##### 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
    SEPTEMBER 27, 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                                                           |  | 52-2106600                           
|(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 October 31, 2002 the registrant had
100 membership interests outstanding.



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TABLE OF CONTENTS



|                                                                                            |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                                                     
|FINANCIAL INFORMATION                                                                      
|                                                                                            | Item 1. Financial Statements                                                                 
|AMERICAN COMMERCIAL LINES LLC CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS               
|AMERICAN COMMERCIAL LINES LLC CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS               
|AMERICAN COMMERCIAL LINES LLC CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS               
|AMERICAN COMMERCIAL LINES LLC CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION       
|AMERICAN COMMERCIAL LINES LLC CONDENSED CONSOLIDATED STATEMENT OF MEMBERS EQUITY (DEFICIT)
|AMERICAN COMMERCIAL LINES LLC NOTES TO CONDENSED CONSOLIDATED 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                           
|                                                                                            | Item 4. Controls and Procedures                                                              
|PART II OTHER INFORMATION                                                                  
|                                                                                            | Item 3. Defaults Upon Senior Securities                                                      
|                                                                                            | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                                                                                  
|CERTIFICATIONS                                                                             
|AMENDMENT NO. 1 TO CREDIT AGREEMENT                                                        
|AMENDMENT NO. 1 TO RECEIVABLES PURCHASE AGREEMENT                                          
|RELEASE AND WAIVER OF EMPLOYMENT                                                           



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##### Table of Contents






PART I




FINANCIAL INFORMATION




Item 1.     Financial
Statements




AMERICAN COMMERCIAL LINES LLC

CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS

|                                  |                                    |                          |         |               |         |   |         |        |         | 
|--------------------------------- | ---------------------------------- | ------------------------ | ------- | ------------- | ------- | - | ------- | ------ | ------- | 
|                                  |                                    |                         
|                                  |                                    | Quarters Ended          
|                                  |                                    |                         
|                                  |                                    | September 27,            |         | September 28,
|                                  |                                    | 2002                     |         | 2001         
|                                  |                                    |                          |         |              
|                                  |                                    |                         
|                                  |                                    | (Unaudited)             
|                                  |                                    | (Dollars in thousands)  
|OPERATING REVENUE                 |                                    | $                        | 179,657 |               |         | $ | 207,341 |       
|OPERATING EXPENSE                 |                                    |                          |         |               |         |   |         |       
|                                  | Materials, Supplies and Other      |                          |         | 78,495        |         |   |         | 87,667 |        
|                                  | Restructuring Cost                 |                          |         | 83            |         |   |         |       |        
|                                  | Rent                               |                          |         | 13,150        |         |   |         | 14,249 |        
|                                  | Labor and Fringe Benefits          |                          |         | 42,597        |         |   |         | 41,807 |        
|                                  | Fuel                               |                          |         | 19,936        |         |   |         | 23,915 |        
|                                  | Depreciation and Amortization      |                          |         | 15,866        |         |   |         | 14,107 |        
|                                  | Gain on Property Dispositions, Net |                          |         |              |         |   |         | (5,032 | )      
|                                  | Taxes, Other Than Income Taxes     |                          |         | 6,398         |         |   |         | 6,464  |        
|                                  |                                    |                          |         |               |         |   |         |       
|                                  |                                    | Total Operating Expenses |         |               | 176,525 |   |         |        | 183,177 | 
|                                  |                                    |                          |         |               |         |   |         |       
|OPERATING INCOME                  |                                    |                          | 3,132   |               |         |   | 24,164  |       
|OTHER EXPENSE                     |                                    |                          |         |               |         |   |         |       
|                                  | Interest Expense                   |                          |         | 14,915        |         |   |         | 16,959 |        
|                                  | Other, Net                         |                          |         | 730           |         |   |         | 1,912  |        
|                                  |                                    |                          |         |               |         |   |         |       
|                                  |                                    | Total Other Expense      |         |               | 15,645  |   |         |        | 18,871  | 
|                                  |                                    |                          |         |               |         |   |         |       
|(LOSS) INCOME BEFORE INCOME TAXES |                                    |                          | (12,513 | )             |         |   | 5,293   |       
|INCOME TAXES                      |                                    |                          | 129     |               |         |   | 89      |       
|                                  |                                    |                          |         |               |         |   |         |       
|NET (LOSS) INCOME                 |                                    | $                        | (12,642 | )             |         | $ | 5,204   |       
|                                  |                                    |                          |         |               |         |   |         |       

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
OPERATIONS

|                                                                                            |                                    |                          |         |              |         |                   |         |         |         |   |         |         |         | 
|------------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------ | ------- | ------------ | ------- | ----------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                            |                                    |                          |         | December 29, |         |                  
|                                                                                            |                                    | May 29 to                |         | 2001         |         | Nine Months Ended
|                                                                                            |                                    | September 27,            |         | to May 28,   |         | September 28,    
|                                                                                            |                                    | 2002                     |         | 2002         |         | 2001             
|                                                                                            |                                    |                          |         |              |         |                  
|                                                                                            |                                    |                         
|                                                                                            |                                    | (Unaudited)             
|                                                                                            |                                    | (Dollars in thousands)  
|OPERATING REVENUE                                                                           |                                    | $                        | 235,651 |              |         | $                 | 284,805 |         |         | $ | 573,323 |        
|OPERATING EXPENSE                                                                           |                                    |                          |         |              |         |                   |         |         |         |   |         |        
|                                                                                            | Materials, Supplies and Other      |                          |         | 101,994      |         |                   |         | 138,092 |         |   |         | 258,672 |        
|                                                                                            | Restructuring Cost                 |                          |         | 83           |         |                   |         | 13,493  |         |   |         |        |        
|                                                                                            | Rent                               |                          |         | 17,525       |         |                   |         | 23,121  |         |   |         | 42,765  |        
|                                                                                            | Labor and Fringe Benefits          |                          |         | 54,578       |         |                   |         | 65,760  |         |   |         | 123,130 |        
|                                                                                            | Fuel                               |                          |         | 26,844       |         |                   |         | 30,434  |         |   |         | 71,606  |        
|                                                                                            | Depreciation and Amortization      |                          |         | 21,497       |         |                   |         | 21,824  |         |   |         | 42,473  |        
|                                                                                            | Gain on Property Dispositions, Net |                          |         |             |         |                   |         | (455    | )       |   |         | (16,106 | )      
|                                                                                            | Taxes, Other Than Income Taxes     |                          |         | 8,672        |         |                   |         | 10,926  |         |   |         | 19,859  |        
|                                                                                            |                                    |                          |         |              |         |                   |         |         |         |   |         |        
|                                                                                            |                                    | Total Operating Expenses |         |              | 231,193 |                   |         |         | 303,195 |   |         |         | 542,399 | 
|                                                                                            |                                    |                          |         |              |         |                   |         |         |         |   |         |        
|OPERATING INCOME (LOSS)                                                                     |                                    |                          | 4,458   |              |         |                   | (18,390 | )       |         |   | 30,924  |        
|OTHER EXPENSE                                                                               |                                    |                          |         |              |         |                   |         |         |         |   |         |        
|                                                                                            | Interest Expense                   |                          |         | 19,533       |         |                   |         | 25,712  |         |   |         | 55,039  |        
|                                                                                            | Other, Net                         |                          |         | 1,098        |         |                   |         | 827     |         |   |         | 399     |        
|                                                                                            |                                    |                          |         |              |         |                   |         |         |         |   |         |        
|                                                                                            |                                    | Total Other Expense      |         |              | 20,631  |                   |         |         | 26,539  |   |         |         | 55,438  | 
|                                                                                            |                                    |                          |         |              |         |                   |         |         |         |   |         |        
|LOSS BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND
    CUMULATIVE EFFECT OF ACCOUNTING CHANGE |                                    |                          | (16,173 | )            |         |                   | (44,929 | )       |         |   | (24,514 | )      
|INCOME TAXES (BENEFIT)                                                                      |                                    |                          | 165     |              |         |                   | (919    | )       |         |   | 351     |        
|                                                                                            |                                    |                          |         |              |         |                   |         |         |         |   |         |        
|LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
    EFFECT OF ACCOUNTING CHANGE               |                                    |                          | (16,338 | )            |         |                   | (44,010 | )       |         |   | (24,865 | )      
|EXTRAORDINARY ITEM  GAIN ON EARLY
    EXTINGUISHMENT OF DEBT                               |                                    |                          |        |              |         |                   |        |         |         |   | 1,885   |        
|CUMULATIVE EFFECT OF ACCOUNTING CHANGE                                                      |                                    |                          |        |              |         |                   |        |         |         |   | (490    | )      
|                                                                                            |                                    |                          |         |              |         |                   |         |         |         |   |         |        
|NET LOSS                                                                                    |                                    | $                        | (16,338 | )            |         | $                 | (44,010 | )       |         | $ | (23,470 | )      
|                                                                                            |                                    |                          |         |              |         |                   |         |         |         |   |         |        

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 CASH
FLOWS

|                                                 |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |         |   |         |         |  
|------------------------------------------------ | --------------------------------------------- | ------------------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------- | - | ----------------- | ------- | ------- | - | ------ | ------- | ------- | - | ------- | ------- | -
|                                                 |                                               | May 29 to                                   |                                                            | December 29,                                            |   | Nine Months Ended
|                                                 |                                               | September 27,                               |                                                            | 2001 to May 28,                                         |   | September 28,    
|                                                 |                                               | 2002                                        |                                                            | 2002                                                    |   | 2001             
|                                                 |                                               |                                             |                                                            |                                                         |   |                  
|                                                 |                                               |                                            
|                                                 |                                               | (Unaudited)                                
|                                                 |                                               |                                            
|                                                 |                                               | (Dollars in thousands)                     
|OPERATING ACTIVITIES                             |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        
|                                                 | Net Loss                                      |                                             | $                                                          | (16,338                                                 | ) |                   | $       | (44,010 | ) |        | $       | (23,470 | )
|                                                 | Adjustments to Reconcile Net Loss to Net Cash |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |         |  
|                                                 |                                               | Provided by (Used in) Operating Activities: |                                                            |                                                         |   |                   |         |         |   |        |         |         |   |        
|                                                 |                                               |                                             | Depreciation and Amortization                              |                                                         |   | 21,497            |         |         |   | 21,824 |         |         |   | 42,473  |        
|                                                 |                                               |                                             | Interest Accretion and Debt Issuance Cost
    Amortization |                                                         |   | 1,680             |         |         |   | 1,245  |         |         |   | 3,284   |        
|                                                 |                                               |                                             | Gain on Property Dispositions                              |                                                         |   |                  |         |         |   | (455   | )       |         |   | (16,106 | )      
|                                                 |                                               |                                             | Other Operating Activities                                 |                                                         |   | 1,157             |         |         |   | (5,422 | )       |         |   | (1,147  | )      
|                                                 |                                               |                                             | Changes in Operating Assets and Liabilities:               |                                                         |   |                   |         |         |   |        |         |         |   |         |        
|                                                 |                                               |                                             |                                                            | Accounts Receivable                                     |   |                   | (6,681  | )       |   |        | (3,240  | )       |   |         | (13,291 | )
|                                                 |                                               |                                             |                                                            | Materials and Supplies                                  |   |                   | (5,621  | )       |   |        | (5,160  | )       |   |         | (3,840  | )
|                                                 |                                               |                                             |                                                            | Accrued Interest                                        |   |                   | 9,562   |         |   |        | 10,332  |         |   |         | (7,471  | )
|                                                 |                                               |                                             |                                                            | Other Current Assets                                    |   |                   | 5,297   |         |   |        | (3,149  | )       |   |         | (4,214  | )
|                                                 |                                               |                                             |                                                            | Other Current Liabilities                               |   |                   | (3,795  | )       |   |        | 8,357   |         |   |         | 22,845  |  
|                                                 |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        
|                                                 |                                               |                                             |                                                            | Net Cash Provided by (Used in) Operating
    Activities |   |                   | 6,758   |         |   |        | (19,678 | )       |   |         | (937    | )
|INVESTING ACTIVITIES                             |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        
|                                                 | Property Additions                            |                                             |                                                            | (5,998                                                  | ) |                   |         | (5,605  | ) |        |         | (13,025 | )
|                                                 | Proceeds from Property Dispositions           |                                             |                                                            | 643                                                     |   |                   |         | 988     |   |        |         | 22,911  |  
|                                                 | Net Change in Restricted Cash                 |                                             |                                                            | (104                                                    | ) |                   |         |        |   |        |         |        |  
|                                                 | Proceeds from Sale of Terminals               |                                             |                                                            |                                                        |   |                   |         |        |   |        |         | 8,241   |  
|                                                 | Other Investing Activities                    |                                             |                                                            | (1,749                                                  | ) |                   |         | (2,859  | ) |        |         | (7,933  | )
|                                                 |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        
|                                                 |                                               |                                             |                                                            | Net Cash (Used in) Provided by Investing
    Activities |   |                   | (7,208  | )       |   |        | (7,476  | )       |   |         | 10,194  |  
|FINANCING ACTIVITIES                             |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        
|                                                 | Danielson Holding Corporation Investment      |                                             |                                                            |                                                        |   |                   |         | 25,000  |   |        |         |        |  
|                                                 | Short-Term Borrowings                         |                                             |                                                            | 5,000                                                   |   |                   |         |        |   |        |         | 8,250   |  
|                                                 | Long-Term Debt Repaid                         |                                             |                                                            | (8,040                                                  | ) |                   |         | (25,190 | ) |        |         | (40,709 | )
|                                                 | Bank Overdrafts                               |                                             |                                                            | (1,442                                                  | ) |                   |         | 1,149   |   |        |         | (6,672  | )
|                                                 | Debt Costs                                    |                                             |                                                            |                                                        |   |                   |         |        |   |        |         | (3,462  | )
|                                                 | Other Financing Activities                    |                                             |                                                            | (928                                                    | ) |                   |         | (173    | ) |        |         | 102     |  
|                                                 |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        
|                                                 |                                               |                                             |                                                            | Net Cash (Used in) Provided by Financing
    Activities |   |                   | (5,410  | )       |   |        | 786     |         |   |         | (42,491 | )
|                                                 |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        
|Net Decrease in Cash and Cash Equivalents        |                                               |                                             | (5,860                                                     | )                                                       |   |                   | (26,368 | )       |   |        | (33,234 | )      
|Cash and Cash Equivalents at Beginning of Period |                                               |                                             | 20,885                                                     |                                                         |   |                   | 47,253  |         |   |        | 59,568  |        
|                                                 |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        
|                                                 |                                               |                                             |                                                            | Cash and Cash Equivalents at End of Period              |   | $                 | 15,025  |         |   | $      | 20,885  |         |   | $       | 26,334  |  
|                                                 |                                               |                                             |                                                            |                                                         |   |                   |         |         |   |        |         |        

