##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|  |  |                                                                                             
|- |  | --------------------------------------------------------------------------------------------
|þ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  |  | For the year ended December 31, 2005                                                        
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-22276








Allied Holdings, Inc.


(Exact name of registrant as specified in its charter)


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

160 Clairemont Avenue, Suite 200, Decatur, Georgia
30030


(Address of principal executive office)


(404) 373-4285


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


None


(Title of Class)




No par value Common Stock


(Title of Class)


o þ


o þ


þ o


S-K 10-K 10-K. þ


12b-2


o o þ


12b-2). o þ






DOCUMENTS INCORPORATED BY REFERENCE












---



##### 










ALLIED HOLDINGS, INC.


TABLE OF CONTENTS


|                                                                           |  |                                                                                                                          |  |        |    | 
|-------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ------ | -- | 
|                                                                           |  |                                                                                                                          |  | Page   |   
|                                                                           |  | Caption                                                                                                                  |  | Number |   
|                                                                           |  |                                                                                                                          |  |        |   
|PART I                                                                     |  |                                                                                                                          |  |        |    | 
|Item 1.                                                                    |  | Business                                                                                                                 |  |        | 2  | 
|Item 1A.                                                                   |  | Risk Factors                                                                                                             |  |        | 15 | 
|Item 1B.                                                                   |  | Unresolved Staff Comments                                                                                                |  |        | 22 | 
|Item 2.                                                                    |  | Properties                                                                                                               |  |        | 22 | 
|Item 3.                                                                    |  | Legal Proceedings                                                                                                        |  |        | 23 | 
|Item 4.                                                                    |  | Submission of Matters to a Vote of Security
    Holders                                                                  |  |        | 23 | 
|                                                                          
|PART II                                                                    |  |                                                                                                                          |  |        |    | 
|Item 5.                                                                    |  | Market for the Registrants Common
    Equity, Related Stockholder Matters and Issuer Purchases of
    Equity Securities |  |        | 24 | 
|Item 6.                                                                    |  | Selected Financial Data                                                                                                  |  |        | 26 | 
|Item 7.                                                                    |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                |  |        | 26 | 
|Item 7A.                                                                   |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                           |  |        | 55 | 
|Item 8.                                                                    |  | Financial Statements and Supplementary
    Data                                                                          |  |        | 55 | 
|Item 9.                                                                    |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                                 |  |        | 55 | 
|Item 9A.                                                                   |  | Controls and Procedures                                                                                                  |  |        | 55 | 
|Item 9B.                                                                   |  | Other Information                                                                                                        |  |        | 57 | 
|                                                                          
|PART III                                                                   |  |                                                                                                                          |  |        |    | 
|Item 10.                                                                   |  | Directors and Executive Officers of the
    Registrant                                                                   |  |        | 57 | 
|Item 11.                                                                   |  | Executive Compensation                                                                                                   |  |        | 60 | 
|Item 12.                                                                   |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                       |  |        | 67 | 
|Item 13.                                                                   |  | Certain Relationships and Related
    Transactions                                                                       |  |        | 69 | 
|Item 14.                                                                   |  | Principal Accountant Fees and Services                                                                                   |  |        | 69 | 
|                                                                          
|PART IV                                                                    |  |                                                                                                                          |  |        |    | 
|Item 15.                                                                   |  | Exhibits and Financial Statement
    Schedules                                                                           |  |        | 70 | 
|EX-4.3(B) CONSENT AGREEMENT DATED 1-30-06                                 
|EX-4.3(C) CONSENT AGREEMENT DATED 2-17-06                                 
|EX-4.3(D) FOREBEARANCE AGREEMENT DATED 3-9-06                             
|EX-4.3(E) FOREBEARANCE AGREEMENT DATED 4-3-06                             
|EX-4.3(F) CONSENT AND FOURTH AMENDMENT DATED 4-18-06                      
|EX-4.3(G) CONSENT DATED 5-1-06                                            
|EX-4.3(H) FOREBEARANCE DATED 5-18-06                                      
|EX-4.3(I) CONSENT AND FOREBEARANCE DATED 5-30-06                          
|EX-10.5 AMENDED SEERANCE PAY AND RETENTION AND EMERGENCE BONUS PLAN       
|EX-10.16(C) AMENDMENT DATED 12-19-05                                      
|EX-10.17(B) AMENDMENT TO GENERAL MOTORS AGREEMENT DATED 12-8-05           
|EX-10.18 AMENDMENT TO AMERICAN HONDA MOTOR COMPANY AGREEMENT DATED 1-30-06
|EX-21.1 SUBSIDIARIES OF ALLIED HOLDINGS, INC.                             
|EX-23.1 CONSENT OF KPMG LLP                                               
|EX-31.1 SECTION 302 CERTIFICATION OF HUGH E. SAWYER                       
|EX-31.2 SECTION 302 CERTIFICATION OF THOMAS H. KING                       
|EX-32.1 SECTION 1350 CERT OF HUGH E. SAWYER                               
|EX-32.2 SECTION 1350 CERT OF THOMAS H. KING                               



1



---



##### Table of Contents






PART I







|        |         
|------- | --------
|Item 1. | Business

When we use the terms Allied, we,
us, and our, we mean Allied Holdings,
Inc. and its subsidiaries on a consolidated basis, and as the
context requires, Allied Holdings, Inc. and its subsidiaries
that filed for Chapter 11 protection pursuant to the
U.S. Bankruptcy Code.


Our Company




Voluntary Reorganization under Chapter 11




debtors-in


debtor-in






2



---



##### Table of Contents















3



---



##### Table of Contents







debtors-in debtor-in








4



---



##### Table of Contents





Principal Operating Subsidiaries




| |                        
| | -----------------------
| | Allied Automotive Group





| |           
| | ----------
| | Axis Group





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

10-K.


Our Operations


day-to


5



---



##### Table of Contents







Corporate History












Customer Relationships








| |   |                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a contract with DaimlerChrysler, which was renewed in December
    2005, expires on September 30, 2007, and grants the
    Automotive Group primary carrier rights for 24 locations in the
    U.S. and 13 in Canada. The contract may be terminated by
    location on 150 days notice by either party. This contract,

6



---



##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | as renewed, provides for an increase in underlying base rates as
    of October 1, 2005 and again on October 1, 2006. This
    renewed agreement was approved by the Bankruptcy Court in March
    2006;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | a contract with General Motors which expires in December 2008
    grants the Automotive Group primary carrier rights for 36
    locations in the U.S. and Canada. This contract was renewed in
    December 2005 with rate increases effective January 1, 2006
    and January 1, 2007. General Motors does not have the right
    to contract with other automobile-hauling service providers at a
    location under the terms of the contract unless the Automotive
    Group fails to comply with service or quality standards at such
    location. Should an event of non-compliance occur, the
    Automotive Group has 30 days in which to cure. If Allied
    Automotive does not cure, General Motors may give 60 days
    notice of termination with respect to the applicable location.
    This renewed agreement was approved by the Bankruptcy Court in
    January 2006;                                                                                                                                                                                                                                  
|
| |  | a contract with American Honda Motor Company for vehicles
    delivered in the United States which extends the Automotive
    Groups current contract with Honda in the United States
    through March 31, 2009. Pursuant to the terms of the
    agreement which was renewed in March 2006, the Automotive Group
    will continue performing vehicle delivery services at all of the
    locations in the United States that it currently serves for
    Honda. The contract renewal includes increases in the underlying
    rates paid by Honda to the Automotive Group for vehicle delivery
    services effective April 1, 2006, and again on
    April 1, 2007 and April 1, 2008;                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | an agreement in principle with Toyota regarding a contract which
    will expire on March 31, 2007. This agreement in principle
    provides that the contract may be terminated by either party by
    giving 60 days notice and provides for an increase in base
    rates effective February 1, 2006 at locations which
    generated approximately 68% of the revenues for 2005 associated
    with the Toyota account. In addition, during the first quarter
    of 2006, we ceased performing vehicle delivery services at
    locations that generated approximately 32% of the 2005 revenues
    associated with the Toyota account. This agreement in principle
    remains subject to the execution of a definitive agreement and
    approval of the agreement by the Bankruptcy Court; and                                                                                                                                                                                                                                                                                                                    
|
| |  | an agreement in principle reached in December 2005 with Ford
    Motor Company through Autogistics, a service relationship
    between Ford and UPS Logistics, that oversees Fords
    vehicle delivery network. This agreement in principle grants the
    Automotive Group primary carrier rights for 22 locations in the
    U.S. and Canada. The agreement in principle provides for the
    Automotive Group to retain all of its business in North America
    for Ford for a two-year term expiring December 31, 2007,
    and required the Automotive Group to reduce its rates at one
    location served for Ford effective December 2005. The Automotive
    Group will increase rates on all business served to Ford,
    effective January 1, 2007 under the agreement in principle.
    The agreement in principle contemplates that each party to the
    contract will have the right to terminate the agreement by
    location on 75 days notice. This agreement in principle
    remains subject to the execution of a definitive agreement and
    approval of the agreement by the Bankruptcy Court.



Proprietary Management Information Systems




7



---



##### Table of Contents







Management Strategy and Employee Incentives






Risk Management and Insurance














| |   |                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The first layer includes the first $1 million of every
    claim. We retain liability for this layer, with no aggregate
    limit.                                                                                                                                                                                                 
|
| |  | The second layer includes the amount by which individual claims
    exceed $1 million up to $5 million per occurrence. For
    this second layer, we retain liability up to an aggregate
    deductible of $7 million. Aggregate claim amounts in the
    second layer in excess of $7 million are covered by excess
    insurance.

8



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The third layer includes the amount by which individual claims
    exceed $5 million per occurrence. Individual claim amounts
    greater than $5 million are covered by excess insurance to
    a limit of $150 million per occurrence.





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











Equipment, Maintenance and Fuel




9



---



##### Table of Contents



















10



---



##### Table of Contents









Competition and Market Share










| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | General Motors utilizes Vector SCM, a division of CF
    Corporation, which acts as the global lead logistics service
    provider for General Motors;                                                                                             
|
| |  | Ford has engaged Autogistics to oversee its vehicle delivery
    network. All Ford vehicles in North America are shipped
    under the operating direction of Autogistics which has a service
    relationship with Ford through UPS Logistics; and
|
| |  | DaimlerChrysler has formed Insight, a joint venture with the
    Union Pacific Railroad.                                                                                                                                                           





11



---



##### Table of Contents







| |   |                                                    
| | - | ---------------------------------------------------
| |  | The Waggoners Trucking (Waggoners); and          
|
| |  | Cassens Transport Company (Cassens);             
|
| |  | Jack Cooper Transport Co., Inc. (Jack Cooper);   
|
| |  | Blue Thunder Auto Transport, Inc. (Blue Thunder);
|
| |  | United Road Service (United Road);               
|
| |  | Fleet Car-lease, Inc. (Fleet).                   
|
| |  | Active Transportation (Active);                  



Employees and Owner-Operators






10-K


12



---



##### Table of Contents











Regulation










13



---



##### Table of Contents



Revenue Variability




Industry Overview




|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |    |      |      |      |  |       |      |      |   
|--------------------------------------------- | ------------- | ----- | ----- | ---- | ---- | ---- |  | ------ | ---- | ---- | ---- | ---- | --- | ------ | -- | ---- | ---- | ---- |  | ----- | ---- | ---- | --
|                                              |               |       |       |      |      | 2005 |  |        |      |      | 2004 |     
|                                              |               |       |       |      |      | vs.  |  |        |      |      | vs.  |     
|                                              |               |       |       |      |      | 2004 |  |        |      |      | 2003 |     
|                                              |               | 2005  |       |      | 2004 |      |  | Change |      |      | 2003 |      |     | Change |   
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|New Vehicle Production (in millions of units) |               |       |       |      |      |      |  |        |      |      |      |      |     |        |    |      |      |      |  |      
|United States:                                |               |       |       |      |      |      |  |        |      |      |      |      |     |        |    |      |      |      |  |      
|                                              | Big Three(1)  |       |       | 8.0  |      |      |  | 8.4    |      |      |      | (4.8 | )%  |        |    | 8.9  |      |      |  | (5.6  | )%  
|                                              | Other         |       |       | 3.5  |      |      |  | 3.2    |      |      |      | 9.4  | %   |        |    | 2.9  |      |      |  | 10.3  | %   
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|                                              |               |       | Total |      |      | 11.5 |  |        |      | 11.6 |      |      |     | (0.9   | )% |      |      | 11.8 |  |       |      | (1.7 | )%
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|Canada:                                       |               |       |       |      |      |      |  |        |      |      |      |      |     |        |    |      |      |      |  |      
|                                              | Big Three(1)  |       |       | 1.8  |      |      |  | 1.9    |      |      |      | (5.3 | )%  |        |    | 1.8  |      |      |  | 5.6   | %   
|                                              | Other         |       |       | 0.9  |      |      |  | 0.8    |      |      |      | 12.5 | %   |        |    | 0.7  |      |      |  | 14.3  | %   
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|                                              |               |       | Total |      |      | 2.7  |  |        |      | 2.7  |      |      |     |       | %  |      |      | 2.5  |  |       |      | 8.0  | % 
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|Mexico:                                       |               |       |       |      |      |      |  |        |      |      |      |      |     |        |    |      |      |      |  |      
|                                              | Big Three(1)  |       |       | 0.9  |      |      |  | 0.9    |      |      |      |     | %   |        |    | 0.9  |      |      |  |      | %   
|                                              | Other         |       |       | 0.7  |      |      |  | 0.6    |      |      |      | 16.7 | %   |        |    | 0.6  |      |      |  |      | %   
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|                                              |               |       | Total |      |      | 1.6  |  |        |      | 1.5  |      |      |     | 6.7    | %  |      |      | 1.5  |  |       |      |     | % 
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|New Vehicle Sales (in millions of units)      |               |       |       |      |      |      |  |        |      |      |      |      |     |        |    |      |      |      |  |      
|United States:                                |               |       |       |      |      |      |  |        |      |      |      |      |     |        |    |      |      |      |  |      
|                                              | Big Three(1)  |       |       | 10.2 |      |      |  | 10.6   |      |      |      | (3.8 | )%  |        |    | 10.8 |      |      |  | (1.9  | )%  
|                                              | Import        |       |       | 2.7  |      |      |  | 2.7    |      |      |      |     | %   |        |    | 2.7  |      |      |  | 0.0   | %   
|                                              | Transplant(2) |       |       | 3.8  |      |      |  | 3.4    |      |      |      | 11.8 | %   |        |    | 3.2  |      |      |  | 6.2   | %   
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|                                              |               | Total |       |      | 16.7 |      |  |        | 16.7 |      |      |      |    | %      |    |      | 16.7 |      |  |       | 0.0  | %   
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|Canada:                                       |               |       |       |      |      |      |  |        |      |      |      |      |     |        |    |      |      |      |  |      
|                                              | Big Three(1)  |       |       | 1.0  |      |      |  | 0.9    |      |      |      | 11.1 | %   |        |    | 1.0  |      |      |  | (10.0 | )%  
|                                              | Other         |       |       | 0.6  |      |      |  | 0.6    |      |      |      |     | %   |        |    | 0.6  |      |      |  | 0.0   | %   
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   
|                                              |               | Total |       |      | 1.6  |      |  |        | 1.5  |      |      |      | 6.7 | %      |    |      | 1.6  |      |  |       | (6.3 | )%  
|                                              |               |       |       |      |      |      |  |        |      |      |      |      |     |        |   






|    |                                                                                               
|--- | ----------------------------------------------------------------------------------------------
|(1) | Represents General Motors Corporation, Ford Motor Company and
    DaimlerChrysler Corporation.
|   
|(2) | Represents foreign vehicles made in the U.S.                                                  

14



---



##### Table of Contents



Source:




CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS


10-K 10-K, 10-K




SEC Filings


10-K, 10-Q, 8-K


1-800-SEC-0330.







|         |             
|-------- | ------------
|Item 1A. | Risk Factors

10-K 10-K.


15



---



##### Table of Contents





| |                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to successfully reorganize under
    Chapter 11, which would likely terminate our future
    business prospects and our ability to continue as a going
    concern and result in a liquidation of our assets.





| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We currently face a liquidity shortfall that, if not
    resolved, could jeopardize our ability to continue as a going
    concern and could ultimately require our liquidation.

10-K




| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have a significant amount of debt and substantially all
    our assets are pledged as collateral for long-term obligations,
    which could limit our operational flexibility and customer
    relationships or otherwise adversely affect our financial
    condition.





| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | We may not be able to repay, refinance or extend our debt as it
    matures. The DIP Facility matures on February 2, 2007;
|
| |  | If we are not able to refinance or extend our debt when it
    matures, we may not be able to repay the debt;             

16



---



##### Table of Contents





| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Substantially all our assets are pledged as collateral for our
    debt and as a result we are limited in our ability to sell
    assets to generate additional cash;
|
| |  | Our flexibility in responding to changes in the business and
    industry may be reduced;                                                                            
|
| |  | We may be more vulnerable to economic downturns;                                                                                                                     
|
| |  | We may be unable to invest in our fleet of Rigs;                                                                                                                     
|
| |  | We may be unable to meet customer demands; and                                                                                                                       
|
| |  | We may be limited in our ability to withstand competitive
    pressures.                                                                                             



| |                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------
| | The terms of our DIP Facility place restrictions on us,
    which create risks of default and reduces our
    flexibility.







| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We will be required to make significant capital
    expenditures on our Rigs in the coming years or we may not be
    able to maintain our current level of terminal operations or
    customer relationships.





17



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are not able to modify our Master Agreement in the
    U.S. or renegotiate our other union contracts on terms
    favorable to us as they expire, or if work stoppages or other
    labor disruptions occur during such negotiations, it could
    preclude us from emerging from bankruptcy and would have a
    material adverse effect on our operations.









| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Rising interest rates could adversely affect our cash flow
    and interest expense.





18



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A shortage of fuel or higher fuel prices resulting from
    fuel shortages or other factors could have a detrimental effect
    on the automotive industry or the automotive transportation
    industry and could materially and adversely affect our
    operations.







| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | A further decline in the automotive industry could have a
    material adverse effect on our operations.





| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | The internal strategies of our largest customers could
    have a material effect on our performance





| |                                                          
| | ---------------------------------------------------------
| | Losses may exceed our insurance coverage or
    reserves.



19



---



##### Table of Contents







| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | We have a history of losses and may not be able to improve
    our performance to achieve profitability.





| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our restricted cash, cash equivalents and other time
    deposits are not available for use in our operations even if
    they were needed to fund our operations.





| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we do not maintain our relationships with major
    customers or these relationships are terminated, reduced or
    redesigned, our operations could be materially and adversely
    affected.





20



---



##### Table of Contents







| |                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Competition in the automotive transportation industry
    could result in a loss of our market share or a reduction in our
    rates, which could have a material adverse effect on our
    operations.





| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our common stock is not currently listed on a national
    securities exchange, which could make it more difficult for
    investors to liquidate their shares, result in a decline in the
    stock price and make it difficult for us to raise additional
    capital.

over-the over-the




| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | Adverse changes in the foreign business climate, primarily
    in Canada, could adversely affect our operations.





| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Major changes in key personnel on whom we depend could
    adversely affect our operations.



21



---



##### Table of Contents





| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | The loss of our Teamster drivers and mechanics could
    adversely affect our operations





| |                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have previously had material weaknesses in our internal
    control over financial reporting, and any unidentified material
    weaknesses could cause us to fail to meet our SEC and other
    reporting requirements.





12b-2), 10-K,











|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties



22



---



##### Table of Contents



year-to


10-K,









|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

10-K.







|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



Executive Officers of the Registrant




|                    |  |     |    |  |       |                                                        
|------------------- |  | --- | -- |  | ----- | -------------------------------------------------------
|Name                |  | Age |    |  | Title
|                    |  |     |    |  |      
|Robert J. Rutland   |  |     | 64 |  |       | Chairman and Director                                  
|Hugh E. Sawyer      |  |     | 51 |  |       | President, Chief Executive Officer, and Director       
|Guy W. Rutland, IV  |  |     | 42 |  |       | Senior Vice President and Director                     
|Thomas M. Duffy     |  |     | 45 |  |       | Executive Vice President, General Counsel and Secretary
|Thomas H. King      |  |     | 51 |  |       | Executive Vice President and Chief Financial Officer   
|Joseph V. Marinelli |  |     | 49 |  |       | Senior Vice President, Field Operations                





23



---



##### Table of Contents
















PART II







|        |                                                                                                                         
|------- | ------------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities



24



---



##### Table of Contents





|               |  |                         |      |  |      |   |      |      |  |   |      |  |  |   |      | 
|-------------- |  | ----------------------- | ---- |  | ---- | - | ---- | ---- |  | - | ---- |  |  | - | ---- | 
|               |  | Year Ended December 31, |     
|               |  |                         |     
|               |  | 2005                    |      |  | 2004 |  
|               |  |                         |      |  |      |  
|Period:        |  | High                    |      |  | Low  |   |      | High |  |   | Low  | 
|               |  |                         |      |  |      |   |      |      |  |   |      | 
|First Quarter  |  | $                       | 4.50 |  |      | $ | 2.10 |      |  | $ | 7.89 |  |  | $ | 4.86 | 
|Second Quarter |  | $                       | 2.30 |  |      | $ | 0.41 |      |  | $ | 6.21 |  |  | $ | 3.85 | 
|Third Quarter  |  | $                       | 0.81 |  |      | $ | 0.06 |      |  | $ | 4.26 |  |  | $ | 2.18 | 
|Fourth Quarter |  | $                       | 0.65 |  |      | $ | 0.18 |      |  | $ | 3.34 |  |  | $ | 1.97 | 



10-K.




|                                                           |  |                            |           |  |                     |   |                      |                                |  |  |         |    
|---------------------------------------------------------- |  | -------------------------- | --------- |  | ------------------- | - | -------------------- | ------------------------------ |  |  | ------- | ---
|                                                           |  | Number of Securities to be |           |  |                     |   | Number of Securities |                               
|                                                           |  | Issued Upon Exercise of    |           |  | Weighted-Average    |   |                      | Remaining Available for Future | 
|                                                           |  | Outstanding Options,       |           |  | Exercise Price of   |   |                      | Issuance Under Equity          | 
|Plan Category                                              |  | Warrants and Rights        |           |  | Outstanding Options |   |                      | Compensation Plans             | 
|                                                           | 
|Equity compensation plans approved by security holders(1)  |  |                            | 1,572,667 |  |                     | $ | 3.67                 |                                |  |  | 520,010 | (2)
|Equity compensation plans not approved by security holders |  |                            |          |  |                     |   |                     |                                |  |  |        |    
|                                                           |  |                            |           |  |                     |   |                      |                                | 
|Total                                                      |  |                            | 1,572,667 |  |                     | $ | 3.67                 |                                |  |  | 520,010 |    
|                                                           |  |                            |           |  |                     |   |                      |                                | 






|    |                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Consists of our 1993 Long-Term Incentive Plan as adopted in
    1993, amended in 2000, amended and restated in 2001, amended in
    2002, and amended and restated in 2004. For a description of our
    equity compensation plan, see Note 20 of our consolidated
    financial statements included in this Annual Report on
    Form 10-K.
|   
|(2) | Includes our Employee Stock Purchase Plan, which has
    199,269 shares available for future issuance. However, in
    June 2005 the Employee Stock Purchase Plan was amended to
    suspend future purchases under the plan.                                                                                                               

25



---



##### Table of Contents








|        |                                     
|------- | ------------------------------------
|Item 6. | Selected Consolidated Financial Data

10-K.


|                                          |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |         |  
|----------------------------------------- | ---------------------------------------------------------------------------------------------------------- | --------------------------------------- | - | -------- | ---- |  | - | ------- | - |  | ---- | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                          |                                                                                                            | Year Ended December 31,                 |  
|                                          |                                                                                                            | (In thousands except per share amounts) |  
|                                          |                                                                                                            |                                         |  
|                                          |                                                                                                            | 2005                                    |   |          | 2004 |  |   | 2003    |   |  | 2002 |         |   | 2001 |  
|                                          |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |  
|Selected Statement of Operations Data:    |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |        
|                                          | Revenues                                                                                                   |                                         | $ | 892,934  |      |  | $ | 895,213 |   |  | $    | 865,463 |   |      | $ | 898,060 |   |  | $ | 896,767 |  
|                                          |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |  
|                                          | Loss before income taxes, reorganization items and cumulative
    effect of change in accounting principle |                                         |   | (129,425 | )    |  |   | (41,522 | ) |  |      | (2,338  | ) |      |   | (4,563  | ) |  |   | (60,789 | )
|                                          | Reorganization items                                                                                       |                                         |   | (7,131   | )    |  |   |        |   |  |      |        |   |      |   |        |   |  |   |        |  
|                                          |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |  
|                                          | Loss before income taxes and cumulative effect of change in
    accounting principle                       |                                         |   | (136,556 | )    |  |   | (41,522 | ) |  |      | (2,338  | ) |      |   | (4,563  | ) |  |   | (60,789 | )
|                                          | Income tax benefit (expense)                                                                               |                                         |   | 10,832   |      |  |   | (12,361 | ) |  |      | (6,266  | ) |      |   | 1,129   |   |  |   | 21,293  |  
|                                          |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |  
|                                          | Loss before cumulative effect of change in accounting principle                                            |                                         |   | (125,724 | )    |  |   | (53,883 | ) |  |      | (8,604  | ) |      |   | (3,434  | ) |  |   | (39,496 | )
|                                          | Cumulative effect of change in accounting principle, net of tax                                            |                                         |   |         |      |  |   |        |   |  |      |        |   |      |   | (4,092  | ) |  |   |        |  
|                                          |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |  
|                                          | Net loss                                                                                                   |                                         | $ | (125,724 | )    |  | $ | (53,883 | ) |  | $    | (8,604  | ) |      | $ | (7,526  | ) |  | $ | (39,496 | )
|                                          |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |  
|                                          | Net loss per share  basic and diluted                                                                     |                                         | $ | (14.02   | )    |  | $ | (6.15   | ) |  | $    | (1.02   | ) |      | $ | (0.91   | ) |  | $ | (4.86   | )
|                                          | Weighted average common shares outstanding  basic and
    diluted                                         |                                         |   | 8,970    |      |  |   | 8,757   |   |  |      | 8,475   |   |      |   | 8,301   |   |  |   | 8,128   |  
|Selected Balance Sheet Data (period end): |                                                                                                            |                                         |   |          |      |  |   |         |   |  |      |         |   |      |   |         |   |  |   |        
|                                          | Total assets                                                                                               |                                         | $ | 383,116  |      |  | $ | 421,532 |   |  | $    | 460,063 |   |      | $ | 468,387 |   |  | $ | 537,104 |  
|                                          | Debtor-in-possession credit facility                                                                       |                                         |   | (151,997 | )    |  |   |        |   |  |      |        |   |      |   |        |   |  |   |        |  
|                                          | Pre-petition long-term debt, including current portion and
    revolving credit facility                   |                                         |   |         |      |  |   | 251,238 |   |  |      | 246,500 |   |      |   | 248,475 |   |  |   | 289,158 |  
|                                          | Other long-term liabilities                                                                                |                                         |   | 74,096   |      |  |   | 70,444  |   |  |      | 59,697  |   |      |   | 64,792  |   |  |   | 72,296  |  
|                                          | Stockholders (deficit) equity                                                                             |                                         |   | (187,367 | )    |  |   | (41,549 | ) |  |      | 8,814   |   |      |   | 10,314  |   |  |   | 17,997  |  






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

You should read the discussion and analysis in this
section in conjunction with the consolidated financial
statements and accompanying notes included in Item 15 of
this Annual Report on
Form 10-K.


Executive Overview






26



---



##### Table of Contents













| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | The Chapter 11 Proceedings;                                      
|
| |  | Summary of Other Events;                                         
|
| |  | Our Customers;                                                   
|
| |  | Our Competitors;                                                 
|
| |  | Collective Bargaining Agreements and Regulations Which Impact Us;
|
| |  | Results of Operations;                                           
|
| |  | Liquidity and Capital Resources;                                 
|
| |  | Off-Balance Sheet Arrangements;                                  
|
| |  | Disclosures About Market Risks;                                  
|
| |  | Critical Accounting Policies and Estimates; and                  
|
| |  | Recent Accounting Pronouncements.                                

The Chapter 11 Proceedings


10-K


debtors-in debtors-in debtor-in


27



---



##### Table of Contents



10-K.






| |   |                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | pay pre-petition wages, payroll taxes, certain employee benefits
    and related expenses;                                                                                                                                                                                                                 
|
| |  | maintain and pay obligations with respect to our insurance
    programs, including the continued payment of workers
    compensation claims on an uninterrupted basis in the ordinary
    course of business, all premiums and other amounts due and owing
    with respect to the insurance programs; and
|
| |  | enter into financing arrangements for insurance premiums on a
    continuing basis.                                                                                                                                                                                                                        









28



---



##### Table of Contents



Due to these
uncertainties, an investment in our common stock or debt
securities is highly speculative and accordingly, we urge
investors to exercise caution with respect to existing and
future investments in our common stock or debt
securities.


Summary of Other Events








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 2005  a non-cash impairment charge related to our
    Automotive Groups goodwill; a reduction in the number of
    vehicles we delivered; an increase in the cost of fuel and
    labor; recognition of a withdrawal liability related to
    multiemployer pension plans from which we withdrew; additional
    expenses related to the Chapter 11 Proceedings; and an
    increase in interest expense associated with higher average
    outstanding debt and higher effective interest rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | 2004  increased expenses related to our
    self-insurance programs including a non-cash charge related to
    our conclusion that we could no longer reliably determine
    insurance reserves on a discounted basis due to continued
    adverse development for claims incurred in prior years, as well
    as higher than expected costs for insurance premiums; a non-cash
    impairment related to goodwill at the Axis Group; increased
    audit and accounting costs; increased depreciation expense on
    some of our Rigs due to a revision of their estimated useful
    lives; a non-cash charge to record an additional valuation
    allowance against our deferred tax assets; increased maintenance
    costs; the adverse impact of excess costs associated with lower
    than expected shipment levels in January 2004; and dramatically
    higher fuel prices beginning in the second quarter and
    continuing throughout the year.
|
| |  | 2003  the adverse impact of the decline in new
    vehicle production; a non-cash charge to record a valuation
    allowance against our deferred tax assets; the adverse effects
    to our net loss were partially offset by a pre-tax gain from the
    settlement of litigation with Ryder System; the strengthening of
    the Canadian dollar against the U.S. dollar; reduced
    depreciation as a result of fully depreciated assets in our
    fleet of Rigs; and the elimination of certain non-performing
    terminal locations that operated at a loss.                                                                                                                                                                                                                                                                                                                                                                                        





29



---



##### Table of Contents



over-the over-the


Our Customers












| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a contract with DaimlerChrysler, which was renewed in December
    2005, expires on September 30, 2007, and grants the
    Automotive Group primary carrier rights for 24 locations in the
    U.S. and 13 in Canada. The contract may be terminated by
    location on 150 days notice by either party. This contract,
    as renewed, provides for an increase in underlying base rates as
    of October 1, 2005 and again on October 1, 2006. This
    renewed agreement was approved by the Bankruptcy Court in March
    2006;                                                                                                                                                                                                                                                                                                                                                    
|
| |  | a contract with General Motors which expires in December 2008
    grants the Automotive Group primary carrier rights for 36
    locations in the U.S. and Canada. This contract was renewed in
    December 2005 with rate increases effective January 1, 2006
    and January 1, 2007. General Motors does not have the right
    to contract with other automobile-hauling service providers at a
    location under the terms of the contract unless the Automotive
    Group fails to comply with service or quality standards at such
    location. Should an event of non-compliance occur, the
    Automotive Group has 30 days in which to cure. If Allied
    Automotive does not cure, General Motors may give 60 days
    notice of termination with respect to the applicable location.
    This renewed agreement was approved by the Bankruptcy Court in
    January 2006;

30



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a contract with American Honda Motor Company for vehicles
    delivered in the United States which extends the Automotive
    Groups current contract with Honda in the United States
    through March 31, 2009. Pursuant to the terms of the
    agreement which was renewed in March 2006, the Automotive Group
    will continue performing vehicle delivery services at all of the
    locations in the United States that it currently serves for
    Honda. The contract renewal includes increases in the underlying
    rates paid by Honda to the Automotive Group for vehicle delivery
    services effective April 1, 2006, and again on
    April 1, 2007 and April 1, 2008;                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | an agreement in principle with Toyota regarding a contract which
    will expire on March 31, 2007. This agreement in principle
    provides that the contract may be terminated by either party by
    giving 60 days notice and provides for an increase in base
    rates effective February 1, 2006 at locations which
    generated approximately 68% of the revenues for 2005 associated
    with the Toyota account. In addition, during the first quarter
    of 2006, we ceased performing vehicle delivery services at
    locations that generated approximately 32% of the 2005 revenues
    associated with the Toyota account. This agreement in principle
    remains subject to the execution of a definitive agreement and
    approval of the agreement by the Bankruptcy Court; and                                                                                                                                                                                                                                                                                                                    
|
| |  | an agreement in principle reached in December 2005 with Ford
    Motor Company through Autogistics, a service relationship
    between Ford and UPS Logistics, that oversees Fords
    vehicle delivery network. This agreement in principle grants the
    Automotive Group primary carrier rights for 22 locations in the
    U.S. and Canada. The agreement in principle provides for the
    Automotive Group to retain all of its business in North America
    for Ford for a two-year term expiring December 31, 2007,
    and required the Automotive Group to reduce its rates at one
    location served for Ford effective December 2005. The Automotive
    Group will increase rates on all business served to Ford,
    effective January 1, 2007 under the agreement in principle.
    The agreement in principle contemplates that each party to the
    contract will have the right to terminate the agreement by
    location on 75 days notice. This agreement in principle
    remains subject to the execution of a definitive agreement and
    approval of the agreement by the Bankruptcy Court.

