<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[X]     ANNUAL  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
 -      EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 1997

[ ]     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                                  58-0360550
-----------------------------------------------    ---------------------------
(State or other jurisdiction of incorporation or   (I.R.S. Employer ID Number)
               organization)

            160 Clairemont Avenue, Suite 200, Decatur, Georgia 30030
------------------------------------------------------------------------------
                     (Address of principal executive office)

        Registrant's telephone number, including area code (404) 373-4285

           Securities registered pursuant to Section 12(b) of the Act:

      No par value Common Stock                  New York Stock Exchange
-------------------------------------   --------------------------------------
          (Title of Class)              (Name of Exchange on which Registered)

           Securities registered pursuant to Section 12(g) of the Act:

                                      None
                                ----------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

                                       YES  [X]   NO  [ ]
                                             -         -
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by referenced in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]

As of March 5, 1998 Registrant had outstanding 7,877,547 shares of common stock.
The aggregate market value of the common stock held by nonaffiliates of the
Registrant, based upon the closing sales price of the common stock on March 5,
1998 as reported on The New York Stock Exchange, was approximately $83,100,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for Registrant's 1998 Annual Meeting of
Shareholders to be held May 27, 1998 are incorporated by reference in Part III.


<PAGE>   2







0221076

                              ALLIED HOLDINGS, INC.

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                            Page
                                                                                                            ----
                     Caption                                                                               Number
                     -------                                                                               ------
PART I.

<S>               <C>                                                                                       <C>
ITEM 1.           BUSINESS...................................................................................2

ITEM 2.           PROPERTIES.................................................................................7

ITEM 3.           LEGAL PROCEEDINGS........................................ .................................7

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................................8

PART II.

ITEM 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED

                   STOCKHOLDER MATTERS.......................................................................9

ITEM 6.           SELECTED CONSOLIDATED FINANCIAL DATA......................................................10

ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

                  CONDITION AND RESULTS OF OPERATIONS.......................................................11

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............................................14

ITEM 9.           DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE......................................14

PART III.

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........................................14

ITEM 11.          EXECUTIVE COMPENSATION....................................................................14

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................14

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................14

PART IV.

ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND

                  REPORTS ON FORM 8-K.......................................................................15
</TABLE>


<PAGE>   3


                                     PART I

ITEM 1.    BUSINESS.

         1. GENERAL

     Allied Holdings, Inc. (the "Company" or "Allied"), founded in 1934, is a
holding company which operates through its wholly-owned subsidiaries. The
Company's principal operating divisions are Allied Automotive Group, Inc.
("Allied Automotive Group" or "Automotive Group") and Axis Group, Inc. ("Axis"
or the "Axis Group"). Allied Automotive Group is the largest motor carrier in
North America specializing in the transportation of new and used automobiles and
light trucks and serves all of the major domestic and foreign automotive
manufacturers. The Axis Group provides logistics solutions and other services to
the new and used vehicle distribution market and other segments of the
automotive industry, including the rapidly growing used car superstore market.
Axis is the global logistics services arm of the Allied Holdings Family of
Companies. On September 30, 1997, the Company acquired Ryder Automotive Carrier
Services, Inc. and RC Management Corp. (collectively, "Ryder Automotive Group")
from Ryder System, Inc.(the "Ryder Automotive Group Acquisition"). For the year
ended December 31, 1997, after giving pro forma effect to the Ryder Automotive
Group Acquisition, revenues and operating income of the Company would have been
approximately $1,044.9 million and $43.9 million, respectively.

         Allied Automotive Group offers a full range of automotive delivery
services including transporting new, used and off-lease vehicles to dealers from
plants, rail ramps, ports and auctions, and providing vehicle rail-car loading
and unloading services. The Allied Automotive Group represented approximately
98% of the Company's consolidated 1997 revenues. The Allied Automotive Group
operates primarily in the short-haul segment of the automotive transportation
industry with an average length of haul of less than 200 miles. The Allied
Automotive Group delivers new and used vehicles throughout the United States and
Canada for all of the major domestic and foreign manufacturers of automobiles
and light trucks. General Motors, Ford and Chrysler represent the Company's
largest customers, accounting for in total approximately 77% of 1997 revenues.
The Automotive Group also provides services to all of the major foreign
manufacturers, including Honda, Mazda, Nissan, Toyota, Isuzu, Volkswagen and
Mitsubishi. Allied Automotive Group transported approximately 67% of the new
vehicles sold in the United States and Canada in 1997, and had 1997 revenues
nearly five times greater than its closest competitor, after giving pro forma
effect to the Ryder Automotive Group Acquisition.

         The Company provides logistics solutions through the Axis Group that
complement its new and used vehicle distribution services operations and is
pursuing additional opportunities in the growing remarketed vehicle sector,
which includes the delivery of used and previously leased vehicles and vehicles
sold through the automotive auction process. For example, the Axis Group has
entered into agreements with AutoNation and DriversMart to provide
transportation logistics services for the movement of vehicles to their
reconditioning centers and stores. The Axis Group has also entered into a
contract with Aucnet to provide transportation logistics services relating to
the movement of vehicles sold through live interactive auctions and bulletin
board sales on the Internet. In addition, the Axis Group has entered into a
contract with Volkswagen to provide port processing and vehicle distribution
services.

         2.  RYDER AUTOMOTIVE CARRIER GROUP

         Ryder Automotive Group, prior to its acquisition by the Company, was
North America's largest motor carrier of new and used automobiles and light
trucks offering a full range of automotive delivery services including
transporting new, used and off-lease vehicles to dealers from plants, railramps,
ports and auctions, and providing vehicles rail-car loading and unloading
services.  The Ryder Automotive Group also provided logistics solutions and
other services to the new and used vehicle distribution market and other
segments of the automotive industry, including the growing used car superstore
market.

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<PAGE>   4
         3. SERVICES

         As a result of the Ryder Automotive Group Acquisition, the Allied
Automotive Group is the largest motor carrier in North America specializing in
the transportation of new and used automobiles and light trucks for all the
major domestic and foreign automotive manufacturers. Allied and the Ryder
Automotive Group together participated in the transportation of approximately
67% of the new vehicles sold in the United States and Canada in 1997, including
more than 50% of the North American production of General Motors, Ford and
Chrysler. Allied Automotive Group believes it can capture a larger percentage of
its major customers' North American production by building upon its
relationships with manufacturers and leveraging its reputation for high quality
services, competitive pricing and value-added services. Allied Automotive Group
also believes that it can expand the types of services provided to its existing
customers by utilizing its sophisticated technology in order to deliver vehicles
and provide other services more efficiently and cost effectively than its
competitors.

         The Company has made a significant commitment to providing
complementary services to its existing customers and to new customers through
its Axis Group subsidiary. The Axis Group is aggressively pursuing opportunities
to provide logistics solutions to customers in the automotive industry and seeks
to leverage its proprietary information systems in order to efficiently provide
such services. These services include identifying new and innovative
distribution methods for customers, providing solutions relating to improving
the management of inventory of new and used vehicles, and providing
reconditioning services relating to the used and remarketed vehicle market. The
Company further believes that significant opportunities exist for it to provide
automotive hauling and other related services to its existing customers' foreign
manufacturing plants through the formation of joint ventures with established
local transportation carriers. For example, through Kar-Tainer International,
Ltd., a subsidiary of the Axis Group, the Company transports finished and
partially completed vehicles and parts in intermodal containers both
domestically and internationally.

         4. CUSTOMER RELATIONSHIPS

         The Company has contracts with most of its customers. The Allied
Automotive Group's contracts with its customers establish rates for the
transportation of vehicles based upon a fixed rate per vehicle transported and a
variable rate for each mile a vehicle is transported. While the contracts
generally do not permit Allied Automotive Group to recover for increases in fuel
prices, fuel taxes or labor cost, certain of the Allied Automotive Group
contracts provide for renegotiation in the event material adverse changes occur.
The Allied Automotive Group has an agreement with Ford expiring in May 1999
which provides that the Allied Automotive Group is the primary carrier for 24
locations in the United States and all Canadian locations and a contract with
Chrysler expiring in June 2000, which provides that the Allied Automotive Group
is the primary carrier for 26 locations throughout the United States and Canada.
The Company operates at the former Ryder Automotive Group locations under a
month-to-month contract with Ford in the United States and Canada and under
various contracts with Chrysler in the United States with terms varying from
month-to-month to those which expire in February 2001. The Allied Automotive
Group has an agreement in principal with General Motors to enter into a
three-year contract.

         5. PROPRIETARY MANAGEMENT INFORMATION SYSTEMS

         The Company has made a long-term commitment to utilizing technology to
serve its customers. The Company's information systems subsidiary, Link
Information Systems, Inc. ("Link") provides information systems services to the
Allied Automotive Group, Axis Group and other subsidiaries of the Company.
Link's advanced management information system is a centralized, fully integrated
information system utilizing a mainframe computer together with client servers.
The system is based on a company-wide information database, which allows


                                       3
<PAGE>   5



Link to quickly respond to customer information requests without having to
combine data files from several sources. Updates with respect to vehicle load,
dispatch and delivery are immediately available from Link locations for
reporting to customers and for better control and tracking of customer vehicle
inventories. Through electronic data interchange ("EDI"), Link communicates
directly with manufacturers in the process of delivering vehicles and
electronically bills and collects from manufacturers. Link also utilizes EDI to
communicate with inspection companies, railroads, port processors and other
carriers.

         Subsidiaries of the Company utilize Link's information system to allow
them to operate more efficiently. For example, the information systems
automatically design an optimal load for each specialized tractor-trailer
("Rig"), taking into account factors such as the capacity of the Rig, the size
of the vehicles, the route, the drop points, fuel taxes, applicable weight and
height restrictions and the formula for paying drivers. The system also
determines the most economical and efficient load sequence and drop sequence for
the vehicles to be transported.

         6. MANAGEMENT STRATEGY

         The Company has adopted a performance management strategy which it
believes contributes to quality, enhanced efficiency, safety and profitability
in its operations. The Company's management strategy and culture is designed to
enhance employee performance through careful selection and continuous training
of new employees, with individual performance goals established for each
employee and performance measured regularly through the Company's management
information system. The Company believes that its performance management
strategy is unique with respect to the role that employees play in the form of
participation in this process.

         The Company has developed and implemented various programs to
incentivize and reward increased employee productivity. The various programs
developed by the Company reward damage-free delivery by drivers, driver
efficiency and driver safety. The Company believes that these programs have
improved customer and employee satisfaction and driver related productivity in
areas such as damage-free deliveries.

         During 1997, the Company adopted an economic value added ("EVA") based
performance measurement and incentive compensation system. EVA is the measure
used by the Company to determine incentive compensation for senior management.
EVA also provides management with a measure to gauge financial performance,
allocate capital to appropriate projects, assist in providing valuations in
regard to proposed acquisitions, and evaluate daily operating decisions. The
Company believes that the EVA based performance measurement and incentive
compensation system promotes the creation of economic value and increase
shareholder value by aligning the interests of senior management with that of
the Company's shareholders.

         7. RISK MANAGEMENT AND INSURANCE

         The Company's risk management subsidiary, Haul Risk Management
Services, Inc. ("HRMS"), is responsible for defining risks and securing
appropriate insurance programs and coverages at cost effective rates for the
Company. HRMS internally administers all claims for auto and general liability
and for workers compensation claims in Alabama, Florida, Georgia, Missouri,
North Carolina, South Carolina, Tennessee and Virginia. Liability claims are
subject to periodic audits by the Company's commercial insurance carriers. The
Company currently retains up to $650,000 of liability for each claim for
workers' compensation and up to $500,000 of liability for automobile and general
liability, including personal injury and property damage claims. In addition to
the $500,000 per occurrence deductible for automobile liability, there is a
$500,000 aggregate deductible for those claims which exceed the $500,000 per
occurrence deductible. The Company also retains up to $250,000 of liability for
each cargo damage claim in the United States. In Canada, the Company retains up
to C$100,000 (approximately U.S. $70,000 at February 27, 1998) of liability for
each claim for personal injury, property damage or cargo damage. If the Company
were to experience a material increase in the frequency or severity of accidents
or workers' compensation claims or unfavorable developments in existing claims,
the Company's operating results could be adversely affected. The Company formed
Haul Insurance Limited in December 1995 as a captive insurance subsidiary to
provide insurance coverage to the Company with respect to its deductibles for
workers' compensation and commercial general liability in the United States and
for automobile liability insurance in the United States and Canada.

                                       4
<PAGE>   6




         8. EQUIPMENT, MAINTENANCE AND FUEL

         As a result of the Ryder Automotive Group Acquisition, the Allied
Automotive Group operates approximately 5,200 rigs with an average age of 6.9
years. The Allied Automotive Group has historically invested heavily in both new
equipment and equipment upgrades, which have served to increase efficiency and
extend the useful life of Rigs. Currently, new 75-foot Rigs cost between
$120,000 and $140,000.

         All of the Automotive Group's terminals have access to a central parts
warehouse through the management information system. The system calculates
maximum and minimum parts inventory quantities based upon usage and
automatically reorders parts. The Automotive Group is in the process of
implementing its management information system at the Ryder Automotive Group
terminals. Minor modifications of equipment are performed at terminal locations.
Major modifications involving change in length, configuration or load capacity
are performed by the trailer manufacturers.

         In order to reduce fuel costs, the Automotive Group purchases
approximately 55% of its fuel in bulk. Also, fuel is purchased by drivers on the
road from a few major suppliers that offer discounts and central billing. The
Automotive Group has entered into futures contracts to manage a portion of its
exposure to fuel price fluctuations.

