##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the year ended December 31, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 0-22276
 
 
 Allied Holdings, Inc.
 (Exact name of registrant as specified in its charter)
 Georgia(State or other jurisdiction of 
incorporation or organization)
    
    58-0360550(I.R.S. Employer
ID Number)160 Clairemont Avenue, Suite 200, Decatur, Georgia 30030(Address of principal executive office)
    
    (404) 373-4285(Registrants telephone number, including area code)
 Securities
registered pursuant to Section 12(b) of the Act:
 None(Title of Class)
    
    No par value Common Stock(Title of Class)
 o þ
 o þ
 þ o
 þ
 o o þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



ALLIED HOLDINGS, INC.
 TABLE OF CONTENTS
 PageCaption
    
    NumberPART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    14Item 1B.
    
    Unresolved Staff Comments
    
    
    20Item 2.
    
    Properties
    
    
    20Item 3.
    
    Legal Proceedings
    
    
    20Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    21PART IIItem 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    21Item 6.
    
    Selected Financial Data
    
    
    23Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    46Item 8.
    
    Financial Statements and Supplementary Data
    
    
    46Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    46Item 9A.
    
    Controls and Procedures
    
    
    46Item 9B.
    
    Other Information
    
    
    47PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    48Item 11.
    
    Director and Executive Compensation
    
    
    51Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    62Item 13.
    
    Certain Relationships, Related Transactions and Director Independence
    
    
    64Item 14.
    
    Principal Accountant Fees and Services
    
    
    64PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    66EX-4.3 SECURED SUPER-PRIORITY DEBTOR IN POSESSION AND EXIT GUARANTEE AGREEMENTEX-4.3(A) FIRST AMENDMENT TO EXIT CREDIT AND GUARANTEE AGREEMENTEX-4.4 LOAN AND SECURITY AGREEMENT AND GUARANTEEEX-10.13 SEVERANCE AGREEMENT AND FULL RELASE/ HUGH E. SAWYEREX-10.24 SETTLEMENT AGREEMENTEX-21.1 SUBSIDIARIES OF ALLIED HOLDINGS, INC.EX-23.1 CONSENT OF KPMG LLPEX-31.1 CERTIFICATION BY HUGH E. SAWYEREX-31.2 CERTIFICATION BY THOMAS H. KINGEX-32.1 CERTIFICATION BY HUGH E. SAWYEREX-32.2 CERTIFICATION BY THOMAS H. KING




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PART I
 
 Item 1. Business
 When we use the terms Allied, we, us, and our, we mean Allied Holdings, Inc. and its
subsidiaries on a consolidated basis, and as the context requires, Allied Holdings, Inc. and its
subsidiaries that filed for Chapter 11 protection pursuant to the U.S. Bankruptcy Code.
 Our Company
  Voluntary Reorganization under Chapter 11
     i)
    
    Payment of the Original DIP Facility and funding of the exit financing, both of which have been facilitated by the New DIP Facility, subject to certain conditions;ii)
    
    Payment in cash, reinstatement, return of collateral or other treatment of other secured claims agreed between the holder of each such claim and Yucaipa;
 2




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iii)
    
    Distribution of new common stock on a pro rata basis to the holders of allowed general unsecured claims;iv)
    
    Cancellation of the existing common stock interests in the Debtors (holders of equity interests will receive nothing under the Disclosure Statement for the Joint Plan); andv)
    
    Assumption of assumed contracts.
       3




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www.administar.net www.alliedholdings.com.
 Principal Operating Subsidiaries
 Allied Automotive Group
  Axis Group
  
    
    vehicle inspection services for the pre-owned and off-lease markets;
    
    carrier management and brokerage services for various automotive clients;
    
    a variety of related support services to the pre-owned and off-lease vehicle markets,
title storage, marshalling and rail yard management (offered through its subsidiaries CT
Services, Inc. and Axis Canada);
    
    a computerized vehicle tracking service for Toyota;
    
    vehicle processing services at ports and inland distribution centers; and
    
    logistics and distribution services to the Mexican automobile industry (offered through
its subsidiary, Axis Logistica).
  Our Operations
  4




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Corporate History
      Customer Relationships
   5




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
    
    a contract with DaimlerChrysler, which was renewed in December 2005, expires on
September 30, 2007, and grants the Automotive Group primary carrier rights for 24 locations
in the U.S. and 13 in Canada. The contract may be terminated by location on 150 days notice
by either party. This contract, as renewed, provided for an increase in underlying base
rates as of October 1, 2005 and again on October 1, 2006. This renewed agreement was
approved by the Bankruptcy Court in March 2006;
    
    a contract with General Motors, which expires in December 2008, grants the Automotive
Group primary carrier rights for 36 locations in the U.S. and Canada. This contract was
renewed in December 2005 with rate increases effective January 1, 2006 and January 1,
2007. General Motors does not have the right to contract with other vehicle-hauling
service providers at a location under the terms of the contract unless the Automotive Group
fails to comply with service or quality standards at such location. Should an event of
non-compliance occur, the Automotive Group has 30 days in which to cure. If Allied
Automotive does not cure, General Motors may give 60 days notice of termination with
respect to the applicable location. This renewed agreement was approved by the Bankruptcy
Court in January 2006;
    
    a contract with American Honda Motor Company for vehicles delivered in the United States
which extends the Automotive Groups current contract with Honda in the United States
through March 31, 2009. Pursuant to the terms of the agreement which was renewed in March
2006, the Automotive Group will continue performing vehicle delivery services at all of the
locations in the United States that it currently serves for Honda. The contract renewal
includes increases in the underlying rates paid by Honda to the Automotive Group for
vehicle delivery services effective April 1, 2006, and again on April 1, 2007 and April 1,
2008;
    
    an executed agreement with Toyota regarding a contract commencing on April 1, 2007,
which will expire on March 31, 2008. This agreement was approved by the
Bankruptcy Court on May 10, 2007 and provides for an increase in the base rates
effective as of May 10, 2007; and
    
    an agreement in principle with Ford Motor Company through Autogistics, a service
relationship between Ford and UPS Logistics, that oversees Fords vehicle delivery network.
This agreement in principle grants the Automotive Group primary rights to 22 locations in
the U.S. and Canada, provided that Ford will have the right to resource certain business
from Allied at locations which are mutually acceptable to both Ford and Allied. The
agreement in principle provides for increased rates on all business served by Allied for Ford
beginning when we emerge from Chapter 11. This agreement in principle
remains subject to the execution of a definitive agreement between the parties and the
approval of the agreement by the Bankruptcy Court.
  Proprietary Management Information Systems
  6




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Management Strategy
  Risk Management and Insurance
     
    
    The first layer includes the first $1 million of every claim. We retain liability for
this layer, with no aggregate limit.
    
    The second layer includes the amount by which individual claims exceed $1 million up to
$5 million per occurrence. For this second layer, we retain liability up to an aggregate
deductible of $7 million. Aggregate claim amounts in the second layer in excess of $7
million are covered by excess insurance.
    
    The third layer includes the amount by which individual claims exceed $5 million per
occurrence. Individual claim amounts greater than $5 million are covered by excess
insurance to a limit of $150 million per occurrence.
  7




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
    
    The first layer includes the first CDN $500,000 of every claim. We retain liability for
this layer, with no aggregate limit.
    
    The second layer includes the amount by which individual claims exceed CDN $500,000 up
to CDN $1 million, per occurrence. For this second layer, we retain liability up to an
aggregate deductible of CDN $500,000. Aggregate claim amounts in the second layer in
excess of CDN $500,000 are covered by excess insurance.
    
    The third layer includes the amount by which individual claims exceed CDN $1 million,
per occurrence. Individual claim amounts that are greater than CDN $1 million are covered
by excess insurance to a limit of $150 million per occurrence.
      Equipment, Maintenance and Fuel
     8




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9




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Competition and Market Share
     
    
    The Waggoners Trucking (Waggoners);
    
    Cassens Transport Company (Cassens);
    
    Jack Cooper Transport Co., Inc. (Jack Cooper);
    
    United Road Service (United Road);
    
    Fleet Car-lease, Inc. (Fleet); and
    
    Active Transportation (Active);
  Employees and Owner-Operators
   10




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
    
    Total U.S. wage concessions of 15%, limited to $35 million per year during the three-year
duration of the agreement;
    
    The elimination of future Teamster wage increases;
    
    A wage freeze relating to the salaries of management and other nonbargaining employees
during the three-year duration of the agreement (with a few exceptions); and
    
    Entitlement of the U.S. Teamsters to a portion of earnings before interest, taxes,
depreciation and amortization (EBITDA) in excess of the projections included in the
Disclosure Statement for the Joint Plan.
      11




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Regulation
     Revenue Variability
   12




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Industry Overview
  2006
    
    
    
    
    
    
    2005vs.
    
    
    
    
    
    
    vs.2005
    
    
    
    
    
    
    20042006
    
    
    2005
    
    
    Change
    
    
    2004
    
    
    ChangeNew Vehicle Production (in millions of units)United States:Big Three(1)
    
    
    7.3
    
    
    
    8.0
    
    
    
    (8.8
    )%
    
    
    8.4
    
    
    
    (4.8
    )%Other
    
    
    3.5
    
    
    
    3.5
    
    
    
    
    %
    
    
    3.2
    
    
    
    9.4
    %Total
    
    
    10.8
    
    
    
    11.5
    
    
    
    (6.1
    )%
    
    
    11.6
    
    
    
    (0.9
    )%Canada:Big Three(1)
    
    
    1.6
    
    
    
    1.8
    
    
    
    (11.1
    )%
    
    
    1.9
    
    
    
    (5.3
    )%Other
    
    
    0.9
    
    
    
    0.9
    
    
    
    
    %
    
    
    0.8
    
    
    
    12.5
    %Total
    
    
    2.5
    
    
    
    2.7
    
    
    
    (7.4
    )%
    
    
    2.7
    
    
    
    
    %Mexico:Big Three(1)
    
    
    1.2
    
    
    
    0.9
    
    
    
    33.3
    %
    
    
    0.9
    
    
    
    
    %Other
    
    
    0.8
    
    
    
    0.7
    
    
    
    14.3
    %
    
    
    0.6
    
    
    
    16.7
    %Total
    
    
    2.0
    
    
    
    1.6
    
    
    
    25.0
    %
    
    
    1.5
    
    
    
    6.7
    %New Vehicle Sales (in millions of units)United States:Big Three(1)
    
    
    9.6
    
    
    
    10.2
    
    
    
    (5.9
    )%
    
    
    10.6
    
    
    
    (3.8
    )%Import
    
    
    3.0
    
    
    
    2.7
    
    
    
    11.1
    %
    
    
    2.7
    
    
    
    
    %Transplant(2)
    
    
    3.9
    
    
    
    3.8
    
    
    
    2.6
    %
    
    
    3.4
    
    
    
    11.8
    %Total
    
    
    16.5
    
    
    
    16.7
    
    
    
    (1.2
    )%
    
    
    16.7
    
    
    
    
    %Canada:Big Three(1)
    
    
    1.0
    
    
    
    1.0
    
    
    
    
    %
    
    
    0.9
    
    
    
    11.1
    %Other
    
    
    0.6
    
    
    
    0.6
    
    
    
    
    %
    
    
    0.6
    
    
    
    
    %Total
    
    
    1.6
    
    
    
    1.6
    
    
    
    
    %
    
    
    1.5
    
    
    
    6.7
    %
 
 (1)
    
    Represents General Motors Corporation, Ford Motor Company and DaimlerChrysler Corporation.(2)
    
    Represents foreign vehicles made in the U.S. Source:
  CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
  13




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SEC Filings
   
 Item 1A.
Risk Factors
  We may not be able to successfully reorganize under Chapter 11, which would likely terminate our
future business prospects and our ability to continue as a going concern and result in a
liquidation of our assets.
  Investors
in our common stock and debt securities will suffer a loss since, under the Disclosure
Statement for the Joint Plan , equity shareholders will receive nothing and debt holders will
receive less than the amount of their initial investment.
  14




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We have a significant amount of debt and substantially all our assets are pledged as collateral for
debt obligations, which could limit our operational flexibility and customer relationships or
otherwise adversely affect our financial condition.
  
    
    We may not be able to repay, refinance or extend our debt as it matures. The New DIP
Facility matures on September 30, 2007 if we do not emerge from Chapter 11 on or prior to
that date;
    
    If we are not able to refinance or extend our debt when it matures, we may not be able
to repay the debt;
    
    Substantially all our assets are pledged as collateral for our debt and as a result we
are limited in our ability to sell assets to generate additional cash;
    
    Our flexibility in responding to changes in the business and industry may be reduced;
    
    We may be more vulnerable to economic downturns;
    
    We may be unable to invest in our fleet of Rigs;
    
    We may be unable to meet customer demands; and
    
    We may be limited in our ability to withstand competitive pressures.
 The terms of the New DIP Facility place restrictions on us, which create risks of default and
limits our flexibility.
   We will be required to make significant capital expenditures on our Rigs in the coming years and we
may not be able to maintain our current level of terminal operations or customer relationships.
  15




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If we are not able to renegotiate our union contracts on terms favorable to us as they expire, or
if work stoppages or other labor disruptions occur during such negotiations, it could have a
material adverse effect on our operations.
   Rising interest rates could adversely affect our cash flow and interest expense.
   A shortage of fuel or higher fuel prices resulting from fuel shortages or other factors could have
a detrimental effect on the automotive industry or the automotive transportation industry and could
materially and adversely affect our operations.
  16




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A further decline in the automotive industry could have a material adverse effect on our
operations.
  The internal strategies of our largest customers could have a material effect on our performance.
  Losses may exceed our insurance coverage or reserves.
    We have a history of losses and may not be able to improve our performance to achieve
profitability.
  17




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Our restricted cash, cash equivalents and other time deposits are not available for use in our
operations even if they were needed to fund our operations.
  If we do not maintain our relationships with major customers or these relationships are terminated,
reduced or redesigned, our operations could be materially and adversely affected.
   Competition in the automotive transportation industry could result in a loss of our market share or
a reduction in our rates, which could have a material adverse effect on our operations.
  18




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Our common stock is not currently listed on a national securities exchange, which could make it
more difficult for investors to liquidate their shares, result in a decline in the stock price and
make it difficult for us to raise additional capital.
  Adverse changes in the foreign business climate, primarily in Canada, could adversely affect our
operations.
  Major changes in key personnel on whom we depend could adversely affect our operations.
  The loss of our Teamster drivers and mechanics could adversely affect our operations.
  We have previously had material weaknesses in our internal control over financial reporting, and
any unidentified material weaknesses could cause us to fail to meet our SEC and other reporting
requirements.
   19




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
    
 Item 3. Legal Proceedings
  20




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Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
   Year Ended December 31,2006
    
    
    2005Period:
    
    High
    
    
    Low
    
    
    High
    
    
    LowFirst Quarter
    
    $
    1.01
    
    
    $
    0.55
    
    
    $
    4.50
    
    
    $
    2.10Second Quarter
    
    $
    0.95
    
    
    $
    0.81
    
    
    $
    2.30
    
    
    $
    0.41Third Quarter
    
    $
    0.94
    
    
    $
    0.54
    
    
    $
    0.81
    
    
    $
    0.06Fourth Quarter
    
    $
    1.42
    
    
    $
    0.45
    
    
    $
    0.65
    
    
    $
    0.18
   Performance Graph
  21




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Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act
of 1933, or the Securities Act of 1934 that might incorporate future filings, including this Annual
Report on Form 10-K, in whole or in part, the performance graph presented above shall not be
incorporated by reference into any such filings.
 22




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Item 6. Selected Financial Data
  Year Ended December 31,(In thousands, except per share amounts)2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Selected Statement of Operations Data:Revenues
    
    $
    893,837
    
    
    $
    892,934
    
    
    $
    895,213
    
    
    $
    865,463
    
    
    $
    898,060Income (loss) before income taxes,reorganization items and cumulativeeffect of change in accounting principle
    
    
    836
    
    
    
    (129,425
    )
    
    
    (41,522
    )
    
    
    (2,338
    )
    
    
    (4,563
    )Reorganization items
    
    
    (12,772
    )
    
    
    (7,131
    )
    
    
    
    
    
    
    
    
    
    
    Loss before income taxes and cumulativeeffect of change in accounting principle
    
    
    (11,936
    )
    
    
    (136,556
    )
    
    
    (41,522
    )
    
    
    (2,338
    )
    
    
    (4,563
    )Income tax (expense) benefit
    
    
    (389
    )
    
    
    10,832
    
    
    
    (12,361
    )
    
    
    (6,266
    )
    
    
    1,129Loss before cumulative effect of changein accounting principle
    
    
    (12,325
    )
    
    
    (125,724
    )
    
    
    (53,883
    )
    
    
    (8,604
    )
    
    
    (3,434
    )Cumulative effect of change in accountingprinciple, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,092
    )Net loss
    
    $
    (12,325
    )
    
    $
    (125,724
    )
    
    $
    (53,883
    )
    
    $
    (8,604
    )
    
    $
    (7,526
    )Net loss per share  basic and diluted
    
    $
    (1.37
    )
    
    $
    (14.02
    )
    
    $
    (6.15
    )
    
    $
    (1.02
    )
    
    $
    (0.91
    )Weighted-average common sharesoutstanding  basic and diluted
    
    
    8,980
    
    
    
    8,970
    
    
    
    8,757
    
    
    
    8,475
    
    
    
    8,301Selected Balance Sheet Data (period end):Total assets
    
    $
    338,768
    
    
    $
    383,116
    
    
    $
    421,532
    
    
    $
    460,063
    
    
    $
    468,387Debtor-in-possession credit facility
    
    
    (161,357
    )
    
    
    (151,997
    )
    
    
    
    
    
    
    
    
    
    
    Pre-petition long-term debt, includingcurrent portion and revolving creditfacilities
    
    
    
    
    
    
    
    
    
    
    (251,238
    )
    
    
    (246,500
    )
    
    
    (248,475
    )Long-term liabilities  other
    
    
    (81,422
    )
    
    
    (78,887
    )
    
    
    (91,690
    )
    
    
    (86,013
    )
    
    
    (82,884
    )Liabilities subject to compromise
    
    
    (199,212
    )
    
    
    (199,322
    )
    
    
    
    
    
    
    
    
    
    
    Stockholders (deficit) equity
    
    
    (204,132
    )
    
    
    (187,367
    )
    
    
    (41,549
    )
    
    
    8,814
    
    
    
    10,314
 
 1
        Income tax expense for the year ended December 31, 2003 included a charge of $6.8 million to record a valuation allowance against our deferred tax assets.2
       Effective January 1, 2002, we adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, and recorded a charge related to the impairment of goodwill of the Axis Group.
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 You should read the discussion and analysis in this section in conjunction with the consolidated
financial statements and accompanying notes included in Item 15 of this Annual Report on Form 10-K.
 Executive Overview
  23




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i)
    
    Payment of the Original DIP Facility and funding of the exit financing, both of which
have been facilitated by the New DIP Facility, subject to certain conditions;ii)
    
    Payment in cash, reinstatement, return of collateral or other treatment of other
secured claims agreed between the holder of each such claim and Yucaipa;iii)
    
    Distribution of new common stock on a pro rata basis to the holders of allowed general
unsecured claims;iv)
    
    Cancellation of the existing common stock interests in the Debtors (holders of equity
interests would receive nothing under the Disclosure Statement for the Joint Plan); andv)
    
    Assumption of assumed contracts.
    
    
    Total U.S. wage concessions of 15%, limited to $35 million per year during the
three-year duration of the agreement;
    
    The elimination of future Teamster wage increases;
 24




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
    
    A wage freeze relating to the salaries of management and other nonbargaining employees
during the three-year duration of the agreement (with certain exceptions); and
    
    Entitlement of the U.S. Teamsters to a portion of EBITDA in excess of the projections
included in the Disclosure Statement for the Joint Plan.
     Due to these uncertainties, an
investment in our common stock or debt securities is highly speculative and accordingly, we urge
investors to exercise caution with respect to existing and future investments in our common stock
or debt securities.
  25




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##### Table of Contents




    
    Results of Operations;
    
    Liquidity and Capital Resources;
    
    Off-Balance Sheet Arrangements;
    
    Disclosures About Market Risks;
    
    Critical Accounting Policies and Estimates; and
    
    Recent Accounting Pronouncements.
 Results of Operations
  
    
    2006  a reduction in the number of vehicles delivered, which was primarily offset by
an improvement in revenue per vehicle delivered, resulting from customer rate increases and
fuel surcharge revenue; lower interest costs; and additional expenses related to the
Chapter 11 Proceedings.
    
    2005  a non-cash impairment charge related to our Automotive Groups goodwill; a
reduction in the number of vehicles delivered; an increase in the cost of fuel and labor;
recognition of a withdrawal liability related to multiemployer pension plans from which we
withdrew; expenses related to the Chapter 11 Proceedings; and increased interest expense
associated with higher average outstanding debt and higher effective interest rates.
    