Our Competitors








Collective Bargaining Agreements and Regulations Which Impact
Us




31



---



##### Table of Contents















32



---



##### Table of Contents



Results of Operations




|                                                  |                                             |                               |       |      |       |    |       |      |       |    |       |      |      |   
|------------------------------------------------- | ------------------------------------------- | ----------------------------- | ----- | ---- | ----- | -- | ----- | ---- | ----- | -- | ----- | ---- | ---- | --
|                                                  |                                             | As a % of revenues            |      
|                                                  |                                             |                               |      
|                                                  |                                             | 2005                          |       |      | 2004  |    |       | 2003 |      
|                                                  |                                             |                               |       |      |       |    |       |      |      
|                                                  |                                             | %                             |       |      | %     |    |       | %    |      
|Revenues                                          |                                             |                               | 100.0 | %    |       |    | 100.0 | %    |       |    | 100.0 | %   
|                                                  |                                             |                               |       |      |       |    |       |      |      
|Operating expenses:                               |                                             |                               |       |      |       |    |       |      |       |    |       |     
|                                                  | Salaries, wages, and fringe benefits        |                               |       | 54.0 | %     |    |       | 54.6 | %     |    |       | 54.3 | %   
|                                                  | Operating supplies and expenses             |                               |       | 20.2 | %     |    |       | 18.1 | %     |    |       | 16.0 | %   
|                                                  | Purchased transportation                    |                               |       | 13.4 | %     |    |       | 12.4 | %     |    |       | 11.5 | %   
|                                                  | Insurance and claims                        |                               |       | 4.7  | %     |    |       | 4.6  | %     |    |       | 4.4  | %   
|                                                  | Operating taxes and licenses                |                               |       | 3.3  | %     |    |       | 3.3  | %     |    |       | 3.5  | %   
|                                                  | Depreciation and amortization               |                               |       | 3.4  | %     |    |       | 4.8  | %     |    |       | 5.3  | %   
|                                                  | Rents                                       |                               |       | 0.8  | %     |    |       | 1.0  | %     |    |       | 0.7  | %   
|                                                  | Communications and utilities                |                               |       | 0.7  | %     |    |       | 0.7  | %     |    |       | 0.8  | %   
|                                                  | Other operating expenses                    |                               |       | 1.3  | %     |    |       | 1.1  | %     |    |       | 1.2  | %   
|                                                  | Impairment of goodwill                      |                               |       | 8.9  | %     |    |       | 0.9  | %     |    |       | 0.0  | %   
|                                                  | (Gain) loss on disposal of operating assets |                               |       | (0.1 | )%    |    |       | (0.1 | )%    |    |       | 0.2  | %   
|                                                  |                                             |                               |       |      |       |    |       |      |      
|                                                  |                                             | Total operating expenses      |       |      | 110.6 | %  |       |      | 101.4 | %  |       |      | 97.9 | % 
|                                                  |                                             |                               |       |      |       |    |       |      |      
|Operating (loss) income                           |                                             |                               | (10.6 | )%   |       |    | (1.4  | )%   |       |    | 2.1   | %   
|Other income (expense):                           |                                             |                               |       |      |       |    |       |      |       |    |       |     
|                                                  | Interest expense                            |                               |       | (4.4 | )%    |    |       | (3.5 | )%    |    |       | (3.4 | )%  
|                                                  | Investment income                           |                               |       | 0.3  | %     |    |       | 0.1  | %     |    |       | 0.4  | %   
|                                                  | Foreign exchange gain                       |                               |       | 0.2  | %     |    |       | 0.2  | %     |    |       | 0.4  | %   
|                                                  | Other, net                                  |                               |       | 0.1  | %     |    |       | 0.0  | %     |    |       | 0.2  | %   
|                                                  |                                             |                               |       |      |       |    |       |      |      
|                                                  |                                             | Total other income (expense): |       |      | (3.8  | )% |       |      | (3.2  | )% |       |      | (2.4 | )%
|                                                  |                                             |                               |       |      |       |    |       |      |      
|Loss before reorganization items and income taxes |                                             |                               | (14.4 | )%   |       |    | (4.6  | )%   |       |    | (0.3  | )%  
|Reorganization items                              |                                             |                               | (0.8  | )%   |       |    | 0.0   | %    |       |    | 0.0   | %   
|                                                  |                                             |                               |       |      |       |    |       |      |      
|Loss before income taxes                          |                                             |                               | (15.2 | )%   |       |    | (4.6  | )%   |       |    | (0.3  | )%  
|Income tax benefit (expense)                      |                                             |                               | 1.2   | %    |       |    | (1.4  | )%   |       |    | (0.7  | )%  
|                                                  |                                             |                               |       |      |       |    |       |      |      
|Net loss                                          |                                             |                               | (14.0 | )%   |       |    | (6.0  | )%   |       |    | (1.0  | )%  
|                                                  |                                             |                               |       |      |       |    |       |      |      



| |                                                                          
| | -------------------------------------------------------------------------
| | Year Ended December 31, 2005 Compared to Year Ended
    December 31, 2004



| |         
| | --------
| | Revenues





33



---



##### Table of Contents















| |                                     
| | ------------------------------------
| | Salaries, wages, and fringe benefits



34



---



##### Table of Contents











| |                                
| | -------------------------------
| | Operating supplies and expenses





| |                         
| | ------------------------
| | Purchased transportation



35



---



##### Table of Contents







| |                     
| | --------------------
| | Insurance and claims







| |                              
| | -----------------------------
| | Depreciation and amortization

5-year




| |      
| | -----
| | Rents





| |                         
| | ------------------------
| | Other operating expenses





| |                       
| | ----------------------
| | Impairment of goodwill





36



---



##### Table of Contents





| |                 
| | ----------------
| | Interest expense





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The write off of $4.9 million in deferred financing costs
    related to the Pre-petition Facility. Based on the financial
    reports delivered on July 29, 2005 to our lenders under the
    Pre-petition Facility, we were in violation of one of the
    financial covenants in our Pre-petition Facility as of
    June 30, 2005. As a result, we wrote off the related
    $4.9 million in deferred financing costs during the second
    quarter of 2005;
|
| |  | Payment of a $1.9 million prepayment penalty related to our
    Pre-petition Facility;                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | An increase in our average outstanding debt. Average outstanding
    debt increased by approximately $20.3 million during 2005
    versus 2004 resulting in additional interest expense of
    approximately $2.5 million;                                                                                                                                                                                                                                      
|
| |  | An increase in the effective interest rate from 9.58% in 2004 to
    12.2% in 2005 resulting in additional interest expense of
    approximately $2.9 million;                                                                                                                                                                                                                                                                                                  
|
| |  | An increase in lender fees of approximately $0.9 million
    including commitment, agent and letter of credit fees as well as
    additional fees related to amendments to the Pre-petition
    Facility; and                                                                                                                                                                                                                                                   
|
| |  | An increase in amortization of debt issuance costs of
    approximately $0.9 million. Although total deferred debt
    issuance costs related to the DIP Facility are less than those
    related to the Pre-petition Facility, the amortization period is
    much shorter, resulting in higher amortization charges year over
    year.                                                                                                                       





| |   |                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The discontinuation of interest accrued on the Senior Notes
    effective August 1, 2005. Contractual interest not accrued
    or paid on the Senior Notes was $5.4 million for
    2005; and
|
| |  | A decrease of approximately $1.0 million related to
    interest on prior year tax assessments.                                                                                              



| |                  
| | -----------------
| | Investment income





| |           
| | ----------
| | Other, net

Kar-Tainer




| |                     
| | --------------------
| | Reorganization items

10-K




| |             
| | ------------
| | Income taxes



37



---



##### Table of Contents







| |                                                                          
| | -------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared to Year Ended
    December 31, 2003



| |         
| | --------
| | Revenues











| |                                     
| | ------------------------------------
| | Salaries, wages, and fringe benefits









38



---



##### Table of Contents





| |                                
| | -------------------------------
| | Operating supplies and expenses











| |                         
| | ------------------------
| | Purchased transportation





| |                     
| | --------------------
| | Insurance and claims



39



---



##### Table of Contents





| |                             
| | ----------------------------
| | Operating taxes and licenses





| |                              
| | -----------------------------
| | Depreciation and amortization







| |      
| | -----
| | Rents





| |                       
| | ----------------------
| | Impairment of goodwill





| |                                            
| | -------------------------------------------
| | Gain (loss) on disposal of operating assets



40



---



##### Table of Contents





| |                 
| | ----------------
| | Interest expense





| |                            
| | ---------------------------
| | Other nonoperating expenses









| |             
| | ------------
| | Income taxes



Liquidity and Capital Resources




debtor-in


41



---



##### Table of Contents





10-K






42



---



##### Table of Contents







| |                     
| | --------------------
| | Operating Activities











| |                     
| | --------------------
| | Investing Activities



43



---



##### Table of Contents





















44



---



##### Table of Contents









| |                     
| | --------------------
| | Financing activities





| |                  
| | -----------------
| | Credit Facilities

The Wall Street Journal


18-month




45



---



##### Table of Contents







Balance Sheet Classification of
Borrowings Outstanding under Revolving Credit Agreements that
include both a Subjective Acceleration Clause and a
Lock-Box Arrangement








46



---



##### Table of Contents

















| |             
| | ------------
| | Senior Notes

5 8


10-K


47



---



##### Table of Contents





90-7,


Contractual
Obligations




|                                     |  |       |         |                 |      |   |        |           |  |   |           |  |  |            |        |  |  |   |        | 
|------------------------------------ |  | ----- | ------- | --------------- | ---- | - | ------ | --------- |  | - | --------- |  |  | ---------- | ------ |  |  | - | ------ | 
|                                     |  |       |         | Payments Due In |     
|                                     |  |       |         |                 |     
|Contractual Obligations              |  | Total |         |                 | 2006 |   |        | 2007-2008 |  |   | 2009-2010 |  |  | Thereafter |       
|                                     |  |       |         |                 |      |   |        |           |  |   |           |  |  |            |       
|DIP Facility(1)                      |  | $     | 151,997 |                 |      | $ | 51,997 |           |  | $ | 100,000   |  |  | $          |       |  |  | $ |       | 
|Operating Lease Obligations          |  |       | 25,718  |                 |      |   | 11,360 |           |  |   | 10,771    |  |  |            | 3,219  |  |  |   | 368    | 
|Purchase Obligations(2)              |  |       | 88,184  |                 |      |   | 10,385 |           |  |   | 21,347    |  |  |            | 21,766 |  |  |   | 34,686 | 
|                                     |  |       |         |                 |      |   |        |           |  |   |           |  |  |            |       
|                                     |  |       | 265,899 |                 |      |   | 73,742 |           |  |   | 132,118   |  |  |            | 24,985 |  |  |   | 35,054 | 
|Liabilities Subject to Compromise(3) |  |       | 154,313 |                 |      |   |       |           |  |   | 154,313   |  |  |            |       |  |  |   |       | 
|                                     |  |       |         |                 |      |   |        |           |  |   |           |  |  |            |       
|Total                                |  | $     | 420,212 |                 |      | $ | 73,742 |           |  | $ | 286,431   |  |  | $          | 24,985 |  |  | $ | 35,054 | 
|                                     |  |       |         |                 |      |   |        |           |  |   |           |  |  |            |       






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The DIP Facility in the table above excludes interest payable.
    As discussed above, the Revolver and the term loans included in
    the DIP Facility are classified as current; however, the
    payments are not due until 2007. The DIP Facility has a
    contractual maturity date of February 2, 2007 unless it is
    otherwise accelerated.                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | This obligation relates to the previously mentioned IBM
    agreement. In April 2001, we entered into a five-year commitment
    with IBM whereby IBM would provide our mainframe computer
    processing services. In December 2003, we amended this
    agreement. The amended agreement is a ten-year commitment,
    commencing February 2004, for IBM to provide additional services
    to manage applications for EDI, network services, technical
    services, and applications development and support. The
    agreement includes outsourcing at prices defined within the
    agreement. Our Chapter 11 filing has not affected the terms
    and services under this contract.
|   
|(3) | Includes the Senior Notes and related accrued interest. The
    payment date is based on our best estimate of when they will be
    settled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



| |                  
| | -----------------
| | Letters of Credit



48



---



##### Table of Contents







Off-Balance Sheet Arrangements


10-K.


Disclosures About Market Risks






| |            
| | -----------
| | Fuel Prices





| |               
| | --------------
| | Interest Rates

The Wall Street Journal


49



---



##### Table of Contents







| |                          
| | -------------------------
| | Risk Management Retention











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





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







50



---



##### Table of Contents













| |                                
| | -------------------------------
| | Foreign Currency Exchange Rates







| |          
| | ---------
| | Inflation



Critical Accounting Policies and Estimates




10-K.




10-K


51



---



##### Table of Contents

















52



---



##### Table of Contents











Employers Accounting for
Pensions Employers
Accounting for Postretirement Benefits Other than Pensions 10-K.






53



---



##### Table of Contents



10-K.










10-K


Recent Accounting Pronouncements


Accounting
Changes and Error Corrections. Accounting Changes Reporting Changes in Interim
Financial Statements.


54



---



##### Table of Contents





Accounting for Conditional Asset
Retirement Obligations, Accounting for Asset Retirement
Obligations,


Share-Based Payment Accounting for Stock-Based
Compensation, Accounting for Stock
Issued to Employees Statement of Cash Flows









|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

10-K.


55



---



##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and
Procedures. 15d-15(e)




| |                                                              
| | -------------------------------------------------------------
| | (b) Changes in Internal Control over Financial
    Reporting:









12b-2), 10-K,




56



---



##### Table of Contents














|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



DIRECTORS WHOSE TERMS EXPIRE AT THE 2006 ANNUAL MEETING


DAVID G. BANNISTER


Director since 1993


Age 50




WILLIAM P. BENTON


Director since 1998


Age 82


37-year


57



---



##### Table of Contents



ROBERT J. RUTLAND


Director since 1965


Age 64




HUGH E. SAWYER


Director since 2001


Age 51




DIRECTORS WHOSE TERMS EXPIRE AT THE 2007 ANNUAL MEETING


THOMAS E. BOLAND


Director since 2001


Age 71




GUY W. RUTLAND, IV


Director since 1993


Age 42




58



---



##### Table of Contents



BERNER F. WILSON, JR.


Director since 1993


Age 67




DIRECTORS WHOSE TERMS EXPIRE AT THE 2008 ANNUAL MEETING


GUY W. RUTLAND, III


Director since 1964


Age 69




J. LELAND STRANGE


Director since 2002


Age 64




ROBERT R. WOODSON


Director since 1993


Age 74




AUDIT COMMITTEE




10-K




59



---



##### Table of Contents



EXECUTIVE OFFICERS


10-K.


SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE











|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

Compensation of Directors






Executive Compensation Table




|                            |                                                             |      |      |                     |           |              |            |         |         |                        |              |           |  |           |         |        |                 |  |        |        |  |  |        |        | 
|--------------------------- | ----------------------------------------------------------- | ---- | ---- | ------------------- | --------- | ------------ | ---------- | ------- | ------- | ---------------------- | ------------ | --------- |  | --------- | ------- | ------ | --------------- |  | ------ | ------ |  |  | ------ | ------ | 
|                            |                                                             |      |      |                     |           |              |            |         |         | Long-Term Compensation |             
|                            |                                                             |      |      |                     |           |              |           
|                            |                                                             |      |      | Annual Compensation |           |              | Securities |         |         |                       
|                            |                                                             |      |      |                     |           |              | Underlying |         |         |                       
|                            |                                                             |      |      |                     |           | Other Annual |            |         | Options |                        |              | All Other | 
|Name and Principal Position |                                                             | Year |      |                     | Salary(1) |              |            | Bonus   |         |                        | Compensation |           |  | Awards(2) |         |        | Compensation(3) | 
|                            |                                                             |      |      |                     |           |              |            |         |         |                        |              |           |  |           |         |        |                 | 
|Hugh E. Sawyer              |                                                             |      | 2005 |                     |           | $            | 722,800    |         |         |                        |             |           |  |           |        |        |                 |  |       |        |  |  |       |       
|                            | President and                                               |      |      | 2004                |           |              |            | 673,007 |         |                        |              |          |  |           |         |       |                 |  |        |       |  |  |        |       | 
|                            | Chief Executive Officer                                     |      |      | 2003                |           |              |            | 496,937 |         |                        | $            | 275,000   |  |           |         |       |                 |  |        |       |  |  | $      | 3,619  | 
|Robert J. Rutland           |                                                             |      | 2005 |                     |           |              | 432,586    |         |         |                        |             |           |  |           |        |        |                 |  |       |        |  |  | 21,195 |       
|                            | Chairman                                                    |      |      | 2004                |           |              |            | 394,423 |         |                        |              |          |  |           |         |       |                 |  |        |       |  |  |        | 18,928 | 
|                            |                                                             |      |      | 2003                |           |              |            | 385,966 |         |                        |              | 123,060   |  |           | $       | 37,606 |                 |  |        |       |  |  |        | 17,185 | 
|Thomas M. Duffy             |                                                             |      | 2005 |                     |           |              | 348,074    |         |         |                        | 86,625       |           |  |           |        |        |                 |  | 20,000 |        |  |  | 18,090 |       
|                            | Executive Vice President,                                   |      |      | 2004                |           |              |            | 303,974 |         |                        |              |          |  |           |         |       |                 |  |        | 20,000 |  |  |        |       | 
|                            | General Counsel, Secretary(4)                               |      |      | 2003                |           |              |            | 235,471 |         |                        |              | 150,000   |  |           |         | 678    |                 |  |        |       |  |  |        |       | 
|David A. Rawden             |                                                             |      | 2005 |                     |           |              | 33,223     |         |         |                        |             |           |  |           | 231,198 |        |                 |  |       |        |  |  |       |       
|                            | Executive Vice President and                                |      |      | 2004                |           |              |            | 317,308 |         |                        |              |          |  |           |         |       |                 |  |        |       |  |  |        |       | 
|                            | Chief Financial Officer(5)                                  |      |      | 2003                |           |              |            | 310,855 |         |                        |              | 100,000   |  |           |         |       |                 |  |        |       |  |  |        |       | 
|Thomas H. King              |                                                             |      | 2005 |                     |           |              | 321,080    |         |         |                        |             |           |  |           |        |        |                 |  | 40,000 |        |  |  |       |       
|                            | Executive Vice President and
    Chief Financial Officer(6) |      |      |                     |           |              |            |         |         |                        |              |           |  |           |         |        |                 |  |        |        |  |  |        |        | 
|Joseph Marinelli            |                                                             |      | 2005 |                     |           |              | 236,043    |         |         |                        |             |           |  |           |        |        |                 |  | 10,000 |        |  |  |       |       
|                            | Senior Vice-President                                       |      |      | 2004                |           |              |            | 156,713 |         |                        |              |          |  |           |         |       |                 |  |        | 40,000 |  |  |        |       | 
|                            | of Field Operations(7)                                      |      |      |                     |           |              |            |         |         |                        |              |           |  |           |         |        |                 |  |        |        |  |  |        |        | 

60



---



##### Table of Contents








|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Each individual was required to take two one-week unpaid
    furloughs in 2004. Mr. Sawyer was required to take five
    one-week non-paid furloughs in 2003, and each remaining
    individual was required to take three one-week unpaid furloughs
    in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(2) | For Mr. Duffy, represents 20,000 shares subject to
    options granted in 2004 and 20,000 shares subject to
    options granted in 2005. For Mr. King, represents
    40,000 shares subject to options granted in 2005. For
    Mr. Marinelli, represents 40,000 shares subject to
    options granted in 2004 and 10,000 shares subject to
    options granted in 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(3) | Amounts in this column for Bob Rutland in 2005, 2004 and 2003
    include the taxable compensation recognized by Mr. Rutland
    in regard to premiums paid from the cash surrender value under
    split dollar insurance agreements. As a result of
    the termination of these agreements due to our Chapter 11
    filing, we will in the future receive back the aggregate of the
    premiums paid by us less certain adjustments. The amounts
    reported are required by the SECs rules. As a result of
    changes in the law, including the Sarbanes-Oxley Act of 2002, we
    discontinued paying the premiums on these policies as of
    July 30, 2002. See Agreements with Executive Officers
    and Directors. For Mr. Sawyer, amounts include
    premiums paid by our company on a term life insurance policy on
    his life for the benefit of his family. For Mr. Duffy,
    amounts include premiums paid by our company on certain life
    insurance policies for the benefit of his family.
|   
|(4) | Became Executive Vice President, General Counsel and Secretary
    in February 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(5) | Employment was terminated and was removed as Executive Vice
    President and Chief Financial Officer in January 2005.
    Mr. Rawden was paid $165,000 in severance pay and $66,197
    to reimburse him for certain relocation expenses, as required by
    his employment agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(6) | Became Executive Vice President and Chief Financial Officer in
    January 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(7) | Joined our company in April 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



Option Grants for Last Fiscal Year


|                       |  |                   |        |            |            |  |      |                  |                        |                      |             |    |  |           |         |  |           |   |        |  |  |   |         | 
|---------------------- |  | ----------------- | ------ | ---------- | ---------- |  | ---- | ---------------- | ---------------------- | -------------------- | ----------- | -- |  | --------- | ------- |  | --------- | - | ------ |  |  | - | ------- | 
|                       |  |                   |        |            |            |  |      |                  |                        | Potential Realizable |            
|                       |  |                   |        |            |            |  |      | Value at Assumed |                       
|                       |  | Individual Grants |        |            |            |  |      |                  | Annual Rates of Stock  |                     
|                       |  |                   |        |            |            |  |      |                  | Price Appreciation for |                     
|                       |  |                   |        |            |            |  |      | Option Term      |                       
|                       |  |                   |        | % of Total |            |  |      |                  |                        |                      | (10 Years)* |   
|                       |  |                   |        | Options    |            |  |      |                  |                        |                      |             |   
|                       |  | Number of         |        |            | Granted to |  |      |                  |                        |                      |             | 5% |  |           | 10%     | 
|                       |  | Securities        |        |            | Employees  |  |      | Exercise         |                        |                      |             |    |  |           |         |  |          
|                       |  | Underlying        |        |            | in Fiscal  |  |      | Price            |                        |                      | Expiration  |    |  | Aggregate |         |  | Aggregate |  
|Name                   |  | Options(1)        |        |            | Year       |  |      | ($/Share)        |                        |                      | Date        |    |  | Value     |         |  | Value     |  
|                       |  |                   |        |            |            |  |      |                  |                        |                      |             |    |  |           |         |  |           |  
|Thomas M. Duffy(1)     |  |                   | 20,000 |            |            |  | 11.8 |                  |                        | $                    | 4.16        |    |  |           | 2/16/15 |  |           | $ | 52,324 |  |  | $ | 132,599 | 
|Thomas H. King(2)      |  |                   | 40,000 |            |            |  |     |                  |                        |                      | 3.81        |    |  |           | 1/25/15 |  |           |   | 95,844 |  |  |   | 242,886 | 
|Joseph V. Marinelli(3) |  |                   | 10,000 |            |            |  | 5.9  |                  |                        |                      | 4.16        |    |  |           | 2/16/15 |  |           |   | 26,162 |  |  |   | 66,300  | 






|    |                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | The dollar gains under these columns result from calculations
    assuming 5% and 10% growth rates from the closing price of our
    Common Stock on the date of grant, as prescribed by the SEC, and
    are not intended to forecast future price appreciation of the
    Common Stock.
|   
|(1) | Represents 20,000 shares subject to options granted on
    February 16, 2005. Mr. Duffys options vest over
    three years at a rate of 33% per year.                                                                                                                                   
|   
|(2) | Represents 40,000 shares subject to options granted on
    January 25, 2005. Mr. Kings options vest over
    three years at a rate of 33% per year.                                                                                                                                     
|   
|(3) | Represents 10,000 shares subject to options granted on
    February 16, 2005. Mr. Marinellis options vest
    over three years at a rate of 33% per year.                                                                                                                               

61



---



##### Table of Contents



in-the


Aggregated Option Exercises During Last Fiscal Year And


Fiscal Year-End Option Values


|                    |  |           |   |  |               |  |                        |                            |  |                              |               |  |  |             |        |  |               |  |   |  |  |  |   | 
|------------------- |  | --------- | - |  | ------------- |  | ---------------------- | -------------------------- |  | ---------------------------- | ------------- |  |  | ----------- | ------ |  | ------------- |  | - |  |  |  | - | 
|                    |  | Number of |   |  |               |  |                        |                            | 
|                    |  | Shares    |   |  |               |  | Number of Shares       |                            |  | Value of Unexercised In-the- |              
|                    |  | Acquired  |   |  |               |  | Underlying Unexercised |                            |  | Money Options at Fiscal      |              
|                    |  | Upon      |   |  | Value         |  |                        | Options at Fiscal Year End |  |                              | Year End(1)   | 
|                    |  | Exercise  |   |  | Realized Upon |  |                        |                            |  |                              |               | 
|Name                |  | of Option |   |  | Exercise      |  |                        | Exercisable                |  |                              | Unexercisable |  |  | Exercisable |        |  | Unexercisable | 
|                    |  |           |   |  |               |  |                        |                            |  |                              |               |  |  |             |        |  |               | 
|Hugh E. Sawyer      |  |           |  |  |               |  |                       |                            |  |                              | 600,000       |  |  |             |       |  |               |  |  |  |  |  |  | 
|Thomas M. Duffy     |  |           |  |  |               |  |                       |                            |  |                              | 101,667       |  |  |             | 23,333 |  |               |  |  |  |  |  |  | 
|Thomas H. King      |  |           |  |  |               |  |                       |                            |  |                              | 13,334        |  |  |             | 26,666 |  |               |  |  |  |  |  |  | 
|Joseph V. Marinelli |  |           |  |  |               |  |                       |                            |  |                              | 16,667        |  |  |             | 33,333 |  |               |  |  |  |  |  |  | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In accordance with the SECs rules, values are calculated
    by subtracting the exercise price from the fair market value of
    the underlying Common Stock. For purposes of this table, fair
    market value is deemed to be $0.60, the closing price of the
    Common Stock on December 31, 2005. No value is assigned to
    options or stock appreciation rights where the exercise price
    for the options and stock appreciation rights was in excess of
    the fair market value of the underlying Common Stock on
    December 31, 2005.