         9. COMPETITION

         The transportation of vehicles in the long-haul segment of the
automotive industry is primarily controlled by rail carriers. In the 1970s and
1980s, following deregulation of the trucking industry by the Interstate
Commerce Commission and as importers obtained a more significant share of United
States automobile sales, new motor carriers, some without union contracts, began
to compete for automobile traffic. In some instances, these new carriers were
created, or their creation facilitated, by importer interests.

         Since the mid-1980s, nearly all transportation has been pursuant to
contracts entered into by negotiation or competitive bid. The competition for
these contracts has been from both rail carriers and union and non-union motor
carriers. As a result, many negotiations and bids have resulted in contracts
that do not allow for recovery of increased costs of labor or fuel over the
contract term and that provide for rate reductions of varying magnitudes.

         Two other recent developments are now beginning to have an impact on
competition. The first is the rise in the use of third-party logistics companies
by automotive manufacturers. This is expected to convert further traffic to
competitive bidding and ease entry for less well capitalized, less sophisticated
haulers as the logistics companies provide the information systems and
integrate, more comprehensively, the full distribution function. The second is
the fundamental changes automotive manufacturers are making to their vehicle
distribution systems in order to expedite the delivery of finished vehicles to
dealers. Certain manufacturers are creating vehicle mixing centers where rail
traffic from numerous manufacturing plants is re-mixed for delivery to the
dealer. These mixing centers offer the opportunity for longer haul business to
be obtained through competitive bidding. In addition, manufacturers are creating
new rail ramps in order to place vehicles in more central locations closer to
the market but off the dealer lots. These new rail ramps may reduce the average
length of haul for motor carriers of automobiles. In metropolitan areas,
competition for traffic from the new rail ramps to the dealers may increase as
local delivery carriers and equipment and driver leasing companies may become
new competitors for the traffic. In addition, some parties may attempt to
utilize drive-away operators or dealer pick-ups to deliver vehicles.

         Major motor carriers specializing in the delivery of new vehicles that
are competitors of the Allied Automotive Group include Leaseway, Jack Cooper,
Cassens, Hadley and E & L, all of which are privately held companies.

         10. EMPLOYEES AND OWNER OPERATORS

         The Company has approximately 8,100 employees, including approximately
5,300 drivers. All drivers and shop and yard personnel are represented by
various labor unions. The majority of the Automotive Group's employees are
covered by the Master Agreement with the Teamsters which expires on May 31,
1999. The compensation and benefits paid by the Automotive Group to union
employees are established by union contracts. The Automotive Group also utilizes
approximately 800 owner-operators, with approximately 200 driving exclusively
for Auto Haulaway, Inc., a subsidiary of the Automotive Group, in Canada and
approximately 600 driving exclusively from former Ryder Automotive


                                       5
<PAGE>   7


Group terminals in the United States. The owner-operators are either paid a
percentage of the revenues they generate or receive normal driver pay plus a
truck allowance.

         11. REGULATION

         The Company is regulated in the United States by the United States
Department of Transportation ("DOT") and various state agencies, and in Canada
by the National Transportation Agency of Canada and various provincial transport
boards. Truck and trailer length, height, width, maximum weight capacity and
other specifications are regulated federally in the United States, as well as by
individual states and provinces. Interstate motor carrier operations are subject
to safety requirements prescribed by the DOT. The DOT also regulates certain
safety features incorporated in the design of Rigs. The motor carrier
transportation industry is also subject to regulatory and legislative changes
which can affect the economics of the industry by requiring changes in operating
policies or influencing the demand for, and the costs of providing, services to
shippers.

         In addition, the Company's terminal operations are subject to
environmental laws and regulations enforced by federal, state, provincial and
local agencies, including those related to the treatment, storage and disposal
of wastes, and those related to the storage and handling of fuel and lubricants.
The Company maintains regular ongoing testing programs for their USTs located at
most of their terminals for compliance with environmental laws and regulations.
Management believes that the Company's USTs are in compliance with current
environmental standards and that the Company will not be required to incur
substantial costs to bring the USTs into compliance with higher standards which
take effect in 1998.

         12. INDUSTRY OVERVIEW

         The following table summarizes historic new vehicle production and
sales in the United States and Canada, the primary sources of the Company's
revenues:

<TABLE>
<CAPTION>


                                                             YEAR ENDED DECEMBER 31,

                                                      1994            1995             1996             1997
                                                      ----            ----             ----             ----
<S>                                                   <C>             <C>              <C>              <C>
NEW VEHICLE PRODUCTION (IN MILLIONS)
United States...........................              11.9            11.6             11.5              11.8
Percent increase (decrease) over prior year           12.6%           (2.3)%           (0.9)%             2.6%
Canada..................................               2.3             2.4              2.4               2.5
Percent increase (decrease) over prior year            2.8%            3.6%             0.0%              4.2%
NEW VEHICLE SALES
United States...........................              15.0            14.7             15.1              15.1
Percent increase (decrease) over prior year            8.3%           (2.2)%            2.5%              0.0%
Canada..................................               1.2             1.1              1.2               1.4
Percent increase (decrease) over prior year            5.3%           (7.6)%            3.5%             16.7%
</TABLE>



         Domestic automotive manufacturing plants are typically dedicated to
manufacturing a particular model or models. Vehicles are usually shipped by rail
to rail ramps throughout the United States and Canada where trucking companies
handle final delivery to dealers. Vehicles destined for dealers within a radius
of approximately 250 miles from the plant are usually shipped by truck. The rail
or truck carrier is responsible for loading the vehicles on railcars or trailers
and for any damages incurred while the vehicles are in the carrier's custody.
Automobiles manufactured in Europe and Asia are transported into the United
States and Canada by ship and usually delivered directly to dealers from
seaports by truck or shipped by rail to rail ramps and delivered by trucks to
dealers. Vehicles transported by ship are normally unloaded by stevedores and
prepared for delivery in port processing centers, which involves cleaning and
may involve installing accessories. The port processor releases the vehicles to
the carrier which loads the vehicles and delivers them to a rail ramp or
directly to dealers.

             CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

         This Annual Report on Form 10-K contains forward-looking statements,
including statements regarding, among other items, (i) the Company's plans,
intentions or expectations, (ii) general industry trends, competitive


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<PAGE>   8



conditions and customer preferences, (iii) the Company's management information
systems, (iv) the Company's efforts to reduce costs, (v) the adequacy of the
Company's sources of cash to finance its current and future operations and (vi)
resolution of litigation without material adverse effect on the Company. This
notice is intended to take advantage of the "safe harbor" provided by the
Private Securities Litigation Reform Act of 1995 with respect to such
forward-looking statements. These forward-looking statements involve a number of
risks and uncertainties. Among others, factors that could cause actual results
to differ materially are the following: development of trends in the general
economy; the highly competitive nature of the automotive distribution industry;
dependence on the automotive industry; loss or reduction of revenues generated
by the Company's major customers; the variability of quarterly results and
seasonality of the automotive distribution industry; labor union and other
employment matters; the dependence on key personnel who have been hired or
retained by the Company; the availability of strategic acquisitions or joint
venture partners; changes in regulatory requirements which are applicable to the
Company's business; and the risk factors listed herein from time to time in the
Company's Securities and Exchange Commission reports, including but not limited
to, its Annual Reports on Form 10-K.

ITEM 2.         PROPERTIES.

         The Company's executive offices are located in Decatur, Georgia, a
suburb of Atlanta. The Company leases approximately 96,000 square feet of space
for its executive offices, which is sufficient to permit the Company to conduct
its operations. The Company operates from 134 terminals which are located at or
near manufacturing plants, ports, and railway terminals. The Company currently
owns 29 of its terminals. The Company leases the remainder of its facilities.
Most of the leased facilities are leased on a year to year basis from railroads
at rents that are not material to the Company.

         Over the past 10 years, changes in governmental regulations have
gradually permitted the lengthening of Rigs from 55 to 75 feet. This has
increased load factors and improved operating efficiency by permitting the
Automotive Group to haul more vehicles with fewer Rigs and employees. The
Company has worked closely with manufacturers to develop specialized equipment
to meet the specific needs of manufacturers.

         The Automotive Group's Rigs are maintained at 65 shops by approximately
300 maintenance personnel, including supervisors. Rigs are scheduled for regular
preventive maintenance inspections. Each shop is equipped to handle repairs
resulting from inspection or driver write up, including repairs to electrical
systems, air conditioners, suspension, hydraulic systems, cooling systems, and
minor engine repairs. Major engine overhaul and engine replacement can be
handled at larger terminal facilities, while smaller terminals rely on outside
vendors. The trend has been to use engine suppliers' outlets for engine repairs
due to the long-term warranties obtained by the Company.

ITEM 3.         LEGAL PROCEEDINGS.

         The Company is routinely a party to litigation incidental to its
business, primarily involving claims for personal injury and property damage
incurred in the transportation of vehicles. The Company does not believe that
any of such pending litigation, if adversely determined, would have a material
adverse effect on the Company.



                                       7
<PAGE>   9




ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

                  NONE

Executive Officers of the Registrant

         The following table sets forth certain information regarding the
Company's executive officers:

<TABLE>
<CAPTION>

                Name                           Age                               Title
                ----                           ---                               -----
<S>                                            <C>          <C>
Robert J. Rutland                               56          Chairman of the Board of Directors and Chief
                                                            Executive Officer

Guy W.  Rutland, III                            61          Chairman Emeritus and Director

A. Mitchell Poole, Jr.                          50          President, Chief Operating Officer, Chief
                                                            Financial Officer, Assistant Secretary and Director

Bernard O. De Wulf                              49          Vice Chairman, Executive Vice President and
                                                            Director

Berner F. Wilson, Jr.                           59          Vice Chairman, Secretary and Director

Guy W.  Rutland, IV                             34          Vice President and Director

Joseph W.  Collier                              55          President of Allied Automotive Group and Director

Randall E. West                                 49          President of Axis Group and Director

Douglas A. Lauer                                34          President of Link Information Systems

Daniel H. Popky                                 33          Senior Vice President, Finance and President of
                                                            Allied Industries
</TABLE>


Mr. Rutland has been Chairman and Chief Executive Officer of the Company since
December 1995. Mr. Rutland served as President and Chief Executive Officer of
the Company from 1986 to December 1995. Prior to October 1993, Mr. Rutland was
Chief Executive Officer of each of the Company's subsidiaries.

Guy Rutland, III was elected Chairman Emeritus in December 1995. Mr. Rutland
served as Chairman of the Board of the Company from 1986 to December 1995. Prior
to October 1993, Mr. Rutland was Chairman or Vice Chairman of each of the
Company's subsidiaries.

Mr. Poole has been President, Chief Operating Officer, Chief Financial Officer,
and Assistant Secretary of the Company since December 1995. Prior to December
1995, Mr. Poole served as Executive Vice President and Chief Financial Officer
of the Company. Mr. Poole joined Allied Systems, ltd. in 1988 as Senior Vice
President and Chief Financial Officer. He was appointed President of Allied
Industries, Inc. in December 1990 and served in that capacity until December
1997. Prior to joining the Company in 1988, Mr. Poole was an audit partner with
Arthur Andersen LLP, independent public accountants.

Mr. De Wulf has been Vice Chairman and an Executive Vice President of the
Company since October 1993. Prior to such time, Mr. De Wulf was Vice Chairman of
each of the Company's subsidiaries. Mr. De Wulf was Vice Chairman of Auto Convoy
from 1983 until 1988 when the Company and Auto Convoy became affiliated.

Mr. Wilson has been Vice President of the Company since October 1993 and Vice
Chairman of the Board of


                                       8
<PAGE>   10


Directors and Secretary since December 1995. Prior to October 1993, Mr. Wilson
was an officer or Vice Chairman of several of the Company's subsidiaries. Mr.
Wilson joined the Company in 1974 and has held various finance, administration,
and operations positions.

Mr. Rutland, IV has been Vice President of the Company since October 1993 and
Senior Vice President - Operations of Allied Automotive Group since November
1997. Mr. Rutland was Vice President - Reengineering Core Team of Allied
Automotive Group, from November 1996 to November 1997. From January 1996 to
November 1996 Mr. Rutland was Assistant Vice President of the Central and
Southeast Region of Operations for Allied Systems, Ltd. From March 1995 to
January 1996 Mr. Rutland was Assistant Vice President of the Central Division of
Operations for Allied Systems, Ltd. From June 1994 to March 1995, Mr. Rutland
was Assistant Vice President of the Eastern Division of Operations for Allied
Systems, Ltd. From 1993 to June 1994 Mr. Rutland was assigned to special
projects with an assignment in Industrial Relations/Labor Department and from
1988 to 1993, Mr. Rutland was Director of Performance Management.

Mr. Collier was appointed as a director of the Company in December 1995. Mr.
Collier has been the President of Allied Automotive Group since December 1995.
Mr. Collier had been Executive Vice President of Marketing and Sales and Senior
Vice President of Allied Systems, Ltd. since 1991. Prior to joining the Company
in 1979, Mr. Collier served in management positions with Bowman Transportation
and also with the Federal Bureau of Investigation.

Mr. West was appointed as a director of the Company in December 1997. Mr. West
has been the President of Axis Group since October 1997. Mr. West was President
of Ryder Automotive Carrier Services, Inc. from January 1996 to October 1997 and
Senior Vice President and General Manager of Ryder International from 1993 to
1995.

Mr. Lauer has been President of Link Information Systems since July 1996. From
January 1996 to July 1996 Mr. Lauer was Vice President and Chief Information
Officer of Allied Industries, Inc. Mr. Lauer has 11 years of information
technology experience. Prior to joining the Company, he was Director,
Information Systems at Exel Logistics.

