##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q

|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|          
|           |  | FOR THE QUARTERLY PERIOD ENDED MARCH 29,
    2002                                               
|          
|or        
|          
|o          |  | 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 333-62227

AMERICAN COMMERCIAL LINES LLC

(Exact Name of Registrant as Specified in Its
Charter)


|                                                                   |  |                                      
|------------------------------------------------------------------ |  | -------------------------------------
|Delaware                                                           |  | 52-210660                            
|(State or Other Jurisdiction of
    Incorporation or Organization) |  | (IRS Employer
    Identification No.)
|                                                                  
|1701 East Market Street                                            |  |                                      
|Jeffersonville, Indiana                                            |  | 47130                                
|(Address of Principal Executive
    Offices)                       |  | (Zip Code)                           

(812) 288-0100

(Registrants Telephone Number, Including
Area Code)


Not Applicable

(Former Name, Former Address and Former Fiscal
Year,


if Changed Since Last Report)


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 þ No o

As of March 29, 2002 registrant had 100
membership interests outstanding.



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TABLE OF CONTENTS



|                          |                                                                                                |  |  |  |  |  |  | 
|------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                          | Item 1. Financial Statements                                                                  
|                          | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                          | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                           
|PART II OTHER INFORMATION
|                          | Item 6: Exhibits and Reports on Form 8-K.                                                     



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##### Table of Contents






Item 1.     Financial
Statements

AMERICAN COMMERCIAL LINES LLC

CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS

|                                                                        |                                    |                        |         |           |   |   |         |        |  
|----------------------------------------------------------------------- | ---------------------------------- | ---------------------- | ------- | --------- | - | - | ------- | ------ | -
|                                                                        |                                    |                       
|                                                                        |                                    | Quarters Ended        
|                                                                        |                                    |                       
|                                                                        |                                    | March 29,              |         | March 30,
|                                                                        |                                    | 2002                   |         | 2001     
|                                                                        |                                    |                        |         |          
|                                                                        |                                    |                       
|                                                                        |                                    | (Unaudited)           
|                                                                        |                                    |                       
|                                                                        |                                    | (Dollars in Thousands)
|OPERATING REVENUE                                                       |                                    | $                      | 170,868 |           |   | $ | 173,098 |       
|OPERATING EXPENSE                                                       |                                    |                        |         |           |   |   |         |       
|                                                                        | Materials, Supplies and Other      |                        |         | 82,046    |   |   |         | 84,671 |  
|                                                                        | Rent                               |                        |         | 13,690    |   |   |         | 14,258 |  
|                                                                        | Labor and Fringe Benefits          |                        |         | 41,092    |   |   |         | 40,185 |  
|                                                                        | Fuel                               |                        |         | 17,323    |   |   |         | 23,761 |  
|                                                                        | Depreciation and Amortization      |                        |         | 13,063    |   |   |         | 14,190 |  
|                                                                        | Gain on Property Dispositions, Net |                        |         | (5        | ) |   |         | (89    | )
|                                                                        | Taxes, Other Than Income Taxes     |                        |         | 6,474     |   |   |         | 6,556  |  
|                                                                        |                                    |                        |         |           |   |   |         |       
|                                                                        |                                    |                        | 173,683 |           |   |   | 183,532 |       
|                                                                        |                                    |                        |         |           |   |   |         |       
|OPERATING LOSS                                                          |                                    |                        | (2,815  | )         |   |   | (10,434 | )     
|OTHER EXPENSE (INCOME)                                                  |                                    |                        |         |           |   |   |         |       
|                                                                        | Interest Expense                   |                        |         | 15,080    |   |   |         | 19,551 |  
|                                                                        | Other, Net                         |                        |         | 567       |   |   |         | (470   | )
|                                                                        |                                    |                        |         |           |   |   |         |       
|                                                                        |                                    |                        | 15,647  |           |   |   | 19,081  |       
|                                                                        |                                    |                        |         |           |   |   |         |       
|LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
    ACCOUNTING CHANGE |                                    |                        | (18,462 | )         |   |   | (29,515 | )     
|INCOME TAXES                                                            |                                    |                        | (993    | )         |   |   | 103     |       
|                                                                        |                                    |                        |         |           |   |   |         |       
|LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                      |                                    |                        | (17,469 | )         |   |   | (29,618 | )     
|CUMULATIVE EFFECT OF ACCOUNTING CHANGE                                  |                                    |                        |        |           |   |   | (490    | )     
|                                                                        |                                    |                        |         |           |   |   |         |       
|NET LOSS                                                                |                                    | $                      | (17,469 | )         |   | $ | (30,108 | )     
|                                                                        |                                    |                        |         |           |   |   |         |       

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

1



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC

CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS

|                                                 |                                                                                               |                                              |                                                         |           |        |         |         |         |        |         |  
|------------------------------------------------ | --------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------- | --------- | ------ | ------- | ------- | ------- | ------ | ------- | -
|                                                 |                                                                                               |                                             
|                                                 |                                                                                               | Quarters Ended                              
|                                                 |                                                                                               |                                             
|                                                 |                                                                                               | March 29,                                    |                                                         | March 30,
|                                                 |                                                                                               | 2002                                         |                                                         | 2001     
|                                                 |                                                                                               |                                              |                                                         |          
|                                                 |                                                                                               |                                             
|                                                 |                                                                                               | (Unaudited)                                 
|                                                 |                                                                                               |                                             
|                                                 |                                                                                               | (Dollars in Thousands)                      
|OPERATING ACTIVITIES                             |                                                                                               |                                              |                                                         |           |        |         |         |        
|                                                 | Net Loss                                                                                      |                                              | $                                                       | (17,469   | )      |         | $       | (30,108 | )     
|                                                 | Adjustments to Reconcile Net Loss to Net Cash
    Provided by (Used in) Operating Activities: |                                              |                                                         |           |        |         |         |         |       
|                                                 |                                                                                               | Depreciation and Amortization                |                                                         |           | 13,810 |         |         |         | 14,945 |        
|                                                 |                                                                                               | Gain on Property Dispositions                |                                                         |           | (5     | )       |         |         | (89    | )      
|                                                 |                                                                                               | Other Operating Activities                   |                                                         |           | (2,267 | )       |         |         | (999   | )      
|                                                 |                                                                                               | Changes in Operating Assets and Liabilities: |                                                         |           |        |         |         |         |        |        
|                                                 |                                                                                               |                                              | Accounts Receivable                                     |           |        | (6,676  | )       |         |        | (9,949  | )
|                                                 |                                                                                               |                                              | Materials and Supplies                                  |           |        | (5,894  | )       |         |        | (4,485  | )
|                                                 |                                                                                               |                                              | Accrued Interest                                        |           |        | 6,864   |         |         |        | (5,645  | )
|                                                 |                                                                                               |                                              | Other Current Assets                                    |           |        | (499    | )       |         |        | (6,633  | )
|                                                 |                                                                                               |                                              | Other Current Liabilities                               |           |        | (5,404  | )       |         |        | 22,851  |  
|                                                 |                                                                                               |                                              |                                                         |           |        |         |         |        
|                                                 |                                                                                               |                                              | Net Cash Used in Operating Activities                   |           |        | (17,540 | )       |         |        | (20,112 | )
|INVESTING ACTIVITIES                             |                                                                                               |                                              |                                                         |           |        |         |         |        
|                                                 | Property Additions                                                                            |                                              |                                                         | (3,389    | )      |         |         | (4,991  | )     
|                                                 | Proceeds from Property Dispositions                                                           |                                              |                                                         | 219       |        |         |         | 396     |       
|                                                 | Other Investing Activities                                                                    |                                              |                                                         | (1,768    | )      |         |         | (975    | )     
|                                                 |                                                                                               |                                              |                                                         |           |        |         |         |        
|                                                 |                                                                                               |                                              | Net Cash Used in Investing Activities                   |           |        | (4,938  | )       |         |        | (5,570  | )
|FINANCING ACTIVITIES                             |                                                                                               |                                              |                                                         |           |        |         |         |        
|                                                 | Short-Term Borrowings                                                                         |                                              |                                                         |          |        |         |         | 8,216   |       
|                                                 | Long-Term Debt Repaid                                                                         |                                              |                                                         | (140      | )      |         |         | (4,391  | )     
|                                                 | Outstanding Checks Net of Deposits                                                            |                                              |                                                         | 812       |        |         |         | (9,774  | )     
|                                                 | Debt Costs                                                                                    |                                              |                                                         |          |        |         |         | (3,262  | )     
|                                                 | Other Financing                                                                               |                                              |                                                         |          |        |         |         | (210    | )     
|                                                 |                                                                                               |                                              |                                                         |           |        |         |         |        
|                                                 |                                                                                               |                                              | Net Cash Provided by (Used in) Financing
    Activities |           |        | 672     |         |         |        | (9,421  | )
|Net Decrease in Cash and Cash Equivalents        |                                                                                               |                                              | (21,806                                                 | )         |        |         | (35,103 | )      
|Cash and Cash Equivalents at Beginning of Period |                                                                                               |                                              | 47,253                                                  |           |        |         | 59,568  |        
|                                                 |                                                                                               |                                              |                                                         |           |        |         |         |        
|                                                 |                                                                                               |                                              | Cash and Cash Equivalents at End of Period              |           | $      | 25,447  |         |         | $      | 24,465  |  
|                                                 |                                                                                               |                                              |                                                         |           |        |         |         |        