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

3



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##### Table of Contents






AMERICAN COMMERCIAL LINES LLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION

|                                     |                                       |                                                     |         |              |         |  |          |         |          |  
|------------------------------------ | ------------------------------------- | --------------------------------------------------- | ------- | ------------ | ------- |  | -------- | ------- | -------- | -
|                                     |                                       | September 27,                                       |         | December 28,
|                                     |                                       | 2002                                                |         | 2001        
|                                     |                                       |                                                     |         |             
|                                     |                                       | (Unaudited)                                         |         |             
|                                     |                                       |                                                    
|                                     |                                       | (Dollars in thousands)                             
|ASSETS                              
|CURRENT ASSETS                       |                                       |                                                     |         |              |         |  |          |        
|                                     | Cash and Cash Equivalents             |                                                     | $       | 15,025       |         |  | $        | 47,253  |         
|                                     | Cash, Restricted                      |                                                     |         | 6,668        |         |  |          |        |         
|                                     | Accounts Receivable, Net              |                                                     |         | 49,946       |         |  |          | 54,785  |         
|                                     | Materials and Supplies                |                                                     |         | 42,116       |         |  |          | 31,335  |         
|                                     | Other Current Assets                  |                                                     |         | 26,877       |         |  |          | 29,633  |         
|                                     |                                       |                                                     |         |              |         |  |          |        
|                                     |                                       | Total Current Assets                                |         |              | 140,632 |  |          |         | 163,006  |  
|PROPERTIES  Net                     |                                       |                                                     | 599,672 |              |         |  | 464,133  |        
|PENSION ASSETS                       |                                       |                                                     | 21,407  |              |         |  | 26,067   |        
|OTHER ASSETS                         |                                       |                                                     | 77,164  |              |         |  | 104,730  |        
|                                     |                                       |                                                     |         |              |         |  |          |        
|                                     |                                       | Total Assets                                        |         | $            | 838,875 |  |          | $       | 757,936  |  
|                                     |                                       |                                                     |         |              |         |  |          |        
|LIABILITIES                         
|CURRENT LIABILITIES                  |                                       |                                                     |         |              |         |  |          |        
|                                     | Accounts Payable                      |                                                     | $       | 29,501       |         |  | $        | 29,737  |         
|                                     | Accrued Payroll and Fringe Benefits   |                                                     |         | 14,969       |         |  |          | 17,206  |         
|                                     | Deferred Revenue                      |                                                     |         | 13,618       |         |  |          | 11,890  |         
|                                     | Accrued Claims and Insurance Premiums |                                                     |         | 26,961       |         |  |          | 24,200  |         
|                                     | Accrued Interest                      |                                                     |         | 10,584       |         |  |          | 18,659  |         
|                                     | Short-Term Debt                       |                                                     |         | 39,000       |         |  |          | 84,000  |         
|                                     | Current Portion of Long-Term Debt     |                                                     |         | 574,604      |         |  |          | 608,519 |         
|                                     | Other Current Liabilities             |                                                     |         | 39,353       |         |  |          | 50,469  |         
|                                     |                                       |                                                     |         |              |         |  |          |        
|                                     |                                       | Total Current Liabilities                           |         |              | 748,590 |  |          |         | 844,680  |  
|                                     | LONG-TERM DEBT                        |                                                     |         |             |         |  |          |        |         
|                                     | PENSION LIABILITY                     |                                                     |         |             |         |  |          | 18,907  |         
|                                     | OTHER LONG-TERM LIABILITIES           |                                                     |         | 21,627       |         |  |          | 42,368  |         
|                                     |                                       |                                                     |         |              |         |  |          |        
|                                     |                                       | Total Liabilities                                   |         |              | 770,217 |  |          |         | 905,955  |  
|                                     |                                       |                                                     |         |              |         |  |          |        
|MEMBERS EQUITY (DEFICIT)           
|Members Interest                    |                                       |                                                     | 85,025  |              |         |  | 220,074  |        
|Other Capital                        |                                       |                                                     | 1,695   |              |         |  | 166,580  |        
|Unearned Compensation                |                                       |                                                     | (1,507  | )            |         |  |         |        
|Retained Deficit                     |                                       |                                                     | (16,338 | )            |         |  | (532,816 | )      
|Accumulated Other Comprehensive Loss |                                       |                                                     | (217    | )            |         |  | (1,857   | )      
|                                     |                                       |                                                     |         |              |         |  |          |        
|                                     |                                       | Total Members Equity (Deficit)                     |         |              | 68,658  |  |          |         | (148,019 | )
|                                     |                                       |                                                     |         |              |         |  |          |        
|                                     |                                       | Total Liabilities and Members Equity
    (Deficit) |         | $            | 838,875 |  |          | $       | 757,936  |  
|                                     |                                       |                                                     |         |              |         |  |          |        

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

4



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##### Table of Contents






AMERICAN COMMERCIAL LINES LLC

CONDENSED CONSOLIDATED STATEMENT OF
MEMBERS EQUITY (DEFICIT)

|                                                        |                                                                                 |                          |          |         |   |              |          |          |   |               |        |       |   |   |          |         |         |   |        |      |      |   |          |         |         |  
|------------------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------ | -------- | ------- | - | ------------ | -------- | -------- | - | ------------- | ------ | ----- | - | - | -------- | ------- | ------- | - | ------ | ---- | ---- | - | -------- | ------- | ------- | -
|                                                        |                                                                                 |                          |          |         |   |              |          |          |   | Accumulated   |        |      
|                                                        |                                                                                 |                          |          |         |   |              |          |          |   | Other         |        |      
|                                                        |                                                                                 | Members                 |          | Other   |   | Unearned     |          | Retained |   | Comprehensive |        |      
|                                                        |                                                                                 | Interest                 |          | Capital |   | Compensation |          | Deficit  |   | Income (Loss) |        | Total
|                                                        |                                                                                 |                          |          |         |   |              |          |          |   |               |        |      
|                                                        |                                                                                 |                         
|                                                        |                                                                                 | (Unaudited)             
|                                                        |                                                                                 |                         
|                                                        |                                                                                 | (Dollars in thousands)  
|Balance at December 28, 2001                            |                                                                                 | $                        | 220,074  |         |   | $            | 166,580  |          |   | $             |       |       |   | $ | (532,816 | )       |         | $ | (1,857 | )    |      | $ | (148,019 | )      
|Comprehensive Loss:                                     |                                                                                 |                          |          |         |   |              |          |          |   |               |        |       |   |   |          |         |         |   |        |      |      |   |          |        
|                                                        | Net loss                                                                        |                          |          |        |   |              |          |         |   |               |        |      |   |   |          | (44,010 | )       |   |        |     |      |   |          | (44,010 | )      
|                                                        | 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 |          |         |  |              |          |          |  |               |        |       |  |   |          |         | (44,010 | ) |        |      | 183  |   |          |         | (43,827 | )
|Other                                                   |                                                                                 |                          |         |         |   |              | (373     | )        |   |               |       |       |   |   |         |         |         |   |       |      |      |   | (373     | )      
|                                                        |                                                                                 |                          |          |         |   |              |          |          |   |               |        |       |   |   |          |         |         |   |        |      |      |   |          |        
|Balance at May 28, 2002                                 |                                                                                 |                          | 220,074  |         |   |              | 166,207  |          |   |               |       |       |   |   | (576,826 | )       |         |   | (1,674 | )    |      |   | (192,219 | )      
|Elimination of historical equity                        |                                                                                 |                          | (220,074 | )       |   |              | (166,207 | )        |   |               |       |       |   |   | 576,826  |         |         |   | 1,674  |      |      |   | 192,219  |        
|Acquisition of ACL by Danielson Holding
    Corporation |                                                                                 |                          | 82,256   |         |   |              |         |          |   |               |       |       |   |   |         |         |         |   |       |      |      |   | 82,256   |        
|Acquisition of Vessel Leasing                           |                                                                                 |                          | 2,769    |         |   |              |         |          |   |               |       |       |   |   |         |         |         |   |       |      |      |   | 2,769    |        
|Issuance of restricted Parent Company common stock      |                                                                                 |                          |         |         |   |              | 1,695    |          |   |               | (1,695 | )     |   |   |         |         |         |   |       |      |      |   |         |        
|Amortization of unearned compensation                   |                                                                                 |                          |         |         |   |              |         |          |   |               | 188    |       |   |   |         |         |         |   |       |      |      |   | 188      |        
|Comprehensive Loss:                                     |                                                                                 |                          |          |         |   |              |          |          |   |               |        |       |   |   |          |         |         |   |        |      |      |   |          |        
|                                                        | Net loss                                                                        |                          |          |        |   |              |          |         |   |               |        |      |   |   |          | (16,338 | )       |   |        |     |      |   |          | (16,338 | )      
|                                                        | Net gain on fuel swaps designated as cash flow
    hedging instruments          |                          |          |        |   |              |          |         |   |               |        |      |   |   |          |        |         |   |        | 111  |      |   |          | 111     |        
|                                                        | Net loss on interest rate swaps designated as
    cash flow hedging instruments |                          |          |        |   |              |          |         |   |               |        |      |   |   |          |        |         |   |        | (591 | )    |   |          | (591    | )      
|                                                        | Foreign Currency Translation                                                    |                          |          |        |   |              |          |         |   |               |        |      |   |   |          |        |         |   |        | 263  |      |   |          | 263     |        
|                                                        |                                                                                 |                          |          |         |   |              |          |          |   |               |        |       |   |   |          |         |         |   |        |      |      |   |          |        
|                                                        |                                                                                 | Total Comprehensive Loss |          |         |  |              |          |          |  |               |        |       |  |   |          |         | (16,338 | ) |        |      | (217 | ) |          |         | (16,555 | )
|                                                        |                                                                                 |                          |          |         |   |              |          |          |   |               |        |       |   |   |          |         |         |   |        |      |      |   |          |        
|Balance at September 27, 2002                           |                                                                                 | $                        | 85,025   |         |   | $            | 1,695    |          |   | $             | (1,507 | )     |   | $ | (16,338  | )       |         | $ | (217   | )    |      | $ | 68,658   |        
|                                                        |                                                                                 |                          |          |         |   |              |          |          |   |               |        |       |   |   |          |         |         |   |        |      |      |   |          |        

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

5



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##### Table of Contents






AMERICAN COMMERCIAL LINES LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)


September 27, 2002


(Dollars in thousands)


Note 1.     Basis of
Presentation

The accompanying unaudited condensed consolidated
financial statements of American Commercial Lines LLC
(ACL) have been prepared in accordance with
accounting principles generally accepted in the United States
for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. For further information, refer to the
consolidated financial statements and footnotes thereto included
in ACLs Annual Report on Form 10-K for the year ended
December 28, 2001. Operating results for the interim
periods presented herein are not necessarily indicative of the
results that may be expected for the year ended
December 27, 2002.

Through May 28, 2002, ACL was in default
under its bank and bond debt, as well as its receivables
facility, due to nonpayment of interest on the debt as well as
other covenant violations. On December 31, 2001, and
subsequent thereto, ACL elected not to pay the interest due on
its bank and bond debt due to ongoing negotiations with its
lenders and noteholders regarding the restructuring of the debt.
ACL obtained forbearance agreements or waivers which enabled it
to complete the Danielson Recapitalization described below and
the debt restructuring described in Note 3.

On May 29, 2002, American Commercial Lines
Holdings LLC (ACL Holdings), ACLs parent
company, and ACL completed a comprehensive restructuring
involving the acquisition and recapitalization of ACL Holdings
and ACL (the Danielson Recapitalization) by
Danielson Holding Corporation (DHC) and subsidiaries
(collectively with DHC, Danielson) and the
restructuring of ACLs outstanding debt obligations (see
Notes 2 and 3). Consulting fees and legal costs incurred in
connection with the Danielson Recapitalization are included in
the accompanying condensed statement of operations as
Restructuring Cost.

In connection with Danielson becoming the owner
of 100% of the membership interests in ACLines LLC
(ACLines), which wholly owns ACL Holdings, Danielson
elected to push down its basis of accounting to the net assets
of ACL. ACLs net assets, liabilities and members
equity have been adjusted, as of the acquisition date, following
push down accounting. Accordingly, effective May 29, 2002,
ACLs accounts have been adjusted to a new basis to reflect
Danielsons basis in ACLs assets and liabilities
based on the estimated fair values of such assets and
liabilities using the principles of Financial Accounting
Standards No. 141, Business Combinations.

Note 2.     Danielson
Acquisition of ACL

Danielsons basis in ACLs net assets
at the acquisition date of $85,025 includes $7,000 in cash paid
for membership interests in ACL Holdings; $2,769 in cash paid
for a 50% membership interest in Vessel Leasing LLC
(Vessel Leasing), an entity in which ACL owns the
other 50% membership interest; the contribution of $25,000 in
cash and ACL 10 1/4% senior notes due June 30, 2008
having an estimated fair value of $43,650; and costs incurred by
Danielson directly associated with the acquisition of $6,606.

6



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


As a result of Danielsons acquisition of
ACL and the push down purchase accounting that resulted, ACL
recorded several non-cash adjustments including the following:

|                                                                           |        |   |         |         | 
|-------------------------------------------------------------------------- | ------ | - | ------- | ------- | 
|Properties                                                                 |        | $ | 120,787 |        
|Net Pension Asset                                                          |        |   | (5,426  | )      
|Other Assets                                                               |        |   | (27,509 | )      
|                                                                           |        |   |         |        
|                                                                           |        | $ | 87,852  |        
|                                                                           |        |   |         |        
|Accrued Interest                                                           |        | $ | (21,977 | )      
|Other Current Liabilities                                                  |        |   | 219     |        
|Short-Term Debt                                                            |        |   | (50,000 | )      
|Long-Term Debt                                                             |        |   | (13,342 | )      
|Pension Liability                                                          |        |   | (18,264 | )      
|Other Long-Term Liabilities                                                |        |   | (19,177 | )      
|Contribution of 10 1/4% senior notes at par
    including accrued interest |        |   | (64,082 | )      
|                                                                           | Equity |   |         | 274,475 | 
|                                                                           |        |   |         |        
|                                                                           |        | $ | 87,852  |        
|                                                                           |        |   |         |        

The above adjustments reflect the estimated fair
value of assets and liabilities acquired by Danielson as of the
date of acquisition. Management believes no significant
intangibles were acquired in the Danielson Recapitalization. The
adjustments are subject to revision once appraisals and other
evaluations of the fair value of the assets acquired and
liabilities assumed are completed. Accordingly, actual push down
accounting adjustments could differ from the adjustments
presented above.

The pro forma unaudited results of operations for
the quarters and nine months ended September 27, 2002 and
September 28, 2001, assuming consummation of the
acquisition as of December 30, 2000, are as follows:

|                                                                                                         |  |                |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ----------------- |  | ------------- | ------- | ------------- |  | - | ------- | - |  | - | ------- | -
|                                                                                                         |  |                |         |                  
|                                                                                                         |  | Quarters Ended |         | Nine Months Ended
|                                                                                                         |  |                |         |                  
|                                                                                                         |  | September 27,  |         | September 28,     |  | September 27, |         | September 28,
|                                                                                                         |  | 2002           |         | 2001              |  | 2002          |         | 2001         
|                                                                                                         |  |                |         |                   |  |               |         |              
|Revenue                                                                                                  |  | $              | 179,657 |                   |  | $             | 207,341 |               |  | $ | 520,456 |   |  | $ | 573,323 |  
|Loss from continuing operations before
    extraordinary item and cumulative effect of accounting change |  |                | (12,642 | )                 |  |               | 3,935   |               |  |   | (64,965 | ) |  |   | (23,678 | )
|Net (loss) income                                                                                        |  |                | (12,642 | )                 |  |               | 3,935   |               |  |   | (64,965 | ) |  |   | (22,283 | )

7



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AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Note 3.     Debt

|                                                |  |               |         |              |  |   |         | 
|----------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                                |  | September 27, |         | December 28,
|                                                |  | 2002          |         | 2001        
|                                                |  |               |         |             
|Revolving Credit Facility                       |  | $             | 39,000  |              |  | $ | 84,000  | 
|Tranche A Term Loan                             |  |               | 45,699  |              |  |   |        | 
|Tranche B Term Loan                             |  |               | 131,570 |              |  |   | 143,951 | 
|Tranche C Term Loan                             |  |               | 154,810 |              |  |   | 169,378 | 
|Senior Notes (New)                              |  |               | 128,190 |              |  |   |        | 
|Senior Subordinated Notes                       |  |               | 67,858  |              |  |   |        | 
|Senior Notes (Old)                              |  |               | 4,904   |              |  |   | 295,000 | 
|Bonds guaranteed by the Maritime Administration |  |               | 40,890  |              |  |   |        | 
|Other Notes                                     |  |               | 683     |              |  |   | 190     | 
|                                                |  |               |         |              |  |   |         | 
|                                                |  |               | 613,604 |              |  |   | 692,519 | 
|Less short-term debt                            |  |               | 39,000  |              |  |   | 84,000  | 
|Less, current portion long-term debt            |  |               | 574,604 |              |  |   | 608,519 | 
|                                                |  |               |         |              |  |   |         | 
|Long-term debt                                  |  | $             |        |              |  | $ |        | 
|                                                |  |               |         |              |  |   |         | 

As part of the Danielson acquisition on
May 29, 2002 of ACL Holdings, ACLs debt was
restructured. Danielson contributed to ACL Holdings $58,493
principal amount of ACLs 10 1/4% senior notes due
June 30, 2008 (Old Senior Notes), plus the
interest obligations, if any, thereon.

