##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

|                |  |                                                                                                                                       
|--------------- |  | --------------------------------------------------------------------------------------------------------------------------------------
|(box with an x) |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934  For the quarterly period ended June 30, 2001

or

|                   |  |                                                                                                                                                                             
|------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(empty ballot box) |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934  For the transition period from _______________________ to _______________________
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|                   |  | Commission File Number: 0-22276                                                                                                                                             

ALLIED HOLDINGS, INC.

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(Exact name of registrant as specified in its charter)

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

Suite 200, 160 Clairemont Avenue, Decatur, Georgia 30030

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(Address of principal executive offices)

(404) 373-4285

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(Registrants telephone number, including area code)



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(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   (box with an x)
   Yes      (empty ballot box)   No

|                                                        |  |  |           | 
|------------------------------------------------------- |  |  | --------- | 
|Outstanding common stock, No par value at July 31, 2001 |  |  | 8,242,851 | 

TOTAL NUMBER OF PAGES INCLUDED IN THIS REPORT: 42

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TABLE OF CONTENTS



|                              |                                                                                               |  |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1  FINANCIAL INFORMATION
|                              | ITEM 1 FINANCIAL STATEMENTS                                                                  
|                              | CONSOLIDATED BALANCE SHEETS                                                                  
|                              | CONSOLIDATED STATEMENTS OF OPERATIONS                                                        
|                              | CONSOLIDATED STATEMENTS OF CASH FLOWS                                                        
|                              | Notes to Consolidated Financial Statements (Unaudited)                                       
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II                      
|OTHER INFORMATION            
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K.                                                    
|Employment Agreement         



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##### Table of Contents



INDEX

PART I

FINANCIAL INFORMATION

|        |  |                                                             |  |  |    |      |  | 
|------- |  | ----------------------------------------------------------- |  |  | -- | ---- |  | 
|        |  |                                                             |  |  |    | PAGE
|        |  |                                                             |  |  |    |     
|ITEM 1: |  | FINANCIAL STATEMENTS                                        |  |  |    |     
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|        |  | Consolidated Balance Sheets as of  June 30, 2001 and        |  |  |    |     
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|        |  | December 31, 2000                                           |  |  | 3  |     
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|        |  | Consolidated Statements of Operations for the Three and Six |  |  |    |     
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|        |  | Month Periods Ended June 30, 2001 and 2000                  |  |  | 4  |     
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|        |  | Consolidated Statements of Cash Flows for the Six           |  |  |    |     
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|        |  | Month Periods Ended June 30, 2001 and 2000                  |  |  | 5  |     
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|        |  | Notes to Consolidated Financial Statements                  |  |  | 6  |     
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|ITEM 2  |  |                                                             |  |  |    |      |  | 
|        |  | Management's Discussion and Analysis of Financial           |  |  |    |     
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|        |  | Condition and Results of Operations                         |  |  | 18 |     
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|ITEM 3  |  |                                                             |  |  |    |      |  | 
|        |  | Quantitative and Qualitative Disclosures about Market Risk  |  |  | 20 |     

PART II

OTHER INFORMATION

|       |  |                                                     |  |  |    |  |  | 
|------ |  | --------------------------------------------------- |  |  | -- |  |  | 
|ITEM 4 |  |                                                     |  |  |    |  |  | 
|       |  | Submission of Matters to a Vote of Security Holders |  |  | 23 | 
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|ITEM 5 |  |                                                     |  |  |    |  |  | 
|       |  | Other Information                                   |  |  | 23 | 
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|ITEM 6 |  |                                                     |  |  |    |  |  | 
|       |  | Exhibits and Reports on Form 8-K                    |  |  | 24 | 
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|       |  | Signature Page                                      |  |  | 25 | 

2



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##### Table of Contents









PART 1  FINANCIAL INFORMATION
ITEM 1  FINANCIAL STATEMENTS




ALLIED HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In Thousands)

|                                            |                                                                                                                                               |                                            |         |         |             |  |             |         |         |  | 
|------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ----------- |  | ----------- | ------- | ------- |  | 
|                                            |                                                                                                                                               |                                            |         |         | June 30     |  | December 31
|                                            |                                                                                                                                               |                                            |         |         | 2001        |  | 2000       
|                                            |                                                                                                                                               |                                            |         |         |             |  |            
|                                            |                                                                                                                                               |                                            |         |         | (Unaudited)
|ASSETS                                      |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                           
|                                           
|                                           
|                                           
|CURRENT ASSETS:                             |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                           
|                                           
|                                           
|                                           
|                                            | Cash and cash equivalents                                                                                                                     |                                            | $       | 13,434  |             |  | $           | 2,373   |        
|                                           
|                                           
|                                           
|                                           
|                                            | Short-term investments                                                                                                                        |                                            |         | 62,482  |             |  |             | 59,892  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Receivables, net of allowance for doubtful accounts                                                                                           |                                            |         | 93,204  |             |  |             | 114,266 |        
|                                           
|                                           
|                                           
|                                           
|                                            | Inventories                                                                                                                                   |                                            |         | 6,984   |             |  |             | 7,415   |        
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred tax assets                                                                                                                           |                                            |         | 12,389  |             |  |             | 10,191  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Prepayments and other current assets                                                                                                          |                                            |         | 20,964  |             |  |             | 19,355  |        
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                            |                                                                                                                                               | Total current assets                       |         |         | 209,457     |  |             |         | 213,492 | 
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|PROPERTY AND EQUIPMENT, NET                 |                                                                                                                                               |                                            | 245,703 |         |             |  | 259,362     |        
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|OTHER ASSETS:                               |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                           
|                                           
|                                           
|                                           
|                                            | Goodwill, net                                                                                                                                 |                                            |         | 93,161  |             |  |             | 95,159  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Other                                                                                                                                         |                                            |         | 43,693  |             |  |             | 42,526  |        
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                            |                                                                                                                                               | Total other assets                         |         |         | 136,854     |  |             |         | 137,685 | 
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                            |                                                                                                                                               | Total assets                               |         | $       | 592,014     |  |             | $       | 610,539 | 
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|LIABILITIES AND STOCKHOLDERS EQUITY        |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                           
|                                           
|                                           
|                                           
|CURRENT LIABILITIES:                        |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                           
|                                           
|                                           
|                                           
|                                            | Current maturities of long-term debt                                                                                                          |                                            | $       | 146,744 |             |  | $           | 109     |        
|                                           
|                                           
|                                           
|                                           
|                                            | Trade accounts payable                                                                                                                        |                                            |         | 41,879  |             |  |             | 45,975  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Accrued liabilities                                                                                                                           |                                            |         | 86,528  |             |  |             | 79,487  |        
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                            |                                                                                                                                               | Total current liabilities                  |         |         | 275,151     |  |             |         | 125,571 | 
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|LONG-TERM DEBT, less current maturities     |                                                                                                                                               |                                            | 190,006 |         |             |  | 324,876     |        
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|POSTRETIREMENT BENEFITS OTHER THAN PENSIONS |                                                                                                                                               |                                            | 9,579   |         |             |  | 9,943       |        
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|DEFERRED INCOME TAXES                       |                                                                                                                                               |                                            | 8,927   |         |             |  | 21,414      |        
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|OTHER LONG-TERM LIABILITIES                 |                                                                                                                                               |                                            | 75,480  |         |             |  | 69,594      |        
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|STOCKHOLDERS EQUITY:                       |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                           
|                                           
|                                           
|                                           
|                                            | Common stock, no par value; 20,000 shares authorized, 8,203
and 8,187 shares outstanding at June 30,
2001 and December 31, 2000, respectively |                                            |         | 0       |             |  |             | 0       |        
|                                           
|                                           
|                                           
|                                           
|                                            | Additional paid-in capital                                                                                                                    |                                            |         | 46,345  |             |  |             | 45,990  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Retained (deficit) earnings                                                                                                                   |                                            |         | (3,976  | )           |  |             | 20,602  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Cumulative other comprehensive income, net of tax                                                                                             |                                            |         | (8,791  | )           |  |             | (6,744  | )      
|                                           
|                                           
|                                           
|                                           
|                                            | Common stock in treasury, at cost, 139 shares at June 30,
2001 and December 31, 2000                                                          |                                            |         | (707    | )           |  |             | (707    | )      
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                            |                                                                                                                                               | Total stockholders equity                 |         |         | 32,871      |  |             |         | 59,141  | 
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        
|                                            |                                                                                                                                               | Total liabilities and stockholders equity |         | $       | 592,014     |  |             | $       | 610,539 | 
|                                            |                                                                                                                                               |                                            |         |         |             |  |             |        