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

2



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION

|                                     |                                       |                                        |          |              |          |   |          |         |          |  
|------------------------------------ | ------------------------------------- | -------------------------------------- | -------- | ------------ | -------- | - | -------- | ------- | -------- | -
|                                     |                                       | March 29,                              |          | December 28,
|                                     |                                       | 2002                                   |          | 2001        
|                                     |                                       |                                        |          |             
|                                     |                                       | (Unaudited)                            |          |             
|                                     |                                       |                                       
|                                     |                                       | (Dollars in Thousands)                
|ASSETS                              
|CURRENT ASSETS                       |                                       |                                        |          |              |          |   |          |        
|                                     | Cash and Cash Equivalents             |                                        | $        | 25,447       |          |   | $        | 47,253  |         
|                                     | Accounts Receivable, Net              |                                        |          | 61,088       |          |   |          | 54,785  |         
|                                     | Materials and Supplies                |                                        |          | 37,229       |          |   |          | 31,335  |         
|                                     | Other Current Assets                  |                                        |          | 29,339       |          |   |          | 29,633  |         
|                                     |                                       |                                        |          |              |          |   |          |        
|                                     |                                       | Total Current Assets                   |          |              | 153,103  |   |          |         | 163,006  |  
|PROPERTIES-Net                       |                                       |                                        | 454,867  |              |          |   | 464,133  |        
|PENSION ASSET                        |                                       |                                        | 26,517   |              |          |   | 26,067   |        
|OTHER ASSETS                         |                                       |                                        | 105,972  |              |          |   | 104,730  |        
|                                     |                                       |                                        |          |              |          |   |          |        
|                                     |                                       | Total Assets                           |          | $            | 740,459  |   |          | $       | 757,936  |  
|                                     |                                       |                                        |          |              |          |   |          |        
|LIABILITIES                         
|CURRENT LIABILITIES                  |                                       |                                        |          |              |          |   |          |        
|                                     | Accounts Payable                      |                                        | $        | 30,096       |          |   | $        | 29,737  |         
|                                     | Accrued Payroll and Fringe Benefits   |                                        |          | 15,368       |          |   |          | 17,206  |         
|                                     | Deferred Revenue                      |                                        |          | 12,476       |          |   |          | 11,890  |         
|                                     | Accrued Claims and Insurance Premiums |                                        |          | 25,786       |          |   |          | 24,200  |         
|                                     | Accrued Interest                      |                                        |          | 25,523       |          |   |          | 18,659  |         
|                                     | Short-Term Debt                       |                                        |          | 84,000       |          |   |          | 84,000  |         
|                                     | Current Portion of Long-Term Debt     |                                        |          | 608,378      |          |   |          | 608,519 |         
|                                     | Other Current Liabilities             |                                        |          | 44,924       |          |   |          | 50,469  |         
|                                     |                                       |                                        |          |              |          |   |          |        
|                                     |                                       | Total Current Liabilities              |          |              | 846,551  |   |          |         | 844,680  |  
|LONG-TERM DEBT                       |                                       |                                        |         |              |          |   |         |        
|PENSION LIABILITY                    |                                       |                                        | 18,514   |              |          |   | 18,907   |        
|OTHER LONG-TERM LIABILITIES          |                                       |                                        | 35,996   |              |          |   | 37,292   |        
|                                     |                                       |                                        |          |              |          |   |          |        
|                                     |                                       | Total Liabilities                      |          |              | 901,061  |   |          |         | 900,879  |  
|                                     |                                       |                                        |          |              |          |   |          |        
|MEMBERS DEFICIT                    
|Members Interest                    |                                       |                                        | 220,074  |              |          |   | 220,074  |        
|Other Capital                        |                                       |                                        | 166,207  |              |          |   | 166,580  |        
|Retained Deficit                     |                                       |                                        | (545,209 | )            |          |   | (527,740 | )      
|Accumulated Other Comprehensive Loss |                                       |                                        | (1,674   | )            |          |   | (1,857   | )      
|                                     |                                       |                                        |          |              |          |   |          |        
|                                     |                                       | Total Members Deficit                 |          |              | (160,602 | ) |          |         | (142,943 | )
|                                     |                                       |                                        |          |              |          |   |          |        
|                                     |                                       | Total Liabilities and Members Deficit |          | $            | 740,459  |   |          | $       | 757,936  |  
|                                     |                                       |                                        |          |              |          |   |          |        

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

3



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC

(Unaudited)


CONDENSED CONSOLIDATED STATEMENT OF
MEMBERS DEFICIT

|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |         |         |  
|------------------------------------------------------------------ | ------------------------------------------------------------------------------- | ------------------------ | ------- | ------- | - | --------- | ------- | --------------- | - | ----- | -------- | ------- | ------- | - | ------ | ---- | ------ | - | -------- | ------- | ------- | -
|                                                                   |                                                                                 |                          |         |         |   |           |         | Accumulated     |   |      
|                                                                   |                                                                                 |                          |         |         |   | Retained  |         | Other           |   |      
|                                                                   |                                                                                 | Members                 |         | Other   |   | Earnings  |         | Comprehensive   |   |      
|                                                                   |                                                                                 | Interest                 |         | Capital |   | (Deficit) |         | Earnings (Loss) |   | Total
|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |      
|                                                                   |                                                                                 |                         
|                                                                   |                                                                                 | (Dollars in Thousands)  
|Balance at December 31, 1999                                       |                                                                                 | $                        | 220,074 |         |   | $         | 162,105 |                 |   | $     | (513,914 | )       |         | $ | (337   | )    |        | $ | (132,072 | )      
|Comprehensive Loss:                                                |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|                                                                   | Net loss                                                                        |                          |         |        |   |           |         |                |   |       |          | (9,134  | )       |   |        |     |        |   |          | (9,134  | )      
|                                                                   | Foreign Currency Translation                                                    |                          |         |        |   |           |         |                |   |       |          |        |         |   |        | (147 | )      |   |          | (147    | )      
|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|                                                                   |                                                                                 | Total Comprehensive Loss |         |         |  |           |         |                 |  |       |          |         | (9,134  | ) |        |      | (147   | ) |          |         | (9,281  | )
|Contribution of capital by CSX                                     |                                                                                 |                          |        |         |   |           | 1,694   |                 |   |       |         |         |         |   |       |      |        |   | 1,694    |        
|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|Balance at December 29, 2000                                       |                                                                                 |                          | 220,074 |         |   |           | 163,799 |                 |   |       | (523,048 | )       |         |   | (484   | )    |        |   | (139,659 | )      
|Cumulative Effect of Accounting Change as of
    December 30, 2000 |                                                                                 |                          |        |         |   |           |        |                 |   |       |         |         |         |   | (300   | )    |        |   | (300     | )      
|Comprehensive Loss:                                                |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|                                                                   | Net loss                                                                        |                          |         |        |   |           |         |                |   |       |          | (3,703  | )       |   |        |     |        |   |          | (3,703  | )      
|                                                                   | Net loss on fuel swaps designated as cash flow
    hedging instruments          |                          |         |        |   |           |         |                |   |       |          |        |         |   |        | (271 | )      |   |          | (271    | )      
|                                                                   | Net loss on interest rate swaps designated as
    cash flow hedging instruments |                          |         |        |   |           |         |                |   |       |          |        |         |   |        | (747 | )      |   |          | (747    | )      
|                                                                   | Foreign Currency Translation                                                    |                          |         |        |   |           |         |                |   |       |          |        |         |   |        | (55  | )      |   |          | (55     | )      
|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|                                                                   |                                                                                 | Total Comprehensive Loss |         |         |  |           |         |                 |  |       |          |         | (3,703  | ) |        |      | (1,073 | ) |          |         | (4,776  | )
|Contribution of capital by CSX                                     |                                                                                 |                          |        |         |   |           | 2,781   |                 |   |       |         |         |         |   |       |      |        |   | 2,781    |        
|Consolidation of ACL Funding Corp.                                 |                                                                                 |                          |        |         |   |           |        |                 |   |       | (989     | )       |         |   |       |      |        |   | (989     | )      
|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|Balance at December 28, 2001                                       |                                                                                 |                          | 220,074 |         |   |           | 166,580 |                 |   |       | (527,740 | )       |         |   | (1,857 | )    |        |   | (142,943 | )      
|Comprehensive Loss (Unaudited):                                    |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|                                                                   | Net loss                                                                        |                          |         |        |   |           |         |                |   |       |          | (17,469 | )       |   |        |     |        |   |          | (17,469 | )      
|                                                                   | Net gain on fuel swaps designated as cash flow
    hedging instruments          |                          |         |        |   |           |         |                |   |       |          |        |         |   |        | 174  |        |   |          | 174     |        
|                                                                   | Net gain on interest rate swaps designated as
    cash flow hedging instruments |                          |         |        |   |           |         |                |   |       |          |        |         |   |        | 228  |        |   |          | 228     |        
|                                                                   | Foreign Currency Translation                                                    |                          |         |        |   |           |         |                |   |       |          |        |         |   |        | (219 | )      |   |          | (219    | )      
|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|                                                                   |                                                                                 | Total Comprehensive Loss |         |         |  |           |         |                 |  |       |          |         | (17,469 | ) |        |      | 183    |   |          |         | (17,286 | )
|Other                                                              |                                                                                 |                          |        |         |   |           | (373    | )               |   |       |         |         |         |   |       |      |        |   | (373     | )      
|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        
|Balance at March 29, 2002                                          |                                                                                 | $                        | 220,074 |         |   | $         | 166,207 |                 |   | $     | (545,209 | )       |         | $ | (1,674 | )    |        | $ | (160,602 | )      
|                                                                   |                                                                                 |                          |         |         |   |           |         |                 |   |       |          |         |         |   |        |      |        |   |          |        

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

4



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC

(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Dollars in Thousands)


Note 1.     Basis of
Presentation

In the opinion of management, the accompanying
condensed consolidated financial statements contain all
adjustments necessary to present fairly the financial position
of American Commercial Lines LLC (ACL) at
March 29, 2002 and December 28, 2001, the results of
its operations and its cash flows for the quarters ended
March 29, 2002 and March 30, 2001, such adjustments
being of a normal recurring nature. Operating results for the
quarter ended March 29, 2002 are not necessarily indicative
of the results that may be expected for the fiscal year ended
December 27, 2002.

While management believes that the disclosures
presented are adequate to make the information not misleading,
it is suggested that these condensed consolidated financial
statements be read in conjunction with the 2001 audited
consolidated financial statements and the notes related thereto
included in ACLs Annual Report on Form 10-K for the
year ended December 28, 2001.

The tax benefit in the first quarter 2002 was due
to the reversal of foreign tax expense that was previously
accrued in relation to a tax matter in South America.

ACLs fiscal year ends on the last Friday in
December. The condensed consolidated financial statements
presented are for the 13 weeks ended March 29, 2002 and
March 30, 2001, and the fiscal year (52 weeks) ended
December 28, 2001.

Note
2.     Significant Events

On December 31, 2001, ACL elected not to pay
the interest due (the Bond Interest Payment) on its
Senior Notes due to ongoing negotiations with its lenders and
noteholders regarding the restructuring of ACLs bank and
bond debt. Following the thirty day grace period provided by the
Indenture (the Acknowledged Defaults), ACL again did
not make the Bond Interest Payment. This election not to make
the Bond Interest Payment is an event of default under the
Indenture, however, certain noteholders party thereto have
entered into forebearance agreements with ACL, agreeing not to
accelerate the debt or take additional adverse actions against
ACL. Acceleration of the debt under the Indenture would have a
material adverse effect on ACLs liquidity.