ACLs existing credit facilities were
amended and restated as of April 11, 2002 (the amended and
restated credit facilities are hereafter referred to as the
Senior Credit Facilities) to, among other things,
modify financial and restrictive covenants thereunder, prepay
$25,000 of term loans (the Term Loans) thereunder
from the $25,000 in cash contributed by Danielson and convert
$50,000 of revolving credit loans (the Revolving Credit
Facility) thereunder into a new tranche of term loans
having an interest rate and other terms substantially similar to
the revolving credit loans under ACLs old senior credit
facilities. The amended and restated credit agreement with
ACLs senior secured lenders contains mandatory prepayments
of the term loans with net proceeds from certain asset sales,
equity issuances, incurrence of indebtedness and sale and
leaseback transactions, as well as excess cash flow, as defined
in the credit agreement.

ACL also completed an exchange offer (the
Exchange Offer) for the Old Senior Notes, pursuant
to which $284,500 or approximately 96.4%, of the principal
amount of ACLs Old Senior Notes were tendered, with the
$58,493 principal amount of ACLs Old Senior Notes
contributed by Danielson and its subsidiaries to ACL Holdings
being deemed tendered in the Exchange Offer. Holders of Old
Senior Notes who tendered their Old Senior Notes pursuant to the
Exchange Offer received approximately $134,700 aggregate
principal amount of new 11.25% senior notes (the Senior
Notes) and approximately $112,900 aggregate principal
amount of 12% pay-in-kind senior subordinated notes (the
PIK Notes). The debt exchange was not an
extinguishment of debt for accounting purposes since the terms
of the new debt are not substantially different from the terms
of the Old Senior Notes exchanged.

Following the consummation of the Exchange Offer,
a holder of $4,000 aggregate principal amount of the Old Senior
Notes exchanged such notes and accrued interest for
approximately $2,400 of Senior Notes and approximately $2,000 of
PIK Notes as permitted by the indentures governing the notes,
following which $6,500 of the Old Senior Notes remained
outstanding.

8



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Since ACL is applying push down accounting
effective with Danielsons acquisition of ACL, ACLs
debt was adjusted to fair value at the acquisition date. The
difference between the principal amount of the debt and its fair
value is being accreted as interest expense over the term of the
debt under the effective interest method.

The Revolving Credit Facility, which provides for
revolving loans and letters of credit not to exceed the
aggregate principal amount of $50,000, matures June 30,
2005, but each loan must be repaid within one year. The
Revolving Credit Facility bears interest at a rate equal to
London InterBank Offered Rates (LIBOR) plus a margin
based on ACLs performance. The interest rate as of
September 27, 2002 was 5.56%.

Tranche A of the Term Loans matures
June 30, 2005. Tranche B of the Term Loans matures
June 30, 2006. Tranche C of the Term Loans matures
June 30, 2007. The Term Loans bear interest at a rate equal
to LIBOR plus a margin based on ACLs performance. The
annual interest rates as of September 27, 2002 were:
Tranche A  5.50%, Tranche B 
5.75% and Tranche C  6.00%.

The new Senior Notes are due January 1, 2008
and bear interest at an annual rate of 11.25%, payable
semi-annually. The PIK Notes are due July 1, 2008 and bear
interest at an annual rate of 12%. ACL has the option of issuing
new PIK Notes in lieu of paying cash interest on such notes each
June 30 and December 31 until maturity. After
2 years from issuance, interest accretes at 13.5% per annum
if ACL elects to not pay the interest due in cash. The interest
rate remains 12% if the interest is paid in cash. The Old Senior
Notes are due June 30, 2008 and bear interest at annual
rate of 10.25%.

In connection with the exchange offer, ACL
completed a consent solicitation of the holders of the Old
Senior Notes, which resulted in the elimination or amendment of
substantially all the restrictive covenants contained in the
indenture governing the Old Senior Notes, the subordination of
the subsidiary guarantees of the Old Senior Notes to the
subsidiary guarantees of ACLs Senior Credit Facilities,
the Senior Notes and the PIK Notes and the waiver of any and all
defaults under the indenture governing the Old Senior Notes
through the effective date of the exchange offer, May 29,
2002.

Also effective May 29, 2002, ACLs
receivables facility, which was administered by PNC Bank, N.A.,
was replaced with a Receivables Purchase Agreement among
American Commercial Lines Funding Corporation, American
Commercial Barge Line LLC, Jupiter Securitization Corporation
and Bank One, NA (the Receivables Facility) having
substantially the same terms as the old receivables facility.

As noted above, DHC purchased the 50% equity
interests that Vectura Group LLC owned in Vessel Leasing at the
time Danielson acquired ACL. Vessel Leasing, which was formerly
accounted for under the equity method is now consolidated with
ACL. Accordingly, the bonds issued by Vessel Leasing that are
guaranteed by the U.S. Maritime Administration are included in
ACLs debt balance. ACL does not guarantee payment of these
bonds.

ACL has an outstanding loan guarantee of $3,206
in the borrowings of one of its equity investees, GMS Venezuela
C.A., from the International Finance Corporation.

The Senior Credit Facilities and the indentures
governing the Senior Notes and the PIK Notes (the
Indentures) 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.
Compliance with financial ratios is measured at the end of each
quarter. The Indentures also contain certain cross default
provisions. ACLs ability to meet the financial ratios is
affected by adverse weather conditions, seasonality and other
risk factors inherent in its business.

The Senior Credit Facilities also contain
provisions which require mandatory prepayments of the Term Loans
with net proceeds from certain asset sales, equity issuances,
incurrence of indebtedness and sale and leaseback transactions,
as well as certain excess cash flow.

9



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


ACL has obtained an amendment (the
Amendment) of certain covenants under the Senior
Credit Facilities, relating to third quarter and fourth quarter
2002 covenants and a waiver of any past violations thereof.
Absent the Amendment, ACL would not have been in compliance with
the leverage or interest coverage ratios contained in its Senior
Credit Facilities as of September 27, 2002.

Among other things, the Amendment:



| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | alters the leverage and interest coverage ratios
    for the third and fourth quarters of 2002;                                                    
|
| |  | increases the interest rate on the Term Loans and
    Revolving Credit Facility and charges a 1.0% per annum
    additional deferred interest rate;
|
| |  | freezes ACLs additional unsecured
    indebtedness and investment capacity to current levels;                                                     
|
| |  | requires ACL to maintain $5.0 million cash
    on hand;                                                                                            
|
| |  | requires ACL to retain a consulting firm to
    represent and report to the lenders party to the Senior Credit
    Facilities (the Lenders); and 
|
| |  | requires ACL to submit a financial restructuring
    plan to the Lenders prior to December 28, 2002.                                               

The Amendment also clarified that the financial
effects of consolidating Vessel Leasing in ACLs financial
statements are to be excluded from debt covenant calculations
under the Senior Credit Facilities.

At the end of the first quarter of 2003, the
covenant ratios in the Senior Credit Facilities revert to levels
in effect before the Amendment. Although management is working
on operating and financial plans to comply with its debt
covenants in 2003 and thereafter, management believes it is
probable that ACL will not be in compliance with debt covenants
at the end of the first quarter 2003, absent another amendment
to the Senior Credit Facilities. As a result of the uncertainty
of ACLs ability to meet its debt covenants, ACL has
classified all of ACLs long-term debt as current debt.
Failure to meet the covenants could result in acceleration of
the debt, higher interest rates or other adverse consequences,
which could have a material adverse effect on ACL since it is
highly leveraged.

On October 31 2002 ACL received a
notification from Bank One stating that ACL was in violation of
the cross-default provisions contained in the Receivables
Facility which provides that a failure to maintain the financial
ratios provided by the Senior Credit Facilities, whether or not
amended or waived, constitutes a default under the Receivables
Facility. Bank One and ACL have agreed to an amendment to the
Receivables Facility which will permit ACL to continue utilizing
the Receivables Facility and which:



| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increases the loss reserve on the Receivables
    Facility from 10% to 15%, thereby reducing ACLs borrowing
    capacity under the Receivables Facility;
|
| |  | changes the termination date of the Receivables
    Facility from May 29, 2003 to January 31, 2003; and                                                  
|
| |  | increases certain facility fees under the
    Receivables Facility.                                                                                      

10



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Principal payments of long-term debt due during
the next five fiscal years and thereafter and unamortized debt
discount assuming debt is not accelerated are as follows:

|                          |      |   |         |        | 
|------------------------- | ---- | - | ------- | ------ | 
|                          | 2002 |   | $       | 20,191 | 
|                          | 2003 |   |         | 28,326 | 
|                          | 2004 |   |         | 27,286 | 
|                          | 2005 |   |         | 83,848 | 
|                          | 2006 |   |         | 85,713 | 
|Thereafter                |      |   | 387,959 |       
|                          |      |   |         |       
|                          |      |   | 633,323 |       
|Unamortized debt discount |      |   | (58,719 | )     
|                          |      |   |         |       
|                          |      | $ | 574,604 |       
|                          |      |   |         |       



|        |                       
|------- | ----------------------
|Note 4. | Materials and Supplies

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

|                   |  |               |        |              |  |   |        | 
|------------------ |  | ------------- | ------ | ------------ |  | - | ------ | 
|                   |  | September 27, |        | December 28,
|                   |  | 2002          |        | 2001        
|                   |  |               |        |             
|Raw Materials      |  | $             | 4,219  |              |  | $ | 3,633  | 
|Work in Process    |  |               | 22,449 |              |  |   | 13,029 | 
|Parts and Supplies |  |               | 15,448 |              |  |   | 14,673 | 
|                   |  |               |        |              |  |   |        | 
|                   |  | $             | 42,116 |              |  | $ | 31,335 | 
|                   |  |               |        |              |  |   |        | 



|        |                                              
|------- | ---------------------------------------------
|Note 5. | 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.

At September 27, 2002, ACL had forward fuel
purchase contracts outstanding with an aggregate notional amount
of approximately $3,209, and a fair value of approximately
$62 gain, which has been recorded in accounts receivable
with the offset to other comprehensive income and an additional
fair value gain of $36 which has been recorded as a receivable
with an offset to the allowance for doubtful accounts in the
condensed consolidated statement of position. Under these
agreements, ACL will pay fixed prices ranging from $0.61 to
$0.74 per gallon. There were 4.4 million gallons remaining
on the contracts at September 27, 2002. The agreements
terminate October 31, 2003. 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 $36 but
has fully reserved for the amount. Management believes that the
other trading partner does not present a credit risk to ACL.

11



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


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 zero as of
September 27, 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) in the condensed consolidated statement of
operations.

For the quarter and nine months ended
September 27, 2002, the entire change in value resulted in
losses of $1 and $37, 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 loss of $325 and $363 for its share of these swaps
for the quarter and nine months ended September 27, 2002,
respectively.



|        |                  
|------- | -----------------
|Note 6. | Business Segments

|                                  |  |                     |         |              |  |          |        |       |  |   |       |  |  |   |         |  
|--------------------------------- |  | ------------------- | ------- | ------------ |  | -------- | ------ | ----- |  | - | ----- |  |  | - | ------- | -
|                                  |  |                     |         |              |  |         
|                                  |  | Reportable Segments |         |              |  |         
|                                  |  |                     |         |              |  |         
|                                  |  | Barging             |         | Construction |  | Other(1) |        | Total
|                                  |  |                     |         |              |  |          |        |      
|QUARTER ENDED SEPTEMBER 27, 2002  |  |                     |         |              |  |          |        |       |  |   |       |  |  |   |         |  
|Revenues from external customers  |  | $                   | 157,376 |              |  | $        | 19,675 |       |  | $ | 2,606 |  |  | $ | 179,657 |  
|Intersegment revenues             |  |                     |        |              |  |          | 171    |       |  |   |      |  |  |   | 171     |  
|Segment earnings                  |  |                     | 2,907   |              |  |          | 73     |       |  |   | 152   |  |  |   | 3,132   |  
|QUARTER ENDED SEPTEMBER 28, 2001  |  |                     |         |              |  |          |        |       |  |   |       |  |  |   |         |  
|Revenues from external customers  |  | $                   | 178,297 |              |  | $        | 26,486 |       |  | $ | 2,558 |  |  | $ | 207,341 |  
|Intersegment revenues             |  |                     |        |              |  |          | 290    |       |  |   |      |  |  |   | 290     |  
|Segment earnings                  |  |                     | 23,087  |              |  |          | 645    |       |  |   | 432   |  |  |   | 24,164  |  
|MAY 29 to SEPTEMBER 27, 2002      |  |                     |         |              |  |          |        |       |  |   |       |  |  |   |         |  
|Revenues from external customers  |  | $                   | 210,841 |              |  | $        | 21,033 |       |  | $ | 3,777 |  |  | $ | 235,651 |  
|Intersegment revenues             |  |                     |        |              |  |          | 180    |       |  |   |      |  |  |   | 180     |  
|Segment earnings (loss)           |  |                     | 4,743   |              |  |          | (753   | )     |  |   | 468   |  |  |   | 4,458   |  
|DECEMBER 29, 2001 to MAY 28, 2002 |  |                     |         |              |  |          |        |       |  |   |       |  |  |   |         |  
|Revenues from external customers  |  | $                   | 243,202 |              |  | $        | 37,659 |       |  | $ | 3,944 |  |  | $ | 284,805 |  
|Intersegment revenues             |  |                     |        |              |  |          | 560    |       |  |   | 20    |  |  |   | 580     |  
|Segment (loss) earnings           |  |                     | (21,182 | )            |  |          | 1,287  |       |  |   | 1,505 |  |  |   | (18,390 | )

12



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AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


|                                     |  |                     |         |              |  |          |        |       |  |   |        |  |  |   |         | 
|------------------------------------ |  | ------------------- | ------- | ------------ |  | -------- | ------ | ----- |  | - | ------ |  |  | - | ------- | 
|                                     |  |                     |         |              |  |         
|                                     |  | Reportable Segments |         |              |  |         
|                                     |  |                     |         |              |  |         
|                                     |  | Barging             |         | Construction |  | Other(1) |        | Total
|                                     |  |                     |         |              |  |          |        |      
|NINE MONTHS ENDED SEPTEMBER 28, 2001 |  |                     |         |              |  |          |        |       |  |   |        |  |  |   |         | 
|Revenues from external customers     |  | $                   | 487,599 |              |  | $        | 75,372 |       |  | $ | 10,352 |  |  | $ | 573,323 | 
|Intersegment revenues                |  |                     |        |              |  |          | 1,346  |       |  |   | 4      |  |  |   | 1,350   | 
|Segment earnings                     |  |                     | 25,256  |              |  |          | 4,125  |       |  |   | 1,543  |  |  |   | 30,924  | 



---



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

The following is a reconciliation of ACLs
segment earnings (loss) to ACLs consolidated totals.

|                                                                                                     |                  |               |         |               |   |               |        |              |   |               |         |         |   |   |         |         |   |   |         |         |  
|---------------------------------------------------------------------------------------------------- | ---------------- | ------------- | ------- | ------------- | - | ------------- | ------ | ------------ | - | ------------- | ------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                     |                  | Quarter       |         | Quarter       |   |               |        | December 29, |   | Nine Months  
|                                                                                                     |                  | Ended         |         | Ended         |   | May 29 to     |        | 2001 to      |   | Ended        
|                                                                                                     |                  | September 27, |         | September 28, |   | September 27, |        | June 28,     |   | September 27,
|                                                                                                     |                  | 2002          |         | 2001          |   | 2002          |        | 2002         |   | 2001         
|                                                                                                     |                  |               |         |               |   |               |        |              |   |              
|Total segment earnings (loss)                                                                        |                  | $             | 3,132   |               |   | $             | 24,164 |              |   | $             | 4,458   |         |   | $ | (18,390 | )       |   | $ | 30,924  |        
|Unallocated amounts:                                                                                 |                  |               |         |               |   |               |        |              |   |               |         |         |   |   |         |         |   |   |         |        
|                                                                                                     | Interest expense |               |         | (14,915       | ) |               |        | (16,959      | ) |               |         | (19,533 | ) |   |         | (25,712 | ) |   |         | (55,039 | )
|                                                                                                     | Other, net       |               |         | (730          | ) |               |        | (1,912       | ) |               |         | (1,098  | ) |   |         | (827    | ) |   |         | (399    | )
|                                                                                                     |                  |               |         |               |   |               |        |              |   |               |         |         |   |   |         |         |   |   |         |        
|(Loss) income before income taxes, extraordinary
    item and cumulative effect of accounting change |                  | $             | (12,513 | )             |   | $             | 5,293  |              |   | $             | (16,173 | )       |   | $ | (44,929 | )       |   | $ | (24,514 | )      
|                                                                                                     |                  |               |         |               |   |               |        |              |   |               |         |         |   |   |         |         |   |   |         |        



|        |                                                          
|------- | ---------------------------------------------------------
|Note 7. | Summarized Operations of Significant Equity
    Investees

|                 |  |               |        |               |  |               |        |              |  |               |        |  |  |   |        |  |  |   |        | 
|---------------- |  | ------------- | ------ | ------------- |  | ------------- | ------ | ------------ |  | ------------- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                 |  | Quarter       |        | Quarter       |  | May 29,       |        | December 29, |  | Nine Months  
|                 |  | Ended         |        | Ended         |  | 2002 to       |        | 2001 to      |  | Ended        
|                 |  | September 27, |        | September 28, |  | September 27, |        | May 28,      |  | September 28,
|                 |  | 2002          |        | 2001          |  | 2002          |        | 2002         |  | 2001         
|                 |  |               |        |               |  |               |        |              |  |              
|Revenue          |  | $             | 21,020 |               |  | $             | 24,279 |              |  | $             | 28,791 |  |  | $ | 35,671 |  |  | $ | 68,901 | 
|Operating income |  |               | 2,215  |               |  |               | 242    |              |  |               | 3,217  |  |  |   | 2,982  |  |  |   | 3,610  | 
|Net income       |  |               | 1,198  |               |  |               | 104    |              |  |               | 1,710  |  |  |   | 235    |  |  |   | 931    | 