Mr. Popky has been Senior Vice President, Finance of the Company and President
of Allied Industries, Inc. since December 1997. From December 1995 to December
1997, Mr. Popky was Vice President, Finance of the Company. From January 1995
to December 1995 Mr. Popky was Vice President and Controller and from October
1994 to January 1995 he was Assistant Vice President and Controller for the
Company. Prior to joining the Company, Mr. Popky held various positions with
Arthur Andersen LLP for 9 years.

                                     PART II

ITEM 5.         MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS.

The Company's common stock is traded on the New York Stock Exchange under the
symbol AHI. The common stock began trading on September 29, 1993 on The Nasdaq
Stock Market and has been trading on the New York Stock Exchange since March 3,
1998. Prior to September 29, 1993, there had been no established public trading
market for the common stock. Market information regarding the common stock is
set forth in Financial Statements and Supplementary Data included elsewhere
herein.

As of March 5, 1998 there were approximately 2,300 holders of the Company's
common stock. The Company has paid no cash dividends in the last two years.



                                       9
<PAGE>   11

ITEM 6.        SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below for each of the five
years in the period ended December 31, 1997 are derived from the Company's
Consolidated Financial Statements which have been audited by Arthur Andersen
LLP, independent public accountants. The selected consolidated financial data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements and notes thereto.

<TABLE>
<CAPTION>

                                                                                     Year ended December 31,
                                                                             (in thousands except per share amounts)
                                                                              -------------------------------------
                                                                   1997           1996           1995         1994         1993
                                                                   ----           ----           ----         ----         ----


STATEMENT OF OPERATION DATA:
<S>                                                            <C>            <C>            <C>          <C>          <C>
   Revenues                                                    $581,530       $392,547       $381,464     $297,236     $241,981
                                                               --------       --------       --------     --------     --------
   Operating expenses:
      Salaries, wages and fringe benefits                       309,641        204,838        195,952      157,979      134,054
      Operating supplies and expenses                           102,432         62,880         62,179       51,532       44,090
      Purchased transportation                                   52,787         34,533         32,084        9,486        3,223
      Rent expense                                                6,452          4,975          5,354        3,214        3,485
      Insurance and claims                                       22,256         16,849         16,022       12,043        9,745
      Operating taxes and licenses                               18,358         16,122         16,564       14,301       12,223
      Depreciation and amortization                              33,340         26,425         25,431       16,314       11,683
      Communications and utilities                                4,030          3,111          3,434        1,855        1,456
      Other operating expenses                                    5,541          4,219          3,522        1,781        1,662
      Acquisition related realignment(1)                          8,914             --             --           --           --
                                                               --------       --------       --------     --------     --------
      Total operating expenses                                  563,751        373,952        360,543      268,505      221,621
                                                               --------       --------       --------     --------     --------
   Operating Income                                              17,779         18,595         20,921       28,731       20,360
   Minority interest in income                                       --             --             --           --         (858)
   Interest expense                                             (14,095)       (10,720)       (11,260)      (5,462)      (6,042)
   Interest income                                                  868            603            707          312          313
   Other income ( expense), net                                      --             --             --           --          (49)
                                                               --------       --------       --------     --------     --------
   Income before income taxes,
     extraordinary item and cumulative
     effect of accounting change                                  4,552          8,478         10,368       23,581       13,724
   Income tax provision (2)                                      (2,150)        (3,557)        (4,222)      (9,393)      (4,183)
                                                               --------       --------       --------     --------     --------
   Income before extraordinary item and
     cumulative effect of accounting change                       2,402          4,921          6,146       14,188        9,541
   Extraordinary loss on early
     extinguishment of debt                                          --           (935)            --       (2,627)          --
   Cumulative effect of change in
     accounting for postretirement benefits
     other than pensions(3)                                          --             --             --           --       (2,592)
                                                               --------       --------       --------     --------     --------
   Net income                                                  $  2,402       $  3,986       $  6,146     $ 11,561     $  6,949
                                                               ========       ========       ========     ========     ========
   Income before extraordinary item and
     cumulative effect of accounting change per share(4)       $   0.31       $   0.64       $    .80     $   1.84     $   1.24
   Net income per share(4)                                     $   0.31       $   0.52       $    .80     $   1.50     $   0.90

BALANCE SHEET DATA:                                            $149,673       $ 49,202       $ 50,421     $ 50,861     $ 30,225
   Current assets                                               157,679         48,494         43,257       44,608       38,412
   Current liabilities                                          558,939        211,083        214,686      218,806      119,897
   Total assets
   Long-term debt and capital lease
     obligations less current portion                           228,003         93,708        106,634      120,136       41,845
   Stockholders' equity                                          57,328         56,709         53,022       45,835       35,759
</TABLE>


(1) Represents a non-cash charge the Company recorded during the third quarter
    of 1997 to write down Company Rigs and terminal facilities that were idled
    or closed as a result of the Ryder Automotive Group Acquisition.

(2) Prior to the Company's initial public offering, Allied Systems, Ltd. as a
    limited partnership, and its general partners, as corporations, were subject
    to taxation under Subchapter S and did not pay federal or most state taxes.
    Accordingly, the Company's consolidated financial statements for the periods
    prior to the offering include a pro forma provision for income taxes.

(3) Effective January 1, 1993, the Company adopted the provisions of SFAS 106,
    "Employers' Accounting for Postretirement Benefits Other Than Pensions."
    Adoption of this accounting standard resulted in a one-time, after pro forma
    tax, non-cash charge to earnings of $2,592,000.

(4) Excluding a one-time charge the Company recorded in connection with the
    Ryder Automotive Group Acquisition, net income was $0.98.

                                       10
<PAGE>   12



ITEM 7.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

   The following table sets forth the percentage relationship of expense items
to revenues for the periods indicated:

<TABLE>
<CAPTION>

                                                                           Year ended December 31,
                                                                      ---------------------------------
                                                                      1997          1996          1995
                                                                      ----          ----          ----

<S>                                                                   <C>          <C>          <C>
Revenues                                                               100.0%       100.0%       100.0%
                                                                       -----       ------       ------
Operating Expenses:
   Salaries, wages and fringe benefits                                  53.2         52.2         51.4
   Operating supplies and expenses                                      17.6         16.0         16.3
   Purchased transportation                                              9.1          8.8          8.4
   Rent expense                                                          1.1          1.3          1.4
   Insurance and claims                                                  3.8          4.3          4.2
   Operating taxes and licenses                                          3.2          4.1          4.3
   Depreciation and amortization                                         5.7          6.7          6.7
   Communications and utilities                                          0.7          0.8          0.9
   Other operating expenses                                              1.0          1.1          0.9
   Acquisition related realignment                                       1.5          0.0          0.0
                                                                       -----       ------       ------
Total operating expenses                                                96.9         95.3         94.5
                                                                       -----       ------       ------
Operating income                                                         3.1          4.7          5.5
                                                                       -----       ------       ------
Other income(expense):

   Interest expense                                                     (2.4)        (2.8)        (3.0)
   Interest income                                                       0.1          0.2          0.2
                                                                       -----       ------       ------
Total other income (expense)                                            (2.3)        (2.6)        (2.8)
                                                                       -----       ------       ------
Income before income taxes and extraordinary item                        0.8          2.1          2.7
Income tax provision                                                    (0.4)        (0.9)        (1.1)
                                                                       -----       ------       ------
Income before extraordinary item                                         0.4          1.2          1.6
Extraordinary loss on early extinguishment of debt                       0.0         (0.2)         0.0
                                                                       -----       ------       ------
Net Income                                                               0.4%         1.0%         1.6%
                                                                       =====       ======       ======
</TABLE>

1997 Compared to 1996

         Revenues were $581.5 million in 1997 compared to $392.6 million in
1996, an increase of $188.9 million, or 48%. The increase in revenues was due to
a 41% increase in the number of vehicles delivered by the Allied Automotive
Group together with an increase in the revenue generated per vehicle delivered
due to an increase in the percentage of longer-haul dealer deliveries. The
number of vehicles delivered by the Automotive Group increased 38% because of
the acquisition of Ryder's Automotive Carrier Group and the inclusion of their
results since September 30, 1997, the date of the acquisition. The remaining
increase in vehicle deliveries was primarily due to increased new vehicle
production and sales in Canada which led to increased deliveries by the
Automotive Group's Canadian operations. Net income in 1997 was $7.6 million, or
$0.98 per share, compared with net income of $4.9 million, or $0.64 per share in
1996, an increase of 53% (excluding a one time charge related to the acquisition
of Ryder's Automotive Carrier Group recorded in 1997 and an extraordinary loss
on the early extinguishment of debt recorded during 1996). The significant
increase in earnings was primarily due to contributions from the acquisition of
Ryder's Automotive Carrier Group together with increased earnings from the
Allied Automotive Group's Canadian operations due to increased vehicle
deliveries. In addition, net income in 1996 was impacted by strikes at a number
of General Motors manufacturing plants.

         The operating ratio (operating expenses as a percentage of revenues)
for 1997 was 96.9%, compared to 95.3% in 1996. The operating ratio increased 1.6
percentage points, but 1.5 of the percentage point increase was due to a
non-cash charge the company recorded during the third quarter of 1997 to
write-down Company rigs and terminal facilities that will be idled or closed as
a result of the acquisition of Ryder's Automotive Carrier Group. Excluding this
one time charge, the operating ratio for 1997 was virtually unchanged from the
prior year.


                                       11
<PAGE>   13



         The following is a discussion of the changes in the Company's major
expense categories:

         Salaries, wages and fringe benefits increased from 52.2% of revenues in
1996 to 53.2% in 1997. This increase is primarily due to annual salary and
benefit increases of approximately 3%, offset in part by productivity and
efficiency improvements implemented during 1997 by the Allied Automotive Group
together with increases in purchased transportation.

         Operating supplies and expenses as a percentage of revenues increased
from 16.0% in 1996 to 17.6% in 1997. The increase is mainly the result of the
acquisition of the Ryder Automotive Group as its operating costs as a percentage
of revenues were higher than the Company's.

         Purchased transportation increased from 8.8% of revenues in 1996 to
9.1% of revenues in 1997 primarily due to an increase in the number of vehicles
hauled by other carriers for the Allied Automotive Group as part of an exchange
program to improve loaded miles.

         Insurance and claims expense as a percentage of revenues decreased from
4.3% in 1996 to 3.8% in 1997 mainly due to lower cargo claims costs resulting
from quality programs instituted during 1997.

         Operating taxes and licenses decreased from 4.1% of revenues in 1996 to
3.2% in 1997. This decrease is due to efforts made by the Company to reduce its
licensing costs per rig together with an overall decrease in the number of rigs
operated by the Allied Automotive Group after the acquisition of the Ryder
Automotive Group.

         Depreciation and amortization as a percentage of revenues decreased
from 6.7% in 1996 to 5.7% in 1997. The decrease is mainly the result of
depreciation expense on the rigs acquired as part of the Ryder Automotive Group
representing a lower percentage of revenues than the Company's due to the age
and useful lives of the rigs. In addition, depreciation and amortization expense
has been reduced due to a reduction in the number of rigs operated by the Allied
Automotive Group after the acquisition of Ryder Automotive Group.

         Interest expense as a percentage of revenues decreased from 2.8% in
1996 to 2.4% in 1997, however interest expense increased from $10.7 million in
1996 to $14.1 million in 1997. The increase was primarily the result of interest
on additional borrowings used to finance the Kar-Tainer and the Ryder Automotive
Group acquisitions.

         The effective tax rate increased from approximately 42% of pre-tax
income in 1996 to approximately 47% in 1997. The increase was due to higher
non-deductible expenses resulting from the acquisition of the Ryder Automotive
Group together with lower pre-tax income which made the non-deductible expenses
a greater percentage of pre-tax income.

1996 Compared to 1995

         Revenues were $392.6 million in 1996 compared to $381.5 million in
1995, an increase of $11.1 million, or 2.9%. The increase in revenues was
primarily due to a 5% increase in the number of vehicles delivered by the Allied
Automotive Group, offset in part by a decrease in the revenue generated per
vehicle delivered due to an increase in the percentage of shorter haul
deliveries. Net income during 1996 was $4.9 million, or $0.64 per share,
compared with $6.2 million, or $0.80 per share in 1995, (excluding an
extraordinary loss on the early extinguishment of debt recorded during 1996).
Net income during 1996 was impacted by strikes at a number of General Motors
manufacturing plants, the severe winter weather during the first quarter of
1996, a rise in diesel fuel prices throughout 1996, and the planned start-up
costs for the Axis Group.

         The operating ratio for 1996 was 95.3%, compared to 94.5% in 1995. The
increase was primarily due to planned startup costs for the Axis Group, together
with increased fuel costs and an increase in the percentage of light trucks
hauled by the Allied Automotive Group, which led to lower load averages and
increased costs.

         The following is a discussion of the changes in the Company's major
expense categories:



                                       12
<PAGE>   14


         Salaries, wages and fringe benefits increased from 51.4% of revenues in
1995 to 52.2% of revenues in 1996. This change as a percentage of revenues was
primarily due to the addition of payroll costs for the Axis Group, increased
costs resulting from strikes at General Motors during March and October 1996 and
the severe winter weather during the first quarter of 1996.

         Operating supplies and expenses as a percentage of revenues decreased
from 16.3% in 1995 to 16.0% in 1996, despite a rise in diesel fuel prices. This
decrease is mainly due to an increase in the units delivered by owner-operators
combined with the use of newer, more fuel efficient equipment which has reduced
the costs to operate the Allied Automotive Group's Rigs and has increased fuel
efficiency. Owner-operators are responsible for all costs to operate their rigs
and such costs are included in purchased transportation. In addition, the Allied
Automotive Group implemented productivity and efficiency programs that reduced
operating expenses.

         Purchased transportation increased from 8.4% of revenues in 1995 to
8.8% in 1996. This is mainly due to an increase in the number of units hauled by
owner-operators and by other carriers for the Allied Automotive Group as part of
an exchange program to improve loaded miles.