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

3



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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)

|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |         |         |  |  |  |  |  |  |  |  | 
|------------------------------------ | ------------------------------------------------ | ------------------------ | ------- | -------------------------- | ------- | ------------------------ | ------- | ----------- | ------- | ----------- | -------- | ------- | ------- | - | ------- | ------- | ------- |  |  |  |  |  |  |  |  | 
|                                     |                                                  |                          |         | For the Three Months Ended |         | For the Six Months Ended |         |             |         |            
|                                     |                                                  |                          |         | June 30                    |         | June 30                  |         |             |         |            
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |            
|                                     |                                                  |                          |         | 2001                       |         | 2000                     |         | 2001        |         | 2000        |          |         |         |   |         |         |         | 
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |         |         | 
|                                     |                                                  |                          |         | (Unaudited)                |         | (Unaudited)              |         | (Unaudited) |         | (Unaudited) |          |         |         |   |         |         |         | 
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|REVENUES                             |                                                  | $                        | 250,195 |                            |         | $                        | 295,897 |             |         | $           | 468,374  |         |         | $ | 578,781 |        
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|OPERATING EXPENSES:                  |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Salaries, wages and fringe benefits              |                          |         | 140,589                    |         |                          |         | 154,275     |         |             |          | 272,306 |         |   |         | 309,113 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Operating supplies and expenses                  |                          |         | 38,330                     |         |                          |         | 48,302      |         |             |          | 79,772  |         |   |         | 99,884  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Purchased transportation                         |                          |         | 28,666                     |         |                          |         | 29,301      |         |             |          | 51,962  |         |   |         | 56,454  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Insurance and claims                             |                          |         | 13,768                     |         |                          |         | 13,087      |         |             |          | 27,057  |         |   |         | 25,143  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Operating taxes and licenses                     |                          |         | 8,507                      |         |                          |         | 10,982      |         |             |          | 17,133  |         |   |         | 21,841  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Depreciation and amortization                    |                          |         | 15,281                     |         |                          |         | 15,393      |         |             |          | 30,305  |         |   |         | 30,635  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Rents                                            |                          |         | 1,592                      |         |                          |         | 2,173       |         |             |          | 3,662   |         |   |         | 4,499   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Communications and utilities                     |                          |         | 1,914                      |         |                          |         | 2,006       |         |             |          | 3,952   |         |   |         | 4,215   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other operating expenses                         |                          |         | 5,155                      |         |                          |         | 3,182       |         |             |          | 9,178   |         |   |         | 5,737   |        
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|                                     |                                                  | Total operating expenses |         |                            | 253,802 |                          |         |             | 278,701 |             |          |         | 495,327 |   |         |         | 557,521 | 
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|                                     |                                                  | Operating (loss) income  |         |                            | (3,607  | )                        |         |             | 17,196  |             |          |         | (26,953 | ) |         |         | 21,260  | 
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|OTHER INCOME (EXPENSE):              |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Equity in earnings of joint ventures, net of tax |                          |         | 1,330                      |         |                          |         | 1,798       |         |             |          | 2,539   |         |   |         | 2,699   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Gain (loss) on sale of assets                    |                          |         | 2,576                      |         |                          |         | 91          |         |             |          | 2,743   |         |   |         | (12     | )      
|                                    
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|                                     | Interest expense                                 |                          |         | (9,387                     | )       |                          |         | (8,348      | )       |             |          | (17,853 | )       |   |         | (16,749 | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Interest income                                  |                          |         | 626                        |         |                          |         | 689         |         |             |          | 1,590   |         |   |         | 2,009   |        
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|                                     |                                                  |                          | (4,855  | )                          |         |                          | (5,770  | )           |         |             | (10,981  | )       |         |   | (12,053 | )      
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|LOSS (INCOME) BEFORE INCOME TAXES    |                                                  |                          | (8,462  | )                          |         |                          | 11,426  |             |         |             | (37,934  | )       |         |   | 9,207   |        
|                                    
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|INCOME TAX BENEFIT (EXPENSE)         |                                                  |                          | 2,746   |                            |         |                          | (4,537  | )           |         |             | 13,356   |         |         |   | (3,353  | )      
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|NET (LOSS) INCOME                    |                                                  |                          | $(5,716 | )                          |         | $                        | 6,889   |             |         |             | $(24,578 | )       |         | $ | 5,854   |        
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|PER COMMON SHARE  BASIC AND DILUTED |                                                  |                          | $(0.71  | )                          |         | $                        | 0.87    |             |         |             | $(3.04   | )       |         | $ | 0.74    |        
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|COMMON SHARES OUTSTANDING:           |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | BASIC                                            |                          |         | 8,086                      |         |                          |         | 7,916       |         |             |          | 8,083   |         |   |         | 7,901   |        
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        
|                                     | DILUTED                                          |                          |         | 8,086                      |         |                          |         | 7,916       |         |             |          | 8,083   |         |   |         | 7,908   |        
|                                     |                                                  |                          |         |                            |         |                          |         |             |         |             |          |         |         |   |         |        

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

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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |             |        |        |         |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------- | ------------------------ | ------- | ----------- | ------ | ------ | ------- | -
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         | For the Six Months Ended
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         | June 30                 
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                         
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         | 2001                     |         | 2000       
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         | (Unaudited)              |         | (Unaudited)
|CASH FLOWS FROM OPERATING ACTIVITIES:                        |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Net loss                                                                        |                                                                                     |                                                     | $(24,578                                            | )       |                          | $       | 5,854       |       
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                             | Adjustments to reconcile net loss to net
cash provided by operating activities: |                                                                                     |                                                     |                                                     |         |                          |         |             |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 | Depreciation and amortization                                                       |                                                     |                                                     | 30,305  |                          |         |             | 30,635 |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 | (Gain) loss on sale of property and equipment                                       |                                                     |                                                     | (2,743  | )                        |         |             | 12     |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 | Deferred income taxes                                                               |                                                     |                                                     | (13,356 | )                        |         |             | 838    |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 | Compensation expense related to stock options and grants                            |                                                     |                                                     | 138     |                          |         |             | 408    |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 | Equity in earnings of joint ventures                                                |                                                     |                                                     | (2,539  | )                        |         |             | (2,699 | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 | Amortization of Teamsters Union signing bonus                                       |                                                     |                                                     | 1,202   |                          |         |             | 1,238  |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 | Change in operating assets and liabilities excluding
effect of businesses acquired: |                                                     |                                                     |         |                          |         |             |        |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 |                                                                                     | Receivables, net of allowance for doubtful accounts |                                                     |         | 20,827                   |         |             |        | (4,289 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 |                                                                                     | Inventories                                         |                                                     |         | 415                      |         |             |        | 42     |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 |                                                                                     | Prepayments and other current assets                |                                                     |         | (1,635                   | )       |             |        | (3,117 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 |                                                                                     | Trade accounts payable                              |                                                     |         | (4,084                   | )       |             |        | (5,488 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                 |                                                                                     | Accrued liabilities                                 |                                                     |         | 12,620                   |         |             |        | 3,631  |        
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                             |                                                                                 |                                                                                     |                                                     | Total adjustments                                   |         |                          | 41,150  |             |        |        | 21,211  |  
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                             |                                                                                 |                                                                                     |                                                     | Net cash provided by operating activities           |         |                          | 16,572  |             |        |        | 27,065  |  
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Purchases of property and equipment                                             |                                                                                     |                                                     | (16,942                                             | )       |                          |         | (9,079      | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from sale of property and equipment                                    |                                                                                     |                                                     | 4,745                                               |         |                          |         | 112         |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Purchase of business, net of cash acquired                                      |                                                                                     |                                                     | 0                                                   |         |                          |         | (8,185      | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Investment in joint ventures                                                    |                                                                                     |                                                     | (464                                                | )       |                          |         | 0           |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Increase in short-term investments                                              |                                                                                     |                                                     | (2,590                                              | )       |                          |         | (11,918     | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Increase in the cash surrender value of life insurance                          |                                                                                     |                                                     | (240                                                | )       |                          |         | (240        | )     
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                             |                                                                                 |                                                                                     |                                                     | Net cash used in investing activities               |         |                          | (15,491 | )           |        |        | (29,310 | )
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from (repayments of) issuance of long-term debt, net                   |                                                                                     |                                                     | 11,765                                              |         |                          |         | (7,095      | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from issuance of common stock                                          |                                                                                     |                                                     | 217                                                 |         |                          |         | 422         |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repurchase of common stock                                                      |                                                                                     |                                                     | 0                                                   |         |                          |         | (282        | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other, net                                                                      |                                                                                     |                                                     | (573                                                | )       |                          |         | 165         |       
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|                                                             |                                                                                 |                                                                                     |                                                     | Net cash provided by (used in) financing activities |         |                          | 11,409  |             |        |        | (6,790  | )
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS |                                                                                 |                                                                                     | (1,429                                              | )                                                   |         |                          | (641    | )          
|                                                            
|                                                            
|                                                            
|                                                            
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         |                                                                                 |                                                                                     | 11,061                                              |                                                     |         |                          | (9,676  | )          
|                                                            
|                                                            
|                                                            
|                                                            
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               |                                                                                 |                                                                                     | 2,373                                               |                                                     |         |                          | 13,984  |            
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                   |                                                                                 | $                                                                                   | 13,434                                              |                                                     |         | $                        | 4,308   |            
|                                                             |                                                                                 |                                                                                     |                                                     |                                                     |         |                          |         |            

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

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##### Table of Contents



Allied Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)