    2004  increased expenses related to our self-insurance programs including a non-cash
charge related to our conclusion that we could no longer reliably determine insurance
reserves on a discounted basis due to continued adverse development for claims incurred in
prior years, as well as higher than expected costs for insurance premiums; a non-cash
impairment charge related to goodwill at the Axis Group; increased audit and accounting
costs; increased depreciation expense on some of our Rigs due to a revision of their
estimated useful lives; a non-cash charge to record an additional valuation allowance
against our deferred tax assets; increased maintenance costs; the adverse impact of excess
costs associated with lower than expected shipment levels in January 2004; and dramatically
higher fuel prices beginning in the second quarter and continuing throughout the year.
  26




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As a % of revenues2006
    
    
    2005
    
    
    2004%
    
    
    %
    
    
    %Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Salaries, wages, and fringe benefits
    
    
    50.4
    %
    
    
    54.0
    %
    
    
    54.6
    %Operating supplies and expenses
    
    
    20.5
    %
    
    
    20.2
    %
    
    
    18.1
    %Purchased transportation
    
    
    12.9
    %
    
    
    13.4
    %
    
    
    12.4
    %Insurance and claims
    
    
    4.7
    %
    
    
    4.7
    %
    
    
    4.6
    %Operating taxes and licenses
    
    
    3.1
    %
    
    
    3.3
    %
    
    
    3.3
    %Depreciation and amortization
    
    
    3.3
    %
    
    
    3.4
    %
    
    
    4.8
    %Rents
    
    
    0.8
    %
    
    
    0.8
    %
    
    
    1.0
    %Communications and utilities
    
    
    0.7
    %
    
    
    0.7
    %
    
    
    0.7
    %Other operating expenses
    
    
    0.9
    %
    
    
    1.3
    %
    
    
    1.1
    %Impairment of goodwill
    
    
    0.0
    %
    
    
    8.9
    %
    
    
    0.9
    %Gain on disposal of operating assets, net
    
    
    (0.4
    )%
    
    
    (0.1
    )%
    
    
    (0.1
    )%Total operating expenses
    
    
    96.9
    %
    
    
    110.6
    %
    
    
    101.4
    %Operating income (loss)
    
    
    3.1
    %
    
    
    (10.6
    )%
    
    
    (1.4
    )%Other income (expense):Interest expense
    
    
    (3.4
    )%
    
    
    (4.4
    )%
    
    
    (3.5
    )%Investment income
    
    
    0.5
    %
    
    
    0.3
    %
    
    
    0.1
    %Foreign exchange (losses) gains, net
    
    
    (0.1
    )%
    
    
    0.2
    %
    
    
    0.2
    %Other, net
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    0.0
    %Total other income (expense)
    
    
    (3.0
    )%
    
    
    (3.8
    )%
    
    
    (3.2
    )%Income (loss) before reorganization items and income taxes
    
    
    0.1
    %
    
    
    (14.4
    )%
    
    
    (4.6
    )%Reorganization items
    
    
    (1.4
    )%
    
    
    (0.8
    )%
    
    
    0.0
    %Loss before income taxes
    
    
    (1.3
    )%
    
    
    (15.2
    )%
    
    
    (4.6
    )%Income tax (expense) benefit
    
    
    (0.0
    )%
    
    
    1.2
    %
    
    
    (1.4
    )%Net loss
    
    
    (1.3
    )%
    
    
    (14.0
    )%
    
    
    (6.0
    )%
 Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
  Revenues
  27




---



##### Table of Contents



28




---



##### Table of Contents



Salaries, wages and fringe benefits
    Operating supplies and expenses
  29




---



##### Table of Contents



Purchased transportation
  Insurance and claims
  Other operating expenses
  Impairment of goodwill
  30




---



##### Table of Contents



Gain on disposal of operating assets, net
  Interest expense
  
    
    The discontinuation of interest accrued on our Senior Notes subsequent to the Petition
Date. Effective August 1, 2005 and in accordance with the American Institute of Certified
Public Accountants Statement of Position 90-7 (SOP 90-7), Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code, we ceased accruing interest on our
Senior Notes since the repayment of this debt and related interest are stayed by the
Bankruptcy Court as a result of the Chapter 11 Proceedings. Interest expense recognized on
the Senior Notes was $7.5 million for 2005;
    
    Lower charges related to deferred financing costs. Charges related to deferred
financing costs decreased $2.8 million in 2006 compared to 2005. This was due primarily to
the write-off of $4.9 million in deferred financing costs during 2005 as a result of the
violation of one of the financial covenants in our pre-petition facility as of June 30,
2005, the effect of which was partially offset by higher amortization of deferred financing
costs related to the Original DIP Facility in 2006. The amortization was higher in 2006 as
a result of the revision, in March 2006, of the end of the amortization period of the
deferred financing costs related to the Original DIP Facility as a result of certain
financial covenant violations. As a result of the covenant violations related to the
Original DIP Facility, we revised the end of the amortization period from February 2, 2007,
the initial maturity date of the Original DIP Facility, to May 18, 2006, the end of the
forbearance period under the Original DIP Facility;
    
    The prepayment penalty of $1.9 million, which we paid to our pre-petition lenders in
August 2005; and
    
    Reduced letter of credit fees. Letter of credit fees were approximately $1.2 million
lower in 2006 than 2005 due to the incurrence, during 2005, of line of credit fees on both
the Original DIP Facility as well as the pre-petition facility as we transitioned from one
facility to the other.
  Investment income
  Foreign exchange losses/gains, net
  31




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##### Table of Contents



Reorganization items
  Income taxes
  Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
  Revenues
  32




---



##### Table of Contents



Salaries, wages, and fringe benefits
    Operating supplies and expenses
  33




---



##### Table of Contents



Purchased transportation
  Insurance and claims
   Depreciation and amortization
  Rents
  Other operating expenses
  Impairment of goodwill
   Interest expense
  
    
    The write off of $4.9 million in deferred financing
costs related to the pre-petition
facility, discussed above;
    
    Payment of the $1.9 million prepayment penalty related
to our pre-petition facility;
 34




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##### Table of Contents




    
    An increase in our average outstanding debt. Average outstanding debt increased by
approximately $20.3 million during 2005 versus 2004 resulting in additional interest
expense of approximately $2.5 million;
    
    An increase in the effective interest rate from 9.6% in 2004 to 12.2% in 2005 resulting
in additional interest expense of approximately $2.9 million;
    
    An increase in lender fees of approximately $0.9 million including commitment, agent and
letter of credit fees as well as additional fees related to
amendments to the pre-petition
facility; and
    
    An increase in amortization of debt issuance costs of approximately $0.9 million.
Although total deferred debt issuance costs related to the Original DIP Facility are less
than those related to the pre-petition facility, the amortization period was much shorter,
resulting in higher amortization charges year over year.
  
    
    The discontinuation of interest accrued on the Senior Notes effective August 1, 2005.
Contractual interest not accrued or paid on the Senior Notes was $5.4 million for 2005; and
    
    A decrease of approximately $1.0 million related to interest on prior year tax
assessments.
 Investment income
  Other, net
  Reorganization items
  Income taxes
  Liquidity and Capital Resources
 Overview
  35




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##### Table of Contents




    
    Rescheduling and deferring capital expenditures;
    
    Obtaining the Bankruptcy Courts approval to reduce wages paid to our collective
bargaining employees covered under the Master Agreement with the IBT by 10% for the months
of May and June 2006;
    
    Obtaining the Bankruptcy Courts approval to delay, to July 1, 2006, wage and cost of
living increases to our collective bargaining employees that were previously scheduled to
go into effect on June 1, 2006;
    
    Implementing unpaid furloughs for certain nonbargaining employees for certain periods in
May and June 2006; and
    
    Implementing other internal cost-saving initiatives.
    Operating Activities
  36




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Investing Activities
      37




---



##### Table of Contents



Financing activities
  Credit facilities
  38




---



##### Table of Contents



1 2
       39




---



##### Table of Contents



Contractual Obligations
  Payments Due InContractual Obligations
    
    Total
    
    
    2007
    
    
    2008-2009
    
    
    2010-2011
    
    
    ThereafterOriginal DIP Facility(1)
    
    $
    161,357
    
    
    $
    161,357
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating lease obligations
    
    
    18,967
    
    
    
    10,043
    
    
    
    7,253
    
    
    
    1,145
    
    
    
    526Insurance premium financing(2)
    
    
    5,414
    
    
    
    5,414
    
    
    
    
    
    
    
    
    
    
    
    Liability for unfunded defined benefit
pension and other postretirement plans(3)
    
    
    15,564
    
    
    
    1,337
    
    
    
    2,541
    
    
    
    2,322
    
    
    
    9,364Purchase obligations(4)
    
    
    77,799
    
    
    
    10,658
    
    
    
    21,538
    
    
    
    21,984
    
    
    
    23,619Insurance premium commitments
    
    
    22,678
    
    
    
    22,678
    
    
    
    
    
    
    
    
    
    
    
    Claims and insurance reserves(5)
    
    
    103,093
    
    
    
    38,786
    
    
    
    28,058
    
    
    
    12,491
    
    
    
    23,758Senior Notes(6)
    
    
    154,313
    
    
    
    154,313
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    559,185
    
    
    $
    404,586
    
    
    $
    59,390
    
    
    $
    37,942
    
    
    $
    57,267
 
 (1)
    
    Excludes interest payable of $445,000. The Original DIP Facility was replaced by
the New DIP Facility on March 30, 2007. The Original DIP Facility and the New DIP Facility
are more fully discussed in Note 14 to the consolidated financial statements included in
Item 15 of this Annual Report on Form 10-K.(2)
    
    Excludes interest payable of $21,000. See Note 11 to the consolidated financial
statements included in Item 15 of this Annual Report on Form 10-K for a discussion of
these financing arrangements.(3)
    
    The table above includes only the liability for the defined benefit
postretirement plans other than pensions since these plans are the only unfunded plans. We
also have one underfunded defined benefit pension plan with a recognized liability of
$899,000, which is not included in the table above.(4)
    
    This obligation relates to an agreement with IBM. In April 2001, we entered into
a five-year commitment with IBM whereby IBM would provide our mainframe computer processing
services. In December 2003, we amended this agreement. The amended agreement is a ten-year
commitment, commencing February 2004, for IBM to provide additional services to manage
applications for EDI, network services, technical services, and applications development
and support. The agreement includes outsourcing at prices defined within the agreement.
Our Chapter 11 filing has not affected the terms and services under this contract. The
obligation amount included in the table does not include a pre-petition obligation to IBM
of $977,000 pursuant to this agreement since the timing and amount of the payment is
uncertain.(5)
    
    Expected payouts of the aggregate amount of claims exclude liabilities subject to
compromise since the timing of expected payouts cannot be estimated.(6)
    
    The Senior Notes, and related accrued interest as of the Petition Date, are
expected to be allowed general unsecured claims. The Disclosure Statement for the Joint
Plan contemplates distribution of new common stock on a pro rata basis to the holders of
general unsecured claims.  40




---



##### Table of Contents



Letters of Credit
   Off-Balance Sheet Arrangements
  Disclosures About Market Risks
  Fuel Prices
  Interest Rates
  41




---



##### Table of Contents



Risk Management Retention
      Foreign Currency Exchange Rates
   Inflation
  Critical Accounting Policies and Estimates
  42




---



##### Table of Contents



43




---



##### Table of Contents



Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R)
 Employers Accounting for Pension Employers Accounting for Postretirement Benefits Other than Pensions.
 44




---



##### Table of Contents



%Discount rate
    
    Investment return
    
    
    Impact5.50%
    
    
    8.00%
    
    
    
    (12.9
    )%6.00%
    
    
    8.00%
    
    
    
    10.0
    %5.75%
    
    
    8.25%
    
    
    
    8.5
    %5.75%
    
    
    7.75%
    
    
    
    (8.5
    )%
   Goodwill and Other Intangible Assets,
 45




---



##### Table of Contents




    
    In 1994, in connection with the acquisition of Auto Haulaway, a Canadian company, we assumed the obligations of a postretirement benefit plan to provide certain retired employees with healthcare and life insurance benefits.  The obligation of $810,000 as of January 1, 2006, related to this plan had not been reflected in our consolidated balance sheet.
    
    We identified several uncertain tax positions during 2006 that did not meet the criteria under GAAP for recognition of the benefit.  The estimated liability for tax, interest and penalties of $370,000 as of January 1, 2006 had not been reflected in our consolidated balance sheet.
    
    A number of proofs of claim were filed against the Debtors by various creditors and security holders prior to the bar date set by the Bankruptcy Court.  As part of the claims reconciliation process, the Debtors are reviewing these claims for validity. In reconciling proofs of claims submitted by creditors, we identified additional pre-petition liabilities of $296,000 during 2006 that had not been reflected in liabilities subject to compromise. As additional proofs of claim are reconciled, the Debtors may need to record additional liabilities subject to compromise.  Such adjustments could have a material effect on the consolidated financial statements.
    Recent Accounting Pronouncements
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control over Financial Reporting:
  46




---



##### Table of Contents



Item 9B. Other Information
  47




---



##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  DAVID G. BANNISTER
Director Since 1993
Age 51
  THOMAS E. BOLAND
Director Since 2001
Age 72
  GUY W. RUTLAND, III
Director Since 1964
Age 70
  GUY W. RUTLAND, IV
Director Since 1993
Age 43
  ROBERT J. RUTLAND
Director Since 1965
Age 65
 48




---



##### Table of Contents



HUGH E. SAWYER
Director Since 2001
Age 52
  J. LELAND STRANGE
Director Since 2002
Age 65
  BERNER F. WILSON, JR.
Director Since 1993
Age 68
  ROBERT R. WOODSON
Director Since 1993
Age 75
  AUDIT COMMITTEE
   49




---



##### Table of Contents



EXECUTIVE OFFICERS
  Name
    
    Age
    
    TitleRobert J. Rutland
    
    
    65
    
    
    Chairman and DirectorHugh E. Sawyer
    
    
    52
    
    
    President, Chief Executive Officer and DirectorGuy W. Rutland, IV
    
    
    43
    
    
    Senior Vice President and DirectorThomas M. Duffy
    
    
    46
    
    
    Executive Vice President, General Counsel and SecretaryThomas H. King
    
    
    52
    
    
    Executive Vice President and Chief Financial OfficerJoseph V. Marinelli
    
    
    50
    
    
    Senior Vice President, Field Operations
      50




---



##### Table of Contents



SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
   
 Item 11. Director and Executive Compensation
 Director Compensation
  Director Compensation Table
 Change inPension ValueFees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and Non-Earned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    qualifiedor Paid
    
    
    
    
    
    
    Option
    
    
    Non-Equity
    
    
    Deferredin Cash
    
    
    Stock
    
    
    Awards
    
    
    Incentive Plan
    
    
    Compensation
    
    
    All Other(1)
    
    
    Awards
    
    
    (2)
    
    
    Compensation
    
    
    Earnings
    
    
    Compensation
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)David G. Bannister
    
    
    79,500
    
    
    
    
    
    
    
    2,367
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,867Thomas E. Boland
    
    
    74,500
    
    
    
    
    
    
    
    2,367
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,867Guy W. Rutland, III
    
    
    56,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,500J. Leland Strange
    
    
    61,000
    
    
    
    
    
    
    
    2,367
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,367Berner F. Wilson,
Jr.
    
    
    56,500
    
    
    
    
    
    
    
    2,367
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,867Robert R. Woodson
    
    
    76,000
    
    
    
    
    
    
    
    2,367
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,367William P. Benton(3)
    
    
    69,000
    
    
    
    
    
    
    
    2,367
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,367
 
 (1)
    
    For the year ended December 31, 2006, each director who was not also an employee
received an annual fee of $25,000 and a fee of $1,500 for each meeting of the Board or any
of its committees attended, plus reimbursement of expenses for attending meetings. An
additional fee of $5,000 was paid to the chairman of each committee of the Board.
Directors are also eligible to participate in our Amended and Restated Long-Term Incentive
Plan (the LTI Plan). No awards were made to directors under the LTI Plan in 2006.(2)
    
    Option Awards. The amounts in this column represent the amount of the expense
recognized in the consolidated financial statements for the year ended December 31, 2006
attributable to all outstanding stock option awards for each nonemployee director,
disregarding any adjustments for estimated 51




---



##### Table of Contents



forfeitures, and thus include amounts attributable to option awards made prior to 2006. No
awards were granted in 2006. See Note 2(n) to the consolidated financial statements included
in Item 15 of this Annual Report on Form 10-K for the year ended December 31, 2006 for an
explanation of the assumptions made in the valuation of these awards.(3)
    
    Mr. Benton resigned from the Board in March 2007.   Compensation Discussion and Analysis
      Executive Compensation Components.
  Base Salary
 52




---



##### Table of Contents



Incentive Compensation
 Retention
Plan
   Stock Compensation
 Other Compensation.
 CEO Compensation.
 53




---



##### Table of Contents



Compensation Committee Report
  
 Notwithstanding anything to the contrary which is or may be set forth in any of our filings under
the Securities Act of 1933 or the Exchange Act that might incorporate company filings, including
this Annual Report on Form 10-K , in whole or in part, the preceding Compensation Committee Report
shall not be incorporated by reference in any such filings.
 Summary Compensation Table
  54




---



##### Table of Contents



Change inPension ValueNon-
    
    
    andEquity
    
    
    NonqualifiedIncentive
    
    
    DeferredStock
    
    
    Option
    
    
    Plan
    
    
    Compensation
    
    
    All OtherName and
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Earnings(7)
    
    
    Compensation
    
    
    TotalPrincipal Position
    
    Year
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Hugh E. Sawyer
President and Chief
Executive Officer
    
    2006
    
    
    589,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96
    
    
    
    17,964
    (2)
    
    
    607,675Robert J. Rutland
Chairman
    
    2006
    
    
    394,423
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,869
    (3)
    
    
    438,292Thomas H. King
Executive Vice
President and Chief
Financial Officer
    
    2006
    
    
    317,308
    
    
    
    
    
    
    
    
    
    
    
    37,867
    
    
    
    
    
    
    
    
    
    
    
    11,964
    (4)
    
    
    367,139Thomas M. Duffy
Executive Vice
President, General
Counsel and
Secretary
    
    2006
    
    
    317,308
    
    
    
    
    
    
    
    
    
    
    
    20,800
    
    
    
    
    
    
    
    
    
    
    
    43,317
    (5)
    
    
    381,425Joseph V. Marinelli
Senior Vice
President, Field
Operations
    
    2006
    
    
    216,346
    
    
    
    
    
    
    
    
    
    
    
    64,533
    
    
    
    
    
    
    
    
    
    
    
    10,481
    (6)
    
    
    291,360
 
 (1)
    
    Option Awards. The amounts in this column represent the amount of the expense
recognized in the consolidated financial statements for the year ended December 31, 2006
attributable to all outstanding stock option awards for each of the named executive officers,
disregarding any adjustments for estimated forfeitures, and thus include amounts attributable
to option awards made prior to 2006. No awards were granted in 2006.
See Note 2(n) to the
consolidated financial statements included in Item 15 of this Annual Report on Form 10-K for
the year ended December 31, 2006 for an explanation of the assumptions made in the valuation
of these awards.(2)
    
    Consists of a car allowance of $15,600 and $2,364 for long-term disability and life
insurance enhancements.(3)
    
    Consists of a car allowance of $9,600 and $34,269 for long-term disability and life
insurance enhancements.(4)
    
    Consists of a car allowance of $9,600 and $2,364 for long-term disability and life
insurance enhancements.(5)
    
    Consists of a car allowance of $9,600 and $2,344 for long-term disability and life
insurance enhancements and $31,257 for certain premiums for life insurance for Mr. Duffy and
his wife.(6)
    
    Consists of a car allowance of $8,400 and $2,081 for long-term disability and life
insurance enhancements.(7)
    
    The amounts in this column represent the change in the present value of the
accumulated benefit obligation in the Allied Holdings Defined Benefit Plan during 2006
attributable to the named executive officer. The accumulated benefit obligation was
calculated using assumptions consistent with those used for financial reporting purposes. For
the year ended December 31, 2006 we revised some of these assumptions. Due to this and the
application of various actuarial factors, the accumulated benefit obligation decreased for
Messrs. Rutland and Duffy. Therefore, there is no compensation expense reported in this
category for these individuals. Messrs. King and Marinelli are not participants in the
pension plan. The assumptions are included in Note 16 of the notes to the consolidated
financial statements included in Item 15 of this Annual Report on Form 10-K. 55




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##### Table of Contents



Grants of Plan-Based Awards
  Outstanding Equity Awards at Fiscal Year-End
  Option Awards(1)
    
    
    Stock AwardsEquity
    
    
    EquityEquity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Incentive
    
    
    Incentive PlanIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan
    
    
    Awards:Plan
    
    
    