Further, as a result of ACLs failure to
make the Bond Interest Payment, J.P. Morgan Chase & Co.
delivered a notice to ACL in January 2002 asserting that ACL was
in default of the Credit Agreement. ACL was also in default
under other covenants specified in the Credit Agreement. Certain
lenders party to the Credit Agreement entered into forbearance
agreements with ACL, agreeing not to accelerate the debt or take
additional adverse actions against ACL. Acceleration of the debt
under the Credit Agreement would have a material adverse effect
on ACLs liquidity.

In accordance with these facts and circumstances,
ACL has reclassified the outstanding obligations under the
Indenture and the Credit Agreement from long term to current.

On March 15, 2002, ACL entered into a
definitive recapitalization agreement regarding the acquisition
and recapitalization of ACL (the Danielson
Recapitalization) by Danielson Holding Corporation
(Danielson) and on April 15, 2002 issued an
exchange offer for the outstanding Senior Notes. The exchange
offer is expected to conclude on or before May 20, 2002.

In order to assist in the consummation of the
Danielson Recapitalization, ACL has received forbearance
agreements relating to the Acknowledged Defaults from its senior
secured lenders pending the negotiation and execution of
definitive documentation relating to the amendment of ACLs
Senior Credit Facilities satisfactory to the parties. As of
April 11, 2002, ACL and certain lenders executed an
amendment agreement under

5



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AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

which the Senior Credit Facilities will be
amended and restated upon the satisfaction of certain conditions
set forth in the amendment agreement, including the consummation
of the Danielson Recapitalization.

As a result of the events described above, PNC
Bank, National Association (PNC), as Administrator
under ACLs receivables facility with PNC (the
Receivables Purchase Agreement), asserted that ACL
was in default under the Receivables Purchase Agreement. ACL and
PNC entered into a waiver of the Receivables Purchase Agreement
on February 11, 2002 and a modification to that waiver on
February 25, 2002 and on April 1, 2002 (collectively,
the RPA Waiver). The RPA Waiver has the effect of
waiving the default asserted by PNC, provided that ACL enters
into certain definitive agreements with Danielson relating to
the Danielson Recapitalization and refinances the Receivables
Purchase Agreement on or before June 30, 2002. The RPA
Waiver also requires ACL to reduce its overall borrowings under
the facility to no more than $55,000,000. A default under the
Receivables Purchase Agreement or the RPA Waiver could have a
material adverse effect on ACLs liquidity.

The collective bargaining agreement between
Jeffboat and its unionized employees represented by the
International Brotherhood of Teamsters, Local No. 89 expired on
April 29, 2002. Despite Jeffboats efforts, no
agreement could be reached as to a new collective bargaining
agreement and the union employees chose to strike, beginning on
the morning of April 30, 2002. After a vote on May 5,
2002, the union employees rejected Jeffboats last,
best and final offer, which was made on April 29,
2002, and continued their strike. A prolonged strike could have
a material adverse effect on Jeffboats operations and
could result in a material adverse effect on ACLs results
of operations. Jeffboat plans to continue negotiations with the
union. Jeffboat also intends to pursue alternatives to resume
production. These actions by Jeffboat could mitigate any
potential adverse effect on Jeffboat and ACL. ACL has
approximately 90 employees represented by unions at locations
other than Jeffboat. ACLs relations with employees at
these locations are not affected by the strike.

Note 3.     Materials
and Supplies

Materials and Supplies are carried at the lower
of cost (average) or market and consist of the following:

|                   |  |           |        |              |  |   |        | 
|------------------ |  | --------- | ------ | ------------ |  | - | ------ | 
|                   |  | March 29, |        | December 28,
|                   |  | 2002      |        | 2001        
|                   |  |           |        |             
|Raw Materials      |  | $         | 4,343  |              |  | $ | 3,633  | 
|Work in Process    |  |           | 18,199 |              |  |   | 13,029 | 
|Parts and Supplies |  |           | 14,687 |              |  |   | 14,673 | 
|                   |  |           |        |              |  |   |        | 
|                   |  | $         | 37,229 |              |  | $ | 31,335 | 
|                   |  |           |        |              |  |   |        | 

Note 4.     Financial
Instruments and Risk Management

Fuel Price
Risk Management

ACL uses forward fuel purchases to provide
short-term protection against a sharp increase in diesel fuel
prices. These instruments generally cover a portion of the
companys forecasted diesel fuel needs for towboat
operations over the next one to twelve months.

ACL accounts for the forward fuel purchases as
cash flow hedges. In accordance with Statement of Financial
Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities
(SFAS 133), such financial instruments are
marked-to-market with the offset to other comprehensive income
and then subsequently recognized as a component of fuel expense
when the underlying fuel being hedged is used. ACL adopted
SFAS 133 at the beginning of the first quarter of 2001.

6



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AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

At March 29, 2002, ACL had forward fuel
purchase contracts outstanding with an aggregate notional amount
of approximately $1,530 and a fair value of approximately $69
loss, which has been recorded in other current liabilities with
the offset to other comprehensive income and an additional fair
value gain of $179 which has been recorded as receivable with an
offset to the allowance for doubtful accounts in the condensed
consolidated statement of financial position. The $69 loss will
be recognized in earnings within the next 7 months. Under
these agreements, ACL will pay fixed prices ranging from $0.51
to $0.86 per gallon. There were 2.4 million gallons
remaining on the contracts at March 29, 2002. The
agreements terminate October 31, 2002. Due to the
bankruptcy of Enron, one of the trading partners, ACL believes
the hedge is no longer effective and has recognized the
mark-to-market gain of $179 but has fully reserved for the
amount. Management believes that the other trading partner does
not present a credit risk to ACL.

Interest Rate
Risk Management

ACL entered into an interest rate cap agreement
in the third quarter of 2000 to reduce the impact of potential
rate increases on floating rate debt. The interest rate cap has
a notional amount of $202,000 and a fair value of $14 as of
March 29, 2002 and is effective through August 11,
2003. ACL accounts for the interest rate cap as a cash flow
hedge whereby the fair value of the interest rate cap is
reflected as an asset or liability in the accompanying condensed
consolidated statement of financial position. The cap rate
(hedging instrument) is the same interest rate index as the base
interest rate for the floating rate debt (hedged item). When the
interest rate index exceeds the interest rate cap, a portion of
the change in fair value of the instrument represents a change
in intrinsic value which is an effective hedge. This portion of
the change in value will be recorded as other comprehensive
income. The remaining change in fair value is recorded as other
expense (income) on the condensed consolidated statement of
operations.

For the quarters ended March 29, 2002 and
March 30, 2001, the entire change in fair value resulted in
losses of $22 and $106, respectively, which are recorded in
other expense (income) in the condensed consolidated statement
of operations.

ACL also records changes to other assets on the
accompanying condensed consolidated statement of financial
position, with the offset recorded as comprehensive income
(loss), for changes in the fair value of interest rate swap
agreements entered into by Global Material Services LLC
(GMS), an entity in which ACL has a 50% ownership
interest accounted for by the equity method. ACL recognized a
comprehensive gain of $228 for its share of these swaps in the
quarter ended March 29, 2002.

Note 5.     Business
Segments

|                                 |  |                     |         |              |  |          |        |       |  |   |       |  |  |   |         |  
|-------------------------------- |  | ------------------- | ------- | ------------ |  | -------- | ------ | ----- |  | - | ----- |  |  | - | ------- | -
|                                 |  |                     |         |              |  |         
|                                 |  | Reportable Segments |         |              |  |         
|                                 |  |                     |         |              |  |         
|                                 |  | Barging             |         | Construction |  | Other(1) |        | Total
|                                 |  |                     |         |              |  |          |        |      
|Quarter ended March 29, 2002     |  |                     |         |              |  |          |        |       |  |   |       |  |  |   |         |  
|Revenues from external customers |  | $                   | 145,463 |              |  | $        | 23,311 |       |  | $ | 2,094 |  |  | $ | 170,868 |  
|Intersegment revenues            |  |                     |        |              |  |          | 456    |       |  |   | 8     |  |  |   | 464     |  
|Segment (loss) earnings          |  |                     | (5,282  | )            |  |          | 1,674  |       |  |   | 793   |  |  |   | (2,815  | )
|Quarter ended March 30, 2001     |  |                     |         |              |  |          |        |       |  |   |       |  |  |   |         |  
|Revenues from external customers |  | $                   | 146,281 |              |  | $        | 23,371 |       |  | $ | 3,446 |  |  | $ | 173,098 |  
|Intersegment revenues            |  |                     |        |              |  |          | 655    |       |  |   | 4     |  |  |   | 659     |  
|Segment earnings                 |  |                     | (11,657 | )            |  |          | 861    |       |  |   | 362   |  |  |   | (10,434 | )

7



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AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following is a reconciliation of ACLs
revenues from external customers and segment (loss) earnings to
ACLs consolidated totals.

|                                                                        |                  |                |         |           |   |   |         |         |  
|----------------------------------------------------------------------- | ---------------- | -------------- | ------- | --------- | - | - | ------- | ------- | -
|                                                                        |                  |               
|                                                                        |                  | Quarters Ended
|                                                                        |                  |               
|                                                                        |                  | March 29,      |         | March 30,
|                                                                        |                  | 2002           |         | 2001     
|                                                                        |                  |                |         |          
|Revenues                                                                |                  |                |         |           |   |   |         |        
|Revenues from external customers                                        |                  | $              | 170,868 |           |   | $ | 173,098 |        
|Intersegment revenues                                                   |                  |                | 464     |           |   |   | 659     |        
|Elimination of intersegment revenues                                    |                  |                | (464    | )         |   |   | (659    | )      
|                                                                        |                  |                |         |           |   |   |         |        
|Operating revenue                                                       |                  | $              | 170,868 |           |   | $ | 173,098 |        
|                                                                        |                  |                |         |           |   |   |         |        
|Earnings                                                                |                  |                |         |           |   |   |         |        
|Total segment (loss) earnings                                           |                  | $              | (2,815  | )         |   | $ | (10,434 | )      
|Unallocated amounts:                                                    |                  |                |         |           |   |   |         |        
|                                                                        | Interest expense |                |         | (15,080   | ) |   |         | (19,551 | )
|                                                                        | Other, net       |                |         | (567      | ) |   |         | 470     |  
|                                                                        |                  |                |         |           |   |   |         |        
|Loss before income taxes and cumulative effect of
    accounting change |                  | $              | (18,462 | )         |   | $ | (29,515 | )      
|                                                                        |                  |                |         |           |   |   |         |        



---



|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | Financial data for a segment operating terminals
    along the U.S. inland waterways.