         Interest expense for 1996 decreased to $10.7 million compared to $11.3
million in 1995. This decrease is primarily the result of reductions in
long-term debt during the year due to debt repayments.

         The effective tax rate increased from approximately 41% of pre-tax
income in 1995 to approximately 42% of pre-tax income in 1996. The increase was
due to higher state taxes.

Liquidity and Capital Resources

         The Company's sources of liquidity are funds provided by operations and
borrowings under its revolving credit facility with a syndicate of banks. The
Company's liquidity needs are for the acquisition and maintenance of rigs and
terminal facilities, the payment of operating expenses and the payment of
interest on and repayment of long-term debt.

         Net cash provided by operating activities totaled $39.6 million in 1996
and $47.8 million in 1997. The increase in cash flows from operations was mainly
due to increased earnings (excluding a one-time non-cash charge) and higher
depreciation and amortization expense. Net cash used in investing activities
totaled $33.0 million in 1997 and $163.3 million in 1997. The increase in cash
used in investing activities during 1997 was primarily due to the acquisition of
Kar-Tainer for approximately $13.1 million in April 1997 and the acquisition of
the Ryder Automotive Group for approximately $114.5 million in September 1997.
Net cash used in financing activities was $15.7 million in 1996 compared to
$124.0 million of cash provided by financing activities in 1997. The increase in
cash provided by financing activities was due to borrowings under the Company's
revolving credit facility to finance the acquisition of Kar-Tainer and the
issuance of $150 million of Senior Notes due in 2007. Proceeds of the Senior
Notes were used to finance the acquisition of the Ryder Automotive Group, to pay
related fees and expenses and to repay a portion of the borrowings outstanding
under the Company's revolving credit facility.

         In connection with the acquisition of the Ryder Automotive Group, the
Company refinanced its revolving credit facility with a syndicate of banks. The
new revolving credit facility allows the Company to borrow, under a revolving
line of credit, and issue letters of credit, up to the lesser of $230 million or
a borrowing base amount that is determined based on a defined percentage of the
Company's accounts receivable and equipment. The credit facility matures in
September 2002 and the interest rate is, at the Company's option, either (I) the
bank's base rate, as defined, or (ii) the bank's Eurodollar rate, as defined, as
determined at the date of each borrowing, plus an applicable margin. The Company
has the right to repay the outstanding debt under the credit facility, in whole
or in part, without penalty or premium, subject to a limitation that prepayment
of Eurodollar rate loans will be subject to a breakage penalty if prepaid other
than on the last day of the applicable interest period. The Company will be
subject to mandatory prepayment with a defined percentage of net proceeds from
certain asset sales, new debt offerings and new equity offerings. The credit
facility gives the Company the ability to reduce the commitment amount and the
Company periodically reviews its borrowing needs. The Company had $35 million
outstanding under the revolving credit facility at December 31, 1997 bearing
interest at a weighted average interest rate of 8.4%. In addition, the Company
had $9.6 million of letters of credit outstanding under its revolving credit
facility at


                                       13
<PAGE>   15


December 31, 1997. The Company has entered into interest rate cap agreements to
cap a portion of the outstanding borrowings under its revolving credit facility.
Such interest rate cap agreements are required under the terms of its revolving
credit facility.

         The credit facility, the Senior Notes due in 2007 and the Senior
Subordinated Notes due in 2003, set forth a number of affirmative, negative,
and financial covenants binding on the Company. The negative covenants limit
the ability of the Company to, among other things, incur debt, incur liens,
make investments, make dividend or other distributions, or enter into any
merger or other consolidation transaction. The financial covenants include
the maintenance of a minimum consolidated tangible net worth, compliance with
a leverage ratio, and limitations on capital expenditures.

         The Company's obligations under the Senior Notes due in 2007 are
guaranteed by substantially all of the subsidiaries of the Company (the
"Guarantors"). Separate financial statements of the Guarantors are not provided
herein as (i) the Guarantors are jointly and severally liable for the Company's
obligations under the Notes, (ii) the subsidiaries which are not Guarantors are
inconsequential to the consolidated operations of the Company and its
subsidiaries and (iii) the net assets and earnings of the Guarantors are
substantially equivalent to the net assets and earnings of the consolidated
entity as reflected in these consolidated financial statements.  There are no
restrictions, on the ability of the Guarantors to make distributions to the
Company.

Year 2000

         Based on a preliminary study, the Company does not anticipate either a
significant amount of incremental expense or a disruption in service associated
with the Year 2000 computer issue and its impact on the Company's systems.
However, there can be no assurance that the Company's systems nor the systems of
other companies with whom the Company conducts business will be Year 2000
compliant prior to December 31, 1999 or that the failure of any such system will
not have a material adverse effect on the Company's business, operating results
and financial condition.

Seasonality and Inflation

         The Company generally experiences its highest revenues and earnings
during the second and fourth quarters of each calendar year due to the shipment
of new vehicle models and because the first and third quarters are impacted by
manufacturing plant downtime. During the past three years, inflation has not
significantly affected the Company's results of operations.

ITEM 8.         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

          Financial statements and supplementary data are set forth beginning
on page F-1 of this Report.

ITEM 9.         DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

          NONE.

                                    PART III

          Certain information required by Part III is omitted from this report
in that the Registrant will file a definitive Proxy Statement pursuant to
Regulation 14A (the "Proxy Statement") not later than 120 days after the end of
the fiscal year covered by this report, and certain information included therein
is incorporated herein by reference. Only those sections of the Proxy Statement
which specifically address the items set forth herein are incorporated by
reference. Such information does not include the Compensation Committee Report
or the Performance Graph included in the Proxy Statement.

ITEM 10.        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information concerning the Company's directors required by this
Item is incorporated by reference to the Company's Proxy Statement. The
information concerning the Company's executive officers required by this Item is
incorporated by reference to the section in Part I, Item 4, entitled "Executive
Officers of the Registrant."

         The information regarding compliance with Section 16 of the Securities
Exchange Act of 1934, as amended, is to be set forth in the Proxy Statement and
is hereby incorporated by reference.

ITEM 11.        EXECUTIVE COMPENSATION.

         The information required by this Item is incorporated by reference to
the Company's Proxy Statement.

ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information required by this Item is incorporated by reference to
the Company's Proxy Statement.

ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information required by this Item is incorporated by reference to
the Company's Proxy Statement.


                                       14
<PAGE>   16

                                     PART IV

ITEM 14.        EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
                8-K.

       (a)      The following documents are filed as part of this report:

                (1)      Financial Statements:

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                             Page
                                                                                             ----
<S>                                                                                           <C>
Report of Independent Public Accountants......................................................F-1
Consolidated Balance Sheets at December 31, 1997 and 1996.....................................F-2
Consolidated Statements of Operations for the Years Ended December 31, 1997, 1996 and 1995....F-3
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
         December 31, 1997, 1996 and 1995.....................................................F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995....F-5
Notes to Consolidated Financial Statements....................................................F-6
</TABLE>


                (2)       Financial Statement Schedules:

                     INDEX TO FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>                                                                                           <C>
Report of Independent Public Accountants......................................................S-1

Schedule II - Valuation and Qualifying Accounts for the Years Ended
  December 31, 1997, 1996 and 1995  ..........................................................S-2
</TABLE>


All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes.

  (b) Reports on Form 8-K: (i) the Company filed a Form 8-K dated October 10,
  1997 relating to the Company's acquisition of all of the outstanding capital
  stock of Ryder Automotive Carrier Services, Inc. and RC Management Corp.
  from Rider System, Inc.; and (ii) the Company filed a Form 8-K dated October
  21, 1997 relating to the issuance by the Company of $150.0 million of its
  8 5/8% Senior Notes due 2007 and the consummation of the Company's $230
  million new credit facility.

  (c) Exhibits;

Exhibit Index filed as part of this report



                                       15
<PAGE>   17






                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
Allied Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of ALLIED HOLDINGS,
INC. (a Georgia corporation) AND SUBSIDIARIES as of December 31, 1997 and 1996
and the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Allied Holdings, Inc. and
subsidiaries as of December 31, 1997 and 1996 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.


ARTHUR ANDERSEN LLP

/s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
February 9, 1998


                                       F-1
<PAGE>   18

                     ALLIED HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1997 AND 1996

                                 (IN THOUSANDS)



                                     ASSETS
<TABLE>
<CAPTION>


                                                                                           1997           1996
                                                                                         --------       --------
<S>                                                                                      <C>            <C>
CURRENT ASSETS:
   Cash and cash equivalents                                                             $ 10,530       $  1,973
   Short-term investments                                                                  19,540          8,520
   Receivables, net of allowance for doubtful accounts of
     $2,078 and $564 in 1997 and 1996, respectively                                        74,881         22,673
   Inventories                                                                              5,391          4,096
   Deferred tax assets                                                                     17,812            353
   Prepayments and other current assets                                                    21,519         11,587
                                                                                         --------       --------
            Total current assets                                                          149,673         49,202
                                                                                         --------       --------
PROPERTY AND EQUIPMENT, NET                                                               286,214        132,552
OTHER ASSETS:                                                                            --------       --------

   Goodwill, net                                                                           99,310         22,081
   Notes receivable due from related parties                                                  573            573
   Other                                                                                   23,169          6,675
                                                                                         --------       --------
            Total other assets                                                            123,052         29,329
                                                                                         --------       --------
            Total assets                                                                 $558,939       $211,083
                                                                                         ========       ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES:
   Current maturities of long-term debt                                                  $  2,980       $  2,275
   Trade accounts payable                                                                  36,263         15,872
   Accrued liabilities                                                                    118,436         30,347
                                                                                         --------       --------
            Total current liabilities                                                     157,679         48,494
                                                                                         --------       --------
LONG-TERM DEBT, LESS CURRENT MATURITIES                                                   228,003         93,708
                                                                                         --------       --------
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS                                                11,355          3,621
                                                                                         --------       --------
DEFERRED INCOME TAXES                                                                      35,062          7,487
                                                                                         --------       --------
OTHER LONG-TERM LIABILITIES                                                                69,512          1,064
COMMITMENTS AND CONTINGENCIES (NOTES 5, 7, AND 8)                                        --------       --------

STOCKHOLDERS' EQUITY:
   Common stock, no par value; 20,000 shares authorized,
     7,819 and 7,810 shares outstanding at December 31, 1997
     and 1996, respectively                                                                     0              0
   Additional paid-in capital                                                              43,758         43,657
   Retained earnings                                                                       16,877         14,475
   Foreign currency translation adjustment, net of tax                                     (2,826)          (743)
   Unearned compensation                                                                     (481)          (680)
                                                                                         --------       --------
            Total stockholders' equity                                                     57,328         56,709
                                                                                         --------       --------
            Total liabilities and stockholders' equity                                   $558,939       $211,083
                                                                                         ========       ========
</TABLE>

   The accompanying notes are an integral part of these consolidated balance
   sheets.

                                      F-2

<PAGE>   19

                     ALLIED HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                            1997            1996           1995
                                                                          --------        --------       --------
<S>                                                                       <C>             <C>            <C>
REVENUES                                                                  $581,530        $392,547       $381,464
                                                                          --------        --------       --------
OPERATING EXPENSES:
   Salaries, wages, and fringe benefits                                    309,641         204,838        195,952
   Operating supplies and expenses                                         102,432          62,880         62,179
   Purchased transportation                                                 52,787          34,533         32,084
   Insurance and claims                                                     22,256          16,849         16,022
   Operating taxes and licenses                                             18,358          16,122         16,564
   Depreciation and amortization                                            33,340          26,425         25,431
   Rent expense                                                              6,452           4,975          5,354
   Communications and utilities                                              4,030           3,111          3,435
   Other operating expenses                                                  5,541           4,219          3,522
   Acquisition related realignment                                           8,914               0              0
                                                                          --------        --------       --------
            Total operating expenses                                       563,751         373,952        360,543
                                                                          --------        --------       --------
            Operating income                                                17,779          18,595         20,921
                                                                          --------        --------       --------
OTHER INCOME (EXPENSE):
   Interest expense                                                        (14,095)        (10,720)       (11,260)
   Interest income                                                             868             603            707
                                                                          --------        --------       --------
                                                                           (13,227)        (10,117)       (10,553)
                                                                          --------        --------       --------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY
  ITEM                                                                       4,552           8,478         10,368

INCOME TAX PROVISION                                                        (2,150)         (3,557)        (4,222)
                                                                          --------        --------       --------
INCOME BEFORE EXTRAORDINARY ITEM                                             2,402           4,921          6,146

EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF
  DEBT, NET OF INCOME TAX BENEFIT OF $573                                        0            (935)             0
                                                                          --------        --------       --------
NET INCOME                                                                $  2,402        $  3,986       $  6,146
                                                                          ========        ========       ========
PER COMMON SHARE:
   Income before extraordinary item--basic and
     diluted                                                                 $0.31          ($0.64)         $0.80
   Extraordinary loss on early extinguishment of
     debt                                                                     0.00           (0.12)          0.00
                                                                          --------        --------       --------
NET INCOME PER COMMON SHARE BASIC AND DILUTED                                $0.31           $0.52          $0.80
                                                                          ========        ========       ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                   7,728           7,725          7,725
                                                                          ========        ========       ========
</TABLE>


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


                                      F-3

<PAGE>   20




                     ALLIED HOLDINGS, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                              COMMON STOCK        ADDITIONAL
                                                                           -----------------       PAID-IN         RETAINED
                                                                           SHARES     AMOUNT       CAPITAL         EARNINGS
                                                                           ------     ------      ----------      ----------
<S>                                                                        <C>        <C>         <C>             <C>
BALANCE, DECEMBER 31, 1994                                                   7,725    $   0        $42,977         $ 4,343

