SecProbe.io

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

Mail Stop 3-8

								March 29, 2005

By Facsimile and U.S. Mail

Mr. G. Stephen Felker
Chairman, President and Chief Executive Officer
Avondale Incorporated
506 South Broad St
Monroe, GA 30655

	RE:	Form 10-K for the fiscal year ended August 27, 2004
		File No. 33-68412
Filed November 12, 2004

Form 10-Q for the quarter ended November 26, 2004

Dear Mr. Felker:

    We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your disclosures in
future filings in response to these comments.  If you disagree, we
will consider your explanation as to why our comment is
inapplicable
or a revision is unnecessary.  Please be as detailed as necessary
in
your explanation.  In some of our comments, we may ask you to
provide
us with supplemental information so we may better understand your
disclosure.  After reviewing this information, we may or may not
raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

**********************************

General

1. Where a comment below requests additional disclosures or other
revisions to be made, these revisions should be included in your
future filings, as applicable.

FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST 27, 2004

Item 6. Selected Financial Data, page 14

2. We note that you disclose Adjusted EBITDA, a non-GAAP financial
measure that is used to determine compliance with certain
covenants
of your debt and receivables securitization agreements.  Please
revise your disclosure to discuss (1) the materiality of the
agreements and the related covenants, (2) the amounts or limits
required for compliance with the covenants, and (3) the actual or
reasonably likely effects of compliance or non-compliance with the
covenants on your financial condition and liquidity.  See Question
10
of the SEC`s Frequently Asked Questions Regarding the Use of Non-
GAAP
Financial Measures (the Non-GAAP FAQ), available on our website at
www.sec.gov.

3. Each time you present the measure Adjusted EBITDA, please also
present alongside the measure your cash flows from operating,
investing and financing activities.  Refer to Question 12 of the
Non-
GAAP FAQ.

4. Please tell us whether the ratio of Adjusted EBITDA to interest
expense, net and discount and expenses on sale of receivables is
also
one of your material debt covenants.  If so, please add a footnote
to
the table describing how you calculate the ratio and also provide
disclosure similar to the disclosure we have requested above with
respect to your presentation of Adjusted EBITDA.  Refer to
Question
10 of the Non-GAAP FAQ for additional information.  If not, please
tell us supplementally why you believe you are permitted to
include
this measure in your filing in light of the prohibitions in Item
10(e) of Regulation S-K.  Ensure your supplemental response is
clear
in terms of the usefulness of this non-GAAP measure and how the
measure is used by management.

Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operation, page 16

5. On page 9 you disclose that you have established reserves for
certain "significant" environmental projects.  Due to the
significance of these environmental projects, we feel that
additional
detailed disclosures in MD&A and in the financial statement
footnotes
regarding the judgments and assumptions underlying the recognition
and measurement of the liabilities are necessary to inform readers
fully regarding the range of reasonably possible outcomes that
could
have a material effect on your financial condition, results of
operations, or liquidity.  For example, as discussed in paragraph
9
of SFAS 5, we believe that the amounts accrued for each matter
should
be disclosed.  To the extent it is reasonably possible you will
incur
losses in excess of recorded amounts related to this or other
contingent liabilities, please provide the applicable disclosures
in
accordance with SFAS 5, including the amount or range of
reasonably
possible losses in excess of recorded amounts.  Alternatively, if
no
amount of loss in excess of recorded amounts is believed to be
reasonably possible, please state this in your disclosure.  Please
note that the term reasonably possible, as described in paragraph
.160 of SOP 96-1, spans a significant range starting from remote
and
ending with probable.  Other disclosures, as further described in
SAB
Topic 5-Y, may be necessary, including (but not limited to):
* The circumstances affecting the reliability and precision of
loss
estimates;
* The extent to which unasserted claims are reflected in the
accruals
or may affect the magnitude of the contingency;
* Whether, and to what extent, losses may be recoverable from
third
parties;
* The timing of payments of accrued and unrecognized amounts;
* The material components of the accruals and significant
assumptions
underlying estimates;
* The recurring costs of managing hazardous substances and
pollutions
in ongoing operations;
* Manadated expenditures to remediate previously contaminated
sites,
and;
* Other infrequent or non-recurring clean-up expenditures that can
be
anticipated, but which are not required in the present
circumstances.
See the guidance provided in SFAS 5, SAB Topic 5-Y, and SOP 96-1.
Show us supplementally what the revised disclosures would look
like
for the historical periods presented.