Note
6.     Contingencies

A number of legal actions are pending against ACL
in which claims are made in substantial amounts. While the
ultimate results of pending litigation cannot be predicted with
certainty, management does not currently expect that resolution
of these matters will have a material adverse effect on the
consolidated results of operations, financial position and cash
flows.

Note 7.     Changes
in Accounting Standards

In July 2001, the FASB issued Statement of
Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets (SFAS 142) which
establishes the accounting for goodwill and other intangible
assets following their recognition. SFAS 142 applies to all
goodwill and other intangible assets whether acquired singly, as
part of a group, or in a business combination. SFAS 142
provides that goodwill should not be amortized but should be
tested for impairment annually using a fair-value based approach.

In addition, SFAS 142 provides that other
intangible assets other than goodwill should be amortized over
their useful lives and reviewed for impairment in accordance
with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets to be
Disposed Of (SFAS 121). ACL adopted
SFAS 142 on December 29, 2001. ACL is required to
perform a transitional impairment test under SFAS 142 for
all goodwill recorded as of December 29, 2001. Any
impairment loss recorded as a result of completing the
transitional impairment test will be treated as a change in
accounting principle. The impact of the adoption of SFAS 142 on
ACLs results operations for all periods beginning on or
after December 29, 2001 will be to eliminate amortization
of goodwill. Management of ACL has not yet completed the
transitional impairment test under SFAS 142, however, management
believes there will not be a material impact on the financial
statements as a result of adopting SFAS 142.

In October 2001, the FASB issued Statement of
Financial Accounting Standards No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets
(SFAS 144). SFAS 144 addresses financial

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AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS 121 and
the accounting and reporting provisions of Accounting Principles
Board Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, for the
disposal of a segment of business (as previously defined in that
Opinion). SFAS 144 also amends Accounting Research Bulletin
No. 51, Consolidated Financial Statements, to eliminate the
exception to consolidation for a subsidiary for which control is
likely to be temporary.

The objectives of SFAS 144 are to address
significant issues relating to the implementation of
SFAS 121 and to develop a single accounting model, based on
the framework established in SFAS 121, for long-lived
assets to be disposed of by sale, whether previously held and
used or newly acquired. ACL adopted SFAS 144 in the first
quarter 2002. The provisions of SFAS 144 do not have an
impact on ACLs financial statements as of March 29,
2002.

Note 8.     Guarantor
Financial Statements

The $735,000 of debt issued by ACL and a
revolving credit facility, which provides for revolving loans
and the issuance of letters of credit in an aggregate amount up
to $100,000, are guaranteed by ACLs wholly-owned domestic
subsidiaries, other than ACL Capital Corp. (which was formed in
connection with the transaction), any Accounts Receivable
Subsidiary (as defined in the indenture and credit agreement
governing such debt) and certain subsidiaries of ACL without
substantial assets or operations (collectively the
Guarantor Subsidiaries). Such guarantees are full,
unconditional and joint and several. Separate financial
statements of the Guarantor Subsidiaries are not presented
because management has determined that they would not be
material to investors. The following supplemental financial
information sets forth on a combined basis, combining statements
of financial position, statements of operations and statements
of cash flows for the Guarantor Subsidiaries, non-guarantor
subsidiaries and for ACL as of March 29, 2002 and
December 28, 2001 and for the quarters ended March 29,
2002 and March 30, 2001.

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AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Condensed Combining Statement of Operations
for the Quarter Ended March 29, 2002

(Dollars in Thousands)


|                         |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |        |  
|------------------------ | ---------------------------------- | ------------ | ------- | ------------ | - | ------------ | ------ | -------- | - | - | - | ------ | - | - | ------- | ------ | -
|                         |                                    | Guarantor    |         | Other        |   |              |        | Combined
|                         |                                    | Subsidiaries |         | Subsidiaries |   | Eliminations |        | Totals  
|                         |                                    |              |         |              |   |              |        |         
|OPERATING REVENUE        |                                    | $            | 165,447 |              |   | $            | 5,421  |          |   | $ |  |        |   | $ | 170,868 |       
|OPERATING EXPENSE        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|                         | Materials, Supplies and Other      |              |         | 77,193       |   |              |        | 4,853    |   |   |   |       |   |   |         | 82,046 |  
|                         | Rent                               |              |         | 13,328       |   |              |        | 362      |   |   |   |       |   |   |         | 13,690 |  
|                         | Labor and Fringe Benefits          |              |         | 40,246       |   |              |        | 846      |   |   |   |       |   |   |         | 41,092 |  
|                         | Fuel                               |              |         | 17,281       |   |              |        | 42       |   |   |   |       |   |   |         | 17,323 |  
|                         | Depreciation and Amortization      |              |         | 11,650       |   |              |        | 1,413    |   |   |   |       |   |   |         | 13,063 |  
|                         | Gain on Property Dispositions, Net |              |         | (2           | ) |              |        | (3       | ) |   |   |       |   |   |         | (5     | )
|                         | Taxes, Other Than Income Taxes     |              |         | 6,452        |   |              |        | 22       |   |   |   |       |   |   |         | 6,474  |  
|                         |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|                         |                                    |              | 166,148 |              |   |              | 7,535  |          |   |   |  |        |   |   | 173,683 |       
|                         |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|OPERATING LOSS           |                                    |              | (701    | )            |   |              | (2,114 | )        |   |   |  |        |   |   | (2,815  | )     
|OTHER EXPENSE (INCOME)   |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|                         | Interest Expense                   |              |         | 15,080       |   |              |        |         |   |   |   |       |   |   |         | 15,080 |  
|                         | Interest Expense, Affiliate  Net  |              |         |             |   |              |        | 1,694    |   |   |   | (1,694 | ) |   |         |       |  
|                         | Other, Net                         |              |         | (814         | ) |              |        | (313     | ) |   |   | 1,694  |   |   |         | 567    |  
|                         |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|                         |                                    |              | 14,266  |              |   |              | 1,381  |          |   |   |  |        |   |   | 15,647  |       
|                         |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|LOSS BEFORE INCOME TAXES |                                    |              | (14,967 | )            |   |              | (3,495 | )        |   |   |  |        |   |   | (18,462 | )     
|INCOME TAXES             |                                    |              | (1,020  | )            |   |              | 27     |          |   |   |  |        |   |   | (993    | )     
|                         |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|NET LOSS                 |                                    | $            | (13,947 | )            |   | $            | (3,522 | )        |   | $ |  |        |   | $ | (17,469 | )     
|                         |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       

10



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AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Condensed Combining Statement of Operations
for the Quarter Ended March 30, 2001

(Dollars in Thousands)


|                                                                        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |        |  
|----------------------------------------------------------------------- | ---------------------------------- | ------------ | ------- | ------------ | - | ------------ | ------ | -------- | - | - | - | ------ | - | - | ------- | ------ | -
|                                                                        |                                    | Guarantor    |         | Other        |   |              |        | Combined
|                                                                        |                                    | Subsidiaries |         | Subsidiaries |   | Eliminations |        | Totals  
|                                                                        |                                    |              |         |              |   |              |        |         
|OPERATING REVENUE                                                       |                                    | $            | 167,126 |              |   | $            | 5,972  |          |   | $ |  |        |   | $ | 173,098 |       
|OPERATING EXPENSE                                                       |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|                                                                        | Materials, Supplies and Other      |              |         | 79,919       |   |              |        | 4,752    |   |   |   |       |   |   |         | 84,671 |  
|                                                                        | Rent                               |              |         | 13,898       |   |              |        | 360      |   |   |   |       |   |   |         | 14,258 |  
|                                                                        | Labor and Fringe Benefits          |              |         | 39,359       |   |              |        | 826      |   |   |   |       |   |   |         | 40,185 |  
|                                                                        | Fuel                               |              |         | 23,832       |   |              |        | (71      | ) |   |   |       |   |   |         | 23,761 |  
|                                                                        | Depreciation and Amortization      |              |         | 12,919       |   |              |        | 1,271    |   |   |   |       |   |   |         | 14,190 |  
|                                                                        | Gain on Property Dispositions, Net |              |         | (89          | ) |              |        |         |   |   |   |       |   |   |         | (89    | )
|                                                                        | Taxes, Other Than Income Taxes     |              |         | 6,553        |   |              |        | 3        |   |   |   |       |   |   |         | 6,556  |  
|                                                                        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|                                                                        |                                    |              | 176,391 |              |   |              | 7,141  |          |   |   |  |        |   |   | 183,532 |       
|                                                                        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|OPERATING LOSS                                                          |                                    |              | (9,265  | )            |   |              | (1,169 | )        |   |   |  |        |   |   | (10,434 | )     
|OTHER EXPENSE (INCOME)                                                  |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|                                                                        | Interest Expense                   |              |         | 19,551       |   |              |        |         |   |   |   |       |   |   |         | 19,551 |  
|                                                                        | Interest Expense, Affiliate  Net  |              |         |             |   |              |        | 1,554    |   |   |   | (1,554 | ) |   |         |       |  
|                                                                        | Other, Net                         |              |         | (1,364       | ) |              |        | (660     | ) |   |   | 1,554  |   |   |         | (470   | )
|                                                                        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|                                                                        |                                    |              | 18,187  |              |   |              | 894    |          |   |   |  |        |   |   | 19,081  |       
|                                                                        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
    ACCOUNTING CHANGE |                                    |              | (27,452 | )            |   |              | (2,063 | )        |   |   |  |        |   |   | (29,515 | )     
|INCOME TAXES                                                            |                                    |              | 26      |              |   |              | 77     |          |   |   |  |        |   |   | 103     |       
|                                                                        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                      |                                    |              | (27,478 | )            |   |              | (2,140 | )        |   |   |  |        |   |   | (29,618 | )     
|CUMULATIVE EFFECT OF ACCOUNTING CHANGE                                  |                                    |              | (490    | )            |   |              |       |          |   |   |  |        |   |   | (490    | )     
|                                                                        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       
|NET LOSS                                                                |                                    | $            | (27,968 | )            |   | $            | (2,140 | )        |   | $ |  |        |   | $ | (30,108 | )     
|                                                                        |                                    |              |         |              |   |              |        |          |   |   |   |        |   |   |         |       

11



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Condensed Combining Statement of Cash Flows
for the Quarter Ended March 29, 2002