Agreements with Named Executive Officers and Directors




| |                                    
| | -----------------------------------
| | Employment and Severance Agreements







62



---



##### Table of Contents

















63



---



##### Table of Contents













| |                                       
| | --------------------------------------
| | Split-Dollar Life Insurance Agreements







|                      |  |                 |         | 
|--------------------- |  | --------------- | ------- | 
|Name of Insured       |  | Annual Premiums |        
|                      |  |                 |        
|Berner F. Wilson, Jr. |  | $               | 62,976  | 
|Guy W. Rutland III    |  |                 | 324,638 | 
|Guy W. Rutland IV     |  |                 | 13,098  | 
|Robert J. Rutland     |  |                 | 257,441 | 



Long-Term Incentive Plan




64



---



##### Table of Contents









| |                           
| | --------------------------
| | Nonqualified Stock Options





| |                        
| | -----------------------
| | Restricted Stock Awards





| |                        
| | -----------------------
| | Incentive Stock Options





| |                          
| | -------------------------
| | Stock Appreciation Rights



65



---



##### Table of Contents



Retirement Plans




Allied Defined Benefit Pension Plan


|             |  |                  |        |  |    |   |        |    |  |   |        |  |  |    |        |  |            |   |        |  |  |   |        | 
|------------ |  | ---------------- | ------ |  | -- | - | ------ | -- |  | - | ------ |  |  | -- | ------ |  | ---------- | - | ------ |  |  | - | ------ | 
|             |  | Years of Service |       
|             |  |                  |       
|Remuneration |  | 10               |        |  | 15 |   |        | 20 |  |   | 25     |  |  | 30 |        |  | 35 or More |  
|             |  |                  |        |  |    |   |        |    |  |   |        |  |  |    |        |  |            |  
|$100,000     |  | $                | 20,000 |  |    | $ | 30,000 |    |  | $ | 40,000 |  |  | $  | 50,000 |  |            | $ | 50,000 |  |  | $ | 50,000 | 
|125,000      |  |                  | 25,000 |  |    |   | 37,500 |    |  |   | 50,000 |  |  |    | 62,500 |  |            |   | 62,500 |  |  |   | 62,500 | 
|150,000      |  |                  | 30,000 |  |    |   | 45,000 |    |  |   | 60,000 |  |  |    | 75,000 |  |            |   | 75,000 |  |  |   | 75,000 | 
|175,000      |  |                  | 34,000 |  |    |   | 51,000 |    |  |   | 68,000 |  |  |    | 85,000 |  |            |   | 85,000 |  |  |   | 85,000 | 
|200,000      |  |                  | 34,000 |  |    |   | 51,000 |    |  |   | 68,000 |  |  |    | 85,000 |  |            |   | 85,000 |  |  |   | 85,000 | 
|225,000      |  |                  | 34,000 |  |    |   | 51,000 |    |  |   | 68,000 |  |  |    | 85,000 |  |            |   | 85,000 |  |  |   | 85,000 | 
|250,000      |  |                  | 34,000 |  |    |   | 51,000 |    |  |   | 68,000 |  |  |    | 85,000 |  |            |   | 85,000 |  |  |   | 85,000 | 
|275,000      |  |                  | 34,000 |  |    |   | 51,000 |    |  |   | 68,000 |  |  |    | 85,000 |  |            |   | 85,000 |  |  |   | 85,000 | 
|300,000      |  |                  | 34,000 |  |    |   | 51,000 |    |  |   | 68,000 |  |  |    | 85,000 |  |            |   | 85,000 |  |  |   | 85,000 | 







|                    |  |                           |      | 
|------------------- |  | ------------------------- | ---- | 
|                    |  | Years of Credited Service |     
|Name                |  | as of December 31, 2005   |     
|                    |  |                           |     
|Robert J. Rutland   |  |                           | 37.7 | 
|Hugh E. Sawyer      |  |                           | 0.6  | 
|Thomas M. Duffy     |  |                           | 3.6  | 
|Guy W. Rutland, IV  |  |                           | 17.5 | 
|David A. Rawden     |  |                           | 0.0  | 
|Thomas H. King      |  |                           | 0.0  | 
|Joseph V. Marinelli |  |                           | 0.0  | 



Compensation and Nominating Committee Interlocks and Insider
Participation in Compensation Decisions




66



---



##### Table of Contents










|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters

COMMON STOCK OWNERSHIP BY MANAGEMENT AND


CERTAIN BENEFICIAL OWNERS




|                                                                      |  |                       |           |  |                      |  |      | 
|--------------------------------------------------------------------- |  | --------------------- | --------- |  | -------------------- |  | ---- | 
|                                                                      |  | Number of Shares      |           |  | Percentage of Shares | 
|Beneficial Owner                                                      |  | Beneficially Owned(1) |           |  | Outstanding(2)       | 
|                                                                      |  |                       |           |  |                      | 
|Robert J. Rutland(3)                                                  |  |                       | 1,123,894 |  |                      |  | 12.5 | 
|Guy W. Rutland, III(4)                                                |  |                       | 850,718   |  |                      |  | 9.5  | 
|Guy W. Rutland, IV(5)                                                 |  |                       | 651,936   |  |                      |  | 7.3  | 
|Hugh E. Sawyer(6)                                                     |  |                       | 620,000   |  |                      |  | 6.5  | 
|Berner F. Wilson, Jr.(7)                                              |  |                       | 108,743   |  |                      |  | 1.2  | 
|Thomas M. Duffy(8)                                                    |  |                       | 113,197   |  |                      |  | 1.2  | 
|David A. Rawden                                                       |  |                       | 16,600    |  |                      |  | *    | 
|David G. Bannister(9)                                                 |  |                       | 39,334    |  |                      |  | *    | 
|Robert R. Woodson(9)                                                  |  |                       | 39,334    |  |                      |  | *    | 
|William P. Benton(9)                                                  |  |                       | 37,334    |  |                      |  | *    | 
|Thomas E. Boland(9)                                                   |  |                       | 38,334    |  |                      |  | *    | 
|J. Leland Strange(9)                                                  |  |                       | 35,334    |  |                      |  | *    | 
|Thomas H. King(10)                                                    |  |                       | 13,334    |  |                      |  | *    | 
|Joseph V. Marinelli(11)                                               |  |                       | 16,667    |  |                      |  | *    | 
|All executive officers and directors as a group (12)
    (14 persons) |  |                       | 3,704,759 |  |                      |  | 37.5 | 






| |   |             
| | - | ------------
| | * | Less than 1%



|    |                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Under the rules of the SEC, a person is deemed to be a
    beneficial owner of any securities that such person has the
    right to acquire beneficial ownership of within 60 days as
    well as any securities owned by such persons spouse,
    children or relatives living in the same household.  
|   
|(2) | Based on 8,980,329 shares outstanding as of April 5,
    2006. Shares underlying outstanding stock options or warrants
    held by the person indicated and exercisable within 60 days
    of such date are deemed to be outstanding for purposes of
    calculating the percentage owned by such holder.
|   
|(3) | Includes 18,099 shares owned by his wife as to which he
    disclaims beneficial ownership.                                                                                                                                                                                                              
|   
|(4) | Includes 18,099 shares owned by his wife and 67,800 shares
    owned by a private foundation as to which he disclaims
    beneficial ownership.                                                                                                                                                          
|   
|(5) | Includes 647,211 shares held in a limited partnership of
    which he is the direct beneficiary.                                                                                                                                                                                                         
|   
|(6) | Includes options to acquire 600,000 shares.                                                                                                                                                                                                                                                              
|   
|(7) | Includes options to acquire 8,334 shares.                                                                                                                                                                                                                                                                
|   
|(8) | Includes 5,245 shares owned by his wife as to which he
    disclaims beneficial ownership, and options to acquire
    105,000 shares.                                                                                                                                                                    
|   
|(9) | Includes options to acquire 33,334 shares for each
    individual.                                                                                                                                                                                                                                       



|     |                                           
|---- | ------------------------------------------
|(10) | Includes options to acquire 13,334 shares.
|    
|(11) | Includes options to acquire 16,667 shares.

67



---



##### Table of Contents





|     |                                            
|---- | -------------------------------------------
|(12) | Includes options to acquire 896,671 shares.



|                                                          |                                                                                                                     |                    |         |  |                    |  |     |  | 
|--------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | ------------------ | ------- |  | ------------------ |  | --- |  | 
|                                                          |                                                                                                                     | Number of Shares   |         |  | Percentage of      | 
|Name and Address of Beneficial Owner                      |                                                                                                                     | Beneficially Owned |         |  | Shares Outstanding | 
|                                                          |                                                                                                                     |                    |         |  |                    | 
|Robert E. Robotti, Robotti & Company, LLC,
    Robotti &  |                                                                                                                     |                    | 594,390 |  |                    |  | 6.6 | 
|                                                          | Company Advisors, LLC and The Ravenswood Management Company, LLC
    and the Ravenswood Investment Company, L.P.(1) |                    |         |  |                    |  |     |  | 
|                                                          | 52 Vanderbilt Avenue,                                                                                               |                    |         |  |                    |  |     |  | 
|                                                          | Suite 503 New York, New York 10017                                                                                  |                    |         |  |                    |  |     |  | 
|Nikon Hecht, Aspen Advisors LLC, Sopris Capital Partners, |                                                                                                                     |                    | 794,895 |  |                    |  | 8.9 | 
|                                                          | L.P., Sopris Capital, LLC, Sopris Capital Advisors, LLC(2)                                                          |                    |         |  |                    |  |     |  | 
|                                                          | 152 West
    57thStreet
    New York, New York 10019                                                                |                    |         |  |                    |  |     |  | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | According to a Schedule 13G filed on February 14, 2006
    on behalf of Robert E. Robotti, Robotti & Company,
    LLC and Robotti & Company Advisors LLC, in its role as
    a broker dealer and an investment advisor, and The Ravenswood
    Management Company, LLC and the Ravenswood Investment Company,
    L.P., of which Mr. Robotti serves as Managing Member of the
    General Partner of such limited partnership. Mr. Robotti
    possesses shared voting and investment power as to the
    securities but does not have sole voting or investment power as
    to the securities.                                                                                                                                                                                    
|   
|(2) | According to a Schedule 13G filed on March 16, 2006 on
    behalf of Nikos Hecht, Sopris Capital Partners, L.P., Sopris
    Capital, LLL, Aspen Advisors, LLL and Sopris Capital Advisors,
    LLC, in its role as a broker dealer and an investment advisor,
    Mr. Hecht is the managing member and owner of a majority of
    the membership interests of Sopris Capital, Aspen Advisors and
    Sopris Advisors. Each of Sopris Capital, Aspen Advisors and
    Sopris Advisors, as investment managers for their respective
    private clients, has discretionary investment authority over the
    common stock held by their respective private clients.
    Mr. Hecht possesses shared voting and investment power but
    does not have sole voting and investment power.






|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



Audit Fees


10-Q.


68



---



##### Table of Contents



Audit-Related Fees




Tax Fees




All Other Fees









PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules





| |                          
| | -------------------------
| | (1) Financial Statements:

INDEX TO FINANCIAL STATEMENTS


|                                                                                                                                   |  |      |     | 
|---------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                   |  | Page |    
|                                                                                                                                   |  |      |    
|Report of Independent Registered Public
    Accounting Firm                                                                        |  |      | F-1 | 
|Consolidated Balance Sheets at
    December 31, 2005 and 2004                                                                      |  |      | F-2 | 
|Consolidated Statements of Operations for
    the Years Ended December 31, 2005, 2004, and 2003                                    |  |      | F-3 | 
|Consolidated Statements of Changes in
    Stockholders (Deficit) Equity for the Years Ended
    December 31, 2005, 2004, and 2003 |  |      | F-4 | 
|Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2005, 2004, and 2003                                    |  |      | F-5 | 
|Notes to Consolidated Financial
    Statements                                                                                     |  |      | F-6 | 



| |                                   
| | ----------------------------------
| | (2) Financial Statement Schedules:

INDEX TO FINANCIAL STATEMENT SCHEDULES


|                                                                                                              |  |      |     | 
|------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                              |  | Page |    
|                                                                                                              |  |      |    
|Schedule II  Valuation and
    Qualifying Accounts for the Years Ended December 31, 2005,
    2004, and 2003 |  |      | S-1 | 





| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | (3) Exhibits: The list of exhibits required by this item is
    set forth in (b) Exhibits below.



69



---



##### Table of Contents





|        |   |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | - | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |            
|No.     |   | Description
|        |   |            
|        | 3 | .1          |  | Amended and Restated Articles of Incorporation of the Company
    (incorporated by reference from Exhibit 3.1 to the
    Registration Statement on Form S-1 (File
    Number 33-66620) filed with the Commission on July 28,
    1993, as amended on September 2, 1993 and
    September 17, 1993 and deemed effective on
    September 29, 1993).                                                                                                                                                                                                                                                                                        
|       
|        | 3 | .2          |  | Amended and Restated Bylaws of the Company (incorporated by
    reference from Exhibit 3.2 to the Annual Report on
    Form 10-K filed with the Commission on April 16, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       
|        | 4 | .1          |  | Form of certificate representing shares of the Companys
    common stock (incorporated by reference from Exhibit 4.1 to
    the Registration Statement on Form S-1 (File
    Number 33-66620) filed with the Commission on July 28,
    1993, as amended on September 2, 1993 and
    September 17, 1993 and deemed effective on
    September 29, 1993).                                                                                                                                                                                                                                                                                
|       
|        | 4 | .2          |  | Indenture by and among the Company, the Guarantors listed
    therein, and The First National Bank of Chicago, as Trustee,
    dated September 30, 1997 (incorporated by reference from
    Exhibit 4.1 to the Registration Statement on Form S-4
    (File Number 333-37113) filed with the Commission on
    October 3, 1997).                                                                                                                                                                                                                                                                                                          
|       
|        | 4 | .3          |  | Senior Secured, Super Priority Debtor-in-Possession Credit
    Agreement, dated as of August 1, 2005, by and among Allied
    Holdings, Inc., Allied Systems, Ltd. (L.P.), each subsidiary
    listed as a credit party thereto, General Electric Capital
    Corporation, Morgan Stanley Senior Funding, Inc., Marathon
    Structured Finance Fund, L.P., GECC Capital Markets, Inc. and
    the lenders from time to time party thereto (incorporated by
    reference from Exhibit 4.4 to the Current Report on
    Form 8-K filed with the Commission on September 23,
    2005).                                                    
|       
|        | 4 | .3(a)       |  | Third Amendment, dated November 16, 2005 to the Senior
    Secured, Super Priority Debtor-in-Possession Credit Agreement,
    dated as of August 1, 2005, by and among Allied Holdings,
    Inc., Allied Systems, Ltd. (L.P.), each subsidiary listed as a
    credit party thereto, General Electric Capital Corporation,
    Morgan Stanley Senior Funding, Inc., Marathon Structured Finance
    Fund, L.P., GECC Capital Markets, Inc. and the lenders from time
    to time party thereto (incorporated by reference from
    Exhibit 4.4(a) to the Quarterly Report on Form 10-Q
    filed with the Commission on December 9, 2005).
|       
|        | 4 | .3(b)*      |  | Consent Agreement, dated January 30, 2006 to Senior
    Secured, Super Priority Debtor-in-Possession Credit Agreement,
    dated as of August 1, 2005, by and among Allied Holdings,
    Inc., Allied Systems, Ltd. (L.P.), each subsidiary listed as a
    credit party thereto, General Electric Capital Corporation,
    Morgan Stanley Senior Funding, Inc., Marathon Structured Finance
    Fund, L.P., GECC Capital Markets, Inc. and the lenders from time
    to time party thereto.                                                                                                                                              
|       
|        | 4 | .3(c)*      |  | Consent Agreement, dated February 17, 2006 to Senior
    Secured, Super Priority Debtor-in-Possession Credit Agreement,
    dated as of August 1, 2005, by and among Allied Holdings,
    Inc., Allied Systems, Ltd. (L.P.), each subsidiary listed as a
    credit party thereto, General Electric Capital Corporation,
    Morgan Stanley Senior Funding, Inc., Marathon Structured Finance
    Fund, L.P., GECC Capital Markets, Inc. and the lenders from time
    to time party thereto.                                                                                                                                             
|       
|        | 4 | .3(d)*      |  | Forbearance Agreement, dated March 9, 2006 to Senior
    Secured, Super Priority Debtor-in-Possession Credit Agreement,
    dated as of August 1, 2005, by and among Allied Holdings,
    Inc., Allied Systems, Ltd. (L.P.), each subsidiary listed as a
    credit party thereto, General Electric Capital Corporation,
    Morgan Stanley Senior Funding, Inc., Marathon Structured Finance
    Fund, L.P., GECC Capital Markets, Inc. and the lenders from time
    to time party thereto.                                                                                                                                             
|       
|        | 4 | .3(e)*      |  | Forbearance Agreement, dated April 3, 2006 to Senior
    Secured, Super Priority Debtor-in-Possession Credit Agreement,
    dated as of August 1, 2005, by and among Allied Holdings,
    Inc., Allied Systems, Ltd. (L.P.), each subsidiary listed as a
    credit party thereto, General Electric Capital Corporation,
    Morgan Stanley Senior Funding, Inc., Marathon Structured Finance
    Fund, L.P., GECC Capital Markets, Inc. and the lenders from time
    to time party thereto.                                                                                                                                             

70



---



##### Table of Contents



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|       
|        | 4  | .3(f)*      |  | Consent and Fourth Amendment, dated April 18, 2006 to
    Senior Secured, Super Priority Debtor-in-Possession Credit
    Agreement, dated as of August 1, 2005, by and among Allied
    Holdings, Inc., Allied Systems, Ltd. (L.P.), each subsidiary
    listed as a credit party thereto, General Electric Capital
    Corporation, Morgan Stanley Senior Funding, Inc., Marathon
    Structured Finance Fund, L.P., GECC Capital Markets, Inc. and
    the lenders from time to time party thereto.
|       
|        | 4  | .3(g)*      |  | Consent dated May 1, 2006 to Senior Secured, Super Priority
    Debtor-in-Possession Credit Agreement, dated as of
    August 1, 2005, by and among Allied Holdings, Inc., Allied
    Systems, Ltd. (L.P.), each subsidiary listed as a credit party
    thereto, General Electric Capital Corporation, Morgan Stanley
    Senior Funding, Inc., Marathon Structured Finance Fund, L.P.,
    GECC Capital Markets, Inc. and the lenders from time to time
    party thereto.                         
|       
|        | 4  | .3(h)*      |  | Forbearance dated May 18, 2006 to Senior Secured, Super
    Priority Debtor-in-Possession Credit Agreement, dated as of
    August 1, 2005, by and among Allied Holdings, Inc., Allied
    Systems, Ltd. (L.P.), each subsidiary listed as a credit party
    thereto, General Electric Capital Corporation, Morgan Stanley
    Senior Funding, Inc., Marathon Structured Finance Fund, L.P.,
    GECC Capital Markets, Inc. and the lenders from time to time
    party thereto.                    
|       
|        | 4  | .3(i)*      |  | Consent and Forbearance dated May 30, 2006 to Senior
    Secured, Super Priority Debtor-in-Possession Credit Agreement,
    dated as of August 1, 2005, by and among Allied Holdings,
    Inc., Allied Systems, Ltd. (L.P.), each subsidiary listed as a
    credit party thereto, General Electric Capital Corporation,
    Morgan Stanley Senior Funding, Inc., Marathon Structured Finance
    Fund, L.P., GECC Capital Markets, Inc. and the lenders from time
    to time party thereto.        
|       
|        | 10 | .1         |  | Amended and Restated Long Term Incentive Plan of Allied
    Holdings, Inc. (incorporated by reference from Exhibit 10.2
    to the Annual Report on Form 10-K for the year ended
    December 31, 2000, filed with the Commission on
    April 16, 2001).                                                                                                                                                                                                                                            
|       
|        | 10 | .2         |  | Allied Holdings, Inc. 401(k) Retirement Plan (incorporated by
    reference from Exhibit 10 to the Registration Statement on
    Form S-8 (File Number 33-76108) filed with the
    Commission on March 4, 1994).                                                                                                                                                                                                                                                                                    
|       
|        | 10 | .3         |  | Allied Holdings, Inc. Deferred Compensation Plan (incorporated
    by reference from Exhibit 4 to the Registration Statement
    on Form S-8 (File Number 333-51102) filed with the
    Commission on December 1, 2000).                                                                                                                                                                                                                                                                             
|       
|        | 10 | .4         |  | Allied Holdings, Inc. Amended and Restated 1999 Employee Stock
    Purchase Plan, as amended through June 19, 2003
    (incorporated by reference from Exhibit 10.2 to the
    Quarterly Report on Form 10-Q filed with the Commission on
    August 12, 2003).                                                                                                                                                                                                                                      
|       
|        | 10 | .4(a)      |  | First Amendment to Allied Holdings, Inc. Amended and Restated
    1999 Employee Stock Purchase Plan (incorporated by reference
    from Exhibit 10.4(a) to the Current Report on Form 8-K
    filed with the Commission on June 22, 2005).                                                                                                                                                                                                                                                           
|       
|        | 10 | .5*£       |  | Allied Holdings, Inc. Amended Severance Pay and Retention and
    Emergence Bonus Plan for Key Employees and Summary Plan
    Description.                                                                                                                                                                                                                                                                                                                                                           
|       
|        | 10 | .6          |  | Intentionally Omitted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|        | 10 | .7          |  | Intentionally Omitted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|        | 10 | .8         |  | Employment Agreement between Allied Holdings, Inc. and Hugh E.
    Sawyer (incorporated by reference from Exhibit 10.1 to the
    Quarterly Report on Form 10-Q filed with the Commission on
    August 14, 2001).                                                                                                                                                                                                                                                                                   
|       
|        | 10 | .8(a)      |  | First Amendment to Employment Agreement between Allied Holdings,
    Inc. and Hugh E. Sawyer (incorporated by reference from
    Exhibit 10.1 to the Quarterly Report on Form 10-Q
    filed with the Commission on May 15, 2002).                                                                                                                                                                                                                                                                   
|       
|        | 10 | .8(b)      |  | Second Amendment to Employment Agreement between Allied
    Holdings, Inc. and Hugh E. Sawyer (incorporated by reference
    from Exhibit 10.8(b) to the Quarterly Report on
    Form 10-Q filed with the Commission on May 17, 2004).                                                                                                                                                                                                                                                               

71



---



##### Table of Contents



|        |    |             |  |                                                                                                                                                                                                                                                         
|------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|       
|        | 10 | .9         |  | Employment Agreement between Allied Holdings, Inc. and Thomas
    King (incorporated by reference from Exhibit 10.21 to the
    Current Report on Form 8-K filed with the Commission on
    January 27, 2005).                                          
|        | 10 | .9(a)      |  | First Amendment to Employment Agreement between Allied Holdings,
    Inc. and Thomas King (incorporated by reference from
    Exhibit 10.21(a) to the Current Report on Form 8-K
    filed with the Commission on May 27, 2005).                        
|       
|        | 10 | .10        |  | Amended and Restated Employment Agreement between Allied
    Holdings, Inc. and Thomas Duffy (incorporated by reference from
    Exhibit 10.10 to the Current Report on Form 8-K filed
    with the Commission on January 27, 2005).                    
|       
|        | 10 | .10(a)     |  | First Amendment to Amended and Restated Employment Agreement
    between Allied Holdings, Inc. and Thomas Duffy (incorporated by
    reference from Exhibit 10.10(a) to the Current Report on
    Form 8-K filed with the Commission on May 27, 2005).  
|       
|        | 10 | .11        |  | Employment Agreement between Allied Holdings, Inc. and Robert J.
    Rutland (incorporated by reference from Exhibit 10.4 to the
    Quarterly Report on Form 10-Q filed with the Commission on
    May 15, 2002).                                      
|       
|        | 10 | .11(a)     |  | First Amendment to Employment Agreement between Allied Holdings,
    Inc. and Robert J. Rutland (incorporated by reference from
    Exhibit 10.11(a) to the Current Report on Form 8-K
    filed with the Commission on January 27, 2005).              
|       
|        | 10 | .12        |  | Employment Agreement between Allied Holdings, Inc. and Guy
    Rutland IV (incorporated by reference from
    Exhibit 10.12 to the Annual Report on Form 10-K filed
    with the Commission on April 18, 2005).                                         
|       
|        | 10 | .13         |  | Intentionally Omitted.                                                                                                                                                                                                                                  
|       
|        | 10 | .14         |  | Summary of Financial Terms of Collective Bargaining Agreement
    with the International                                                                                                                                                                
|       
|        |    |             |  | Brotherhood of Teamsters in the United States, effective
    June 1, 2003 (incorporated by reference from
    Exhibit 10.1 to the Quarterly Report on Form 10-Q
    filed with the Commission on August 12, 2003).                                      
|       
|        | 10 | .15£        |  | Agreement between Allied Automotive Group, Inc. and UPS
    Autogistics, Inc., as amended (incorporated by reference from
    Exhibit 10.1 to the Quarterly Report on Form 10-Q
    filed with the Commission on November 13, 2001).                    
|       
|        | 10 | .15(a)£     |  | Amendment No. 2 to Agreement between Allied Automotive
    Group, Inc. and UPS Autogistics, Inc. (incorporated by reference
    from Exhibit 10.1 to the Quarterly Report on Form 10-Q
    filed with the Commission on November 14, 2002).             
|       
|        | 10 | .15(b)      |  | Amendment to Agreement between Allied Automotive Group, Inc. and
    UPS Autogistics, Inc. (incorporated by reference from
    Exhibit 10.15(b) to the Current Report on Form 8-K
    filed with the Commission on July 18, 2005).                      
|       
|        | 10 | .16£        |  | Agreement between the Company and DaimlerChrysler Corporation
    (incorporated by reference from Exhibit 10.6 to the Annual
    Report on Form 10-K filed with the Commission on
    April 16, 2001).                                                  
|       
|        | 10 | .16(a)£     |  | Amendment to Agreement between the Company and DaimlerChrysler
    Corporation (incorporated by reference from
    Exhibit 10.12(a) to the Annual Report on Form 10-K
    filed with the Commission on March 27, 2003).                                 
|       
|        | 10 | .16(b)£     |  | Amendment dated October 29, 2004 to the Agreement between
    the Company and DaimlerChrysler Corporation (incorporated by
    reference from Exhibit 10.16(b) to the Current Report on
    Form 8-K filed with the Commission on November 3,
    2004).
|       
|        | 10 | .16(c)£*    |  | Amendment dated December 19, 2005 to the Agreement between
    the Company and DaimlerChrysler Corporation.                                                                                                                                             
|       
|        | 10 | .17£        |  | Agreement between the Company and General Motors Corporation
    (incorporated by reference from Exhibit 10.17 to the Annual
    Report on Form 10-K filed with the Commission on
    April 13, 2004).                                                  
|       
|        | 10 | .17(a)£     |  | Amendment to Agreement between the Company and General Motors
    dated April 6, 2005 (incorporated by reference from
    Exhibit 10.19 to the Current Report on Form 8-K filed
    with the Commission on April 18, 2005).                             

72



---



##### Table of Contents



|        |    |             |  |                                                                                                                                                                                                                                                                                                                             
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|       
|        | 10 | .17(b)£*    |  | Amendment to Agreement between the Company and General Motors
    dated December 8, 2005.                                                                                                                                                                                                                                   
|       
|        | 10 | .18£*       |  | Amendment to Agreement between the Company and American Honda
    Motor Company dated January 30, 2006.                                                                                                                                                                                                                     
|       
|        | 10 | .19         |  | Intentionally Omitted.                                                                                                                                                                                                                                                                                                      
|       
|        | 10 | .20         |  | Agreement between the Company and Toyota Motor Sales, U.S.A.,
    Inc., dated April 1, 1990 (incorporated by reference from
    Exhibit 10.20 to the Annual Report on Form 10-K filed
    with the Commission on April 18, 2005).                                                                                           
|       
|        | 10 | .20(a)£     |  | Amendment to Agreement between the Company and Toyota Motor
    Sales, U.S.A., Inc. dated December 20, 2004 (incorporated
    by reference from Exhibit 10.20(a) to the Annual Report on
    Form 10-K filed with the Commission on April 18, 2005).                                                                        
|       
|        | 10 | .21         |  | Intentionally Omitted.                                                                                                                                                                                                                                                                                                      
|       
|        | 10 | .22£        |  | Agreement between the Company and American Honda Motor Co.,
    Inc., dated April 1, 2002 (incorporated by reference from
    Exhibit 10.22 to the Annual Report on Form 10-K filed
    with the Commission on April 18, 2005).                                                                                             
|       
|        | 10 | .23         |  | IBM Global Services National Agreement between Allied Holdings,
    Inc. and International Business Machines Corporation, dated
    April 1, 2001 (incorporated by reference from Exhibit 10.12
    to the Annual Report on Form 10-K filed with the Commission
    on March 27, 2002).                                     
|       
|        | 10 | .23(a)      |  | Amendment No. 4 to the IBM Global Services National
    Agreement between Allied Holdings, Inc. and International
    Business Machines Corporation, effective February 1, 2004
    (incorporated by reference from Exhibit 10.20(a) to the
    Annual Report on Form 10-K filed with the Commission on
    April 13, 2004).
|       
|        | 21 | .1*         |  | Subsidiaries of Allied Holdings, Inc.                                                                                                                                                                                                                                                                                       
|       
|        | 23 | .1*         |  | Consent of KPMG LLP.                                                                                                                                                                                                                                                                                                        
|       
|        | 24 | .1*         |  | Powers of Attorney (included within the signature page of this
    Report).                                                                                                                                                                                                                                                 
|       
|        | 31 | .1*         |  | Rule 13a-14(a)/15d-14(a) Certification by Hugh E. Sawyer.                                                                                                                                                                                                                                                                   
|       
|        | 31 | .2*         |  | Rule 13a-14(a)/15d-14(a) Certification by Thomas H. King.                                                                                                                                                                                                                                                                   
|       
|        | 32 | .1*         |  | Section 1350 Certification by Hugh E. Sawyer.                                                                                                                                                                                                                                                                               
|       
|        | 32 | .2*         |  | Section 1350 Certification by Thomas H. King.                                                                                                                                                                                                                                                                               
|       
|        | 99 | .1          |  | Charter of the Audit Committee of the Board of Directors
    (incorporated by reference from Exhibit 99.1 to the Annual
    Report on Form 10-K filed with the Commission on
    April 13, 2004).                                                                                                                           
|       
|        | 99 | .2          |  | Charter of the Compensation and Nominating Committee of the
    Board of Directors (incorporated by reference from
    Exhibit 99.2 to the Annual Report on Form 10-K filed
    with the Commission on April 13, 2004).                                                                                                     
|       
|        | 99 | .3          |  | Allied Holdings, Inc. Code of Conduct (incorporated by reference
    from Exhibit 99.3 to the Annual Report on Form 10-K
    filed with the Commission on April 13, 2004)                                                                                                                                                   






|  |                
|- | ---------------
|* | Filed herewith.



|  |                                                                                                       
|- | ------------------------------------------------------------------------------------------------------
|£ | Confidential treatment has been requested and/or granted with
    respect to portions of this exhibit.



|  |                                                       
|- | ------------------------------------------------------
| | Management contract, compensatory plan or arrangement.