    
    
    
    
    
    
    
    Number
    
    
    Market
    
    
    Awards:
    
    
    Market orNumber
    
    
    
    
    
    
    Awards:
    
    
    
    
    
    
    
    
    
    
    of Shares
    
    
    Value of
    
    
    Number of
    
    
    Payout Valueof
    
    
    Number of
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    or Units
    
    
    Shares or
    
    
    Unearned
    
    
    of UnearnedSecurities
    
    
    Securities
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    of Stock
    
    
    Units of
    
    
    Shares,
    
    
    Shares, UnitsUnderlying
    
    
    Underlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    That
    
    
    Stock
    
    
    Units or
    
    
    or OtherUnexercised
    
    
    Unexercised
    
    
    Unexercised
    
    
    Option
    
    
    
    
    
    
    Have
    
    
    That Have
    
    
    Other Rights
    
    
    Rights ThatOptions
    
    
    Options
    
    
    Unearned
    
    
    Exercise
    
    
    Option
    
    
    Not
    
    
    Not
    
    
    That Have
    
    
    Have NotExercisable
    
    
    Unexercisable
    
    
    Options
    
    
    Price
    
    
    Expiration
    
    
    Vested
    
    
    Vested
    
    
    Not Vested
    
    
    VestedName
    
    (#)
    
    
    (#)
    
    
    (#)
    
    
    ($)
    
    
    Date
    
    
    (#)
    
    
    ($)
    
    
    (#)
    
    
    ($)Hugh E. Sawyer:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,626
    
    
    
    
    
    
    
    
    
    
    
    2.68
    
    
    
    6/18/2011425,374
    
    
    
    
    
    
    
    
    
    
    
    2.68
    
    
    
    6/18/2011100,000
    
    
    
    
    
    
    
    
    
    
    
    3.70
    
    
    
    12/17/2012Robert J. Rutland
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Thomas H. King:13,333
    
    
    
    26,667
    
    
    
    
    
    
    
    3.68
    
    
    
    1/25/2015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Thomas M. Duffy:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    7.06
    
    
    
    11/29/200950,000
    
    
    
    
    
    
    
    
    
    
    
    2.77
    
    
    
    6/1/201110,000
    
    
    
    
    
    
    
    
    
    
    
    2.60
    
    
    
    9/24/201213,333
    
    
    
    6,667
    
    
    
    
    
    
    
    6.65
    
    
    
    2/11/20146,667
    
    
    
    13,333
    
    
    
    
    
    
    
    4.16
    
    
    
    2/16/2015Joseph V. Marinelli:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,667
    
    
    
    13,333
    
    
    
    
    
    
    
    5.50
    
    
    
    5/19/20143,333
    
    
    
    6,667
    
    
    
    
    
    
    
    4.16
    
    
    
    2/16/2015
 56




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##### Table of Contents



(1)
    
    Each option grant has a ten-year term and vests in equal annual installments
commencing one year from the date of grant with full vesting occurring on the second, third or
fifth anniversary of the grant date. Vesting may be accelerated upon the occurrence of certain
events, such as death, disability, retirement or certain changes in control of our company. All
options were granted with an exercise price equal to the closing price of the common stock on the
date of grant. Option Exercises and Stock Vested
  Pension Benefits
 
 Number of
    
    PresentYears
    
    Value of
    
    PaymentsCredited
    
    Accumulated
    
    During LastService
    
    Benefit
    
    Fiscal YearName
    
    Plan Name
    
    (#)
    
    ($)
    
    ($)Hugh E. Sawyer
    
    Allied Defined Benefit
Pension Plan
    
    0.6
    
    10,418
    
    Robert J. Rutland
    
    Allied Defined Benefit
Pension Plan
    
    37.7
    
    944,446
    
    Thomas H. King
    
    Allied Defined Benefit
Pension Plan
    
    0.0
    
    0.0
    
    Thomas M. Duffy
    
    Allied Defined Benefit
Pension Plan
    
    3.6
    
    45,954
    
    Joseph V. Marinelli
    
    Allied Defined Benefit
Pension Plan
    
    0.0
    
    0.0
    
    
 57




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##### Table of Contents



Allied Defined Benefit Pension Plan
  Years of ServiceRemuneration
    
    10
    
    
    15
    
    
    20
    
    
    25
    
    
    30
    
    
    35 or more$100,000
    
    $
    20,000
    
    
    $
    30,000
    
    
    $
    40,000
    
    
    $
    50,000
    
    
    $
    50,000
    
    
    $
    50,000125,000
    
    
    25,000
    
    
    
    37,500
    
    
    
    50,000
    
    
    
    62,500
    
    
    
    62,500
    
    
    
    62,500150,000
    
    
    30,000
    
    
    
    45,000
    
    
    
    60,000
    
    
    
    75,000
    
    
    
    75,000
    
    
    
    75,000175,000
    
    
    34,000
    
    
    
    51,000
    
    
    
    68,000
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    85,000200,000
    
    
    34,000
    
    
    
    51,000
    
    
    
    68,000
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    85,000225,000
    
    
    34,000
    
    
    
    51,000
    
    
    
    68,000
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    85,000250,000
    
    
    34,000
    
    
    
    51,000
    
    
    
    68,000
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    85,000275,000
    
    
    34,000
    
    
    
    51,000
    
    
    
    68,000
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    85,000300,000
    
    
    34,000
    
    
    
    51,000
    
    
    
    68,000
    
    
    
    85,000
    
    
    
    85,000
    
    
    
    85,000
   Nonqualified Deferred Compensation
  Agreements with Named Executive Officers and Directors
 Employment and Severance Agreements
  58




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##### Table of Contents



59




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##### Table of Contents



Split-Dollar Life Insurance Agreements
    Name of Insured
    
    Annual PremiumsBerner F. Wilson, Jr.
    
    $
    62,976Guy W. Rutland III
    
    
    324,638Guy W. Rutland IV
    
    
    13,098Robert J. Rutland
    
    
    257,441
 60




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##### Table of Contents



Long-Term Incentive Plan
   Nonqualified Stock Options
  Restricted Stock Awards
  Incentive Stock Options
  Stock Appreciation Rights
  61




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##### Table of Contents



Compensation Committee Interlocks and Insider Participation in Compensation Decisions
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Number of Securities to be
    
    
    
    
    
    
    Number of SecuritiesIssued Upon Exercise of
    
    
    Weighted-Average
    
    
    Remaining Available for FutureOutstanding Options,
    
    
    Exercise Price of
    
    
    Issuance Under EquityPlan Category
    
    Warrants and Rights
    
    
    Outstanding Options
    
    
    Compensation PlansEquity
compensation plans
approved by
security holders(1)
    
    
    1,550,167
    
    
    $
    3.66
    
    
    
    542,510
    (2)Equity compensation
plans not approved
by security holders.
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,550,167
    
    
    $
    3.66
    
    
    
    542,510
 
 (1)
    
    Consists of our 1993 Long-Term Incentive Plan as adopted in 1993, amended in 2000,
amended and restated in 2001, amended in 2002, and amended and restated in 2004. For a
description of our equity compensation plans, see Note 20 to our consolidated financial
statements included in Item 15 of this Annual Report on Form 10-K.(2)
    
    Includes our Employee Stock Purchase Plan, which has 199,269 shares available for
future issuance. However, in June 2005 the Employee Stock Purchase Plan was amended to
suspend future purchases under the plan. COMMON STOCK OWNERSHIP BY MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
  Number of Shares
    
    
    Percentage of SharesBENEFICIAL OWNER
    
    Beneficially Owned(1)
    
    
    Outstanding(2)Robert J. Rutland(3)
    
    
    1,123,894
    
    
    
    12.5Guy W. Rutland, III(4)
    
    
    850,718
    
    
    
    9.5Guy W. Rutland, IV(5)
    
    
    651,936
    
    
    
    7.3Hugh E. Sawyer(6)
    
    
    620,000
    
    
    
    6.5Berner F. Wilson, Jr.(7)
    
    
    108,743
    
    
    
    1.2Thomas M. Duffy(8)
    
    
    113,197
    
    
    
    1.2David G. Bannister(9)
    
    
    39,334
    
    
    
    *Robert R. Woodson(9)
    
    
    39,334
    
    
    
    *Thomas E. Boland(9)
    
    
    38,334
    
    
    
    *J. Leland Strange(9)
    
    
    35,334
    
    
    
    *Thomas H. King(10)
    
    
    13,333
    
    
    
    *Joseph V. Marinelli(11)
    
    
    30,000
    
    
    
    *All executive officers and directors as
a group(12) (12 persons)
    
    
    3,664,157
    
    
    
    37.0
 
 *
    
    Less than 1% 62




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##### Table of Contents



(1)
    
    Under the rules of the SEC, a person is deemed to be a beneficial owner of any
securities that such person has the right to acquire beneficial ownership of within 60 days as
well as any securities owned by such persons spouse, children or relatives living in the same
household.(2)
    
    Based on 8,980,329 shares outstanding as of May 3, 2007. Shares underlying
outstanding stock options or warrants held by the person indicated and exercisable within 60
days of such date are deemed to be outstanding for purposes of calculating the percentage
owned by such holder.(3)
    
    Includes 18,099 shares owned by his wife as to which he disclaims beneficial
ownership.(4)
    
    Includes 18,099 shares owned by his wife and 67,800 shares owned by a private
foundation as to which he disclaims beneficial ownership.(5)
    
    Includes 647,211 shares held in a limited partnership of which he is the direct
beneficiary.(6)
    
    Includes options to acquire 600,000 shares.(7)
    
    Includes options to acquire 8,334 shares.(8)
    
    Includes 5,245 shares owned by his wife as to which he disclaims beneficial
ownership, and options to acquire 105,000 shares.(9)
    
    Includes options to acquire 33,334 shares for each individual.(10)
    
    Includes options to acquire 13,333 shares.(11)
    
    Includes options to acquire 30,000 shares.(12)
    
    Includes options to acquire 923,337 shares.  Name and Address of
    
    Number of Shares
    
    
    Percentage of SharesBeneficial Owner
    
    Beneficially Owned
    
    
    OutstandingRobert E. Robotti, Robotti & Company,
LLC, Robotti & Company Advisors, LLC and
The Ravenswood Management Company, LLC
and the Ravenswood Investment Company,
L.P.(1)
52 Vanderbilt Avenue, Suite 503
New York, New York 10017
    
    
    594,390
    
    
    
    6.6Nikon Hecht
Aspen Advisors LLC
Sopris Capital Partners, L.P.
Sopris Capital, LLC
Sopris Capital Advisors, LLC(2)
152 West 57th Street
New York, New York 10019
    
    
    889,895
    
    
    
    9.9Armory Master Fund Ltd., Armory Fund LP,
Armory Partners LLC, Armory Offshore Fund
Ltd., Armory Advisors LLC, The Seaport
Group, LLC Profit Sharing Plan, Stephen
C. Smith, Michael Meagher and Jay
Burnham(3)
999 Fifth Avenue, Suite 450
San Rafael, California 94901
    
    
    648,700
    
    
    
    7.2
 
 (1)
    
    According to a Schedule 13G filed on February 15, 2006 on behalf of Robert
E. Robotti, Robotti & Company, LLC and Robotti & Company Advisors LLC, in its role as a broker
dealer and an investment advisor, and The Ravenswood Management Company, LLC and the
Ravenswood Investment Company, L.P., of which Mr. Robotti serves as Managing Member of the
General Partner of such limited partnership. Mr. Robotti possesses shared voting and
investment power as to the securities but does not have sole voting or investment power as to
the securities. 63




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##### Table of Contents



(2)
    
    According to a Schedule 13D/A filed on April 24, 2007 on behalf of Nikos Hecht,
Sopris Capital Partners, L.P., Sopris Capital, LLL, Aspen Advisors, LLL and Sopris Capital
Advisors, LLC, in its role as a broker dealer and an investment advisor, Mr. Hecht is the
managing member and owner of a majority of the membership interests of Sopris Capital, Aspen
Advisors and Sopris Advisors. Each of Sopris Capital, Aspen Advisors and Sopris Advisors, as
investment managers for their respective private clients, has discretionary investment
authority over the common stock held by their respective private clients. Mr. Hecht possesses
shared voting and investment power but does not have sole voting and investment power.(3)
    
    According to a Schedule 13G filed on February 7, 2007 on behalf of Armory Master
Fund Ltd., Armory Fund LP, Armory Partners LLC, Armory Offshore Fund Ltd., Armory Advisors
LLC, in its role as an investment advisor, The Seaport Group, LLC Profit Sharing Plan, Stephen
C. Smith, Michael Meagher and Jay Burnham. Armory Advisors LLC, as investment manager for its
private clients, has discretionary investment authority over the common stock held by its
respective private clients. Mr. Smith and Mr. Meagher possess shared voting and investment
power but do not have sole voting and investment power.  
 Item 13. Certain Relationships, Related Transactions and Director Independence
   
 Item 14. Principal Accountant Fees and Services
  Audit Fees
  Audit-Related Fees
  Tax Fees
  64




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##### Table of Contents



All Other Fees
   65




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
   INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets at December 31, 2006 and 2005
    
    
    F-2Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005, and 2004
    
    
    F-3Consolidated Statements of Changes in Stockholders (Deficit) Equity for the Years Ended December 31, 2006, 2005, and 2004
    
    
    F-4Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005, and 2004
    
    
    F-5Notes to Consolidated Financial Statements
    
    
    F-6
  INDEX TO FINANCIAL STATEMENT SCHEDULES
 PageSchedule II  Valuation and Qualifying Accounts for the Years Ended December 31, 2006, 2005, and 2004
    
    
    S-1
     ExhibitNo.
    
    Description3.1
    
    Amended and Restated Articles of Incorporation of the Company
(incorporated by reference from Exhibit 3.1 to the Registration
Statement on Form S-1 (File Number 33-66620) filed with the Commission
on July 28, 1993, as amended on September 2, 1993 and September 17,
1993 and deemed effective on September 29, 1993).3.2
    
    Amended and Restated Bylaws of the Company (incorporated by reference
from Exhibit 3.2 to the Annual Report on Form 10-K filed with the
Commission on April 16, 2001).4.1
    
    Form of certificate representing shares of the Companys common stock
(incorporated by reference from Exhibit 4.1 to the Registration
Statement on Form S-1 (File Number 33-66620) filed with the Commission
on July 28, 1993, as amended on September 2, 1993 and September 17,
1993 and deemed effective on September 29, 1993).4.2
    
    Indenture by and among the Company, the Guarantors listed therein, and
The First National Bank of Chicago, as Trustee, dated September 30,
1997 (incorporated by reference from Exhibit 4.1 to the Registration
Statement on Form S-4 (File Number 333-37113) filed with the
Commission on October 3, 1997).4.3*
    
    SECURED SUPER-PRIORITY DEBTOR IN POSSESSION AND EXIT CREDIT AND
GUARANTY AGREEMENT, dated as of March 30, 2007, entered into by and
among ALLIED HOLDINGS, INC., a Georgia corporation and a debtor and
debtor in possession under Chapter 11 of the Bankruptcy Code (as
defined) (Holdings), ALLIED SYSTEMS, LTD. (L.P.), a Georgia limited
partnership and a debtor and debtor in possession under Chapter 11 of
the Bankruptcy Code (Systems and, together with Holdings, the
Borrowers), CERTAIN SUBSIDIARIES OF BORROWERS, as Subsidiary
Guarantors, the Lenders party hereto from time to time, GOLDMAN SACHS
CREDIT PARTNERS L.P. (GSCP), as Syndication Agent (in such capacity,
Syndication Agent), and THE CIT GROUP/BUSINESS CREDIT, INC.(CIT),
 66




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##### Table of Contents



ExhibitNo.
    
    Descriptionas Administrative Agent (together with its permitted successors in
such capacity, Administrative Agent) and as Collateral Agent
(together with its permitted successor in such capacity, Collateral
Agent)4.3 (a)*
    
    First Amendment dated April 18, 2008 to the SECURED SUPER-PRIORITY
DEBTOR IN POSSESSION AND EXIT CREDIT AND GUARANTY AGREEMENT, dated as
of March 30, 2007, entered into by and among ALLIED HOLDINGS, INC., a
Georgia corporation and a debtor and debtor in possession under
Chapter 11 of the Bankruptcy Code (as defined) (Holdings), ALLIED
SYSTEMS, LTD. (L.P.), a Georgia limited partnership and a debtor and
debtor in possession under Chapter 11 of the Bankruptcy Code
(Systems and, together with Holdings, the Borrowers), CERTAIN
SUBSIDIARIES OF BORROWERS, as Subsidiary Guarantors, the Lenders party
hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. (GSCP),
as Syndication Agent (in such capacity, Syndication Agent), and THE
CIT GROUP/BUSINESS CREDIT, INC.(CIT), as Administrative Agent
(together with its permitted successors in such capacity,
Administrative Agent) and as Collateral Agent (together with its
permitted successor in such capacity, Collateral Agent).4.4*
    
    LOAN AND SECURITY AGREEMENT AND GUARANTYdated April 5, 2007, by and
among ALLIED SYSTEMS, LTD. (L.P.), a Georgia limited partnership and a
debtor and debtor in possession under Chapter 11 of the Bankruptcy
Code (Borrower) ALLIED HOLDINGS, INC., a Georgia corporation and a
debtor and debtor in possession under Chapter 11 of the Bankruptcy
Code (Holdings), THE OTHER SUBSIDIARIES (AS DEFINED) OF HOLDINGS
PARTY HERETO (such Subsidiaries, together with any future Subsidiaries
of Holdings, the Subsidiary Guaranters,and together with Borrower
and Holdings, collectively, the Loan Parties, and individually, a
Loan Party), and YUCAIPA TRANSPORTATION, LLC, A Delaware limited
liability company (Lender).10.1
    
    Amended and Restated Long Term Incentive Plan of Allied Holdings, Inc.
(incorporated by reference from Exhibit 10.2 to the Annual Report on
Form 10-K for the year ended December 31, 2000, filed with the
Commission on April 16, 2001).10.2
    
    Allied Holdings, Inc. 401(k) Retirement Plan (incorporated by
reference from Exhibit 10 to the Registration Statement on Form S-8
(File Number 33-76108) filed with the Commission on March 4, 1994).10.3
    
    Allied Holdings, Inc. Deferred Compensation Plan (incorporated by
reference from Exhibit 4 to the Registration Statement on Form S-8
(File Number 333-51102) filed with the Commission on December 1,
2000).10.4
    
    Allied Holdings, Inc. Amended and Restated 1999 Employee Stock
Purchase Plan, as amended through June 19, 2003 (incorporated by
reference from Exhibit 10.2 to the Quarterly Report on Form 10-Q filed
with the Commission on August 12, 2003).10.4(a)
    
    First Amendment to Allied Holdings, Inc. Amended and Restated 1999
Employee Stock Purchase Plan (incorporated by reference from Exhibit
10.4(a) to the Current Report on Form 8-K filed with the Commission on
June 22, 2005).10.5£
    
    Allied Holdings, Inc. Amended Severance Pay and Retention and
Emergence Bonus Plan for Key Employees and Summary Plan Description
(incorporated by reference from Exhibit 10.5 to the Annual Report on
Form 10-K filed with the Commission on June 16, 2006).10.6
    
    Intentionally Omitted.10.7
    
    Intentionally Omitted.10.8
    
    Employment Agreement between Allied Holdings, Inc. and Hugh E. Sawyer
(incorporated by reference from Exhibit 10.1 to the Quarterly Report
on Form 10-Q filed with the Commission on August 14, 2001).10.8(a)
    
    First Amendment to Employment Agreement between Allied Holdings, Inc.
and Hugh E. Sawyer (incorporated by reference from Exhibit 10.1 to the
Quarterly Report on Form 10-Q filed with the Commission on May 15,
2002).
 67




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##### Table of Contents



ExhibitNo.
    