   Net income                                                                    0        0              0           6,146
   Foreign currency translation adjustment, net of
     income taxes of $701
                                                                                 0        0              0               0
                                                                             -----     ----        -------         -------
BALANCE, DECEMBER 31, 1995                                                   7,725        0         42,977          10,489

   Net income                                                                    0        0              0           3,986
   Foreign currency translation adjustment, net of income taxes of
      $181                                                                       0        0              0               0
   Restricted stock                                                             85        0            680               0
                                                                             -----     ----        -------         -------
BALANCE, DECEMBER 31, 1996                                                   7,810        0         43,657          14,475

   Net income                                                                    0        0              0           2,402
   Foreign currency translation adjustment, net of income taxes of
      $1,331                                                                     0        0              0               0
   Nonqualified options exercised                                               17        0            163               0
   Restricted stock                                                             (8)       0            (62)              0
                                                                             -----     ----        -------         -------
BALANCE, DECEMBER 31, 1997                                                   7,819     $  0        $43,758         $16,877
                                                                             =====     ====        =======         =======

<CAPTION>
                                                                            FOREIGN
                                                                           CURRENCY
                                                                          TRANSLATION         UNEARNED
                                                                           ADJUSTMENT       COMPENSATION       TOTAL
                                                                          -----------       ------------    -----------
<S>                                                                       <C>               <C>             <C>
BALANCE, DECEMBER 31, 1994                                                   $(1,485)            $  0           $45,835

   Net income                                                                      0                0             6,146
   Foreign currency translation adjustment, net of
     income taxes of $701
                                                                               1,041                0             1,041
                                                                             -------            -----           -------
BALANCE, DECEMBER 31, 1995                                                      (444)               0            53,022

   Net income                                                                      0                0             3,986
   Foreign currency translation adjustment, net of
      income taxes of $18                                                       (299)               0              (299)
   Restricted stock                                                                0             (680)                0
                                                                             -------            -----           -------
BALANCE, DECEMBER 31, 1996                                                      (743)            (680)           56,709


   Net income                                                                      0                0             2,402
   Foreign currency translation adjustment, net of income
      taxes of $1,331                                                         (2,083)               0            (2,083)
   Nonqualified options exercised                                                  0                0               163
   Restricted stock                                                                0              199               137
                                                                             -------            -----           -------
BALANCE, DECEMBER 31, 1997                                                   $(2,826)           $(481)          $57,328
                                                                             =======            =====           =======
</TABLE>




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

                                      F-4
<PAGE>   21

                     ALLIED HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>


                                                                      1997         1996       1995
                                                                    --------    ---------   --------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                 <C>         <C>         <C>
   Net income                                                       $  2,402    $   3,986   $  6,146
                                                                    --------    ---------   --------
   Adjustments to reconcile net income to net cash
     provided by operating activities:
         Depreciation and amortization                                33,340       26,425     25,431
         Loss (gain) on sale of property and
           equipment                                                     144          (13)       (57)
         Acquisition related realignment                               8,914            0          0
         Extraordinary loss on early extinguishment
           of debt, net                                                    0          935          0
         Deferred income taxes                                         2,990        1,921      1,806
         Change in operating assets and liabilities,
           excluding effect of businesses acquired:
               Receivables, net                                       (4,314)          (9)     1,299
               Inventories                                               382           82        163
               Prepayments and other current assets                    1,216          452       (444)
               Trade accounts payable                                  2,296        4,565        645
               Accrued liabilities                                       474        1,277     (4,927)
                                                                    --------    ---------   --------
                 Total adjustments                                    45,442       35,635     23,916
                                                                    --------    ---------   --------
                 Net cash provided by operating
                   activities                                         47,844       39,621     30,062
                                                                    --------    ---------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                               (27,243)     (25,972)   (18,210)
   Proceeds from sale of property and equipment                          953        3,447        768
   Purchase of businesses, net of cash acquired                     (123,492)           0          0
   Increase in short-term investments                                (11,020)      (8,520)         0
   Increase in the cash surrender value of life
     insurance                                                        (2,451)      (1,981)      (589)
                                                                    --------    ---------   --------
                 Net cash used in investing activities              (163,253)     (33,026)   (18,031)
                                                                    --------    ---------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayments of long-term debt                                      (83,901)     (57,691)   (11,952)
   Proceeds from issuance of long-term debt                          216,953       42,657          0
   Other, net                                                         (9,042)        (655)      (827)
                                                                    --------    ---------   --------
                 Net cash provided by (used in)
                   financing activities                              124,010      (15,689)   (12,779)
                                                                    --------    ---------   --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
  EQUIVALENTS                                                            (44)         (80)       183
                                                                    --------    ---------    -------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                                          8,557       (9,174)      (565)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                         1,973       11,147     11,712
                                                                   ---------    ---------   --------
CASH AND CASH EQUIVALENTS AT END OF YEAR                           $  10,530    $   1,973   $ 11,147
                                                                   =========    =========   ========
</TABLE>

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


                                      F-5


<PAGE>   22



                     ALLIED HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 1997, 1996, AND 1995


 1.   ORGANIZATION AND OPERATIONS

      Allied Holdings, Inc. (the "Company"), a Georgia corporation, is a holding
      company which operates through its wholly owned subsidiaries. The
      principal operating divisions of the Company are Allied Automotive Group,
      Inc. ("Allied Automotive Group") and Axis Group, Inc. ("Axis Group").
      Allied Automotive Group is engaged in the business of transporting
      automobiles and light trucks from manufacturing plants, ports, auctions,
      and railway distribution points to automobile dealerships. Axis Group
      provides distribution and logistics services for the automotive industry.

      The Company acquired Ryder Automotive Carrier Services, Inc. and RC
      Management Corp. (collectively "Ryder Automotive Carrier Group") on
      September 30, 1997 (Note 2), resulting in the Company becoming the largest
      motor carrier of automobiles and light trucks in North America.

      The Company has four additional operating divisions: Allied Industries,
      Inc. ("Allied Industries"), Haul Insurance Limited ("Haul"), Link
      Information Systems, Inc. ("Link"), and Haul Risk Management, Inc. ("Risk
      Management"), which provide services to Allied Automotive Group, Axis
      Group, and the other subsidiaries of the Company. Allied Industries
      provides administrative, financial, and other related services. During
      December 1995, the Company incorporated Haul as a captive insurance
      company. Haul was formed for the purpose of insuring general liability,
      automobile liability, and workers' compensation for the Company. Link,
      which was incorporated in 1996, provides information systems hardware,
      software, and support. Risk Management was incorporated in 1997 and offers
      a range of risk management and claims administration services.

 2.   ACQUISITION OF RYDER AUTOMOTIVE CARRIER GROUP

      On September 30, 1997, the Company completed the acquisition of Ryder
      Automotive Carrier Group from Ryder System, Inc. for approximately $114.5
      million in cash, subject to post-closing adjustments. The acquisition has
      been accounted for under the purchase method, and accordingly, the
      operating results of Ryder Automotive Carrier Group have been included in
      the accompanying financial statements since the date of the acquisition.

      In conjunction with the acquisition, the Company issued $150,000,000 of 8
      5/8% senior notes (the "Senior Notes") in order to finance the
      acquisition, pay related fees and expenses, and reduce borrowings (Note
      6). Upon completion of the acquisition, the Company recorded a pretax
      charge of approximately $8.9 million to write down Company rigs and
      terminal facilities that will be idled or closed as a result of the
      acquisition.



                                      F-6
<PAGE>   23


      The following unaudited pro forma results of operations for the years
      ended December 31, 1997 and 1996 assume that the acquisition of Ryder
      Automotive Carrier Group and the Senior Notes offering had occurred on
      January 1, 1996. The pro forma results are not necessarily indicative of
      what actually would have occurred if the acquisition had been consummated
      on January 1, 1996 nor are they intended to be a projection of future
      results from combined operations (in thousands, except per share data).

<TABLE>
<CAPTION>

                                                                                       1997           1996
                                                                                    ----------       --------
<S>                                                                                 <C>              <C>
                Revenues                                                            $1,044,875       $960,661
                Operating income                                                        43,904         31,748
                Income before extraordinary item                                        15,515          5,674
                Net income                                                              15,515          4,739
                Income per share before extraordinary
                  item:
                    Basic                                                                $2.01         $ 0.73
                    Diluted                                                              $1.98         $ 0.73
                Net income per share:
                    Basic                                                                $2.01         $ 0.61
                    Diluted                                                              $1.98         $ 0.61
                Weighted average common shares
                  outstanding                                                            7,728          7,725
</TABLE>

 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF CONSOLIDATION

      The consolidated financial statements include the accounts of the Company
      and its subsidiaries. All significant intercompany transactions and
      accounts have been eliminated.

      FOREIGN CURRENCY TRANSLATION

      The assets and liabilities of the Company's Canadian subsidiaries are
      translated into U.S. dollars using current exchange rates in effect at the
      balance sheet date, and revenues and expenses are translated at average
      monthly exchange rates. The resulting translation adjustments are recorded
      as a separate component of stockholders' equity, net of related income
      taxes.

      REVENUE RECOGNITION

      Substantially all revenue is derived from transporting automobiles and
      light trucks from manufacturing plants, ports, auctions, and railway
      distribution points to automobile dealerships. Revenue is recorded by the
      Company when the vehicles are delivered to the dealerships.

      CASH AND CASH EQUIVALENTS

      The Company considers all highly liquid investments with an original
      maturity of three months or less to be cash equivalents.


                                       F-7
<PAGE>   24


      INVENTORIES

      Inventories consist primarily of tires, parts, materials, and supplies for
      servicing the Company's tractors and trailers. Inventories are recorded at
      the lower of cost (on a first-in, first-out basis) or market.

      PREPAYMENTS AND OTHER CURRENT ASSETS

      Prepayments and other current assets consist of the following at December
      31, 1997 and 1996 (in thousands):

<TABLE>
<CAPTION>

                                                                                 1997           1996
                                                                                -------        -------
<S>                                                                             <C>            <C>
                Tires on tractors and trailers                                  $13,582        $ 6,785
                Prepaid insurance                                                 3,228          2,572
                Other                                                             4,709          2,230
                                                                                -------        -------
                                                                                $21,519        $11,587
                                                                                =======        =======
</TABLE>
      TIRES ON TRACTORS AND TRAILERS

      Tires on tractors and trailers are capitalized and amortized to operating
      supplies and expenses on a cents per mile basis.

      PROPERTY AND EQUIPMENT

      Property and equipment are stated at cost. Major property additions,
      replacements, and betterments are capitalized, while maintenance and
      repairs which do not extend the useful lives of these assets are expensed
      currently. Depreciation is provided using the straight-line method for
      financial reporting and accelerated methods for income tax purposes. The
      detail of property and equipment at December 31, 1997 and 1996 is as
      follows (in thousands):

<TABLE>
<CAPTION>


                                                                    1997            1996         USEFUL LIVES
                                                                   --------        --------    -----------------
<S>                                                                <C>             <C>         <C>
       Tractors and trailers                                       $320,282        $181,841    4 to 10 years
       Buildings and facilities
         (including leasehold
         improvements)
                                                                     41,250          23,679    4 to 25 years
       Land                                                          17,888           9,953
       Furniture, fixtures, and equipment                            15,418          10,520    3 to 10 years
       Service cars and equipment                                     1,670           1,175    3 to 10 years
                                                                   --------        --------
                                                                    396,508         227,168
       Less accumulated depreciation and
         amortization                                               110,294          94,616
                                                                   --------        --------
                                                                   $286,214        $132,552
                                                                   ========        ========
</TABLE>

                                       F-8
<PAGE>   25


                SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                             1997         1996            1995
                                                                          --------       ------         -------
<S>                                                                       <C>            <C>            <C>
       Cash paid during the year for interest                             $  9,189       $8,514         $11,470
       Cash paid during the year for income
         taxes, net of refunds                                                 278         (280)          1,364
       Liabilities assumed in connection with
         businesses acquired*                                             (170,745)           0               0

</TABLE>
* Includes trade accounts payable, accrued liabilities, postretirement benefits
  other than pensions, deferrred income taxes and other long-term liabilities.

      GOODWILL

      The acquisition of Ryder Automotive Carrier Group resulted in goodwill of
      approximately $67,637,000. Goodwill related to the acquisition is being
      amortized on a straight-line basis over 40 years. Other goodwill is being
      amortized on a straight-line basis from ten to thirty years. Amortization
      (included in depreciation and amortization expense) for the years ended
      December 31, 1997, 1996, and 1995 amounted to approximately $2,086,000,
      $1,541,000, and $1,407,000, respectively. Accumulated amortization was
      approximately $7,709,000 and $5,623,000 at December 31, 1997 and 1996,
      respectively. The Company periodically evaluates the realizability of
      goodwill based on expectations of nondiscounted cash flows and operating
      income for each subsidiary having a material goodwill balance. In the
      opinion of management, no impairment of goodwill exists at December 31,
      1997.

      CASH SURRENDER VALUE OF LIFE INSURANCE

      The Company maintains life insurance policies for certain employees of the
      Company. Under the terms of the policies, the Company will receive, upon
      the death of the insured, the lesser of aggregate premiums paid or the
      face amount of the policy. Any excess proceeds over premiums paid are
      remitted to the employee's beneficiary. The Company records the increase
      in cash surrender value each year as a reduction of premium expense. The
      Company has recorded approximately $6,577,000 and $4,127,000 of cash
      surrender value as of December 31, 1997 and 1996, respectively, included
      in other assets on the accompanying balance sheets.

      USE OF ESTIMATES

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements. Estimates also affect the reported amounts of
      revenues and expenses during the reporting period. Actual results could
      differ from those estimates.