13



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AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Note 8.     Comprehensive
Income (Loss)

|                                                                                       |                                 |               |         |               |   |               |       |              |  |               |         |         |   |   |         |         |   |   |         |         |  
|-------------------------------------------------------------------------------------- | ------------------------------- | ------------- | ------- | ------------- | - | ------------- | ----- | ------------ |  | ------------- | ------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                       |                                 | Quarter       |         | Quarter       |   | May 29,       |       | December 29, |  | Nine Months  
|                                                                                       |                                 | Ended         |         | Ended         |   | 2002 to       |       | 2001 to      |  | Ended        
|                                                                                       |                                 | September 27, |         | September 28, |   | September 27, |       | May 28,      |  | September 28,
|                                                                                       |                                 | 2002          |         | 2001          |   | 2002          |       | 2002         |  | 2001         
|                                                                                       |                                 |               |         |               |   |               |       |              |  |              
|Net (loss) income                                                                      |                                 | $             | (12,642 | )             |   | $             | 5,204 |              |  | $             | (16,338 | )       |   | $ | (44,010 | )       |   | $ | (23,470 | )      
|Net gain (loss) on fuel swaps designated as cash
    flow hedging instruments          |                                 |               | 62      |               |   |               | (201  | )            |  |               | 111     |         |   |   | 174     |         |   |   | (892    | )      
|Net (loss) gain on interest rate swaps designated
    as cash flow hedging instruments |                                 |               | (325    | )             |   |               | (624  | )            |  |               | (591    | )       |   |   | 228     |         |   |   | (941    | )      
|Foreign currency translation (loss) gain                                               |                                 |               | (51     | )             |   |               | 147   |              |  |               | 263     |         |   |   | (219    | )       |   |   | (5      | )      
|                                                                                       |                                 |               |         |               |   |               |       |              |  |               |         |         |   |   |         |         |   |   |         |        
|                                                                                       | Total comprehensive (loss) gain |               | $       | (12,956       | ) |               | $     | 4,526        |  |               | $       | (16,555 | ) |   | $       | (43,827 | ) |   | $       | (25,308 | )
|                                                                                       |                                 |               |         |               |   |               |       |              |  |               |         |         |   |   |         |         |   |   |         |        

Note 9.     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 10.     Members
Equity

On July 24, 2002, the Board of Directors of
DHC amended DHCs 1995 Stock and Incentive Plan and granted
stock options to management of ACL for 1,560,000 shares of DHC
common stock. The options have an exercise price of $5.00 per
share and expire 10 years from the date of grant. One half
of the options time vest over a 4 year period in equal
annual installments and one half of the options vest over a
4 year period in equal annual installments contingent upon
the financial performance of ACL. ACL accounts for stock options
under the intrinsic value method based on APB 25,
Accounting for Stock Issued to Employees. Because
the market price of DHC common stock has been lower than the
exercise price of the options since the date of grant, no
expense has been recognized in the accompanying financial
statements.

On May 29, 2002, DHC issued 339,040 shares
of restricted DHC common stock to ACL management. These
restricted shares have been valued at fair value at the date of
issuance and vest one third annually over a three year period.
The full value of these shares is recorded as other capital with
an offset to unearned compensation in members equity. As
employees render service over the vesting period, compensation
expense is recorded and unearned compensation is reduced.

Note 11.     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 and intangible assets with indefinite
lives 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 should
be

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AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


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). SFAS 121 has been superceded
by SFAS 144 which is described below. The adoption of
SFAS 142 on December 29, 2001 has not had a
significant effect on ACLs financial position or results
of operations.

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 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 did not have an
impact on ACLs financial statements during the nine month
period ended September 27, 2002.

In June 2002, the FASB issued Statement of
Financial Accounting Standard No. 146 Accounting for
Costs Associated with Exit or Disposal Activities
(SFAS 146), which addresses financial
accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs incurred in a Restructuring)
(Issue 94-3). The principal difference between
SFAS 146 and Issue 94-3 relates to
SFAS 146s requirements for recognition of a liability
for a cost associated with an exit or disposal activity.
SFAS 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the
liability is incurred. Under Issue 94-3, a liability for an
exit cost as generally defined in Issue 94-3 was recognized
at the date of an entitys commitment to an exit plan.
Severance pay under SFAS 146, in many cases, would be
recognized over time rather than up front.

Additionally, under SFAS 146, if the benefit
arrangement requires employees to render future service beyond a
minimum retention period a liability should be
recognized as employees render service over the future service
period even if the benefit formula used to calculate an
employees termination benefit is based on length of
service. The provisions of SFAS 146 are effective for exit
or disposal activities that are initiated after
December 31, 2002, with early application encouraged.
Management expects to adopt SFAS 146 in 2003.

Note 13.     Guarantor
Financial Statements

Debt issued by ACL amounting to $332,079 in
outstanding term loans as of September 27, 2002, $259,671
in outstanding notes under the Indentures as of
September 27, 2002 and the Revolving Credit Facility, which
provides for revolving loans and the issuance of letters of
credit in an aggregate amount up to $50,000, are guaranteed by
ACLs wholly-owned domestic subsidiaries, other than ACL
Capital Corp. (which was formed in connection with the issuance
of the senior notes), any Accounts Receivable Subsidiary (as
defined in the Indentures with respect to 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.

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AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


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
September 27, 2002 and December 28, 2001 and for the
quarter ended September 27, 2002 and the periods
May 29, 2002 through September 27, 2002 and
December 29, 2001 thorough May 28, 2002 and for the
quarter and nine months ended September 28, 2001.

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AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Operations
for the Quarter Ended September 27, 2002

|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        | 
|--------------------------------- | --------------------------------- | ---------------------- | ------- | ------------ | - | ------------ | ------ | -------- |  | - | - | ------ | - | - | ------- | ------ | 
|                                  |                                   | Guarantor              |         | Other        |   |              |        | Combined
|                                  |                                   | Subsidiaries           |         | Subsidiaries |   | Eliminations |        | Totals  
|                                  |                                   |                        |         |              |   |              |        |         
|                                  |                                   |                       
|                                  |                                   | (Dollars in thousands)
|OPERATING REVENUE                 |                                   | $                      | 164,621 |              |   | $            | 15,036 |          |  | $ |  |        |   | $ | 179,657 |       
|OPERATING EXPENSE                 |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|                                  | Materials, Supplies and Other     |                        |         | 73,147       |   |              |        | 5,348    |  |   |   |       |   |   |         | 78,495 | 
|                                  | Restructuring Cost                |                        |         | 83           |   |              |        |         |  |   |   |       |   |   |         | 83     | 
|                                  | Rent                              |                        |         | 12,807       |   |              |        | 343      |  |   |   |       |   |   |         | 13,150 | 
|                                  | Labor and Fringe Benefits         |                        |         | 41,564       |   |              |        | 1,033    |  |   |   |       |   |   |         | 42,597 | 
|                                  | Fuel                              |                        |         | 19,762       |   |              |        | 174      |  |   |   |       |   |   |         | 19,936 | 
|                                  | Depreciation and Amortization     |                        |         | 14,035       |   |              |        | 1,831    |  |   |   |       |   |   |         | 15,866 | 
|                                  | Taxes, Other Than Income Taxes    |                        |         | 6,379        |   |              |        | 19       |  |   |   |       |   |   |         | 6,398  | 
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|                                  |                                   |                        | 167,777 |              |   |              | 8,748  |          |  |   |  |        |   |   | 176,525 |       
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|OPERATING (LOSS) INCOME           |                                   |                        | (3,156  | )            |   |              | 6,288  |          |  |   |  |        |   |   | 3,132   |       
|OTHER EXPENSE (INCOME)            |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|                                  | Interest Expense                  |                        |         | 14,387       |   |              |        | 528      |  |   |   |       |   |   |         | 14,915 | 
|                                  | Interest Expense, Affiliate  Net |                        |         |             |   |              |        | 1,837    |  |   |   | (1,837 | ) |   |         |       | 
|                                  | Other, Net                        |                        |         | (2,877       | ) |              |        | 1,770    |  |   |   | 1,837  |   |   |         | 730    | 
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|                                  |                                   |                        | 11,510  |              |   |              | 4,135  |          |  |   |  |        |   |   | 15,645  |       
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|(LOSS) INCOME BEFORE INCOME TAXES |                                   |                        | (14,666 | )            |   |              | 2,153  |          |  |   |  |        |   |   | (12,513 | )     
|INCOME TAXES                      |                                   |                        | 89      |              |   |              | 40     |          |  |   |  |        |   |   | 129     |       
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|NET (LOSS) EARNINGS               |                                   | $                      | (14,755 | )            |   | $            | 2,113  |          |  | $ |  |        |   | $ | (12,642 | )     
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       

17



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AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Operations
for the Period May 29 through September 27,
2002

|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |         | 
|--------------------------------- | --------------------------------- | ---------------------- | ------- | ------------ | - | ------------ | ------ | -------- |  | - | - | ------ | - | - | ------- | ------- | 
|                                  |                                   | Guarantor              |         | Other        |   |              |        | Combined
|                                  |                                   | Subsidiaries           |         | Subsidiaries |   | Eliminations |        | Totals  
|                                  |                                   |                        |         |              |   |              |        |         
|                                  |                                   |                       
|                                  |                                   | (Dollars in thousands)
|OPERATING REVENUE                 |                                   | $                      | 215,305 |              |   | $            | 20,346 |          |  | $ |  |        |   | $ | 235,651 |        
|OPERATING EXPENSE                 |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|                                  | Materials, Supplies and Other     |                        |         | 94,820       |   |              |        | 7,174    |  |   |   |       |   |   |         | 101,994 | 
|                                  | Restructuring Cost                |                        |         | 83           |   |              |        |         |  |   |   |       |   |   |         | 83      | 
|                                  | Rent                              |                        |         | 17,049       |   |              |        | 476      |  |   |   |       |   |   |         | 17,525  | 
|                                  | Labor and Fringe Benefits         |                        |         | 53,173       |   |              |        | 1,405    |  |   |   |       |   |   |         | 54,578  | 
|                                  | Fuel                              |                        |         | 26,594       |   |              |        | 250      |  |   |   |       |   |   |         | 26,844  | 
|                                  | Depreciation and Amortization     |                        |         | 19,082       |   |              |        | 2,415    |  |   |   |       |   |   |         | 21,497  | 
|                                  | Taxes, Other Than Income Taxes    |                        |         | 8,652        |   |              |        | 20       |  |   |   |       |   |   |         | 8,672   | 
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|                                  |                                   |                        | 219,453 |              |   |              | 11,740 |          |  |   |  |        |   |   | 231,193 |        
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|OPERATING (LOSS) INCOME           |                                   |                        | (4,148  | )            |   |              | 8,606  |          |  |   |  |        |   |   | 4,458   |        
|OTHER EXPENSE (INCOME)            |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|                                  | Interest Expense                  |                        |         | 18,846       |   |              |        | 687      |  |   |   |       |   |   |         | 19,533  | 
|                                  | Interest Expense, Affiliate  Net |                        |         |             |   |              |        | 2,420    |  |   |   | (2,420 | ) |   |         |        | 
|                                  | Other, Net                        |                        |         | (3,637       | ) |              |        | 2,315    |  |   |   | 2,420  |   |   |         | 1,098   | 
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|                                  |                                   |                        | 15,209  |              |   |              | 5,422  |          |  |   |  |        |   |   | 20,631  |        
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|(LOSS) INCOME BEFORE INCOME TAXES |                                   |                        | (19,357 | )            |   |              | 3,184  |          |  |   |  |        |   |   | (16,173 | )      
|INCOME TAXES                      |                                   |                        | 108     |              |   |              | 57     |          |  |   |  |        |   |   | 165     |        
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|NET (LOSS) INCOME                 |                                   | $                      | (19,465 | )            |   | $            | 3,127  |          |  | $ |  |        |   | $ | (16,338 | )      
|                                  |                                   |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        

18



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Operations
for the Period December 29, 2001 through May 28,
2002

|                         |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |         |  
|------------------------ | ---------------------------------- | ---------------------- | ------- | ------------ | - | ------------ | ------ | -------- | - | - | - | ------ | - | - | ------- | ------- | -
|                         |                                    | Guarantor              |         | Other        |   |              |        | Combined
|                         |                                    | Subsidiaries           |         | Subsidiaries |   | Eliminations |        | Totals  
|                         |                                    |                        |         |              |   |              |        |         
|                         |                                    |                       
|                         |                                    | (Dollars in thousands)
|OPERATING REVENUE        |                                    | $                      | 273,063 |              |   | $            | 11,742 |          |   | $ |  |        |   | $ | 284,805 |        
|OPERATING EXPENSE        |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |        
|                         | Materials, Supplies and Other      |                        |         | 128,363      |   |              |        | 9,729    |   |   |   |       |   |   |         | 138,092 |  
|                         | Restructuring Cost                 |                        |         | 13,493       |   |              |        |         |   |   |   |       |   |   |         | 13,493  |  
|                         | Rent                               |                        |         | 22,527       |   |              |        | 594      |   |   |   |       |   |   |         | 23,121  |  
|                         | Labor and Fringe Benefits          |                        |         | 64,172       |   |              |        | 1,588    |   |   |   |       |   |   |         | 65,760  |  
|                         | Fuel                               |                        |         | 30,316       |   |              |        | 118      |   |   |   |       |   |   |         | 30,434  |  
|                         | Depreciation and Amortization      |                        |         | 19,413       |   |              |        | 2,411    |   |   |   |       |   |   |         | 21,824  |  
|                         | Gain on Property Dispositions, Net |                        |         | (452         | ) |              |        | (3       | ) |   |   |       |   |   |         | (455    | )
|                         | Taxes, Other Than Income Taxes     |                        |         | 10,902       |   |              |        | 24       |   |   |   |       |   |   |         | 10,926  |  
|                         |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |        
|                         |                                    |                        | 288,734 |              |   |              | 14,461 |          |   |   |  |        |   |   | 303,195 |        
|                         |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |        
|OPERATING LOSS           |                                    |                        | (15,671 | )            |   |              | (2,719 | )        |   |   |  |        |   |   | (18,390 | )      
|OTHER EXPENSE (INCOME)   |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |        
|                         | Interest Expense                   |                        |         | 25,691       |   |              |        | 21       |   |   |   |       |   |   |         | 25,712  |  
|                         | Interest Expense, Affiliate  Net  |                        |         |             |   |              |        | 2,801    |   |   |   | (2,801 | ) |   |         |        |  
|                         | Other, Net                         |                        |         | (1,472       | ) |              |        | (502     | ) |   |   | 2,801  |   |   |         | 827     |  
|                         |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |        
|                         |                                    |                        | 24,219  |              |   |              | 2,320  |          |   |   |  |        |   |   | 26,539  |        
|                         |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |        
|LOSS BEFORE INCOME TAXES |                                    |                        | (39,890 | )            |   |              | (5,039 | )        |   |   |  |        |   |   | (44,929 | )      
|INCOME TAXES (BENEFIT)   |                                    |                        | (976    | )            |   |              | 57     |          |   |   |  |        |   |   | (919    | )      
|                         |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |        
|NET LOSS                 |                                    | $                      | (38,914 | )            |   | $            | (5,096 | )        |   | $ |  |        |   | $ | (44,010 | )      
|                         |                                    |                        |         |              |   |              |        |          |   |   |   |        |   |   |         |        