    Description10.8(b)
    
    Second Amendment to Employment Agreement between Allied Holdings, Inc.
and Hugh E. Sawyer (incorporated by reference from Exhibit 10.8(b) to
the Quarterly Report on Form 10-Q filed with the Commission on May 17,
2004).10.9
    
    Employment Agreement between Allied Holdings, Inc. and Thomas King
(incorporated by reference from Exhibit 10.21 to the Current Report on
Form 8-K filed with the Commission on January 27, 2005).10.9(a)
    
    First Amendment to Employment Agreement between Allied Holdings, Inc.
and Thomas King (incorporated by reference from Exhibit 10.21(a) to
the Current Report on Form 8-K filed with the Commission on May 27,
2005).10.10
    
    Amended and Restated Employment Agreement between Allied Holdings,
Inc. and Thomas Duffy (incorporated by reference from Exhibit 10.10 to
the Current Report on Form 8-K filed with the Commission on January
27, 2005).10.10(a)
    
    First Amendment to Amended and Restated Employment Agreement between
Allied Holdings, Inc. and Thomas Duffy (incorporated by reference from
Exhibit 10.10(a) to the Current Report on Form 8-K filed with the
Commission on May 27, 2005).10.11
    
    Employment Agreement between Allied Holdings, Inc. and Robert J.
Rutland (incorporated by reference from Exhibit 10.4 to the Quarterly
Report on Form 10-Q filed with the Commission on May 15, 2002).10.11(a)
    
    First Amendment to Employment Agreement between Allied Holdings, Inc.
and Robert J. Rutland (incorporated by reference from Exhibit 10.11(a)
to the Current Report on Form 8-K filed with the Commission on January
27, 2005).10.12
    
    Employment Agreement between Allied Holdings, Inc. and Guy Rutland IV
(incorporated by reference from Exhibit 10.12 to the Annual Report on
Form 10-K filed with the Commission on April 18, 2005).10.13*
    
    Severance Agreement and Full Release dated April 20, 2007 by and
between Hugh E. Sawyer and Allied Holdings, Inc., a Georgia
corporation.10.14
    
    Summary of Financial Terms of Collective Bargaining Agreement with the
International Brotherhood of Teamsters in the United States, effective
June 1, 2003 (incorporated by reference from Exhibit 10.1 to the
Quarterly Report on Form 10-Q filed with the Commission on August 12,
2003).10.15 £
    
    Agreement between Allied Automotive Group, Inc. and UPS Autogistics,
Inc., as amended (incorporated by reference from Exhibit 10.1 to the
Quarterly Report on Form 10-Q filed with the Commission on November
13, 2001).10.15(a) £
    
    Amendment No. 2 to Agreement between Allied Automotive Group, Inc. and
UPS Autogistics, Inc. (incorporated by reference from Exhibit 10.1 to
the Quarterly Report on Form 10-Q filed with the Commission on
November 14, 2002).10.15(b)
    
    Amendment to Agreement between Allied Automotive Group, Inc. and UPS
Autogistics, Inc. (incorporated by reference from Exhibit 10.15(b) to
the Current Report on Form 8-K filed with the Commission on July 18,
2005).10.16 £
    
    Agreement between the Company and DaimlerChrysler Corporation
(incorporated by reference from Exhibit 10.6 to the Annual Report on
Form 10-K filed with the Commission on April 16, 2001).10.16(a) £
    
    Amendment to Agreement between the Company and DaimlerChrysler
Corporation (incorporated by reference from Exhibit 10.12(a) to the
Annual Report on Form 10-K filed with the Commission on March 27,
2003).10.16(b) £
    
    Amendment dated October 29, 2004 to the Agreement between the Company
and DaimlerChrysler
 68




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##### Table of Contents



ExhibitNo.
    
    DescriptionCorporation (incorporated by reference from
Exhibit 10.16(b) to the Current Report on Form 8-K filed with the
Commission on November 3, 2004).10.16(c) £
    
    Amendment dated December 19, 2005 to the Agreement between the Company
and DaimlerChrysler Corporation (incorporated by reference from
Exhibit 10.16(c) to the Annual Report on Form 10-K filed with the
Commission on June 16, 2006).10.17 £
    
    Agreement between the Company and General Motors Corporation
(incorporated by reference from Exhibit 10.17 to the Annual Report on
Form 10-K filed with the Commission on April 13, 2004).10.17(a) £
    
    Amendment to Agreement between the Company and General Motors dated
April 6, 2005 (incorporated by reference from Exhibit 10.19 to the
Current Report on Form 8-K filed with the Commission on April 18,
2005).10.17(b) £
    
    Amendment to Agreement between the Company and General Motors dated
December 8, 2005 (incorporated by reference from Exhibit 10.17(b) to
the Annual Report on Form 10-K filed with the Commission on June 16,
2006).10.18 £
    
    Amendment to Agreement between the Company and American Honda Motor
Company dated January 30, 2006 (incorporated by reference from Exhibit
10.18 to the Annual Report on Form 10-K filed with the Commission on
June 16, 2006).10.19
    
    Intentionally Omitted.10.20
    
    Agreement between the Company and Toyota Motor Sales, U.S.A., Inc.,
dated April 1, 1990 (incorporated by reference from Exhibit 10.20 to
the Annual Report on Form 10-K filed with the Commission on April 18,
2005).10.20(a) £
    
    Amendment to Agreement between the Company and Toyota Motor Sales,
U.S.A., Inc. dated December 20, 2004 (incorporated by reference from
Exhibit 10.20(a) to the Annual Report on Form 10-K filed with the
Commission on April 18, 2005).10.21
    
    Intentionally Omitted.10.22 £
    
    Agreement between the Company and American Honda Motor Co., Inc.,
dated April 1, 2002 (incorporated by reference from Exhibit 10.22 to
the Annual Report on Form 10-K filed with the Commission on April 18,
2005).10.23
    
    IBM Global Services National Agreement between Allied Holdings, Inc.
and International Business Machines Corporation, dated April 1, 2001
(incorporated by reference from Exhibit 10.12 to the Annual Report on
Form 10-K filed with the Commission on March 27, 2002).10.23(a)
    
    Amendment No. 4 to the IBM Global Services National Agreement between
Allied Holdings, Inc. and International Business Machines Corporation,
effective February 1, 2004 (incorporated by reference from Exhibit
10.20(a) to the Annual Report on Form 10-K filed with the Commission
on April 13, 2004).10.24*
    
    Settlement Agreement entered into by and among (a) Allied Holdings,
Inc., and its affiliates that are debtors and debtors in possession
(collectively, the Debtors), (b) Yucaipa American Alliance Fund I,
LP and Yucaipa American Alliance (Parallel) Fund I, LP (collectively,
Yucaipa), (c) the Official Committee of Unsecured Creditors in the
Bankruptcy Cases (the Creditors Committee), (d) Sopris Capital
Advisors, LLC, Aspen Advisors LLC and Armory Advisors LLC
(collectively, the Equity Holders), (e) Andrews & Kurth LLP, (f)
Sonnenschein Nath & Rosenthal LLP, (g) Kilpatrick Stockton LLP and (h)
Jeffries & Company, Inc.21.1*
    
    Subsidiaries of Allied Holdings, Inc.23.1*
    
    Consent of KPMG LLP.24.1*
    
    Powers of Attorney (included within the signature page of this Report).
 69




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##### Table of Contents



ExhibitNo.
    
    Description31.1*
    
    Rule 13a-14(a)/15d-14(a) Certification by Hugh E. Sawyer.31.2*
    
    Rule 13a-14(a)/15d-14(a) Certification by Thomas H. King.32.1*
    
    Section 1350 Certification by Hugh E. Sawyer.32.2*
    
    Section 1350 Certification by Thomas H. King.99.1
    
    Charter of the Audit Committee of the Board of Directors (incorporated
by reference from Exhibit 99.1 to the Annual Report on Form 10-K filed
with the Commission on April 13, 2004).99.2
    
    Charter of the Compensation and Nominating Committee of the Board of
Directors (incorporated by reference from Exhibit 99.2 to the Annual
Report on Form 10-K filed with the Commission on April 13, 2004).99.3
    
    Allied Holdings, Inc. Code of Conduct (incorporated by reference from
Exhibit 99.3 to the Annual Report on Form 10-K filed with the
Commission on April 13, 2004).
 
 *
    
    Filed herewith.£
    
    Confidential treatment has been requested and/or granted with respect to portions of this
exhibit.
    
    Management contract, compensatory plan or arrangement.(c)
    
    Financial Statement Schedules. The list of exhibits required by this item is set forth
above. 70




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##### Table of Contents



SIGNATURES
  ALLIED HOLDINGS, INC.Date:  May 23, 2007
    By:
    /s/ HUGH E. SAWYERHugh E. Sawyer,President and
Chief Executive Officer
(Principal Executive Officer) Date:  May 23, 2007
    By:
    /s/ THOMAS H. KINGThomas H. King,Executive Vice President andChief Financial Officer
(Principal Financial and Accounting Officer) 71




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##### Table of Contents



POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ ROBERT J. RUTLAND

Robert J. Rutland
    
    Chairman and Director
    
    May 23, 2007/s/ GUY W. RUTLAND, III

Guy W. Rutland, III
    
    Chairman Emeritus and Director
    
    May 23, 2007/s/ HUGH E. SAWYER

Hugh E. Sawyer
    
    President, Chief Executive Officer and
Director
    
    May 23, 2007/s/ DAVID G. BANNISTER

David G. Bannister
    
    Director
    
    May 23, 2007/s/ THOMAS E. BOLAND

Thomas E. Boland
    
    Director
    
    May 23, 2007/s/ GUY W. RUTLAND, IV

Guy W. Rutland, IV
    
    Senior Vice President and Director
    
    May 23, 2007/s/ J. LELAND STRANGE

J. Leland Strange
    
    Director
    
    May 23, 2007/s/ BERNER F. WILSON, JR.

Berner F. Wilson, Jr.
    
    Director
    
    May 23, 2007/s/ ROBERT R. WOODSON
    
    Director
    
    May 23, 2007Robert R. Woodson
 72




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Share-Based
Payment Employers
 Accounting for Defined Benefit Pension and Other Postretirement Plans Considering the Effects of Prior-Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements.
 Financial Reporting by Entities in Reorganization Under
the Bankruptcy Code.
 /s/ KPMG LLP 
 F-1




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
(Debtor-in-Possession since July 31, 2005)
CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
(In thousands)
 2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,314
    
    
    $
    4,117Restricted cash, cash equivalents and other time deposits
    
    
    32,436
    
    
    
    32,830Receivables,
net of allowances of $1,701 and $2,218 as of December 31,
2006 and December 31, 2005, respectively
    
    
    52,427
    
    
    
    61,427Inventories
    
    
    4,916
    
    
    
    5,132Deferred income taxes
    
    
    1,907
    
    
    
    128Prepayments and other current assets
    
    
    21,463
    
    
    
    59,434Total current assets
    
    
    115,463
    
    
    
    163,068Property and equipment, net of accumulated depreciation
    
    
    129,231
    
    
    
    123,904Goodwill, net
    
    
    3,545
    
    
    
    3,545Other assets:Restricted cash, cash equivalents and other time deposits
    
    
    65,857
    
    
    
    69,764Other noncurrent assets
    
    
    24,672
    
    
    
    22,835Total other assets
    
    
    90,529
    
    
    
    92,599Total assets
    
    $
    338,768
    
    
    $
    383,116LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities not subject to compromise:Debtor-in-possession credit facility
    
    $
    161,357
    
    
    $
    151,997Accounts and notes payable
    
    
    26,364
    
    
    
    56,960Accrued liabilities
    
    
    74,439
    
    
    
    83,317Deferred income taxes
    
    
    106
    
    
    
    Total current liabilities
    
    
    262,266
    
    
    
    292,274Long-term liabilities not subject to compromise:Postretirement benefits other than pensions
    
    
    14,227
    
    
    
    4,648Deferred income taxes
    
    
    1,926
    
    
    
    143Other long-term liabilities
    
    
    65,269
    
    
    
    74,096Total long-term liabilities
    
    
    81,422
    
    
    
    78,887Liabilities subject to compromise
    
    
    199,212
    
    
    
    199,322Commitments and contingencies
    
    
    
    
    
    
    Stockholders deficit:Preferred stock, no par value. Authorized 5,000 shares; none outstanding
    
    
    
    
    
    
    Common stock, no par value. Authorized 20,000 shares; 8,980 shares
outstanding at December 31, 2006 and December 31, 2005
    
    
    
    
    
    
    Additional paid-in capital
    
    
    49,081
    
    
    
    48,545Treasury stock, 139 shares at cost
    
    
    (707
    )
    
    
    (707
    )Accumulated deficit
    
    
    (228,432
    )
    
    
    (214,631
    )Accumulated other comprehensive loss, net of tax
    
    
    (24,074
    )
    
    
    (20,574
    )Total stockholders deficit
    
    
    (204,132
    )
    
    
    (187,367
    )Total liabilities and stockholders deficit
    
    $
    338,768
    
    
    $
    383,116
  F  - 2




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
(Debtor-in-Possession since July 31, 2005)
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2006, 2005 and 2004
(In thousands, except per share data)
 2006
    
    
    2005
    
    
    2004Revenues
    
    $
    893,837
    
    
    $
    892,934
    
    
    $
    895,213Operating expenses:Salaries, wages and fringe benefits
    
    
    451,018
    
    
    
    482,609
    
    
    
    488,728Operating supplies and expenses
    
    
    183,723
    
    
    
    180,481
    
    
    
    162,266Purchased transportation
    
    
    115,209
    
    
    
    119,431
    
    
    
    111,214Insurance and claims
    
    
    41,651
    
    
    
    42,033
    
    
    
    40,821Operating taxes and licenses
    
    
    28,059
    
    
    
    29,841
    
    
    
    29,804Depreciation and amortization
    
    
    29,430
    
    
    
    29,925
    
    
    
    42,943Rents
    
    
    7,158
    
    
    
    7,500
    
    
    
    8,556Communications and utilities
    
    
    6,252
    
    
    
    6,090
    
    
    
    6,342Other operating expenses
    
    
    7,810
    
    
    
    11,797
    
    
    
    10,124Impairment of goodwill
    
    
    
    
    
    
    79,172
    
    
    
    8,295Gain on disposal of operating assets, net
    
    
    (3,297
    )
    
    
    (869
    )
    
    
    (839
    )Total operating expenses
    
    
    867,013
    
    
    
    988,010
    
    
    
    908,254Operating income (loss)
    
    
    26,824
    
    
    
    (95,076
    )
    
    
    (13,041
    )Other income (expense):Interest expense (excludes contractual interest of $12.9 million
and $5.4 million in 2006 and 2005, respectively)
    
    
    (30,160
    )
    
    
    (39,410
    )
    
    
    (31,355
    )Investment income
    
    
    4,807
    
    
    
    2,813
    
    
    
    1,136Foreign exchange (losses) gains, net
    
    
    (635
    )
    
    
    1,414
    
    
    
    1,929Other, net
    
    
    
    
    
    
    834
    
    
    
    (191
    )Total other income (expense)
    
    
    (25,988
    )
    
    
    (34,349
    )
    
    
    (28,481
    )Income (loss) before reorganization items and income taxes
    
    
    836
    
    
    
    (129,425
    )
    
    
    (41,522
    )Reorganization items
    
    
    (12,772
    )
    
    
    (7,131
    )
    
    
    Loss before income taxes
    
    
    (11,936
    )
    
    
    (136,556
    )
    
    
    (41,522
    )Income tax (expense) benefit
    
    
    (389
    )
    
    
    10,832
    
    
    
    (12,361
    )Net loss
    
    $
    (12,325
    )
    
    $
    (125,724
    )
    
    $
    (53,883
    )Basic and diluted loss per common share:Net loss:Basic and diluted
    
    $
    (1.37
    )
    
    $
    (14.02
    )
    
    $
    (6.15
    )Weighted-average common shares outstanding:Basic and diluted
    
    
    8,980
    
    
    
    8,970
    
    
    
    8,757
  F  - 3




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
(Debtor-in-Possession since July 31, 2005)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS (DEFICIT) EQUITY
Years Ended December 31, 2006, 2005, and 2004
(In thousands)
 AccumulatedComprehensive
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    OtherIncome
    
    
    Common Stock
    
    
    Paid-in
    
    
    Treasury
    
    
    Accumulated
    
    
    Comprehensive(Loss)
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stock
    
    
    Deficit
    
    
    Income (Loss)
    
    
    TotalBalance, December 31, 2003
    
    
    
    
    
    
    8,764
    
    
    $
    
    
    
    $
    47,511
    
    
    $
    (707
    )
    
    $
    (35,024
    )
    
    $
    (2,966
    )
    
    $
    8,814Net loss
    
    $
    (53,883
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,883
    )
    
    
    
    
    
    
    (53,883
    )Other comprehensive income (loss):Foreign currency translation
adjustment, net of income
taxes of $(256)
    
    
    2,941
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,941
    
    
    
    2,941Minimum pension liability,

net of income taxes of $0
    
    
    (331
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (331
    )
    
    
    (331
    )Comprehensive loss
    
    $
    (51,273
    )Issuance of common stock
    
    
    
    
    
    
    196
    
    
    
    
    
    
    
    589
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    589Compensation expense for
restricted stock, net of
forfeitures
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    321
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321Balance, December 31, 2004
    
    
    
    
    
    
    8,919
    
    
    $
    
    
    
    $
    48,421
    
    
    $
    (707
    )
    
    $
    (88,907
    )
    
    $
    (356
    )
    
    $
    (41,549
    )Net loss
    
    $
    (125,724
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125,724
    )
    
    
    
    
    
    
    (125,724
    )Other comprehensive loss:Foreign currency translation
adjustment, net of income
taxes of $256
    
    
    (1,075
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,075
    )
    
    
    (1,075
    )Minimum pension liability,

net of income taxes of $0
    
    
    (19,143
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,143
    )
    
    
    (19,143
    )Comprehensive loss
    
    $
    (145,942
    )Issuance of common stock
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124Balance, December 31, 2005
    
    
    
    
    
    
    8,980
    
    
    $
    
    
    
    $
    48,545
    
    
    $
    (707
    )
    
    $
    (214,631
    )
    
    $
    (20,574
    )
    
    $
    (187,367
    )Cumulative-effect adjustment
resulting from the adoption of

SAB 108, net of income taxes of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,476
    )
    
    
    
    
    
    
    (1,476
    )Net loss
    
    $
    (12,325
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,325
    )
    
    
    
    
    
    
    (12,325
    )Other comprehensive income (loss):Foreign currency translation
adjustment, net of income
taxes of $0
    
    
    (161
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (161
    )
    
    
    (161
    )Adjustment to minimum pension
liability, net of income taxes of $0
    
    
    20,169
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,169
    
    
    
    20,169Comprehensive income
    
    $
    7,683Adjustment to initially apply
Statement of Financial
Accounting Standards No. 158,
net of income taxes of $0
    
    $
    (23,508
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,508
    )
    
    
    (23,508
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    536
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    536Balance, December 31, 2006
    
    
    
    
    
    
    8,980
    
    
    $
    
    
    
    $
    49,081
    
    
    $
    (707
    )
    
    $
    (228,432
    )
    
    $
    (24,074
    )
    
    $
    (204,132
    )
  F  - 4




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
(Debtor-in-Possession since July 31, 2005)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2006, 2005, and 2004
(In thousands)
 2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net loss
    
    $
    (12,325
    )
    
    $
    (125,724
    )
    
    $
    (53,883
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    29,430
    
    
    
    29,925
    
    
    
    42,943Impairment of goodwill
    
    
    
    
    
    
    79,172
    
    
    
    8,295Gain on disposal of operating assets, net
    
    
    (3,297
    )
    
    
    (1,703
    )
    
    
    (839
    )Write-off and amortization of deferred financing costs
    
    
    5,817
    
    
    
    8,631
    
    
    
    2,797Interest expense paid in kind
    
    
    6,351
    
    
    
    
    
    
    
    Foreign exchange losses (gains), net
    
    
    635
    
    
    
    (1,414
    )
    
    
    (1,929
    )Reorganization items
    
    
    12,772
    
    
    
    7,131
    
    
    
    Deferred income taxes
    
    
    110
    
    
    
    (11,261
    )
    
    
    11,275Stock-based compensation expense
    
    
    536
    
    
    
    
    
    
    
    321Change in operating assets and liabilities:Receivables, net of allowances
    
    
    8,979
    
    
    
    (2,712
    )
    
    
    (4,727
    )Inventories
    
    
    216
    
    
    
    (623
    )
    
    
    414Prepayments and other assets
    
    
    33,193
    
    
    
    (31,993
    )
    
    
    (3,299
    )Accounts and notes payable
    
    
    (2,236
    )
    
    
    13,045
    
    
    
    (1,747
    )Accrued liabilities
    
    
    (19,646
    )
    
    
    5,518
    
    
    
    13,860Net cash provided by (used in) operating activities before payment of
reorganization items
    
    
    60,535
    
    
    
    (32,008
    )
    
    
    13,481Reorganization items paid
    
    
    (11,690
    )
    
    
    (2,939
    )
    
    
    Net cash provided by (used in) operating activities
    
    
    48,845
    
    
    
    (34,947
    )
    
    
    13,481Cash flows from investing activities:Purchases of property and equipment
    
    
    (35,846
    )
    
    
    (19,405
    )
    
    
    (22,542
    )Proceeds from sales of property and equipment
    
    
    4,496
    
    
    
    3,253
    
    
    
    3,040Proceeds from sale of equity in subsidiaries
    
    
    
    
    
    
    2,000
    
    
    
    Decrease (increase) in restricted cash, cash equivalents and other time deposits
    
    
    4,301
    
    
    
    (19,714
    )
    