      FAIR VALUE OF FINANCIAL INSTRUMENTS

      Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures
      About Fair Value of Financial Instruments," requires disclosure of the
      following information about the fair value of certain financial
      instruments for which it is practicable to estimate that value. For
      purposes of the following disclosure, the fair value of a financial
      instrument is the amount at which the instrument could be exchanged in a
      current transaction between willing parties, other than in a forced sale
      or liquidation.


                                      F-9


<PAGE>   26

      The amounts disclosed represent management's best estimates of fair value.
      In accordance with SFAS No. 107, the Company has excluded certain
      financial instruments and all other assets and liabilities from its
      disclosure. Accordingly, the aggregate fair value amounts presented are
      not intended to, and do not, represent the underlying fair value of the
      Company.

      The methods and assumptions used to estimate fair value are as follows:

               CASH AND CASH EQUIVALENTS

               The carrying amount approximates fair value due to the relatively
               short period to maturity of these instruments.

               SHORT-TERM INVESTMENTS

               The Company's short-term investments are comprised of debt
               securities, all classified as trading securities, which are
               carried at their fair value based on the quoted market prices of
               those investments. Accordingly, net realized and unrealized gains
               and losses on trading securities are included in net earnings.

               LONG-TERM DEBT

               The carrying amount approximates fair value based on the
               borrowing rates currently available to the Company for borrowings
               with similar terms and average maturities.

               INTEREST RATE CAP AGREEMENTS

               The Company has entered into several interest rate protection
               agreements which expire at various dates through February 1999.
               The agreements protect outstanding floating rate debt at varying
               amounts ranging from $40,000,000 in 1997 to $33,000,000 in 1999.
               Under the agreements, the Company is reimbursed when actual
               interest rates exceed a limit, as defined. The limit, based
               primarily on the 90-day LIBOR, ranges from 6.5% to 8% over the
               protection period, and certain of the agreements limit the
               reimbursement if actual LIBOR exceeds a specified rate. The fair
               value of the interest rate cap agreements is the amount at which
               they could be settled, based on estimates obtained from brokers.

               FUEL HEDGING CONTRACTS

               The Company has entered into futures contracts to manage a
               portion of the Company's exposure to fuel price fluctuations.
               Gains and losses resulting from fuel hedging transactions are
               recognized when the underlying fuel being hedged is used. The
               fair value of fuel hedging contracts is estimated based on quoted
               market prices.

      The financial instruments are generally executed with major financial
      institutions which expose the Company to acceptable levels of market and
      credit risks and may at times be concentrated with certain counterparties
      or groups of counterparties. The credit worthiness of counterparties is
      subject to continuing review and full performance is anticipated.

      The asset and (liability) amounts recorded in the balance sheet and the
      estimated fair values of financial instruments at December 31, 1997
      consisted of the following (in thousands):


                                      F-10

<PAGE>   27

<TABLE>
<CAPTION>


                                                   CARRYING          FAIR
                                                    AMOUNT           VALUE
                                                   --------        --------
                <S>                                <C>             <C>
                Cash and cash equivalents          $ 10,530        $ 10,530
                Short-term investments               19,540          19,540
                Long-term debt                     (230,983)       (230,983)
                Interest rate cap agreements             91               0
                Fuel hedging contracts                    0            (489)


</TABLE>

      ACCRUED LIABILITIES

      Accrued liabilities consist of the following at December 31, 1997 and 1996
      (in thousands):

<TABLE>
<CAPTION>

                                                       1997           1996
                                                     --------       -------
                <S>                                  <C>            <C>
                Wages and benefits                   $ 44,676       $12,566
                Claims and insurance reserves          28,476        13,145
                Other                                  45,284         4,636
                                                     --------       -------
                                                     $118,436       $30,347
                                                     ========       =======
</TABLE>

      The long-term portion of claims and insurance reserves is included in the
      balance sheet as other long-term liabilities and amounts to approximately
      $66,795,000 and $0 at December 31, 1997 and 1996, respectively.

      CLAIMS AND INSURANCE RESERVES

      In the United States, the Company retains liability up to $650,000 for
      each workers' compensation claim and $500,000 for each claim for
      automobile and general liability, including personal injury and property
      damage claims. In addition to the $500,000 per occurrence deductible for
      automobile liability, there is a $500,000 aggregate deductible for those
      claims which exceed the $500,000 per occurrence deductible. In addition,
      the Company retains liability up to $250,000 for each cargo damage claim.
      In Canada, the Company retains liability up to CDN $100,000 for each claim
      for personal injury, property damage, and cargo damage.

      The reserves for self-insured workers' compensation, automobile, and
      general liability losses are based on actuarial estimates that are
      discounted at rates ranging from 5% to 6% to their present value based on
      the Company's historical claims experience adjusted for current industry
      trends. The undiscounted amount of the reserves for claims and insurance
      at December 31, 1997 and 1996 was approximately $97,697,000 and
      $14,026,000, respectively. The claims and insurance reserves are adjusted
      periodically as such claims mature, to reflect changes in actuarial
      estimates based on actual experience.

      The estimated costs of all known and potential losses are accrued by the
      Company. In the opinion of management, adequate provision has been made
      for all incurred claims.

      INCOME TAXES

      The Company follows the practice of providing for income taxes based on
      SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires
      recognition of deferred tax liabilities and assets for the expected future
      tax consequences of events that have been included in the financial
      statements or tax returns (Note 4).


                                      F-11
<PAGE>   28


      EARNINGS PER SHARE

      In February 1997, the Financial Accounting Standards Board issued SFAS No.
      128, "Earnings Per Share." This new statement requires presentation of
      basic and diluted earnings per share. Basic earnings per share are
      calculated by dividing net income available to common stockholders by the
      weighted average number of common shares outstanding for the years
      presented. Diluted earnings per share reflects the potential dilution that
      could occur if securities and other contracts to issue common stock were
      exercised or converted into common stock or resulted in the issuance of
      common stock that then shared in the earnings of the entity. Basic and
      diluted earnings per share are not materially different for the years
      presented. A reconciliation of the number of weighted average shares used
      in calculating basic and diluted earnings per share is as follows (in
      thousands):

<TABLE>
<CAPTION>


                                                                                 1997        1996         1995
                                                                               ------        -----       ------
       <S>                                                                     <C>           <C>         <C>
       Weighted average number of common shares
         outstanding-basic earnings per share                                    7,728       7,725       7,725
       Effect of potentially dilutive shares
         outstanding                                                                82           0           0
                                                                               -------       -----       -----
       Weighted average number of common shares
         outstanding-diluted earnings per share                                  7,810       7,725       7,725
                                                                               =======       =====       ======
</TABLE>

      NEW ACCOUNTING STANDARDS

      In 1997, the Financial Accounting Standards Board issued SFAS No. 129,
      "Disclosure of Information about Capital Structure," which establishes
      standards for disclosing information about an entity's capital structure,
      and SFAS No. 130, "Reporting Comprehensive Income," which establishes
      standards for displaying comprehensive income and its components in a full
      set of general purpose financial statements. Both SFAS No. 129 and SFAS
      No. 130 are effective for fiscal years beginning after December 15, 1997,
      and the adoption of these statements is not expected to have a material
      impact.

      RECLASSIFICATION

      Certain amounts in the December 31, 1996 and 1995 financial statements
      have been reclassified to conform to the current year presentation.

 4.   INCOME TAXES

      For all periods presented, the accompanying financial statements reflect
      provisions for income taxes computed in accordance with the requirements
      of SFAS No. 109.


                                       F-12
<PAGE>   29



      The following summarizes the components of the income tax provision (in
      thousands):

<TABLE>
<CAPTION>


                                                                     1997           1996          1995
                                                                    -------        ------        ------
                <S>                                                 <C>            <C>           <C>
                Current:
                    Federal                                          $ (874)       $  369        $  571
                    State                                               110           269           177
                    Foreign                                             340           932         1,989
                Deferred:
                    Federal                                           3,148         4,365         3,371
                    State                                               415           646           422
                    Foreign                                            (989)       (3,024)       (2,308)
                                                                     -------        ------        ------
                             Total income tax
                                provision                            $2,150        $3,557        $4,222
                                                                     ======        ======        ======

</TABLE>


      The provision for income taxes differs from the amounts computed by
      applying federal statutory rates due to the following (in thousands):

<TABLE>
<CAPTION>

                                                                                1997          1996          1995
                                                                               ------        ------        ------
       <S>                                                                    <C>           <C>           <C>
       Provision computed at the federal
          statutory rate                                                      $1,548        $2,883        $3,525
       State income taxes, net of federal income
          tax benefit                                                            346           604           415
       Insurance premiums, net of recovery                                       258          (115)           54
       Amortization of goodwill                                                  274           146           146
       Earnings in jurisdictions taxed at rates
          different from the statutory U.S.
          federal rate                                                          (166)         (494)         (252)
       Other, net                                                               (110)          533           334
                                                                              ------        ------        ------
       Total income tax provision                                             $2,150        $3,557        $4,222
                                                                              ======        ======        ======
</TABLE>


      The tax effect of significant temporary differences representing deferred
      tax assets and liabilities at December 31, 1997 and 1996 is as follows (in
      thousands):


                                      F-13

<PAGE>   30
<TABLE>
<CAPTION>
                                                                                  1997             1996
                                                                                 -------          ------
                <S>                                                              <C>             <C>
                Deferred tax assets:
                    Claims and insurance expense                                 $28,510         $ 1,661
                    Accrued compensation expense                                   6,016           1,617
                    Postretirement benefits                                        4,581           1,500
                    Other liabilities not currently
                      deductible
                                                                                  11,687           1,010
                    Tax carryforwards                                             10,736           3,067
                    Other, net                                                     5,379           1,831
                                                                                 -------         -------
                              Total deferred tax assets                           66,909          10,686
                                                                                 -------         -------
                Deferred tax liabilities:
                   Prepaids currently deductible                                  (5,707)         (2,623)
                   Depreciation and amortization                                 (68,328)        (13,813)
                   Postemployment benefits                                        (5,665)           (752)
                   Other, net                                                     (4,459)           (632)
                                                                                 -------         -------
                              Total deferred tax
                              liabilities                                        (84,159)        (17,820)
                                                                                 -------         -------
                Net deferred tax liabilities                                    $(17,250)        $(7,134)
                                                                                ========         =======
</TABLE>
      The Company has certain tax carryforwards available to offset future
      income taxes consisting of net operating losses that expire from 2000 to
      2013, foreign tax credits that expire from 2001 to 2003, charitable
      contributions that expire in 2003, and alternative minimum tax credits
      that have no expiration dates.

      Management believes that a valuation allowance is not considered necessary
      based on the Company's earnings history, the projections for future
      taxable income and other relevant considerations over the periods during
      which the deferred tax assets are deductible.

 5.   LEASE COMMITMENTS

      RELATED PARTIES

      Prior to December 1995, the Company leased automobiles and service trucks
      from a related party under leases generally having one-year to three-year
      lease terms at fixed monthly rental rates. In addition, the Company leased
      office space through December 1997 from a related party under a lease
      which was to expire in 2003. On December 31, 1997, this space was sold to
      an unrelated party, and a new and revised agreement was signed effective
      January 1, 1998 which extends the lease term through 2007. Rental expenses
      under these noncancelable leases amounted to approximately $1,456,000 in
      1997, $1,030,000 in 1996, and $1,652,000 in 1995. In the opinion of
      management, the terms of these leases were as favorable as those which
      could be obtained from unrelated lessors.

      UNRELATED PARTIES

      The Company leases equipment and certain terminal facilities from
      unrelated parties under noncancelable operating lease agreements which
      expire in various years through 2003. Rental expenses under these leases
      amounted to approximately $4,277,000, $3,245,000, and $1,796,000 in 1997,
      1996, and 1995, respectively.

      The Company also leases certain terminal facilities from unrelated parties
      under cancelable leases (i.e., month-to-month terms). The total rental


                                      F-14
<PAGE>   31

      expenses under these leases were approximately $2,198,000, $2,142,000, and
      $1,965,000 for the years ended December 31, 1997, 1996, and 1995,
      respectively.

      Future minimum rental commitments under all noncancelable operating lease
      agreements, excluding lease agreements that expire within one year, are as
      follows as of December 31, 1997 (in thousands):


<TABLE>
         <S>                                 <C>
         1998                                $ 5,794
         1999                                  4,889
         2000                                  3,674
         2001                                  2,598
         2002                                  2,888
         Thereafter                           10,897
                                             -------
                                    Total    $30,740
                                             =======
</TABLE>

 6.   LONG-TERM DEBT

      Long-term debt consisted of the following at December 31, 1997 and 1996
(in thousands):

<TABLE>
<CAPTION>
                                                                                 1997              1996
                                                                               --------          -------

                <S>                                                            <C>               <C>
                Revolving credit facility                                      $ 35,000          $49,348
                Senior notes                                                    150,000                0
                Senior subordinated notes                                        40,000           40,000
                Other                                                             5,983            6,635
                                                                               --------          -------
                                                                                230,983           95,983
                Less current maturities of long-term debt                        (2,980)          (2,275)
                                                                               --------          -------
                                                                               $228,003          $93,708
                                                                               ========          =======
</TABLE>

      In September 1997, the Company issued $150,000,000 of Senior Notes through
      a private placement. Subsequently, the Senior Notes were registered with
      the Securities and Exchange Commission. The Senior Notes mature October 1,
      2007 and bear interest at 8 5/8% annually. Interest on the Senior Notes
      will be payable semi-annually in arrears on April 1 and October 1 of each
      year, commencing on April 1, 1998.