(Dollars in Thousands)


|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |         |        |         |  
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------- | ------------ | ------ | ------------ | ----- | -------- | ----- | ----- | - | - | - | ------- | ------- | ------- | ------ | ------- | -
|                                                         |                                                                                               | Guarantor                                    |                                                         | Other        |        |              |       | Combined
|                                                         |                                                                                               | Subsidiaries                                 |                                                         | Subsidiaries |        | Eliminations |       | Totals  
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |         
|OPERATING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |        
|                                                         | Net Loss                                                                                      |                                              | $                                                       | (13,947      | )      |              | $     | (3,522   | )     |       | $ |  |   |         | $       | (17,469 | )     
|                                                         | Adjustments to Reconcile Net Loss to Net Cash
    Provided by (Used in) Operating Activities: |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |         |       
|                                                         |                                                                                               | Depreciation and Amortization                |                                                         |              | 12,397 |              |       |          | 1,413 |       |   |   |  |         |         |         | 13,810 |        
|                                                         |                                                                                               | Gain on Property Dispositions                |                                                         |              | (2     | )            |       |          | (3    | )     |   |   |  |         |         |         | (5     | )      
|                                                         |                                                                                               | Other Operating Activities                   |                                                         |              | (1,832 | )            |       |          | (435  | )     |   |   |  |         |         |         | (2,267 | )      
|                                                         |                                                                                               | Changes in Operating Assets and Liabilities: |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |         |        |        
|                                                         |                                                                                               |                                              | Accounts Receivable                                     |              |        | (18,976      | )     |          |       | 488   |   |   |   | 11,812  |         |         |        | (6,676  | )
|                                                         |                                                                                               |                                              | Materials and Supplies                                  |              |        | (6,061       | )     |          |       | 167   |   |   |   |        |         |         |        | (5,894  | )
|                                                         |                                                                                               |                                              | Accrued Interest                                        |              |        | 6,864        |       |          |       |      |   |   |   |        |         |         |        | 6,864   |  
|                                                         |                                                                                               |                                              | Other Current Assets                                    |              |        | (3,324       | )     |          |       | 2,825 |   |   |   |        |         |         |        | (499    | )
|                                                         |                                                                                               |                                              | Other Current Liabilities                               |              |        | 7,206        |       |          |       | (798  | ) |   |   | (11,812 | )       |         |        | (5,404  | )
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |        
|                                                         |                                                                                               |                                              | Net Cash (Used in) Provided by Operating
    Activities |              |        | (17,675      | )     |          |       | 135   |   |   |   |        |         |         |        | (17,540 | )
|INVESTING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |        
|                                                         | Property Additions                                                                            |                                              |                                                         | (3,354       | )      |              |       | (35      | )     |       |   |  |   |         |         | (3,389  | )     
|                                                         | Proceeds from Property Dispositions                                                           |                                              |                                                         | 216          |        |              |       | 3        |       |       |   |  |   |         |         | 219     |       
|                                                         | Other Investing Activities                                                                    |                                              |                                                         | (1,772       | )      |              |       | 4        |       |       |   |  |   |         |         | (1,768  | )     
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |        
|                                                         |                                                                                               |                                              | Net Cash Used in Investing Activities                   |              |        | (4,910       | )     |          |       | (28   | ) |   |   |        |         |         |        | (4,938  | )
|FINANCING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |        
|                                                         | Long-Term Debt Repaid                                                                         |                                              |                                                         | (140         | )      |              |       |         |       |       |   |  |   |         |         | (140    | )     
|                                                         | Outstanding Checks Net of Deposits                                                            |                                              |                                                         | 812          |        |              |       |         |       |       |   |  |   |         |         | 812     |       
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |        
|                                                         |                                                                                               |                                              | Net Cash Provided by Financing Activities               |              |        | 672          |       |          |       |      |   |   |   |        |         |         |        | 672     |  
|Net (Decrease) Increase in Cash and Cash
    Equivalents |                                                                                               |                                              | (21,913                                                 | )            |        |              | 107   |          |       |       |  |   |   |         | (21,806 | )      
|Cash and Cash Equivalents at Beginning of Period         |                                                                                               |                                              | 45,912                                                  |              |        |              | 1,341 |          |       |       |  |   |   |         | 47,253  |        
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |        
|                                                         |                                                                                               |                                              | Cash and Cash Equivalents at End of Period              |              | $      | 23,999       |       |          | $     | 1,448 |   |   | $ |        |         |         | $      | 25,447  |  
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |       |   |   |   |         |         |        

12



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Condensed Combining Statement of Cash Flows
for the Quarter Ended March 30, 2001

(Dollars in Thousands)


|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |         |        |         |  
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------- | ------------ | ------ | ------------ | ----- | -------- | ----- | ------ | - | ------ | - | ------ | ------- | ------- | ------ | ------- | -
|                                                         |                                                                                               | Guarantor                                    |                                                         | Other        |        |              |       | Combined
|                                                         |                                                                                               | Subsidiaries                                 |                                                         | Subsidiaries |        | Eliminations |       | Totals  
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |         
|OPERATING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |        
|                                                         | Net Loss                                                                                      |                                              | $                                                       | (27,968      | )      |              | $     | (2,140   | )     |        | $ |       |   |        | $       | (30,108 | )     
|                                                         | Adjustments to Reconcile Net Loss to Net Cash
    Provided by (Used in) Operating Activities: |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |         |       
|                                                         |                                                                                               | Depreciation and Amortization                |                                                         |              | 13,674 |              |       |          | 1,271 |        |   |        |  |        |         |         | 14,945 |        
|                                                         |                                                                                               | Gain on Property Dispositions                |                                                         |              | (89    | )            |       |          |      |        |   |        |  |        |         |         | (89    | )      
|                                                         |                                                                                               | Other Operating Activities                   |                                                         |              | (236   | )            |       |          | (763  | )      |   |        |  |        |         |         | (999   | )      
|                                                         |                                                                                               | Changes in Operating Assets and Liabilities: |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |         |        |        
|                                                         |                                                                                               |                                              | Accounts Receivable                                     |              |        | (10,522      | )     |          |       | 573    |   |        |   |       |         |         |        | (9,949  | )
|                                                         |                                                                                               |                                              | Materials and Supplies                                  |              |        | (4,363       | )     |          |       | (122   | ) |        |   |       |         |         |        | (4,485  | )
|                                                         |                                                                                               |                                              | Accrued Interest                                        |              |        | (5,645       | )     |          |       |       |   |        |   |       |         |         |        | (5,645  | )
|                                                         |                                                                                               |                                              | Other Current Assets                                    |              |        | (9,468       | )     |          |       | 2,835  |   |        |   |       |         |         |        | (6,633  | )
|                                                         |                                                                                               |                                              | Other Current Liabilities                               |              |        | 21,524       |       |          |       | 1,327  |   |        |   |       |         |         |        | 22,851  |  
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |        
|                                                         |                                                                                               |                                              | Net Cash (Used in) Provided by Operating
    Activities |              |        | (23,093      | )     |          |       | 2,981  |   |        |   |       |         |         |        | (20,112 | )
|INVESTING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |        
|                                                         | Property Additions                                                                            |                                              |                                                         | (3,665       | )      |              |       | (1,326   | )     |        |   |       |   |        |         | (4,991  | )     
|                                                         | Proceeds from Property Dispositions                                                           |                                              |                                                         | 396          |        |              |       |         |       |        |   |       |   |        |         | 396     |       
|                                                         | Other Investing Activities                                                                    |                                              |                                                         | (132         | )      |              |       | 157      |       |        |   | (1,000 | ) |        |         | (975    | )     
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |        
|                                                         |                                                                                               |                                              | Net Cash Used in Investing Activities                   |              |        | (3,401       | )     |          |       | (1,169 | ) |        |   | (1,000 | )       |         |        | (5,570  | )
|FINANCING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |        
|                                                         | Short-Term Borrowings                                                                         |                                              |                                                         | 8,216        |        |              |       |         |       |        |   |       |   |        |         | 8,216   |       
|                                                         | Long-Term Debt Repaid                                                                         |                                              |                                                         | (4,391       | )      |              |       |         |       |        |   |       |   |        |         | (4,391  | )     
|                                                         | Outstanding Checks Net of Deposits                                                            |                                              |                                                         | (9,774       | )      |              |       |         |       |        |   |       |   |        |         | (9,774  | )     
|                                                         | Debt Costs                                                                                    |                                              |                                                         | (3,262       | )      |              |       |         |       |        |   |       |   |        |         | (3,262  | )     
|                                                         | Cash Dividends Paid                                                                           |                                              |                                                         |             |        |              |       | (1,000   | )     |        |   | 1,000  |   |        |         |        |       
|                                                         | Other Financing                                                                               |                                              |                                                         | (210         | )      |              |       |         |       |        |   |       |   |        |         | (210    | )     
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |        
|                                                         |                                                                                               |                                              | Net Cash Used in Financing Activities                   |              |        | (9,421       | )     |          |       | (1,000 | ) |        |   | 1,000  |         |         |        | (9,421  | )
|Net Increase (Decrease) in Cash and Cash
    Equivalents |                                                                                               |                                              | (35,915                                                 | )            |        |              | 812   |          |       |        |  |        |   |        | (35,103 | )      
|Cash and Cash Equivalents at Beginning of Period         |                                                                                               |                                              | 57,289                                                  |              |        |              | 2,279 |          |       |        |  |        |   |        | 59,568  |        
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |        
|                                                         |                                                                                               |                                              | Cash and Cash Equivalents at End of Period              |              | $      | 21,374       |       |          | $     | 3,091  |   |        | $ |       |         |         | $      | 24,465  |  
|                                                         |                                                                                               |                                              |                                                         |              |        |              |       |          |       |        |   |        |   |        |         |        

13



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Condensed Combining Statement of Financial
Position at March 29, 2002

