------------------- | ---------------- |  | ----------- | ------ | ----------- |  | ------- | ------- | ------- |  | - | ----- | ----- |  | - | ----- | - | 
|                             |       |       | Payments Due by Period
|                             |       |       |                       
|                             |       |       |                        |                  |  |             |        |             |  |         |         |         |  |   |       |       |  |   | After
|Contractual Obligations      |       | Total |                        | Less than 1 year |  | 1 - 3 years |        | 4 - 5 years |  | 5 years
|                             |       |       |                        |                  |  |             |        |             |  |        
|Short-term Debt              |       | $     | 3,604                  |                  |  | $           | 3,604  |             |  | $       |        |         |  | $ |      |       |  | $ |      |  
|Long-term Debt               |       |       | 153,721                |                  |  |             |       |             |  |         | 149,219 |         |  |   | 4,502 |       |  |   |      |  
|Operating Leases             |       |       | 8,370                  |                  |  |             | 1,665  |             |  |         | 5,172   |         |  |   | 1,533 |       |  |   |      |  
|Equipment purchase orders    |       |       | 5,500                  |                  |  |             | 5,500  |             |  |         |        |         |  |   |      |       |  |   |      |  
|Raw material purchase
orders |       |       | 38,937                 |                  |  |             | 38,937 |             |  |         |        |         |  |   |      |       |  |   |      |  
|                             |       |       |                        |                  |  |             |        |             |  |         |         |         |  |   |       |       |  |   |       |  
|                             | Total |       | $                      | 210,132          |  |             | $      | 49,706      |  |         | $       | 154,391 |  |   | $     | 6,035 |  |   | $     |  | 
|                             |       |       |                        |                  |  |             |        |             |  |         |         |         |  |   |       |       |  |   |       |  

Management believes that cash generated from operations, together with the
borrowings available under its revolving line of credit and proceeds from sales
of trade receivables, will be sufficient to meet the Companys working capital
and capital expenditure needs in the foreseeable future.

FORWARD LOOKING STATEMENTS

Statements herein regarding anticipated capital expenditures and
anticipated performance in future periods constitute forward looking statements
within the meaning of the Securities Act of 1933 and Securities Exchange 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 selling 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 international trade and 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



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OTHER DATA    NON-GAAP FINANCIAL MEASURE

EBITDA, a non-GAAP financial measure which is presented in this report 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):

|                                                                                    |  |                      |        |          |  |   |        | 
|----------------------------------------------------------------------------------- |  | -------------------- | ------ | -------- |  | - | ------ | 
|                                                                                    |  | Thirteen Weeks Ended
|                                                                                    |  |                     
|                                                                                    |  | Nov. 30,             |        | Nov. 29,
|                                                                                    |  | 2001                 |        | 2002    
|                                                                                    |  |                      |        |         
|Net income (loss)                                                                   |  | $                    | (8,399 | )        |  | $ | 1,409  | 
|Interest expense, net                                                               |  |                      | 5,314  |          |  |   | 4,527  | 
|Discount and expenses on sale of receivables                                        |  |                      | 571    |          |  |   | 712    | 
|Provision for (benefit of) income taxes                                             |  |                      | (5,065 | )        |  |   | 865    | 
|Depreciation and amortization                                                       |  |                      | 11,944 |          |  |   | 10,919 | 
|Facility restructuring non cash charges                                             |  |                      | 4,838  |          |  |   |       | 
|Adjustment of carrying value of inventories
to LIFO basis, net of market adjustment |  |                      | (600   | )        |  |   | 150    | 
|                                                                                    |  |                      |        |          |  |   |        | 
|EBITDA                                                                              |  | $                    | 8,603  |          |  | $ | 18,582 | 
|                                                                                    |  |                      |        |          |  |   |        | 




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 30, 2002.




Item 4. Controls and Procedures.

As required by the Securities and Exchange Commission, the Company has
performed an evaluation under the supervision and with the participation of the
Companys management, including the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Companys
disclosure controls and procedures and internal controls. Based on that
evaluation, the Companys management, including the Chief Executive Officer and
Chief Financial Officer, conclude that the Companys disclosure controls and
procedures and internal controls were effective as of November 29, 2002. There
have been no significant changes in the Companys internal controls or in other
factors that could significantly affect internal controls subsequent to
November 29, 2002.

The Companys disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in reports filed or
submitted under the Exchange Act is recorded, processed and reported within the
time periods specified in the Securities and Exchange Commissions rules and
forms. Further, these disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that such information is
accumulated and communicated to the Companys management, including its
principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding disclosure.

12



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##### Table of Contents



AVONDALE INCORPORATED




PART II  OTHER INFORMATION

|        |  |                                                    
|------- |  | ---------------------------------------------------
|Item 1. |  | Legal Proceedings                                  
|        |  | None                                               
|        |  |                                                    
|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



|    |  |                                                                          
|--- |  | -------------------------------------------------------------------------
|(a) |  | The Company held its Annual Meeting of
Shareholders on November 14, 2002.



|    |  |                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Nine directors were elected at the Annual Meeting
to serve until the Annual Meeting of Shareholders in 2003. 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.
James A. Rubright
John P. Stevens



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) |  | The Company had outstanding shares of Class A
Common Stock and Class B Common Stock having an aggregate of
31,130,517 votes entitled to be cast at the Annual Meeting. Of
such aggregate outstanding votes, 172,536 votes were not
present at the Annual Meeting in person or by proxy. The
remaining outstanding 30,957,981 votes were present at the
Annual Meeting in person or by proxy, and voted for the 9
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
|
| | None             

13



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| |                        
| | -----------------------
| | (b) Reports on Form 8-K



| | 1. |  | On October 15, 2002, the Company
filed a current report on Form 8-K regarding its press
release announcing sales and earnings for the fiscal
year ended August 30, 2002.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------




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: /s/ January 10, 2003 |  |                       |  |                                                                                         

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CERTIFICATION

I, G. Stephen Felker, certify that:



|1. |  | I have reviewed this Quarterly Report on Form 10-Q of Avondale
Incorporated;                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this Quarterly Report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Quarterly Report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this Quarterly Report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this Quarterly Report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                        



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Quarterly Report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent functions):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this Quarterly Report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                                                                       
|---------------------- |  | --------------------------------------------------------------------------------------
|Date: January 10, 2003 |  | /s/ G. STEPHEN FELKERG. Stephen Felker
Chairman, President and Chief
Executive Officer

15



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##### Table of Contents






CERTIFICATION

I, Jack R. Altherr, Jr., certify that:



|1. |  | I have reviewed this Quarterly Report on Form 10-Q of Avondale
Incorporated;                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this Quarterly Report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Quarterly Report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this Quarterly Report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this Quarterly Report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                        



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Quarterly Report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent functions):
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this Quarterly Report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                                                                       
|---------------------- |  | --------------------------------------------------------------------------------------
|Date: January 10, 2003 |  | /s/ JACK R. ALTHERR, JR.Jack R. Altherr, Jr.
Vice Chairman and Chief Financial Officer

16