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|Note 1. |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
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|        |  | The unaudited consolidated financial statements included herein have
been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. The
statements contained herein reflect all adjustments, all of which are
of a normal, recurring nature, which are, in the opinion of management,
necessary to present fairly the financial condition, results of
operations and cash flows for the periods presented. Operating results
for the three and six month periods ended June 30, 2001 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2001. The interim financial statements should be
read in conjunction with the financial statements and notes thereto of
Allied Holdings, Inc. and Subsidiaries, (the Company) included in the
Companys 2000 Annual Report on Form 10-K.                                                                                                                                                                                                                                                                 
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|Note 2. |  | Long-Term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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|        |  | On September 30, 1997, the Company issued $150 million of 8 5/8 %
senior notes (the Notes) through a private placement. Subsequently,
the senior notes were registered with the Securities and Exchange
Commission. The net proceeds from the Notes were used to fund the
acquisition of Ryder Automotive Carrier Services, Inc. and RC
Management Corp., pay related fees and expenses, and reduce outstanding
indebtedness. The Companys obligations under the Notes are guaranteed
by substantially all of the subsidiaries of the Company (the Guarantor
Subsidiaries). 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. and Axis Netherlands C.V. do not guarantee the Companys
obligations under the Notes (the Nonguarantor Subsidiaries). The
following condensed consolidating balance sheets, statements of
operations and statements of cash flows present the financial
statements of the parent company and the combined financial statements
of the Guarantor Subsidiaries and Nonguarantor subsidiaries. The
Guarantors are jointly and severally liable for the Companys
obligations under the Notes and there are no restrictions on the
ability of the Guarantors to make distributions to the Company.

6



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2001
In Thousands

|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |         |        |         |         | 
|------------------------------------------- | --------------------------------------------------- | ------------------------------------------------- | ------------------------- | ------------------------------------------ | ------ | -------- | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------- | -------- | -------- | -------- | -------- | ------- | ------ | ------- | ------- | 
|                                            |                                                     |                                                   |                           |                                            |        | ALLIED   |         | GUARANTOR    |         | NONGUARANTOR |         |              |        |              |         |          |          |         
|                                            |                                                     |                                                   |                           |                                            |        | HOLDINGS |         | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |        | CONSOLIDATED
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |             
|CURRENT ASSETS:                             |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                           
|                                           
|                                           
|                                           
|                                            | Cash and cash equivalents                           |                                                   | $                         | (639                                       | )      |          | $       | 2,586        |         |              | $       | 11,487       |        |              | $       |         |          |          | $        | 13,434  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Short-term investments                              |                                                   |                           |                                           |        |          |         |             |         |              |         | 62,482       |        |              |         |         |          |          |          | 62,482  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Receivables, net of allowance for doubtful accounts |                                                   |                           | 31                                         |        |          |         | 89,744       |         |              |         | 3,429        |        |              |         |         |          |          |          | 93,204  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Inventories                                         |                                                   |                           |                                           |        |          |         | 6,984        |         |              |         |             |        |              |         |         |          |          |          | 6,984   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred tax asset  current                        |                                                   |                           | 10,193                                     |        |          |         | 1,614        |         |              |         | 582          |        |              |         |         |          |          |          | 12,389  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Prepayments and other current assets                |                                                   |                           | 1,567                                      |        |          |         | 19,132       |         |              |         | 265          |        |              |         |         |          |          |          | 20,964  |       
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                            |                                                     |                                                   | Total current assets      |                                            |        | 11,152   |         |              |         | 120,060      |         |              |        | 78,245       |         |          |          |         |          |         |        | 209,457 |        
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|PROPERTY AND EQUIPMENT, NET                 |                                                     |                                                   | 13,909                    |                                            |        |          | 228,123 |              |         |              | 3,671   |              |        |              |        |          |          |          | 245,703  |        
|                                           
|                                           
|                                           
|                                           
|OTHER ASSETS:                               |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                           
|                                           
|                                           
|                                           
|                                            | Goodwill, net                                       |                                                   |                           | 1,574                                      |        |          |         | 91,587       |         |              |         |             |        |              |         |         |          |          |          | 93,161  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Other                                               |                                                   |                           | 17,246                                     |        |          |         | 16,560       |         |              |         | 9,887        |        |              |         |         |          |          |          | 43,693  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred tax asset  noncurrent                     |                                                   |                           | 30,108                                     |        |          |         |             |         |              |         |             |        |              |         | (30,108  | )        |          |          |        |       
|                                           
|                                           
|                                           
|                                           
|                                            | Intercompany receivables                            |                                                   |                           | 269,921                                    |        |          |         |             |         |              |         |             |        |              |         | (269,921 | )        |          |          |        |       
|                                           
|                                           
|                                           
|                                           
|                                            | Investment in subsidiaries                          |                                                   |                           | 49,725                                     |        |          |         | 13,949       |         |              |         |             |        |              |         | (63,674  | )        |          |          |        |       
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                            |                                                     |                                                   | Total other assets        |                                            |        | 368,574  |         |              |         | 122,096      |         |              |        | 9,887        |         |          |          | (363,703 | )        |         |        | 136,854 |        
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                            |                                                     |                                                   | Total assets              |                                            | $      | 393,635  |         |              | $       | 470,279      |         |              | $      | 91,803       |         |          | $        | (363,703 | )        |         | $      | 592,014 |        
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|CURRENT LIABILITIES:                        |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                           
|                                           
|                                           
|                                           
|                                            | Current maturities of long-term debt                |                                                   | $                         | 145,104                                    |        |          | $       | 1,640        |         |              | $       |             |        |              | $       |         |          |          | $        | 146,744 |       
|                                           
|                                           
|                                           
|                                           
|                                            | Trade accounts payable                              |                                                   |                           | 2,489                                      |        |          |         | 38,423       |         |              |         | 967          |        |              |         |         |          |          |          | 41,879  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Intercompany payables                               |                                                   |                           |                                           |        |          |         | 266,935      |         |              |         | 2,986        |        |              |         | (269,921 | )        |          |          |        |       
|                                           
|                                           
|                                           
|                                           
|                                            | Accrued liabilities                                 |                                                   |                           | 23,171                                     |        |          |         | 49,535       |         |              |         | 13,822       |        |              |         |         |          |          |          | 86,528  |       
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                            |                                                     |                                                   | Total current liabilities |                                            |        | 170,764  |         |              |         | 356,533      |         |              |        | 17,775       |         |          |          | (269,921 | )        |         |        | 275,151 |        
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|LONG-TERM DEBT, less current maturities     |                                                     |                                                   | 190,000                   |                                            |        |          | 6       |              |         |              |        |              |        |              |        |          |          |          | 190,006  |        
|                                           
|                                           
|                                           
|                                           
|POSTRETIREMENT BENEFITS OTHER THAN PENSIONS |                                                     |                                                   |                          |                                            |        |          | 9,579   |              |         |              |        |              |        |              |        |          |          |          | 9,579    |        
|                                           
|                                           
|                                           
|                                           
|DEFERRED INCOME TAXES                       |                                                     |                                                   |                          |                                            |        |          | 39,035  |              |         |              |        |              |        |              | (30,108 | )        |          |          | 8,927    |        
|                                           
|                                           
|                                           
|                                           
|OTHER LONG-TERM LIABILITIES                 |                                                     |                                                   |                          |                                            |        |          | 34,468  |              |         |              | 41,012  |              |        |              |        |          |          |          | 75,480   |        
|                                           
|                                           
|                                           
|                                           
|STOCKHOLDERS EQUITY:                       |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                           
|                                           
|                                           
|                                           
|                                            |                                                     | Common stock, no par value                        |                           |                                            |       |          |         |              |        |              |         |              |       |              |         |          |         |          |          |         |       |        
|                                           
|                                           
|                                           
|                                           
|                                            |                                                     | Additional paid-in capital                        |                           |                                            | 46,345 |          |         |              | 88,856  |              |         |              | 13,254 |              |         |          | (102,110 | )        |          |         | 46,345 |        
|                                           
|                                           
|                                           
|                                           
|                                            |                                                     | Retained (deficit) earnings                       |                           |                                            | (3,976 | )        |         |              | (48,567 | )            |         |              | 22,686 |              |         |          | 25,881   |          |          |         | (3,976 | )      
|                                           
|                                           
|                                           
|                                           
|                                            |                                                     | Cumulative other comprehensive income, net of tax |                           |                                            | (8,791 | )        |         |              | (9,631  | )            |         |              | (2,924 | )            |         |          | 12,555   |          |          |         | (8,791 | )      
|                                           
|                                           
|                                           
|                                           
|                                            |                                                     | Treasury stock                                    |                           |                                            | (707   | )        |         |              |        |              |         |              |       |              |         |          |         |          |          |         | (707   | )      
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                            |                                                     |                                                   |                           | Total stockholders equity                 |        |          | 32,871  |              |         |              | 30,658  |              |        |              | 33,016  |          |          |          | (63,674  | )       |        |         | 32,871  | 
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        
|                                            |                                                     |                                                   |                           | Total liabilities and stockholders equity |        | $        | 393,635 |              |         | $            | 470,279 |              |        | $            | 91,803  |          |          | $        | (363,703 | )       |        | $       | 592,014 | 
|                                            |                                                     |                                                   |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |          |          |          |        