73



---



##### Table of Contents



SIGNATURES






| |                      
| | ---------------------
| | Allied Holdings, Inc.



| |     |                    
| | --- | -------------------
| | By: | /s/ Hugh E. Sawyer,

| |                              
| | -----------------------------
| |                              
| | Hugh E. Sawyer,              
| | President and                
| | Chief Executive Officer      
| | (Principal Executive Officer)



| |     |                   
| | --- | ------------------
| | By: | /s/ Thomas H. King

| |                                             
| | --------------------------------------------
| |                                             
| | Thomas H. King,                             
| | Executive Vice President and                
| | Chief Financial Officer                     
| | (Principal Financial and Accounting Officer)

74



---



##### Table of Contents



POWER OF ATTORNEY


attorneys-in 10-K, attorneys-in




|                                                   |  |                                                 |  |               |  | 
|-------------------------------------------------- |  | ----------------------------------------------- |  | ------------- |  | 
|Signature                                          |  | Title                                           |  | Date         
|                                                   |  |                                                 |  |              
|                                                  
|/s/ Robert J. RutlandRobert J. Rutland             |  | Chairman and Director                           |  | June 16, 2006
|                                                  
|/s/ Guy W.
    Rutland, IIIGuy W. Rutland, III     |  | Chairman Emeritus and Director                  |  | June 16, 2006
|                                                  
|/s/ Hugh E. SawyerHugh E. Sawyer                   |  | President, Chief Executive Officer and Director |  | June 16, 2006
|                                                  
|/s/ David G. BannisterDavid G. Bannister           |  | Director                                        |  | June 16, 2006
|                                                  
|/s/ William P. BentonWilliam P. Benton             |  | Director                                        |  | June 16, 2006
|                                                  
|/s/ Thomas E. BolandThomas E. Boland               |  | Director                                        |  | June 16, 2006
|                                                  
|/s/ Guy W.
    Rutland, IVGuy W. Rutland, IV       |  | Senior Vice President and Director              |  | June 16, 2006
|                                                  
|/s/ J. Leland StrangeJ. Leland Strange             |  | Director                                        |  | June 16, 2006
|                                                  
|/s/ Berner F.
    Wilson, Jr.Berner F. Wilson, Jr. |  | Director                                        |  | June 16, 2006
|                                                  
|/s/ Robert R. WoodsonRobert R. Woodson             |  | Director                                        |  | June 16, 2006

75



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












90-7, Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code.




| |             
| | ------------
| | /s/ KPMG LLP





F-1



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


(Debtor-in





CONSOLIDATED BALANCE SHEETS


December 31, 2005 and 2004


(In thousands)


|                                                        |                                                                                                                                                           |                                     |                                             |          |        |          |         |         |        |         |  
|------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | ------------------------------------------- | -------- | ------ | -------- | ------- | ------- | ------ | ------- | -
|                                                        |                                                                                                                                                           | 2005                                |                                             |          | 2004   |         
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|ASSETS                                                 
|Current assets:                                         |                                                                                                                                                           |                                     |                                             |          |        |          |         |        
|                                                        | Cash and cash equivalents                                                                                                                                 |                                     | $                                           | 4,117    |        |          | $       | 2,516   |       
|                                                        | Restricted cash, cash equivalents and other time deposits                                                                                                 |                                     |                                             | 32,830   |        |          |         | 27,378  |       
|                                                        | Receivables, net of allowances of $2,218 and $2,156 as of
    December 31, 2005                                                                           |                                     |                                             |          |        |          |         |         |       
|                                                        |                                                                                                                                                           | and December 31, 2004, respectively |                                             |          | 61,427 |          |         |         | 57,309 |        
|                                                        | Inventories                                                                                                                                               |                                     |                                             | 5,132    |        |          |         | 4,649   |       
|                                                        | Deferred income taxes                                                                                                                                     |                                     |                                             | 128      |        |          |         | 4,632   |       
|                                                        | Prepayments and other current assets                                                                                                                      |                                     |                                             | 59,434   |        |          |         | 12,414  |       
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|                                                        |                                                                                                                                                           |                                     | Total current assets                        |          |        | 163,068  |         |         |        | 108,898 |  
|Property and equipment, net of accumulated depreciation |                                                                                                                                                           |                                     | 123,904                                     |          |        |          | 135,635 |        
|Goodwill, net                                           |                                                                                                                                                           |                                     | 3,545                                       |          |        |          | 83,977  |        
|Other assets:                                           |                                                                                                                                                           |                                     |                                             |          |        |          |         |        
|                                                        | Restricted cash, cash equivalents and other time deposits                                                                                                 |                                     |                                             | 69,764   |        |          |         | 55,502  |       
|                                                        | Other noncurrent assets                                                                                                                                   |                                     |                                             | 22,835   |        |          |         | 37,520  |       
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|                                                        |                                                                                                                                                           |                                     | Total other assets                          |          |        | 92,599   |         |         |        | 93,022  |  
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|                                                        |                                                                                                                                                           |                                     | Total assets                                |          | $      | 383,116  |         |         | $      | 421,532 |  
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|                                                       
|LIABILITIES AND STOCKHOLDERS DEFICIT                  
|Current liabilities not subject to compromise:          |                                                                                                                                                           |                                     |                                             |          |        |          |         |        
|                                                        | Debtor-in-possession credit facility                                                                                                                      |                                     | $                                           | 151,997  |        |          | $       |        |       
|                                                        | Accounts and notes payable                                                                                                                                |                                     |                                             | 57,196   |        |          |         | 34,690  |       
|                                                        | Accrued liabilities                                                                                                                                       |                                     |                                             | 83,317   |        |          |         | 85,463  |       
|                                                        | Current portion of long-term debt                                                                                                                         |                                     |                                             |         |        |          |         | 13,500  |       
|                                                        | Borrowings under pre-petition revolving credit facility                                                                                                   |                                     |                                             |         |        |          |         | 2,972   |       
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|                                                        |                                                                                                                                                           |                                     | Total current liabilities                   |          |        | 292,510  |         |         |        | 136,625 |  
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|Long-term liabilities not subject to compromise:        |                                                                                                                                                           |                                     |                                             |          |        |          |         |        
|                                                        | Long-term debt, less current portion                                                                                                                      |                                     |                                             |         |        |          |         | 234,766 |       
|                                                        | Postretirement benefits other than pensions                                                                                                               |                                     |                                             | 4,412    |        |          |         | 5,082   |       
|                                                        | Deferred income taxes                                                                                                                                     |                                     |                                             | 143      |        |          |         | 16,164  |       
|                                                        | Other long-term liabilities                                                                                                                               |                                     |                                             | 74,096   |        |          |         | 70,444  |       
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|                                                        |                                                                                                                                                           |                                     | Total long-term liabilities                 |          |        | 78,651   |         |         |        | 326,456 |  
|Liabilities subject to compromise                       |                                                                                                                                                           |                                     | 199,322                                     |          |        |          |        |        
|Commitments and contingencies                           |                                                                                                                                                           |                                     |                                            |          |        |          |        |        
|Stockholders deficit:                                  |                                                                                                                                                           |                                     |                                             |          |        |          |         |        
|                                                        | Preferred stock, no par value. Authorized 5,000 shares;
    none outstanding                                                                              |                                     |                                             |         |        |          |         |        |       
|                                                        | Common stock, no par value. Authorized 20,000 shares; 8,980
    and 8,919 shares outstanding at December 31, 2005 and
    December 31, 2004, respectively |                                     |                                             |         |        |          |         |        |       
|                                                        | Additional paid-in capital                                                                                                                                |                                     |                                             | 48,545   |        |          |         | 48,421  |       
|                                                        | Treasury stock, 139 shares at cost                                                                                                                        |                                     |                                             | (707     | )      |          |         | (707    | )     
|                                                        | Accumulated deficit                                                                                                                                       |                                     |                                             | (214,631 | )      |          |         | (88,907 | )     
|                                                        | Accumulated other comprehensive loss, net of tax                                                                                                          |                                     |                                             | (20,574  | )      |          |         | (356    | )     
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|                                                        |                                                                                                                                                           |                                     | Total stockholders deficit                 |          |        | (187,367 | )       |         |        | (41,549 | )
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         
|                                                        |                                                                                                                                                           |                                     | Total liabilities and stockholders deficit |          | $      | 383,116  |         |         | $      | 421,532 |  
|                                                        |                                                                                                                                                           |                                     |                                             |          |        |         



F-2



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


(Debtor-in





CONSOLIDATED STATEMENTS OF OPERATIONS


Years Ended December 31, 2005, 2004 and 2003


(In thousands, except per share data)


|                                                  |                                                                              |                              |          |         |          |   |         |         |         |   |         |         |         |  
|------------------------------------------------- | ---------------------------------------------------------------------------- | ---------------------------- | -------- | ------- | -------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                                  |                                                                              | 2005                         |          |         | 2004     |   |         | 2003    |        
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|Revenues                                          |                                                                              | $                            | 892,934  |         |          | $ | 895,213 |         |         | $ | 865,463 |        
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|Operating expenses:                               |                                                                              |                              |          |         |          |   |         |         |         |   |         |        
|                                                  | Salaries, wages, and fringe benefits                                         |                              |          | 482,609 |          |   |         | 488,728 |         |   |         | 469,540 |        
|                                                  | Operating supplies and expenses                                              |                              |          | 180,481 |          |   |         | 162,266 |         |   |         | 138,512 |        
|                                                  | Purchased transportation                                                     |                              |          | 119,431 |          |   |         | 111,214 |         |   |         | 99,604  |        
|                                                  | Insurance and claims                                                         |                              |          | 42,033  |          |   |         | 40,821  |         |   |         | 38,168  |        
|                                                  | Operating taxes and licenses                                                 |                              |          | 29,841  |          |   |         | 29,804  |         |   |         | 30,376  |        
|                                                  | Depreciation and amortization                                                |                              |          | 29,925  |          |   |         | 42,943  |         |   |         | 45,556  |        
|                                                  | Rents                                                                        |                              |          | 7,500   |          |   |         | 8,556   |         |   |         | 6,090   |        
|                                                  | Communications and utilities                                                 |                              |          | 6,090   |          |   |         | 6,342   |         |   |         | 7,138   |        
|                                                  | Other operating expenses                                                     |                              |          | 11,797  |          |   |         | 10,124  |         |   |         | 10,671  |        
|                                                  | Impairment of goodwill                                                       |                              |          | 79,172  |          |   |         | 8,295   |         |   |         |        |        
|                                                  | (Gain) loss on disposal of operating assets, net                             |                              |          | (869    | )        |   |         | (839    | )       |   |         | 1,325   |        
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|                                                  |                                                                              | Total operating expenses     |          |         | 988,010  |   |         |         | 908,254 |   |         |         | 846,980 |  
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|                                                  |                                                                              | Operating (loss) income      |          |         | (95,076  | ) |         |         | (13,041 | ) |         |         | 18,483  |  
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|Other income (expense):                           |                                                                              |                              |          |         |          |   |         |         |         |   |         |        
|                                                  | Interest expense (excludes contractual interest of
    $5.4 million in 2005) |                              |          | (39,410 | )        |   |         | (31,355 | )       |   |         | (29,138 | )      
|                                                  | Investment income                                                            |                              |          | 2,813   |          |   |         | 1,136   |         |   |         | 3,172   |        
|                                                  | Foreign exchange gains, net                                                  |                              |          | 1,414   |          |   |         | 1,929   |         |   |         | 3,169   |        
|                                                  | Other, net                                                                   |                              |          | 834     |          |   |         | (191    | )       |   |         | 1,976   |        
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|                                                  |                                                                              | Total other income (expense) |          |         | (34,349  | ) |         |         | (28,481 | ) |         |         | (20,821 | )
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|Loss before reorganization items and income taxes |                                                                              |                              | (129,425 | )       |          |   | (41,522 | )       |         |   | (2,338  | )      
|Reorganization items                              |                                                                              |                              | (7,131   | )       |          |   |        |         |         |   |        |        
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|Loss before income taxes                          |                                                                              |                              | (136,556 | )       |          |   | (41,522 | )       |         |   | (2,338  | )      
|Income tax benefit (expense)                      |                                                                              |                              | 10,832   |         |          |   | (12,361 | )       |         |   | (6,266  | )      
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|                                                  |                                                                              | Net loss                     |          | $       | (125,724 | ) |         | $       | (53,883 | ) |         | $       | (8,604  | )
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|Basic and diluted loss per common share:          |                                                                              |                              |          |         |          |   |         |         |         |   |         |        
|Net loss:                                         |                                                                              |                              |          |         |          |   |         |         |         |   |         |        
|                                                  | Basic and diluted                                                            |                              | $        | (14.02  | )        |   | $       | (6.15   | )       |   | $       | (1.02   | )      
|                                                  |                                                                              |                              |          |         |          |   |         |         |        
|Weighted average common shares outstanding:       |                                                                              |                              |          |         |          |   |         |         |         |   |         |        
|                                                  | Basic and diluted                                                            |                              |          | 8,970   |          |   |         | 8,757   |         |   |         | 8,475   |        
|                                                  |                                                                              |                              |          |         |          |   |         |         |        



F-3



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


(Debtor-in





CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
(DEFICIT) EQUITY


Years Ended December 31, 2005, 2004, and 2003


(In thousands)


|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |          |   |   |         |   |         |   |          |          |         |  
|-------------------------- | ------------------------------------------------------------- | ---------------------------------------------------------------------------- | - | ------------ | ------- | ---------- | ------- | ------ | - | -------- | -------- | ----------- | -------- | ----- | ------ | ------------- | - | - | ------------- | - | - | ----- | -------- | -------- | - | - | ------- | - | ------- | - | -------- | -------- | ------- | -
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          | Accumulated |          |       |       
|                           |                                                               |                                                                              |   | Common Stock |         | Additional |         |        |   |          | Retained |             |          | Other |        |               |  
|                           |                                                               | Comprehensive                                                                |   |              |         |            | Paid-In |        |   | Treasury |          |             | Earnings |       |        | Comprehensive |   |   |              
|                           |                                                               | Income (Loss)                                                                |   |              | Shares  |            |         | Amount |   | Capital  |          |             | Stock    |       |        | (Deficit)     |   |   | Income (Loss) |   |   | Total |         
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |         
|Balance, December 31, 2002 |                                                               |                                                                              |   |              |         |            | 8,421   |        |   | $        |         |             |          | $     | 46,801 |               |   | $ | (707          | ) |   | $     | (26,420  | )        |   | $ | (9,360  | ) |         | $ | 10,314   |         
|                           | Net loss                                                      |                                                                              | $ | (8,604       | )       |            |         |       |   |          |          |            |          |       |        |              |   |   |               |  |   |       |          | (8,604   | ) |   |         |  |         |   |          | (8,604   | )      
|                           | Other comprehensive loss:                                     |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |          |   |   |         |   |         |   |          |          |        
|                           |                                                               | Foreign currency translation adjustment, net of income taxes of
    $(3,974) |   |              | 6,192   |            |         |        |  |          |          |             |         |       |        |               |  |   |               |   |  |       |          |          |  |   |         |   | 6,192   |   |          |          | 6,192   |  
|                           |                                                               | Minimum pension liability, net of income taxes of $(126)                     |   |              | 202     |            |         |        |  |          |          |             |         |       |        |               |  |   |               |   |  |       |          |          |  |   |         |   | 202     |   |          |          | 202     |  
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|                           | Comprehensive loss                                            |                                                                              | $ | (2,210       | )       |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |          |   |   |         |   |         |   |          |          |        
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|                           | Issuance of common stock                                      |                                                                              |   |              |         |            |         | 161    |   |          |          |            |          |       |        | 450           |   |   |               |  |   |       |          |         |   |   |         |  |         |   |          | 450      |        
|                           | Compensation expense for restricted stock, net of forfeitures |                                                                              |   |              |         |            |         | 182    |   |          |          |            |          |       |        | 260           |   |   |               |  |   |       |          |         |   |   |         |  |         |   |          | 260      |        
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|Balance, December 31, 2003 |                                                               |                                                                              |   |              |         |            | 8,764   |        |   |          |         |             |          |       | 47,511 |               |   |   | (707          | ) |   |       | (35,024  | )        |   |   | (2,966  | ) |         |   | 8,814    |         
|                           | Net loss                                                      |                                                                              | $ | (53,883      | )       |            |         |       |   |          |          |            |          |       |        |              |   |   |               |  |   |       |          | (53,883  | ) |   |         |  |         |   |          | (53,883  | )      
|                           | Other comprehensive loss:                                     |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |          |   |   |         |   |         |   |          |          |        
|                           |                                                               | Foreign currency translation adjustment, net of income taxes of
    $(256)   |   |              | 2,941   |            |         |        |  |          |          |             |         |       |        |               |  |   |               |   |  |       |          |          |  |   |         |   | 2,941   |   |          |          | 2,941   |  
|                           |                                                               | Minimum pension liability, net of income taxes of $0                         |   |              | (331    | )          |         |        |  |          |          |             |         |       |        |               |  |   |               |   |  |       |          |          |  |   |         |   | (331    | ) |          |          | (331    | )
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|                           | Comprehensive loss                                            |                                                                              | $ | (51,273      | )       |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |          |   |   |         |   |         |   |          |          |        
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|                           | Issuance of common stock                                      |                                                                              |   |              |         |            |         | 196    |   |          |          |            |          |       |        | 589           |   |   |               |  |   |       |          |         |   |   |         |  |         |   |          | 589      |        
|                           | Compensation expense for restricted stock, net of forfeitures |                                                                              |   |              |         |            |         | (41    | ) |          |          |            |          |       |        | 321           |   |   |               |  |   |       |          |         |   |   |         |  |         |   |          | 321      |        
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|Balance, December 31, 2004 |                                                               |                                                                              |   |              |         |            | 8,919   |        |   | $        |         |             |          | $     | 48,421 |               |   | $ | (707          | ) |   | $     | (88,907  | )        |   | $ | (356    | ) |         | $ | (41,549  | )       
|                           | Net loss                                                      |                                                                              | $ | (125,724     | )       |            |         |       |   |          |          |            |          |       |        |              |   |   |               |  |   |       |          | (125,724 | ) |   |         |  |         |   |          | (125,724 | )      
|                           | Other comprehensive loss:                                     |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |          |   |   |         |   |         |   |          |          |        
|                           |                                                               | Foreign currency translation adjustment, net of income taxes of
    $256     |   |              | (1,075  | )          |         |        |  |          |          |             |         |       |        |               |  |   |               |   |  |       |          |          |  |   |         |   | (1,075  | ) |          |          | (1,075  | )
|                           |                                                               | Minimum pension liability, net of income taxes of $0                         |   |              | (19,143 | )          |         |        |  |          |          |             |         |       |        |               |  |   |               |   |  |       |          |          |  |   |         |   | (19,143 | ) |          |          | (19,143 | )
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|                           | Comprehensive loss                                            |                                                                              | $ | (145,942     | )       |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |          |   |   |         |   |         |   |          |          |        
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|                           | Issuance of common stock                                      |                                                                              |   |              |         |            |         | 61     |   |          |          |            |          |       |        | 124           |   |   |               |  |   |       |          |         |   |   |         |  |         |   |          | 124      |        
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         
|Balance, December 31, 2005 |                                                               |                                                                              |   |              |         |            | 8,980   |        |   | $        |         |             |          | $     | 48,545 |               |   | $ | (707          | ) |   | $     | (214,631 | )        |   | $ | (20,574 | ) |         | $ | (187,367 | )       
|                           |                                                               |                                                                              |   |              |         |            |         |        |   |          |          |             |          |       |        |               |   |   |               |   |   |       |          |         



F-4



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


(Debtor-in





CONSOLIDATED STATEMENTS OF CASH FLOWS


Years Ended December 31, 2005, 2004, and 2003


(In thousands)


|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |        |        |         |         |        |         |         |  
|------------------------------------------------------------ | --------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ------------------------------ | ---------------------------------------------------------------------------------------------- | ------- | ------- | ------- | ------- | ------ | ------ | ------- | ------- | ------ | ------- | ------- | -
|                                                             |                                                                                               | 2005                                                     |                                |                                                                                                | 2004    |         |         | 2003    |       
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|Cash flows from operating activities:                        |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |        |        |         |        
|                                                             | Net loss                                                                                      |                                                          | $                              | (125,724                                                                                       | )       |         | $       | (53,883 | )      |        | $       | (8,604  | )     
|                                                             | Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities: |                                                          |                                |                                                                                                |         |         |         |         |        |        |         |         |       
|                                                             |                                                                                               | Interest expense paid in kind                            |                                |                                                                                                |        |         |         |         |       |        |         |         | 1,065  |        
|                                                             |                                                                                               | Write-off and amortization of deferred financing costs   |                                |                                                                                                | 8,631   |         |         |         | 2,797  |        |         |         | 3,697  |        
|                                                             |                                                                                               | Depreciation and amortization                            |                                |                                                                                                | 29,925  |         |         |         | 42,943 |        |         |         | 45,556 |        
|                                                             |                                                                                               | Impairment of goodwill                                   |                                |                                                                                                | 79,172  |         |         |         | 8,295  |        |         |         |       |        
|                                                             |                                                                                               | Reorganization items                                     |                                |                                                                                                | 7,131   |         |         |         |       |        |         |         |       |        
|                                                             |                                                                                               | (Gain) loss on disposal of assets                        |                                |                                                                                                | (1,703  | )       |         |         | (839   | )      |         |         | 1,325  |        
|                                                             |                                                                                               | Foreign exchange gains                                   |                                |                                                                                                | (1,414  | )       |         |         | (1,929 | )      |         |         | (3,169 | )      
|                                                             |                                                                                               | Deferred income taxes                                    |                                |                                                                                                | (11,261 | )       |         |         | 11,275 |        |         |         | 6,914  |        
|                                                             |                                                                                               | Compensation expense related to stock options and grants |                                |                                                                                                |        |         |         |         | 321    |        |         |         | 260    |        
|                                                             |                                                                                               | Amortization of Teamsters Union contract costs           |                                |                                                                                                |        |         |         |         |       |        |         |         | 1,000  |        
|                                                             |                                                                                               | Change in operating assets and liabilities:              |                                |                                                                                                |         |         |         |         |        |        |         |         |        |        
|                                                             |                                                                                               |                                                          | Receivables, net of allowances |                                                                                                |         | (2,712  | )       |         |        | (4,727 | )       |         |        | 8,378   |        
|                                                             |                                                                                               |                                                          | Inventories                    |                                                                                                |         | (623    | )       |         |        | 414    |         |         |        | 272     |        
|                                                             |                                                                                               |                                                          | Prepayments and other assets   |                                                                                                |         | (32,039 | )       |         |        | (3,272 | )       |         |        | (158    | )      
|                                                             |                                                                                               |                                                          | Accounts and notes payable     |                                                                                                |         | 13,045  |         |         |        | (1,747 | )       |         |        | (3,512  | )      
|                                                             |                                                                                               |                                                          | Accrued liabilities            |                                                                                                |         | 5,518   |         |         |        | 13,860 |         |         |        | (16,186 | )      
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|                                                             |                                                                                               |                                                          |                                | Net cash (used in) provided by operating activities before
    payment of reorganization items |         |         | (32,054 | )       |        |        | 13,508  |         |        |         | 36,838  |  
|                                                             |                                                                                               |                                                          | Reorganization items paid      |                                                                                                |         | (2,939  | )       |         |        |       |         |         |        |        |        
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|                                                             |                                                                                               |                                                          |                                | Net cash (used in) provided by operating activities                                            |         |         | (34,993 | )       |        |        | 13,508  |         |        |         | 36,838  |  
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|Cash flows from investing activities:                        |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |        |        |         |        
|                                                             | Purchases of property and equipment                                                           |                                                          |                                | (19,405                                                                                        | )       |         |         | (22,542 | )      |        |         | (18,555 | )     
|                                                             | Proceeds from sales of property and equipment                                                 |                                                          |                                | 3,253                                                                                          |         |         |         | 3,040   |        |        |         | 685     |       
|                                                             | Proceeds from sale of equity in subsidiaries                                                  |                                                          |                                | 2,000                                                                                          |         |         |         |        |        |        |         |        |       
|                                                             | Increase in restricted cash, cash equivalents and other time
    deposits                     |                                                          |                                | (19,714                                                                                        | )       |         |         | (796    | )      |        |         | (81,279 | )     
|                                                             | Decrease in restricted investments                                                            |                                                          |                                |                                                                                               |         |         |         |        |        |        |         | 60,732  |       
|                                                             | Funds deposited with insurance carriers                                                       |                                                          |                                | (9,766                                                                                         | )       |         |         | (32,072 | )      |        |         | (22,680 | )     
|                                                             | Funds returned from insurance carriers                                                        |                                                          |                                | 5,969                                                                                          |         |         |         | 34,995  |        |        |         | 19,560  |       
|                                                             | Decrease (increase) in the cash surrender value of life insurance                             |                                                          |                                | 46                                                                                             |         |         |         | (27     | )      |        |         | 2       |       
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|                                                             |                                                                                               |                                                          |                                | Net cash used in investing activities                                                          |         |         | (37,617 | )       |        |        | (17,402 | )       |        |         | (41,535 | )
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|Cash flows from financing activities:                        |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |        |        |         |        
|                                                             | Additions to debtor-in-possession revolving credit facility, net                              |                                                          |                                | 51,997                                                                                         |         |         |         |        |        |        |         |        |       
|                                                             | Additions to debtor-in-possession facility term borrowings                                    |                                                          |                                | 100,000                                                                                        |         |         |         |        |        |        |         |        |       
|                                                             | (Repayments of) additions to revolving credit facilities, net                                 |                                                          |                                | (2,972                                                                                         | )       |         |         | 2,972   |        |        |         | (24,635 | )     
|                                                             | Additions to pre-petition debt                                                                |                                                          |                                | 25,000                                                                                         |         |         |         | 20,000  |        |        |         | 99,875  |       
|                                                             | Repayment of pre-petition debt                                                                |                                                          |                                | (123,266                                                                                       | )       |         |         | (18,234 | )      |        |         | (78,280 | )     
|                                                             | Payment of deferred financing costs                                                           |                                                          |                                | (8,271                                                                                         | )       |         |         | (475    | )      |        |         | (3,038  | )     
|                                                             | Proceeds from insurance financing arrangements                                                |                                                          |                                | 42,401                                                                                         |         |         |         | 31,252  |        |        |         | 19,313  |       
|                                                             | Repayments of insurance financing arrangements                                                |                                                          |                                | (10,827                                                                                        | )       |         |         | (32,634 | )      |        |         | (17,634 | )     
|                                                             | Proceeds from issuance of common stock                                                        |                                                          |                                | 124                                                                                            |         |         |         | 589     |        |        |         | 450     |       
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|                                                             |                                                                                               |                                                          |                                | Net cash provided by (used in) financing activities                                            |         |         | 74,186  |         |        |        | 3,470   |         |        |         | (3,949  | )
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|Effect of exchange rate changes on cash and cash equivalents |                                                                                               |                                                          | 25                             |                                                                                                |         |         | 792     |         |        |        | 1,346   |        
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|                                                             |                                                                                               |                                                          |                                | Net change in cash and cash equivalents                                                        |         |         | 1,601   |         |        |        | 368     |         |        |         | (7,300  | )
|Cash and cash equivalents at beginning of year               |                                                                                               |                                                          | 2,516                          |                                                                                                |         |         | 2,148   |         |        |        | 9,448   |        
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|Cash and cash equivalents at end of year                     |                                                                                               | $                                                        | 4,117                          |                                                                                                |         | $       | 2,516   |         |        | $      | 2,148   |        
|                                                             |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |       
|Supplemental cash flow information:                          |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |        |        |         |        
|Cash paid (refunds received) during the year for:            |                                                                                               |                                                          |                                |                                                                                                |         |         |         |         |        |        |         |        
|                                                             | Interest                                                                                      |                                                          | $                              | 27,461                                                                                         |         |         | $       | 27,136  |        |        | $       | 24,562  |       
|                                                             | Income taxes, net                                                                             |                                                          |                                | (346                                                                                           | )       |         |         | 489     |        |        |         | (739    | )     



F-5



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2005, 2004, and 2003




|    |                            
|--- | ---------------------------
|(1) | Organization and Operations



| |                 
| | ----------------
| | Company Overview





| |                    
| | -------------------
| | Chapter 11 Overview



debtors-in




|    |                                           
|--- | ------------------------------------------
|(2) | Summary of Significant Accounting Policies



|    |                      
|--- | ---------------------
|(a) | Basis of Presentation



90-7 90-7), Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code 90-7 90-7




F-6



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|    |                             
|--- | ----------------------------
|(b) | Foreign Currency Translation



F-7



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                           
|--- | ------------------------------------------
|(c) | Revenue Recognition and Related Allowances





|    |                                               
|--- | ----------------------------------------------
|(d) | Cash, Cash Equivalents and Other Time Deposits





|    |            
|--- | -----------
|(e) | Inventories

first-in,


|              |  |      |       |  |      |   |       | 
|------------- |  | ---- | ----- |  | ---- | - | ----- | 
|              |  | 2005 |       |  | 2004 |  
|              |  |      |       |  |      |  
|Parts         |  | $    | 3,863 |  |      | $ | 3,576 | 
|Shop supplies |  |      | 345   |  |      |   | 388   | 
|Bulk fuel     |  |      | 660   |  |      |   | 475   | 
|Other         |  |      | 264   |  |      |   | 210   | 
|              |  |      |       |  |      |  
|              |  | $    | 5,132 |  |      | $ | 4,649 | 
|              |  |      |       |  |      |  



|    |                               
|--- | ------------------------------
|(f) | Tires on Tractors and Trailers





|    |                       
|--- | ----------------------
|(g) | Property and Equipment





| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | 4 to 10 years for tractors and trailers;                                                     
|
| |  | 6 years for costs capitalized as part of the tractor and
    trailer remanufacturing program;

F-8



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | 5 to 30 years for buildings and facilities (including
    leasehold improvements); and
|
| |  | 3 to 10 years for furniture, fixtures, service cars and
    equipment.                



|    |                                
|--- | -------------------------------
|(h) | Impairment of Long-Lived Assets

Accounting for the
Impairment or Disposal of Long-Lived Assets




|    |               
|--- | --------------
|(i) | Deferred Costs

debtor-in








|    |                                                 
|--- | ------------------------------------------------
|(j) | Interest in Split-Dollar Life Insurance Policies



F-9



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                     
|--- | ------------------------------------
|(k) | Goodwill and Other Intangible Assets

Goodwill and Other Intangible
Assets






|    |                                    
|--- | -----------------------------------
|(l) | Fair Value of Financial Instruments

Disclosures About Fair Values of
Financial Instruments








| |   |                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The carrying amount of cash, cash equivalents and other time
    deposits, including restricted amounts, approximates fair value
    due to the relatively short period to maturity of these
    instruments.                                                                                                                   
|
| |  | The carrying amount of the Companys credit facilities
    approximates fair value based on the borrowing rates currently
    available to the Company for borrowings with similar terms and
    average maturities. The fair value of the Senior Notes is based
    on the year-end market price, based on actual transactions.

F-10



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                  |  |                 |          |   |            |   |          |      |  |   |          |   |  |   |          |  
|--------------------------------------------------------------------------------- |  | --------------- | -------- | - | ---------- | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                                                  |  | Carrying Amount |          |   | Fair Value |  
|                                                                                  |  |                 |          |   |            |  
|                                                                                  |  | 2005            |          |   | 2004       |   |          | 2005 |  |   | 2004     |  
|                                                                                  |  |                 |          |   |            |   |          |      |  |   |          |  
|Cash, cash equivalents and other time deposits (including
    restricted amounts) |  | $               | 106,711  |   |            | $ | 85,396   |      |  | $ | 106,711  |   |  | $ | 85,396   |  
|Debtor-in-possession financing                                                    |  |                 | (151,997 | ) |            |   |         |      |  |   | (151,997 | ) |  |   |         |  
|Pre-petition credit facility                                                      |  |                 |         |   |            |   | (101,238 | )    |  |   |         |   |  |   | (101,238 | )
|85/8% senior notes                                                                |  |                 | (150,000 | ) |            |   | (150,000 | )    |  |   | (119,250 | ) |  |   | (120,000 | )



|    |                              
|--- | -----------------------------
|(m) | Claims and Insurance Reserves











|    |                         
|--- | ------------------------
|(n) | Stock-Based Compensation

Accounting for Stock Issued to
Employees Accounting for Stock-Based Compensation Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment
of FASB Statement No. 123


F-11



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                   |                                                                                    |                   |          |      |        |   |         |        |       |   |        |        |       |  
|------------------ | ---------------------------------------------------------------------------------- | ----------------- | -------- | ---- | ------ | - | ------- | ------ | ----- | - | ------ | ------ | ----- | -
|                   |                                                                                    | 2005              |          |      | 2004   |   |         | 2003   |      
|                   |                                                                                    |                   |          |      |        |   |         |        |      
|Reported net loss  |                                                                                    | $                 | (125,724 | )    |        | $ | (53,883 | )      |       | $ | (8,604 | )     
|                   | Plus: stock-based employee compensation included in reported net
    loss          |                   |          |     |        |   |         | 321    |       |   |        | 390    |      
|                   | Less: stock-based employee compensation determined under the
    fair value method |                   |          | (923 | )      |   |         | (1,119 | )     |   |        | (1,180 | )    
|                   |                                                                                    |                   |          |      |        |   |         |        |      
|Pro forma net loss |                                                                                    | $                 | (126,647 | )    |        | $ | (54,681 | )      |       | $ | (9,394 | )     
|                   |                                                                                    |                   |          |      |        |   |         |        |      
|Loss per share:    |                                                                                    |                   |          |      |        |   |         |        |       |   |        |       
|                   | As reported:                                                                       |                   |          |      |        |   |         |        |       |   |        |        |      
|                   |                                                                                    | Basic and diluted |          | $    | (14.02 | ) |         | $      | (6.15 | ) |        | $      | (1.02 | )
|                   | Pro forma:                                                                         |                   |          |      |        |   |         |        |       |   |        |        |      
|                   |                                                                                    | Basic and diluted |          | $    | (14.12 | ) |         | $      | (6.24 | ) |        | $      | (1.11 | )





|                        |  |      |                |   |      |  |                |      |  |  |         |  
|----------------------- |  | ---- | -------------- | - | ---- |  | -------------- | ---- |  |  | ------- | -
|                        |  | 2005 |                |   | 2004 |  |                | 2003 | 
|                        |  |      |                |   |      |  |                |      | 
|Dividend yield          |  |      | 0              | % |      |  | 0              | %    |  |  | 0       | %
|Expected volatility     |  |      | 74             | % |      |  | 72             | %    |  |  | 71      | %
|Risk-free interest rate |  |      | 4.16% and 4.20 | % |      |  | 3.56% and 4.39 | %    |  |  | 2.71    | %
|Expected holding period |  |      | 7.85 years     |   |      |  | 7.85 years     |      |  |  | 7 years |  





|    |             
|--- | ------------
|(o) | Income Taxes



F-12



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                
|--- | -------------------------------
|(p) | Pension and Other Benefit Plans











|    |                   
|--- | ------------------
|(q) | Earnings Per Share

Earnings Per Share




| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | For the years ended December 31, 2005, 2004 and 2003,
    options to acquire 1,572,667, 1,588,667 and
    1,709,967 shares of common stock, respectively; and
|
| |  | For the years ended December 31, 2004 and 2003, 8,957 and
    170,993 shares of unvested restricted stock, respectively.                                     





|    |                              
|--- | -----------------------------
|(r) | Commitments and Contingencies



F-13



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                
|--- | -------------------------------
|(s) | Guarantees and Indemnifications



| |           
| | ----------
| | Guarantees





| |                 
| | ----------------
| | Indemnifications







|    |                                   
|--- | ----------------------------------
|(t) | Derivatives and Hedging Activities