    
    (796
    )Funds deposited with insurance carriers
    
    
    (1,856
    )
    
    
    (9,766
    )
    
    
    (32,072
    )Funds returned from insurance carriers
    
    
    4,512
    
    
    
    5,969
    
    
    
    34,995Net cash used in investing activities
    
    
    (24,393
    )
    
    
    (37,663
    )
    
    
    (17,375
    )Cash flows from financing activities:(Repayment of) addition to debtor-in-possession revolving credit facility, net
    
    
    (6,991
    )
    
    
    51,997
    
    
    
    (Repayments of) additions to pre-petition revolving credit facilities, net
    
    
    
    
    
    
    (2,972
    )
    
    
    2,972Additions to debtor-in-possession term debt
    
    
    10,000
    
    
    
    100,000
    
    
    
    Additions to pre-petition term debt
    
    
    
    
    
    
    25,000
    
    
    
    20,000Repayment of pre-petition term debt
    
    
    
    
    
    
    (123,266
    )
    
    
    (18,234
    )Payment of financing costs
    
    
    (345
    )
    
    
    (8,271
    )
    
    
    (475
    )Proceeds from insurance financing arrangements
    
    
    6,362
    
    
    
    42,401
    
    
    
    31,252Repayments of insurance financing arrangements
    
    
    (34,446
    )
    
    
    (10,827
    )
    
    
    (32,634
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    124
    
    
    
    589Net cash (used in) provided by financing activities
    
    
    (25,420
    )
    
    
    74,186
    
    
    
    3,470Effect of exchange rate changes on cash and cash equivalents
    
    
    (835
    )
    
    
    25
    
    
    
    792Net change in cash and cash equivalents
    
    
    (1,803
    )
    
    
    1,601
    
    
    
    368Cash and cash equivalents at beginning of year
    
    
    4,117
    
    
    
    2,516
    
    
    
    2,148Cash and cash equivalents at end of year
    
    $
    2,314
    
    
    $
    4,117
    
    
    $
    2,516Supplemental cash flow information:Cash paid (refunds received) during the year for:Interest
    
    $
    19,943
    
    
    $
    27,461
    
    
    $
    27,136Income taxes, net
    
    
    313
    
    
    
    (346
    )
    
    
    489Supplemental disclosure of noncash financing activity:Interest paid in kind via addition to term debt
    
    $
    6,351
    
    
    $
    
    
    
    $
    
  F  - 5




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006, 2005, and 2004
 (1) Organization and Operations
 Company Overview
  Chapter 11 Overview
    (2) Summary of Significant Accounting Policies
 (a) Basis of Presentation
 F  - 6




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##### Table of Contents



F  - 7




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
 Financial Reporting by Entities in Reorganization Under the Bankruptcy Code,
  (b) Foreign Currency Translation
  (c) Revenue Recognition and Related Allowances
  (d) Cash, Cash Equivalents and Other Time Deposits
  F  - 8




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  (e) Inventories
  2006
    
    
    2005Parts
    
    $
    3,696
    
    
    $
    3,863Shop supplies
    
    
    331
    
    
    
    345Bulk fuel
    
    
    738
    
    
    
    660Other
    
    
    151
    
    
    
    264$
    4,916
    
    
    $
    5,132
 (f) Tires on Tractors and Trailers
  (g) Property and Equipment
  
    
    4 to 10 years for tractors and trailers;
    
    6 years for costs capitalized as part of the tractor and trailer remanufacturing program;
    
    5 to 30 years for buildings and facilities (including leasehold improvements); and
    
    3 to 10 years for furniture, fixtures, service cars and equipment.
 (h) Impairment of Long-Lived Assets
 Accounting for the
Impairment or Disposal of Long-Lived Assets,
 (i) Financing Costs
  F  - 9




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  (j) Interest in Split-Dollar Life Insurance Policies
   (k) Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets,
  (l) Fair Value of Financial Instruments
 Disclosures About Fair Values of Financial Instruments
 F  - 10




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   
    
    The carrying amount of cash, cash equivalents and other time deposits, including
restricted amounts, approximates fair value due to the relatively short period to maturity
of these instruments.
    
    The carrying amount of the Companys credit facilities approximates fair value based on
the borrowing rates currently available to the Company for borrowings with similar terms
and average maturities. The fair value of the 85/8% senior notes is
based on trade prices of transactions at or prior to the year-end measurement date. The
pricing of such trades may have been impacted by the limited trading of these notes.
  Carrying Amount
    
    
    Estimated Fair Value2006
    
    
    2005
    
    
    2006
    
    
    2005Cash, cash equivalents and other
time deposits (including restricted
amounts)
    
    $
    100,607
    
    
    $
    106,711
    
    
    $
    100,607
    
    
    $
    106,711Debtor-in-possession financing
    
    
    (161,357
    )
    
    
    (151,997
    )
    
    
    (161,357
    )
    
    
    (151,997
    )85/8% senior notes
    
    
    (150,000
    )
    
    
    (150,000
    )
    
    
    (103,500
    )
    
    
    (119,250
    )
 (m) Claims and Insurance Reserves
     F-11




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (n) Stock-Based Compensation
 Share-Based Payment
 Accounting
for Stock Issued to Employees, Accounting for Stock-Based Compensation Accounting
for Stock-Based Compensation  Transition and Disclosure, an amendment of FASB Statement No. 123, .
  2005
    
    
    2004Reported net loss
    
    $
    (125,724
    )
    
    $
    (53,883
    )Plus: stock-based employee compensation included in reported net loss
    
    
    
    
    
    
    321Less: stock-based employee compensation determined under the fair value method
    
    
    (923
    )
    
    
    (1,119
    )Pro forma net loss
    
    $
    (126,647
    )
    
    $
    (54,681
    )Loss per share:As reported:Basic and diluted
    
    $
    (14.02
    )
    
    $
    (6.15
    )Pro forma:Basic and diluted
    
    $
    (14.12
    )
    
    $
    (6.24
    )
   2005
    
    
    2004Dividend yield
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    74
    %
    
    
    72
    %Risk-free interest rate
    
    4.16% and 4.20%
    
    3.56% and 4.39%Expected holding period
    
    7.85 years
    
    7.85 years
 (o) Income Taxes
  F-12




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (p) Pension and Other Benefit Plans
     Employers Accounting for Defined Benefit Pension and Other Postretirement Plans
 an amendment of FASB Statements No. 87, 88, 106 and 132(R),
 (q) Earnings Per Share
 Earnings Per Share,
 
    
    For the years ended December 31, 2006, 2005 and 2004, options to acquire 1,550,167,
1,572,667 and 1,588,667 shares of common stock, respectively; and
    
    For the year ended December 31, 2004, 8,957 shares of unvested restricted stock.
  (r) Commitments and Contingencies
 F-13




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (s) Guarantees and Indemnifications
 Guarantees
  Indemnifications
   (t) Derivatives and Hedging Activities
 Accounting for Derivative Instruments and Hedging Activities,
  (u) Use of Estimates
  F-14




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (v) Other Comprehensive Loss
  2006
    
    
    2005Foreign currency translation adjustment
    
    $
    (156
    )
    
    $
    (317
    )Pension and other postretirement benefit plan adjustments
    
    
    24,230
    
    
    
    20,891Accumulated other comprehensive loss
    
    $
    24,074
    
    
    $
    20,574
   (w) Adoption of SEC Staff Accounting Bulletin No. 108
 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements
in Current Year Financial Statements
  
    
    In 1994, in connection with the acquisition of Auto Haulaway, a Canadian company, the
Company assumed the obligations of a postretirement benefit plan to provide certain retired
employees with healthcare and life insurance benefits. The obligation of $810,000 as of
January 1, 2006, related to this plan had not been reflected in the Companys consolidated
balance sheet.
    
    The Company identified several uncertain tax positions during 2006 that did not meet the
criteria under GAAP for recognition of the benefit. The estimated liability for tax,
interest and penalties of $370,000 as of January 1, 2006 had not been reflected in the
Companys consolidated balance sheet.
    
    A number of proofs of claim were filed against the Debtors by various creditors and
security holders prior to the bar date set by the Bankruptcy Court. As part of the claims
reconciliation process, the Debtors are reviewing these claims for validity. In reconciling
proofs of claims submitted by creditors, the Company identified additional pre-petition
liabilities of $296,000 during 2006 that had not been reflected in liabilities subject to
compromise. As additional proofs of claim are reconciled, the Debtors may need to record
additional liabilities subject to compromise. Such adjustments could have a material
effect on the consolidated financial statements.
 (3) Chapter 11 Proceedings
 Summary of Proceedings
     i)
    
    Payment of the Original DIP Facility and funding of the exit financing, both of which
have been facilitated by the New DIP Facility, subject to certain conditions;ii)
    
    Payment in cash, reinstatement, return of collateral or other treatment of other
secured claims agreed between the holder of each such claim and Yucaipa;iii)
    
    Distribution of new common stock on a pro rata basis to the holders of allowed general
unsecured claims;
 F-15




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 iv)
    
    Cancellation of the existing common stock interests in the Debtors (holders of equity
interests would receive nothing under the Disclosure Statement for the Joint Plan); andv)
    
    Assumption of assumed contracts.
      Credit Facilities
  F-16




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Accounting for Reorganization
  
    
    separated liabilities that are subject to compromise from liabilities that are not
subject to compromise;
    
    distinguished transactions and events that are directly associated with the
reorganization from the ongoing operations of the business; and
    
    ceased accruing interest on the 85/8 % senior notes (Senior
Notes).
 Liabilities Subject to Compromise
     2006
    
    
    2005Accounts payable
    
    $
    25,156
    
    
    $
    24,922Senior Notes
    
    
    150,000
    
    
    
    150,000Accrued interest on Senior Notes
    
    
    4,313
    
    
    
    4,313Multiemployer pension withdrawal liabilities
    
    
    15,847
    
    
    
    15,847Accrued claims and insurance reserves
    
    
    3,000
    
    
    
    3,109Other accrued liabilities
    
    
    896
    
    
    
    1,131$
    199,212
    
    
    $
    199,322
 Reorganization Items
  F-17




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2006
    
    
    2005Legal and professional fees
    
    $
    9,859
    
    
    $
    5,153Write-off of deferred financing costs
    
    
    
    
    
    
    1,442Provision for rejected executory contracts and leases
    
    
    
    
    
    
    220Employee retention plan
    
    
    2,576
    
    
    
    173Other reorganization items
    
    
    337
    
    
    
    143$
    12,772
    
    
    $
    7,131
 Condensed Financial Statement Information of the Debtors and Non-debtors
  Condensed Consolidating Balance Sheet Information
December 31, 2006
(In thousands)
 Debtors
    
    
    Non-Debtors
    
    
    Eliminations
    
    
    ConsolidatedCurrent assets
    
    $
    78,646
    
    
    $
    36,796
    
    
    $
    21
    
    
    $
    115,463Intercompany receivables (payables)
    
    
    16,953
    
    
    
    (16,953
    )
    
    
    
    
    
    
    Property and equipment, net
    
    
    125,236
    
    
    
    3,995
    
    
    
    
    
    
    
    129,231Goodwill, net
    
    
    3,545
    
    
    
    
    
    
    
    
    
    
    
    3,545Investment in subsidiaries
    
    
    18,931
    
    
    
    6,220
    
    
    
    (25,151
    )
    
    
    Other assets
    
    
    24,402
    
    
    
    66,127
    
    
    
    
    
    
    
    90,529Total assets
    
    $
    267,713
    
    
    $
    96,185
    
    
    $
    (25,130
    )
    
    $
    338,768Liabilities not subject to compromise:Current liabilities
    
    $
    237,603
    
    
    $
    26,273
    
    
    $
    (1,610
    )
    
    $
    262,266Other noncurrent liabilities
    
    
    34,092
    
    
    
    47,330
    
    
    
    
    
    
    
    81,422Liabilities subject to compromise
    
    
    199,212
    
    
    
    
    
    
    
    
    
    
    
    199,212Stockholders (deficit) equity
    
    
    (203,194
    )
    
    
    22,582
    
    
    
    (23,520
    )
    
    
    (204,132
    )Total liabilities and stockholders (deficit) equity
    
    $
    267,713
    
    
    $
    96,185
    
    
    $
    (25,130
    )
    
    $
    338,768
 F-18




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Condensed Consolidating Balance Sheet Information
December 31, 2005
(In thousands)
 Debtors
    
    
    Non-Debtors
    
    
    Eliminations
    
    
    ConsolidatedCurrent assets
    
    $
    121,807
    
    
    $
    41,261
    
    
    $
    
    
    
    $
    163,068Intercompany receivables (payables)
    
    
    14,744
    
    
    
    (14,744
    )
    
    
    
    
    
    
    Property and equipment, net
    
    
    120,212
    
    
    
    3,692
    
    
    
    
    
    
    
    123,904Goodwill, net
    
    
    3,545
    
    
    
    
    
    
    
    
    
    
    
    3,545Investment in subsidiaries
    
    
    21,169
    
    
    
    6,223
    
    
    
    (27,392
    )
    
    
    Other assets
    
    
    22,366
    
    
    
    70,233
    
    
    
    
    
    
    
    92,599Total assets
    
    $
    303,843
    
    
    $
    106,665
    
    
    $
    (27,392
    )
    
    $
    383,116Liabilities not subject to compromise:Current liabilities
    
    $
    264,029
    
    
    $
    28,245
    
    
    $
    
    
    
    $
    292,274Other noncurrent liabilities
    
    
    26,920
    
    
    
    51,967
    
    
    
    
    
    
    
    78,887Liabilities subject to compromise
    
    
    199,322
    
    
    
    
    
    
    
    
    
    
    
    199,322Stockholders (deficit) equity
    
    
    (186,428
    )
    
    
    26,453
    
    
    
    (27,392
    )
    
    
    (187,367
    )Total liabilities and stockholders (deficit) equity
    
    $
    303,843
    
    
    $
    106,665
    
    
    $
    (27,392
    )
    
    $
    383,116
 Condensed Consolidating Statement of Operations Information
For the Year Ended December 31, 2006
(In thousands)
 Debtors
    
    
    Non-Debtors
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    889,638
    
    
    $
    5,561
    
    
    $
    (1,362
    )
    
    $
    893,837Operating expenses
    
    
    856,907
    
    
    
    11,468
    
    
    
    (1,362
    )
    
    
    867,013Operating income (loss)
    
    
    32,731
    
    
    
    (5,907
    )
    
    
    
    
    
    
    26,824Other (expense) income, net
    
    
    (32,396
    )
    
    
    4,383
    
    
    
    2,025
    
    
    
    (25,988
    )(Loss) income before reorganization
items and income taxes
    
    
    335
    
    
    
    (1,524
    )
    
    
    2,025
    
    
    
    836Reorganization items
    
    
    (12,772
    )
    
    
    
    
    
    
    
    
    
    
    (12,772
    )Loss before income taxes
    
    
    (12,437
    )
    
    
    (1,524
    )
    
    
    2,025
    
    
    
    (11,936
    )Income tax benefit (expense)
    
    
    112
    
    
    
    (2,132
    )
    
    
    1,631
    
    
    
    (389
    )Net loss
    
    $
    (12,325
    )
    
    $
    (3,656
    )
    
    $
    3,656
    
    
    $
    (12,325
    )
 F-19




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Condensed Consolidating Statement of Operations Information
For the Year Ended December 31, 2005
(In thousands)
 Debtors
    
    
    Non-Debtors
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    889,643
    
    
    $
    41,413
    
    
    $
    (38,122
    )
    
    $
    892,934Operating expenses
    
    
    982,931
    
    
    
    43,201
    
    
    
    (38,122
    )
    
    
    988,010Operating loss
    
    
    (93,288
    )
    
    
    (1,788
    )
    
    
    
    
    
    
    (95,076
    )Other (expense) income, net
    
    
    (37,326
    )
    
    
    9,133
    
    
    
    (6,156
    )
    
    
    (34,349
    )(Loss) income before reorganization
items and income taxes
    
    
    (130,614
    )
    
    
    7,345
    
    
    
    (6,156
    )
    
    
    (129,425
    )Reorganization items
    
    
    (7,131
    )
    
    
    
    
    
    
    
    
    
    
    (7,131
    )(Loss) income before income taxes
    
    
    (137,745
    )
    
    
    7,345
    
    
    
    (6,156
    )
    
    
    (136,556
    )Income tax benefit (expense)
    
    
    12,021
    
    
    
    (1,189
    )
    
    
    
    
    
    
    10,832Net (loss) income
    
    $
    (125,724
    )
    
    $
    6,156
    
    
    $
    (6,156
    )
    
    $
    (125,724
    )
 Condensed Consolidating Statement of Cash Flows Information
For the Year Ended December 31, 2006
(In thousands)
 Debtors
    
    
    Non-Debtors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in):Operating activities
    
    $
    53,397
    
    
    $
    (4,552
    )
    
    $
    
    
    
    $
    48,845Investing activities
    
    
    (27,724
    )
    
    
    3,331
    
    
    
    
    
    
    
    (24,393
    )Financing activities
    
    
    (25,420
    )
    
    
    
    
    
    
    
    
    
    
    (25,420
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    (794
    )
    
    
    (41
    )
    
    
    
    
    
    
    (835
    )Net change in cash and cash equivalents
    
    
    (541
    )
    
    
    (1,262
    )
    
    
    
    
    
    
    (1,803
    )Cash and cash equivalents at beginning of year
    
    
    730
    
    
    
    3,387
    
    
    
    
    
    
    
    4,117Cash and cash equivalents at end of year
    
    $
    189
    
    
    $
    2,125
    
    
    $
    
    
    
    $
    2,314
 Condensed Consolidating Statement of Cash Flows Information
For the Year Ended December 31, 2005
(In thousands)
 Debtors
    
    
    Non-Debtors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by (used in):Operating activities
    
    $
    (56,614
    )
    
    $
    21,667
    
    
    $
    
    
    
    $
    (34,947
    )Investing activities
    
    
    (17,070
    )
    
    
    (20,593
    )
    
    
    
    
    
    
    (37,663
    )Financing activities
    
    
    74,186
    
    
    
    
    
    
    
    
    
    
    
    74,186Effect of exchange rate changes on cash and
cash equivalents
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    25Net change in cash and cash equivalents
    
    
    527
    
    
    
    1,074
    
    
    
    
    
    
    
    1,601Cash and cash equivalents at beginning of year
    
    
    203
    
    
    
    2,313
    
    
    
    
    
    
    
    2,516Cash and cash equivalents at end of year
    
    $
    730
    
    
    $
    3,387
    
    
    $
    
    
    
    $
    4,117
 (4) Recent Accounting Pronouncements
 F-20




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes,
 Accounting for Purchases of Life Insurance  Determining the
Amount that Could be Realized in Accordance with FASB Technical Bulletin No 85-4, Accounting for
Purchases of Life Insurance
 Fair Value Measurements
 F-21




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Disclosures about Fair Value of Financial
Instruments,
 an amendment of FASB Staff
Position FAS 123(R)-1 Technical Corrections of FASB Statement
No. 123(R).
 The Fair Value Option For Financial Assets and
Financial Liabilities, including an Amendment of SFAS No. 115
 (5) Restricted Investments and Investment Income
  2004Cash proceeds
    
    $
    157,950Gross realized gains.
    
    
    120Gross realized losses
    
    
    (299
    )
  2006
    
    
    2005
    
    
    2004Interest and dividend income
    
    $
    4,807
    
    
    $
    2,813
    
    
    $
    1,315Realized losses
    
    
    
    
    
    
    
    
    
    
    (179
    )$
    4,807
    
    
    $
    2,813
    
    
    $
    1,136
 (6) Prepayments and Other Current Assets
  F-22




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2006
    
    
    2005Prepaid insurance
    
    $
    14,689
    
    
    $
    50,185Tires on tractors and trailers
    
    
    2,360
    
    
    
    2,245Prepaid licenses
    
    
    1,285
    
    
    
    1,532Short-term deposits with Pre-petition lenders
    
    
    11
    
    
    
    2,679Prepaid taxes
    
    
    1,065
    
    
    
    1,163Other
    
    
    2,053
    
    
    
    1,630$
    21,463
    
    
    $
    59,434
  (7) Property and Equipment
  2006
    
    
    2005Tractors and trailers
    
    $
    423,899
    
    
    $
    424,057Buildings and facilities (including leasehold improvements)
    
    
    45,360
    
    
    
    45,191Furniture, fixtures and equipment
    
    
    44,286
    
    
    
    44,066Land
    
    
    9,786
    
    
    
    10,415Service cars and equipment
    
    
    4,513
    
    
    
    4,477527,844
    
    
    
    528,206Less accumulated depreciation
    
    
    (398,613
    )
    
    
    (404,302
    )$
    129,231
    
    
    $
    123,904
      F-23




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (8) Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets
      AlliedAutomotiveGroup
    
    
    Axis Group
    
    
    TotalBalance as of December 31, 2004
    
    $
    80,041
    
    
    $
    3,936
    
    
    $
    83,977Impairment of goodwill
    
    
    (79,172
    )
    
    
    
    
    
    
    (79,172
    )Change in carrying amount due to a change in currency rates
    
    
    (869
    )
    
    
    3
    
    
    
    (866
    )
 F-24




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Disposal of reporting unit component
    
    
    
    
    
    
    (394
    )
    
    
    (394
    )Balance as of December 31, 2005
    
    $
    
    
    
    $
    3,545
    
    
    $
    3,545
   2006
    
    
    2005Gross carrying amount
    
    $
    1,333
    
    
    $
    1,504Accumulated amortization
    
    
    (1,067
    )
    
    
    (1,040
    )Unamortized balances
    
    $
    266
    
    
    $
    464
  (9) Other Noncurrent Assets
  2006
    
    
    2005Deposits with insurance companies
    
    $
    10,547
    
    
    $
    5,100Interest in split-dollar life insurance policies.
    