7



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2000
In Thousands

|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |         |         | 
|------------------------------------------- | --------------------------------------------------- | ------------------------------------------ | ------- | -------- | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------ |  | ------- | -------- | -------- | - | ------- | ------- | ------- | 
|                                            |                                                     |                                            |         | ALLIED   |         | GUARANTOR    |         | NONGUARANTOR |         |              |        |              |        |  |         |         
|                                            |                                                     |                                            |         | HOLDINGS |         | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |        | CONSOLIDATED
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |             
|CURRENT ASSETS:                             |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                           
|                                           
|                                           
|                                           
|                                            | Cash and cash equivalents                           |                                            | $       | (1,213   | )       |              | $       | 2,063        |         |              | $      | 1,523        |        |  | $       |         |          |   | $       | 2,373   |        
|                                           
|                                           
|                                           
|                                           
|                                            | Short-term investments                              |                                            |         |         |         |              |         |             |         |              |        | 59,892       |        |  |         |         |          |   |         | 59,892  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Receivables, net of allowance for doubtful accounts |                                            |         | 805      |         |              |         | 112,876      |         |              |        | 585          |        |  |         |         |          |   |         | 114,266 |        
|                                           
|                                           
|                                           
|                                           
|                                            | Inventories                                         |                                            |         |         |         |              |         | 7,415        |         |              |        |             |        |  |         |         |          |   |         | 7,415   |        
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred tax asset  current                        |                                            |         | 8,009    |         |              |         | 1,600        |         |              |        | 582          |        |  |         |         |          |   |         | 10,191  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Prepayments and other current assets                |                                            |         | 1,974    |         |              |         | 15,007       |         |              |        | 2,374        |        |  |         |         |          |   |         | 19,355  |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total current assets                       |         |          | 9,575   |              |         |              | 138,961 |              |        |              | 64,956 |  |         |          |         |   |         |         | 213,492 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|PROPERTY AND EQUIPMENT, NET                 |                                                     |                                            | 16,319  |          |         |              | 239,866 |              |         |              | 3,177  |              |        |  |        |          |          |   | 259,362 |        
|                                           
|                                           
|                                           
|                                           
|OTHER ASSETS:                               |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                           
|                                           
|                                           
|                                           
|                                            | Goodwill, net                                       |                                            |         | 1,633    |         |              |         | 93,526       |         |              |        |             |        |  |         |         |          |   |         | 95,159  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Other                                               |                                            |         | 15,732   |         |              |         | 16,372       |         |              |        | 10,422       |        |  |         |         |          |   |         | 42,526  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred tax asset  noncurrent                     |                                            |         | 17,585   |         |              |         |             |         |              |        |             |        |  |         | (17,585  | )        |   |         |        |        
|                                           
|                                           
|                                           
|                                           
|                                            | Intercompany receivables                            |                                            |         | 260,850  |         |              |         |             |         |              |        |             |        |  |         | (260,850 | )        |   |         |        |        
|                                           
|                                           
|                                           
|                                           
|                                            | Investment in subsidiaries                          |                                            |         | 80,057   |         |              |         | 14,072       |         |              |        |             |        |  |         | (94,129  | )        |   |         |        |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total other assets                         |         |          | 375,857 |              |         |              | 123,970 |              |        |              | 10,422 |  |         |          | (372,564 | ) |         |         | 137,685 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total assets                               |         | $        | 401,751 |              |         | $            | 502,797 |              |        | $            | 78,555 |  |         | $        | (372,564 | ) |         | $       | 610,539 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|CURRENT LIABILITIES:                        |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                           
|                                           
|                                           
|                                           
|                                            | Current maturities of long-term debt                |                                            | $       |         |         |              | $       | 109          |         |              | $      |             |        |  | $       |         |          |   | $       | 109     |        
|                                           
|                                           
|                                           
|                                           
|                                            | Trade accounts payable                              |                                            |         | 1,590    |         |              |         | 43,475       |         |              |        | 910          |        |  |         |         |          |   |         | 45,975  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Intercompany payables                               |                                            |         |         |         |              |         | 259,268      |         |              |        | 1,582        |        |  |         | (260,850 | )        |   |         |        |        
|                                           
|                                           
|                                           
|                                           
|                                            | Accrued liabilities                                 |                                            |         | 16,592   |         |              |         | 51,684       |         |              |        | 11,211       |        |  |         |         |          |   |         | 79,487  |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total current liabilities                  |         |          | 18,182  |              |         |              | 354,536 |              |        |              | 13,703 |  |         |          | (260,850 | ) |         |         | 125,571 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|LONG-TERM DEBT, less current maturities     |                                                     |                                            | 324,428 |          |         |              | 448     |              |         |              |       |              |        |  |        |          |          |   | 324,876 |        
|                                           
|                                           
|                                           
|                                           
|POSTRETIREMENT BENEFITS OTHER THAN PENSIONS |                                                     |                                            |        |          |         |              | 9,943   |              |         |              |       |              |        |  |        |          |          |   | 9,943   |        
|                                           
|                                           
|                                           
|                                           
|DEFERRED INCOME TAXES                       |                                                     |                                            |        |          |         |              | 38,999  |              |         |              |       |              |        |  | (17,585 | )        |          |   | 21,414  |        
|                                           
|                                           
|                                           
|                                           
|OTHER LONG-TERM LIABILITIES                 |                                                     |                                            |        |          |         |              | 36,660  |              |         |              | 32,934 |              |        |  |        |          |          |   | 69,594  |        
|                                           
|                                           
|                                           
|                                           
|STOCKHOLDERS EQUITY:                       |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                           
|                                           
|                                           
|                                           
|                                            | Common stock, no par value                          |                                            |         |         |         |              |         |             |         |              |        |             |        |  |         |         |          |   |         |        |        
|                                           
|                                           
|                                           
|                                           
|                                            | Additional paid-in capital                          |                                            |         | 45,990   |         |              |         | 81,180       |         |              |        | 13,612       |        |  |         | (94,792  | )        |   |         | 45,990  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Retained earnings (deficit)                         |                                            |         | 20,602   |         |              |         | (10,171      | )       |              |        | 20,309       |        |  |         | (10,138  | )        |   |         | 20,602  |        
|                                           
|                                           
|                                           
|                                           
|                                            | Cumulative other comprehensive income, net of tax   |                                            |         | (6,744   | )       |              |         | (8,798       | )       |              |        | (2,003       | )      |  |         | 10,801   |          |   |         | (6,744  | )      
|                                           
|                                           
|                                           
|                                           
|                                            | Treasury stock                                      |                                            |         | (707     | )       |              |         |             |         |              |        |             |        |  |         |         |          |   |         | (707    | )      
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total stockholders equity                 |         |          | 59,141  |              |         |              | 62,211  |              |        |              | 31,918 |  |         |          | (94,129  | ) |         |         | 59,141  | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total liabilities and stockholders equity |         | $        | 401,751 |              |         | $            | 502,797 |              |        | $            | 78,555 |  |         | $        | (372,564 | ) |         | $       | 610,539 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        