19



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Operations
for the Quarter Ended September 28, 2001

|                             |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        |  
|---------------------------- | ---------------------------------- | ---------------------- | ------- | ------------ | - | ------------ | ------ | -------- |  | - | - | ------ | - | - | ------- | ------ | -
|                             |                                    | Guarantor              |         | Other        |   |              |        | Combined
|                             |                                    | Subsidiaries           |         | Subsidiaries |   | Eliminations |        | Totals  
|                             |                                    |                        |         |              |   |              |        |         
|                             |                                    |                       
|                             |                                    | (Dollars in thousands)
|OPERATING REVENUE            |                                    | $                      | 193,543 |              |   | $            | 13,798 |          |  | $ |  |        |   | $ | 207,341 |       
|OPERATING EXPENSE            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|                             | Materials, Supplies and Other      |                        |         | 81,643       |   |              |        | 6,024    |  |   |   |       |   |   |         | 87,667 |  
|                             | Rent                               |                        |         | 13,883       |   |              |        | 366      |  |   |   |       |   |   |         | 14,249 |  
|                             | Labor and Fringe Benefits          |                        |         | 40,539       |   |              |        | 1,268    |  |   |   |       |   |   |         | 41,807 |  
|                             | Fuel                               |                        |         | 23,662       |   |              |        | 253      |  |   |   |       |   |   |         | 23,915 |  
|                             | Depreciation and Amortization      |                        |         | 12,830       |   |              |        | 1,277    |  |   |   |       |   |   |         | 14,107 |  
|                             | Gain on Property Dispositions, Net |                        |         | (5,032       | ) |              |        |         |  |   |   |       |   |   |         | (5,032 | )
|                             | Taxes, Other Than Income Taxes     |                        |         | 6,453        |   |              |        | 11       |  |   |   |       |   |   |         | 6,464  |  
|                             |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|                             |                                    |                        | 173,978 |              |   |              | 9,199  |          |  |   |  |        |   |   | 183,177 |       
|                             |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|OPERATING INCOME             |                                    |                        | 19,565  |              |   |              | 4,599  |          |  |   |  |        |   |   | 24,164  |       
|OTHER EXPENSE (INCOME)       |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|                             | Interest Expense                   |                        |         | 16,959       |   |              |        |         |  |   |   |       |   |   |         | 16,959 |  
|                             | Interest Expense, Affiliate  Net  |                        |         |             |   |              |        | 1,616    |  |   |   | (1,616 | ) |   |         |       |  
|                             | Other, Net                         |                        |         | (972         | ) |              |        | 1,268    |  |   |   | 1,616  |   |   |         | 1,912  |  
|                             |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|                             |                                    |                        | 15,987  |              |   |              | 2,884  |          |  |   |  |        |   |   | 18,871  |       
|                             |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|EARNINGS BEFORE INCOME TAXES |                                    |                        | 3,578   |              |   |              | 1,715  |          |  |   |  |        |   |   | 5,293   |       
|INCOME TAXES                 |                                    |                        | 89      |              |   |              |       |          |  |   |  |        |   |   | 89      |       
|                             |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       
|NET EARNINGS                 |                                    | $                      | 3,489   |              |   | $            | 1,715  |          |  | $ |  |        |   | $ | 5,204   |       
|                             |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |       

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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Operations
for the Nine Months Ended September 28, 2001

|                                                                                            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |         |  
|------------------------------------------------------------------------------------------- | ---------------------------------- | ---------------------- | ------- | ------------ | - | ------------ | ------ | -------- |  | - | - | ------ | - | - | ------- | ------- | -
|                                                                                            |                                    | Guarantor              |         | Other        |   |              |        | Combined
|                                                                                            |                                    | Subsidiaries           |         | Subsidiaries |   | Eliminations |        | Totals  
|                                                                                            |                                    |                        |         |              |   |              |        |         
|                                                                                            |                                    |                       
|                                                                                            |                                    | (Dollars in thousands)
|OPERATING REVENUE                                                                           |                                    | $                      | 544,680 |              |   | $            | 28,643 |          |  | $ |  |        |   | $ | 573,323 |        
|OPERATING EXPENSE                                                                           |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|                                                                                            | Materials, Supplies and Other      |                        |         | 242,921      |   |              |        | 15,751   |  |   |   |       |   |   |         | 258,672 |  
|                                                                                            | Rent                               |                        |         | 41,607       |   |              |        | 1,158    |  |   |   |       |   |   |         | 42,765  |  
|                                                                                            | Labor and Fringe Benefits          |                        |         | 120,031      |   |              |        | 3,099    |  |   |   |       |   |   |         | 123,130 |  
|                                                                                            | Fuel                               |                        |         | 71,288       |   |              |        | 318      |  |   |   |       |   |   |         | 71,606  |  
|                                                                                            | Depreciation and Amortization      |                        |         | 38,624       |   |              |        | 3,849    |  |   |   |       |   |   |         | 42,473  |  
|                                                                                            | Gain on Property Dispositions, Net |                        |         | (16,106      | ) |              |        |         |  |   |   |       |   |   |         | (16,106 | )
|                                                                                            | Taxes, Other Than Income Taxes     |                        |         | 19,842       |   |              |        | 17       |  |   |   |       |   |   |         | 19,859  |  
|                                                                                            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|                                                                                            |                                    |                        | 518,207 |              |   |              | 24,192 |          |  |   |  |        |   |   | 542,399 |        
|                                                                                            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|OPERATING INCOME                                                                            |                                    |                        | 26,473  |              |   |              | 4,451  |          |  |   |  |        |   |   | 30,924  |        
|OTHER EXPENSE (INCOME)                                                                      |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|                                                                                            | Interest Expense                   |                        |         | 55,039       |   |              |        |         |  |   |   |       |   |   |         | 55,039  |  
|                                                                                            | Interest Expense, Affiliate  Net  |                        |         |             |   |              |        | 4,781    |  |   |   | (4,781 | ) |   |         |        |  
|                                                                                            | Other, Net                         |                        |         | (4,702       | ) |              |        | 320      |  |   |   | 4,781  |   |   |         | 399     |  
|                                                                                            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|                                                                                            |                                    |                        | 50,337  |              |   |              | 5,101  |          |  |   |  |        |   |   | 55,438  |        
|                                                                                            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|LOSS BEFORE INCOME TAXES, EXTRAORDINARY ITEM AND
    CUMULATIVE EFFECT OF ACCOUNTING CHANGE |                                    |                        | (23,864 | )            |   |              | (650   | )        |  |   |  |        |   |   | (24,514 | )      
|INCOME TAXES                                                                                |                                    |                        | 300     |              |   |              | 51     |          |  |   |  |        |   |   | 351     |        
|                                                                                            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE
    EFFECT OF ACCOUNTING CHANGE               |                                    |                        | (24,164 | )            |   |              | (701   | )        |  |   |  |        |   |   | (24,865 | )      
|EXTRAORDINARY ITEM  GAIN ON EARLY
    EXTINGUISHMENT OF DEBT                               |                                    |                        | 1,885   |              |   |              |       |          |  |   |  |        |   |   | 1,885   |        
|CUMULATIVE EFFECT OF ACCOUNTING CHANGE                                                      |                                    |                        | (490    | )            |   |              |       |          |  |   |  |        |   |   | (490    | )      
|                                                                                            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        
|NET LOSS                                                                                    |                                    | $                      | (22,769 | )            |   | $            | (701   | )        |  | $ |  |        |   | $ | (23,470 | )      
|                                                                                            |                                    |                        |         |              |   |              |        |          |  |   |   |        |   |   |         |        

21



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Cash Flows
for the Period May 29 through September 27,
2002

|                                                 |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |         |   |        |        |  
|------------------------------------------------ | ---------------------------------------------------------- | --------------------------------- | -------------------------------------------- | ------------------------------------------ | - | ------------ | ------ | -------- | - | ----- | ------- | ------ | - | - | ------ | ------- | - | ------ | ------ | -
|                                                 |                                                            | Guarantor                         |                                              | Other                                      |   |              |        | Combined
|                                                 |                                                            | Subsidiaries                      |                                              | Subsidiaries                               |   | Eliminations |        | Totals  
|                                                 |                                                            |                                   |                                              |                                            |   |              |        |         
|                                                 |                                                            |                                  
|                                                 |                                                            | (Dollars in thousands)           
|OPERATING ACTIVITIES                             |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        
|                                                 | Net (Loss) Income                                          |                                   | $                                            | (19,465                                    | ) |              | $      | 3,127    |   |       | $       |       |   |   | $      | (16,338 | )
|                                                 | Adjustments to Reconcile Net (Loss) Income to Net
    Cash |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |         |  
|                                                 |                                                            | Provided by Operating Activities: |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |         |   |       
|                                                 |                                                            |                                   | Depreciation and Amortization                |                                            |   | 19,082       |        |          |   | 2,415 |         |        |   |  |        |         |   | 21,497 |       
|                                                 |                                                            |                                   | Interest Accretion                           |                                            |   | 1,644        |        |          |   | 36    |         |        |   |  |        |         |   | 1,680  |       
|                                                 |                                                            |                                   | Other Operating Activities                   |                                            |   | (2,096       | )      |          |   | 3,253 |         |        |   |  |        |         |   | 1,157  |       
|                                                 |                                                            |                                   | Changes in Operating Assets and Liabilities: |                                            |   |              |        |          |   |       |         |        |   |   |        |         |   |        |       
|                                                 |                                                            |                                   |                                              | Accounts Receivable                        |   |              | 2,170  |          |   |       | (11,949 | )      |   |   | 3,098  |         |   |        | (6,681 | )
|                                                 |                                                            |                                   |                                              | Materials and Supplies                     |   |              | (5,859 | )        |   |       | 238     |        |   |   |       |         |   |        | (5,621 | )
|                                                 |                                                            |                                   |                                              | Accrued Interest                           |   |              | 9,900  |          |   |       | (338    | )      |   |   |       |         |   |        | 9,562  |  
|                                                 |                                                            |                                   |                                              | Other Current Assets                       |   |              | 2,969  |          |   |       | 2,328   |        |   |   |       |         |   |        | 5,297  |  
|                                                 |                                                            |                                   |                                              | Other Current Liabilities                  |   |              | (7,488 | )        |   |       | 6,791   |        |   |   | (3,098 | )       |   |        | (3,795 | )
|                                                 |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        
|                                                 |                                                            |                                   |                                              | Net Cash Provided by Operating Activities  |   |              | 857    |          |   |       | 5,901   |        |   |   |       |         |   |        | 6,758  |  
|INVESTING ACTIVITIES                             |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        
|                                                 | Property Additions                                         |                                   |                                              | (5,944                                     | ) |              |        | (54      | ) |       |         |       |   |   |        | (5,998  | )
|                                                 | Proceeds from Property Dispositions                        |                                   |                                              | 643                                        |   |              |        |         |   |       |         |       |   |   |        | 643     |  
|                                                 | Net Change in Restricted Cash                              |                                   |                                              |                                           |   |              |        | (104     | ) |       |         |       |   |   |        | (104    | )
|                                                 | Other Investing Activities                                 |                                   |                                              | 2,240                                      |   |              |        | 11       |   |       |         | (4,000 | ) |   |        | (1,749  | )
|                                                 |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        
|                                                 |                                                            |                                   |                                              | Net Cash Used in Investing Activities      |   |              | (3,061 | )        |   |       | (147    | )      |   |   | (4,000 | )       |   |        | (7,208 | )
|FINANCING ACTIVITIES                             |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        
|                                                 | Short-Term Borrowings                                      |                                   |                                              | 5,000                                      |   |              |        |         |   |       |         |       |   |   |        | 5,000   |  
|                                                 | Long-Term Debt Repaid                                      |                                   |                                              | (6,596                                     | ) |              |        | (1,444   | ) |       |         |       |   |   |        | (8,040  | )
|                                                 | Cash Dividends Paid                                        |                                   |                                              |                                           |   |              |        | (4,000   | ) |       |         | 4,000  |   |   |        |        |  
|                                                 | Bank Overdrafts                                            |                                   |                                              | (1,442                                     | ) |              |        |         |   |       |         |       |   |   |        | (1,442  | )
|                                                 | Other Financing Activities                                 |                                   |                                              | (928                                       | ) |              |        |         |   |       |         |       |   |   |        | (928    | )
|                                                 |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        
|                                                 |                                                            |                                   |                                              | Net Cash Used in Financing Activities      |   |              | (3,966 | )        |   |       | (5,444  | )      |   |   | 4,000  |         |   |        | (5,410 | )
|                                                 |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        
|Net Decrease in Cash and Cash Equivalents        |                                                            |                                   | (6,170                                       | )                                          |   |              | 310    |          |   |       |        |        |   |   | (5,860 | )      
|Cash and Cash Equivalents at Beginning of Period |                                                            |                                   | 18,727                                       |                                            |   |              | 2,158  |          |   |       |        |        |   |   | 20,885 |        
|                                                 |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        
|                                                 |                                                            |                                   |                                              | Cash and Cash Equivalents at End of Period |   | $            | 12,557 |          |   | $     | 2,468   |        |   | $ |       |         |   | $      | 15,025 |  
|                                                 |                                                            |                                   |                                              |                                            |   |              |        |          |   |       |         |        |   |   |        |        