(Dollars in Thousands)


|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |         |          |  
|------------------------------------ | ------------------------------------- | -------------------------------------- | -------- | ------------ | -------- | ------------ | ------- | -------- | ------- | - | -------- | ------- | -------- | - | -------- | ------- | -------- | -
|                                     |                                       | Guarantor                              |          | Other        |          |              |         | Combined
|                                     |                                       | Subsidiaries                           |          | Subsidiaries |          | Eliminations |         | Totals  
|                                     |                                       |                                        |          |              |          |              |         |         
|ASSETS                              
|CURRENT ASSETS                       |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     | Cash and Cash Equivalents             |                                        | $        | 23,999       |          |              | $       | 1,448    |         |   | $        |        |          |   | $        | 25,447  |         
|                                     | Accounts Receivable  Net             |                                        |          | 30,234       |          |              |         | 42,666   |         |   |          | (11,812 | )        |   |          | 61,088  |         
|                                     | Materials and Supplies                |                                        |          | 36,241       |          |              |         | 988      |         |   |          |        |          |   |          | 37,229  |         
|                                     | Other Current Assets                  |                                        |          | 38,424       |          |              |         | (9,085   | )       |   |          |        |          |   |          | 29,339  |         
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Current Assets                   |          |              | 128,898  |              |         |          | 36,017  |   |          |         | (11,812  | ) |          |         | 153,103  |  
|PROPERTIES  NET                     |                                       |                                        | 413,396  |              |          |              | 41,471  |          |         |   |         |         |          |   | 454,867  |        
|PENSION ASSET                        |                                       |                                        | 26,517   |              |          |              |        |          |         |   |         |         |          |   | 26,517   |        
|OTHER ASSETS                         |                                       |                                        | 158,277  |              |          |              | 51,732  |          |         |   | (104,037 | )       |          |   | 105,972  |        
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Assets                           |          | $            | 727,088  |              |         | $        | 129,220 |   |          | $       | (115,849 | ) |          | $       | 740,459  |  
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|LIABILITIES                         
|CURRENT LIABILITIES                  |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     | Accounts Payable                      |                                        | $        | 28,809       |          |              | $       | 1,287    |         |   | $        |        |          |   | $        | 30,096  |         
|                                     | Accrued Payroll and Fringe Benefits   |                                        |          | 15,368       |          |              |         |         |         |   |          |        |          |   |          | 15,368  |         
|                                     | Deferred Revenue                      |                                        |          | 12,476       |          |              |         |         |         |   |          |        |          |   |          | 12,476  |         
|                                     | Accrued Claims and Insurance Premiums |                                        |          | 25,786       |          |              |         |         |         |   |          |        |          |   |          | 25,786  |         
|                                     | Accrued Interest                      |                                        |          | 25,523       |          |              |         |         |         |   |          |        |          |   |          | 25,523  |         
|                                     | Short-term Debt                       |                                        |          | 84,000       |          |              |         |         |         |   |          |        |          |   |          | 84,000  |         
|                                     | Current Portion of Long-Term Debt     |                                        |          | 608,378      |          |              |         |         |         |   |          |        |          |   |          | 608,378 |         
|                                     | Other Current Liabilities             |                                        |          | 32,977       |          |              |         | 23,759   |         |   |          | (11,812 | )        |   |          | 44,924  |         
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Current Liabilities              |          |              | 833,317  |              |         |          | 25,046  |   |          |         | (11,812  | ) |          |         | 846,551  |  
|LONG-TERM NOTE PAYABLE TO AFFILIATE  |                                       |                                        |         |              |          |              | 92,569  |          |         |   | (92,569  | )       |          |   |         |        
|PENSION LIABILITY                    |                                       |                                        | 18,514   |              |          |              |        |          |         |   |         |         |          |   | 18,514   |        
|OTHER LONG-TERM LIABILITIES          |                                       |                                        | 35,859   |              |          |              | 137     |          |         |   |         |         |          |   | 35,996   |        
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Liabilities                      |          | $            | 887,690  |              |         | $        | 117,752 |   |          | $       | (104,381 | ) |          | $       | 901,061  |  
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|MEMBERS DEFICIT                    
|Members Interest                    |                                       | $                                      | 220,074  |              |          | $            |        |          |         | $ |         |         |          | $ | 220,074  |        
|Other Capital                        |                                       |                                        | 166,207  |              |          |              | 57,374  |          |         |   | (57,374  | )       |          |   | 166,207  |        
|Retained Deficit                     |                                       |                                        | (545,209 | )            |          |              | (45,906 | )        |         |   | 45,906   |         |          |   | (545,209 | )      
|Accumulated Other Comprehensive Loss |                                       |                                        | (1,674   | )            |          |              |        |          |         |   |         |         |          |   | (1,674   | )      
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Members Deficit                 |          |              | (160,602 | )            |         |          | 11,468  |   |          |         | (11,468  | ) |          |         | (160,602 | )
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Liabilities and Members Deficit |          | $            | 727,088  |              |         | $        | 129,220 |   |          | $       | (115,849 | ) |          | $       | 740,459  |  
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        

14



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


(Unaudited)


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Condensed Combining Statement of Financial
Position at December 28, 2001

(Dollars in Thousands)


|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |         |          |  
|------------------------------------ | ------------------------------------- | -------------------------------------- | -------- | ------------ | -------- | ------------ | ------- | -------- | ------- | - | -------- | ------- | -------- | - | -------- | ------- | -------- | -
|                                     |                                       | Guarantor                              |          | Other        |          |              |         | Combined
|                                     |                                       | Subsidiaries                           |          | Subsidiaries |          | Eliminations |         | Totals  
|                                     |                                       |                                        |          |              |          |              |         |         
|ASSETS                              
|CURRENT ASSETS                       |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     | Cash and Cash Equivalents             |                                        | $        | 45,912       |          |              | $       | 1,341    |         |   | $        |        |          |   | $        | 47,253  |         
|                                     | Accounts Receivable  Net             |                                        |          | 25,612       |          |              |         | 43,154   |         |   |          | (13,981 | )        |   |          | 54,785  |         
|                                     | Materials and Supplies                |                                        |          | 30,180       |          |              |         | 1,155    |         |   |          |        |          |   |          | 31,335  |         
|                                     | Other Current Assets                  |                                        |          | 41,069       |          |              |         | (11,436  | )       |   |          |        |          |   |          | 29,633  |         
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Current Assets                   |          |              | 142,773  |              |         |          | 34,214  |   |          |         | (13,981  | ) |          |         | 163,006  |  
|PROPERTIES  NET                     |                                       |                                        | 422,877  |              |          |              | 41,256  |          |         |   |         |         |          |   | 464,133  |        
|PENSION ASSET                        |                                       |                                        | 26,067   |              |          |              |        |          |         |   |         |         |          |   | 26,067   |        
|OTHER ASSETS                         |                                       |                                        | 153,227  |              |          |              | 52,702  |          |         |   | (101,199 | )       |          |   | 104,730  |        
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Assets                           |          | $            | 744,944  |              |         | $        | 128,172 |   |          | $       | (115,180 | ) |          | $       | 757,936  |  
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|LIABILITIES                         
|CURRENT LIABILITIES                  |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     | Accounts Payable                      |                                        | $        | 28,094       |          |              | $       | 1,643    |         |   | $        |        |          |   | $        | 29,737  |         
|                                     | Accrued Payroll and Fringe Benefits   |                                        |          | 17,206       |          |              |         |         |         |   |          |        |          |   |          | 17,206  |         
|                                     | Deferred Revenue                      |                                        |          | 11,890       |          |              |         |         |         |   |          |        |          |   |          | 11,890  |         
|                                     | Accrued Claims and Insurance Premiums |                                        |          | 24,200       |          |              |         |         |         |   |          |        |          |   |          | 24,200  |         
|                                     | Accrued Interest                      |                                        |          | 18,659       |          |              |         |         |         |   |          |        |          |   |          | 18,659  |         
|                                     | Short-term Debt                       |                                        |          | 84,000       |          |              |         |         |         |   |          |        |          |   |          | 84,000  |         
|                                     | Current Portion of Long-Term Debt     |                                        |          | 608,519      |          |              |         |         |         |   |          |        |          |   |          | 608,519 |         
|                                     | Other Current Liabilities             |                                        |          | 40,249       |          |              |         | 24,201   |         |   |          | (13,981 | )        |   |          | 50,469  |         
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Current Liabilities              |          |              | 832,817  |              |         |          | 25,844  |   |          |         | (13,981  | ) |          |         | 844,680  |  
|LONG-TERM NOTE PAYABLE TO AFFILIATE  |                                       |                                        |         |              |          |              | 86,700  |          |         |   | (86,700  | )       |          |   |         |        
|LONG-TERM DEBT                       |                                       |                                        |         |              |          |              |        |          |         |   |         |         |          |   |         |        
|PENSION LIABILITY                    |                                       |                                        | 18,907   |              |          |              |        |          |         |   |         |         |          |   | 18,907   |        
|OTHER LONG-TERM LIABILITIES          |                                       |                                        | 36,163   |              |          |              | 1,129   |          |         |   |         |         |          |   | 37,292   |        
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Liabilities                      |          | $            | 887,887  |              |         | $        | 113,673 |   |          | $       | (100,681 | ) |          | $       | 900,879  |  
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|MEMBERS DEFICIT                    
|Members Interest                    |                                       | $                                      | 220,074  |              |          | $            |        |          |         | $ |         |         |          | $ | 220,074  |        
|Other Capital                        |                                       |                                        | 166,580  |              |          |              | 57,374  |          |         |   | (57,374  | )       |          |   | 166,580  |        
|Retained Deficit                     |                                       |                                        | (527,740 | )            |          |              | (42,875 | )        |         |   | 42,875   |         |          |   | (527,740 | )      
|Accumulated Other Comprehensive Loss |                                       |                                        | (1,857   | )            |          |              |        |          |         |   |         |         |          |   | (1,857   | )      
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Members Deficit                 |          |              | (142,943 | )            |         |          | 14,499  |   |          |         | (14,499  | ) |          |         | (142,943 | )
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        
|                                     |                                       | Total Liabilities and Members Deficit |          | $            | 744,944  |              |         | $        | 128,172 |   |          | $       | (115,180 | ) |          | $       | 757,936  |  
|                                     |                                       |                                        |          |              |          |              |         |          |         |   |          |         |          |   |          |        

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

Forward Looking and Cautionary
Statements

This Quarterly Report contains certain
forward-looking statements about American Commercial Lines
financial position and results of operations. These statements
include words such as believe, expect,
anticipate, intend, estimate
or other similar words. Any statements that express or involve
discussions as to expectations, beliefs or plans are not
historical facts and involve known and unknown risks,
uncertainties and other important factors that may cause the
actual results to materially differ from those considered by the
forward-looking statements. Such important factors include:



| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | substantial leverage and ability to service debt;                                                                                                                                                         
|
| |  | changing market, labor, legal and regulatory
    conditions and trends in the barge and inland shipping
    industries;                                                                                   
|
| |  | general economic and business conditions,
    including a prolonged or substantial recession in the United
    States or certain international commodity markets such as the
    market for grain exports;
|
| |  | annual worldwide weather conditions, particularly
    those affecting North and South America.                                                                                                            

Although we believe that our plans, intentions
and expectations reflected in or suggested by such
forward-looking statements are reasonable, actual results could
differ materially from a projection or assumption in any of our
forward-looking statements. Our future financial condition and
results of operations, as well as any forward-looking
statements, are subject to change and inherent risks and
uncertainties discussed under Item 1.
Business  Risks Associated With Our
Business and elsewhere in ACLs Annual Report on
Form 10-K for the year ended December 28, 2001, as
well as in our other filings with the Securities and Exchange
Commission. The forward-looking statements contained in this
Quarterly Report on Form 10-Q are made only as of the date
hereof and ACL does not have or undertake any obligation to
update or revise any forward-looking statements whether as a
result of new information, subsequent events or otherwise,
unless otherwise required by law.