8



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2001
In Thousands

|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |         |         |  
|--------------------------------- | ------------------------------------------------ | ------------------------ | ------- | -------- | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                  |                                                  |                          |         | ALLIED   |         | GUARANTOR    |         | NONGUARANTOR |         |              |        |              |        |   |         |        
|                                  |                                                  |                          |         | HOLDINGS |         | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |        | CONSOLIDATED
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |             
|REVENUES                          |                                                  | $                        | 4,950   |          |         | $            | 467,525 |              |         | $            | 19,033 |              |        | $ | (23,134 | )       |         | $ | 468,374 |        
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|OPERATING EXPENSES:               |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Salaries, wages and fringe benefits              |                          |         | 7,446    |         |              |         | 264,860      |         |              |        |             |        |   |         |        |         |   |         | 272,306 |        
|                                 
|                                 
|                                 
|                                 
|                                  | Operating supplies and expenses                  |                          |         | 975      |         |              |         | 78,744       |         |              |        | 53           |        |   |         |        |         |   |         | 79,772  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Purchased transportation                         |                          |         |         |         |              |         | 51,962       |         |              |        |             |        |   |         |        |         |   |         | 51,962  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Insurance and claims                             |                          |         |         |         |              |         | 27,702       |         |              |        | 17,539       |        |   |         | (18,184 | )       |   |         | 27,057  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Operating taxes and licenses                     |                          |         | 93       |         |              |         | 17,040       |         |              |        |             |        |   |         |        |         |   |         | 17,133  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Depreciation and amortization                    |                          |         | 1,725    |         |              |         | 28,224       |         |              |        | 356          |        |   |         |        |         |   |         | 30,305  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Rents                                            |                          |         | 1,041    |         |              |         | 2,618        |         |              |        | 3            |        |   |         |        |         |   |         | 3,662   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Communications and utilities                     |                          |         | 112      |         |              |         | 3,834        |         |              |        | 6            |        |   |         |        |         |   |         | 3,952   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Other operating expenses                         |                          |         | 3,606    |         |              |         | 10,388       |         |              |        | 134          |        |   |         | (4,950  | )       |   |         | 9,178   |        
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                  |                                                  | Total operating expenses |         |          | 14,998  |              |         |              | 485,372 |              |        |              | 18,091 |   |         |         | (23,134 | ) |         |         | 495,327 |  
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                  |                                                  | Operating (loss) income  |         |          | (10,048 | )            |         |              | (17,847 | )            |        |              | 942    |   |         |         |        |   |         |         | (26,953 | )
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|OTHER INCOME (EXPENSE):           |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Equity in earnings of joint ventures, net of tax |                          |         |         |         |              |         | 2,437        |         |              |        | 102          |        |   |         |        |         |   |         | 2,539   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Gain on sale of assets                           |                          |         |         |         |              |         | 2,743        |         |              |        |             |        |   |         |        |         |   |         | 2,743   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Interest expense                                 |                          |         | (17,069  | )       |              |         | (16,132      | )       |              |        | (96          | )      |   |         | 15,444  |         |   |         | (17,853 | )      
|                                 
|                                 
|                                 
|                                 
|                                  | Interest income                                  |                          |         | 15,495   |         |              |         | 112          |         |              |        | 1,427        |        |   |         | (15,444 | )       |   |         | 1,590   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Intercompany dividends                           |                          |         | 1,980    |         |              |         | (1,980       | )       |              |        |             |        |   |         |        |         |   |         |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | Equity in losses of subsidiaries                 |                          |         | (28,117  | )       |              |         |             |         |              |        |             |        |   |         | 28,117  |         |   |         |        |        
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                  |                                                  |                          | (27,711 | )        |         |              | (12,820 | )            |         |              | 1,433  |              |        |   | 28,117  |         |         |   | (10,981 | )      
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|(LOSS) INCOME BEFORE INCOME TAXES |                                                  |                          | (37,759 | )        |         |              | (30,667 | )            |         |              | 2,375  |              |        |   | 28,117  |         |         |   | (37,934 | )      
|                                 
|                                 
|                                 
|                                 
|INCOME TAX BENEFIT (PROVISION)    |                                                  |                          | 13,181  |          |         |              | 912     |              |         |              | (737   | )            |        |   |        |         |         |   | 13,356  |        
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|NET (LOSS) INCOME                 |                                                  | $                        | (24,578 | )        |         | $            | (29,755 | )            |         | $            | 1,638  |              |        | $ | 28,117  |         |         | $ | (24,578 | )      
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
In Thousands

|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |         |         | 
|------------------------------ | ------------------------------------------------------- | ------------------------ | ------ | -------- | ------ | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                               |                                                         |                          |        | ALLIED   |        | GUARANTOR    |         | NONGUARANTOR |         |              |        |              |        |   |         |        
|                               |                                                         |                          |        | HOLDINGS |        | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |        | CONSOLIDATED
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |             
|REVENUES                       |                                                         | $                        | 2,485  |          |        | $            | 577,371 |              |         | $            | 17,643 |              |        | $ | (18,718 | )       |         | $ | 578,781 |        
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|OPERATING EXPENSES:            |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                              
|                              
|                              
|                              
|                               | Salaries, wages and fringe benefits                     |                          |        | 1,775    |        |              |         | 307,338      |         |              |        |             |        |   |         |        |         |   |         | 309,113 |        
|                              
|                              
|                              
|                              
|                               | Operating supplies and expenses                         |                          |        | 800      |        |              |         | 99,059       |         |              |        | 25           |        |   |         |        |         |   |         | 99,884  |        
|                              
|                              
|                              
|                              
|                               | Purchased transportation                                |                          |        |         |        |              |         | 56,454       |         |              |        |             |        |   |         |        |         |   |         | 56,454  |        
|                              
|                              
|                              
|                              
|                               | Insurance and claims                                    |                          |        |         |        |              |         | 25,245       |         |              |        | 16,130       |        |   |         | (16,232 | )       |   |         | 25,143  |        
|                              
|                              
|                              
|                              
|                               | Operating taxes and licenses                            |                          |        | 5        |        |              |         | 21,836       |         |              |        |             |        |   |         |        |         |   |         | 21,841  |        
|                              
|                              
|                              
|                              
|                               | Depreciation and amortization                           |                          |        | 59       |        |              |         | 30,207       |         |              |        | 369          |        |   |         |        |         |   |         | 30,635  |        
|                              
|                              
|                              
|                              
|                               | Rents                                                   |                          |        | 39       |        |              |         | 4,460        |         |              |        |             |        |   |         |        |         |   |         | 4,499   |        
|                              
|                              
|                              
|                              
|                               | Communications and utilities                            |                          |        | 8        |        |              |         | 4,207        |         |              |        |             |        |   |         |        |         |   |         | 4,215   |        
|                              
|                              
|                              
|                              
|                               | Other operating expenses                                |                          |        | 1,276    |        |              |         | 6,762        |         |              |        | 185          |        |   |         | (2,486  | )       |   |         | 5,737   |        
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                               |                                                         | Total operating expenses |        |          | 3,962  |              |         |              | 555,568 |              |        |              | 16,709 |   |         |         | (18,718 | ) |         |         | 557,521 | 
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                               |                                                         | Operating (loss) income  |        |          | (1,477 | )            |         |              | 21,803  |              |        |              | 934    |   |         |         |        |   |         |         | 21,260  | 
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|OTHER INCOME (EXPENSE):        |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                              
|                              
|                              
|                              
|                               | Equity in earnings (loss) of joint ventures, net of tax |                          |        |         |        |              |         | 2,913        |         |              |        | (214         | )      |   |         |        |         |   |         | 2,699   |        
|                              
|                              
|                              
|                              
|                               | Loss on sale of assets                                  |                          |        |         |        |              |         | (12          | )       |              |        |             |        |   |         |        |         |   |         | (12     | )      
|                              
|                              
|                              
|                              
|                               | Interest expense                                        |                          |        | (14,896  | )      |              |         | (17,200      | )       |              |        | (53          | )      |   |         | 15,400  |         |   |         | (16,749 | )      
|                              
|                              
|                              
|                              
|                               | Interest income                                         |                          |        | 15,382   |        |              |         | 191          |         |              |        | 1,836        |        |   |         | (15,400 | )       |   |         | 2,009   |        
|                              
|                              
|                              
|                              
|                               | Intercompany dividends                                  |                          |        | 4,140    |        |              |         | (4,140       | )       |              |        |             |        |   |         |        |         |   |         |        |        
|                              
|                              
|                              
|                              
|                               | Equity in earnings of subsidiaries                      |                          |        | 5,340    |        |              |         |             |         |              |        |             |        |   |         | (5,340  | )       |   |         |        |        
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                               |                                                         |                          | 9,966  |          |        |              | (18,248 | )            |         |              | 1,569  |              |        |   | (5,340  | )       |         |   | (12,053 | )      
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|INCOME BEFORE INCOME TAXES     |                                                         |                          | 8,489  |          |        |              | 3,555   |              |         |              | 2,503  |              |        |   | (5,340  | )       |         |   | 9,207   |        
|                              
|                              
|                              
|                              
|INCOME TAX (PROVISION) BENEFIT |                                                         |                          | (2,635 | )        |        |              | 34      |              |         |              | (752   | )            |        |   |        |         |         |   | (3,353  | )      
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|NET INCOME                     |                                                         | $                        | 5,854  |          |        | $            | 3,589   |              |         | $            | 1,751  |              |        | $ | (5,340  | )       |         | $ | 5,854   |        
|                               |                                                         |                          |        |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        