    
    5,973
    
    
    
    6,181Other deposits
    
    
    2,336
    
    
    
    2,503Tires on tractors and trailers
    
    
    2,950
    
    
    
    2,619Overfunded pension plans
    
    
    2,473
    
    
    
    Deferred financing costs
    
    
    124
    
    
    
    5,595Other
    
    
    269
    
    
    
    837$
    24,672
    
    
    $
    22,835
  2006
    
    
    2005Cost
    
    $
    345
    
    
    $
    7,646Accumulated amortization
    
    
    (221
    )
    
    
    (2,051
    )Net
    
    $
    124
    
    
    $
    5,595
    (10) Equity in Joint Ventures and Other Income (Expenses)
  F-25




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (11) Accounts and Notes Payable and Accrued Liabilities
   2006
    
    
    2005Wages and benefits
    
    $
    27,272
    
    
    $
    30,748Claims and insurance reserves
    
    
    38,786
    
    
    
    39,602Accrued interest
    
    
    738
    
    
    
    3,761Accrued taxes
    
    
    3,797
    
    
    
    4,017Purchased transportation
    
    
    2,723
    
    
    
    3,563Other
    
    
    1,123
    
    
    
    1,626$
    74,439
    
    
    $
    83,317
  2006
    
    
    2005
    
    
    2004Beginning balance
    
    $
    459
    
    
    $
    434
    
    
    $
    808Additions to reserve charged to salaries, wages, and fringe benefits
    
    
    74
    
    
    
    1,116
    
    
    
    1,670Cash payments
    
    
    (173
    )
    
    
    (1,091
    )
    
    
    (2,044
    )Ending balance
    
    $
    360
    
    
    $
    459
    
    
    $
    434
  (12) Claims and Insurance Reserves
   
    
    The first layer includes the first $1 million of every claim. The Company retains
liability for this layer, with no aggregate limit.
 F-26




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 
    
    The second layer includes the amount by which individual claims exceed $1 million up to
$5 million per occurrence. For this second layer, the Company retains liability up to an
aggregate deductible of $7 million. Aggregate claim amounts in the second layer in excess
of $7 million are covered by excess insurance.
    
    The third layer includes the amount by which individual claims exceed $5 million per
occurrence. Individual claim amounts greater than $5 million are covered by excess
insurance to a limit of $150 million per occurrence.
  
    
    The first layer includes the first CDN $500,000 of every claim. The Company retains
liability for this layer, with no aggregate limit.
    
    The second layer includes the amount by which individual claims exceed CDN $500,000 up
to CDN $1 million, per occurrence. For this second layer, the Company retains liability up
to an aggregate deductible of CDN $500,000. Aggregate claim amounts in the second layer in
excess of CDN 500,000 are covered by excess insurance.
    
    The third layer includes the amount by which individual claims exceed CDN $1 million,
per occurrence. Individual claim amounts that are greater than CDN $1 million are covered
by excess insurance to a limit of $150 million per occurrence.
       F-27




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   2006
    
    
    2005Accrued liabilities  current
    
    $
    38,786
    
    
    $
    39,602Other long-term liabilities  noncurrent
    
    
    64,307
    
    
    
    70,040103,093
    
    
    
    109,642Liabilities subject to compromise
    
    
    3,000
    
    
    
    3,109Total liability included in the consolidated balance sheets
    
    $
    106,093
    
    
    $
    112,751
  2007
    
    $
    38,7862008
    
    
    17,2132009
    
    
    10,8452010
    
    
    7,3722011
    
    
    5,1192012 and thereafter
    
    
    23,758$
    103,093
   (13) Lease Commitments
      F-28




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 SubleaseCommitments
    
    
    Income2007
    
    $
    10,043
    
    
    $
    4652008
    
    
    4,408
    
    
    
    2009
    
    
    2,845
    
    
    
    2010
    
    
    807
    
    
    
    2011
    
    
    338
    
    
    
    Thereafter
    
    
    526
    
    
    
    Total
    
    $
    18,967
    
    
    $
    465
  (14) Debt
  2006
    
    
    2005Current liabilities not subject to compromise:Original DIP Revolver
    
    $
    45,005
    
    
    $
    51,997Original DIP Facility  Term Loan A
    
    
    20,000
    
    
    
    20,000Original DIP Facility  Term Loan B
    
    
    85,709
    
    
    
    80,000Original DIP Facility  Term Loan C
    
    
    10,643
    
    
    
    $
    161,357
    
    
    $
    151,997Liabilities subject to compromise:Senior Notes
    
    $
    150,000
    
    
    $
    150,000
 Credit Facilities
 The Wall Street Journal
  F-29




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   1 2
   F-30




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Canadian Revolving Credit Facility
  Rig Financing
  Pre-petition Facility
   F-31




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Senior Notes
   
    
    Haul Insurance Ltd. ;
    
    Arrendadora de Equipo Para el Transporte de Automoviles, S. de R.L. de C.V. ;
    
    Axis Logistica, S. de R.L. de C.V. ;
    
    Axis Operadora Hermosillo;
    
    Ace Operations, LLC.
    (15) Other Long-Term Liabilities
  2006
    
    
    2005Claims and insurance reserves
    
    $
    64,307
    
    
    $
    70,040Other
    
    
    962
    
    
    
    4,056$
    65,269
    
    
    $
    74,096
 (16) Employee Benefits
 (a) Pension and Postretirement Benefit Plans
  F-32




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Employers Accounting for Pensions ,
 .
 F-33




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Before
    
    
    
    
    
    
    AfterApplication of
    
    
    SFAS No. 158
    
    
    Application ofSFAS No. 158
    
    
    Adjustments
    
    
    SFAS No. 158Other noncurrent assets
    
    $
    40,349
    
    
    $
    (15,677
    )
    
    $
    24,672Total other assets
    
    
    106,206
    
    
    
    (15,677
    )
    
    
    90,529Postretirement benefits other than pensions
    
    
    6,396
    
    
    
    7,831
    
    
    
    14,227Total long-term liabilities
    
    
    73,591
    
    
    
    7,831
    
    
    
    81,422Accumulated other comprehensive loss, net of tax
    
    
    566
    
    
    
    23,508
    
    
    
    24,074Total stockholders deficit
    
    
    180,624
    
    
    
    23,508
    
    
    
    204,132
  Defined Benefit
    
    
    PostretirementPension Plans
    
    
    Benefit Plans
    
    
    TotalNet actuarial losses
    
    $
    16,273
    
    
    $
    12,257
    
    
    $
    28,530Net prior service cost (credits)
    
    
    39
    
    
    
    (3,459
    )
    
    
    (3,420
    )$
    16,312
    
    
    $
    8,798
    
    
    $
    25,110
  Defined Benefit
    
    
    PostretirementPension Plans
    
    
    Benefit Plans
    
    
    TotalAmortization of net actuarial losses
    
    $
    1,299
    
    
    $
    898
    
    
    $
    2,197Amortization of net prior service cost (credits)
    
    
    48
    
    
    
    (304
    )
    
    
    (256
    )$
    1,347
    
    
    $
    594
    
    
    $
    1,941
  Defined Pension Plans Benefit
    
    

Postretirement Benefit Plans2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Benefit obligation at beginning of year
    
    $
    54,884
    
    
    $
    52,942
    
    
    $
    43,647
    
    
    $
    12,503
    
    
    $
    15,874
    
    
    $
    8,610Service cost
    
    
    92
    
    
    
    84
    
    
    
    94
    
    
    
    56
    
    
    
    52
    
    
    
    58Interest cost
    
    
    3,049
    
    
    
    3,014
    
    
    
    2,674
    
    
    
    658
    
    
    
    708
    
    
    
    396Plan amendments and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    810
    
    
    
    
    
    
    
    (3,807
    )Actuarial loss (gain)
    
    
    114
    
    
    
    2,086
    
    
    
    9,216
    
    
    
    2,691
    
    
    
    (2,720
    )
    
    
    11,920Benefits paid
    
    
    (3,007
    )
    
    
    (3,242
    )
    
    
    (2,689
    )
    
    
    (1,154
    )
    
    
    (1,411
    )
    
    
    (1,303
    )Benefit obligation at end of year
    
    $
    55,132
    
    
    $
    54,884
    
    
    $
    52,942
    
    
    $
    15,564
    
    
    $
    12,503
    
    
    $
    15,874
 F-34




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Defined Benefit
    
    
    Postretirement BenefitPension Plans
    
    
    Plans2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    51,761
    
    
    $
    50,924
    
    
    $
    44,836
    
    
    $
    
    
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    7,603
    
    
    
    3,462
    
    
    
    4,324
    
    
    
    
    
    
    
    
    
    
    
    Employer contributions
    
    
    350
    
    
    
    617
    
    
    
    4,453
    
    
    
    1,236
    
    
    
    1,411
    
    
    
    1,303Benefits paid
    
    
    (3,007
    )
    
    
    (3,242
    )
    
    
    (2,689
    )
    
    
    (1,236
    )
    
    
    (1,411
    )
    
    
    (1,303
    )Fair value of plan assets at end of year
    
    $
    56,707
    
    
    $
    51,761
    
    
    $
    50,924
    
    
    $
    
    
    
    $
    
    
    
    $
    Reconciliation of funded status:Funded status excess (deficiency)
    
    $
    1,575
    
    
    $
    (3,123
    )
    
    $
    (2,018
    )
    
    $
    (15,564
    )
    
    $
    (12,503
    )
    
    $
    (15,874
    )Unrecognized actuarial loss
    
    
    
    
    
    
    21,804
    
    
    
    20,797
    
    
    
    
    
    
    
    10,240
    
    
    
    13,603Unrecognized prior service cost (credits)
    
    
    
    
    
    
    87
    
    
    
    135
    
    
    
    
    
    
    
    (3,785
    )
    
    
    (4,111
    )Additional minimum liability
    
    
    
    
    
    
    (22,145
    )
    
    
    (3,112
    )
    
    
    
    
    
    
    
    
    
    
    Net asset (liability) recognized
    
    $
    1,575
    
    
    $
    (3,377
    )
    
    $
    15,802
    
    
    $
    (15,564
    )
    
    $
    (6,048
    )
    
    $
    (6,382
    )Amounts recognized in the consolidated balance
sheets consist of:Noncurrent assets
    
    $
    2,473
    
    
    $
    
    
    
    $
    18,114
    
    
    $
    
    
    
    $
    
    
    
    $
    Current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,337
    )
    
    
    (1,400
    )
    
    
    (1,300
    )Long-term liabilities
    
    
    (898
    )
    
    
    (3,377
    )
    
    
    (2,312
    )
    
    
    (14,227
    )
    
    
    (4,648
    )
    
    
    (5,082
    )$
    1,575
    
    
    $
    (3,377
    )
    
    $
    15,802
    
    
    $
    (15,564
    )
    
    $
    (6,048
    )
    
    $
    (6,382
    )
  Defined Benefit
    
    
    PostretirementPension Plans
    
    
    Benefit Plans2007
    
    $
    2,572
    
    
    $
    1,3372008
    
    
    2,660
    
    
    
    1,3102009
    
    
    2,741
    
    
    
    1,2312010
    
    
    2,927
    
    
    
    1,1682011
    
    
    3,120
    
    
    
    1,1542012-2016
    
    
    17,799
    
    
    
    5,350
   F-35




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Defined Benefit
    
    
    PostretirementPension Plans
    
    
    Benefit Plans2006
    
    
    2005
    
    
    2006
    
    
    2005Weighted-average discount rate
    
    
    5.75
    %
    
    
    5.50
    %
    
    
    5.75
    %
    
    
    5.50
    %Weighted-average rate of compensation increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
   Defined Benefit
    
    
    PostretirementPension Plans
    
    
    Benefit Plans2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Weighted-average discount rate
    
    
    5.50
    %
    
    
    5.75
    %
    
    6.25% and 6.00%
    
    
    5.50
    %
    
    
    5.75
    %
    
    
    6.25
    %Weighted-average expected
long-term rate of return on assets.
    
    
    8.00
    %
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AWeighted-average rate of
compensation increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
   Defined Benefit
    
    
    Postretirement BenefitPension Plans
    
    
    Plans2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Components of net periodic benefit cost:Service cost
    
    $
    92
    
    
    $
    84
    
    
    $
    94
    
    
    $
    56
    
    
    $
    52
    
    
    $
    58Interest cost
    
    
    3,049
    
    
    
    3,014
    
    
    
    2,674
    
    
    
    703
    
    
    
    708
    
    
    
    395Expected return on plan assets
    
    
    (4,056
    )
    
    
    (4,250
    )
    
    
    (3,719
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of unrecognized net actuarial loss
    
    
    2,095
    
    
    
    1,866
    
    
    
    1,070
    
    
    
    674
    
    
    
    643
    
    
    
    256Amortization of prior service cost (credits)
    
    
    48
    
    
    
    48
    
    
    
    48
    
    
    
    (326
    )
    
    
    (326
    )
    
    
    (326
    )Net periodic benefit cost
    
    $
    1,228
    
    
    $
    762
    
    
    $
    167
    
    
    $
    1,107
    
    
    $
    1,077
    
    
    $
    383
 F-36




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  1% Increase
    
    
    1% DecreaseAccumulated postretirement benefit obligation
    
    $
    1,683
    
    
    $
    (1,302
    )Total of service and interest cost
    
    
    108
    
    
    
    (84
    )
  Target
    
    
    ActualAllocations
    
    
    AllocationsAsset Category
    
    2006
    
    
    2006
    
    
    2005Cash
    
    
    0
    %
    
    
    0.9
    %
    
    
    0.7
    %Fixed income
    
    
    30
    
    
    
    28.8
    
    
    
    29.4Core equity
    
    
    35
    
    
    
    35.8
    
    
    
    41.0Real estate investment trust
    
    
    10
    
    
    
    9.9
    
    
    
    4.6Small cap
    
    
    15
    
    
    
    14.6
    
    
    
    14.2International equity
    
    
    10
    
    
    
    10.0
    
    
    
    10.1Total
    
    
    100
    %
    
    
    100.0
    %
    
    
    100.0
    %
      F-37




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (b) 401(k) Plan
  (c) Employee Stock Purchase Plan
  (d) Long-term Incentive Plan
    (17) Income Taxes
  F-38




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2006
    
    
    2005
    
    
    2004U.S.
    
    $
    (9,708
    )
    
    $
    (89,842
    )
    
    $
    (16,188
    )Foreign
    
    
    (2,228
    )
    
    
    (46,714
    )
    
    
    (25,334
    )Total loss before income taxes
    
    $
    (11,936
    )
    
    $
    (136,556
    )
    
    $
    (41,522
    )
  2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    (195
    )
    
    
    372
    
    
    
    (29
    )Foreign
    
    
    474
    
    
    
    58
    
    
    
    1,115Deferred:Federal
    
    
    4
    
    
    
    (10,203
    )
    
    
    10,216State
    
    
    
    
    
    
    (1,059
    )
    
    
    1,059Foreign
    
    
    106
    
    
    
    
    
    
    
    Total income tax expense (benefit)
    
    $
    389
    
    
    $
    (10,832
    )
    
    $
    12,361
  2006
    
    
    2005
    
    
    2004Benefit computed at the federal statutory rate
    
    $
    (4,178
    )
    
    $
    (47,795
    )
    
    $
    (14,533
    )Effects of:State income taxes, net of federal income tax effects
    
    
    (864
    )
    
    
    (3,081
    )
    
    
    (1,072
    )Impairment of goodwill  tax basis differential
    
    
    
    
    
    
    14,460
    
    
    
    962Nondeductible expenses
    
    
    4,518
    
    
    
    2,385
    
    
    
    209Valuation allowance
    
    
    845
    
    
    
    23,690
    
    
    
    26,401Other, net
    
    
    68
    
    
    
    (491
    )
    
    
    394Total income tax expense (benefit)
    
    $
    389
    
    
    $
    (10,832
    )
    
    $
    12,361
  2006
    
    
    2005Deferred tax assets:Tax carryforwards
    
    $
    42,023
    
    
    $
    43,303Claims and insurance expense
    
    
    38,139
    
    
    
    39,770Accrued compensation expense
    
    
    3,609
    
    
    
    2,129Postretirement benefits
    
    
    6,014
    
    
    
    2,286Pension liabilities
    
    
    6,763
    
    
    
    8,057Other liabilities not currently deductible
    
    
    881
    
    
    
    1,152Bad debt allowances
    
    
    547
    
    
    
    746Other, net
    
    
    2,517
    
    
    
    2,553Total deferred tax assets
    
    
    100,493
    
    
    
    99,996Valuation allowance
    
    
    (76,015
    )
    
    
    (73,436
    )Deferred tax liabilities:Depreciation and amortization
    
    
    (18,325
    )
    
    
    (19,378
    )Assets currently deductible
    
    
    (5,946
    )
    
    
    (6,955
    )Other, net
    
    
    (332
    )
    
    
    (242
    )Total deferred tax liabilities
    
    
    (24,603
    )
    
    
    (26,575
    )Net deferred tax liabilities
    
    $
    (125
    )
    
    $
    (15
    )
   F-39




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      (18) Commitments and Contingencie s
 (a) Effect of Chapter 11 Filings
   F-40




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (b) Customer Contracts
   (c) Letters of Credit
  (d) Litigation, Claims, and Assessments
   F-41




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  (e) Employment Agreements
  (f) Purchase and Service Contract Commitments
  2007
    
    $
    10,6582008
    
    
    10,6892009
    
    
    10,8492010
    
    
    10,9172011
    
    
    11,0672012  2014
    
    
    23,619$
    77,799
  (g) Collective Bargaining Agreements
   F-42




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  
    
    Total U.S. wage concessions of 15%, limited to $35 million per year during the
three-year duration of the agreement;
    
    The elimination of future Teamster wage increases;
    
    A wage freeze relating to the salaries of management and nonbargaining employees during
the three-year duration of the agreement (with a few exceptions); and
    
    Entitlement of the U.S. Teamsters to a portion of earnings before interest, taxes,
depreciation and amortization (EBITDA) in excess of the EBITDA projections included in
the Disclosure Statement for the Joint Plan.
    (19) Industry Segment and Geographic Information
 Disclosure About Segments of an Enterprise and
Related Information,
  F-43




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Revenues  unaffiliated customers:Allied Automotive Group
    
    $
    864,576
    
    
    $
    865,427
    
    
    $
    869,507Axis Group
    
    
    29,261
    
    
    
    27,507
    
    
    
    25,706Total
    
    $
    893,837
    
    
    $
    892,934
    
    
    $
    895,213Depreciation and amortization:Allied Automotive Group
    
    $
    27,225
    
    
    $
    27,160
    
    
    $
    38,596Axis Group
    
    
    1,397
    
    
    
    1,609
    
    
    
    1,938Corporate/other
    
    
    808
    
    
    
    1,156
    
    
    
    2,409Total
    
    $
    29,430
    
    
    $
    29,925
    
    
    $
    42,943Operating income (loss):Allied Automotive Group
    
    $
    29,267
    
    
    $
    (93,417
    )
    
    $
    2,249Axis Group
    
    
    7,153
    
    
    
    4,306
    
    
    
    (5,410
    )Corporate/other
    
    
    (9,596
    )
    
    
    (5,965
    )
    
    
    (9,880
    )Total
    
    
    26,824
    
    
    
    (95,076
    )
    
    
    (13,041
    )Reconciling items:Interest expense
    
    
    (30,160
    )
    
    
    (39,410
    )
    
    
    (31,355
    )Investment income
    
    
    4,807
    
    
    
    2,813
    
    
    
    1,136Foreign exchange (losses) gains, net
    
    
    (635
    )
    
    
    1,414
    
    
    
    1,929Other, net
    
    
    
    
    
    
    834
    
    
    
    (191
    )Loss before reorganization items and income taxes
    
    
    836
    
    
    
    (129,425
    )
    