22



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Cash Flows
for the Period December 29, 2001 through May 28,
2002

|                                                         |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |         |        |         |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------- | ------------ | ------ | ------------ | ----- | -------- | ----- | ----- | - | ---- | - | ------- | ------- | ------- | ------ | ------- | -
|                                                         |                                                                                                   | Guarantor                                                  |                                                         | Other        |        |              |       | Combined
|                                                         |                                                                                                   | Subsidiaries                                               |                                                         | Subsidiaries |        | Eliminations |       | Totals  
|                                                         |                                                                                                   |                                                            |                                                         |              |        |              |       |         
|                                                         |                                                                                                   |                                                           
|                                                         |                                                                                                   | (Dollars in thousands)                                    
|OPERATING ACTIVITIES                                     |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        
|                                                         | Net Loss                                                                                          |                                                            | $                                                       | (38,914      | )      |              | $     | (5,096   | )     |       | $ |     |   |         | $       | (44,010 | )     
|                                                         | Adjustments to Reconcile Net Loss to Net Cash
    (Used in)
    Provided by Operating Activities: |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |         |       
|                                                         |                                                                                                   | Depreciation and Amortization                              |                                                         |              | 19,413 |              |       |          | 2,411 |       |   |      |  |         |         |         | 21,824 |        
|                                                         |                                                                                                   | Interest Accretion and Debt Issuance Cost
    Amortization |                                                         |              | 1,235  |              |       |          | 10    |       |   |      |  |         |         |         | 1,245  |        
|                                                         |                                                                                                   | Gain on Property Dispositions                              |                                                         |              | (452   | )            |       |          | (3    | )     |   |      |  |         |         |         | (455   | )      
|                                                         |                                                                                                   | Other Operating Activities                                 |                                                         |              | (4,637 | )            |       |          | (785  | )     |   |      |  |         |         |         | (5,422 | )      
|                                                         |                                                                                                   | Changes in Operating Assets and Liabilities:               |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |         |        |        
|                                                         |                                                                                                   |                                                            | Accounts Receivable                                     |              |        | (18,565      | )     |          |       | 2,958 |   |      |   | 12,367  |         |         |        | (3,240  | )
|                                                         |                                                                                                   |                                                            | Materials and Supplies                                  |              |        | (5,139       | )     |          |       | (21   | ) |      |   |        |         |         |        | (5,160  | )
|                                                         |                                                                                                   |                                                            | Accrued Interest                                        |              |        | 10,331       |       |          |       | 1     |   |      |   |        |         |         |        | 10,332  |  
|                                                         |                                                                                                   |                                                            | Other Current Assets                                    |              |        | (4,427       | )     |          |       | 1,278 |   |      |   |        |         |         |        | (3,149  | )
|                                                         |                                                                                                   |                                                            | Other Current Liabilities                               |              |        | 20,029       |       |          |       | 695   |   |      |   | (12,367 | )       |         |        | 8,357   |  
|                                                         |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        
|                                                         |                                                                                                   |                                                            | Net Cash (Used in) Provided by Operating
    Activities |              |        | (21,126      | )     |          |       | 1,448 |   |      |   |        |         |         |        | (19,678 | )
|INVESTING ACTIVITIES                                     |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        
|                                                         | Property Additions                                                                                |                                                            |                                                         | (5,554       | )      |              |       | (51      | )     |       |   |     |   |         |         | (5,605  | )     
|                                                         | Proceeds from Property Dispositions                                                               |                                                            |                                                         | 985          |        |              |       | 3        |       |       |   |     |   |         |         | 988     |       
|                                                         | Other Investing Activities                                                                        |                                                            |                                                         | (2,276       | )      |              |       | 5        |       |       |   | (588 | ) |         |         | (2,859  | )     
|                                                         |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        
|                                                         |                                                                                                   |                                                            | Net Cash Used in Investing Activities                   |              |        | (6,845       | )     |          |       | (43   | ) |      |   | (588    | )       |         |        | (7,476  | )
|FINANCING ACTIVITIES                                     |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        
|                                                         | Danielson Holding Corporation Investment                                                          |                                                            |                                                         | 25,000       |        |              |       |         |       |       |   |     |   |         |         | 25,000  |       
|                                                         | Cash Dividends Paid                                                                               |                                                            |                                                         |             |        |              |       | (588     | )     |       |   | 588  |   |         |         |        |       
|                                                         | Long-Term Debt Repaid                                                                             |                                                            |                                                         | (25,190      | )      |              |       |         |       |       |   |     |   |         |         | (25,190 | )     
|                                                         | Bank Overdrafts                                                                                   |                                                            |                                                         | 1,149        |        |              |       |         |       |       |   |     |   |         |         | 1,149   |       
|                                                         | Other Financing Activities                                                                        |                                                            |                                                         | (173         | )      |              |       |         |       |       |   |     |   |         |         | (173    | )     
|                                                         |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        
|                                                         |                                                                                                   |                                                            | Net Cash Provided by (Used in) Financing
    Activities |              |        | 786          |       |          |       | (588  | ) |      |   | 588     |         |         |        | 786     |  
|                                                         |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        
|Net (Decrease) Increase in Cash and Cash
    Equivalents |                                                                                                   |                                                            | (27,185                                                 | )            |        |              | 817   |          |       |       |  |      |   |         | (26,368 | )      
|Cash and Cash Equivalents at Beginning of Period         |                                                                                                   |                                                            | 45,912                                                  |              |        |              | 1,341 |          |       |       |  |      |   |         | 47,253  |        
|                                                         |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        
|                                                         |                                                                                                   |                                                            | Cash and Cash Equivalents at End of Period              |              | $      | 18,727       |       |          | $     | 2,158 |   |      | $ |        |         |         | $      | 20,885  |  
|                                                         |                                                                                                   |                                                            |                                                         |              |        |              |       |          |       |       |   |      |   |         |         |        

23



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Cash Flows
for the Nine Months Ended September 28, 2001

|                                                         |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |         |         |         |  
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------- | ------------ | ------- | ------------ | ----- | -------- | ------ | ------- | - | ------ | - | ------ | ------- | ------- | ------- | ------- | -
|                                                         |                                                                                               | Guarantor                                    |                                                         | Other        |         |              |       | Combined
|                                                         |                                                                                               | Subsidiaries                                 |                                                         | Subsidiaries |         | Eliminations |       | Totals  
|                                                         |                                                                                               |                                              |                                                         |              |         |              |       |         
|                                                         |                                                                                               |                                             
|                                                         |                                                                                               | (Dollars in thousands)                      
|OPERATING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        
|                                                         | Net Loss                                                                                      |                                              | $                                                       | (22,769      | )       |              | $     | (701     | )      |         | $ |       |   |        | $       | (23,470 | )      
|                                                         | Adjustments to Reconcile Net Loss to Net Cash
    Provided by (Used in) Operating Activities: |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |         |        
|                                                         |                                                                                               | Depreciation and Amortization                |                                                         |              | 38,624  |              |       |          | 3,849  |         |   |        |  |        |         |         | 42,473  |        
|                                                         |                                                                                               | Debt Issuance Cost Amortization              |                                                         |              | 3,284   |              |       |          |       |         |   |        |   |        |         |         | 3,284   |        
|                                                         |                                                                                               | Gain on Property Dispositions                |                                                         |              | (16,106 | )            |       |          |       |         |   |        |  |        |         |         | (16,106 | )      
|                                                         |                                                                                               | Other Operating Activities                   |                                                         |              | (4      | )            |       |          | (1,143 | )       |   |        |  |        |         |         | (1,147  | )      
|                                                         |                                                                                               | Changes in Operating Assets and Liabilities: |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |         |         |        
|                                                         |                                                                                               |                                              | Accounts Receivable                                     |              |         | 11,004       |       |          |        | (24,295 | ) |        |   |       |         |         |         | (13,291 | )
|                                                         |                                                                                               |                                              | Materials and Supplies                                  |              |         | (3,444       | )     |          |        | (396    | ) |        |   |       |         |         |         | (3,840  | )
|                                                         |                                                                                               |                                              | Accrued Interest                                        |              |         | (7,471       | )     |          |        |        |   |        |   |       |         |         |         | (7,471  | )
|                                                         |                                                                                               |                                              | Other Current Assets                                    |              |         | (10,759      | )     |          |        | 6,545   |   |        |   |       |         |         |         | (4,214  | )
|                                                         |                                                                                               |                                              | Other Current Liabilities                               |              |         | 4,225        |       |          |        | 18,620  |   |        |   |       |         |         |         | 22,845  |  
|                                                         |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        
|                                                         |                                                                                               |                                              | Net Cash Provided by (Used in) Operating
    Activities |              |         | (3,416       | )     |          |        | 2,479   |   |        |   |       |         |         |         | (937    | )
|INVESTING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        
|                                                         | Property Additions                                                                            |                                              |                                                         | (11,188      | )       |              |       | (1,837   | )      |         |   |       |   |        |         | (13,025 | )      
|                                                         | Proceeds from Property Dispositions                                                           |                                              |                                                         | 22,911       |         |              |       |         |        |         |   |       |   |        |         | 22,911  |        
|                                                         | Proceeds from Sale of Terminals                                                               |                                              |                                                         | 8,241        |         |              |       |         |        |         |   |       |   |        |         | 8,241   |        
|                                                         | Other Investing Activities                                                                    |                                              |                                                         | (8,396       | )       |              |       | 1,463    |        |         |   | (1,000 | ) |        |         | (7,933  | )      
|                                                         |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        
|                                                         |                                                                                               |                                              | Net Cash Provided by Investing Activities               |              |         | 11,568       |       |          |        | (374    | ) |        |   | (1,000 | )       |         |         | 10,194  |  
|FINANCING ACTIVITIES                                     |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        
|                                                         | Short-Term Borrowings                                                                         |                                              |                                                         | 8,250        |         |              |       |         |        |         |   |       |   |        |         | 8,250   |        
|                                                         | Long-Term Debt Repaid                                                                         |                                              |                                                         | (40,709      | )       |              |       |         |        |         |   |       |   |        |         | (40,709 | )      
|                                                         | Cash Dividends Paid                                                                           |                                              |                                                         |             |         |              |       | (1,000   | )      |         |   | 1,000  |   |        |         |        |        
|                                                         | Bank Overdrafts                                                                               |                                              |                                                         | (6,672       | )       |              |       |         |        |         |   |       |   |        |         | (6,672  | )      
|                                                         | Debt Costs                                                                                    |                                              |                                                         | (3,462       | )       |              |       |         |        |         |   |       |   |        |         | (3,462  | )      
|                                                         | Other Financing Activities                                                                    |                                              |                                                         | 102          |         |              |       |         |        |         |   |       |   |        |         | 102     |        
|                                                         |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        
|                                                         |                                                                                               |                                              | Net Cash Used in Financing Activities                   |              |         | (42,491      | )     |          |        | (1,000  | ) |        |   | 1,000  |         |         |         | (42,491 | )
|                                                         |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        
|Net (Decrease) Increase in Cash and Cash
    Equivalents |                                                                                               |                                              | (34,339                                                 | )            |         |              | 1,105 |          |        |         |  |        |   |        | (33,234 | )      
|Cash and Cash Equivalents at Beginning of Period         |                                                                                               |                                              | 57,289                                                  |              |         |              | 2,279 |          |        |         |  |        |   |        | 59,568  |        
|                                                         |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        
|                                                         |                                                                                               |                                              | Cash and Cash Equivalents at End of Period              |              | $       | 22,950       |       |          | $      | 3,384   |   |        | $ |       |         |         | $       | 26,334  |  
|                                                         |                                                                                               |                                              |                                                         |              |         |              |       |          |        |         |   |        |   |        |         |        

24



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Financial
Position at September 27, 2002

|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |         |         | 
|-------------------------------------- | ------------------------------------- | ------------------------------------- | ------- | ------------ | ------- | ------------ | ------- | -------- | ------- |  | ------- | ------- | -------- | - | ------- | ------- | ------- | 
|                                       |                                       | Guarantor                             |         | Other        |         |              |         | Combined
|                                       |                                       | Subsidiaries                          |         | Subsidiaries |         | Eliminations |         | Totals  
|                                       |                                       |                                       |         |              |         |              |         |         
|                                       |                                       |                                      
|                                       |                                       | (Dollars in thousands)               
|ASSETS                                
|CURRENT ASSETS                         |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|                                       | Cash and Cash Equivalents             |                                       | $       | 12,557       |         |              | $       | 2,468    |         |  | $       |        |          |   | $       | 15,025  |        
|                                       | Cash, Restricted                      |                                       |         |             |         |              |         | 6,668    |         |  |         |        |          |   |         | 6,668   |        
|                                       | Accounts Receivable, Net              |                                       |         | 27,665       |         |              |         | 37,746   |         |  |         | (15,465 | )        |   |         | 49,946  |        
|                                       | Materials and Supplies                |                                       |         | 41,179       |         |              |         | 937      |         |  |         |        |          |   |         | 42,116  |        
|                                       | Other Current Assets                  |                                       |         | 38,943       |         |              |         | (9,731   | )       |  |         | (2,335  | )        |   |         | 26,877  |        
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|                                       |                                       | Total Current Assets                  |         |              | 120,344 |              |         |          | 38,088  |  |         |         | (17,800  | ) |         |         | 140,632 | 
|PROPERTIES  NET                       |                                       |                                       | 517,745 |              |         |              | 81,927  |          |         |  |        |         |          |   | 599,672 |        
|PENSION ASSET                          |                                       |                                       | 21,407  |              |         |              |        |          |         |  |        |         |          |   | 21,407  |        
|OTHER ASSETS                           |                                       |                                       | 120,809 |              |         |              | 54,011  |          |         |  | (97,656 | )       |          |   | 77,164  |        
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|                                       |                                       | Total Assets                          |         | $            | 780,305 |              |         | $        | 174,026 |  |         | $       | (115,456 | ) |         | $       | 838,875 | 
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|LIABILITIES                           
|CURRENT LIABILITIES                    |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|                                       | Accounts Payable                      |                                       | $       | 28,338       |         |              | $       | 1,163    |         |  | $       |        |          |   | $       | 29,501  |        
|                                       | Accrued Payroll and Fringe Benefits   |                                       |         | 14,969       |         |              |         |         |         |  |         |        |          |   |         | 14,969  |        
|                                       | Deferred Revenue                      |                                       |         | 13,618       |         |              |         | 2,335    |         |  |         | (2,335  | )        |   |         | 13,618  |        
|                                       | Accrued Claims and Insurance Premiums |                                       |         | 26,961       |         |              |         |         |         |  |         |        |          |   |         | 26,961  |        
|                                       | Accrued Interest                      |                                       |         | 10,137       |         |              |         | 447      |         |  |         |        |          |   |         | 10,584  |        
|                                       | Short-term Debt                       |                                       |         | 39,000       |         |              |         |         |         |  |         |        |          |   |         | 39,000  |        
|                                       | Current Portion of Long-Term Debt     |                                       |         | 533,714      |         |              |         | 40,890   |         |  |         |        |          |   |         | 574,604 |        
|                                       | Other Current Liabilities             |                                       |         | 36,789       |         |              |         | 18,029   |         |  |         | (15,465 | )        |   |         | 39,353  |        
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|                                       |                                       | Total Current Liabilities             |         |              | 703,526 |              |         |          | 62,864  |  |         |         | (17,800  | ) |         |         | 748,590 | 
|LONG-TERM NOTE PAYABLE TO AFFILIATE    |                                       |                                       |        |              |         |              | 92,569  |          |         |  | (92,569 | )       |          |   |        |        
|LONG-TERM DEBT                         |                                       |                                       |        |              |         |              |        |          |         |  |        |         |          |   |        |        
|OTHER LONG-TERM LIABILITIES            |                                       |                                       | 15,393  |              |         |              | 7,010   |          |         |  | (776    | )       |          |   | 21,627  |        
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|                                       |                                       | Total Liabilities                     |         |              | 718,919 |              |         |          | 162,443 |  |         |         | (111,145 | ) |         |         | 770,217 | 
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|MEMBERS EQUITY                       
|Members Interest                      |                                       |                                       | 77,753  |              |         |              | 7,272   |          |         |  |        |         |          |   | 85,025  |        
|Other Capital                          |                                       |                                       | 1,695   |              |         |              | 57,374  |          |         |  | (57,374 | )       |          |   | 1,695   |        
|Unearned Compensation                  |                                       |                                       | (1,507  | )            |         |              |        |          |         |  |        |         |          |   | (1,507  | )      
|Retained Deficit                       |                                       |                                       | (16,338 | )            |         |              | (53,063 | )        |         |  | 53,063  |         |          |   | (16,338 | )      
|Accumulated Other Comprehensive Income |                                       |                                       | (217    | )            |         |              |        |          |         |  |        |         |          |   | (217    | )      
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|                                       |                                       | Total Members Equity                 |         |              | 61,386  |              |         |          | 11,583  |  |         |         | (4,311   | ) |         |         | 68,658  | 
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        
|                                       |                                       | Total Liabilities and Members Equity |         | $            | 780,305 |              |         | $        | 174,026 |  |         | $       | (115,456 | ) |         | $       | 838,875 | 
|                                       |                                       |                                       |         |              |         |              |         |          |         |  |         |         |          |   |         |        

25



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##### Table of Contents



AMERICAN COMMERCIAL LINES LLC


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Unaudited)  (Continued)