9



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001
In Thousands

|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |         |         |  
|--------------------------------- | ------------------------------------------------ | ------------------------ | ------ | -------- | ------ | ------------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | - | ------- | ------ | ------- | - | ------- | ------- | ------- | -
|                                  |                                                  |                          |        | ALLIED   |        | GUARANTOR    |         | NONGUARANTOR |         |              |       |              |       |   |         |       
|                                  |                                                  |                          |        | HOLDINGS |        | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |       | CONSOLIDATED
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |             
|REVENUES                          |                                                  | $                        | 2,475  |          |        | $            | 249,749 |              |         | $            | 9,538 |              |       | $ | (11,567 | )      |         | $ | 250,195 |        
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|OPERATING EXPENSES:               |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Salaries, wages and fringe benefits              |                          |        | 2,325    |        |              |         | 138,264      |         |              |       |             |       |   |         |       |         |   |         | 140,589 |        
|                                 
|                                 
|                                 
|                                 
|                                  | Operating supplies and expenses                  |                          |        | 72       |        |              |         | 38,208       |         |              |       | 50           |       |   |         |       |         |   |         | 38,330  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Purchased transportation                         |                          |        |         |        |              |         | 28,666       |         |              |       |             |       |   |         |       |         |   |         | 28,666  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Insurance and claims                             |                          |        |         |        |              |         | 13,900       |         |              |       | 8,960        |       |   |         | (9,092 | )       |   |         | 13,768  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Operating taxes and licenses                     |                          |        | 46       |        |              |         | 8,461        |         |              |       |             |       |   |         |       |         |   |         | 8,507   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Depreciation and amortization                    |                          |        | 878      |        |              |         | 14,214       |         |              |       | 189          |       |   |         |       |         |   |         | 15,281  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Rents                                            |                          |        | 509      |        |              |         | 1,080        |         |              |       | 3            |       |   |         |       |         |   |         | 1,592   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Communications and utilities                     |                          |        | 98       |        |              |         | 1,810        |         |              |       | 6            |       |   |         |       |         |   |         | 1,914   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Other operating expenses                         |                          |        | 1,846    |        |              |         | 5,690        |         |              |       | 94           |       |   |         | (2,475 | )       |   |         | 5,155   |        
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                  | Total operating expenses |        |          | 5,774  |              |         |              | 250,293 |              |       |              | 9,302 |   |         |        | (11,567 | ) |         |         | 253,802 |  
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                  | Operating (loss) income  |        |          | (3,299 | )            |         |              | (544    | )            |       |              | 236   |   |         |        |        |   |         |         | (3,607  | )
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|OTHER INCOME (EXPENSE):           |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Equity in earnings of joint ventures, net of tax |                          |        |         |        |              |         | 1,218        |         |              |       | 112          |       |   |         |       |         |   |         | 1,330   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Gain on sale of assets                           |                          |        |         |        |              |         | 2,576        |         |              |       |             |       |   |         |       |         |   |         | 2,576   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Interest expense                                 |                          |        | (9,046   | )      |              |         | (8,073       | )       |              |       | (56          | )     |   |         | 7,788  |         |   |         | (9,387  | )      
|                                 
|                                 
|                                 
|                                 
|                                  | Interest income                                  |                          |        | 7,785    |        |              |         | 49           |         |              |       | 580          |       |   |         | (7,788 | )       |   |         | 626     |        
|                                 
|                                 
|                                 
|                                 
|                                  | Intercompany dividends                           |                          |        | 1,729    |        |              |         | (1,729       | )       |              |       |             |       |   |         |       |         |   |         |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | Equity in losses of subsidiaries                 |                          |        | (5,238   | )      |              |         |             |         |              |       |             |       |   |         | 5,238  |         |   |         |        |        
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                  |                          | (4,770 | )        |        |              | (5,959  | )            |         |              | 636   |              |       |   | 5,238   |        |         |   | (4,855  | )      
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|(LOSS) INCOME BEFORE INCOME TAXES |                                                  |                          | (8,069 | )        |        |              | (6,503  | )            |         |              | 872   |              |       |   | 5,238   |        |         |   | (8,462  | )      
|                                 
|                                 
|                                 
|                                 
|INCOME TAX BENEFIT (PROVISION)    |                                                  |                          | 2,353  |          |        |              | 696     |              |         |              | (303  | )            |       |   |        |        |         |   | 2,746   |        
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|NET (LOSS) INCOME                 |                                                  | $                        | (5,716 | )        |        | $            | (5,807  | )            |         | $            | 569   |              |       | $ | 5,238   |        |         | $ | (5,716  | )      
|                                  |                                                  |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000
In Thousands

|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |         |         | 
|-------------------------- | ------------------------------------------------------- | ------------------------ | ------ | -------- | ----- | ------------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | - | ------ | ------ | ------ | - | ------- | ------- | ------- | 
|                           |                                                         |                          |        | ALLIED   |       | GUARANTOR    |         | NONGUARANTOR |         |              |       |              |       |   |        |       
|                           |                                                         |                          |        | HOLDINGS |       | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |       | CONSOLIDATED
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |             
|REVENUES                   |                                                         | $                        | 1,243  |          |       | $            | 295,899 |              |         | $            | 8,017 |              |       | $ | (9,262 | )      |        | $ | 295,897 |        
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|OPERATING EXPENSES:        |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|                          
|                          
|                          
|                          
|                           | Salaries, wages and fringe benefits                     |                          |        | 117      |       |              |         | 154,158      |         |              |       |             |       |   |        |       |        |   |         | 154,275 |        
|                          
|                          
|                          
|                          
|                           | Operating supplies and expenses                         |                          |        | 425      |       |              |         | 47,864       |         |              |       | 13           |       |   |        |       |        |   |         | 48,302  |        
|                          
|                          
|                          
|                          
|                           | Purchased transportation                                |                          |        |         |       |              |         | 29,301       |         |              |       |             |       |   |        |       |        |   |         | 29,301  |        
|                          
|                          
|                          
|                          
|                           | Insurance and claims                                    |                          |        |         |       |              |         | 12,871       |         |              |       | 8,234        |       |   |        | (8,018 | )      |   |         | 13,087  |        
|                          
|                          
|                          
|                          
|                           | Operating taxes and licenses                            |                          |        | 2        |       |              |         | 10,980       |         |              |       |             |       |   |        |       |        |   |         | 10,982  |        
|                          
|                          
|                          
|                          
|                           | Depreciation and amortization                           |                          |        | 29       |       |              |         | 15,364       |         |              |       |             |       |   |        |       |        |   |         | 15,393  |        
|                          
|                          
|                          
|                          
|                           | Rents                                                   |                          |        | 19       |       |              |         | 2,154        |         |              |       |             |       |   |        |       |        |   |         | 2,173   |        
|                          
|                          
|                          
|                          
|                           | Communications and utilities                            |                          |        | 1        |       |              |         | 2,005        |         |              |       |             |       |   |        |       |        |   |         | 2,006   |        
|                          
|                          
|                          
|                          
|                           | Other operating expenses                                |                          |        | 544      |       |              |         | 3,822        |         |              |       | 60           |       |   |        | (1,244 | )      |   |         | 3,182   |        
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|                           |                                                         | Total operating expenses |        |          | 1,137 |              |         |              | 278,519 |              |       |              | 8,307 |   |        |        | (9,262 | ) |         |         | 278,701 | 
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|                           |                                                         | Operating income (loss)  |        |          | 106   |              |         |              | 17,380  |              |       |              | (290  | ) |        |        |       |   |         |         | 17,196  | 
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|OTHER INCOME (EXPENSE):    |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|                          
|                          
|                          
|                          
|                           | Equity in earnings (loss) of joint ventures, net of tax |                          |        |         |       |              |         | 1,914        |         |              |       | (116         | )     |   |        |       |        |   |         | 1,798   |        
|                          
|                          
|                          
|                          
|                           | Gain on sale of assets                                  |                          |        |         |       |              |         | 91           |         |              |       |             |       |   |        |       |        |   |         | 91      |        
|                          
|                          
|                          
|                          
|                           | Interest expense                                        |                          |        | (7,480   | )     |              |         | (8,540       | )       |              |       | (25          | )     |   |        | 7,697  |        |   |         | (8,348  | )      
|                          
|                          
|                          
|                          
|                           | Interest income                                         |                          |        | 7,680    |       |              |         | 105          |         |              |       | 601          |       |   |        | (7,697 | )      |   |         | 689     |        
|                          
|                          
|                          
|                          
|                           | Intercompany dividends                                  |                          |        | 4,140    |       |              |         | (4,140       | )       |              |       |             |       |   |        |       |        |   |         |        |        
|                          
|                          
|                          
|                          
|                           | Equity in earnings of subsidiaries                      |                          |        | 6,800    |       |              |         |             |         |              |       |             |       |   |        | (6,800 | )      |   |         |        |        
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|                           |                                                         |                          | 11,140 |          |       |              | (10,570 | )            |         |              | 460   |              |       |   | (6,800 | )      |        |   | (5,770  | )      
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|INCOME BEFORE INCOME TAXES |                                                         |                          | 11,246 |          |       |              | 6,810   |              |         |              | 170   |              |       |   | (6,800 | )      |        |   | 11,426  |        
|                          
|                          
|                          
|                          
|INCOME TAX PROVISION       |                                                         |                          | (4,357 | )        |       |              | (82     | )            |         |              | (98   | )            |       |   |       |        |        |   | (4,537  | )      
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        
|NET INCOME                 |                                                         | $                        | 6,889  |          |       | $            | 6,728   |              |         | $            | 72    |              |       | $ | (6,800 | )      |        | $ | 6,889   |        
|                           |                                                         |                          |        |          |       |              |         |              |         |              |       |              |       |   |        |        |        |   |         |        