Accounting for Derivative Instruments
and Hedging Activities,






|    |                 
|--- | ----------------
|(u) | Use of Estimates



F-14



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                         
|--- | ------------------------
|(v) | Other Comprehensive Loss



|                                        |  |      |         |   |      |   |        |  
|--------------------------------------- |  | ---- | ------- | - | ---- | - | ------ | -
|                                        |  | 2005 |         |   | 2004 |  
|                                        |  |      |         |   |      |  
|Foreign currency translation adjustment |  | $    | 317     |   |      | $ | 1,392  |  
|Minimum pension liability adjustment    |  |      | (20,891 | ) |      |   | (1,748 | )
|                                        |  |      |         |   |      |  
|Accumulated other comprehensive loss    |  | $    | (20,574 | ) |      | $ | (356   | )
|                                        |  |      |         |   |      |  





|    |                       
|--- | ----------------------
|(3) | Chapter 11 Proceedings



| |                       
| | ----------------------
| | Summary of Proceedings



debtors-in


debtor-in


F-15



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










DIP Facility




F-16



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                              
| | -----------------------------
| | Accounting for Reorganization

90-7 90-7,




| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | separated liabilities that are subject to compromise from
    liabilities that are not subject to compromise;                                      
|
| |  | distinguished transactions and events that are directly
    associated with the reorganization from the ongoing operations
    of the business; and
|
| |  | ceased accruing interest on the
    85/8% senior notes (Senior Notes).                                                                           



| |                                  
| | ---------------------------------
| | Liabilities Subject to Compromise









|                                             |  |   |         | 
|-------------------------------------------- |  | - | ------- | 
|Accounts payable                             |  | $ | 24,922  | 
|Senior Notes                                 |  |   | 150,000 | 
|Accrued interest on Senior Notes             |  |   | 4,313   | 
|Multiemployer pension withdrawal liabilities |  |   | 15,847  | 
|Accrued claims and insurance reserves        |  |   | 3,109   | 
|Other accrued liabilities                    |  |   | 1,131   | 
|                                             |  |   |        
|                                             |  | $ | 199,322 | 
|                                             |  |   |        

F-17



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                     
| | --------------------
| | Reorganization Items



|                                                      |  |   |       | 
|----------------------------------------------------- |  | - | ----- | 
|Legal and professional fees                           |  | $ | 5,153 | 
|Write-off of deferred financing costs                 |  |   | 1,442 | 
|Provision for rejected executory contracts and leases |  |   | 220   | 
|Employee retention plan                               |  |   | 173   | 
|Other reorganization items                            |  |   | 143   | 
|                                                      |  |   |      
|                                                      |  | $ | 7,131 | 
|                                                      |  |   |      



| |                                                                             
| | ----------------------------------------------------------------------------
| | Condensed Financial Statement Information of the Debtors
    and Non-Debtors



Condensed Consolidating Balance Sheet Information


December 31, 2005


(In thousands)


|                                       |                              |                                                      |              |         |             |         |         |              |         |         |              |   |         |         |          |         |         |         | 
|-------------------------------------- | ---------------------------- | ---------------------------------------------------- | ------------ | ------- | ----------- | ------- | ------- | ------------ | ------- | ------- | ------------ | - | ------- | ------- | -------- | ------- | ------- | ------- | 
|                                       |                              | Debtors                                              |              |         | Non-Debtors |         |         | Eliminations |         |         | Consolidated |  
|                                       |                              |                                                      |              |         |             |         |         |              |         |         |              |  
|Current assets                         |                              | $                                                    | 121,807      |         |             | $       | 41,261  |              |         | $       |             |   |         | $       | 163,068  |        
|Intercompany receivables (payables)    |                              |                                                      | 14,744       |         |             |         | (14,744 | )            |         |         |             |   |         |         |         |        
|Property and equipment, net            |                              |                                                      | 120,212      |         |             |         | 3,692   |              |         |         |             |   |         |         | 123,904  |        
|Goodwill, net                          |                              |                                                      | 3,545        |         |             |         |        |              |         |         |             |   |         |         | 3,545    |        
|Investment in related party            |                              |                                                      | 26,402       |         |             |         | 6,223   |              |         |         | (32,625      | ) |         |         |         |        
|Other assets                           |                              |                                                      | 22,366       |         |             |         | 70,233  |              |         |         |             |   |         |         | 92,599   |        
|                                       |                              |                                                      |              |         |             |         |         |              |         |         |              |  
|                                       |                              |                                                      | Total assets |         | $           | 309,076 |         |              | $       | 106,665 |              |   | $       | (32,625 | )        |         | $       | 383,116 | 
|                                       |                              |                                                      |              |         |             |         |         |              |         |         |              |  
|Liabilities not subject to compromise: |                              |                                                      |              |         |             |         |         |              |         |         |              |   |         |         |          |        
|                                       | Current liabilities          |                                                      | $            | 264,265 |             |         | $       | 28,245       |         |         |              |   |         |         | $        | 292,510 |        
|                                       | Other noncurrent liabilities |                                                      |              | 26,684  |             |         |         | 51,967       |         |         |              |  |         |         |          | 78,651  |        
|Liabilities subject to compromise      |                              |                                                      | 199,322      |         |             |         |        |              |         |         |             |   |         |         | 199,322  |        
|Stockholders (deficit) equity         |                              |                                                      | (181,195     | )       |             |         | 26,453  |              |         |         | (32,625      | ) |         |         | (187,367 | )      
|                                       |                              |                                                      |              |         |             |         |         |              |         |         |              |  
|                                       |                              | Total liabilities and stockholders (deficit) equity |              | $       | 309,076     |         |         | $            | 106,665 |         |              | $ | (32,625 | )       |          | $       | 383,116 |        
|                                       |                              |                                                      |              |         |             |         |         |              |         |         |              |  

F-18



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Condensed Consolidating Statement of Operations
Information


For the Year Ended December 31, 2005


(In thousands)


|                                                           |                   |         |          |          |             |   |        |              |  |   |              |   |  |   |          |          |  
|---------------------------------------------------------- | ----------------- | ------- | -------- | -------- | ----------- | - | ------ | ------------ |  | - | ------------ | - |  | - | -------- | -------- | -
|                                                           |                   | Debtors |          |          | Non-Debtors |   |        | Eliminations |  |   | Consolidated |  
|                                                           |                   |         |          |          |             |   |        |              |  |   |              |  
|Revenues                                                   |                   | $       | 889,643  |          |             | $ | 41,413 |              |  | $ | (38,122      | ) |  | $ | 892,934  |         
|Operating expenses                                         |                   |         | 982,931  |          |             |   | 43,201 |              |  |   | (38,122      | ) |  |   | 988,010  |         
|                                                           |                   |         |          |          |             |   |        |              |  |   |              |  
|Operating loss                                             |                   |         | (93,288  | )        |             |   | (1,788 | )            |  |   |             |   |  |   | (95,076  | )       
|Other (expense) income, net                                |                   |         | (43,482  | )        |             |   | 9,133  |              |  |   |             |   |  |   | (34,349  | )       
|                                                           |                   |         |          |          |             |   |        |              |  |   |              |  
|(Loss) income before reorganization items and income taxes |                   |         | (136,770 | )        |             |   | 7,345  |              |  |   |             |   |  |   | (129,425 | )       
|Reorganization items                                       |                   |         | (7,131   | )        |             |   |       |              |  |   |             |   |  |   | (7,131   | )       
|                                                           |                   |         |          |          |             |   |        |              |  |   |              |  
|(Loss) income before income taxes                          |                   |         | (143,901 | )        |             |   | 7,345  |              |  |   |             |   |  |   | (136,556 | )       
|Income tax benefit (expense)                               |                   |         | 12,021   |          |             |   | (1,189 | )            |  |   |             |   |  |   | 10,832   |         
|                                                           |                   |         |          |          |             |   |        |              |  |   |              |  
|                                                           | Net (loss) income |         | $        | (131,880 | )           |   | $      | 6,156        |  |   | $            |  |  |   | $        | (125,724 | )
|                                                           |                   |         |          |          |             |   |        |              |  |   |              |  

Condensed Consolidating Statement of Cash Flows
Information


For the Year Ended December 31, 2005


(In thousands)


|                                                             |                      |         |     |         |             |   |       |              |   |              |   |   |  |   |       |         |  
|------------------------------------------------------------ | -------------------- | ------- | --- | ------- | ----------- | - | ----- | ------------ | - | ------------ | - | - |  | - | ----- | ------- | -
|                                                             |                      | Debtors |     |         | Non-Debtors |   |       | Eliminations |   | Consolidated |  
|                                                             |                      |         |     |         |             |   |       |              |   |              |  
|Net cash (used in) provided by:                              |                      |         |     |         |             |   |       |              |   |              |   |   |  |   |       |        
|                                                             | Operating activities |         | $   | (56,660 | )           |   | $     | 21,667       |   |              | $ |  |  |   | $     | (34,993 | )
|                                                             | Investing activities |         |     | (17,024 | )           |   |       | (20,593      | ) |              |   |  |  |   |       | (37,617 | )
|                                                             | Financing activities |         |     | 74,186  |             |   |       |             |   |              |   |  |  |   |       | 74,186  |  
|Effect of exchange rate changes on cash and cash equivalents |                      |         | 25  |         |             |   |      |              |   |              |  |   |  |   | 25    |        
|                                                             |                      |         |     |         |             |   |       |              |   |              |   |  
|Net change in cash and cash equivalents                      |                      |         | 527 |         |             |   | 1,074 |              |   |              |  |   |  |   | 1,601 |        
|Cash and cash equivalents at beginning of year               |                      |         | 203 |         |             |   | 2,313 |              |   |              |  |   |  |   | 2,516 |        
|                                                             |                      |         |     |         |             |   |       |              |   |              |   |  
|Cash and cash equivalents at end of year                     |                      | $       | 730 |         |             | $ | 3,387 |              |   | $            |  |   |  | $ | 4,117 |        
|                                                             |                      |         |     |         |             |   |       |              |   |              |   |  



|    |                                 
|--- | --------------------------------
|(4) | Recent Accounting Pronouncements

Accounting
Changes and Error Corrections. Accounting Changes Reporting Changes in Interim
Financial Statements.


Accounting for Conditional Asset
Retirement Obligations


F-19



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Accounting for Asset Retirement
Obligations,


Share-Based Payment Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees Statement of Cash Flows.




F-20



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                             
|--- | --------------------------------------------
|(5) | Restricted Investments and Investment Income



|                   |                       |      |   |         |      |  |   |        |  
|------------------ | --------------------- | ---- | - | ------- | ---- |  | - | ------ | -
|                   |                       | 2004 |   |         | 2003 | 
|                   |                       |      |   |         |      | 
|Fixed maturities:  |                       |      |   |         |      |  |   |       
|                   | Cash proceeds         |      | $ | 157,950 |      |  | $ | 78,360 |  
|                   | Gross realized gains  |      |   | 120     |      |  |   | 2,206  |  
|                   | Gross realized losses |      |   | (299    | )    |  |   | (616   | )
|Equity securities: |                       |      |   |         |      |  |   |       
|                   | Cash proceeds         |      |   |        |      |  |   | 13,506 |  
|                   | Gross realized gains  |      |   |        |      |  |   | 2,072  |  
|                   | Gross realized losses |      |   |        |      |  |   | (1,217 | )



|                             |  |      |       |  |      |   |       |      |  |   |        |  
|---------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ------ | -
|                             |  | 2005 |       |  | 2004 |   |       | 2003 | 
|                             |  |      |       |  |      |   |       |      | 
|Interest and dividend income |  | $    | 2,813 |  |      | $ | 1,315 |      |  | $ | 2,045  |  
|Realized (losses) gains      |  |      |      |  |      |   | (179  | )    |  |   | 2,445  |  
|Unrealized losses            |  |      |      |  |      |   |      |      |  |   | (1,318 | )
|                             |  |      |       |  |      |   |       |      | 
|                             |  | $    | 2,813 |  |      | $ | 1,136 |      |  | $ | 3,172  |  
|                             |  |      |       |  |      |   |       |      | 



|    |                                     
|--- | ------------------------------------
|(6) | Prepayments and Other Current Assets



|                                              |  |      |        |  |      |   |        | 
|--------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                              |  | 2005 |        |  | 2004 |  
|                                              |  |      |        |  |      |  
|Tires on tractors and trailers                |  | $    | 2,245  |  |      | $ | 2,231  | 
|Prepaid insurance                             |  |      | 50,185 |  |      |   | 4,058  | 
|Prepaid licenses                              |  |      | 1,532  |  |      |   | 1,570  | 
|Short-term deposits with Pre-petition lenders |  |      | 2,179  |  |      |   |       | 
|Other                                         |  |      | 3,293  |  |      |   | 4,555  | 
|                                              |  |      |        |  |      |  
|                                              |  | $    | 59,434 |  |      | $ | 12,414 | 
|                                              |  |      |        |  |      |  





F-21



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                       
|--- | ----------------------
|(7) | Property and Equipment



|                                                            |  |      |          |   |      |   |          |  
|----------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                            |  | 2005 |          |   | 2004 |  
|                                                            |  |      |          |   |      |  
|Tractors and trailers                                       |  | $    | 424,057  |   |      | $ | 450,111  |  
|Buildings and facilities (including leasehold improvements) |  |      | 45,191   |   |      |   | 46,482   |  
|Furniture, fixtures and equipment                           |  |      | 44,066   |   |      |   | 43,464   |  
|Land                                                        |  |      | 10,415   |   |      |   | 11,505   |  
|Service cars and equipment                                  |  |      | 4,477    |   |      |   | 4,151    |  
|                                                            |  |      |          |   |      |  
|                                                            |  |      | 528,206  |   |      |   | 555,713  |  
|Less accumulated depreciation                               |  |      | (404,302 | ) |      |   | (420,078 | )
|                                                            |  |      |          |   |      |  
|                                                            |  | $    | 123,904  |   |      | $ | 135,635  |  
|                                                            |  |      |          |   |      |  











|    |                                     
|--- | ------------------------------------
|(8) | Goodwill and Other Intangible Assets

Goodwill and Other
Intangible Assets,


F-22



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












F-23



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                              |  |            |         |   |            |   |        |       |  |   |         |  
|------------------------------------------------------------- |  | ---------- | ------- | - | ---------- | - | ------ | ----- |  | - | ------- | -
|                                                              |  | Allied     |         |   |            |   |       
|                                                              |  | Automotive |         |   |            |   |       
|                                                              |  | Group      |         |   | Axis Group |   |        | Total | 
|                                                              |  |            |         |   |            |   |        |       | 
|Balance as of December 31, 2003                               |  | $          | 77,983  |   |            | $ | 12,220 |       |  | $ | 90,203  |  
|Impairment of goodwill                                        |  |            |        |   |            |   | (8,295 | )     |  |   | (8,295  | )
|Increase in carrying amount due to a change in currency rates |  |            | 2,058   |   |            |   | 11     |       |  |   | 2,069   |  
|                                                              |  |            |         |   |            |   |        |       | 
|Balance as of December 31, 2004                               |  |            | 80,041  |   |            |   | 3,936  |       |  |   | 83,977  |  
|Impairment of goodwill                                        |  |            | (79,172 | ) |            |   |       |       |  |   | (79,172 | )
|Change in carrying amount due to a change in currency rates   |  |            | (869    | ) |            |   | 3      |       |  |   | (866    | )
|Disposal of reporting unit component                          |  |            |        |   |            |   | (394   | )     |  |   | (394    | )
|                                                              |  |            |         |   |            |   |        |       | 
|Balance as of December 31, 2005                               |  | $          |        |   |            | $ | 3,545  |       |  | $ | 3,545   |  
|                                                              |  |            |         |   |            |   |        |       | 



|                         |  |      |        |   |      |   |       |  
|------------------------ |  | ---- | ------ | - | ---- | - | ----- | -
|                         |  | 2005 |        |   | 2004 |  
|                         |  |      |        |   |      |  
|Gross carrying value     |  | $    | 1,504  |   |      | $ | 1,504 |  
|Accumulated amortization |  |      | (1,040 | ) |      |   | (890  | )
|                         |  |      |        |   |      |  
|Unamortized balances     |  | $    | 464    |   |      | $ | 614   |  
|                         |  |      |        |   |      |  





|    |                        
|--- | -----------------------
|(9) | Other Noncurrent Assets



|                                                     |  |      |        |  |      |   |        | 
|---------------------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                                                     |  | 2005 |        |  | 2004 |  
|                                                     |  |      |        |  |      |  
|Interest in split-dollar life insurance policies     |  | $    | 6,181  |  |      | $ | 6,227  | 
|Deferred financing costs                             |  |      | 5,595  |  |      |   | 7,396  | 
|Prepaid pension asset                                |  |      |       |  |      |   | 18,114 | 
|Cash collateral for self-insurance letters of credit |  |      | 4,961  |  |      |   |       | 
|Deposits                                             |  |      | 2,599  |  |      |   | 1,996  | 
|Other                                                |  |      | 3,499  |  |      |   | 3,787  | 
|                                                     |  |      |        |  |      |  
|                                                     |  | $    | 22,835 |  |      | $ | 37,520 | 
|                                                     |  |      |        |  |      |  



F-24



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                         |  |      |        |   |      |   |        |  
|------------------------ |  | ---- | ------ | - | ---- | - | ------ | -
|                         |  | 2005 |        |   | 2004 |  
|                         |  |      |        |   |      |  
|Cost                     |  | $    | 7,646  |   |      | $ | 15,235 |  
|Accumulated amortization |  |      | (2,051 | ) |      |   | (7,839 | )
|                         |  |      |        |   |      |  
|Net                      |  | $    | 5,595  |   |      | $ | 7,396  |  
|                         |  |      |        |   |      |  





|     |                                                     
|---- | ----------------------------------------------------
|(10) | Equity in Joint Ventures and Other Income (Expenses)





|     |                                                   
|---- | --------------------------------------------------
|(11) | Accounts and Notes Payable and Accrued Liabilities





|                              |  |      |        |  |      |   |        | 
|----------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                              |  | 2005 |        |  | 2004 |  
|                              |  |      |        |  |      |  
|Wages and benefits            |  | $    | 30,748 |  |      | $ | 31,059 | 
|Claims and insurance reserves |  |      | 39,602 |  |      |   | 36,764 | 
|Accrued interest              |  |      | 3,761  |  |      |   | 4,756  | 
|Accrued taxes                 |  |      | 4,017  |  |      |   | 5,320  | 
|Purchased transportation      |  |      | 3,563  |  |      |   | 1,942  | 
|Other                         |  |      | 1,626  |  |      |   | 5,622  | 
|                              |  |      |        |  |      |  
|                              |  | $    | 83,317 |  |      | $ | 85,463 | 
|                              |  |      |        |  |      |  



F-25



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                         |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                         |  | 2005 |        |   | 2004 |   |        | 2003 | 
|                                                                         |  |      |        |   |      |   |        |      | 
|Beginning balance                                                        |  | $    | 434    |   |      | $ | 808    |      |  | $ | 1,076  |  
|Additions to reserve charged to salaries, wages, and fringe
    benefits |  |      | 1,052  |   |      |   | 1,670  |      |  |   | 1,043  |  
|Cash payments                                                            |  |      | (1,072 | ) |      |   | (2,044 | )    |  |   | (1,311 | )
|                                                                         |  |      |        |   |      |   |        |      | 
|Ending balance                                                           |  | $    | 414    |   |      | $ | 434    |      |  | $ | 808    |  
|                                                                         |  |      |        |   |      |   |        |      | 





|     |                              
|---- | -----------------------------
|(12) | Claims and Insurance Reserves





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







| |   |                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The first layer includes the first CDN $500,000 of every claim.
    The Company retains liability for this layer, with no aggregate
    limit.                                                                                                                                                                                                         
|
| |  | The second layer includes the amount by which individual claims
    exceed CDN $500,000 up to CDN $1 million, per occurrence.
    For this second layer, the Company retains liability up to an
    aggregate deductible of CDN $500,000. Aggregate claim amounts in
    the second layer in excess of CDN 500,000 are covered by excess
    insurance.

F-26



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The third layer includes the amount by which individual claims
    exceed CDN $1 million, per occurrence. Individual claim
    amounts that are greater than CDN $1 million are covered by
    excess insurance to a limit of $150 million per occurrence.















|                                                            |  |      |         |  |      |   |         | 
|----------------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | 
|                                                            |  | 2005 |         |  | 2004 |  
|                                                            |  |      |         |  |      |  
|Accrued liabilities  current                               |  | $    | 39,602  |  |      | $ | 36,764  | 
|Other long-term liabilities  noncurrent                    |  |      | 70,040  |  |      |   | 67,621  | 
|                                                            |  |      |         |  |      |  
|                                                            |  |      | 109,642 |  |      |   | 104,385 | 
|Liabilities subject to compromise                           |  |      | 3,109   |  |      |   |        | 
|                                                            |  |      |         |  |      |  
|Total liability included in the consolidated balance sheets |  | $    | 112,751 |  |      | $ | 104,385 | 
|                                                            |  |      |         |  |      |  

F-27



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2006                |  | $ | 39,602  | 
|2007                |  |   | 22,376  | 
|2008                |  |   | 14,186  | 
|2009                |  |   | 9,034   | 
|2010                |  |   | 6,079   | 
|2011 and thereafter |  |   | 18,365  | 
|                    |  |   |        
|                    |  | $ | 109,642 | 
|                    |  |   |        







|     |                  
|---- | -----------------
|(13) | Lease Commitments









F-28



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|           |       |             |        |          |        |   |     |     | 
|---------- | ----- | ----------- | ------ | -------- | ------ | - | --- | --- | 
|           |       |             |        | Sublease |       
|           |       | Commitments |        |          | Income |  
|           |       |             |        |          |        |  
|2006       |       | $           | 11,360 |          |        | $ | 371 |    
|2007       |       |             | 6,963  |          |        |   | 334 |    
|2008       |       |             | 3,808  |          |        |   |    |    
|2009       |       |             | 2,617  |          |        |   |    |    
|2010       |       |             | 602    |          |        |   |    |    
|Thereafter |       |             | 368    |          |        |   |    |    
|           |       |             |        |          |        |  
|           | Total |             | $      | 25,718   |        |   | $   | 705 | 
|           |       |             |        |          |        |  



|     |     
|---- | ----
|(14) | Debt



|                                     |                                                       |      |         |          |      |   |         |         |  
|------------------------------------ | ----------------------------------------------------- | ---- | ------- | -------- | ---- | - | ------- | ------- | -
|                                     |                                                       | 2005 |         |          | 2004 |  
|                                     |                                                       |      |         |          |      |  
|DIP Facility  Revolver              |                                                       | $    | 51,997  |          |      | $ |        |        
|DIP Facility  Term Loan A           |                                                       |      | 20,000  |          |      |   |        |        
|DIP Facility  Term Loan B           |                                                       |      | 80,000  |          |      |   |        |        
|Pre-petition Facility  Term Loan A  |                                                       |      |        |          |      |   | 78,266  |        
|Pre-petition Facility  Term Loan B  |                                                       |      |        |          |      |   | 20,000  |        
|Pre-petition Facility  Revolver     |                                                       |      |        |          |      |   | 2,972   |        
|Senior Notes                         |                                                       |      | 150,000 |          |      |   | 150,000 |        
|                                     |                                                       |      |         |          |      |  
|                                     |                                                       |      | 301,997 |          |      |   | 251,238 |        
|Less:                                |                                                       |      |         |          |      |   |         |        
|                                     | Pre-petition debt classified as subject to compromise |      |         | (150,000 | )    |   |         |        |  
|                                     | DIP Facility                                          |      |         | (151,997 | )    |   |         |        |  
|                                     | Pre-petition Facility  Revolver                      |      |         |         |      |   |         | (2,972  | )
|                                     | Current portion of long-term debt                     |      |         |         |      |   |         | (13,500 | )
|                                     |                                                       |      |         |          |      |  
|Long-term debt, less current portion |                                                       | $    |        |          |      | $ | 234,766 |        
|                                     |                                                       |      |         |          |      |  



| |             
| | ------------
| | DIP Facility

debtor-in The Wall Street Journal


F-29



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




18-month






Balance Sheet Classification of
Borrowings Outstanding under Revolving Credit Agreements that
include both a Subjective Acceleration Clause and a
Lock-Box Arrangement. 10-K


F-30



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












F-31



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










| |                      
| | ---------------------
| | Pre-petition Facility







| |             
| | ------------
| | Senior Notes





F-32



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | Haul Insurance Ltd.;                                                             
|
| |  | Arrendadora de Equipo Para el Transporte de Automoviles, S. de
    R.L. de C.V. ;
|
| |  | Axis Logistica, S. de R.L. de C.V. ;                                             
|
| |  | Axis Operadora Hermosillo;                                                       
|
| |  | Ace Operations, LLC.                                                             





90-7,




|     |                            
|---- | ---------------------------
|(15) | Other Long-term Liabilities



|                              |  |      |        |  |      |   |        | 
|----------------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                              |  | 2005 |        |  | 2004 |  
|                              |  |      |        |  |      |  
|Claims and insurance reserves |  | $    | 70,040 |  |      | $ | 67,621 | 
|Other                         |  |      | 4,056  |  |      |   | 2,823  | 
|                              |  |      |        |  |      |  
|                              |  | $    | 74,096 |  |      | $ | 70,444 | 
|                              |  |      |        |  |      |  



|     |                  
|---- | -----------------
|(16) | Employee Benefits



|    |                                         
|--- | ----------------------------------------
|(a) | Pension and Postretirement Benefit Plans



F-33



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


30-year










|                                        |                           |                 |        |        |                        |   |        |        |   |   |        |        |   |      |        |        |      |   |        |        |   |   |       |        |  
|--------------------------------------- | ------------------------- | --------------- | ------ | ------ | ---------------------- | - | ------ | ------ | - | - | ------ | ------ | - | ---- | ------ | ------ | ---- | - | ------ | ------ | - | - | ----- | ------ | -
|                                        |                           | Defined Benefit |        |        | Postretirement Benefit |  
|                                        |                           | Pension Plans   |        |        | Plans                  |  
|                                        |                           |                 |        |        |                        |  
|                                        |                           | 2005            |        |        | 2004                   |   |        | 2003   |   |   | 2005   |        |   | 2004 |        |        | 2003 |  
|                                        |                           |                 |        |        |                        |   |        |        |   |   |        |        |   |      |        |        |      |  
|Benefit obligation at beginning of year |                           | $               | 52,942 |        |                        | $ | 43,647 |        |   | $ | 40,170 |        |   | $    | 15,874 |        |      | $ | 8,610  |        |   | $ | 9,911 |       
|                                        | Service cost              |                 |        | 84     |                        |   |        | 94     |   |   |        | 89     |   |      |        | 52     |      |   |        | 58     |   |   |       | 52     |  
|                                        | Interest cost             |                 |        | 3,014  |                        |   |        | 2,674  |   |   |        | 2,691  |   |      |        | 708    |      |   |        | 396    |   |   |       | 616    |  
|                                        | Plan amendments and other |                 |        |       |                        |   |        |       |   |   |        |       |   |      |        |       |      |   |        | (3,807 | ) |   |       |       |  
|                                        | Actuarial loss (gain)     |                 |        | 2,086  |                        |   |        | 9,216  |   |   |        | 3,512  |   |      |        | (2,720 | )    |   |        | 11,920 |   |   |       | 164    |  
|                                        | Benefits paid             |                 |        | (3,242 | )                      |   |        | (2,689 | ) |   |        | (2,815 | ) |      |        | (1,411 | )    |   |        | (1,303 | ) |   |       | (2,133 | )
|                                        |                           |                 |        |        |                        |   |        |        |   |   |        |        |   |      |        |        |      |  
|Benefit obligation at end of year       |                           | $               | 54,884 |        |                        | $ | 52,942 |        |   | $ | 43,647 |        |   | $    | 12,503 |        |      | $ | 15,874 |        |   | $ | 8,610 |       
|                                        |                           |                 |        |        |                        |   |        |        |   |   |        |        |   |      |        |        |      |  

F-34



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |   |        |         |        |   |        |        |        |  
|----------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ------ | ------- | ---------------------- | - | ------ | ------ | ------ | - | ------ | ------ | ------ | ---- | ------ | ------- | ------ | - | ------ | ------- | ------ | - | ------ | ------ | ------ | -
|                                                                  |                                                                                                         | Defined Benefit                          |        |         | Postretirement Benefit |  
|                                                                  |                                                                                                         | Pension Plans                            |        |         | Plans                  |  
|                                                                  |                                                                                                         |                                          |        |         |                        |  
|                                                                  |                                                                                                         | 2005                                     |        |         | 2004                   |   |        | 2003   |        |   | 2005   |        |        | 2004 |        |         | 2003   |  
|                                                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |  
|Change in plan assets:                                            |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |   |        |         |        |   |        |       
|                                                                  | Fair value of plan assets at beginning of year                                                          |                                          | $      | 50,924  |                        |   | $      | 44,836 |        |   | $      | 38,089 |        |      | $      |        |        |   | $      |        |        |   | $      |       |       
|                                                                  |                                                                                                         | Actual return on plan assets             |        |         | 3,462                  |   |        |        | 4,324  |   |        |        | 8,815  |      |        |         |       |   |        |         |       |   |        |        |       |  
|                                                                  |                                                                                                         | Employer contributions                   |        |         | 617                    |   |        |        | 4,453  |   |        |        | 747    |      |        |         | 1,411  |   |        |         | 1,303  |   |        |        | 2,133  |  
|                                                                  |                                                                                                         | Benefits paid                            |        |         | (3,242                 | ) |        |        | (2,689 | ) |        |        | (2,815 | )    |        |         | (1,411 | ) |        |         | (1,303 | ) |        |        | (2,133 | )
|                                                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |  
|                                                                  |                                                                                                         | Fair value of plan assets at end of year |        | $       | 51,761                 |   |        | $      | 50,924 |   |        | $      | 44,836 |      |        | $       |       |   |        | $       |       |   |        | $      |       |  
|                                                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |  
|Reconciliation of funded status:                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |   |        |         |        |   |        |       
|                                                                  | Funded status excess (deficiency)                                                                       |                                          | $      | (3,123  | )                      |   | $      | (2,018 | )      |   | $      | 1,189  |        |      | $      | (12,503 | )      |   | $      | (15,874 | )      |   | $      | (8,610 | )     
|                                                                  | Unrecognized actuarial loss                                                                             |                                          |        | 21,804  |                        |   |        | 20,797 |        |   |        | 13,256 |        |      |        | 10,240  |        |   |        | 13,603  |        |   |        | 1,938  |       
|                                                                  | Unrecognized prior service cost                                                                         |                                          |        | 87      |                        |   |        | 135    |        |   |        | 183    |        |      |        | (3,785  | )      |   |        | (4,111  | )      |   |        | (630   | )     
|                                                                  | Additional minimum liability                                                                            |                                          |        | (22,145 | )                      |   |        | (3,112 | )      |   |        | (2,886 | )      |      |        |        |        |   |        |        |        |   |        |       |       
|                                                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |  
|                                                                  | Net asset (liability) recognized                                                                        |                                          | $      | (3,377  | )                      |   | $      | 15,802 |        |   | $      | 11,742 |        |      | $      | (6,048  | )      |   | $      | (6,382  | )      |   | $      | (7,302 | )     
|                                                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |  
|Amounts recognized in the consolidated balance sheets consist of: |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |   |        |         |        |   |        |       
|                                                                  | Pension asset (included in other noncurrent assets)                                                     |                                          | $      |        |                        |   | $      | 18,114 |        |   | $      | 14,166 |        |      | $      |        |        |   | $      |        |        |   | $      |       |       
|                                                                  | Pension and postretirement benefit obligations (primarily
    included in other long-term liabilities)* |                                          |        | (3,377  | )                      |   |        | (2,312 | )      |   |        | (2,424 | )      |      |        | (6,048  | )      |   |        | (6,382  | )      |   |        | (7,302 | )     
|                                                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |  
|                                                                  |                                                                                                         | $                                        | (3,377 | )       |                        | $ | 15,802 |        |        | $ | 11,742 |        |        | $    | (6,048 | )       |        | $ | (6,382 | )       |        | $ | (7,302 | )     
|                                                                  |                                                                                                         |                                          |        |         |                        |   |        |        |        |   |        |        |        |      |        |         |        |  






|  |                                                                                                                                                                    
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Current portions of the postretirement benefit plans as of
    December 31, 2005, 2004 and 2003 were $1.4 million,
    $1.3 million and $2.0 million, respectively.