      Borrowings under the Senior Notes are general unsecured obligations of the
      Company. The Company's obligations under the Senior Notes are guaranteed
      by substantially all of the subsidiaries of the Company (the
      "Guarantors"). Separate financial statements of the Guarantors are not
      provided herein as (i) the Guarantors are jointly and severally liable for
      the Company's obligations under the Senior Notes, (ii) the subsidiaries
      which are not Guarantors are inconsequential to the consolidated
      operations of the Company and its subsidiaries and (iii) the net assets
      and earnings of the Guarantors are substantially equivalent to the net
      assets and earnings of the consolidated entity as reflected in these
      consolidated financial statements. There are no restrictions on the
      ability of Guarantors to make distributions to the Company.

      The Senior Notes set forth a number of negative covenants binding on the
      Company. The covenants limit the Company's ability to, among other things,
      purchase or redeem stock, make dividend or other distributions, make
      investments, and incur or repay debt (with the exception of payment of
      interest or principal at stated maturity).

      Concurrent with the issuance of the Senior Notes, the Company closed on a
      new revolving credit facility (the "New Revolving Credit Facility"). The
      New Revolving Credit Facility allows the Company to borrow under a
      revolving line of credit and issue letters of credit up to the lesser of
      $230,000,000 or a borrowing base amount, as defined in the New Revolving
      Credit Facility. Annual commitment fees are due on the undrawn portion of
      the commitment. Amounts outstanding under the New Revolving Credit
      Facility mature 2002. The interest rate for the New Revolving Credit
      Facility is, at the Company's option, either (i) the bank's base rate, as


                                      F-15
<PAGE>   32

      defined, or (ii) the bank's Eurodollar rate, as defined, as determined at
      the date of each borrowing, plus an applicable margin.

      Borrowings under the New Revolving Credit Facility are secured by a first
      priority security interest on assets (other than real estate) of the
      Company and certain of its subsidiaries but including a pledge of stock of
      certain subsidiaries. In addition, certain subsidiaries of the Company
      jointly and severally guarantee the obligations of the Company under the
      New Revolving Credit Facility.

      The New Revolving Credit Facility sets forth a number of affirmative,
      negative, and financial covenants binding on the Company. The negative
      covenants limit the ability of the Company to, among other things, incur
      debt, incur liens, make investments, make dividend or other distributions,
      or enter into any merger or other consolidation transaction. The financial
      covenants include the maintenance of a minimum consolidated net worth,
      compliance with a leverage ratio and a coverage ratio, and limitations on
      capital expenditures.

      In February 1996, the Company issued $40,000,000 of senior subordinated
      notes ("Senior Subordinated Notes") through a private placement. The
      Senior Subordinated Notes mature February 1, 2003 and bear interest at 12%
      annually. Proceeds from the Senior Subordinated Notes were used to reduce
      outstanding Company borrowings.

      Future maturities of long-term debt are as follows at December 31, 1997
(in thousands):

                         1998                               $  2,980
                         1999                                  2,740
                         2000                                    159
                         2001                                    104
                         2002                                 35,000
                         Thereafter                          190,000
                                                            --------
                                                            $230,983
                                                            ========

      At December 31, 1997, the weighted average interest rate on borrowings
      under the New Revolving Credit Facility was 8.4%, and approximately
      $9,600,000 was committed under letters of credit. At December 31, 1997,
      the Company had available borrowings under the New Revolving Credit
      Facility of approximately $185,400,000.

 7.   EMPLOYEE BENEFITS

      PENSION PLANS

      The Company maintains the Allied Defined Benefit Pension Plan, a trusteed
      noncontributory defined benefit pension plan for management and office
      personnel in the United States, and the Pension Plan for Employees of Auto
      Haulaway, Inc. and Associated Companies for management and office
      personnel in Canada (the "Plans"). Under the Plans, benefits are paid to
      eligible employees upon retirement based primarily on years of service and
      compensation levels at retirement. Contributions to the Plans reflect
      benefits attributed to employees' services to date and services expected
      to be rendered in the future. The Company's funding policy is to
      contribute annually at a rate that is intended to fund future service
      benefits as a level percentage of pay and past service benefits over a
      30-year period.


                                      F-16
<PAGE>   33


      The following table sets forth the Plans' funded status and amounts
      recognized in the Company's balance sheets as of December 31, 1997 and
      1996 (in thousands):

<TABLE>
<CAPTION>
                                                                                          1997           1996
                                                                                         -------        ------
       <S>                                                                               <C>            <C>
       Actuarial present value of benefit obligations:
           Accumulated benefit obligation, including vested benefits of
              $19,313 and $16,444 in 1997 and 1996, respectively                         $ 19,670        $ 16,810
                                                                                         ========        ========

       Projected benefit obligation                                                      $ 26,697        $ 21,438
       Plan assets at fair value                                                           22,543          19,052
                                                                                         --------        --------
       Projected benefit obligation in excess of plan
           assets                                                                          (4,154)         (2,386)

       Unrecognized net loss                                                                4,434           2,787
       Unrecognized prior service cost                                                       (437)           (472)
       Unrecognized net transition asset being
           recognized over approximately 15 years                                            (228)           (270)
                                                                                         --------        --------
       Accrued pension cost recognized in the
           consolidated balance sheets                                                   $   (385)       $   (341)
                                                                                         ========        ========
</TABLE>

      The net periodic pension cost consisted of the following components for
the years ended December 31, 1997, 1996, and 1995 (in thousands):


<TABLE>
<CAPTION>

                                                                               1997          1996          1995
                                                                              ------        ------        ------
       <S>                                                                    <C>           <C>          <C>
       Service cost for benefits earned during
         the period                                                           $1,127        $  993        $  732
       Interest cost on projected benefit obligation                           1,642         1,523         1,336
       Actual gain on plan assets                                             (3,158)       (2,226)       (2,522)
       Net amortization and deferral of
         actuarial gains and losses                                            1,373           713         1,169
                                                                              ------        ------        ------
       Net periodic pension cost                                              $  984        $1,003        $  715
                                                                              ======        ======        ======

      The following assumptions were used:

                                                                               1997          1996          1995
                                                                              ------        ------        ------

       Weighted average discount rate                                           7.5%          7.75%          7.5%
       Increase in future compensation levels                               3.5-6.0        3.5-6.0       3.5-6.0
       Expected long-term rate of return on
          assets -- United States                                              10.0           10.0          10.0
       Expected long-term rate of return on
          assets--Canada                                                        7.5            7.5           7.5
</TABLE>

      At December 31, 1997, plan assets consisted primarily of U.S. and
      international corporate bonds and stocks, convertible equity securities,
      and U.S. and Canadian government securities.

      A substantial number of the Company's employees are covered by
      union-sponsored, collectively bargained, multiemployer pension plans. The
      Company contributed and charged to expense approximately $17,926,000,
      $11,444,000, and $10,916,000 for the years ended December 31, 1997, 1996,
      and 1995, respectively, for such plans. These contributions are determined
      in accordance with the provisions of negotiated labor contracts and are
      generally based on the number of man-hours worked.


                                      F-17
<PAGE>   34

      401(K) PLAN

      The Company has a 401(k) plan covering all of its employees in the United
      States. Prior to July 1, 1993, the Company did not contribute to this
      plan; however, the Company did incur the cost of administering this plan.
      The Company's administrative expense for the 401(k) plan was approximately
      $102,000, $165,000, and $160,000 in fiscal years 1997, 1996, and 1995,
      respectively. Beginning July 1, 1993, the Company contributes the lesser
      of 3% of participant wages or $1,000 per year for each nonbargaining unit
      participant of the plan. The Company contributed approximately $319,000,
      $225,000, and $225,000 to the plan during the years ended December 31,
      1997, 1996, and 1995, respectively.

      POSTRETIREMENT BENEFIT PLANS

      The Company provides certain health care and life insurance benefits for
      eligible employees who retired prior to July 1, 1993 and their dependents.
      Generally, the health care plan pays a stated percentage of most medical
      expenses reduced for any deductibles and payments by government programs
      or other group coverage. The life insurance plan pays a lump-sum death
      benefit based on the employee's salary at retirement. These plans are
      unfunded. Employees retiring after July 1, 1993 are not entitled to any
      postretirement medical or life insurance benefits.

      In conjunction with the Ryder Automotive Carrier Group acquisition, the
      Company took over a postretirement benefit plan to provide retired
      employees with certain health care and life insurance benefits.
      Substantially all employees not covered by union-administered medical
      plans and who had retired as of September 30, 1997 are eligible for these
      benefits. Benefits are generally provided to qualified retirees under age
      65 and eligible dependents.

      The following table sets forth the status of all of these postretirement
      benefit plans reconciled to the accrued postretirement benefit cost
      recognized in the Company's balance sheets at December 31, 1997 and 1996
      (in thousands):


<TABLE>
<CAPTION>
                                                                                    1997           1996
                                                                                   -------       -------
                <S>                                                                <C>           <C>
                Accumulated postretirement benefit obligation, retirees            $10,711       $ 3,586
                Unrecognized net gain                                                  984           338
                                                                                   -------       -------
                Accrued postretirement benefit cost                                 11,695         3,924
                Less current portion                                                  (340)         (303)
                                                                                   -------       -------
                                                                                   $11,355       $ 3,621
                                                                                   =======       =======
</TABLE>


      Net periodic benefit cost for 1997, 1996, and 1995 included the following
components (in thousands):

<TABLE>
<CAPTION>
                                                                                    1997        1996      1995
                                                                                    ----        ----      ----
       <S>                                                                          <C>         <C>       <C>
       Service cost of benefits earned                                               $  0       $  0      $  0
       Interest cost on accumulated postretirement
         benefit obligation                                                           330        260       308
                                                                                     ----       ----      ----
       Net periodic postretirement benefit cost                                      $330       $260      $308
                                                                                     ====       ====      ====


</TABLE>

                                      F-18
<PAGE>   35

      Assumptions used in the computation of the accumulated postretirement
benefit obligation and net periodic benefit cost are as follows:

<TABLE>
<CAPTION>
                                                                            1997       1996        1995
                                                                            ----       -----       ----
                <S>                                                         <C>        <C>         <C>
                Discount rate                                                7.5%       7.75%       7.5%
                Initial health care cost trend rate                          9.5       10.25       11.0
                Ultimate health care cost trend
                  rate                                                       5.5         5.5        5.5
                Year ultimate health care cost trend rate reached           2003        2003       2003
</TABLE>

      If the health care cost trend rate were increased 1%, the accumulated
      postretirement benefit obligation as of December 31, 1997 would have
      increased by approximately $841,000. The effect of this change on the
      periodic postretirement benefit cost for 1997 would be approximately
      $21,000.

      A substantial number of the Company's employees are covered by
      union-sponsored, collectively bargained, multiemployer health and welfare
      benefit plans. The Company contributed and charged to expense
      approximately $22,402,000, $14,811,000, and $13,723,000 in 1997, 1996, and
      1995, respectively, in connection with these plans. These required
      contributions are determined in accordance with the provisions of
      negotiated labor contracts and are for both active and retired employees.

 8.   COMMITMENTS AND CONTINGENCIES

      The Company is involved in various litigation and environmental matters
      relating to employment practices, damages, and other matters arising from
      operations in the ordinary course of business. In the opinion of
      management, the ultimate disposition of these matters will not have a
      material adverse effect on the Company's financial position or results of
      operations.

      The Company has entered into employment agreements with certain executive
      officers of the Company. The agreements, which are substantially similar,
      provide for compensation to the officers in the form of annual base
      salaries and bonuses based on earnings. The employment agreements also
      provide for severance benefits upon the occurrence of certain events,
      including a change in control, as defined.

 9.   REVENUES FROM MAJOR CUSTOMERS

      Substantially all of the Company's revenues are realized through the
      automotive industry.

      In 1997, 1996, and 1995, approximately 77%, 81%, and 80%, respectively, of
      the Company's revenues were derived from the three major domestic
      automobile manufacturers, one of which, Ford Motor Company, accounted for
      approximately 41%, 53%, and 52% of revenues, respectively.

10.   INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION

      In June 1997, the Financial Accounting Standards Board issued SFAS No.
      131, "Disclosures about Segments of an Enterprise and Related


                                      F-19
<PAGE>   36

      Information." SFAS No. 131 establishes standards for reporting information
      about operating segments in annual financial statements and requires
      reporting selected information about operating segments in interim
      financial reports issued to stockholders. SFAS No. 131 is effective for
      fiscal years beginning after December 15, 1997. The adoption of SFAS No.
      131 is not expected to have a material impact.

      The Company operates in one reportable industry segment: transporting
      automobiles and light trucks from manufacturing plants, ports, auctions,
      and railway distribution points to automotive dealerships. Geographic
      financial information for 1997, 1996, and 1995 is as follows (in
      thousands):

<TABLE>
<CAPTION>
                                                                   1997            1996            1995
                                                                 --------        --------        --------
              <S>                                                <C>             <C>             <C>
              Revenues:
                    United States                                $422,736        $264,909        $258,038
                    Canada                                        158,794         127,638         123,426
                                                                 --------        --------        --------
                                                                 $581,530        $392,547        $381,464
                                                                 ========        ========        ========

                Operating income (loss):
                    United States                                $ 14,700        $ 19,129        $ 19,821
                    Canada                                          3,079            (534)          1,100
                                                                 --------        --------        --------
                                                                 $ 17,779        $ 18,595        $ 20,921
                                                                 ========        ========        ========

                Identifiable assets:
                    United States                                $455,905        $133,618        $136,948
                    Canada                                        103,034          77,465          77,738
                                                                 --------        --------        --------
                                                                 $558,939        $211,083        $214,686
                                                                 ========        ========        ========
</TABLE>


11.   STOCKHOLDERS' EQUITY

      The Company has authorized 5,000,000 shares of preferred stock with no par
      value. No shares have been issued, and therefore, there were no shares
      outstanding at December 31, 1997 and 1996. The board of directors has the
      authority to issue these shares and to fix dividends, voting and
      conversion rights, redemption provisions, liquidation preferences, and
      other rights and restrictions.