10



---



##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2001
In Thousands

|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |         |         |        |         |  
|------------------------------------------------------------ | -------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------- | -------- | ------- | ------------ | ------ | ------------ | ------- | ------------ | ---- | ------------ | ------ | ------ | ------- | - | ------- | ------- | ------- | ------ | ------- | -
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         | ALLIED   |         | GUARANTOR    |        | NONGUARANTOR |         |              |      |              |        |        |         |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         | HOLDINGS |         | SUBSIDIARIES |        | SUBSIDIARIES |         | ELIMINATIONS |      | CONSOLIDATED
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |             
|CASH FLOWS FROM OPERATING ACTIVITIES                        
|                                                             | Net (loss) income                                                                                  |                                                          | $                                                   | (24,578                                             | )       |          | $       | (29,755      | )      |              | $       | 1,638        |      |              | $      | 28,117 |         |   | $       | (24,578 | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             | Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities: |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |         |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    | Depreciation and amortization                            |                                                     |                                                     | 1,725   |          |         |              | 28,224 |              |         |              | 356  |              |        |        |        |   |         |         | 30,305  |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    | Gain on sale of property and equipment                   |                                                     |                                                     |        |          |         |              | (2,743 | )            |         |              |     |              |        |        |        |   |         |         | (2,743  | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    | Deferred income taxes                                    |                                                     |                                                     | (15,000 | )        |         |              | 1,644  |              |         |              |     |              |        |        |        |   |         |         | (13,356 | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    | Compensation expense related to stock options and grants |                                                     |                                                     | 138     |          |         |              |       |              |         |              |     |              |        |        |        |   |         |         | 138     |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    | Equity in earnings of joint ventures                     |                                                     |                                                     |        |          |         |              | (2,437 | )            |         |              | (102 | )            |        |        |        |   |         |         | (2,539  | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    | Equity in losses of subsidiaries                         |                                                     |                                                     | 28,117  |          |         |              |       |              |         |              |     |              |        |        | (28,117 | ) |         |         |        |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    | Amortization of Teamsters Union signing bonus            |                                                     |                                                     |        |          |         |              | 1,202  |              |         |              |     |              |        |        |        |   |         |         | 1,202   |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    | Change in operating assets and liabilities:              |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |         |         |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    |                                                          | Receivables, net of allowance for doubtful accounts |                                                     |         | 774      |         |              |        | 22,897       |         |              |      | (2,844       | )      |        |         |  |         |         |         | 20,827 |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    |                                                          | Inventories                                         |                                                     |         |         |         |              |        | 415          |         |              |      |             |        |        |         |  |         |         |         | 415    |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    |                                                          | Prepayments and other current assets                |                                                     |         | 407      |         |              |        | (4,151       | )       |              |      | 2,109        |        |        |         |  |         |         |         | (1,635 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    |                                                          | Intercompany receivables and payables               |                                                     |         | (9,071   | )       |              |        | 7,667        |         |              |      | 1,404        |        |        |         |  |         |         |         |       |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    |                                                          | Trade accounts payable                              |                                                     |         | 899      |         |              |        | (5,040       | )       |              |      | 57           |        |        |         |  |         |         |         | (4,084 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                                    |                                                          | Accrued liabilities                                 |                                                     |         | 6,579    |         |              |        | (4,648       | )       |              |      | 10,689       |        |        |         |  |         |         |         | 12,620 |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Total adjustments                                   |         |          | 14,568  |              |        |              | 43,030  |              |      |              | 11,669 |        |         |   | (28,117 | )       |         |        | 41,150  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash (used in) provided by operating activities |         |          | (10,010 | )            |        |              | 13,275  |              |      |              | 13,307 |        |         |   |        |         |         |        | 16,572  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Purchases of property and equipment                                                                |                                                          |                                                     | (67                                                 | )       |          |         | (16,155      | )      |              |         | (720         | )    |              |        |       |         |   |         | (16,942 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Intercompany sale of property and equipment                                                        |                                                          |                                                     | 811                                                 |         |          |         | (811         | )      |              |         |             |      |              |        |       |         |   |         |        |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from sale of property and equipment                                                       |                                                          |                                                     |                                                    |         |          |         | 4,745        |        |              |         |             |      |              |        |       |         |   |         | 4,745   |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Investment in joint ventures                                                                       |                                                          |                                                     |                                                    |         |          |         |             |        |              |         | (464         | )    |              |        |       |         |   |         | (464    | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Intercompany dividend received (paid)                                                              |                                                          |                                                     | 1,980                                               |         |          |         | (1,980       | )      |              |         |             |      |              |        |       |         |   |         |        |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Increase in short-term investments                                                                 |                                                          |                                                     |                                                    |         |          |         |             |        |              |         | (2,590       | )    |              |        |       |         |   |         | (2,590  | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Increase in cash surrender value of life insurance                                                 |                                                          |                                                     | (240                                                | )       |          |         |             |        |              |         |             |      |              |        |       |         |   |         | (240    | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash provided by (used in) investing activities |         |          | 2,484   |              |        |              | (14,201 | )            |      |              | (3,774 | )      |         |   |        |         |         |        | (15,491 | )
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from issuance of long-term debt, net                                                      |                                                          |                                                     | 10,676                                              |         |          |         | 1,089        |        |              |         |             |      |              |        |       |         |   |         | 11,765  |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from issuance of common stock                                                             |                                                          |                                                     | 217                                                 |         |          |         |             |        |              |         |             |      |              |        |       |         |   |         | 217     |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other, net                                                                                         |                                                          |                                                     | (2,793                                              | )       |          |         | 868          |        |              |         | 1,352        |      |              |        |       |         |   |         | (573    | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash provided by financing activities           |         |          | 8,100   |              |        |              | 1,957   |              |      |              | 1,352  |        |         |   |        |         |         |        | 11,409  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS |                                                                                                    |                                                          |                                                    |                                                     |         |          | (508    | )            |        |              | (921    | )            |      |              |       |        |         |   | (1,429  | )      
|                                                            
|                                                            
|                                                            
|                                                            
|NET INCREASE IN CASH AND CASH EQUIVALENTS                    |                                                                                                    |                                                          | 574                                                 |                                                     |         |          | 523     |              |        |              | 9,964   |              |      |              |       |        |         |   | 11,061  |        
|                                                            
|                                                            
|                                                            
|                                                            
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               |                                                                                                    |                                                          | (1,213                                              | )                                                   |         |          | 2,063   |              |        |              | 1,523   |              |      |              |       |        |         |   | 2,373   |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                   |                                                                                                    | $                                                        | (639                                                | )                                                   |         | $        | 2,586   |              |        | $            | 11,487  |              |      | $            |       |        |         | $ | 13,434  |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        

11



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##### Table of Contents



SUPPLEMENTAL GUARANTOR INFORMATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000
In Thousands