Overview

American Commercial Lines LLC (ACL)
is an integrated marine transportation and service company,
providing barge transportation on the inland waterways of North
and South America. ACL supports its barging operations by
providing towboat and barge construction, terminal and vessel
repair services to American Commercial Barge Line LLC
(ACBL) and third parties. ACBL is the leading
provider of river barge transportation throughout the Inland
Waterways. In addition, since expanding its barge transportation
operations to South America in 1993, American Commercial Lines
International LLC, a wholly owned subsidiary of ACL (ACL
International), has become the leading provider of barge
transportation services on the Orinoco River in Venezuela and
through UABL Limited, a venture in which ACL has a 50% ownership
interest, on the Panama/ Paraguay River system serving
Argentina, Brazil, Paraguay, Uruguay and Bolivia. ACL
International also provides transportation services on the
Higuamo River in the Dominican Republic. ACL is a wholly owned
subsidiary of its parent holding company, American Commercial
Lines Holdings LLC (ACL Holdings).

ACLs secured debt was issued pursuant to a
Credit Agreement, dated June 30, 1998, with certain lenders
and J.P. Morgan Chase Bank (formerly, The Chase Manhattan Bank),
as administrative agent (the Senior Credit
Facilities), consisting of a $200.0 million
Tranche B Term Loan due June, 2006, a $235.0 million
Tranche C Term Loan due June 2007 (collectively, the
Term Loans) and a revolving credit facility
providing for revolving loans and the issuance of letters of
credit for the account of ACL in an aggregate principal amount
of up to $100.0 million due June 2005 (the Revolving
Credit Facility). ACL also has outstanding
$295.0 million of unsecured 10 1/4% Senior Notes due
June 2008 (the Senior Notes).

On May 25, 2001, ACL entered into an
agreement to sell substantially all of the terminals (the
Terminal Sale) of its wholly owned terminal
subsidiary, American Commercial Terminals LLC (ACT),
other than its coal transfer facility at St. Louis, Missouri and
its tank storage facility at Memphis, Tennessee to

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Global Material Services LLC (GMS), a
joint venture between ACT, and Mid-South Terminal Company, L.P.,
an unaffiliated third party. The sale of seven terminals was
completed on May 25, 2001. An additional terminal site in
Omaha, Nebraska was transferred on June 29, 2001.

Results of Operations

Quarter Ended
March 29, 2002 Compared with Quarter Ended March 30,
2001

Operating Revenue.Operating revenue for the quarter
ended March 29, 2002 decreased 1% to $170.9 million
from $173.1 million for the quarter ended March 30,
2001. The revenue decrease was primarily due to the loss of
revenue associated with the Terminal Sale and lower revenue from
ACLs Venezuelan business unit partially offset by an
increase in revenue from the start of operations in the
Dominican Republic.

Domestic barging revenue decreased
$0.3 million to $140.0 million due to lower freight
rates for all commodities, partially offset by increased volume
as a result of better operating conditions.

International revenues decreased
$0.6 million to $5.4 million due to the absence of
payments for minimum contracted tonnage in Venezuela, partially
offset by revenue from ACLs Dominican Republic unit, which
began operation in the third quarter of 2001. Revenue at
ACLs Jeffboat LLC (Jeffboat) subsidiary
decreased $0.1 million to $23.3 million primarily due
to lower total volume of hopper barge sales, partially offset by
construction of one additional, 30,000 barrel tank barge.

Operating Expense.Operating expense for the quarter
ended March 29, 2002 decreased 5% to $173.7 million
from $183.5 million in the first quarter of 2001. Domestic
barging expense decreased $7.8 million to
$142.9 million due to reduced fuel prices and better
operating conditions, partially offset by fees related to the
Danielson Restructuring (as defined under Failure to Pay
Interest on Senior Notes). Fuel price before the effect of
user tax and hedging was 62 cents per gallon in the first
quarter of 2002 on a volume of 26.1 million gallons,
compared to 88 cents per gallon in the first quarter of 2001.
ACL hedges fuel to be consumed for barge freight commitments
that are pre-priced and not protected by contract rate
adjustments. Contract adjustments along with the hedging program
currently protect roughly 60% of ACLs fuel consumption.
International barging expenses increased $0.7 million to
$7.9 million primarily due to an increase in fees for start
up activities and an increase in operating expense from the
start of the Dominican Republic operation. Jeffboats
expenses decreased $0.9 million to $21.6 million due
to lower volume of hopper barge construction and improved
productivity in the construction of hopper barges.

Operating (Loss).Operating loss for the quarter ended
March 29, 2002 was $2.8 million, a $7.6 million
improvement compared to the loss of $10.4 million for the
first quarter of 2001. The reduction of operating loss is due to
the reasons discussed above.

Interest Expense.Interest expense for the first quarter
of 2002 decreased to $15.1 million from $19.6 million
for the same period in 2001. The decrease was due to lower
London Interbank Offered Rates (LIBOR), which are
the basis for certain interest rate adjustments under ACLs
Senior Credit Facilities, lower outstanding balances on the Term
Loans, and lower balances of other debt. The decrease was
partially offset by a higher outstanding balance on the
Revolving Credit Facility.

Loss Before Income Taxes and Cumulative Effect
of Accounting Change.The loss before
income taxes and cumulative effect of accounting change, was
$18.5 million for the first quarter 2002 compared to a loss of
$29.5 million for the same period in 2001 due to the
reasons discussed above.

Income Taxes.Income
taxes for the quarter was a benefit of $1.0 million
compared to expense of $0.1 million in the first quarter of
last year. The benefit was due to the reversal of foreign tax
expense that was previously accrued in relation to a tax matter
in South America. ACL passes its U.S. federal and most of its
state taxable income to ACL Holdings, whose equity holders are
responsible for those income taxes.

Loss Before Cumulative Effect of Accounting
Change.The loss before cumulative
effect of accounting change, was $17.5 million for the
first quarter 2002 compared to loss of $29.6 million for
the same period in 2001 due to the reasons discussed above.

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Cumulative Effect of Accounting Change.There was no cumulative effect of
accounting change for the first quarter of 2002 compared to a
loss of $0.5 million in the first quarter of 2001, due to
recognition of a loss on the fair value of an interest rate cap
as a result of ACLs adoption of FASB Statement
No. 133 as of December 30, 2000.

Net Loss.Net loss
for the quarter was $17.5 million compared to loss of $30.1
million in the same period last year due to the reasons
discussed above.

Seasonality:ACLs business is seasonal, and
its quarterly revenues and profits historically have been lower
during the first and second fiscal quarters of the year (January
through June) and higher during the third and fourth fiscal
quarters (July through December) due to the North American grain
harvest. In addition, working capital requirements fluctuate
throughout the year.

Outlook

Operating conditions are expected to remain
favorable, as compared to the prior year, into the second
quarter, however the grain freight tariff is expected to be
lower than the first quarter as market grain freight rates have
decreased approximately 15 % since the beginning of March, 2002.

The collective bargaining agreement between
Jeffboat and its unionized employees represented by the
International Brotherhood of Teamsters, Local No. 89 expired on
April 29, 2002. Despite Jeffboats efforts, no
agreement could be reached as to a new collective bargaining
agreement and the union employees chose to strike, beginning on
the morning of April 30, 2002. After a vote on May 5,
2002, the union employees rejected Jeffboats last,
best and final offer, which was made on April 29,
2002, and continued their strike. A prolonged strike could have
a material adverse effect on Jeffboats operations and
could result in a material adverse effect on ACLs results
of operations. Jeffboat plans to continue negotiations with the
union. Jeffboat also intends to pursue alternatives to resume
production. These actions by Jeffboat could mitigate any
potential adverse effect on Jeffboat and ACL. ACL has
approximately 90 employees represented by unions at locations
other than Jeffboat. ACLs relations with employees at
these locations are not affected by the strike.

Management expects the average price of fuel
consumed by ACBL vessels to remain consistent with current
market prices resulting in a price per gallon in the second
quarter of 2002 of approximately 13 cents lower than the price
in the second quarter of 2001. Management expects that
ACBLs vessels will consume approximately 110 million
gallons annually and generally ratably throughout the year. ACBL
has barge freight contract price adjustment clauses and a
fuel-hedging program which currently provide protection for
approximately 60% of gallons consumed. Contract adjustments are
deferred one quarter.

Liquidity and Capital Resources.

As of March 29, 2002, ACL had outstanding
indebtedness of $692.4 million, including
$313.3 million drawn under the Term Loans,
$84.0 million drawn under the Revolving Credit Facility,
$295.0 million aggregate principal amount of Senior Notes
and other notes outstanding of $0.1 million. In addition,
ACL had $5.8 million in outstanding capital lease
obligations and had securitized $36.7 million of the trade
receivables of two subsidiaries as of the end of the quarter.

The Senior Credit Facilities and the indenture
governing the Senior Notes (the Indenture) contain a
number of covenants with specified financial ratios and tests
including, with respect to the Senior Credit Facilities, maximum
leverage ratios, rent adjusted maximum leverage ratios and
interest coverage ratios which could lead to an event of default
which could result in acceleration of the debt, higher interest
rates or other adverse consequences. The Indenture also contains
certain cross default provisions. Compliance with financial
ratios is measured at the end of each quarter. ACLs
ability to meet the financial ratios is affected by adverse
weather conditions, seasonality and other risk factors inherent
in its business.

ACL completed an agreement with its lenders to
amend the Senior Credit Facilities effective December 29,
2000 through December 31, 2001 (Amendment
No. 5). Amendment No. 5 added a rent adjusted
consolidated leverage ratio, a limitation on annual rent
expense, reduced allowable capital expenditures, and increased
the interest rates on the Term Loans and the Revolving Credit
Facility. Following December 31,

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2001, the covenant requirements reverted to those
specified in the original Senior Credit Facilities, which are
more restrictive than the amended covenants. Certain covenants
added by Amendment No. 5 also became more restrictive.