      In addition, the Company adopted a long-term incentive plan which allows
      the issuance of grants or awards of incentive stock options, restricted
      stock, stock appreciation rights, performance units, and performance
      shares to employees and directors of the Company to acquire up to 400,000
      shares of the Company's common stock.

      During December 1996, the Company granted 85,000 shares of restricted
      stock to certain employees of the Company. In connection with the award of
      the restricted stock, the Company recorded $680,000 of unearned
      compensation in the accompanying balance sheets which will be amortized
      over five years, the vesting period of the restricted stock. During 1997,
      8,000 shares of restricted stock were canceled.

      In addition, the Company has granted nonqualified stock options under the
      long-term incentive plan. Options granted become exercisable after one
      year in 20% or 33 1/3% increments per year and expire ten years from the
      date of the grant.


                                      F-20
<PAGE>   37
<TABLE>
<CAPTION>

                                                                                                        WEIGHTED
                                                                                                        AVERAGE
                                                                                      OPTION PRICE      EXERCISE
                                                                    SHARES            (PER SHARE)         PRICE
                                                                    -------           ------------      ---------
       <S>                                                          <C>               <C>               <C>
       Outstanding as of January 1,                                    8,550                $11.75        $11.75
           1995
              Granted                                                128,500                 $9.50          9.50
              Exercised                                                    0                   N/A           N/A
              Canceled                                                     0                   N/A           N/A
                                                                    --------          ------------        ------
       Outstanding as of December 31,
           1995                                                      137,050          $9.50-$11.75          9.64
              Granted                                                 34,000                 $9.00          9.00
              Exercised                                                    0                   N/A           N/A
              Canceled                                                     0                   N/A           N/A
                                                                    --------          ------------        ------
       Outstanding as of December 31,
           1996                                                      171,050          $9.00-$11.75          9.51
              Granted                                                 10,000                $17.13         17.13
              Exercised                                              (17,495)         $9.00-$11.75          9.42
              Canceled                                               (18,500)         $9.00-$11.75          9.07
                                                                    --------          ------------        ------

       Outstanding as of December 31,
           1997                                                      145,055          $9.00-$17.13        $10.11
                                                                    ========          ============        ======
</TABLE>


<TABLE>
<CAPTION>
                                                                              1997          1996         1995
                                                                             ------        ------      -------
       <S>                                                                   <C>           <C>          <C>
       Options exercisable at year-end                                        72,555        41,867        2,850
       Weighted average exercise price of options                           $   9.72       $  9.81      $ 11.75
         exercisable at year-end
       Per share weighted average fair value of
         options granted during the year                                    $   8.27       $  3.74      $  3.77
</TABLE>


      The weighted average remaining contractual life of options outstanding at
December 31, 1997 was eight years.

      The Company has adopted the disclosure-only provisions of SFAS No. 123,
      "Accounting for Stock-Based Compensation," but applies Accounting
      Principles Board Opinion No. 25 and related interpretations in accounting
      for the long-term incentive plan. If the Company had elected to recognize
      compensation cost for the long-term incentive plan based on the fair value
      at the grant dates for awards under the plan, consistent with the method
      prescribed by SFAS No. 123, net income and earnings per share would have
      been changed to the pro forma amounts indicated below at December 31,
      1997, 1996, and 1995 (in thousands, except per share data):


<TABLE>
<CAPTION>
                                                                          1997         1996          1995
                                                                         ------       ------       -------
                <S>                                                      <C>          <C>          <C>
                Net income:
                    As reported                                          $2,402       $3,986       $6,146
                    Pro forma                                             2,305        3,900        6,140
                Earnings per share:
                    As reported                                          $ 0.31        $0.52        $0.80
                    Pro forma                                              0.30         0.50         0.79
</TABLE>


      The fair value of the Company's stock options used to compute pro forma
      net income and earnings per share disclosures is the estimated present
      value at grant date using the Black-Scholes option pricing model with the
      following weighted average assumptions for 1997 and 1996: dividend yield
      of 0%, expected volatility of 34%, a risk-free interest rate of 5.7%, and
      an expected holding period of five years.


                                      F-21
<PAGE>   38
12.   QUARTERLY FINANCIAL DATA (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                   1997
                                                            ----------------------------------------------------
                                                             FIRST           SECOND         THIRD         FOURTH
                                                            --------        -------         -----         ------
        <S>                                                 <C>             <C>             <C>           <C>
                                                                              (IN THOUSANDS,
                                                                          EXCEPT PER SHARE AMOUNTS)

       Revenues                                             $ 96,393       $112,576        $91,384       $281,177
       Operating income (loss)*                                2,806          8,644         (7,156)        13,485
       Net income (loss)*                                        198          3,513         (5,674)         4,365
       Basic and diluted net income
           loss) per share*                                 $   0.03       $   0.45        $ (0.73)      $   0.56
       Average shares outstanding                              7,725          7,725          7,725          7,736
       Stock prices:

           High                                             $  8.250       $ 11.125        $23.375       $ 24.000
           Low                                                 6.250          5.500         11.000         13.750
</TABLE>

    *During the third quarter of 1997, the Company recorded a pretax charge of
     approximately $8.9 million upon completion of the Ryder Carrier Group
     acquisition to write down Company rigs and terminal facilities that will
     be idled or closed as a result of the acquisition.

<TABLE>
<CAPTION>

                                                                                   1996
                                                             --------------------------------------------------
                                                             First          Second         Third         Fourth
                                                             -----          ------         -----         ------
       <S>                                                   <C>            <C>            <C>           <C>
                                                                              (In Thousands,
                                                                         Except Per Share Amounts)

       Revenues                                              $93,396       $107,169        $87,609       $104,373
       Operating income                                        3,090          7,965            987          6,553
       Income (loss) before
         extraordinary item**                                    360          3,098           (936)         2,399
       Basic and diluted income
         (loss) per share before
         extraordinary item**                                $  0.05       $   0.40        $ (0.12)      $   0.31
       Net income (loss)                                        (575)         3,098           (936)         2,399
       Basic and diluted net income
           (loss) per share                                  $ (0.07)      $   0.40        $ (0.12)      $   0.31
       Average shares outstanding                              7,725          7,725          7,725          7,725
       Stock prices:
           High                                              $ 9.875       $ 10.500        $10.625       $ 10.500
           Low                                                 7.750          7.750          8.375          7.000

</TABLE>

               **During the first quarter of 1996, the Company recorded an
                  extraordinary loss on extinguishment of debt of approximately
                  $935,000, net of taxes.


                                      F-22
<PAGE>   39

EXHIBIT DESCRIPTION

(1)        3.1     Amended and Restated Articles of Incorporation of the
                   Company.

(1)        3.2     Amended and Restated Bylaws of the Company.

(1)        4.1     Specimen Common Stock Certificate.

(5)        4.2     Indenture dated September 30, 1997 by and among the Company,
                   the  Guarantors and The First National Bank of Chicago, as
                   Trustee.

(5)        4.3     $230 million Revolving Credit Agreement among Allied
                   Holdings, Inc. and BankBoston, N.A., individually and as
                   Administrative Agent, et al., dated September 30, 1997.

(3)       10.1     Form of the Company's Employment Agreement with executive
                   officers.

(1)       10.2     The Company's Long Term Incentive Plan dated July 1993.

(2)       10.3     The Company's 401(k) Retirement Plan and Defined Benefit
                   Pension Plan and Trust.

(3)       10.5     Form of 12% Senior Subordinated Notes due February 1, 2003.

(4)       10.6     Agreement between the Company and Ford Motor Company, as
                   amended.

(4)       10.7     Agreement between the Company and Chrysler Corporation, as
                   amended.

(6)       10.8     Acquisition Agreement among Allied Holdings, Inc., AH
                   Acquisition Corp., Canadian Acquisition Corp., and Axis
                   International Incorporated and Ryder System, Inc. dated
                   August 20, 1997.

          21.1     List of subsidiary corporations.

          23.1     Consent of Arthur Andersen LLP.

          24.1     Powers of Attorney (included within the signature pages of
                   this Report).

          27.1     Financial Data Schedule (for SEC use only)

(1)      Incorporated by reference from Registration Statement (File Number
         33-66620) as filed with the Securities and Exchange Commission on July
         28, 1993 and amended on September 2, 1993 and September 17, 1993 and
         deemed effective on September 29, 1993.

(2)      Incorporated by reference from Registration Statement (File Number
         33-76108) as filed with the SEC on March 4, 1994 and deemed effective
         on such date, and Annual Report on Form 10-K for the year ended
         December 31, 1993.

(3)      Incorporated by reference from the Company's Annual Report on Form 10-K
         for the year ended December 31,1996.

(4)      Incorporated by reference from Amendment No. 1 to the Company's Annual
         Report on Form 10-K for the year ended December 31,1996. Portions of
         the agreements are omitted pursuant to a request for confidential
         treatment granted by the Commission.


                                       16
<PAGE>   40


(5)      Incorporated by reference from Registration Statement (File Number
         33-37113) as filed with the SEC on October 3, 1997.

(6)      Incorporated by reference from Form 8-K filed with the Commission on
         August 29, 1997. Portions of the agreement are omitted pursuant to a
         request for confidential treatment granted by the Commission.


                                       17
<PAGE>   41


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                     ALLIED HOLDINGS, INC.

Date: March 27, 1998                     By:/s/ Robert J. Rutland
     --------------------------------       ---------------------------------
                                            Robert J. Rutland, Chairman and
                                            Chief Executive Officer




Date: March 27, 1998                      By:/s/ A. Mitchell Poole, Jr.
     ---------------------------------       --------------------------------
                                             A. Mitchell Poole, Jr., President,
                                             Chief Operating Officer,
                                             Chief Financial Officer and
                                             Assistant Secretary



                                       18
<PAGE>   42
                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert J. Rutland and A. Mitchell Poole,
Jr., jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities to sign any amendments to this
Report on Form 10-K, and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


<TABLE>
<CAPTION>
        Signature                        Title                              Date
<S>                           <C>                                     <C>
/s/ Rober J. Rutland                                                    March 27, 1998
--------------------------    Chairman of the Board of Directors      --------------------
Robert J. Rutland             and Chief Executive Officer


/s/ Guy W. Rutland, III                                                 March 27, 1998
--------------------------    Chairman Emeritus and Director          --------------------
Guy W. Rutland, III

/s/ A. Mitchell Poole, Jr.                                              March 27, 1998
--------------------------    President, Chief Operating Officer      --------------------
A. Mitchell Poole, Jr.        and Director


/s/ Bernard O. De Wulf                                                  March 27, 1998
--------------------------    Vice Chairman, Executive Vice           --------------------
Bernard O. De Wulf            President, and Director


/s/ Berner F. Wilson, Jr.                                               March 27, 1998
--------------------------    Vice Chairman, Secretary and            --------------------
Berner F. Wilson, Jr.         Director


/s/ Guy W. Rutland, IV                                                  March 27, 1998
--------------------------    Vice President and Director             --------------------
Guy W. Rutland, IV

/s/ Joseph W. Collier                                                   March 27, 1998
--------------------------    Director, President - Allied            --------------------
Joseph W. Collier             Automotive


/s/ Randall E. West                                                     March 27, 1998
--------------------------    Director, President Axis Group          --------------------
Randall E. West


/s/ David G. Bannister                                                  March 27, 1998
--------------------------    Director                                --------------------
David G. Bannister


/s/ Robeert R. Woodson                                                  March 27, 1998
--------------------------    Director                                --------------------
Robert R. Woodson


/s/ William P. Benton                                                   March 27, 1998
--------------------------    Director                                --------------------
William P. Benton
</TABLE>

                                       19
<PAGE>   43
                     REPORT OF INDEPENDENT PUBLIC ACCOUNTS

To the Stockholders of
Allied Holdings, Inc.:

We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in ALLIED HOLDINGS, INC.'S 1997
annual report to stockholders and this Form 10-K, and have issued our report
thereon dated February 9, 1998. Our audit was made for the purpose of forming
an opinion on those financial statements taken as a whole. The schedule listed
in Item 14 of this Form 10-K is the responsibility of the Company's management,
is presented for purposes of complying with the Securities and Exchange
Commissions rules, and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



/s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
February 9, 1998




                                      S-1
<PAGE>   44
                     ALLIED HOLDINGS, INC. AND SUBSIDIARIES

                       VALUATION AND QUALIFYING ACCOUNTS

             FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995

                                 (In Thousands)


<TABLE>
<CAPTION>
                                                                     ADDITIONS
                                                   BALANCE AT        CHARGED TO                                         BALANCE
                                                   BEGINNING         COSTS AND                                           AT END
               CLASSIFICATION                      OF PERIOD          EXPENSES         DEDUCTIONS       ADJUSTMENTS     OF YEAR
---------------------------------------------    --------------    --------------   ----------------   ------------   -----------
<S>                                              <C>               <C>              <C>                <C>            <C>
YEAR ENDED DECEMBER 31, 1997:
  Allowance for doubtful accounts                   $564               $159             $ (19)(a)         $1,374(b)      $2,078

YEAR ENDED DECEMBER 31, 1996:
  Allowance for doubtful accounts                    689                  0              (125)(a)              0            564

YEAR ENDED DECEMBER 31, 1995:
  Allowance for doubtful accounts                    585                104                 0                  0            689
</TABLE>


(a)  Write-off of uncollectible accounts.

(b)  Balance assumed from the acquisition of Ryder Automotive Carrier Group.




                                      S-2