|          |  |                 |        |  |                |   |       | 
|--------- |  | --------------- | ------ |  | -------------- | - | ----- | 
|          |  | Defined Benefit |        |  | Postretirement |  
|          |  | Pension Plans   |        |  | Benefit Plans  |  
|          |  |                 |        |  |                |  
|2006      |  | $               | 1,831  |  |                | $ | 1,161 | 
|2007      |  |                 | 1,958  |  |                |   | 1,089 | 
|2008      |  |                 | 2,083  |  |                |   | 1,065 | 
|2009      |  |                 | 2,187  |  |                |   | 1,000 | 
|2010      |  |                 | 2,318  |  |                |   | 939   | 
|2011-2015 |  |                 | 14,313 |  |                |   | 4,333 | 



F-35



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                                               |  |                 |      |   |                |  |      |      |  |  |      |   |  |  |      |  
|---------------------------------------------- |  | --------------- | ---- | - | -------------- |  | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                               |  | Defined Benefit |      |   | Postretirement | 
|                                               |  | Pension Plans   |      |   | Benefit Plans  | 
|                                               |  |                 |      |   |                | 
|                                               |  | 2005            |      |   | 2004           |  |      | 2005 |  |  | 2004 |  
|                                               |  |                 |      |   |                |  |      |      |  |  |      |  
|Weighted-average discount rate                 |  |                 | 5.50 | % |                |  | 5.75 | %    |  |  | 5.50 | % |  |  | 5.75 | %
|Weighted-average rate of compensation increase |  |                 | N/A  |   |                |  | N/A  |      |  |  | N/A  |   |  |  | N/A  |  





|                                                             |  |                 |      |   |                |  |                 |      |  |  |      |   |  |      |      |   |      |  |      |   |  |  |      |  
|------------------------------------------------------------ |  | --------------- | ---- | - | -------------- |  | --------------- | ---- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | - |  |  | ---- | -
|                                                             |  | Defined Benefit |      |   | Postretirement | 
|                                                             |  | Pension Plans   |      |   | Benefit Plans  | 
|                                                             |  |                 |      |   |                | 
|                                                             |  | 2005            |      |   | 2004           |  |                 | 2003 |  |  | 2005 |   |  | 2004 |      |   | 2003 | 
|                                                             |  |                 |      |   |                |  |                 |      |  |  |      |   |  |      |      |   |      | 
|Weighted-average discount rate                               |  |                 | 5.75 | % |                |  | 6.25% and 6.00% |      |  |  | 6.75 | % |  |      | 5.75 | % |      |  | 6.25 | % |  |  | 6.75 | %
|Weighted-average expected long-term rate of return on assets |  |                 | 8.50 | % |                |  | 8.50%           |      |  |  | 8.50 | % |  |      | N/A  |   |      |  | N/A  |   |  |  | N/A  |  
|Weighted-average rate of compensation increase               |  |                 | N/A  |   |                |  | N/A             |      |  |  | N/A  |   |  |      | N/A  |   |      |  | N/A  |   |  |  | N/A  |  



F-36



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                         |                                                 |                           |   |        |                |  |   |        |     |  |      |        |       |      |   |      |       |  |   |      |     |  |   |     |     | 
|---------------------------------------- | ----------------------------------------------- | ------------------------- | - | ------ | -------------- |  | - | ------ | --- |  | ---- | ------ | ----- | ---- | - | ---- | ----- |  | - | ---- | --- |  | - | --- | --- | 
|                                         |                                                 | Defined Benefit           |   |        | Postretirement | 
|                                         |                                                 | Pension Plans             |   |        | Benefit Plans  | 
|                                         |                                                 |                           |   |        |                | 
|                                         |                                                 | 2005                      |   |        | 2004           |  |   | 2003   |     |  | 2005 |        |       | 2004 |   |      | 2003  | 
|                                         |                                                 |                           |   |        |                |  |   |        |     |  |      |        |       |      |   |      |       | 
|Components of net periodic benefit cost: |                                                 |                           |   |        |                |  |   |        |     |  |      |        |       |      |   |      |       |  |   |      |     |  |   |    
|                                         | Service cost                                    |                           | $ | 84     |                |  | $ | 94     |     |  | $    | 89     |       |      | $ | 52   |       |  | $ | 58   |     |  | $ | 52  |    
|                                         | Interest cost                                   |                           |   | 3,014  |                |  |   | 2,674  |     |  |      | 2,691  |       |      |   | 708  |       |  |   | 395  |     |  |   | 616 |    
|                                         | Expected return on plan assets                  |                           |   | (4,250 | )              |  |   | (3,719 | )   |  |      | (3,119 | )     |      |   |     |       |  |   |     |     |  |   |    |    
|                                         | Amortization of unrecognized net actuarial loss |                           |   | 1,489  |                |  |   | 893    |     |  |      | 1,415  |       |      |   | 643  |       |  |   | 256  |     |  |   | 71  |    
|                                         | Amortization of prior service cost              |                           |   | 48     |                |  |   | 48     |     |  |      | 48     |       |      |   | (326 | )     |  |   | (326 | )   |  |   | (70 | )  
|                                         | Amortization of transition asset                |                           |   |       |                |  |   |       |     |  |      | (20    | )     |      |   |     |       |  |   |     |     |  |   |    |    
|                                         | Recognized actuarial loss                       |                           |   | 377    |                |  |   | 177    |     |  |      | 216    |       |      |   |     |       |  |   |     |     |  |   |    |    
|                                         |                                                 |                           |   |        |                |  |   |        |     |  |      |        |       |      |   |      |       | 
|                                         |                                                 | Net periodic benefit cost |   | $      | 762            |  |   | $      | 167 |  |      | $      | 1,320 |      |   | $    | 1,077 |  |   | $    | 383 |  |   | $   | 669 | 
|                                         |                                                 |                           |   |        |                |  |   |        |     |  |      |        |       |      |   |      |       | 



|                                              |  |             |       |  |             |   |        |  
|--------------------------------------------- |  | ----------- | ----- |  | ----------- | - | ------ | -
|                                              |  | 1% Increase |       |  | 1% Decrease |  
|                                              |  |             |       |  |             |  
|Accumulated postretirement benefit obligation |  | $           | 1,229 |  |             | $ | (1,053 | )
|Total of service and interest cost            |  |             | 75    |  |             |   | (64    | )



|                             |       |      |      |       |      |  |      |       |  
|---------------------------- | ----- | ---- | ---- | ----- | ---- |  | ---- | ----- | -
|Asset Category               |       | 2005 |      |       | 2004 | 
|                             |       |      |      |       |      | 
|Cash                         |       |      | 0.7  | %     |      |  | 8.7  | %    
|Fixed income                 |       |      | 29.4 | %     |      |  | 25.5 | %    
|Core equity                  |       |      | 41.0 | %     |      |  | 34.9 | %    
|Real estate investment trust |       |      | 4.6  | %     |      |  | 7.5  | %    
|Small cap                    |       |      | 14.2 | %     |      |  | 13.3 | %    
|International equity         |       |      | 10.1 | %     |      |  | 10.1 | %    
|                             |       |      |      |       |      | 
|                             | Total |      |      | 100.0 | %    |  |      | 100.0 | %
|                             |       |      |      |       |      | 



F-37



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|    |            
|--- | -----------
|(b) | 401(k) Plan





|    |                             
|--- | ----------------------------
|(c) | Employee Stock Purchase Plan



F-38



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                         
|--- | ------------------------
|(d) | Long-term Incentive Plan







|     |             
|---- | ------------
|(17) | Income Taxes



|        |                                |      |         |          |      |   |         |         |   |   |        |        |  
|------- | ------------------------------ | ---- | ------- | -------- | ---- | - | ------- | ------- | - | - | ------ | ------ | -
|        |                                | 2005 |         |          | 2004 |   |         | 2003    |  
|        |                                |      |         |          |      |   |         |         |  
|U.S.    |                                | $    | (89,842 | )        |      | $ | (16,188 | )       |   | $ | 104    |       
|Foreign |                                |      | (46,714 | )        |      |   | (25,334 | )       |   |   | (2,442 | )     
|        |                                |      |         |          |      |   |         |         |  
|        | Total loss before income taxes |      | $       | (136,556 | )    |   | $       | (41,522 | ) |   | $      | (2,338 | )
|        |                                |      |         |          |      |   |         |         |  



|          |         |                                    |   |         |         |   |   |        |        |  |   |       |       | 
|--------- | ------- | ---------------------------------- | - | ------- | ------- | - | - | ------ | ------ |  | - | ----- | ----- | 
|          |         | 2005                               |   |         | 2004    |   |   | 2003   |       
|          |         |                                    |   |         |         |   |   |        |       
|Current:  |         |                                    |   |         |         |   |   |        |        |  |   |      
|          | Federal |                                    | $ |        |         |   | $ |       |        |  | $ | 5     |      
|          | State   |                                    |   | 372     |         |   |   | (29    | )      |  |   | (60   | )    
|          | Foreign |                                    |   | 58      |         |   |   | 1,115  |        |  |   | (593  | )    
|Deferred: |         |                                    |   |         |         |   |   |        |        |  |   |      
|          | Federal |                                    |   | (10,203 | )       |   |   | 10,216 |        |  |   | 6,335 |      
|          | State   |                                    |   | (1,059  | )       |   |   | 1,059  |        |  |   | 364   |      
|          | Foreign |                                    |   |        |         |   |   |       |        |  |   | 215   |      
|          |         |                                    |   |         |         |   |   |        |       
|          |         | Total income tax expense (benefit) |   | $       | (10,832 | ) |   | $      | 12,361 |  |   | $     | 6,266 | 
|          |         |                                    |   |         |         |   |   |        |       

F-39



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                      |                                    |      |         |         |      |   |         |        |  |   |       |       | 
|----------------------------------------------------- | ---------------------------------- | ---- | ------- | ------- | ---- | - | ------- | ------ |  | - | ----- | ----- | 
|                                                      |                                    | 2005 |         |         | 2004 |   |         | 2003   | 
|                                                      |                                    |      |         |         |      |   |         |        | 
|Benefit computed at the federal statutory rate        |                                    | $    | (47,795 | )       |      | $ | (14,533 | )      |  | $ | (795  | )    
|Effects of:                                           |                                    |      |         |         |      |   |         |        |  |   |       |      
|State income taxes, net of federal income tax effects |                                    |      | (3,081  | )       |      |   | (1,072  | )      |  |   | 200   |      
|Impairment of goodwill  tax basis differential       |                                    |      | 14,460  |         |      |   | 962     |        |  |   |      |      
|Nondeductible expenses                                |                                    |      | 2,385   |         |      |   | 209     |        |  |   | 415   |      
|Valuation allowance                                   |                                    |      | 23,690  |         |      |   | 26,401  |        |  |   | 6,830 |      
|Other, net                                            |                                    |      | (491    | )       |      |   | 394     |        |  |   | (384  | )    
|                                                      |                                    |      |         |         |      |   |         |        | 
|                                                      | Total income tax expense (benefit) |      | $       | (10,832 | )    |   | $       | 12,361 |  |   | $     | 6,266 | 
|                                                      |                                    |      |         |         |      |   |         |        | 



|                          |                                            |                                |         |         |         |   |         |         |         |  
|------------------------- | ------------------------------------------ | ------------------------------ | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                          |                                            | 2005                           |         |         | 2004    |  
|                          |                                            |                                |         |         |         |  
|Deferred tax assets:      |                                            |                                |         |         |         |   |         |        
|                          | Tax carryforwards                          |                                | $       | 43,303  |         |   | $       | 25,691  |        
|                          | Claims and insurance expense               |                                |         | 39,770  |         |   |         | 36,497  |        
|                          | Accrued compensation expense               |                                |         | 2,129   |         |   |         | 3,432   |        
|                          | Postretirement benefits                    |                                |         | 2,286   |         |   |         | 2,379   |        
|                          | Pension liabilities                        |                                |         | 8,057   |         |   |         |        |        
|                          | Other liabilities not currently deductible |                                |         | 1,152   |         |   |         | 1,974   |        
|                          | Bad debt allowances                        |                                |         | 746     |         |   |         | 724     |        
|                          | Other, net                                 |                                |         | 2,553   |         |   |         | 1,495   |        
|                          |                                            |                                |         |         |         |  
|                          |                                            | Total deferred tax assets      |         |         | 99,996  |   |         |         | 72,192  |  
|                          |                                            |                                |         |         |         |  
|Valuation allowance       |                                            |                                | (73,436 | )       |         |   | (42,020 | )      
|                          |                                            |                                |         |         |         |  
|Deferred tax liabilities: |                                            |                                |         |         |         |   |         |        
|                          | Depreciation and amortization              |                                |         | (19,378 | )       |   |         | (30,993 | )      
|                          | Assets currently deductible                |                                |         | (6,955  | )       |   |         | (10,098 | )      
|                          | Other, net                                 |                                |         | (242    | )       |   |         | (613    | )      
|                          |                                            |                                |         |         |         |  
|                          |                                            | Total deferred tax liabilities |         |         | (26,575 | ) |         |         | (41,704 | )
|                          |                                            |                                |         |         |         |  
|                          |                                            | Net deferred tax liabilities   |         | $       | (15     | ) |         | $       | (11,532 | )
|                          |                                            |                                |         |         |         |  





F-40



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|     |                              
|---- | -----------------------------
|(18) | Commitments and Contingencies



|    |                             
|--- | ----------------------------
|(a) | Effect of Chapter 11 Filings



debtors-in


F-41



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                   
|--- | ------------------
|(b) | Customer Contracts







|    |                  
|--- | -----------------
|(c) | Letters of Credit





|    |                                    
|--- | -----------------------------------
|(d) | Litigation, Claims, and Assessments





F-42



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                      
|--- | ---------------------
|(e) | Employment Agreements





|    |                                          
|--- | -----------------------------------------
|(f) | Purchase and Service Contract Commitments



F-43



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|            |  |   |        | 
|----------- |  | - | ------ | 
|2006        |  | $ | 10,385 | 
|2007        |  |   | 10,658 | 
|2008        |  |   | 10,689 | 
|2009        |  |   | 10,849 | 
|2010        |  |   | 10,917 | 
|2011  2014 |  |   | 34,686 | 
|            |  |   |       
|            |  | $ | 88,184 | 
|            |  |   |       



|    |                                 
|--- | --------------------------------
|(g) | Collective Bargaining Agreements









F-44



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                                            
|---- | -------------------------------------------
|(19) | Industry Segment and Geographic Information

Disclosure About Segments of an Enterprise and Related
Information,




|                                   |                             |                                                   |       |         |          |         |   |         |         |         |   |         |        |         | 
|---------------------------------- | --------------------------- | ------------------------------------------------- | ----- | ------- | -------- | ------- | - | ------- | ------- | ------- | - | ------- | ------ | ------- | 
|                                   |                             | Years Ended December 31,                          |      
|                                   |                             |                                                   |      
|                                   |                             | 2005                                              |       |         | 2004     |         |   | 2003    |        
|                                   |                             |                                                   |       |         |          |         |   |         |        
|Revenues  unaffiliated customers: |                             |                                                   |       |         |          |         |   |         |         |         |   |        
|                                   | Allied Automotive Group     |                                                   | $     | 865,427 |          |         | $ | 869,507 |         |         | $ | 836,835 |       
|                                   | Axis Group                  |                                                   |       | 27,507  |          |         |   | 25,706  |         |         |   | 28,628  |       
|                                   |                             |                                                   |       |         |          |         |   |         |        
|                                   |                             |                                                   | Total |         | $        | 892,934 |   |         | $       | 895,213 |   |         | $      | 865,463 | 
|                                   |                             |                                                   |       |         |          |         |   |         |        
|Depreciation and amortization:     |                             |                                                   |       |         |          |         |   |         |         |         |   |        
|                                   | Allied Automotive Group     |                                                   | $     | 27,160  |          |         | $ | 38,596  |         |         | $ | 39,427  |       
|                                   | Axis Group                  |                                                   |       | 1,609   |          |         |   | 1,938   |         |         |   | 2,887   |       
|                                   | Corporate/other             |                                                   |       | 1,156   |          |         |   | 2,409   |         |         |   | 3,242   |       
|                                   |                             |                                                   |       |         |          |         |   |         |        
|                                   |                             |                                                   | Total |         | $        | 29,925  |   |         | $       | 42,943  |   |         | $      | 45,556  | 
|                                   |                             |                                                   |       |         |          |         |   |         |        
|Operating (loss) income:           |                             |                                                   |       |         |          |         |   |         |         |         |   |        
|                                   | Allied Automotive Group     |                                                   | $     | (93,417 | )        |         | $ | 2,249   |         |         | $ | 11,655  |       
|                                   | Axis Group                  |                                                   |       | 4,306   |          |         |   | (5,410  | )       |         |   | 4,476   |       
|                                   | Corporate/other             |                                                   |       | (5,965  | )        |         |   | (9,880  | )       |         |   | 2,352   |       
|                                   |                             |                                                   |       |         |          |         |   |         |        
|                                   |                             |                                                   | Total |         |          | (95,076 | ) |         |         | (13,041 | ) |         |        | 18,483  | 
|Reconciling items:                 |                             |                                                   |       |         |          |         |   |         |         |         |   |        
|                                   | Interest expense            |                                                   |       | (39,410 | )        |         |   | (31,355 | )       |         |   | (29,138 | )     
|                                   | Investment income           |                                                   |       | 2,813   |          |         |   | 1,136   |         |         |   | 3,172   |       
|                                   | Foreign exchange gains, net |                                                   |       | 1,414   |          |         |   | 1,929   |         |         |   | 3,169   |       
|                                   | Other, net                  |                                                   |       | 834     |          |         |   | (191    | )       |         |   | 1,976   |       
|                                   |                             |                                                   |       |         |          |         |   |         |        
|                                   |                             | Loss before reorganization items and income taxes |       |         | (129,425 | )       |   |         | (41,522 | )       |   |         | (2,338 | )      
|                                   |                             | Reorganization items                              |       |         | (7,131   | )       |   |         |        |         |   |         |       |        
|                                   |                             |                                                   |       |         |          |         |   |         |        
|                                   |                             | Loss before income taxes                          |       | $       | (136,556 | )       |   | $       | (41,522 | )       |   | $       | (2,338 | )      
|                                   |                             |                                                   |       |         |          |         |   |         |        

F-45



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                      |                         |              |   |         |         |  |   |         |         |  |   |         |         | 
|--------------------- | ----------------------- | ------------ | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                      |                         | December 31, |  
|                      |                         |              |  
|                      |                         | 2005         |   |         | 2004    |  |   | 2003    |        
|                      |                         |              |   |         |         |  |   |         |        
|Total assets:         |                         |              |   |         |         |  |   |         |         |  |   |        
|                      | Allied Automotive Group |              | $ | 233,394 |         |  | $ | 274,228 |         |  | $ | 282,735 |        
|                      | Axis Group              |              |   | 22,141  |         |  |   | 19,690  |         |  |   | 31,993  |        
|                      | Corporate/other         |              |   | 127,581 |         |  |   | 127,614 |         |  |   | 145,335 |        
|                      |                         |              |   |         |         |  |   |         |        
|                      |                         | Total        |   | $       | 383,116 |  |   | $       | 421,532 |  |   | $       | 460,063 | 
|                      |                         |              |   |         |         |  |   |         |        
|Capital expenditures: |                         |              |   |         |         |  |   |         |         |  |   |        
|                      | Allied Automotive Group |              | $ | 17,789  |         |  | $ | 21,309  |         |  | $ | 17,959  |        
|                      | Axis Group              |              |   | 1,505   |         |  |   | 1,097   |         |  |   | 299     |        
|                      | Corporate/other         |              |   | 111     |         |  |   | 136     |         |  |   | 297     |        
|                      |                         |              |   |         |         |  |   |         |        
|                      |                         | Total        |   | $       | 19,405  |  |   | $       | 22,542  |  |   | $       | 18,555  | 
|                      |                         |              |   |         |         |  |   |         |        







|          |               |                          |   |         |         |  |   |         |         |  |   |         |         | 
|--------- | ------------- | ------------------------ | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|          |               | Years Ended December 31, |  
|          |               |                          |  
|          |               | 2005                     |   |         | 2004    |  |   | 2003    |        
|          |               |                          |   |         |         |  |   |         |        
|Revenues: |               |                          |   |         |         |  |   |         |         |  |   |        
|          | United States |                          | $ | 719,760 |         |  | $ | 734,247 |         |  | $ | 707,068 |        
|          | Canada        |                          |   | 173,174 |         |  |   | 160,966 |         |  |   | 158,395 |        
|          |               |                          |   |         |         |  |   |         |        
|          |               | Total                    |   | $       | 892,934 |  |   | $       | 895,213 |  |   | $       | 865,463 | 
|          |               |                          |   |         |         |  |   |         |        

|                   |               |              |   |        |         |  |   |        |         |  |   |         |         | 
|------------------ | ------------- | ------------ | - | ------ | ------- |  | - | ------ | ------- |  | - | ------- | ------- | 
|                   |               | December 31, |  
|                   |               |              |  
|                   |               | 2005         |   |        | 2004    |  |   | 2003   |        
|                   |               |              |   |        |         |  |   |        |        
|Long-lived assets: |               |              |   |        |         |  |   |        |         |  |   |        
|                   | United States |              | $ | 90,223 |         |  | $ | 97,621 |         |  | $ | 116,810 |        
|                   | Canada        |              |   | 33,681 |         |  |   | 38,014 |         |  |   | 38,763  |        
|                   |               |              |   |        |         |  |   |        |        
|                   |               | Total        |   | $      | 123,904 |  |   | $      | 135,635 |  |   | $       | 155,573 | 
|                   |               |              |   |        |         |  |   |        |        



F-46



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                           |                             |              |    |    |      |  |    |      |   |  |    |    |  
|-------------------------------------------------------------------------- | --------------------------- | ------------ | -- | -- | ---- |  | -- | ---- | - |  | -- | -- | -
|                                                                           |                             | Years Ended  |   
|                                                                           |                             | December 31, |   
|                                                                           |                             |              |   
|                                                                           |                             | 2005         |    |    | 2004 |  |    | 2003 |  
|                                                                           |                             |              |    |    |      |  |    |      |  
|Revenues earned from Allied Automotive Groups four largest
    customers: |                             |              |    |    |      |  |    |      |   |  |    |   
|                                                                           | General Motors Corporation  |              |    | 34 | %    |  |    | 35   | % |  |    | 36 | %
|                                                                           | Ford Motor Company          |              |    | 23 | %    |  |    | 24   | % |  |    | 23 | %
|                                                                           | DaimlerChrysler Corporation |              |    | 14 | %    |  |    | 14   | % |  |    | 13 | %
|                                                                           | Toyota                      |              |    | 11 | %    |  |    | 9    | % |  |    | 8  | %
|                                                                           |                             |              |    |    |      |  |    |      |  
|                                                                           |                             |              | 82 | %  |      |  | 82 | %    |   |  | 80 | % 
|                                                                           |                             |              |    |    |      |  |    |      |  

|                                                                                   |  |              |    |   |      |  |    |  
|---------------------------------------------------------------------------------- |  | ------------ | -- | - | ---- |  | -- | -
|                                                                                   |  | December 31, |   
|                                                                                   |  |              |   
|                                                                                   |  | 2005         |    |   | 2004 | 
|                                                                                   |  |              |    |   |      | 
|Accounts receivable due from Allied Automotive Groups four
    largest customers: |  |              |    |   |      |  |    |  
|General Motors Corporation                                                         |  |              | 29 | % |      |  | 36 | %
|Ford Motor Company                                                                 |  |              | 22 | % |      |  | 18 | %
|DaimlerChrysler Corporation                                                        |  |              | 15 | % |      |  | 17 | %
|Toyota                                                                             |  |              | 11 | % |      |  | 8  | %
|                                                                                   |  |              |    |   |      | 
|                                                                                   |  |              | 77 | % |      |  | 79 | %
|                                                                                   |  |              |    |   |      | 







|     |                     
|---- | --------------------
|(20) | Stockholders Equity







F-47



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|                                    |           |        |           |              |             |          |            |                |  |   |      |      | 
|----------------------------------- | --------- | ------ | --------- | ------------ | ----------- | -------- | ---------- | -------------- |  | - | ---- | ---- | 
|                                    |           |        |           |              |             | Weighted |           
|                                    |           |        |           | Option Price |             |          | Average    |               
|                                    |           | Shares |           |              | (Per Share) |          |            | Exercise Price | 
|                                    |           |        |           |              |             |          |            |                | 
|Outstanding as of December 31, 2002 |           |        | 1,612,300 |              |             | $        | 1.80-11.75 |                |  | $ | 3.45 |     
|                                    | Granted   |        |           | 138,000      |             |          | $          | 3.15-3.51      |  |   | $    | 3.36 | 
|                                    | Canceled  |        |           | (10,333      | )           |          | $          | 2.60-5.15      |  |   | $    | 4.58 | 
|                                    | Exercised |        |           | (30,000      | )           |          | $          | 3.70           |  |   | $    | 3.70 | 
|                                    |           |        |           |              |             |          |            |                | 
|Outstanding as of December 31, 2003 |           |        | 1,709,967 |              |             | $        | 1.80-11.75 |                |  | $ | 3.65 |     
|                                    | Granted   |        |           | 163,500      |             |          | $          | 5.50-6.65      |  |   | $    | 6.37 | 
|                                    | Canceled  |        |           | (191,467     | )           |          | $          | 2.35-11.75     |  |   | $    | 6.16 | 
|                                    | Exercised |        |           | (93,333      | )           |          | $          | 2.35-5.00      |  |   | $    | 2.79 | 
|                                    |           |        |           |              |             |          |            |                | 
|Outstanding as of December 31, 2004 |           |        | 1,588,667 |              |             | $        | 1.80-10.37 |                |  | $ | 3.68 |     
|                                    | Granted   |        |           | 210,000      |             |          | $          | 3.68-4.16      |  |   | $    | 4.07 | 
|                                    | Canceled  |        |           | (226,000     | )           |          | $          | 2.35-9.50      |  |   | $    | 4.12 | 
|                                    | Exercised |        |           |             |             |          |            |               |  |   |      |     | 
|                                    |           |        |           |              |             |          |            |                | 
|Outstanding as of December 31, 2005 |           |        | 1,572,667 |              |             | $        | 1.80-10.37 |                |  | $ | 3.67 |     
|                                    |           |        |           |              |             |          |            |                | 

F-48



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                                             |  |      |           |  |      |   |           |      |  |   |           | 
|---------------------------------------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|                                                                             |  | 2005 |           |  | 2004 |   |           | 2003 | 
|                                                                             |  |      |           |  |      |   |           |      | 
|Options exercisable at year-end                                              |  |      | 1,253,499 |  |      |   | 1,258,823 |      |  |   | 1,122,319 | 
|Weighted-average exercise price of options exercisable at
    year-end       |  | $    | 3.42      |  |      | $ | 3.33      |      |  | $ | 3.67      | 
|Per share weighted-average fair value of options granted during
    the year |  | $    | 3.07      |  |      | $ | 4.65      |      |  | $ | 3.36      | 



|                         |  |                        |           |          |                        |   |             |         |  |  |           |          |  |          |           |  |  |   |       | 
|------------------------ |  | ---------------------- | --------- | -------- | ---------------------- | - | ----------- | ------- |  |  | --------- | -------- |  | -------- | --------- |  |  | - | ----- | 
|                         |  | Options Outstanding at |           |          | Options Exercisable at |  
|                         |  | December 31, 2005      |           |          | December 31, 2005      |  
|                         |  |                        |           |          |                        |  
|                         |  |                        |           | Weighted |                        |   |            
|                         |  |                        |           | Average  |                        |   |            
|                         |  |                        |           | Weighted |                        |   | Remaining   |         |  |  |           | Weighted | 
|                         |  |                        |           | Average  |                        |   | Contractual |         |  |  |           | Average  | 
|                         |  | Number of              |           |          | Exercise               |   |             | Life    |  |  | Number of |          |  | Exercise |          
|Range of Exercise Prices |  | Shares                 |           |          | Price                  |   |             | (Years) |  |  | Shares    |          |  | Price    |          
|                         |  |                        |           |          |                        |   |             |         |  |  |           |          |  |          |          
|$1.80  3.70             |  |                        | 1,040,167 |          |                        | $ | 2.78        |         |  |  | 6.06      |          |  |          | 979,998   |  |  | $ | 2.74  | 
|$4.16  7.06             |  |                        | 517,500   |          |                        | $ | 5.25        |         |  |  | 7.53      |          |  |          | 258,501   |  |  | $ | 5.60  | 
|$9.50  11.75            |  |                        | 15,000    |          |                        | $ | 10.38       |         |  |  | 2.67      |          |  |          | 15,000    |  |  | $ | 10.38 | 
|                         |  |                        |           |          |                        |   |             |         |  |  |           |          |  |          |          
|                         |  |                        | 1,572,667 |          |                        |   |             |         |  |  | 6.51      |          |  |          | 1,253,499 |  |  | $ | 3.42  | 
|                         |  |                        |           |          |                        |   |             |         |  |  |           |          |  |          |          



|     |                                     
|---- | ------------------------------------
|(21) | Quarterly Financial Data (Unaudited)

|                            |                   |                                          |         |       |        |   |         |       |   |   |         |       |   |   |         |       |  
|--------------------------- | ----------------- | ---------------------------------------- | ------- | ----- | ------ | - | ------- | ----- | - | - | ------- | ----- | - | - | ------- | ----- | -
|                            |                   | 2005                                     |        
|                            |                   |                                          |        
|                            |                   | First                                    |         |       | Second |   |         | Third |   |   | Fourth  |      
|                            |                   |                                          |         |       |        |   |         |       |   |   |         |      
|                            |                   | (In thousands, except per share amounts) |        
|Revenues                    |                   | $                                        | 220,950 |       |        | $ | 232,554 |       |   | $ | 203,090 |       |   | $ | 236,340 |      
|Operating loss              |                   |                                          | (1,881  | )     |        |   | (72,088 | )     |   |   | (5,197  | )     |   |   | (15,910 | )    
|Net loss                    |                   |                                          | (10,058 | )     |        |   | (75,050 | )     |   |   | (15,996 | )     |   |   | (24,620 | )    
|Net loss per share:         |                   |                                          |         |       |        |   |         |       |   |   |         |       |   |   |         |      
|                            | Basic and diluted |                                          | $       | (1.13 | )      |   | $       | (8.36 | ) |   | $       | (1.78 | ) |   | $       | (2.74 | )
|Average shares outstanding: |                   |                                          |         |       |        |   |         |       |   |   |         |       |   |   |         |      
|                            | Basic and diluted |                                          |         | 8,940 |        |   |         | 8,980 |   |   |         | 8,980 |   |   |         | 8,980 |  

|                            |                   |                                          |         |       |        |   |         |       |   |   |         |       |   |   |         |       |  
|--------------------------- | ----------------- | ---------------------------------------- | ------- | ----- | ------ | - | ------- | ----- | - | - | ------- | ----- | - | - | ------- | ----- | -
|                            |                   | 2004                                     |        
|                            |                   |                                          |        
|                            |                   | First                                    |         |       | Second |   |         | Third |   |   | Fourth  |      
|                            |                   |                                          |         |       |        |   |         |       |   |   |         |      
|                            |                   | (In thousands, except per share amounts) |        
|Revenues                    |                   | $                                        | 212,244 |       |        | $ | 236,616 |       |   | $ | 207,599 |       |   | $ | 238,754 |      
|Operating (loss) income     |                   |                                          | (1,482  | )     |        |   | 4,659   |       |   |   | (781    | )     |   |   | (15,437 | )    
|Net loss                    |                   |                                          | (9,048  | )     |        |   | (3,753  | )     |   |   | (7,634  | )     |   |   | (33,448 | )    
|Net loss per share:         |                   |                                          |         |       |        |   |         |       |   |   |         |       |   |   |         |      
|                            | Basic and diluted |                                          | $       | (1.03 | )      |   | $       | (0.43 | ) |   | $       | (0.87 | ) |   | $       | (3.75 | )
|Average shares outstanding: |                   |                                          |         |       |        |   |         |       |   |   |         |       |   |   |         |      
|                            | Basic and diluted |                                          |         | 8,789 |        |   |         | 8,704 |   |   |         | 8,791 |   |   |         | 8,910 |  