    
    (41,522
    )Reorganization items
    
    
    (12,772
    )
    
    
    (7,131
    )
    
    
    Loss before income taxes
    
    $
    (11,936
    )
    
    $
    (136,556
    )
    
    $
    (41,522
    )
 December 31,2006
    
    
    2005
    
    
    2004Total assets:Allied Automotive Group
    
    $
    201,040
    
    
    $
    233,394
    
    
    $
    274,228Axis Group
    
    
    23,532
    
    
    
    22,141
    
    
    
    19,690Corporate/other
    
    
    114,196
    
    
    
    127,581
    
    
    
    127,614Total
    
    $
    338,768
    
    
    $
    383,116
    
    
    $
    421,532Capital expenditures:Allied Automotive Group
    
    $
    34,572
    
    
    $
    17,789
    
    
    $
    21,309Axis Group
    
    
    1,109
    
    
    
    1,505
    
    
    
    1,097Corporate/other
    
    
    165
    
    
    
    111
    
    
    
    136Total
    
    $
    35,846
    
    
    $
    19,405
    
    
    $
    22,542
    F-44




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Revenues:United States
    
    $
    691,332
    
    
    $
    716,469
    
    
    $
    731,228Canada
    
    
    198,307
    
    
    
    173,174
    
    
    
    160,966Other foreign operations
    
    
    4,198
    
    
    
    3,291
    
    
    
    3,019Total
    
    $
    893,837
    
    
    $
    892,934
    
    
    $
    895,213
 December 31,2006
    
    
    2005
    
    
    2004Long-lived assets:United States
    
    $
    93,805
    
    
    $
    86,531
    
    
    $
    94,395Canada
    
    
    31,431
    
    
    
    33,681
    
    
    
    38,014Other foreign operations
    
    
    3,995
    
    
    
    3,692
    
    
    
    3,226Total
    
    $
    129,231
    
    
    $
    123,904
    
    
    $
    135,635
   Years Ended December 31,2006
    
    
    2005
    
    
    2004Revenues earned from Allied Automotive Groups four largest customers:General Motors Corporation
    
    
    36
    %
    
    
    34
    %
    
    
    35
    %Ford Motor Company
    
    
    22
    %
    
    
    23
    %
    
    
    24
    %DaimlerChrysler Corporation
    
    
    14
    %
    
    
    14
    %
    
    
    14
    %Toyota
    
    
    8
    %
    
    
    11
    %
    
    
    9
    %80
    %
    
    
    82
    %
    
    
    82
    %
 December 31,2006
    
    
    2005Accounts receivable due from Allied Automotive Groups four largest customers:General Motors Corporation
    
    
    28
    %
    
    
    29
    %Ford Motor Company
    
    
    28
    %
    
    
    22
    %DaimlerChrysler Corporation
    
    
    13
    %
    
    
    15
    %Toyota
    
    
    8
    %
    
    
    11
    %77
    %
    
    
    77
    %
   (20) Stockholders Equity
 F-45




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
         F  - 46




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
   Weighted-Weighted-
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    Contractual Life
    
    
    ValueOutstanding as of December 31, 2005
    
    
    1,572,667
    
    
    $
    3.67Granted
    
    
    
    
    
    
    Forfeited or expired
    
    
    (22,500
    )
    
    $
    4.47Exercised
    
    
    
    
    
    
    Outstanding as of December 31, 2006
    
    
    1,550,167
    
    
    $
    3.66
    
    
    5.51 years
    
    
    Exercisable at year-end
    
    
    1,367,835
    
    
    $
    3.53
    
    
    5.19 years
    
    
    Vested and expected to vest at December 31, 2006
    
    
    1,527,167
    
    
    $
    3.65
    
    
    5.47 years
    
    
    
    (21) Quarterly Financial Data (Unaudited)
 2006First
    
    
    Second
    
    
    Third
    
    
    Fourth(In thousands, except per share amounts)Revenues
    
    $
    240,828
    
    
    $
    245,382
    
    
    $
    202,151
    
    
    $
    205,476Operating income (loss)
    
    
    4,097
    
    
    
    17,613
    
    
    
    (966
    )
    
    
    6,080Net (loss) income
    
    
    (8,288
    )
    
    
    6,285
    
    
    
    (7,198
    )
    
    
    (3,124
    )Net (loss) income per share:Basic and diluted
    
    $
    (0.92
    )
    
    $
    0.70
    
    
    $
    (0.80
    )
    
    $
    (0.35
    )Average shares outstanding:Basic and diluted
    
    
    8,980
    
    
    
    8,980
    
    
    
    8,980
    
    
    
    8,980
 2005First
    
    
    Second
    
    
    Third
    
    
    Fourth(In thousands, except per share amounts)Revenues
    
    $
    220,950
    
    
    $
    232,554
    
    
    $
    203,090
    
    
    $
    236,340Operating loss
    
    
    (1,881
    )
    
    
    (72,088
    )
    
    
    (5,197
    )
    
    
    (15,910
    )Net loss
    
    
    (10,058
    )
    
    
    (75,050
    )
    
    
    (15,996
    )
    
    
    (24,620
    )Net loss per share:Basic and diluted
    
    $
    (1.13
    )
    
    $
    (8.36
    )
    
    $
    (1.78
    )
    
    $
    (2.74
    )Average shares outstanding:Basic and diluted
    
    
    8,940
    
    
    
    8,980
    
    
    
    8,980
    
    
    
    8,980
 F  - 47




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
    (22) Supplemental Guarantor Information
   F  - 48




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  SUPPLEMENTAL CONSOLIDATING BALANCE SHEET INFORMATION
December 31, 2006
(In thousands)
 Allied
    
    
    Guarantor
    
    
    NonguarantorHoldings
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    189
    
    
    $
    2,125
    
    
    $
    
    
    
    $
    2,314Restricted cash, cash equivalents and other time deposits
    
    
    
    
    
    
    
    
    
    
    32,436
    
    
    
    
    
    
    
    32,436Receivables, net of allowances
    
    
    
    
    
    
    51,035
    
    
    
    1,392
    
    
    
    
    
    
    
    52,427Inventories
    
    
    
    
    
    
    4,916
    
    
    
    
    
    
    
    
    
    
    
    4,916Deferred income taxes
    
    
    1,907
    
    
    
    
    
    
    
    (21
    )
    
    
    21
    
    
    
    1,907Prepayments and other
current assets
    
    
    867
    
    
    
    19,731
    
    
    
    865
    
    
    
    
    
    
    
    21,463Total current assets
    
    
    2,774
    
    
    
    75,871
    
    
    
    36,797
    
    
    
    21
    
    
    
    115,463Property and equipment, net of accumulated depreciation
    
    
    3,140
    
    
    
    122,096
    
    
    
    3,995
    
    
    
    
    
    
    
    129,231Goodwill, net
    
    
    
    
    
    
    3,545
    
    
    
    
    
    
    
    
    
    
    
    3,545Other assets:Restricted cash, cash equivalents and other time deposits
    
    
    
    
    
    
    
    
    
    
    65,857
    
    
    
    
    
    
    
    65,857Other noncurrent assets
    
    
    8,279
    
    
    
    16,125
    
    
    
    268
    
    
    
    
    
    
    
    24,672Intercompany receivables (payables)
    
    
    76,868
    
    
    
    (76,868
    )
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries
    
    
    (98,564
    )
    
    
    5,954
    
    
    
    
    
    
    
    92,610
    
    
    
    Total other assets
    
    
    (13,417
    )
    
    
    (54,789
    )
    
    
    66,125
    
    
    
    92,610
    
    
    
    90,529Total assets
    
    $
    (7,503
    )
    
    $
    146,723
    
    
    $
    106,917
    
    
    $
    92,631
    
    
    $
    338,768Current liabilities not subject to compromise:Debtor-in-possession credit facility
    
    $
    161,357
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    161,357Accounts and notes payable
    
    
    3,269
    
    
    
    23,039
    
    
    
    56
    
    
    
    
    
    
    
    26,364Intercompany (receivables) payables
    
    
    (133,318
    )
    
    
    115,309
    
    
    
    18,009
    
    
    
    
    
    
    
    Accrued liabilities
    
    
    5,825
    
    
    
    44,120
    
    
    
    26,104
    
    
    
    (1,610
    )
    
    
    74,439Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    106Total current liabilities
    
    
    37,133
    
    
    
    182,468
    
    
    
    44,275
    
    
    
    (1,610
    )
    
    
    262,266Long-term liabilities not subject to compromise:Postretirement benefits other than pensions
    
    
    
    
    
    
    14,227
    
    
    
    
    
    
    
    
    
    
    
    14,227Deferred income taxes
    
    
    1,926
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,926Other long-term liabilities
    
    
    60
    
    
    
    17,879
    
    
    
    47,330
    
    
    
    
    
    
    
    65,269Total long-term liabilities
    
    
    1,986
    
    
    
    32,106
    
    
    
    47,330
    
    
    
    
    
    
    
    81,422Liabilities subject to compromise
    
    
    157,510
    
    
    
    41,702
    
    
    
    
    
    
    
    
    
    
    
    199,212Commitments and contingencies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders (deficit) equity:Preferred stock, no par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, no par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid-in capital
    
    
    49,081
    
    
    
    166,130
    
    
    
    2,488
    
    
    
    (168,618
    )
    
    
    49,081Treasury stock
    
    
    (707
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (707
    )(Accumulated deficit) retained earnings
    
    
    (228,432
    )
    
    
    (253,206
    )
    
    
    13,039
    
    
    
    240,167
    
    
    
    (228,432
    )Accumulated other comprehensive loss,
net of tax
    
    
    (24,074
    )
    
    
    (22,477
    )
    
    
    (215
    )
    
    
    22,692
    
    
    
    (24,074
    )Total stockholders (deficit) equity
    
    
    (204,132
    )
    
    
    (109,553
    )
    
    
    15,312
    
    
    
    94,241
    
    
    
    (204,132
    )Total liabilities and stockholders
(deficit) equity
    
    $
    (7,503
    )
    
    $
    146,723
    
    
    $
    106,917
    
    
    $
    92,631
    
    
    $
    338,768
 F  - 49




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  SUPPLEMENTAL CONSOLIDATING BALANCE SHEET INFORMATION
December 31, 2005
(In thousands)
 Allied
    
    
    Guarantor
    
    
    NonguarantorHoldings
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    730
    
    
    $
    3,387
    
    
    $
    
    
    
    $
    4,117Restricted cash, cash equivalents and other time deposits
    
    
    
    
    
    
    
    
    
    
    32,830
    
    
    
    
    
    
    
    32,830Receivables, net of allowances
    
    
    
    
    
    
    59,896
    
    
    
    1,531
    
    
    
    
    
    
    
    61,427Inventories
    
    
    
    
    
    
    5,132
    
    
    
    
    
    
    
    
    
    
    
    5,132Deferred income taxes
    
    
    151
    
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    128Prepayments and other
current assets
    
    
    3,364
    
    
    
    52,535
    
    
    
    3,535
    
    
    
    
    
    
    
    59,434Total current assets
    
    
    3,515
    
    
    
    118,293
    
    
    
    41,260
    
    
    
    
    
    
    
    163,068Property and equipment, net of accumulated depreciation
    
    
    3,762
    
    
    
    116,450
    
    
    
    3,692
    
    
    
    
    
    
    
    123,904Goodwill, net
    
    
    
    
    
    
    3,545
    
    
    
    
    
    
    
    
    
    
    
    3,545Other assets:Restricted cash, cash equivalents and other time deposits
    
    
    
    
    
    
    
    
    
    
    69,764
    
    
    
    
    
    
    
    69,764Other noncurrent assets
    
    
    11,826
    
    
    
    10,541
    
    
    
    468
    
    
    
    
    
    
    
    22,835Intercompany receivables (payables)
    
    
    76,862
    
    
    
    (76,862
    )
    
    
    
    
    
    
    
    
    
    
    Investment in subsidiaries
    
    
    (95,374
    )
    
    
    5,282
    
    
    
    
    
    
    
    90,092
    
    
    
    Total other assets
    
    
    (6,686
    )
    
    
    (61,039
    )
    
    
    70,232
    
    
    
    90,092
    
    
    
    92,599Total assets
    
    $
    591
    
    
    $
    177,249
    
    
    $
    115,184
    
    
    $
    90,092
    
    
    $
    383,116Current liabilities not subject to compromise:Debtor-in-possession credit facility
    
    $
    151,997
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    151,997Accounts and notes payable
    
    
    3,764
    
    
    
    52,446
    
    
    
    750
    
    
    
    
    
    
    
    56,960Intercompany (receivables) payables
    
    
    (133,008
    )
    
    
    117,201
    
    
    
    15,807
    
    
    
    
    
    
    
    Accrued liabilities
    
    
    5,027
    
    
    
    50,812
    
    
    
    27,478
    
    
    
    
    
    
    
    83,317Total current liabilities
    
    
    27,780
    
    
    
    220,459
    
    
    
    44,035
    
    
    
    
    
    
    
    292,274Long-term liabilities not subject to compromise:Postretirement benefits other than pensions
    
    
    
    
    
    
    4,648
    
    
    
    
    
    
    
    
    
    
    
    4,648Deferred income taxes
    
    
    143
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    143Other long-term liabilities
    
    
    2,521
    
    
    
    19,608
    
    
    
    51,967
    
    
    
    
    
    
    
    74,096Total long-term liabilities
    
    
    2,664
    
    
    
    24,256
    
    
    
    51,967
    
    
    
    
    
    
    
    78,887Liabilities subject to compromise
    
    
    157,514
    
    
    
    41,808
    
    
    
    
    
    
    
    
    
    
    
    199,322Commitments and contingencies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stockholders (deficit) equity :Preferred stock, no par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, no par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid-in capital
    
    
    48,545
    
    
    
    166,130
    
    
    
    2,488
    
    
    
    (168,618
    )
    
    
    48,545Treasury stock
    
    
    (707
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (707
    )(Accumulated deficit) retained earnings
    
    
    (214,631
    )
    
    
    (261,466
    )
    
    
    16,694
    
    
    
    244,772
    
    
    
    (214,631
    )Accumulated other comprehensive loss,
net of tax
    
    
    (20,574
    )
    
    
    (13,938
    )
    
    
    
    
    
    
    13,938
    
    
    
    (20,574
    )Total stockholders (deficit) equity
    
    
    (187,367
    )
    
    
    (109,274
    )
    
    
    19,182
    
    
    
    90,092
    
    
    
    (187,367
    )Total liabilities and stockholders
(deficit) equity
    
    $
    591
    
    
    $
    177,249
    
    
    $
    115,184
    
    
    $
    90,092
    
    
    $
    383,116
 F  - 50




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
Year Ended December 31, 2006
(In thousands)
 Allied
    
    
    Guarantor
    
    
    NonguarantorHoldings
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    26,822
    
    
    $
    889,638
    
    
    $
    5,561
    
    
    $
    (28,184
    )
    
    $
    893,837Operating expenses:Salaries, wages and fringe benefits
    
    
    4,807
    
    
    
    438,777
    
    
    
    7,434
    
    
    
    
    
    
    
    451,018Operating supplies and expenses
    
    
    13,766
    
    
    
    169,214
    
    
    
    743
    
    
    
    
    
    
    
    183,723Purchased transportation
    
    
    
    
    
    
    115,143
    
    
    
    66
    
    
    
    
    
    
    
    115,209Insurance and claims
    
    
    19
    
    
    
    40,698
    
    
    
    2,296
    
    
    
    (1,362
    )
    
    
    41,651Operating taxes and licenses
    
    
    276
    
    
    
    27,783
    
    
    
    
    
    
    
    
    
    
    
    28,059Depreciation and amortization
    
    
    808
    
    
    
    27,982
    
    
    
    640
    
    
    
    
    
    
    
    29,430Rents
    
    
    1,517
    
    
    
    5,624
    
    
    
    17
    
    
    
    
    
    
    
    7,158Communications and utilities
    
    
    3,349
    
    
    
    2,847
    
    
    
    56
    
    
    
    
    
    
    
    6,252Other operating expenses
    
    
    4,525
    
    
    
    29,891
    
    
    
    216
    
    
    
    (26,822
    )
    
    
    7,810Gain on disposal of operating assets, net
    
    
    
    
    
    
    (3,297
    )
    
    
    
    
    
    
    
    
    
    
    (3,297
    )Total operating expenses
    
    
    29,067
    
    
    
    854,662
    
    
    
    11,468
    
    
    
    (28,184
    )
    
    
    867,013Operating (loss) income
    
    
    (2,245
    )
    
    
    34,976
    
    
    
    (5,907
    )
    
    
    
    
    
    
    26,824Other income (expense):Interest expense
    
    
    (4,282
    )
    
    
    (25,622
    )
    
    
    (256
    )
    
    
    
    
    
    
    (30,160
    )Investment income
    
    
    66
    
    
    
    59
    
    
    
    4,682
    
    
    
    
    
    
    
    4,807Foreign exchange losses, net
    
    
    
    
    
    
    (595
    )
    
    
    (40
    )
    
    
    
    
    
    
    (635
    )Equity in earnings of subsidiaries
    
    
    6,651
    
    
    
    888
    
    
    
    
    
    
    
    (7,539
    )
    
    
    Total other income (expense)
    
    
    2,435
    
    
    
    (25,270
    )
    
    
    4,386
    
    
    
    (7,539
    )
    
    
    (25,988
    )(Loss) income before reorganization items and income taxes
    
    
    190
    
    
    
    9,706
    
    
    
    (1,521
    )
    
    
    (7,539
    )
    
    
    836Reorganization items
    
    
    (12,437
    )
    
    
    (333
    )
    
    
    (2
    )
    
    
    
    
    
    
    (12,772
    )(Loss) income before income taxes
    
    
    (12,247
    )
    
    
    9,373
    
    
    
    (1,523
    )
    
    
    (7,539
    )
    
    
    (11,936
    )Income tax (expense) benefit
    
    
    (78
    )
    
    
    191
    
    
    
    (2,133
    )
    
    
    1,631
    
    
    
    (389
    )Net (loss) income
    
    $
    (12,325
    )
    
    $
    9,564
    
    
    $
    (3,656
    )
    
    $
    (5,908
    )
    
    $
    (12,325
    )
 F  - 51




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
Year Ended December 31, 2005
(In thousands)
 Allied
    
    
    Guarantor
    
    
    NonguarantorHoldings
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    31,229
    
    
    $
    890,884
    
    
    $
    40,172
    
    
    $
    (69,351
    )
    
    $
    892,934Operating expenses:Salaries, wages and fringe benefits
    
    
    4,955
    
    
    
    479,686
    
    
    
    26,948
    
    
    
    (28,980
    )
    
    
    482,609Operating supplies and expenses
    
    
    13,914
    
    
    
    166,145
    
    
    
    422
    
    
    
    
    
    
    
    180,481Purchased transportation
    
    
    
    
    
    
    119,412
    
    
    
    19
    
    
    
    
    
    
    
    119,431Insurance and claims
    
    
    
    
    
    
    36,422
    
    
    
    14,753
    
    
    
    (9,142
    )
    
    
    42,033Operating taxes and licenses
    
    
    186
    
    
    
    29,655
    
    
    
    
    
    
    
    
    
    
    
    29,841Depreciation and amortization
    
    
    1,156
    
    
    
    28,216
    
    
    
    553
    
    
    
    
    
    
    
    29,925Rents
    
    
    1,537
    
    
    
    5,950
    
    
    
    13
    
    
    
    
    
    
    
    7,500Communications and utilities
    
    
    3,284
    
    
    
    2,769
    
    
    
    37
    
    
    
    
    
    
    
    6,090Other operating expenses
    
    
    7,860
    
    
    
    34,983
    
    
    
    183
    
    
    
    (31,229
    )
    
    
    11,797Impairment of goodwill
    
    
    1,515
    
    
    
    77,657
    
    
    
    
    
    
    
    
    
    
    
    79,172Gain on disposal of operating assets, net
    
    
    
    
    
    
    (869
    )
    
    
    
    
    
    
    
    
    
    
    (869
    )Total operating expenses
    
    
    34,407
    
    
    
    980,026
    
    
    
    42,928
    
    
    
    (69,351
    )
    
    
    988,010Operating loss
    
    
    (3,178
    )
    
    
    (89,142
    )
    
    
    (2,756
    )
    
    
    
    
    
    
    (95,076
    )Other income (expense):Interest expense
    
    
    (6,301
    )
    
    
    (32,857
    )
    
    
    (252
    )
    
    
    
    
    
    
    (39,410
    )Investment income
    
    
    
    
    
    
    40
    
    
    
    2,773
    
    
    
    
    
    
    
    2,813Foreign exchange (losses) gains, net
    
    
    (92
    )
    
    
    1,177
    
    
    
    329
    
    
    
    
    
    
    
    1,414Other, net
    
    
    (5,968
    )
    
    
    6,802
    
    
    