Condensed Combining Statement of Financial
Position at December 28, 2001

|                                     |                                       |                                                     |          |              |          |              |         |          |         |  |         |         |          |   |          |         |          |  
|------------------------------------ | ------------------------------------- | --------------------------------------------------- | -------- | ------------ | -------- | ------------ | ------- | -------- | ------- |  | ------- | ------- | -------- | - | -------- | ------- | -------- | -
|                                     |                                       | Guarantor                                           |          | Other        |          |              |         | Combined
|                                     |                                       | Subsidiaries                                        |          | Subsidiaries |          | Eliminations |         | Totals  
|                                     |                                       |                                                     |          |              |          |              |         |         
|                                     |                                       |                                                    
|                                     |                                       | (Dollars in thousands)                             
|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                  |                                                     |          | 41,019       |          |              |         | (11,386  | )       |  |         |        |          |   |          | 29,633  |         
|                                     |                                       |                                                     |          |              |          |              |         |          |         |  |         |         |          |   |          |        
|                                     |                                       | Total Current Assets                                |          |              | 142,723  |              |         |          | 34,264  |  |         |         | (13,981  | ) |          |         | 163,006  |  
|PROPERTIES  NET                     |                                       |                                                     | 422,877  |              |          |              | 41,256  |          |         |  |        |         |          |   | 464,133  |        
|PENSION ASSET                        |                                       |                                                     | 26,067   |              |          |              |        |          |         |  |        |         |          |   | 26,067   |        
|OTHER ASSETS                         |                                       |                                                     | 148,201  |              |          |              | 52,652  |          |         |  | (96,123 | )       |          |   | 104,730  |        
|                                     |                                       |                                                     |          |              |          |              |         |          |         |  |         |         |          |   |          |        
|                                     |                                       | Total Assets                                        |          | $            | 739,868  |              |         | $        | 128,172 |  |         | $       | (110,104 | ) |          | $       | 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   |              |          |              | 6,205   |          |         |  |        |         |          |   | 42,368   |        
|                                     |                                       |                                                     |          |              |          |              |         |          |         |  |         |         |          |   |          |        
|                                     |                                       | Total Liabilities                                   |          |              | 887,887  |              |         |          | 118,749 |  |         |         | (100,681 | ) |          |         | 905,955  |  
|                                     |                                       |                                                     |          |              |          |              |         |          |         |  |         |         |          |   |          |        
|MEMBERS (DEFICIT) EQUITY           
|Members Interest                    |                                       |                                                     | 220,074  |              |          |              |        |          |         |  |        |         |          |   | 220,074  |        
|Other Capital                        |                                       |                                                     | 166,580  |              |          |              | 57,374  |          |         |  | (57,374 | )       |          |   | 166,580  |        
|Retained Deficit                     |                                       |                                                     | (532,816 | )            |          |              | (47,951 | )        |         |  | 47,951  |         |          |   | (532,816 | )      
|Accumulated Other Comprehensive Loss |                                       |                                                     | (1,857   | )            |          |              |        |          |         |  |        |         |          |   | (1,857   | )      
|                                     |                                       |                                                     |          |              |          |              |         |          |         |  |         |         |          |   |          |        
|                                     |                                       | Total Members (Deficit) Equity                     |          |              | (148,019 | )            |         |          | 9,423   |  |         |         | (9,423   | ) |          |         | (148,019 | )
|                                     |                                       |                                                     |          |              |          |              |         |          |         |  |         |         |          |   |          |        
|                                     |                                       | Total Liabilities and Members (Deficit)
    Equity |          | $            | 739,868  |              |         | $        | 128,172 |  |         | $       | (110,104 | ) |          | $       | 757,936  |  
|                                     |                                       |                                                     |          |              |          |              |         |          |         |  |         |         |          |   |          |        

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

Cautionary Note Regarding Forward-Looking
Statements

Certain statements in this Quarterly Report on
Form 10-Q may constitute forward-looking
statements as defined in Section 27A of the Securities Act
of 1933 (the Securities Act), Section 21E of
the Securities Exchange Act of 1934 (the Exchange
Act), the Private Securities Litigation Reform Act of 1995
(the PSLRA) or in releases made by the Securities
and Exchange Commission, all as may be amended from time to
time. Such forward looking statements involve known and unknown
risks, uncertainties and other important factors that could
cause the actual results, performance or achievements of
American Commercial Lines LLC (ACL), or industry
results, to differ materially from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Statements that are not historical
fact are forward-looking statements. Forward looking statements
can be identified by, among other things, the use of
forward-looking language, such as the words plan,
believe, expect, anticipate,
intend, estimate, project,
may, will, would,
could, should, seeks or
scheduled to, or other similar words, or the
negative of these terms or other variations of these terms or
comparable language, or by discussion of strategy or intentions.
These cautionary statements are being made pursuant to the
Securities Act, the Exchange Act and the PSLRA with the
intention of obtaining the benefits of the safe
harbor provisions of such laws. ACL cautions investors
that any forward-looking statements made by ACL are not
guarantees or indicative of future performance. Important
assumptions and other important factors that could cause actual
results to differ materially from those forward-looking
statements with respect to ACL include, but are not limited to,
the risks and uncertainties affecting their businesses described
in ACLs Annual Report on Form 10-K for the fiscal
year ended December 28, 2001 (particularly Item 1,
Risks Associated With Our Business), in other
securities filings by ACL and other important factors, including:



| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 cyclical or other downturns in demand, a prolonged or
    substantial recession in the United States or certain
    international commodity markets such as the market for grain
    exports, significant pricing competition, unanticipated
    additions to industry capacity, fuel costs and interest rates;
    and
|
| |  | 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. The forward-looking statements contained in this
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 and Significant Events

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 Parana/ 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

27



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of its parent holding company, American
Commercial Lines Holdings LLC (ACL Holdings). ACL
Holdings is an indirect wholly owned subsidiary of Danielson
Holding Corporation (DHC).


Through May 28, 2002, ACL was in default
under its bank and bond debt, as well as its receivables
facility, due to nonpayment of interest on the debt as well as
other covenant violations. On December 31, 2001, and
subsequent thereto, ACL elected not to pay the interest due on
its bank and bond debt due to ongoing negotiations with its
bankers and noteholders regarding the restructuring of the debt.
ACL obtained forbearance agreements or waivers which enabled it
to complete the Danielson Recapitalization described below and
the debt restructuring described in Note 3 in the
accompanying financial statements.

ACLs original secured debt was issued
pursuant to a Credit Agreement, dated June 30, 1998, with
certain lenders and JPMorgan 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 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 had outstanding
$295.0 million of unsecured 10.25% Senior Notes due June
2008 (the Old Senior Notes).

On March 15, 2002, ACL entered into a
definitive recapitalization agreement regarding the acquisition
and recapitalization of ACL (the Danielson
Recapitalization) by DHC and certain DHC subsidiaries
(collectively with DHC, Danielson). On
April 15, 2002, ACL launched an exchange offer pursuant to
which ACL offered to exchange the Old Senior Notes for a new
series of 11.25% senior notes due January 1, 2008 (the
Senior Notes) and a new class of 12% pay-in-kind
senior subordinated notes due July 1, 2008 (the PIK
Notes).

On April 11, 2002, ACL and certain lenders
executed an amendment agreement under which the Senior Credit
Facilities would be amended and restated upon the satisfaction
of certain conditions set forth in the amendment agreement,
including the consummation of the Danielson Recapitalization.

Effective May 29, 2002, the Danielson
Recapitalization was consummated with $58.5 million of the
Old Senior Notes and interest thereon, if any, contributed by
Danielson to ACL Holdings; $230 million, plus accrued
interest, of the remaining $236.5 million in Old Senior
Notes exchanged for new Senior Notes, and new PIK Notes and the
Senior Credit Facilities amended. As part of the Danielson
Recapitalization, DHC contributed $25.0 million in cash to
ACL Holdings, which was immediately used to reduce the
outstanding term loan debt under the Senior Credit Facilities.
In addition, $50.0 million of the amount outstanding under
the Revolving Credit Facility was converted into a new term loan
(the Tranche A Term Loan).

Upon completion of the Danielson Restructuring,
ACL became an indirect wholly owned subsidiary of DHC. At that
same time, SZ Investments, LLC increased its equity ownership in
DHC to approximately 18%. SZ Investments, LLC is an affiliate of
Samuel Zell, DHCs Chief Executive Officer. Another
affiliate of Mr. Zell, HY I Investments, LLC, is a
holder of approximately 42% of ACLs Senior Notes and PIK
Notes.

As of May 29, 2002, after the
$25.0 million reduction in outstanding term loans, and
after the $50.0 million Revolving Credit conversion to a
Tranche A Term Loan, ACLs secured debt
issued under the amended Senior Credit Facilities consisted of a
$46.6 million Tranche A Term Loan due June 30, 2005, a
$134.0 million Tranche B Term Loan due June 30, 2006,
a $157.7 million Tranche C Term Loan due June 30,
2007 (collectively the Term Loans) and the 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 $50.0 million due June 30,
2005. As of September 27, 2002 the outstanding balance
under the Term Loans was $332.1 million and the outstanding
balance under the Revolving Credit Facility was
$39.0 million in cash and $9.0 million in letters of
credit. The Term Loans bear interest at a rate equal to the
London InterBank Offered Rates (LIBOR or LIBO
Rates) plus a margin based on ACLs performance. The
annual interest rates as of September 27, 2002 were:
Tranche A  5.50%; Tranche B  5.75%; and
Tranche C  6.00%. ACL also had outstanding principal
of $137.1 million in new Senior Notes and
$116.1 million in new PIK Notes as of September 27,
2002. $6.5 million in principal of the Old Senior Notes
remain outstanding. The Senior Notes and PIK Notes are unsecured.

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Also effective May 29, 2002, ACLs
receivables facility, which was administered by PNC Bank, N.A.,
was replaced with a Receivables Purchase Agreement among
American Commercial Lines Funding Corporation, ACBL, Jupiter
Securitization Corporation and Bank One, NA (the
Receivables Facility) having substantially the same
terms as the previous receivables facility.

On July 3, 2002, Jeffboat LLC
(Jeffboat), ACLs marine construction
subsidiary, and its unionized employees represented by the
International Brotherhood of Teamsters, Local No. 89,
agreed upon a new collective bargaining agreement, ending a two
month long strike. The previous collective bargaining agreement
had expired on April 29, 2002 and the unionized employees
chose to strike from April 30, 2002 until July 9,
2002, when they returned to work pursuant to the terms of the
new collective bargaining agreement.

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.

Results of Operations

As a result of the acquisition of ACL by
Danielson, ACLs assets and liabilities were adjusted to
estimated fair value under push down purchase accounting.
ACLs consolidated financial statements for the periods
ended before May 29, 2002 were prepared using ACLs
historical basis of accounting. Although a new basis of
accounting began on May 29, 2002, management has summarized
the results for the nine months ended September 27, 2002
below by combining the periods before and after May 29,
2002 together as ACL believes presentation of these periods to
be meaningful for comparison purposes. Except as noted below,
the impact on results of operations related to push down
purchase accounting has not materially affected the
comparability of the periods.



| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | Quarter Ended September 27, 2002
    Compared with Quarter Ended September 28,
    2001

Operating Revenue.Operating revenue for the quarter
ended September 27, 2002 decreased 13.3% to
$179.7 million from $207.3 million for the quarter
ended September 28, 2001. The decrease in revenue was
primarily due to lower domestic barging freight rates and
volume, lower sales volume at Jeffboat, and lower revenue from
ACLs international barging operations.

Domestic barging revenue decreased
$20.8 million to $144.5 million due to lower barging
rates for grain and other bulk freight, lower grain freight
volume, lower demurrage revenue (which is revenue paid by
shippers to carriers for holding barges), lower liquid freight
volume and lower coal freight volume. The decrease was partially
offset by a higher volume of other bulk freight.

International barging revenue decreased
$0.1 million to $12.9 million primarily due to a lower
barging revenue rate in Venezuela from a cost based adjustment
of the primary customers rate in accordance with the terms
of the contract and lower barge charter revenue in Argentina
from the cancellation of an agreement. The revenue decline was
partially offset by increased freight volume in the Dominican
Republic where operations began in the third quarter of 2001 and
increased freight volume in Venezuela.

Revenue at Jeffboat decreased $6.8 million
to $19.7 million primarily due to lower volume of hopper
barge sales and lower volume of oversized tank barge sales as a
result of lower customer orders, residual effects of the strike
and the displacement of man hours into an ocean-going tank barge
that was not completed at the end of the quarter.

Operating Expense.Operating expense for the quarter
ended September 27, 2002 decreased 3.7% to
$176.5 million from $183.2 million in the third
quarter of 2001.

Domestic barging expense increased
$0.4 million to $147.0 million due to reduced gains on
property dispositions, higher depreciation and pension expense
due to purchase accounting adjustments, higher

29



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equipment repairs and increased expense from
lower water on the Mississippi and Ohio rivers. These were
partially offset by lower expense from reduced barging freight
volume, lower fuel prices and lower barge charter rates. The
average fuel price before the effect of user tax and hedging was
74 cents per gallon in the third quarter of 2002 on a volume of
25.5 million gallons, compared to 81 cents per gallon in
the third quarter of 2001. Barge freight contract adjustment
clauses for changes in fuel price currently protect
approximately 50% of ACLs fuel price risk exposure.


International barging expense decreased
$1.1 million to $7.4 million primarily due to lower
cost for services in Venezuela driven by currency devaluation
and lower barge charter expense in Argentina. These were
partially offset by increased costs as a result of increased
freight volume in the Dominican Republic where operations began
in the third quarter of 2001.

Jeffboats expense decreased
$6.2 million to $19.6 million due to lower volume of
hopper and oversized tank barge construction as a result of
lower customer orders.

Interest Expense.Interest expense for the third quarter
of 2002 decreased to $14.9 million from $17.0 million
for the same period in 2001. The decrease was due to lower LIBO
Rates, which are the basis for certain interest rate adjustments
under ACLs Senior Credit Facilities, lower outstanding
balances of Senior Notes and a lower outstanding balance under
the Senior Credit Facilities. The decrease was partially offset
by higher interest rates on the Senior Notes and the inclusion
of Vessel Leasing LLC interest expense in the current quarter.

Income Taxes.Income
tax expense for the third quarter of 2002 was $0.1 million
compared to $0.1 million in the third quarter of 2001. 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.



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Nine Months Ended September 27, 2002
    Compared with Nine Months Ended September 28,
    2001

Operating Revenue.Operating revenue for the nine months
ended September 27, 2002 decreased 9.2% to
$520.5 million from $573.3 million for the nine months
ended September 28, 2001. The revenue decrease was
primarily due to lower domestic barging freight rates and
volumes, the strike at Jeffboat, lower sales at Jeffboat from
reduced customer orders and the loss of revenue associated with
the sale of terminals in 2001, partially offset by increased
revenue from ACLs international business units.

Domestic barging revenue decreased
$36.5 million to $424.5 million due to lower barging
rates for grain, bulk, coal and liquid freight, lower liquid
freight volume, lower coal freight volume, lower demurrage
revenue and lower towing revenue, partially offset by increased
grain freight volumes primarily due to better operating
conditions in the first half of the year and increased bulk
freight volume as a result of increased demand in the third
quarter.

International barging revenue increased
$2.9 million to $29.5 million due to increased revenue
from ACLs Dominican Republic unit which began operation in
the third quarter of 2001, a new operation in Venezuela to move
bauxite tonnage during the low water navigation season and the
sale of logistics services to a third party barge operator in
Venezuela to transport equipment from the United States to
Venezuela. The increase was partially offset by the absence of
payments for minimum contract tonnage in Venezuela.

Revenue at Jeffboat decreased $16.7 million
to $58.7 million primarily due to lower volume of hopper
and tank barge sales as a result of the strike in the second
quarter and lower customer orders in the third quarter.

Operating Expense.Operating expense for the nine months
ended September 27, 2002 decreased 1.5% to
$534.4 million from $542.4 million in the first nine
months of 2001.

Domestic barging expense increased
$4.8 million to $445.1 million due to lower gains on
property dispositions, higher consulting and legal fees of which
$13.5 million were associated with the Danielson
Recapitalization, higher depreciation and pension expense as a
result of purchase accounting adjustments and higher equipment
repair expense, partially offset by reduced fuel prices, better
operating conditions in the first half of 2002, lower barge
freight volume and lower boat depreciation expense due to a
change in the estimated useful life of towboats. The average
fuel price before the effect of user tax and hedging was
68 cents per gallon

30



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##### Table of Contents



in the first nine months of 2002 on a volume of
78.9 million gallons, compared to 84 cents per gallon in
the first nine months of 2001.


International barging expense increased
$3.4 million to $25.4 million primarily due to
additional expenses associated with operations during low water
periods in Venezuela, expenses associated with providing
logistics services to a third party barge operator in Venezuela,
and an increase in expenses from ACLs Dominican Republic
unit, which began operation in the third quarter of 2001.

Jeffboats expense decreased
$13.0 million to $58.2 million due to lower volume of
hopper and tank barge construction as a result of the strike in
the second quarter of 2002 and a lower volume of hopper and
oversized tank barge construction during the third quarter of
2002.