F-49



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|     |                                   
|---- | ----------------------------------
|(22) | Supplemental Guarantor Information





F-50



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




SUPPLEMENTAL CONSOLIDATING BALANCE SHEET INFORMATION


December 31, 2005


|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |   |          |        |  |         |          |          |  
|------------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------------- | ------- | -------- | ------------ | - | ------- | ------------ | -------- | - | ------------ | ------ | ------- | ------------ | - | -------- | ------ |  | ------- | -------- | -------- | -
|                                                        |                                                           | Allied                                               |         |          | Guarantor    |   |         | Nonguarantor |          |   |              |        |        
|                                                        |                                                           | Holdings                                             |         |          | Subsidiaries |   |         | Subsidiaries |          |   | Eliminations |        |         | Consolidated |  
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|                                                        |                                                           | (In thousands)                                       |        
|Current assets:                                         |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |   |          |        |  |         |         
|                                                        | Cash and cash equivalents                                 |                                                      | $       |         |              |   | $       | 730          |          |   | $            | 3,387  |         |              | $ |         |        |  | $       | 4,117    |         
|                                                        | Restricted cash, cash equivalents and other time deposits |                                                      |         |         |              |   |         |             |          |   |              | 32,830 |         |              |   |         |        |  |         | 32,830   |         
|                                                        | Receivables, net of allowances                            |                                                      |         |         |              |   |         | 59,896       |          |   |              | 1,531  |         |              |   |         |        |  |         | 61,427   |         
|                                                        | Inventories                                               |                                                      |         |         |              |   |         | 5,132        |          |   |              |       |         |              |   |         |        |  |         | 5,132    |         
|                                                        | Deferred income taxes                                     |                                                      |         | 151      |              |   |         |             |          |   |              | (23    | )       |              |   |         |        |  |         | 128      |         
|                                                        | Prepayments and other current assets                      |                                                      |         | 3,364    |              |   |         | 52,535       |          |   |              | 3,535  |         |              |   |         |        |  |         | 59,434   |         
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|                                                        |                                                           | Total current assets                                 |         |          | 3,515        |   |         |              | 118,293  |   |              |        | 41,260  |              |   |          |       |  |         |          | 163,068  |  
|Property and equipment, net of accumulated depreciation |                                                           |                                                      | 3,762   |          |              |   | 116,450 |              |          |   | 3,692        |        |         |              |  |          |        |  | 123,904 |         
|Goodwill, net                                           |                                                           |                                                      |        |          |              |   | 3,545   |              |          |   |             |        |         |              |  |          |        |  | 3,545   |         
|Other assets:                                           |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |   |          |        |  |         |         
|                                                        | Restricted cash, cash equivalents and other time deposits |                                                      |         |         |              |   |         |             |          |   |              | 69,764 |         |              |   |         |        |  |         | 69,764   |         
|                                                        | Other noncurrent assets                                   |                                                      |         | 11,826   |              |   |         | 10,541       |          |   |              | 468    |         |              |   |         |        |  |         | 22,835   |         
|                                                        | Intercompany receivables (payables)                       |                                                      |         | 76,862   |              |   |         | (76,862      | )        |   |              |       |         |              |   |         |        |  |         |         |         
|                                                        | Investment in subsidiaries                                |                                                      |         | (95,374  | )            |   |         | 5,282        |          |   |              |       |         |              |   | 90,092   |        |  |         |         |         
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|                                                        |                                                           | Total other assets                                   |         |          | (6,686       | ) |         |              | (61,039  | ) |              |        | 70,232  |              |   |          | 90,092 |  |         |          | 92,599   |  
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|                                                        |                                                           | Total assets                                         |         | $        | 591          |   |         | $            | 177,249  |   |              | $      | 115,184 |              |   | $        | 90,092 |  |         | $        | 383,116  |  
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|Current liabilities not subject to compromise:          |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |   |          |        |  |         |         
|                                                        | Debtor-in-possession credit facility                      |                                                      | $       | 151,997  |              |   | $       |             |          |   | $            |       |         |              | $ |         |        |  | $       | 151,997  |         
|                                                        | Accounts and notes payable                                |                                                      |         | 3,764    |              |   |         | 52,682       |          |   |              | 750    |         |              |   |         |        |  |         | 57,196   |         
|                                                        | Intercompany (receivables) payables                       |                                                      |         | (133,008 | )            |   |         | 117,201      |          |   |              | 15,807 |         |              |   |         |        |  |         |         |         
|                                                        | Accrued liabilities                                       |                                                      |         | 5,027    |              |   |         | 50,812       |          |   |              | 27,478 |         |              |   |         |        |  |         | 83,317   |         
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|                                                        |                                                           | Total current liabilities                            |         |          | 27,780       |   |         |              | 220,695  |   |              |        | 44,035  |              |   |          |       |  |         |          | 292,510  |  
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|Long-term liabilities not subject to compromise:        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |   |          |        |  |         |         
|Postretirement benefits other than pensions             |                                                           |                                                      |        |          |              |   | 4,412   |              |          |   |             |        |         |              |  |          |        |  | 4,412   |         
|Deferred income taxes                                   |                                                           |                                                      | 143     |          |              |   |        |              |          |   |             |        |         |              |  |          |        |  | 143     |         
|Other long-term liabilities                             |                                                           |                                                      | 2,521   |          |              |   | 19,608  |              |          |   | 51,967       |        |         |              |  |          |        |  | 74,096  |         
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|                                                        |                                                           | Total long-term liabilities                          |         |          | 2,664        |   |         |              | 24,020   |   |              |        | 51,967  |              |   |          |       |  |         |          | 78,651   |  
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|Liabilities subject to compromise                       |                                                           |                                                      | 157,514 |          |              |   | 41,808  |              |          |   |             |        |         |              |  |          |        |  | 199,322 |         
|Commitments and contingencies                           |                                                           |                                                      |        |          |              |   |        |              |          |   |             |        |         |              |  |          |        |  |        |         
|Stockholders (deficit) equity:                         |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |   |          |        |  |         |         
|                                                        | Preferred stock, no par value                             |                                                      |         |         |              |   |         |             |          |   |              |       |         |              |   |         |        |  |         |         |         
|                                                        | Common stock, no par value                                |                                                      |         |         |              |   |         |             |          |   |              |       |         |              |   |         |        |  |         |         |         
|                                                        | Additional paid-in capital                                |                                                      |         | 48,545   |              |   |         | 166,130      |          |   |              | 2,488  |         |              |   | (168,618 | )      |  |         | 48,545   |         
|                                                        | Treasury stock                                            |                                                      |         | (707     | )            |   |         |             |          |   |              |       |         |              |   |         |        |  |         | (707     | )       
|                                                        | (Accumulated deficit) retained earnings                   |                                                      |         | (214,631 | )            |   |         | (261,466     | )        |   |              | 16,694 |         |              |   | 244,772  |        |  |         | (214,631 | )       
|                                                        | Accumulated other comprehensive loss, net of tax          |                                                      |         | (20,574  | )            |   |         | (13,938      | )        |   |              |       |         |              |   | 13,938   |        |  |         | (20,574  | )       
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|                                                        |                                                           | Total stockholders (deficit) equity                 |         |          | (187,367     | ) |         |              | (109,274 | ) |              |        | 19,182  |              |   |          | 90,092 |  |         |          | (187,367 | )
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  
|                                                        |                                                           | Total liabilities and stockholders (deficit) equity |         | $        | 591          |   |         | $            | 177,249  |   |              | $      | 115,184 |              |   | $        | 90,092 |  |         | $        | 383,116  |  
|                                                        |                                                           |                                                      |         |          |              |   |         |              |          |   |              |        |         |              |  

F-51



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




SUPPLEMENTAL CONSOLIDATING BALANCE SHEET INFORMATION


December 31, 2004


|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |         |          |         |         |         |         |         |         | 
|------------------------------------------------------- | --------------------------------------------------------- | ------------------------------------ | ---------------------------------------------------- | ------- | ------------ | ------- | ------- | ------------ | ------- | ------- | ------------ | ------ | ------ | ------------ | ------- | -------- | ------- | ------- | ------- | ------- | ------- | ------- | 
|                                                        |                                                           | Allied                               |                                                      |         | Guarantor    |         |         | Nonguarantor |         |         |              |        |       
|                                                        |                                                           | Holdings                             |                                                      |         | Subsidiaries |         |         | Subsidiaries |         |         | Eliminations |        |        | Consolidated |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|                                                        |                                                           | (In thousands)                       |                                                     
|Current assets:                                         |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |         |          |         |         |         |        
|                                                        | Cash and cash equivalents                                 |                                      | $                                                    |        |              |         | $       | 533          |         |         | $            | 1,983  |        |              | $       |         |         |         | $       | 2,516   |        
|                                                        | Restricted cash, cash equivalents and other time deposits |                                      |                                                      |        |              |         |         |             |         |         |              | 27,378 |        |              |         |         |         |         |         | 27,378  |        
|                                                        | Receivables, net of allowances                            |                                      |                                                      |        |              |         |         | 55,407       |         |         |              | 1,902  |        |              |         |         |         |         |         | 57,309  |        
|                                                        | Inventories                                               |                                      |                                                      |        |              |         |         | 4,649        |         |         |              |       |        |              |         |         |         |         |         | 4,649   |        
|                                                        | Deferred income taxes                                     |                                      |                                                      | 2,927   |              |         |         | 1,705        |         |         |              |       |        |              |         |         |         |         |         | 4,632   |        
|                                                        | Prepayments and other current assets                      |                                      |                                                      | 1,699   |              |         |         | 10,465       |         |         |              | 250    |        |              |         |         |         |         |         | 12,414  |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|                                                        |                                                           | Total current assets                 |                                                      |         | 4,626        |         |         |              | 72,759  |         |              |        | 31,513 |              |         |          |        |         |         |         | 108,898 |        
|Property and equipment, net of accumulated depreciation |                                                           |                                      | 4,744                                                |         |              |         | 127,676 |              |         |         | 3,215        |        |        |              |        |          |         |         | 135,635 |        
|Goodwill, net                                           |                                                           |                                      | 1,515                                                |         |              |         | 82,462  |              |         |         |             |        |        |              |        |          |         |         | 83,977  |        
|Other assets:                                           |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |         |          |         |         |         |        
|                                                        | Restricted cash, cash equivalents and other time deposits |                                      |                                                      |        |              |         |         |             |         |         |              | 55,502 |        |              |         |         |         |         |         | 55,502  |        
|                                                        | Other noncurrent assets                                   |                                      |                                                      | 31,995  |              |         |         | 4,907        |         |         |              | 618    |        |              |         |         |         |         |         | 37,520  |        
|                                                        | Deferred income taxes                                     |                                      |                                                      | 17,843  |              |         |         |             |         |         |              |       |        |              |         | (17,843  | )       |         |         |        |        
|                                                        | Intercompany receivables (payables)                       |                                      |                                                      | 75,147  |              |         |         | (72,978      | )       |         |              | (2,169 | )      |              |         |         |         |         |         |        |        
|                                                        | Investment in subsidiaries                                |                                      |                                                      | (9,070  | )            |         |         | 6,170        |         |         |              |       |        |              |         | 2,900    |         |         |         |        |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|                                                        |                                                           | Total other assets                   |                                                      |         | 115,915      |         |         |              | (61,901 | )       |              |        | 53,951 |              |         |          | (14,943 | )       |         |         | 93,022  |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|                                                        |                                                           | Total assets                         |                                                      | $       | 126,800      |         |         | $            | 220,996 |         |              | $      | 88,679 |              |         | $        | (14,943 | )       |         | $       | 421,532 |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|Current liabilities:                                    |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |         |          |         |         |         |        
|                                                        | Current portion of long-term debt                         |                                      | $                                                    |        |              |         | $       | 13,500       |         |         | $            |       |        |              | $       |         |         |         | $       | 13,500  |        
|                                                        | Borrowings under pre-petition revolving credit facility   |                                      |                                                      |        |              |         |         | 2,972        |         |         |              |       |        |              |         |         |         |         |         | 2,972   |        
|                                                        | Accounts and notes payable                                |                                      |                                                      | 3,818   |              |         |         | 30,696       |         |         |              | 176    |        |              |         |         |         |         |         | 34,690  |        
|                                                        | Intercompany payables (receivables)                       |                                      |                                                      | 6,956   |              |         |         | (6,956       | )       |         |              |       |        |              |         |         |         |         |         |        |        
|                                                        | Accrued liabilities                                       |                                      |                                                      | 7,067   |              |         |         | 47,923       |         |         |              | 30,473 |        |              |         |         |         |         |         | 85,463  |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|                                                        |                                                           | Total current liabilities            |                                                      |         | 17,841       |         |         |              | 88,135  |         |              |        | 30,649 |              |         |          |        |         |         |         | 136,625 |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|Long-term liabilities:                                  |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |         |          |         |         |         |        
|Long-term debt, less current portion                    |                                                           |                                      | 150,000                                              |         |              |         | 84,766  |              |         |         |             |        |        |              |        |          |         |         | 234,766 |        
|Postretirement benefits other than pensions             |                                                           |                                      |                                                     |         |              |         | 5,082   |              |         |         |             |        |        |              |        |          |         |         | 5,082   |        
|Deferred income taxes                                   |                                                           |                                      |                                                     |         |              |         | 33,990  |              |         |         | 17           |        |        |              | (17,843 | )        |         |         | 16,164  |        
|Other long-term liabilities                             |                                                           |                                      | 508                                                  |         |              |         | 33,595  |              |         |         | 36,341       |        |        |              |        |          |         |         | 70,444  |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|                                                        |                                                           | Total long-term liabilities          |                                                      |         | 150,508      |         |         |              | 157,433 |         |              |        | 36,358 |              |         |          | (17,843 | )       |         |         | 326,456 |        
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|Commitments and contingencies                           |                                                           |                                      |                                                     |         |              |         |        |              |         |         |             |        |        |              |        |          |         |         |        |        
|Stockholders (deficit) equity:                         |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |         |          |         |         |         |        
|                                                        | Preferred stock, no par value                             |                                      |                                                      |        |              |         |         |             |         |         |              |       |        |              |         |         |         |         |         |        |        
|                                                        | Common stock, no par value                                |                                      |                                                      |        |              |         |         |             |         |         |              |       |        |              |         |         |         |         |         |        |        
|                                                        | Additional paid-in capital                                |                                      |                                                      | 48,421  |              |         |         | 166,130      |         |         |              | 2,488  |        |              |         | (168,618 | )       |         |         | 48,421  |        
|                                                        | Treasury stock                                            |                                      |                                                      | (707    | )            |         |         |             |         |         |              |       |        |              |         |         |         |         |         | (707    | )      
|                                                        | (Accumulated deficit) retained earnings                   |                                      |                                                      | (88,907 | )            |         |         | (179,239     | )       |         |              | 19,184 |        |              |         | 160,055  |         |         |         | (88,907 | )      
|                                                        | Accumulated other comprehensive loss, net of tax          |                                      |                                                      | (356    | )            |         |         | (11,463      | )       |         |              |       |        |              |         | 11,463   |         |         |         | (356    | )      
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|                                                        |                                                           | Total stockholders (deficit) equity |                                                      |         | (41,549      | )       |         |              | (24,572 | )       |              |        | 21,672 |              |         |          | 2,900   |         |         |         | (41,549 | )      
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        
|                                                        |                                                           |                                      | Total liabilities and stockholders (deficit) equity |         | $            | 126,800 |         |              | $       | 220,996 |              |        | $      | 88,679       |         |          | $       | (14,943 | )       |         | $       | 421,532 | 
|                                                        |                                                           |                                      |                                                      |         |              |         |         |              |         |         |              |        |        |              |        

F-52



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
INFORMATION


Year Ended December 31, 2005


|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |         |         |         |   |          |         |         |  
|---------------------------------------------------------- | ------------------------------------------- | ---------------------------- | -------- | ------- | ------------ | - | -------- | ------------ | ------- | - | ------------ | ------ | ------ | ------------ | ------- | ------- | ------- | - | -------- | ------- | ------- | -
|                                                           |                                             | Allied                       |          |         | Guarantor    |   |          | Nonguarantor |         |   |              |        |       
|                                                           |                                             | Holdings                     |          |         | Subsidiaries |   |          | Subsidiaries |         |   | Eliminations |        |        | Consolidated |        
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|                                                           |                                             | (In thousands)               |         
|Revenues                                                   |                                             | $                            | 31,229   |         |              | $ | 890,884  |              |         | $ | 40,172       |        |        | $            | (69,351 | )       |         | $ | 892,934  |        
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|Operating expenses:                                        |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |         |         |         |   |          |        
|                                                           | Salaries, wages and fringe benefits         |                              |          | 4,955   |              |   |          | 479,686      |         |   |              | 26,948 |        |              |         | (28,980 | )       |   |          | 482,609 |        
|                                                           | Operating supplies and expenses             |                              |          | 13,914  |              |   |          | 166,145      |         |   |              | 422    |        |              |         |        |         |   |          | 180,481 |        
|                                                           | Purchased transportation                    |                              |          |        |              |   |          | 119,412      |         |   |              | 19     |        |              |         |        |         |   |          | 119,431 |        
|                                                           | Insurance and claims                        |                              |          |        |              |   |          | 36,422       |         |   |              | 14,753 |        |              |         | (9,142  | )       |   |          | 42,033  |        
|                                                           | Operating taxes and licenses                |                              |          | 186     |              |   |          | 29,655       |         |   |              |       |        |              |         |        |         |   |          | 29,841  |        
|                                                           | Depreciation and amortization               |                              |          | 1,156   |              |   |          | 28,216       |         |   |              | 553    |        |              |         |        |         |   |          | 29,925  |        
|                                                           | Rents                                       |                              |          | 1,537   |              |   |          | 5,950        |         |   |              | 13     |        |              |         |        |         |   |          | 7,500   |        
|                                                           | Communications and utilities                |                              |          | 3,284   |              |   |          | 2,769        |         |   |              | 37     |        |              |         |        |         |   |          | 6,090   |        
|                                                           | Other operating expenses                    |                              |          | 7,860   |              |   |          | 34,983       |         |   |              | 183    |        |              |         | (31,229 | )       |   |          | 11,797  |        
|                                                           | Impairment of goodwill                      |                              |          | 1,515   |              |   |          | 77,657       |         |   |              |       |        |              |         |        |         |   |          | 79,172  |        
|                                                           | Gain on disposal of operating assets, net   |                              |          |        |              |   |          | (869         | )       |   |              |       |        |              |         |        |         |   |          | (869    | )      
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|                                                           |                                             | Total operating expenses     |          |         | 34,407       |   |          |              | 980,026 |   |              |        | 42,928 |              |         |         | (69,351 | ) |          |         | 988,010 |  
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|                                                           |                                             | Operating loss               |          |         | (3,178       | ) |          |              | (89,142 | ) |              |        | (2,756 | )            |         |         |        |   |          |         | (95,076 | )
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|Other income (expense):                                    |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |         |         |         |   |          |        
|                                                           | Interest expense                            |                              |          | (6,301  | )            |   |          | (32,857      | )       |   |              | (252   | )      |              |         |        |         |   |          | (39,410 | )      
|                                                           | Investment income                           |                              |          |        |              |   |          | 40           |         |   |              | 2,773  |        |              |         |        |         |   |          | 2,813   |        
|                                                           | Foreign exchange (losses) gains, net        |                              |          | (92     | )            |   |          | 1,177        |         |   |              | 329    |        |              |         |        |         |   |          | 1,414   |        
|                                                           | Other, net                                  |                              |          | (5,968  | )            |   |          | 6,802        |         |   |              |       |        |              |         |        |         |   |          | 834     |        
|                                                           | Equity in (losses) earnings of subsidiaries |                              |          | (83,826 | )            |   |          | 506          |         |   |              |       |        |              |         | 83,320  |         |   |          |        |        
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|                                                           |                                             | Total other income (expense) |          |         | (96,187      | ) |          |              | (24,332 | ) |              |        | 2,850  |              |         |         | 83,320  |   |          |         | (34,349 | )
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|(Loss) income before reorganization items and income taxes |                                             |                              | (99,365  | )       |              |   | (113,474 | )            |         |   | 94           |        |        |              | 83,320  |         |         |   | (129,425 | )      
|Reorganization items                                       |                                             |                              | (6,505   | )       |              |   | (625     | )            |         |   | (1           | )      |        |              |        |         |         |   | (7,131   | )      
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|(Loss) income before income taxes                          |                                             |                              | (105,870 | )       |              |   | (114,099 | )            |         |   | 93           |        |        |              | 83,320  |         |         |   | (136,556 | )      
|Income tax (expense) benefit                               |                                             |                              | (19,854  | )       |              |   | 31,875   |              |         |   | (1,189       | )      |        |              |        |         |         |   | 10,832   |        
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        
|Net loss                                                   |                                             | $                            | (125,724 | )       |              | $ | (82,224  | )            |         | $ | (1,096       | )      |        | $            | 83,320  |         |         | $ | (125,724 | )      
|                                                           |                                             |                              |          |         |              |   |          |              |         |   |              |        |        |              |        

F-53



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
INFORMATION


Year Ended December 31, 2004


|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |         |         |         |   |         |         |         |  
|---------------------------- | ------------------------------------------- | ---------------------------- | ------- | ------- | ------------ | - | ------- | ------------ | ------- | - | ------------ | ------ | ------- | ------------ | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                             |                                             | Allied                       |         |         | Guarantor    |   |         | Nonguarantor |         |   |              |        |        
|                             |                                             | Holdings                     |         |         | Subsidiaries |   |         | Subsidiaries |         |   | Eliminations |        |         | Consolidated |        
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        
|Revenues                     |                                             | $                            | 36,209  |         |              | $ | 893,620 |              |         | $ | 41,126       |        |         | $            | (75,742 | )       |         | $ | 895,213 |        
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        
|Operating expenses:          |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |         |         |         |   |         |        
|                             | Salaries, wages and fringe benefits         |                              |         | 6,211   |              |   |         | 470,171      |         |   |              | 22,094 |         |              |         | (9,748  | )       |   |         | 488,728 |        
|                             | Operating supplies and expenses             |                              |         | 13,527  |              |   |         | 148,459      |         |   |              | 280    |         |              |         |        |         |   |         | 162,266 |        
|                             | Purchased transportation                    |                              |         |        |              |   |         | 111,214      |         |   |              |       |         |              |         |        |         |   |         | 111,214 |        
|                             | Insurance and claims                        |                              |         |        |              |   |         | 42,343       |         |   |              | 28,263 |         |              |         | (29,785 | )       |   |         | 40,821  |        
|                             | Operating taxes and licenses                |                              |         | 173     |              |   |         | 29,631       |         |   |              |       |         |              |         |        |         |   |         | 29,804  |        
|                             | Depreciation and amortization               |                              |         | 2,409   |              |   |         | 40,055       |         |   |              | 479    |         |              |         |        |         |   |         | 42,943  |        
|                             | Rents                                       |                              |         | 2,691   |              |   |         | 5,860        |         |   |              | 5      |         |              |         |        |         |   |         | 8,556   |        
|                             | Communications and utilities                |                              |         | 3,623   |              |   |         | 2,697        |         |   |              | 22     |         |              |         |        |         |   |         | 6,342   |        
|                             | Other operating expenses                    |                              |         | 6,446   |              |   |         | 39,680       |         |   |              | 207    |         |              |         | (36,209 | )       |   |         | 10,124  |        
|                             | Impairment of goodwill                      |                              |         |        |              |   |         | 8,295        |         |   |              |       |         |              |         |        |         |   |         | 8,295   |        
|                             | Gain on disposal of operating assets, net   |                              |         |        |              |   |         | (839         | )       |   |              |       |         |              |         |        |         |   |         | (839    | )      
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        
|                             |                                             | Total operating expenses     |         |         | 35,080       |   |         |              | 897,566 |   |              |        | 51,350  |              |         |         | (75,742 | ) |         |         | 908,254 |  
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        
|                             |                                             | Operating (loss) income      |         |         | 1,129        |   |         |              | (3,946  | ) |              |        | (10,224 | )            |         |         |        |   |         |         | (13,041 | )
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        
|Other income (expense):      |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |         |         |         |   |         |        
|                             | Interest expense                            |                              |         | (2,226  | )            |   |         | (28,821      | )       |   |              | (308   | )       |              |         |        |         |   |         | (31,355 | )      
|                             | Investment income                           |                              |         |        |              |   |         | 40           |         |   |              | 1,096  |         |              |         |        |         |   |         | 1,136   |        
|                             | Foreign exchange gain (loss)                |                              |         |        |              |   |         | 1,938        |         |   |              | (9     | )       |              |         |        |         |   |         | 1,929   |        
|                             | Other, net                                  |                              |         |        |              |   |         | (191         | )       |   |              |       |         |              |         |        |         |   |         | (191    | )      
|                             | Equity in (losses) earnings of subsidiaries |                              |         | (41,217 | )            |   |         | 517          |         |   |              |       |         |              |         | 40,700  |         |   |         |        |        
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        
|                             |                                             | Total other income (expense) |         |         | (43,443      | ) |         |              | (26,517 | ) |              |        | 779     |              |         |         | 40,700  |   |         |         | (28,481 | )
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        
|Loss before income taxes     |                                             |                              | (42,314 | )       |              |   | (30,463 | )            |         |   | (9,445       | )      |         |              | 40,700  |         |         |   | (41,522 | )      
|Income tax benefit (expense) |                                             |                              | (11,569 | )       |              |   | (286    | )            |         |   | (506         | )      |         |              |        |         |         |   | (12,361 | )      
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        
|Net (loss) income            |                                             | $                            | (53,883 | )       |              | $ | (30,749 | )            |         | $ | (9,951       | )      |         | $            | 40,700  |         |         | $ | (53,883 | )      
|                             |                                             |                              |         |         |              |   |         |              |         |   |              |        |         |              |        

F-54



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
INFORMATION


Year Ended December 31, 2003


|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |         |         |         |   |         |         |         |  
|--------------------------------- | ----------------------------------------- | ---------------------------- | ------ | ------ | ------------ | - | ------- | ------------ | ------- | - | ------------ | ------ | ------ | ------------ | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                  |                                           | Allied                       |        |        | Guarantor    |   |         | Nonguarantor |         |   |              |        |       
|                                  |                                           | Holdings                     |        |        | Subsidiaries |   |         | Subsidiaries |         |   | Eliminations |        |        | Consolidated |        
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        
|Revenues                          |                                           | $                            | 36,519 |        |              | $ | 864,045 |              |         | $ | 36,706       |        |        | $            | (71,807 | )       |         | $ | 865,463 |        
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        
|Operating expenses:               |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |         |         |         |   |         |        
|                                  | Salaries, wages, and fringe benefits      |                              |        | 13,174 |              |   |         | 456,366      |         |   |              |       |        |              |         |        |         |   |         | 469,540 |        
|                                  | Operating supplies and expenses           |                              |        | 9,226  |              |   |         | 129,091      |         |   |              | 195    |        |              |         |        |         |   |         | 138,512 |        
|                                  | Purchased transportation                  |                              |        |       |              |   |         | 99,604       |         |   |              |       |        |              |         |        |         |   |         | 99,604  |        
|                                  | Insurance and claims                      |                              |        |       |              |   |         | 41,162       |         |   |              | 32,294 |        |              |         | (35,288 | )       |   |         | 38,168  |        
|                                  | Operating taxes and licenses              |                              |        | 244    |              |   |         | 30,132       |         |   |              |       |        |              |         |        |         |   |         | 30,376  |        
|                                  | Depreciation and amortization             |                              |        | 3,242  |              |   |         | 41,843       |         |   |              | 471    |        |              |         |        |         |   |         | 45,556  |        
|                                  | Rents                                     |                              |        | 1,523  |              |   |         | 4,561        |         |   |              | 6      |        |              |         |        |         |   |         | 6,090   |        
|                                  | Communications and utilities              |                              |        | 4,451  |              |   |         | 2,673        |         |   |              | 14     |        |              |         |        |         |   |         | 7,138   |        
|                                  | Other operating expenses                  |                              |        | 5,066  |              |   |         | 41,848       |         |   |              | 276    |        |              |         | (36,519 | )       |   |         | 10,671  |        
|                                  | Loss on disposal of operating assets, net |                              |        |       |              |   |         | 1,325        |         |   |              |       |        |              |         |        |         |   |         | 1,325   |        
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        
|                                  |                                           | Total operating expenses     |        |        | 36,926       |   |         |              | 848,605 |   |              |        | 33,256 |              |         |         | (71,807 | ) |         |         | 846,980 |  
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        
|                                  |                                           | Operating income (loss)      |        |        | (407         | ) |         |              | 15,440  |   |              |        | 3,450  |              |         |         |        |   |         |         | 18,483  |  
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        
|Other income (expense):           |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |         |         |         |   |         |        
|                                  | Interest expense                          |                              |        | (7,109 | )            |   |         | (21,780      | )       |   |              | (249   | )      |              |         |        |         |   |         | (29,138 | )      
|                                  | Investment income                         |                              |        |       |              |   |         | 68           |         |   |              | 3,104  |        |              |         |        |         |   |         | 3,172   |        
|                                  | Foreign exchange gain (loss)              |                              |        |       |              |   |         | 3,203        |         |   |              | (34    | )      |              |         |        |         |   |         | 3,169   |        
|                                  | Other, net                                |                              |        | 1,976  |              |   |         |             |         |   |              |       |        |              |         |        |         |   |         | 1,976   |        
|                                  | Equity in earnings of subsidiaries        |                              |        | 2,355  |              |   |         | 515          |         |   |              |       |        |              |         | (2,870  | )       |   |         |        |        
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        
|                                  |                                           | Total other income (expense) |        |        | (2,778       | ) |         |              | (17,994 | ) |              |        | 2,821  |              |         |         | (2,870  | ) |         |         | (20,821 | )
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        
|(Loss) income before income taxes |                                           |                              | (3,185 | )      |              |   | (2,554  | )            |         |   | 6,271        |        |        |              | (2,870  | )       |         |   | (2,338  | )      
|Income tax benefit (expense)      |                                           |                              | (5,419 | )      |              |   | 315     |              |         |   | (1,162       | )      |        |              |        |         |         |   | (6,266  | )      
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        
|                                  |                                           | Net (loss) income            |        | $      | (8,604       | ) |         | $            | (2,239  | ) |              | $      | 5,109  |              |         | $       | (2,870  | ) |         | $       | (8,604  | )
|                                  |                                           |                              |        |        |              |   |         |              |         |   |              |        |        |              |        