Results of Operations, page 17

6. Where you describe two or more business reasons that
contributed
to a material change in a financial statement line item between
periods, please quantify, where possible, the extent to which each
change contributed to the overall change in that line item.  For
example, with respect to the overall change in operating income
from
fiscal year 2002 to 2003 please quantify the extent to which the
changes are attributable to the various contributing factors, such
as
declines in unit volume, reductions in unit cost absorption and
operating efficiencies, and lower raw material costs.  Please also
supplementally tell us why you discuss the $2.5 million
restructuring
charge as a reason for the decline in operating income when the
restructuring charge of $7.0 million in fiscal year 2002 was much
greater.  See Item 303(a) of Regulation S-K and SEC Release No.
33-
8350.

7. Where you identify intermediate causes of changes in your
operating results, also describe the reasons underlying the
intermediate causes.  For example, you indicate that the change in
operating income from fiscal year 2003 to 2004 is due to a
significant increase in raw material costs.  While this
information
is beneficial to the reader, you do not explain why these raw
material costs increased.  A discussion of the relevant factors
and
trends that led to the increased costs would be beneficial to the
reader.  Additionally, we note your statement that reductions in
raw
material costs are expected to yield improvements in margins
during
fiscal 2005.  Please elaborate your disclosures to indicate your
reasoning for this and other similar predictions.  See SEC Release
No. 33-8350.

Liquidity and Capital Resources, page 22

8. Please ensure your discussion and analysis of cash flows is not
merely a recitation of changes evident from the financial
statements.
For example, you indicate that fiscal 2004 net cash used by
operating
activities is a result of changes in accounts receivable,
inventories, accounts payable, and accrued expenses.  Please
provide
analysis explaining the underlying reasons for the fluctuations in
these and any other contributing accounts.

9. Please revise your tabular disclosure of contractual
obligations
to include estimated interest payments on your debt.  A footnote
to
the table should provide appropriate disclosure regarding how you
computed the payments.  Since the table is aimed at increasing
transparency of cash flow, we believe these payments should be
included in the table.  If you choose not to include these
payments,
a footnote to the table should clearly identify the excluded items
and provide any additional information that is material to an
understanding of your cash requirements.  See Item 303(a)(5) of
Regulation S-K.

Item 7A. Quantitative and Qualitative Disclosures About Market
Risk,
page 32

10. In light of the significant increase in your variable rate
debt
as of August 27, 2004, we are unclear as to how a 10% change in
interest rates would not be material to your operations.  Thus,
please provide us supplementally the quantitative analysis that
supports your statement that a 10% change in the effective average
interest rate would not have a material effect on your pretax
earnings for fiscal year 2005.  Please also consider disclosing in
future filings a sensitivity analysis that quantifies the
potential
loss in future earnings resulting from one or more selected
hypothetical changes in interest rates.  See Item 305(a) of
Regulation S-K.

11. As disclosed on page 3 and in your segment footnote,
approximately 16% of your fiscal year 2004 net sales related to
sales
billed to customers domiciled outside the United States.  Please
include relevant disclosure regarding your exposure to exchange
rate
fluctuations, if applicable.  Additionally, please disclose within
your financial statements the aggregate foreign currency
transaction
gain or loss included in determining net income in each period for
which a statement of operations is presented, if material.  See
paragraph 30 of SFAS 52.  If your international transactions are
denominated in U.S. dollars, please state as such in your
disclosures.

Financial Statements

Consolidated Statements of Operations, page 36

12. Please tell us your basis for recording discounts and expenses
on
sales of your trade accounts receivable as non-operating expenses.
We generally expect these amounts to be included within operating
income.

Notes to Financial Statements

General

13. Please disclose how you account for reimbursements from the US
Department of Agriculture for the difference between domestic
cotton
prices and world cotton prices.  Ensure the disclosure indicates
the
line item on the statements of operations where the reimbursements
are included, how the reimbursements are allocated to inventory
units
affected, and your policy with respect to accruing the
reimbursements
before they are received.  Please also consider discussing in MD&A
the impact on your results of operations and cash flows of these
reimbursements.