Failure to
Pay Interest on Senior Notes

On December 31, 2001, ACL elected not to pay
the interest due (the Bond Interest Payment) on its
Senior Notes due to ongoing negotiations with its lenders and
noteholders regarding the restructuring of ACLs bank and
bond debt. Following the thirty day grace period provided by the
Indenture, ACL again did not make the Bond Interest Payment.
This election not to make the Bond Interest Payment is an event
of default under the Indenture. However, certain noteholders
party thereto have entered into forbearance agreements with ACL,
agreeing not to accelerate the Senior Notes or take additional
adverse actions against ACL. Acceleration of the Senior Notes
would have a material adverse effect on ACLs liquidity.
Further, as a result of ACLs failure to make the Bond
Interest Payment, J.P. Morgan Chase & Co. delivered a notice
to ACL in January 2002 asserting that ACL was in default of the
Credit Agreement. ACL was also in default under other covenants
specified in the Credit Agreement (the Acknowledged
Defaults). Certain lenders party to the Credit Agreement
entered into forbearance agreements with ACL, agreeing not to
accelerate the debt outstanding under the Senior Credit
Facilities or take additional adverse actions against ACL on
account of the Acknowledged Defaults. Acceleration of the debt
under the Credit Agreement would have a material adverse effect
on ACLs liquidity.

In accordance with these facts and circumstances,
ACL has reclassified its outstanding obligations under the
Indenture and the Credit Agreement from long term to current.

On March 15, 2002, ACL entered into a
definitive recapitalization agreement regarding the acquisition
and recapitalization of ACL (the Danielson
Recapitalization) by Danielson Holding Corporation
(Danielson) and on April 15, 2002 launched an
exchange offer pursuant to which ACL is offering an exchange of
its outstanding Senior Notes for a new series of senior notes
and a new class of senior subordinated notes. The exchange offer
is scheduled to close on May 20, 2002.

In order to assist in the consummation of the
Danielson Recapitalization, ACL has received forbearance
agreements from its senior secured lenders under its Senior
Credit Facilities pending the negotiation and execution of
definitive documentation relating to the amendment of ACLs
Senior Credit Facilities satisfactory to the parties. As of
April 11, 2002, ACL and certain lenders executed an
amendment agreement under which the Senior Credit Facilities
will be amended and restated upon the satisfaction of certain
conditions set forth in the amendment agreement, including the
consummation of the Danielson Recapitalization.

As a result of the events described above, PNC
Bank, National Association (PNC), as Administrator
under ACLs receivables facility with PNC (the
Receivables Purchase Agreement), asserted that ACL
was in default under the Receivables Purchase Agreement. ACL and
PNC entered into a waiver of the Receivables Purchase Agreement
on February 11, 2002 and a modification to that waiver on
February 25, 2002 and on April 1, 2002 (collectively,
the RPA Waiver). The RPA Waiver has the effect of
waiving the default asserted by PNC, provided that ACL enters
into certain definitive agreements with Danielson relating to
the Danielson Recapitalization and refinances the Receivables
Purchase Agreement on or before June 30, 2002. The RPA
Waiver also requires ACL to reduce its overall borrowings under
the facility to no more than $55.0 million. A default under
the Receivables Purchase Agreement or the RPA Waiver could
result in PNCs cessation of purchasing of ACLs
receivables, which in turn would have a material adverse effect
on ACLs liquidity.

ACLs primary sources of liquidity are cash
flows from operating activities and its Senior Credit
Facilities. ACLs cash balance was $25.4 million as of
March 29, 2002. Cash used by operating activities totaled
$17.5 million for the first quarter of 2002 compared to
cash used by operating activities of $20.1 million for the
first quarter of 2001. The decrease in cash used was primarily
due to the deferral of the Bond Interest Payment, and improved
operating earnings, partially offset by a difference in the
timing of cash disbursements related to trade payables.

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Capital expenditures are expected to be
$32.0 million for 2002, with most expenditures being for
marine equipment maintenance. As of March 29, 2002, a total
of $3.4 million had been spent. ACL will continue to lease
new construction equipment from Vessel Leasing LLC (in which ACL
has a 50% ownership interest) and third parties.

ACL is highly leveraged, which makes it
vulnerable to changes in general economic conditions. ACLs
ability to repay or refinance its debt will depend on, among
other things, financial, business, market, competitive and other
conditions, many of which are beyond ACLs control.
Management believes that cash generated from operations is
sufficient to fund its cash requirements, including capital
expenditures for fleet maintenance, working capital, interest
payments and scheduled principal payments. ACL may, from time to
time, borrow under the Revolving Credit Facility.

Changes In Accounting Standards

In July 2001, the FASB issued Statement of
Financial Accounting Standards No. 142 Goodwill and
Other Intangible Assets (SFAS 142), which
establishes the accounting for goodwill and other intangible
assets following their recognition. SFAS 142 applies to all
goodwill and other intangible assets whether acquired singly, as
part of a group, or in a business combination. SFAS 142
provides that goodwill should not be amortized but should be
tested for impairment annually using a fair-value based
approach. In addition, SFAS 142 provides that intangible
assets other than goodwill should be amortized over their useful
lives and reviewed for impairment in accordance with Statement
of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of  (SFAS 121). ACL
adopted SFAS 142 on December 29, 2001. ACL is required
to perform a transitional impairment test under SFAS 142
for all goodwill recorded as of December 29, 2001. Any
impairment loss recorded as a result of completing the
transitional impairment test will be treated as a change in
accounting principle. The impact of the adoption of
SFAS 142 on ACLs results of operations for all
periods beginning on or after December 29, 2001 will be to
eliminate amortization of goodwill. Management of ACL has not
yet completed the transitional impairment test under
SFAS 142, however, management believes there will not be a
material impact on the financial statements as a result of
adopting SFAS 142.

In October 2001, the FASB issued Statement of
Financial Accounting Standards No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets
(SFAS 144). SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of
long-lived assets and supercedes SFAS 121, and the accounting
and reporting provisions of Accounting Principles Board Opinion
No. 30, Reporting the Results of Operations 
Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business
(as previously defined in that Opinion). SFAS 144 also
amends Accounting Research Bulletin No. 51,
Consolidated Financial Statements, to eliminate the
exception to consolidation for a subsidiary for which control is
likely to be temporary. The objectives of SFAS 144 are to
address significant issues relating to the implementation of
SFAS 121 and to develop a single accounting model, based on
the framework established in SFAS 121, for long-lived
assets to be disposed of by sale, whether previously held and
used or newly acquired. ACL adopted SFAS 144 in the first
quarter of 2002. The provisions of SFAS 144 do not have an
impact on ACLs financial statements as of March 29,
2002.




Item
3.     Quantitative and Qualitative
Disclosures About Market Risk.

ACL is exposed to certain market risks which are
inherent in its financial instruments and which arise from
transactions entered into in the normal course of business.
There have been no material changes to ACLs exposure to
market risks discussed in Item 7A of ACLs 2001 Annual
Report on Form 10-K for the year ended December 28,
2001.

Fuel Price Risk

At March 29, 2002, ACL had forward fuel
purchase contracts outstanding with an aggregate notional amount
of approximately $1.53 million and a fair value of
approximately $.069 million loss, which has been

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recorded in other current liabilities with the
offset to other comprehensive income and an additional fair
value gain of $.179 million which has been recorded as
receivable with an offset to the allowance for doubtful accounts
in the condensed consolidated statement of financial position.
The $.069 million loss will be recognized in earnings
within the next 7 months. Under these agreements, ACL will
pay fixed prices ranging from $0.51 to $0.86 per gallon. There
were 2.4 million gallons remaining on the contracts at
March 29, 2002. The agreements terminate October 31,
2002. Due to the bankruptcy of Enron, one of the trading
partners, ACL believes the hedge is no longer effective and has
recognized the mark-to-market gain of $.179 million but has
fully reserved for the amount. Management believes that the
other trading partner does not present a credit risk to ACL.


Interest Rate Risks

ACL entered into an interest rate cap agreement
in the third quarter of 2000 to reduce the impact of potential
rate increases on floating rate debt. The interest rate cap has
a notional amount of $202.0 million and a fair value of
$.014 million as of March 29, 2002 and is effective
through August 11, 2003. ACL accounts for the interest rate
cap as a cash flow hedge whereby the fair value of the interest
rate cap is reflected as an asset or liability in the
accompanying condensed consolidated statement of financial
position. The cap rate (hedging instrument) is the same interest
rate index as the base interest rate for the floating rate debt
(hedged item). When the interest rate index exceeds the interest
rate cap, a portion of the change in fair value of the
instrument represents a change in intrinsic value which is an
effective hedge. This portion of the change in value will be
recorded as other comprehensive income. The remaining change in
fair value is recorded as other expense (income) on the
condensed consolidated statement of operations.

For the quarters ended March 29, 2002 and
March 30, 2001, the entire change in fair value resulted in
losses of $.022 million and $.106 million
respectively, which are recorded in other expense
(income) in the condensed consolidated statement of
operations.

ACL also records changes to other assets on the
accompanying condensed consolidated statement of financial
position, with the offset recorded as comprehensive income
(loss), for changes in the fair value of interest rate swap
agreements entered into by Global Material Services LLC
(GMS), an entity in which ACL has a 50% ownership
interest accounted for by the equity method. ACL recognized a
comprehensive gain of $0.228 million for its share of these
swaps in the quarter ended March 29, 2002.

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PART II

OTHER INFORMATION



Item 3:     Defaults
Upon Senior Securities

As noted in Part I of this Quarterly Report on
Form 10-Q under Managements Discussion and
Analysis of Financial Condition and Results of Operations 
Liquidity and Capital Resources  Failure to Pay Interest
on Senior Notes, on December 31, 2001, ACL elected
not to pay the interest due in the amount of $15.1 million
on its Senior Notes due to ongoing negotiations with its lenders
and noteholders regarding the restructuring of ACLs bank
and bond debt. Following the thirty day grace period provided by
the Indenture, ACL again did not make the Bond Interest Payment.
This election not to make the Bond Interest Payment is an event
of default under the Indenture. As of May 7, 2002, the
amount of interest due on the Senior Notes is $25.8 million.




Item 6:     Exhibits
and Reports on Form 8-K.

Exhibits

There are no exhibits filed with this report.

Reports on Form 8-K

ACL filed Current Reports on Form 8-K on
January 3, 2002, March 1, 2002 and March 27, 2002.

SIGNATURE

Pursuant to the requirements of the Securities
Exchange Act of 1934, American Commercial Lines LLC has duly
caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                  |  |                                                                                                                                                                                                         
|----------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                  |  | AMERICAN COMMERCIAL LINES LLC
    (Registrant)                                                                                                                                                          
|                 
|Date: May 9, 2002 |  | By: /s/ JAMES J. WOLFF
    ------------------------------------------------
    Name: James J. Wolff
    Title: Senior Vice President and
    Chief Financial Officer
    (Principal Accounting Officer)

22