F-55



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
INFORMATION


Year Ended December 31, 2005


|                                      |                                                                                               |                                                        |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |        |        |         |   |   |          |         |         |         |  
|------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------ | --------------------------------- | ---------------------------------------------------------------------------------------------- | ------------ | ------ | ------ | ------------ | ------- | ------- | ------------ | ------- | --- | ------------ | ------ | ------ | ------- | - | - | -------- | ------- | ------- | ------- | -
|                                      |                                                                                               | Allied                                                 |                                   |                                                                                                | Guarantor    |        |        | Nonguarantor |         |         |              |         |    
|                                      |                                                                                               | Holdings                                               |                                   |                                                                                                | Subsidiaries |        |        | Subsidiaries |         |         | Eliminations |         |     | Consolidated |       
|                                      |                                                                                               |                                                        |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |       
|                                      |                                                                                               | (In thousands)                                         |                                  
|Cash flows from operating activities: |                                                                                               |                                                        |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |        |        |         |   |   |         
|                                      | Net loss                                                                                      |                                                        | $                                 | (125,724                                                                                       | )            |        | $      | (82,224      | )       |         | $            | (1,096  | )   |              | $      | 83,320 |         |   | $ | (125,724 | )      
|                                      | Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities: |                                                        |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |        |        |         |   |   |          |        
|                                      |                                                                                               | Write-off and amortization of deferred financing costs |                                   |                                                                                                | 8,631        |        |        |              |        |         |              |         |    |              |        |        |        |   |   |          | 8,631   |        
|                                      |                                                                                               | Depreciation and amortization                          |                                   |                                                                                                | 1,156        |        |        |              | 28,216  |         |              |         | 553 |              |        |        |        |   |   |          | 29,925  |        
|                                      |                                                                                               | Impairment of goodwill                                 |                                   |                                                                                                | 1,515        |        |        |              | 77,657  |         |              |         |    |              |        |        |        |   |   |          | 79,172  |        
|                                      |                                                                                               | Reorganization items                                   |                                   |                                                                                                | 6,505        |        |        |              | 625     |         |              |         | 1   |              |        |        |        |   |   |          | 7,131   |        
|                                      |                                                                                               | Gain on disposal of assets and other, net              |                                   |                                                                                                |             |        |        |              | (1,703  | )       |              |         |    |              |        |        |        |   |   |          | (1,703  | )      
|                                      |                                                                                               | Foreign exchange gains                                 |                                   |                                                                                                |             |        |        |              | (1,414  | )       |              |         |    |              |        |        |        |   |   |          | (1,414  | )      
|                                      |                                                                                               | Deferred income taxes                                  |                                   |                                                                                                | 21,018       |        |        |              | (32,285 | )       |              |         | 6   |              |        |        |        |   |   |          | (11,261 | )      
|                                      |                                                                                               | Equity in losses (earnings) of subsidiaries            |                                   |                                                                                                | 83,826       |        |        |              | (506    | )       |              |         |    |              |        |        | (83,320 | ) |   |          |        |        
|                                      |                                                                                               | Change in operating assets and liabilities:            |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |        |        |         |   |   |          |         |        
|                                      |                                                                                               |                                                        | Receivables, net of allowances    |                                                                                                |              |       |        |              |         | (3,083  | )            |         |     | 371          |        |        |         |  |   |          |         | (2,712  | )      
|                                      |                                                                                               |                                                        | Inventories                       |                                                                                                |              |       |        |              |         | (623    | )            |         |     |             |        |        |         |  |   |          |         | (623    | )      
|                                      |                                                                                               |                                                        | Prepayments and other assets      |                                                                                                |              | (1,892 | )      |              |         | (26,862 | )            |         |     | (3,285       | )      |        |         |  |   |          |         | (32,039 | )      
|                                      |                                                                                               |                                                        | Accounts and notes payable        |                                                                                                |              | 499    |        |              |         | 11,972  |              |         |     | 574          |        |        |         |  |   |          |         | 13,045  |        
|                                      |                                                                                               |                                                        | Intercompany payables/receivables |                                                                                                |              | (1,765 | )      |              |         | (10,479 | )            |         |     | 12,244       |        |        |         |  |   |          |         |        |        
|                                      |                                                                                               |                                                        | Accrued liabilities               |                                                                                                |              | 2,809  |        |              |         | (9,921  | )            |         |     | 12,630       |        |        |         |  |   |          |         | 5,518   |        
|                                      |                                                                                               |                                                        |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |       
|                                      |                                                                                               |                                                        |                                   | Net cash (used in) provided by operating activities before
    payment of reorganization items |              |        | (3,422 | )            |         |         | (50,630      | )       |     |              | 21,998 |        |         |   |  |          |         |         | (32,054 | )
|                                      |                                                                                               |                                                        | Reorganization items paid         |                                                                                                |              | (2,789 | )      |              |         | (149    | )            |         |     | (1           | )      |        |         |  |   |          |         | (2,939  | )      
|                                      |                                                                                               |                                                        |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |       
|                                      |                                                                                               |                                                        |                                   | Net cash (used in) provided by operating activities                                            |              |        | (6,211 | )            |         |         | (50,779      | )       |     |              | 21,997 |        |         |   |  |          |         |         | (34,993 | )
|                                      |                                                                                               |                                                        |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |       
|Cash flows from investing activities: |                                                                                               |                                                        |                                   |                                                                                                |              |        |        |              |         |         |              |         |     |              |        |        |         |   |   |         
|                                      | Purchases of property and equipment                                                           |                                                        |                                   | (110                                                                                           | )            |        |        | (18,416      | )       |         |              | (879    | )   |              |        |       |         |   |   | (19,405  | )      
|                                      | Proceeds from sales of property and equipment                                                 |                                                        |                                   |                                                                                               |              |        |        | 3,253        |         |         |              |        |     |              |        |       |         |   |   | 3,253    |        
|                                      | Proceeds from sale of equity in subsidiaries                                                  |                                                        |                                   |                                                                                               |              |        |        | 2,000        |         |         |              |        |     |              |        |       |         |   |   | 2,000    |        
|                                      | Increase in restricted cash, cash equivalents and other time
    deposits                     |                                                        |                                   |                                                                                               |              |        |        |             |         |         |              | (19,714 | )   |              |        |       |         |   |   | (19,714  | )      

F-56



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |   |   |   |   |       |          |         |  
|------------------------------------------------------------ | ---------------------------------------------------------------- | --------------------------------------------------- | - | -------- | ------------ | - | --- | ------------ | ------- | - | ------------ | ----- | ------------ | - | - | - | - | - | ----- | -------- | ------- | -
|                                                             |                                                                  | Allied                                              |   |          | Guarantor    |   |     | Nonguarantor |         |   |              |       |             
|                                                             |                                                                  | Holdings                                            |   |          | Subsidiaries |   |     | Subsidiaries |         |   | Eliminations |       | Consolidated |  
|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |  
|                                                             |                                                                  | (In thousands)                                      |  
|                                                             | Funds deposited with insurance carriers                          |                                                     |   |         |              |   |     | (9,766       | )       |   |              |      |              |   |   |  |   |   |       | (9,766   | )      
|                                                             | Funds returned from insurance carriers                           |                                                     |   |         |              |   |     | 5,969        |         |   |              |      |              |   |   |  |   |   |       | 5,969    |        
|                                                             | Decrease in the cash surrender value of life insurance           |                                                     |   | 46       |              |   |     |             |         |   |              |      |              |   |   |  |   |   |       | 46       |        
|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |  
|                                                             |                                                                  | Net cash used in investing activities               |   |          | (64          | ) |     |              | (16,960 | ) |              |       | (20,593      | ) |   |   |  |   |       |          | (37,617 | )
|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |  
|Cash flows from financing activities:                        |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |   |   |   |   |       |         
|                                                             | Additions to debtor-in-possession revolving credit facility, net |                                                     |   | 51,997   |              |   |     |             |         |   |              |      |              |   |   |  |   |   |       | 51,997   |        
|                                                             | Additions to debtor-in-possession facility term borrowings       |                                                     |   | 100,000  |              |   |     |             |         |   |              |      |              |   |   |  |   |   |       | 100,000  |        
|                                                             | Repayments of revolving credit facilities, net                   |                                                     |   |         |              |   |     | (2,972       | )       |   |              |      |              |   |   |  |   |   |       | (2,972   | )      
|                                                             | Additions to pre-petition debt                                   |                                                     |   |         |              |   |     | 25,000       |         |   |              |      |              |   |   |  |   |   |       | 25,000   |        
|                                                             | Repayment of pre-petition debt                                   |                                                     |   |         |              |   |     | (123,266     | )       |   |              |      |              |   |   |  |   |   |       | (123,266 | )      
|                                                             | Intercompany loan for settlement of Pre-petition Facility        |                                                     |   | (138,200 | )            |   |     | 138,200      |         |   |              |      |              |   |   |  |   |   |       |         |        
|                                                             | Payment of deferred financing costs                              |                                                     |   | (7,646   | )            |   |     | (625         | )       |   |              |      |              |   |   |  |   |   |       | (8,271   | )      
|                                                             | Proceeds from insurance financing arrangements                   |                                                     |   |         |              |   |     | 42,401       |         |   |              |      |              |   |   |  |   |   |       | 42,401   |        
|                                                             | Repayments of insurance financing arrangements                   |                                                     |   |         |              |   |     | (10,827      | )       |   |              |      |              |   |   |  |   |   |       | (10,827  | )      
|                                                             | Proceeds from issuance of common stock                           |                                                     |   | 124      |              |   |     |             |         |   |              |      |              |   |   |  |   |   |       | 124      |        
|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |  
|                                                             |                                                                  | Net cash provided by (used in) financing activities |   |          | 6,275        |   |     |              | 67,911  |   |              |       |             |   |   |   |  |   |       |          | 74,186  |  
|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |  
|Effect of exchange rate changes on cash and cash equivalents |                                                                  |                                                     |  |          |              |   | 25  |              |         |   |             |       |              |   |  |   |   |   | 25    |         
|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |  
|                                                             | Net change in cash and cash equivalents                          |                                                     |   |         |              |   |     | 197          |         |   |              | 1,404 |              |   |   |  |   |   |       | 1,601    |        
|Cash and cash equivalents at beginning of year               |                                                                  |                                                     |  |          |              |   | 533 |              |         |   | 1,983        |       |              |   |  |   |   |   | 2,516 |         
|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |  
|Cash and cash equivalents at end of year                     |                                                                  | $                                                   |  |          |              | $ | 730 |              |         | $ | 3,387        |       |              | $ |  |   |   | $ | 4,117 |         
|                                                             |                                                                  |                                                     |   |          |              |   |     |              |         |   |              |       |              |   |  

F-57



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
INFORMATION


Year Ended December 31, 2004


|                                      |                                                                                                        |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |        |        |         |   |   |         |        |        |         |  
|------------------------------------- | ------------------------------------------------------------------------------------------------------ | -------------------------------------------------------- | ------------------------------ | --------------------------------------------------- | ------------ | ------ | ---- | ------------ | ------ | ------ | ------------ | ------ | --- | ------------ | ------ | ------ | ------- | - | - | ------- | ------ | ------ | ------- | -
|                                      |                                                                                                        | Allied                                                   |                                |                                                     | Guarantor    |        |      | Nonguarantor |        |        |              |        |    
|                                      |                                                                                                        | Holdings                                                 |                                |                                                     | Subsidiaries |        |      | Subsidiaries |        |        | Eliminations |        |     | Consolidated |       
|                                      |                                                                                                        |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |       
|                                      |                                                                                                        | (In thousands)                                           |                               
|Cash flows from operating activities: |                                                                                                        |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |        |        |         |   |   |        
|                                      | Net (loss) income                                                                                      |                                                          | $                              | (53,883                                             | )            |        | $    | (30,749      | )      |        | $            | (9,951 | )   |              | $      | 40,700 |         |   | $ | (53,883 | )     
|                                      | Adjustments to reconcile net (loss) income to net cash (used in)
    provided by operating activities: |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |        |        |         |   |   |         |       
|                                      |                                                                                                        | Amortization of deferred financing costs                 |                                |                                                     | 2,797        |        |      |              |       |        |              |        |    |              |        |        |        |   |   |         | 2,797  |       
|                                      |                                                                                                        | Depreciation and amortization                            |                                |                                                     | 2,409        |        |      |              | 40,055 |        |              |        | 479 |              |        |        |        |   |   |         | 42,943 |       
|                                      |                                                                                                        | Impairment of goodwill                                   |                                |                                                     |             |        |      |              | 8,295  |        |              |        |    |              |        |        |        |   |   |         | 8,295  |       
|                                      |                                                                                                        | Gain on disposal of assets and other, net                |                                |                                                     |             |        |      |              | (839   | )      |              |        |    |              |        |        |        |   |   |         | (839   | )     
|                                      |                                                                                                        | Foreign exchange gain, net                               |                                |                                                     |             |        |      |              | (1,929 | )      |              |        |    |              |        |        |        |   |   |         | (1,929 | )     
|                                      |                                                                                                        | Deferred income taxes                                    |                                |                                                     | 11,623       |        |      |              | (365   | )      |              |        | 17  |              |        |        |        |   |   |         | 11,275 |       
|                                      |                                                                                                        | Compensation expense related to stock options and grants |                                |                                                     | 321          |        |      |              |       |        |              |        |    |              |        |        |        |   |   |         | 321    |       
|                                      |                                                                                                        | Equity in losses (earnings) of subsidiaries              |                                |                                                     | 41,217       |        |      |              | (517   | )      |              |        |    |              |        |        | (40,700 | ) |   |         |       |       
|                                      |                                                                                                        | Change in operating assets and liabilities:              |                                |                                                     |              |        |      |              |        |        |              |        |     |              |        |        |         |   |   |         |        |       
|                                      |                                                                                                        |                                                          | Receivables, net of allowances |                                                     |              |       |      |              |        | (3,973 | )            |        |     | (754         | )      |        |         |  |   |         |        | (4,727 | )      
|                                      |                                                                                                        |                                                          | Inventories                    |                                                     |              |       |      |              |        | 414    |              |        |     |             |        |        |         |  |   |         |        | 414    |        
|                                      |                                                                                                        |                                                          | Prepayments and other assets   |                                                     |              | (4,707 | )    |              |        | (1,622 | )            |        |     | 3,057        |        |        |         |  |   |         |        | (3,272 | )      
|                                      |                                                                                                        |                                                          | Accounts and notes payable     |                                                     |              | 1,643  |      |              |        | (3,494 | )            |        |     | 104          |        |        |         |  |   |         |        | (1,747 | )      
|                                      |                                                                                                        |                                                          | Intercompany payables          |                                                     |              | (1,144 | )    |              |        | 9,652  |              |        |     | (8,508       | )      |        |         |  |   |         |        |       |        
|                                      |                                                                                                        |                                                          | Accrued liabilities            |                                                     |              | (1,250 | )    |              |        | (3,520 | )            |        |     | 18,630       |        |        |         |  |   |         |        | 13,860 |        
|                                      |                                                                                                        |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |       
|                                      |                                                                                                        |                                                          |                                | Net cash (used in) provided by operating activities |              |        | (974 | )            |        |        | 11,408       |        |     |              | 3,074  |        |         |   |  |         |        |        | 13,508  |  
|                                      |                                                                                                        |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |       
|Cash flows from investing activities: |                                                                                                        |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |        |        |         |   |   |        
|                                      | Purchases of property and equipment                                                                    |                                                          |                                | (137                                                | )            |        |      | (21,677      | )      |        |              | (728   | )   |              |        |       |         |   |   | (22,542 | )     
|                                      | Proceeds from sale of property and equipment                                                           |                                                          |                                |                                                    |              |        |      | 3,040        |        |        |              |       |     |              |        |       |         |   |   | 3,040   |       
|                                      | (Increase) decrease in restricted cash and cash equivalents                                            |                                                          |                                |                                                    |              |        |      |             |        |        |              | (796   | )   |              |        |       |         |   |   | (796    | )     
|                                      | Funds deposited with insurance carriers                                                                |                                                          |                                |                                                    |              |        |      | (32,072      | )      |        |              |       |     |              |        |       |         |   |   | (32,072 | )     
|                                      | Funds returned from insurance carriers                                                                 |                                                          |                                |                                                    |              |        |      | 34,995       |        |        |              |       |     |              |        |       |         |   |   | 34,995  |       
|                                      | (Increase) decrease in cash surrender value of life insurance                                          |                                                          |                                | (27                                                 | )            |        |      |             |        |        |              |       |     |              |        |       |         |   |   | (27     | )     
|                                      |                                                                                                        |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |       
|                                      |                                                                                                        |                                                          |                                | Net cash provided by (used in) investing activities |              |        | (164 | )            |        |        | (15,714      | )      |     |              | (1,524 | )      |         |   |  |         |        |        | (17,402 | )
|                                      |                                                                                                        |                                                          |                                |                                                     |              |        |      |              |        |        |              |        |     |              |       

F-58



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                             |                                                |                                                     |     |      |              |   |       |              |       |   |              |       |              |   |   |   |   |   |       |         |       | 
|------------------------------------------------------------ | ---------------------------------------------- | --------------------------------------------------- | --- | ---- | ------------ | - | ----- | ------------ | ----- | - | ------------ | ----- | ------------ | - | - | - | - | - | ----- | ------- | ----- | 
|                                                             |                                                | Allied                                              |     |      | Guarantor    |   |       | Nonguarantor |       |   |              |       |             
|                                                             |                                                | Holdings                                            |     |      | Subsidiaries |   |       | Subsidiaries |       |   | Eliminations |       | Consolidated |  
|                                                             |                                                |                                                     |     |      |              |   |       |              |       |   |              |       |              |  
|                                                             |                                                | (In thousands)                                      |    
|Cash flows from financing activities:                        |                                                |                                                     |     |      |              |   |       |              |       |   |              |       |              |   |   |   |   |   |       |        
|                                                             | Additions to revolving credit facility, net    |                                                     |     |     |              |   |       | 2,972        |       |   |              |      |              |   |   |  |   |   |       | 2,972   |      
|                                                             | Additions to pre-petition debt                 |                                                     |     |     |              |   |       | 20,000       |       |   |              |      |              |   |   |  |   |   |       | 20,000  |      
|                                                             | Repayment of pre-petition debt                 |                                                     |     |     |              |   |       | (18,234      | )     |   |              |      |              |   |   |  |   |   |       | (18,234 | )    
|                                                             | Payment of deferred financing costs            |                                                     |     |     |              |   |       | (475         | )     |   |              |      |              |   |   |  |   |   |       | (475    | )    
|                                                             | Proceeds from insurance financing arrangements |                                                     |     |     |              |   |       | 31,252       |       |   |              |      |              |   |   |  |   |   |       | 31,252  |      
|                                                             | Repayments of insurance financing arrangements |                                                     |     |     |              |   |       | (32,634      | )     |   |              |      |              |   |   |  |   |   |       | (32,634 | )    
|                                                             | Proceeds from issuance of common stock         |                                                     |     | 589  |              |   |       |             |       |   |              |      |              |   |   |  |   |   |       | 589     |      
|                                                             |                                                |                                                     |     |      |              |   |       |              |       |   |              |       |              |   |  
|                                                             |                                                | Net cash provided by (used in) financing activities |     |      | 589          |   |       |              | 2,881 |   |              |       |             |   |   |   |  |   |       |         | 3,470 | 
|                                                             |                                                |                                                     |     |      |              |   |       |              |       |   |              |       |              |   |  
|Effect of exchange rate changes on cash and cash equivalents |                                                |                                                     |    |      |              |   | 792   |              |       |   |             |       |              |   |  |   |   |   | 792   |        
|                                                             |                                                |                                                     |     |      |              |   |       |              |       |   |              |       |              |   |  
|                                                             | Net change in cash and cash equivalents        |                                                     |     | (549 | )            |   |       | (633         | )     |   |              | 1,550 |              |   |   |  |   |   |       | 368     |      
|Cash and cash equivalents at beginning of year               |                                                |                                                     | 549 |      |              |   | 1,166 |              |       |   | 433          |       |              |   |  |   |   |   | 2,148 |        
|                                                             |                                                |                                                     |     |      |              |   |       |              |       |   |              |       |              |   |  
|Cash and cash equivalents at end of year                     |                                                | $                                                   |    |      |              | $ | 533   |              |       | $ | 1,983        |       |              | $ |  |   |   | $ | 2,516 |        
|                                                             |                                                |                                                     |     |      |              |   |       |              |       |   |              |       |              |   |  

F-59



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
INFORMATION


Year Ended December 31, 2003


|                                      |                                                                                              |                                                          |                                          |                                           |              |        |       |              |        |         |              |         |      |              |        |        |       |   |   |         |        |         |        | 
|------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------------------------------------- | ----------------------------------------- | ------------ | ------ | ----- | ------------ | ------ | ------- | ------------ | ------- | ---- | ------------ | ------ | ------ | ----- | - | - | ------- | ------ | ------- | ------ | 
|                                      |                                                                                              | Allied                                                   |                                          |                                           | Guarantor    |        |       | Nonguarantor |        |         |              |         |     
|                                      |                                                                                              | Holdings                                                 |                                          |                                           | Subsidiaries |        |       | Subsidiaries |        |         | Eliminations |         |      | Consolidated |       
|                                      |                                                                                              |                                                          |                                          |                                           |              |        |       |              |        |         |              |         |      |              |       
|                                      |                                                                                              | (In thousands)                                           |                                         
|Cash flows from operating activities: |                                                                                              |                                                          |                                          |                                           |              |        |       |              |        |         |              |         |      |              |        |        |       |   |   |        
|                                      | Net (loss) income                                                                            |                                                          | $                                        | (8,604                                    | )            |        | $     | (2,239       | )      |         | $            | 5,109   |      |              | $      | (2,870 | )     |   | $ | (8,604  | )     
|                                      | Adjustments to reconcile net loss (income) to net cash provided
    by operating activities: |                                                          |                                          |                                           |              |        |       |              |        |         |              |         |      |              |        |        |       |   |   |         |       
|                                      |                                                                                              | Interest expense paid in kind                            |                                          |                                           |             |        |       |              | 1,065  |         |              |         |     |              |        |        |      |   |   |         | 1,065  |        
|                                      |                                                                                              | Amortization of deferred financing costs                 |                                          |                                           | 3,697        |        |       |              |       |         |              |         |     |              |        |        |      |   |   |         | 3,697  |        
|                                      |                                                                                              | Depreciation and amortization                            |                                          |                                           | 3,242        |        |       |              | 41,843 |         |              |         | 471  |              |        |        |      |   |   |         | 45,556 |        
|                                      |                                                                                              | Loss on disposal of assets and other, net                |                                          |                                           |             |        |       |              | 1,325  |         |              |         |     |              |        |        |      |   |   |         | 1,325  |        
|                                      |                                                                                              | Foreign exchange gain (loss), net                        |                                          |                                           |             |        |       |              | (3,203 | )       |              |         | 34   |              |        |        |      |   |   |         | (3,169 | )      
|                                      |                                                                                              | Deferred income taxes                                    |                                          |                                           | 17,250       |        |       |              | (9,888 | )       |              |         | (448 | )            |        |        |      |   |   |         | 6,914  |        
|                                      |                                                                                              | Compensation expense related to stock options and grants |                                          |                                           | 260          |        |       |              |       |         |              |         |     |              |        |        |      |   |   |         | 260    |        
|                                      |                                                                                              | Equity in earnings of subsidiaries                       |                                          |                                           | (2,355       | )      |       |              | (515   | )       |              |         |     |              |        |        | 2,870 |   |   |         |       |        
|                                      |                                                                                              | Amortization of Teamsters Union contract costs           |                                          |                                           |             |        |       |              | 1,000  |         |              |         |     |              |        |        |      |   |   |         | 1,000  |        
|                                      |                                                                                              | Change in operating assets and liabilities:              |                                          |                                           |              |        |       |              |        |         |              |         |      |              |        |        |       |   |   |         |        |        
|                                      |                                                                                              |                                                          | Receivables, net of allowances           |                                           |              |       |       |              |        | 7,017   |              |         |      | 1,361        |        |        |       |  |   |         |        | 8,378   |       
|                                      |                                                                                              |                                                          | Inventories                              |                                           |              |       |       |              |        | 272     |              |         |      |             |        |        |       |  |   |         |        | 272     |       
|                                      |                                                                                              |                                                          | Prepayments and other assets             |                                           |              | 1,767  |       |              |        | 1,015   |              |         |      | (2,940       | )      |        |       |  |   |         |        | (158    | )     
|                                      |                                                                                              |                                                          | Accounts and notes payable               |                                           |              | (1,187 | )     |              |        | (2,104  | )            |         |      | (221         | )      |        |       |  |   |         |        | (3,512  | )     
|                                      |                                                                                              |                                                          | Intercompany receivables (payables), net |                                           |              | (8,002 | )     |              |        | (2,766  | )            |         |      | 10,768       |        |        |       |  |   |         |        |        |       
|                                      |                                                                                              |                                                          | Accrued liabilities                      |                                           |              | (1,961 | )     |              |        | (13,681 | )            |         |      | (544         | )      |        |       |  |   |         |        | (16,186 | )     
|                                      |                                                                                              |                                                          |                                          |                                           |              |        |       |              |        |         |              |         |      |              |       
|                                      |                                                                                              |                                                          |                                          | Net cash provided by operating activities |              |        | 4,107 |              |        |         | 19,141       |         |      |              | 13,590 |        |       |   |  |         |        |         | 36,838 | 
|                                      |                                                                                              |                                                          |                                          |                                           |              |        |       |              |        |         |              |         |      |              |       
|Cash flows from investing activities: |                                                                                              |                                                          |                                          |                                           |              |        |       |              |        |         |              |         |      |              |        |        |       |   |   |        
|                                      | Purchases of property and equipment                                                          |                                                          |                                          | (297                                      | )            |        |       | (18,143      | )      |         |              | (115    | )    |              |        |       |       |   |   | (18,555 | )     
|                                      | Intercompany sale of property and equipment                                                  |                                                          |                                          | (682                                      | )            |        |       | 682          |        |         |              |        |      |              |        |       |       |   |   |        |       
|                                      | Proceeds from sale of property and equipment                                                 |                                                          |                                          |                                          |              |        |       | 685          |        |         |              |        |      |              |        |       |       |   |   | 685     |       
|                                      | (Increase) decrease in restricted cash and cash equivalents                                  |                                                          |                                          |                                          |              |        |       |             |        |         |              | (81,279 | )    |              |        |       |       |   |   | (81,279 | )     
|                                      | (Increase) decrease in restricted investments                                                |                                                          |                                          |                                          |              |        |       |             |        |         |              | 60,732  |      |              |        |       |       |   |   | 60,732  |       
|                                      | Funds deposited with insurance carriers                                                      |                                                          |                                          |                                          |              |        |       | (22,680      | )      |         |              |        |      |              |        |       |       |   |   | (22,680 | )     

F-60



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES


Debtor-in


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |   |   |   |   |       |         |         |  
|------------------------------------------------------------ | ---------------------------------------------------------- | ------------------------------------- | --- | ------ | ------------ | - | ----- | ------------ | ------- | - | ------------ | ------ | ------------ | - | - | - | - | - | ----- | ------- | ------- | -
|                                                             |                                                            | Allied                                |     |        | Guarantor    |   |       | Nonguarantor |         |   |              |        |             
|                                                             |                                                            | Holdings                              |     |        | Subsidiaries |   |       | Subsidiaries |         |   | Eliminations |        | Consolidated |  
|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |  
|                                                             |                                                            | (In thousands)                        |    
|                                                             | Funds returned from insurance carriers                     |                                       |     |       |              |   |       | 19,560       |         |   |              |       |              |   |   |  |   |   |       | 19,560  |        
|                                                             | Decrease in cash surrender value of life insurance         |                                       |     | 2      |              |   |       |             |         |   |              |       |              |   |   |  |   |   |       | 2       |        
|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |  
|                                                             |                                                            | Net cash used in investing activities |     |        | (977         | ) |       |              | (19,896 | ) |              |        | (20,662      | ) |   |   |  |   |       |         | (41,535 | )
|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |  
|Cash flows from financing activities:                        |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |   |   |   |   |       |        
|                                                             | (Repayments) additions to revolving credit facilities, net |                                       |     |       |              |   |       | (24,635      | )       |   |              |       |              |   |   |  |   |   |       | (24,635 | )      
|                                                             | Additions to pre-petition debt                             |                                       |     |       |              |   |       | 99,875       |         |   |              |       |              |   |   |  |   |   |       | 99,875  |        
|                                                             | Repayment of pre-petition debt                             |                                       |     |       |              |   |       | (78,280      | )       |   |              |       |              |   |   |  |   |   |       | (78,280 | )      
|                                                             | Payment of deferred financing costs                        |                                       |     | (3,038 | )            |   |       |             |         |   |              |       |              |   |   |  |   |   |       | (3,038  | )      
|                                                             | Proceeds from insurance financing arrangements             |                                       |     |       |              |   |       | 19,313       |         |   |              |       |              |   |   |  |   |   |       | 19,313  |        
|                                                             | Repayments of insurance financing arrangements             |                                       |     |       |              |   |       | (17,634      | )       |   |              |       |              |   |   |  |   |   |       | (17,634 | )      
|                                                             | Proceeds from issuance of common stock                     |                                       |     | 450    |              |   |       |             |         |   |              |       |              |   |   |  |   |   |       | 450     |        
|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |  
|                                                             |                                                            | Net cash used in financing activities |     |        | (2,588       | ) |       |              | (1,361  | ) |              |        |             |   |   |   |  |   |       |         | (3,949  | )
|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |  
|Effect of exchange rate changes on cash and cash equivalents |                                                            |                                       |    |        |              |   | 1,346 |              |         |   |             |        |              |   |  |   |   |   | 1,346 |        
|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |  
|                                                             | Net change in cash and cash equivalents                    |                                       |     | 542    |              |   |       | (770         | )       |   |              | (7,072 | )            |   |   |  |   |   |       | (7,300  | )      
|Cash and cash equivalents at beginning of year               |                                                            |                                       | 7   |        |              |   | 1,936 |              |         |   | 7,505        |        |              |   |  |   |   |   | 9,448 |        
|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |  
|Cash and cash equivalents at end of year                     |                                                            | $                                     | 549 |        |              | $ | 1,166 |              |         | $ | 433          |        |              | $ |  |   |   | $ | 2,148 |        
|                                                             |                                                            |                                       |     |        |              |   |       |              |         |   |              |        |              |   |  

F-61



---



##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES





VALUATION AND QUALIFYING ACCOUNTS


Years Ended December 31, 2005, 2004 and 2003


|                                                         |                              |                |   |       |              |  |   |               |            |  |      |        |   |  |   |       | 
|-------------------------------------------------------- | ---------------------------- | -------------- | - | ----- | ------------ |  | - | ------------- | ---------- |  | ---- | ------ | - |  | - | ----- | 
|                                                         |                              | Balance at     |   |       |              |  |   |               | Balance at | 
|                                                         |                              | Beginning of   |   |       |              |  |   |               | End of     | 
|Classification                                           |                              | Year           |   |       | Additions(a) |  |   | Deductions(b) |            |  | Year |       
|                                                         |                              |                |   |       |              |  |   |               |            |  |      |       
|                                                         |                              | (In thousands) |  
|Allowance for billing adjustments and doubtful accounts: |                              |                |   |       |              |  |   |               |            |  |      |        |   |  |   |      
|                                                         | Year ended December 31, 2005 |                | $ | 2,156 |              |  | $ | 486           |            |  | $    | (424   | ) |  | $ | 2,218 | 
|                                                         | Year ended December 31, 2004 |                |   | 3,575 |              |  |   | 491           |            |  |      | (1,910 | ) |  |   | 2,156 | 
|                                                         | Year ended December 31, 2003 |                |   | 5,587 |              |  |   | 2,024         |            |  |      | (4,036 | ) |  |   | 3,575 | 






|    |                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------
|(a) | Additions are recorded as reductions of revenue as they
    primarily represent billing adjustments.



|    |  |                                                             
|--- |  | ------------------------------------------------------------
|(b) |  | Billing adjustments and write-off of uncollectible accounts.

S-1