    
    
    
    
    
    
    
    
    834Equity in (losses) earnings of subsidiaries
    
    
    (83,826
    )
    
    
    506
    
    
    
    
    
    
    
    83,320
    
    
    
    Total other income (expense)
    
    
    (96,187
    )
    
    
    (24,332
    )
    
    
    2,850
    
    
    
    83,320
    
    
    
    (34,349
    )(Loss) income before reorganization items and income taxes
    
    
    (99,365
    )
    
    
    (113,474
    )
    
    
    94
    
    
    
    83,320
    
    
    
    (129,425
    )Reorganization items
    
    
    (6,505
    )
    
    
    (625
    )
    
    
    (1
    )
    
    
    
    
    
    
    (7,131
    )(Loss) income before income taxes
    
    
    (105,870
    )
    
    
    (114,099
    )
    
    
    93
    
    
    
    83,320
    
    
    
    (136,556
    )Income tax (expense) benefit
    
    
    (19,854
    )
    
    
    31,875
    
    
    
    (1,189
    )
    
    
    
    
    
    
    10,832Net loss
    
    $
    (125,724
    )
    
    $
    (82,224
    )
    
    $
    (1,096
    )
    
    $
    83,320
    
    
    $
    (125,724
    )
  SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
Year Ended December 31, 2004
(In thousands)
 Allied
    
    
    Guarantor
    
    
    NonguarantorHoldings
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    36,209
    
    
    $
    893,620
    
    
    $
    41,126
    
    
    $
    (75,742
    )
    
    $
    895,213Operating expenses:Salaries, wages and fringe benefits
    
    
    6,211
    
    
    
    470,171
    
    
    
    22,094
    
    
    
    (9,748
    )
    
    
    488,728Operating supplies and expenses
    
    
    13,527
    
    
    
    148,459
    
    
    
    280
    
    
    
    
    
    
    
    162,266Purchased transportation
    
    
    
    
    
    
    111,214
    
    
    
    
    
    
    
    
    
    
    
    111,214Insurance and claims
    
    
    
    
    
    
    42,343
    
    
    
    28,263
    
    
    
    (29,785
    )
    
    
    40,821Operating taxes and licenses
    
    
    173
    
    
    
    29,631
    
    
    
    
    
    
    
    
    
    
    
    29,804Depreciation and amortization
    
    
    2,409
    
    
    
    40,055
    
    
    
    479
    
    
    
    
    
    
    
    42,943Rents
    
    
    2,691
    
    
    
    5,860
    
    
    
    5
    
    
    
    
    
    
    
    8,556Communications and utilities
    
    
    3,623
    
    
    
    2,697
    
    
    
    22
    
    
    
    
    
    
    
    6,342Other operating expenses
    
    
    6,446
    
    
    
    39,680
    
    
    
    207
    
    
    
    (36,209
    )
    
    
    10,124Impairment of goodwill
    
    
    
    
    
    
    8,295
    
    
    
    
    
    
    
    
    
    
    
    8,295Gain on disposal of operating assets, net
    
    
    
    
    
    
    (839
    )
    
    
    
    
    
    
    
    
    
    
    (839
    )Total operating expenses
    
    
    35,080
    
    
    
    897,566
    
    
    
    51,350
    
    
    
    (75,742
    )
    
    
    908,254Operating income (loss)
    
    
    1,129
    
    
    
    (3,946
    )
    
    
    (10,224
    )
    
    
    
    
    
    
    (13,041
    )Other income (expense):Interest expense
    
    
    (2,226
    )
    
    
    (28,821
    )
    
    
    (308
    )
    
    
    
    
    
    
    (31,355
    )Investment income
    
    
    
    
    
    
    40
    
    
    
    1,096
    
    
    
    
    
    
    
    1,136Foreign exchange gain (loss)
    
    
    
    
    
    
    1,938
    
    
    
    (9
    )
    
    
    
    
    
    
    1,929Other, net
    
    
    
    
    
    
    (191
    )
    
    
    
    
    
    
    
    
    
    
    (191
    )Equity in (losses) earnings of subsidiaries
    
    
    (41,217
    )
    
    
    517
    
    
    
    
    
    
    
    40,700
    
    
    
    Total other income (expense)
    
    
    (43,443
    )
    
    
    (26,517
    )
    
    
    779
    
    
    
    40,700
    
    
    
    (28,481
    )Loss before income taxes
    
    
    (42,314
    )
    
    
    (30,463
    )
    
    
    (9,445
    )
    
    
    40,700
    
    
    
    (41,522
    )Income tax expense
    
    
    (11,569
    )
    
    
    (286
    )
    
    
    (506
    )
    
    
    
    
    
    
    (12,361
    )Net loss
    
    $
    (53,883
    )
    
    $
    (30,749
    )
    
    $
    (9,951
    )
    
    $
    40,700
    
    
    $
    (53,883
    )
 F  - 52




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
Year Ended December 31, 2006
(In thousands)
 Allied
    
    
    Guarantor
    
    
    NonguarantorHoldings
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (12,325
    )
    
    $
    9,564
    
    
    $
    (3,656
    )
    
    $
    (5,908
    )
    
    $
    (12,325
    )Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:Depreciation and amortization
    
    
    808
    
    
    
    27,982
    
    
    
    640
    
    
    
    
    
    
    
    29,430Gain on disposal of operating assets, net
    
    
    
    
    
    
    (3,297
    )
    
    
    
    
    
    
    
    
    
    
    (3,297
    )Write-off and amortization of deferred financing costs
    
    
    5,817
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,817Interest expense paid in kind
    
    
    6,351
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,351Foreign exchange gains
    
    
    
    
    
    
    595
    
    
    
    40
    
    
    
    
    
    
    
    635Reorganization items
    
    
    12,437
    
    
    
    333
    
    
    
    2
    
    
    
    
    
    
    
    12,772Deferred income taxes
    
    
    27
    
    
    
    (21
    )
    
    
    104
    
    
    
    
    
    
    
    110Stock-based compensation expense
    
    
    536
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    536Equity in (losses) earnings of subsidiaries
    
    
    (6,651
    )
    
    
    (888
    )
    
    
    
    
    
    
    7,539
    
    
    
    Change in operating assets and liabilities:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Receivables, net of allowances
    
    
    
    
    
    
    8,840
    
    
    
    139
    
    
    
    
    
    
    
    8,979Inventories
    
    
    
    
    
    
    216
    
    
    
    
    
    
    
    
    
    
    
    216Prepayments and other assets
    
    
    2,672
    
    
    
    27,839
    
    
    
    2,682
    
    
    
    
    
    
    
    33,193Accounts and notes payable
    
    
    (499
    )
    
    
    (1,043
    )
    
    
    (694
    )
    
    
    
    
    
    
    (2,236
    )Intercompany payables/receivables
    
    
    (310
    )
    
    
    (1,892
    )
    
    
    2,202
    
    
    
    
    
    
    
    Accrued liabilities
    
    
    (483
    )
    
    
    (11,522
    )
    
    
    (6,010
    )
    
    
    (1,631
    )
    
    
    (19,646
    )Net cash provided by (used in) operating activities
before payment of reorganization items
    
    
    8,380
    
    
    
    56,706
    
    
    
    (4,551
    )
    
    
    
    
    
    
    60,535Reorganization items paid
    
    
    (10,879
    )
    
    
    (809
    )
    
    
    (2
    )
    
    
    
    
    
    
    (11,690
    )Net cash (used in) provided by operating activities
    
    
    (2,499
    )
    
    
    55,897
    
    
    
    (4,553
    )
    
    
    
    
    
    
    48,845Cash flows from investing activities:Purchases of property and equipment
    
    
    (165
    )
    
    
    (34,711
    )
    
    
    (970
    )
    
    
    
    
    
    
    (35,846
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    4,496
    
    
    
    
    
    
    
    
    
    
    
    4,496Decrease in restricted cash, cash equivalents and other time deposits
    
    
    
    
    
    
    
    
    
    
    4,301
    
    
    
    
    
    
    
    4,301Funds deposited with insurance carriers
    
    
    
    
    
    
    (1,856
    )
    
    
    
    
    
    
    
    
    
    
    (1,856
    )Funds returned from insurance carriers
    
    
    
    
    
    
    4,512
    
    
    
    
    
    
    
    
    
    
    
    4,512Net cash (used in) provided by investing activities
    
    
    (165
    )
    
    
    (27,559
    )
    
    
    3,331
    
    
    
    
    
    
    
    (24,393
    )Cash flows from financing activities:Repayments of debtor-in-possession revolving credit facilities, net
    
    
    (6,991
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,991
    )Additions to debtor-in-possession term debt
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Payment of deferred financing costs
    
    
    (345
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (345
    )Proceeds from insurance financing arrangements
    
    
    
    
    
    
    6,362
    
    
    
    
    
    
    
    
    
    
    
    6,362Repayments of insurance financing arrangements
    
    
    
    
    
    
    (34,446
    )
    
    
    
    
    
    
    
    
    
    
    (34,446
    )Net cash provided by (used in) financing activities
    
    
    2,664
    
    
    
    (28,084
    )
    
    
    
    
    
    
    
    
    
    
    (25,420
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    (795
    )
    
    
    (40
    )
    
    
    
    
    
    
    (835
    )Net change in cash and cash equivalents
    
    
    
    
    
    
    (541
    )
    
    
    (1,262
    )
    
    
    
    
    
    
    (1,803
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    730
    
    
    
    3,387
    
    
    
    
    
    
    
    4,117Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    189
    
    
    $
    2,125
    
    
    $
    
    
    
    $
    2,314
 F  - 53




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
Year Ended December 31, 2005
(In thousands)
 Allied
    
    
    Guarantor
    
    
    NonguarantorHoldings
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (125,724
    )
    
    $
    (82,224
    )
    
    $
    (1,096
    )
    
    $
    83,320
    
    
    $
    (125,724
    )Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:Depreciation and amortization
    
    
    1,156
    
    
    
    28,216
    
    
    
    553
    
    
    
    
    
    
    
    29,925Impairment of goodwill
    
    
    1,515
    
    
    
    77,657
    
    
    
    
    
    
    
    
    
    
    
    79,172Gain on disposal of assets
    
    
    
    
    
    
    (1,703
    )
    
    
    
    
    
    
    
    
    
    
    (1,703
    )Write-off and amortization of deferred financing costs
    
    
    8,631
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,631Foreign exchange losses (gains)
    
    
    92
    
    
    
    (1,177
    )
    
    
    (329
    )
    
    
    
    
    
    
    (1,414
    )Reorganization items
    
    
    6,505
    
    
    
    625
    
    
    
    1
    
    
    
    
    
    
    
    7,131Deferred income taxes
    
    
    21,018
    
    
    
    (32,285
    )
    
    
    6
    
    
    
    
    
    
    
    (11,261
    )Equity in losses (earnings) of subsidiaries
    
    
    83,826
    
    
    
    (506
    )
    
    
    
    
    
    
    (83,320
    )
    
    
    Change in operating assets and liabilities:Receivables, net of allowances
    
    
    
    
    
    
    (3,083
    )
    
    
    371
    
    
    
    
    
    
    
    (2,712
    )Inventories
    
    
    
    
    
    
    (623
    )
    
    
    
    
    
    
    
    
    
    
    (623
    )Prepayments and other assets
    
    
    (1,846
    )
    
    
    (26,862
    )
    
    
    (3,285
    )
    
    
    
    
    
    
    (31,993
    )Accounts and notes payable
    
    
    499
    
    
    
    11,972
    
    
    
    574
    
    
    
    
    
    
    
    13,045Intercompany payables/receivables
    
    
    (1,765
    )
    
    
    (10,479
    )
    
    
    12,244
    
    
    
    
    
    
    
    Accrued liabilities
    
    
    2,809
    
    
    
    (9,921
    )
    
    
    12,630
    
    
    
    
    
    
    
    5,518Net cash (used in) provided by operating activities
before payment of reorganization items
    
    
    (3,284
    )
    
    
    (50,393
    )
    
    
    21,669
    
    
    
    
    
    
    
    (32,008
    )Reorganization items paid
    
    
    (2,789
    )
    
    
    (149
    )
    
    
    (1
    )
    
    
    
    
    
    
    (2,939
    )Net cash (used in) provided by operating activities
    
    
    (6,073
    )
    
    
    (50,542
    )
    
    
    21,668
    
    
    
    
    
    
    
    (34,947
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (110
    )
    
    
    (18,416
    )
    
    
    (879
    )
    
    
    
    
    
    
    (19,405
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    3,253
    
    
    
    
    
    
    
    
    
    
    
    3,253Proceeds from sale of equity in subsidiaries
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    2,000Increase in restricted cash, cash equivalents and other time deposits
    
    
    
    
    
    
    
    
    
    
    (19,714
    )
    
    
    
    
    
    
    (19,714
    )Funds deposited with insurance carriers
    
    
    
    
    
    
    (9,766
    )
    
    
    
    
    
    
    
    
    
    
    (9,766
    )Funds returned from insurance carriers
    
    
    
    
    
    
    5,969
    
    
    
    
    
    
    
    
    
    
    
    5,969Net cash used in investing activities
    
    
    (110
    )
    
    
    (16,960
    )
    
    
    (20,593
    )
    
    
    
    
    
    
    (37,663
    )Cash flows from financing activities:Addition to debtor-in-possession revolving credit facility, net
    
    
    51,997
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,997Repayment of pre-petition revolving credit facilities, net
    
    
    
    
    
    
    (2,972
    )
    
    
    
    
    
    
    
    
    
    
    (2,972
    )Additions to debtor-in-possession term debt
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Additions to pre-petition debt
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    25,000Repayment of pre-petition debt
    
    
    
    
    
    
    (123,266
    )
    
    
    
    
    
    
    
    
    
    
    (123,266
    )Payment of deferred financing costs
    
    
    (7,646
    )
    
    
    (625
    )
    
    
    
    
    
    
    
    
    
    
    (8,271
    )Intercompany loan for settlement of Pre-petition Facility
    
    
    (138,200
    )
    
    
    138,200
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from insurance financing arrangements
    
    
    
    
    
    
    42,401
    
    
    
    
    
    
    
    
    
    
    
    42,401Repayments of insurance financing arrangements
    
    
    
    
    
    
    (10,827
    )
    
    
    
    
    
    
    
    
    
    
    (10,827
    )Proceeds from issuance of common stock
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124Net cash provided by financing activities
    
    
    6,275
    
    
    
    67,911
    
    
    
    
    
    
    
    
    
    
    
    74,186Effect of exchange rate changes on cash and
cash equivalents
    
    
    (92
    )
    
    
    (212
    )
    
    
    329
    
    
    
    
    
    
    
    25Net change in cash and cash equivalents
    
    
    
    
    
    
    197
    
    
    
    1,404
    
    
    
    
    
    
    
    1,601Cash and cash equivalents at beginning of year
    
    
    
    
    
    
    533
    
    
    
    1,983
    
    
    
    
    
    
    
    2,516Cash and cash equivalents at end of year
    
    $
    
    
    
    $
    730
    
    
    $
    3,387
    
    
    $
    
    
    
    $
    4,117
 F  - 54




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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Debtor-in-Possession since July 31, 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   (Continued)
  SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
Year Ended December 31, 2004
(In thousands)
 Allied
    
    
    Guarantor
    
    
    NonguarantorHoldings
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (53,883
    )
    
    $
    (30,749
    )
    
    $
    (9,951
    )
    
    $
    40,700
    
    
    $
    (53,883
    )Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:Depreciation and amortization
    
    
    2,409
    
    
    
    40,055
    
    
    
    479
    
    
    
    
    
    
    
    42,943Impairment of goodwill
    
    
    
    
    
    
    8,295
    
    
    
    
    
    
    
    
    
    
    
    8,295Gain on disposal of assets and other, net
    
    
    
    
    
    
    (839
    )
    
    
    
    
    
    
    
    
    
    
    (839
    )Write-off and amortization of deferred financing costs
    
    
    2,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,797Foreign exchange (gain) loss, net
    
    
    
    
    
    
    (1,938
    )
    
    
    9
    
    
    
    
    
    
    
    (1,929
    )Deferred income taxes
    
    
    11,623
    
    
    
    (365
    )
    
    
    17
    
    
    
    
    
    
    
    11,275Stock-based compensation expense
    
    
    321
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321Equity in losses (earnings) of subsidiaries
    
    
    41,217
    
    
    
    (517
    )
    
    
    
    
    
    
    (40,700
    )
    
    
    Change in operating assets and liabilities:Receivables, net of allowances
    
    
    
    
    
    
    (3,973
    )
    
    
    (754
    )
    
    
    
    
    
    
    (4,727
    )Inventories
    
    
    
    
    
    
    414
    
    
    
    
    
    
    
    
    
    
    
    414Prepayments and other assets
    
    
    (4,734
    )
    
    
    (1,622
    )
    
    
    3,057
    
    
    
    
    
    
    
    (3,299
    )Accounts and notes payable
    
    
    1,643
    
    
    
    (3,494
    )
    
    
    104
    
    
    
    
    
    
    
    (1,747
    )Intercompany payables
    
    
    (1,144
    )
    
    
    9,652
    
    
    
    (8,508
    )
    
    
    
    
    
    
    Accrued liabilities
    
    
    (1,250
    )
    
    
    (3,520
    )
    
    
    18,630
    
    
    
    
    
    
    
    13,860Net cash (used in) provided by operating activities
    
    
    (1,001
    )
    
    
    11,399
    
    
    
    3,083
    
    
    
    
    
    
    
    13,481Cash flows from investing activities:Purchases of property and equipment
    
    
    (137
    )
    
    
    (21,677
    )
    
    
    (728
    )
    
    
    
    
    
    
    (22,542
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    3,040
    
    
    
    
    
    
    
    
    
    
    
    3,040Increase in restricted cash, cash equivalents and other time deposits
    
    
    
    
    
    
    
    
    
    
    (796
    )
    
    
    
    
    
    
    (796
    )Funds deposited with insurance carriers
    
    
    
    
    
    
    (32,072
    )
    
    
    
    
    
    
    
    
    
    
    (32,072
    )Funds returned from insurance carriers
    
    
    
    
    
    
    34,995
    
    
    
    
    
    
    
    
    
    
    
    34,995Net cash used in investing activities
    
    
    (137
    )
    
    
    (15,714
    )
    
    
    (1,524
    )
    
    
    
    
    
    
    (17,375
    )Cash flows from financing activities:Additions to pre-petition revolving credit facilities, net
    
    
    
    
    
    
    2,972
    
    
    
    
    
    
    
    
    
    
    
    2,972Additions to pre-petition debt
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    20,000Repayment of pre-petition debt
    
    
    
    
    
    
    (18,234
    )
    
    
    
    
    
    
    
    
    
    
    (18,234
    )Payment of deferred financing costs
    
    
    
    
    
    
    (475
    )
    
    
    
    
    
    
    
    
    
    
    (475
    )Proceeds from insurance financing arrangements
    
    
    
    
    
    
    31,252
    
    
    
    
    
    
    
    
    
    
    
    31,252Repayments of insurance financing arrangements
    
    
    
    
    
    
    (32,634
    )
    
    
    
    
    
    
    
    
    
    
    (32,634
    )Proceeds from issuance of common stock
    
    
    589
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    589Net cash provided by financing activities
    
    
    589
    
    
    
    2,881
    
    
    
    
    
    
    
    
    
    
    
    3,470Effect of exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    801
    
    
    
    (9
    )
    
    
    
    
    
    
    792Net change in cash and cash equivalents
    
    
    (549
    )
    
    
    (633
    )
    
    
    1,550
    
    
    
    
    
    
    
    368Cash and cash equivalents at beginning of year
    
    
    549
    
    
    
    1,166
    
    
    
    433
    
    
    
    
    
    
    
    2,148Cash and cash equivalents at end of year
    
    $
    
    
    
    $
    533
    
    
    $
    1,983
    
    
    $
    
    
    
    $
    2,516
 F  - 55




---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
 
 VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2006, 2005 and 2004
 Balance at
    
    
    
    
    
    
    
    
    
    
    Balance atBeginning of
    
    
    
    
    
    
    
    
    
    
    End ofClassification
    
    Year
    
    
    Additions(a)
    
    
    Deductions(b)
    
    
    Year(In thousands)Allowance for billing adjustments and doubtful accounts:Year ended December 31, 2006
    
    $
    2,218
    
    
    $
    466
    
    
    $
    (983
    )
    
    $
    1,701Year ended December 31, 2005
    
    
    2,156
    
    
    
    486
    
    
    
    (424
    )
    
    
    2,218Year ended December 31, 2004
    
    
    3,575
    
    
    
    491
    
    
    
    (1,910
    )
    
    
    2,156
 
 (a)
    
    Additions are recorded as reductions of revenue as they primarily represent billing
adjustments.(b)
    
    Billing adjustments and write-off of uncollectible accounts. S - 1