Note 1., page 39

14. You disclose that your sales are recognized when products are
shipped to customers, but you do not state when title transfer
occurs
or who assumes risk of loss during shipment. Supplementally please
explain to us how your accounting policy complies with the
delivery
and performance requirements of Topic 13:A of SAB 104.  If your
shipping terms determine risk of loss and/or title transfer, you
should disclose such terms in your future filings.  Please also
tell
us when title transfers to the customer and who assumes risk of
loss
if the product is damaged during shipment to the customer.  Please
also revise your disclosures to clarify how your policy complies
with
GAAP when revenue is recognized prior to delivery of the product
to
the customer.

15. You disclose that the estimated useful lives of your property,
plant and equipment range from 3-30 years.  As 3-30 years is a
fairly
broad range, please consider narrowing it by disclosing the useful
lives of specific asset categories within this caption.

16. Please disclose the types of expenses that you include in the
cost of goods sold line item and the types of expenses that you
include in the selling and administrative expenses line item.  In
doing so, please disclose specifically whether you include inbound
freight charges, purchasing and receiving costs, inspection costs,
warehousing costs, internal transfer costs, and the other costs of
your distribution network in cost of goods sold.  If you currently
exclude a significant portion of these costs from cost of goods
sold,
please provide cautionary disclosure in MD&A that your gross
margins
may not be comparable to others, since some entities include the
costs related to their distribution network in cost of goods sold
and
others like you exclude all or a portion of them from gross
margin,
including them instead in a line item such as selling and
administrative expenses.  To the extent it would be material to an
investor`s ability to compare your operating results to others in
your industry, you should quantify in MD&A the amount of these
costs
excluded from cost of goods sold.

17. Please disclose your policy for classifying shipping and
handling
costs in the statements of operations.  If shipping and handling
costs are significant and are not classified in cost of goods
sold,
disclose the amount of these costs and the line item(s) that
include
them.  Please also confirm that amounts paid to you by customers
for
shipping and handling are included in net sales.  See EITF 00-10.

Note 2. Restructuring Charges, net, page 42

18. For each major type of cost associated with your restructuring
activities, such as employee termination costs, disclose the total
amount expected to be incurred in connection with the activity,
the
amount incurred in the period, and the cumulative amount incurred
to
date.  For each type of cost, please also provide a reconciliation
of
the beginning and ending liability balances showing separately the
changes during the period attributable to costs incurred and
charged
to expense, costs paid or otherwise settled, and any adjustments
to
the liability with an explanation of the reason therefore.  See
paragraph 20b. of SFAS 146.  Additionally, describe the timing of
cash payments to be made under the restructuring plans and
disclose
when you expect the restructuring plans to be complete.  Show us
supplementally what the revised disclosures would look like for
the
historical periods presented.

Note 7. Receivables Securitization Facilities, page 44

19. We understand that you sell your receivables to Funding at a
discount and that Funding then resells your receivables to GECC at
a
further discount.  We also understand that the discount on the
receivables sold to Funding is included in the line item captioned
"discounts and expenses on sales of receivables" on your
statements
of operations.  Please help us understand how the further discount
on
the sale of the receivables by Funding to GECC gets reflected in
your
statements of operations, if at all.   In this regard, we are
confused by your statement on page 44 that Funding has experienced
no
gains or losses on the resale of the receivables.

20. Please disclose the gross cash flows related to your accounts
receivable securitizations, such as proceeds from new
securitizations, proceeds from collections reinvested in
revolving-
period securitizations, and servicing fees.  Refer to paragraph
17.f.(4) of SFAS 140.  Also ensure the disclosed amounts reconcile
to
the line item on your statements of cash flows captioned "sales of
accounts receivable, net."  Show us supplementally what the
revised
disclosures would look like for the historical periods presented.

Note 12. Common Stock, page 52

21. We note your disclosure that you "may" be required to purchase
a
portion of the common stock shares held by one of your officers
upon
the officer`s death.  Based on this disclosure, we assume this
does
not represent an unconditional obligation to purchase the shares,
as
discussed in SFAS 150.  Please confirm that our understanding is
correct or otherwi