Interest Expense.Interest expense for the first nine
months of 2002 decreased to $45.2 million from
$55.0 million for the same period in 2001. The decrease was
due to lower LIBO Rates, which are the basis for certain
interest rate adjustments under ACLs Senior Credit
Facilities, lower outstanding balances of Senior Notes and a
lower outstanding balance under the Senior Credit Facilities.
The decrease was partially offset by higher interest rates on
the Senior Notes and the inclusion of Vessel Leasing LLC
interest expense in the current period.

Income Taxes.Income
tax for the nine months was a benefit of $0.8 million compared
to expense of $0.4 million in the first nine months 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.

Extraordinary Item-Gain on Early
Extinguishment of Debt.The gain for
the first nine months of 2001 is a result of ACLs purchase
in the open market of $5.0 million par value of Old Senior
Notes at a discount.

Cumulative Effect of Accounting Change.The cumulative effect of accounting
change for the first nine months of 2001 was a loss of
$0.5 million due to a loss on the fair value of an interest
rate cap as a result of ACLs adoption of FASB Statement of
Financial Accounting Standard No. 133, Accounting for
Derivative Instruments and Hedging Activities, as of
December 30, 2000.

Outlook

Management expects lower freight tariff rates and
volumes in the fourth quarter of 2002 compared to the fourth
quarter of 2001 due to continued weakness in the general
economy. Management also 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 fourth
quarter of 2002 of approximately 84 cents, 13 cents
higher than the price in the fourth 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 which currently provide protection for
approximately 50% of gallons consumed. Contract adjustments are
deferred one quarter.

Liquidity and Capital Resources

Significant changes in ACLs credit
facilities during 2002 are discussed above in Overview and
Significant Events. As of September 27, 2002, ACL had
outstanding indebtedness of $631.4 million, including
$332.1 million drawn under the Term Loans,
$39.0 million drawn under the Revolving Credit Facility,
$137.1 million aggregate principal amount of Senior Notes,
$116.1 million of PIK Notes, $6.5 million in Old
Senior Notes and $0.6 million in other notes. As a result
of DHCs purchase of 50% of the voting interests in Vessel
Leasing LLC (Vessel Leasing), an entity in which ACL
owns the remaining 50% of the voting interests, ACL now
consolidates Vessel Leasings debt. ACLs investment
in Vessel Leasing was previously accounted for under the equity
method. The debt included in ACLs financial statements,
therefore, also includes $40.9 million in outstanding
principal of bonds guaranteed by the U.S. Maritime
Administration that are obligations of Vessel Leasing. Since ACL
is applying push down accounting effective with Danielsons
acquisition of ACL, ACLs debt was adjusted to fair value
at the acquisition date. The total amount of the unamortized
discount as of September 27, 2002 is $58.7 million.
The difference between the principal amount

31



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of the debt and its fair value is being accreted
as interest expense over the term of the debt under the
effective interest method. Accordingly, as of September 27,
2002, the carrying value of the new Senior Notes is
$128.2 million, the carrying value of the PIK Notes is
$67.9 million and the carrying value of the Old Senior Notes is
$4.9 million.


As of September 27, 2002, ACL also had
$1.7 million in outstanding capital lease obligations which
are included in other current and long-term liabilities and had
securitized $38.9 million of the trade receivables of two
subsidiaries.

ACLs primary sources of liquidity are cash
flows from operating activities and its Senior Credit
Facilities. ACLs cash balance was $15.0 million as of
September 27, 2002. There is $2.0 million of liquidity
available under the Revolving Credit Facility as of
September 27, 2002. Cash used by operating activities
totaled $12.9 million for the first nine months of 2002
compared to cash used by operating activities of
$0.9 million for the first nine months of 2001. The
increase in cash used was primarily due to reduced operating
earnings (principally due to the costs incurred for consulting
and legal fees associated with the Danielson Recapitalization
and the adverse effects of the Jeffboat strike on operations), a
difference in the timing of cash disbursements related to trade
payables and increases in inventory balances as a result of the
Jeffboat strike, partially offset by a reduction in interest
payments due to the terms of the Danielson Recapitalization.

Capital expenditures are expected to be
$14.9 million for 2002, with most expenditures being for
marine equipment maintenance. As of September 27, 2002, a
total of $11.6 million had been spent. ACL will continue to
lease new construction equipment from third parties.

ACL is highly leveraged, which makes it
vulnerable to changes in general economic conditions and to
worldwide weather conditions, particularly those affecting North
and South America, given the nature of ACLs business.
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. ACL may, from time to time, borrow under its Revolving
Credit Facilities.

The Senior Credit Facilities and the indentures
governing the Senior Notes and the PIK Notes (the
Indentures) also 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.
Compliance with financial ratios is measured at the end of each
quarter. The Indentures also contain certain cross default
provisions. ACLs ability to meet the financial ratios is
affected by adverse weather conditions, seasonality and other
risk factors inherent in its business.

The Senior Credit Facilities also contain
provisions which require mandatory prepayments of the Term Loans
with net proceeds from certain asset sales, equity issuances,
incurrence of indebtedness and sale and leaseback transactions,
as well as certain excess cash flow.

ACL has obtained an amendment (the
Amendment) of certain covenants under the Senior
Credit Facilities, relating to third quarter and fourth quarter
2002 covenants and a waiver of any past violations thereof.
Absent the Amendment, ACL would not have been in compliance with
the leverage or interest coverage ratios contained in its Senior
Credit Facilities as of September 27, 2002.

Among other things, the Amendment:



| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | alters the leverage and interest coverage ratios
    for the third and fourth quarters of 2002;                                                    
|
| |  | increases the interest rate on the Term Loans and
    Revolving Credit Facility and charges a 1.0% per annum
    additional deferred interest rate;
|
| |  | freezes ACLs additional unsecured
    indebtedness and investment capacity to current levels;                                                     
|
| |  | requires ACL to maintain $5.0 million cash
    on hand;                                                                                            
|
| |  | requires ACL to retain a consulting firm to
    represent and report to the lenders party to the Senior Credit
    Facilities (the Lenders); and 

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| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | requires ACL to submit a financial restructuring
    plan to the Lenders prior to December 28, 2002.

The Amendment also clarified that the financial
effects of consolidating Vessel Leasing in ACLs financial
statements are to be excluded from debt covenant calculations
under the Senior Credit Facilities.

At the end of the first quarter of 2003, the
covenant ratios revert to levels in effect before the Amendment.
Although management is working on operating and financial plans
to comply with its debt covenants in 2003 and thereafter,
management believes it is probable that ACL will not be in
compliance with debt covenants at the end of the first quarter
2003, absent another amendment to the Senior Credit Facilities.
As a result of the uncertainty of ACLs ability to meet its
debt covenants, ACL has classified all of its long-term debt as
current debt. Failure to meet the covenants could result in
acceleration of the debt, higher interest rates or other adverse
consequences, which could have a material adverse effect on ACL
since it is highly leveraged.

On October 31, 2002 ACL received a
notification from Bank One stating that ACL was in violation of
the cross-default provisions contained in the Receivables
Facility, which provides that a failure to maintain the
financial ratios provided by the Credit Agreement, whether or
not amended or waived, constitutes a default under the
Receivables Facility. Bank One and ACL have agreed to an
amendment to the Receivables Facility which will permit ACL to
continue utilizing the Receivables Facility and which:



| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increases the loss reserve on the Receivables
    Facility from 10% to 15%, thereby reducing ACLs borrowing
    capacity under the Receivables Facility;
|
| |  | changes the termination date of the Receivables
    Facility from May 29, 2003 to January 31, 2003; and                                                  
|
| |  | increases certain facility fees under the
    Receivables Facility.                                                                                      

Should ACL be unable to amend or replace the
Receivables Facility after January 31, 2003 or should ACL
be unable to conclude the plans discussed herein, ACLs
ability to maintain ongoing liquidity for the next twelve months
will be questionable.

ACL and its parent, DHC, have had, and plan to
continue to engage in discussions regarding various
restructuring proposals with lenders under ACLs Senior
Credit Facilities and Receivables Facility. Any restructuring
plan could involve various operational restructuring
alternatives; asset sales; sale-leaseback transactions;
purchase, exchange or other amendment or refinancing of its
Senior Notes or PIK Notes; equity transactions; and other
potential transactions designed to resolve liquidity and
covenant compliance issues. A restructuring plan could also
result in a reduction of the principal amount of, or extend the
amortization of, ACL indebtedness. Any restructuring plan may
require the approvals of all of ACLs significant lenders.
As discussed above, HY I Investments, LLC, an affiliate of SZ
Investments, LLC, holds approximately 42% of ACLs Senior
Notes and PIK Notes. SZ Investments, LLC holds approximately 18%
of DHCs outstanding Common Stock and is an affiliate of
Samuel Zell, DHCs Chief Executive Officer.

If any proposed restructuring plan is not
accepted by ACLs lenders and financial covenants are not
reset or compliance with the covenants is not waived by the end
of the first quarter of 2003, ACL will likely default under the
Senior Credit Facilities and Receivables Facility. If such
default were to occur, ACLs lenders could take actions
that would adversely impact the liquidity, financial condition
and results of operations of ACL, including accelerating the
amounts due under such facilities and causing cross-defaults
under ACLs indentures relating to the Senior Notes and PIK
Notes. If ACLs debt were accelerated, ACL would not have
sufficient liquidity to meet the obligations as they become due.
Accordingly, ACL would be required to refinance all or a portion
of its indebtedness on or before maturity. In such event, there
is no assurance that ACL will be able to refinance any of the
indebtedness on commercially reasonable terms or at all.

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ACLs ability to generate cash sufficient to
fund its cash requirements for the next twelve months, including
capital expenditures for fleet maintenance, working capital,
interest payments and scheduled principal payments, is also
dependent on:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the absence of unusually adverse weather
    conditions during the fourth quarter of 2002 and first quarter
    of 2003 (historically, these are the most difficult periods for
    adverse weather conditions due to ice and snow), which, if
    adverse, could reduce or eliminate ACLs ability to
    navigate on certain river segments, adversely affect ACLs
    operational efficiencies and reduce overall volumes transported;
    and                                                                                                                                                                                                                                                                                                  
|
| |  | the absence of a material adverse effect on
    ACLs business from the other risks addressed in this
    Quarterly Report in the section titled Forward Looking and
    Cautionary Statements and the other securities filings
    referenced therein, including, but not limited to, changing
    market, labor, legal and regulatory conditions and trends in the
    barge and inland shipping industries and 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,
    significant pricing competition, unanticipated additions to
    industry capacity, fuel costs and interest rates.

Changes In Accounting Standards

In July 2001, the FASB issued Statement of
Financial Accounting Standard 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 and intangible assets with indefinite
lives 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
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). SFAS 121 has been
superceded by SFAS 144 which is described below. The
adoption of SFAS 142 on December 29, 2001 has not had
a significant effect on ACLs financial position or results
of operations.

In October 2001, the FASB issued Statement of
Financial Accounting Standard 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 did not have an impact on
ACLs financial statements during the nine month period
ended September 27, 2002.

In June 2002, the FASB issued Statement of
Financial Accounting Standard No. 146 Accounting for
Costs Associated with Exit or Disposal Activities
(SFAS 146), which addresses financial
accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs incurred in a Restructuring)
(Issue 94-3). The principal difference between
SFAS 146 and Issue 94-3 relates to
SFAS 146s requirements for recognition of a liability
for a cost associated with an exit or disposal activity.
SFAS 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the
liability is incurred. Under Issue 94-3, a liability for an
exit cost as generally defined in Issue 94-3 was recognized
at the date of an entitys commitment to an exit plan.
Severance pay under SFAS 146, in many cases, would be
recognized over time rather than up front. Additionally, under
SFAS 146,

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if the benefit arrangement requires employees to
render future service beyond a minimum retention
period a liability should be recognized as employees
render service over the future service period even if the
benefit formula used to calculate an employees termination
benefit is based on length of service. The provisions of SFAS
146 are effective for exit or disposal activities that are
initiated after December 31, 2002, with early application
encouraged. Management expects to adopt SFAS 146 in 2003.







|        |                                                               
|------- | --------------------------------------------------------------
|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 September 27, 2002, ACL had forward fuel
purchase contracts outstanding with an aggregate notional amount
of approximately $3.2 million and a fair value of
approximately $.062 million, which has been recorded in
accounts receivable with the offset to other comprehensive
income and an additional fair value of $.036 million which
has been recorded as a receivable with an offset to the
allowance for doubtful accounts in the condensed consolidated
statement of financial position. Under these agreements, ACL
will pay fixed prices ranging from $0.61 to $0.74 per gallon.
There were 4.4 million gallons remaining on the contracts
at September 27, 2002. The agreements terminate
October 31, 2003. 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
$.036 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
zero as of September 27, 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) in the condensed
consolidated statement of operations.

For the quarter and nine months ended
September 27, 2002, the entire change in fair value
resulted in losses of $.001 million and $.037 million,
respectively, which are recorded in other expense
(income) in the condensed consolidated statement of
operations.

ACL also records changes to other assets in 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, an
entity in which ACL has a 50% ownership interest accounted for
by the equity method. ACL recognized a comprehensive loss of
$.325 million and $.363 million for its share of these
swaps for the quarter and the nine months ended
September 27, 2002, respectively.






|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

Within the 90 days prior to the date of this
Quarterly Report on Form 10-Q, ACL carried out an
evaluation, under supervision and with the participation of
ACLs management, including ACLs Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the
design and operation of ACLs disclosure controls and
procedures as defined in Exchange Act Rules 13a-14(c) and
15d-14(c). Based upon

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and as of the date of that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that
ACLs disclosure controls and procedures were effective, in
all material respects, to ensure that information required to be
disclosed in this Quarterly Report on Form 10-Q and
ACLs other periodic filings is recorded, processed,
summarized and reported as and when required.


There have been no significant changes in
ACLs internal controls or in other factors that could
significantly affect the internal controls subsequent to the
date ACL completed its evaluation. Therefore, no corrective
actions were taken.

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##### Table of Contents






PART II

OTHER INFORMATION




Item 3.     Defaults
Upon Senior Securities

ACL is not currently in default of any of its
outstanding indebtedness, having recently entered into
amendments of certain agreements relating thereto. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Liquidity and
Capital Resources for further detail.




Item 6.     Exhibits
and Reports on Form 8-K

Exhibits

|        |      |             |  |                                                                                                                                                                                                                                          
|------- | ---- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|No.     |      | Description
|        |      |            
|        | 10.1 |             |  | Amendment No. 1 and Agreement dated as of
    September 27, 2002 to the Amended and Restated Credit
    Agreement among American Commercial Lines LLC, American
    Commercial Lines Holdings LLC and JPMorgan Chase Bank.               
|        | 10.2 |             |  | First Amendment to Receivables Purchase Agreement
    dated as of November 11, 2002 among American Commercial
    Lines Funding Corporation, American Commercial Barge Line LLC,
    Jupiter Securitization Corporation and Bank One, NA.
|        | 10.3 |             |  | Release and Waiver of Employment and Termination
    of Employment Claims between American Commercial Barge Line LLC
    and Michael A. Khouri dated August 22, 2002.                                                                    

Reports on Form 8-K

ACL filed Current Reports on Form 8-K dated
July 5, 2002 (relating to a change in ACLs certifying
accountants from PricewaterhouseCoopers LLP to Ernst & Young
LLP) and August 12, 2002 (containing the Sarbanes-Oxley Act
of 2002, Section 906 chief executive officer and chief
financial officer certifications for ACL).




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: November 12, 2002 |  | By: /s/ JAMES J. WOLFF
    ------------------------------------------------
    Name: James J. Wolff
    Title: Senior Vice President and
    Chief Financial Officer
    (Principal Accounting Officer)

37



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CERTIFICATIONS

I, Michael C. Hagan, certify that:



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



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



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



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



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

|                        |  |                                                                                                                           
|----------------------- |  | --------------------------------------------------------------------------------------------------------------------------
|Date: November 12, 2002 |  | /s/ MICHAEL C. HAGAN
    ------------------------------------------------
    Michael C. Hagan
    Chief Executive Officer

38



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##### Table of Contents



CERTIFICATIONS

I, James J. Wolff, certify that:



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



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



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



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



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

|                        |  |                                                                                                                       
|----------------------- |  | ----------------------------------------------------------------------------------------------------------------------
|Date: November 12, 2002 |  | /s/ JAMES J. WOLFF
    ------------------------------------------------
    James J. Wolff
    Chief Financial Officer

39