|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |         |        |        |         |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | --------------------------------------------------- | --------------------------------------------------- | ------ | -------- | ------- | ------------ | ------ | ------------ | ------- | ------------ | --- | ------------ | ------- | ------ | ----- | - | ------ | ------- | ------ | ------ | ------- | -
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        | ALLIED   |         | GUARANTOR    |        | NONGUARANTOR |         |              |     |              |         |        |       |  
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        | HOLDINGS |         | SUBSIDIARIES |        | SUBSIDIARIES |         | ELIMINATIONS |     | CONSOLIDATED
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |             
|CASH FLOWS FROM OPERATING ACTIVITIES                        
|                                                             | Net income                                                                                  |                                                                                      | $                                                   | 5,854                                               |        |          | $       | 3,589        |        |              | $       | 1,751        |     |              | $       | (5,340 | )     |   | $      | 5,854   |       
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|                                                             | Adjustments to reconcile net income to net
cash (used in) provided by operating activities: |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |         |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             | Depreciation and amortization                                                        |                                                     |                                                     | 59     |          |         |              | 30,207 |              |         |              | 369 |              |         |        |      |   |        |         | 30,635 |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             | Loss on sale of property and equipment                                               |                                                     |                                                     |       |          |         |              | 12     |              |         |              |    |              |         |        |      |   |        |         | 12     |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             | Deferred income taxes                                                                |                                                     |                                                     | (2,269 | )        |         |              | 3,107  |              |         |              |    |              |         |        |      |   |        |         | 838    |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             | Compensation expense related to stock options and grants                             |                                                     |                                                     | 408    |          |         |              |       |              |         |              |    |              |         |        |      |   |        |         | 408    |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             | Equity in earnings (loss) of joint ventures                                          |                                                     |                                                     |       |          |         |              | (2,913 | )            |         |              | 214 |              |         |        |      |   |        |         | (2,699 | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             | Equity in net income of subsidiaries                                                 |                                                     |                                                     | (5,340 | )        |         |              |       |              |         |              |    |              |         |        | 5,340 |   |        |         |       |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             | Amortization of Teamsters Union signing bonus                                        |                                                     |                                                     |       |          |         |              | 1,238  |              |         |              |    |              |         |        |      |   |        |         | 1,238  |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             | Change in operating assets and liabilities excluding effects of
businesses acquired: |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |         |        |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             |                                                                                      | Receivables, net of allowance for doubtful accounts |                                                     |        | 7        |         |              |        | (3,269       | )       |              |     | (1,027       | )       |        |       |  |        |         |        | (4,289 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             |                                                                                      | Inventories                                         |                                                     |        |         |         |              |        | 42           |         |              |     |             |         |        |       |  |        |         |        | 42     |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             |                                                                                      | Prepayments and other current assets                |                                                     |        | (234     | )       |              |        | (2,751       | )       |              |     | (132         | )       |        |       |  |        |         |        | (3,117 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             |                                                                                      | Trade accounts payable                              |                                                     |        | (103     | )       |              |        | (5,154       | )       |              |     | (231         | )       |        |       |  |        |         |        | (5,488 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             |                                                                                      | Intercompany payables                               |                                                     |        | (11,665  | )       |              |        | 12,844       |         |              |     | (1,179       | )       |        |       |  |        |         |        |       |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                             |                                                                                      | Accrued liabilities                                 |                                                     |        | 4,463    |         |              |        | (5,452       | )       |              |     | 4,620        |         |        |       |  |        |         |        | 3,631  |        
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|                                                             |                                                                                             |                                                                                      |                                                     | Total adjustments                                   |        |          | (14,674 | )            |        |              | 27,911  |              |     |              | 2,634   |        |       |   | 5,340  |         |        |        | 21,211  |  
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|                                                             |                                                                                             |                                                                                      |                                                     | Net cash (used in) provided by operating activities |        |          | (8,820  | )            |        |              | 31,500  |              |     |              | 4,385   |        |       |   |       |         |        |        | 27,065  |  
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Purchases of property and equipment                                                         |                                                                                      |                                                     |                                                    |        |          |         | (7,706       | )      |              |         | (1,373       | )   |              |         |       |       |   |        | (9,079  | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from sale of property and equipment                                                |                                                                                      |                                                     |                                                    |        |          |         | 112          |        |              |         |             |     |              |         |       |       |   |        | 112     |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Purchase of business, net of cash acquired                                                  |                                                                                      |                                                     |                                                    |        |          |         | (8,185       | )      |              |         |             |     |              |         |       |       |   |        | (8,185  | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Return of capital                                                                           |                                                                                      |                                                     | 11,999                                              |        |          |         | (11,999      | )      |              |         |             |     |              |         |       |       |   |        |        |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Intercompany dividend received (paid)                                                       |                                                                                      |                                                     | 4,140                                               |        |          |         | (4,140       | )      |              |         |             |     |              |         |       |       |   |        |        |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Increase in short-term investments                                                          |                                                                                      |                                                     |                                                    |        |          |         |             |        |              |         | (11,918      | )   |              |         |       |       |   |        | (11,918 | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Increase in cash surrender value of life insurance                                          |                                                                                      |                                                     |                                                    |        |          |         | (240         | )      |              |         |             |     |              |         |       |       |   |        | (240    | )     
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|                                                             |                                                                                             |                                                                                      |                                                     | Net cash provided by (used in) investing activities |        |          | 16,139  |              |        |              | (32,158 | )            |     |              | (13,291 | )      |       |   |       |         |        |        | (29,310 | )
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repayment of (proceeds from) long-term debt, net                                            |                                                                                      |                                                     | (7,477                                              | )      |          |         | 382          |        |              |         |             |     |              |         |       |       |   |        | (7,095  | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from issuance of common stock                                                      |                                                                                      |                                                     | 422                                                 |        |          |         |             |        |              |         |             |     |              |         |       |       |   |        | 422     |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repurchase of common stock                                                                  |                                                                                      |                                                     | (282                                                | )      |          |         |             |        |              |         |             |     |              |         |       |       |   |        | (282    | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other, net                                                                                  |                                                                                      |                                                     | (3,751                                              | )      |          |         | 2,386        |        |              |         | 1,530        |     |              |         |       |       |   |        | 165     |       
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|                                                             |                                                                                             |                                                                                      |                                                     | Net cash (used in) provided by financing activities |        |          | (11,088 | )            |        |              | 2,768   |              |     |              | 1,530   |        |       |   |       |         |        |        | (6,790  | )
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS |                                                                                             |                                                                                      |                                                    |                                                     |        |          | (223    | )            |        |              | (418    | )            |     |              |        |        |       |   | (641   | )      
|                                                            
|                                                            
|                                                            
|                                                            
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS         |                                                                                             |                                                                                      | (3,769                                              | )                                                   |        |          | 1,887   |              |        |              | (7,794  | )            |     |              |        |        |       |   | (9,676 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               |                                                                                             |                                                                                      | 1,852                                               |                                                     |        |          | 3,179   |              |        |              | 8,953   |              |     |              |        |        |       |   | 13,984 |        
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                   |                                                                                             | $                                                                                    | (1,917                                              | )                                                   |        | $        | 5,066   |              |        | $            | 1,159   |              |     | $            |        |        |       | $ | 4,308  |        
|                                                             |                                                                                             |                                                                                      |                                                     |                                                     |        |          |         |              |        |              |         |              |     |              |         |        |       |   |        |        

12



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Note 3. Comprehensive Income



| |  |  | The Company had a comprehensive loss of $4.0 million for the second
quarter of 2001 versus comprehensive income of $5.5 million for the
second quarter of 2000. For the first six months of 2001, the
comprehensive loss was $26.6 million, versus comprehensive income $4.0
million for the first six months of 2000. The difference between
comprehensive income and net income is the foreign currency translation
adjustment, net of income taxes.
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 4.  Accounting for Derivative Instruments and Hedging Activities



| |  |  | The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended, the statement
establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded
in other contracts) be recorded in the balance sheet as either an asset
or liability measured at its fair value. SFAS No. 133 requires that
changes in the derivatives fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivatives gains and losses
to offset related results on the hedged item in the income statement,
and requires that a company must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | From time to time, the Company enters into future contracts to manage
the risk associated with changes in fuel prices. Gains and losses from
fuel hedging contracts are recognized as part of fuel expense when the
Company uses the underlying fuel being hedged. The Company does not
enter into fuel hedging contracts for speculative purposes. At June 30,
2001, the Company did not have any outstanding fuel hedging contracts or
other derivative instruments that fall under the provisions of SFAS No.
133.                                                                                                                                                                                                                                                                                                                                                                                                        

Note 5.  Recent Accounting Pronouncements



| |  |  | In June 2001 the Financial Accounting Standards Board approved Statement
of Financial Accounting Standard No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141
prospectively prohibits the pooling of interest method of accounting for
business combinations initiated after June 30, 2001. SFAS No. 142
requires companies to cease amortizing goodwill that existed at June 30,
2001. The amortization of existing goodwill will cease on December 31,
2001. Any goodwill resulting from acquisitions completed after June 30,
2001 will not be amortized. SFAS No. 142 also establishes a new method
of testing goodwill for impairment on an annual basis or on an interim
basis if an event occurs or circumstances change that would reduce the
fair value of a reporting unit below its carrying value. The adoption of
SFAS No. 142 will result in the Companys discontinuation of
amortization of its goodwill; however, the Company will be required to
test its goodwill for impairment under the new
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents





| |  |  | standard beginning in the
first quarter of 2002, which could have an adverse effect on the
Companys future results of operations if an impairment occurs.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

Note 6.  Workforce Reduction Expense



| |  |  | During 2000, the Company recorded a pre-tax $2.5 million workforce
reduction charge related to terminating approximately 100
employees. During 2000, severance payments amounted to
approximately $0.9 million. During the first quarter of 2001, the
Company recorded a pre-tax workforce reduction charge of $5.0
million, and a pre-tax charge of $0.6 million in the second quarter
of 2001. These charges were related to the termination of
approximately 85 employees. Severance payments during the first
quarter of 2001 amounted to approximately $1.9 million and
severance payments during the second quarter of 2001 were
approximately $1.3 million. At June 30, 2001, approximately $4.0
million is outstanding and included in accrued liabilities.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 7.  Segment Reporting



| |  |  | In accordance with the requirements of SFAS No. 131, Disclosure About
Segments of an Enterprise and Related Information, the Company has
identified two reportable industry segments through which it conducts its
operating activities: Allied Automotive Group and Axis Group. These two
segments reflect the organization used by management for internal
reporting. Allied Automotive Group is engaged in the business of
transporting automobiles and light trucks from manufacturing plants,
ports, auctions, and railway distribution points to automobile
dealerships. Axis Group provides distribution, automobile inspection,
auction, and logistics services for the automotive industry.
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|-------------------------------- |  | ------------------ | ------- | ---------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                 |  | Three Months Ended |         | Six Months Ended
|                                 |  | June 30,           |         | June 30,        
|                                 |  |                    |         |                 
|                                 |  | 2001               |         | 2000             |  | 2001 |         | 2000
|                                 |  |                    |         |                  |  |      |         |     
|Revenuesunaffiliated customers: |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|                                
|                                
|                                
|                                
|Allied Automotive Group          |  | $                  | 242,790 |                  |  | $    | 286,385 |      |  | $ | 454,814 |   |  | $ | 563,368 |  
|                                
|                                
|                                
|                                
|Axis Group                       |  |                    | 7,405   |                  |  |      | 9,458   |      |  |   | 13,560  |   |  |   | 15,351  |  
|                                
|                                
|                                
|                                
|Corporate/other                  |  |                    |        |                  |  |      | 54      |      |  |   |        |   |  |   | 62      |  
|                                 |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|                                 |  | $                  | 250,195 |                  |  | $    | 295,897 |      |  | $ | 468,374 |   |  | $ | 578,781 |  
|                                 |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Depreciation and amortization:   |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|                                
|                                
|                                
|                                
|Allied Automotive Group          |  | $                  | 13,506  |                  |  | $    | 13,046  |      |  | $ | 26,789  |   |  | $ | 26,320  |  
|                                
|                                
|                                
|                                
|Axis Group                       |  |                    | 897     |                  |  |      | 813     |      |  |   | 1,791   |   |  |   | 1,441   |  
|                                
|                                
|                                
|                                
|Corporate/other                  |  |                    | 878     |                  |  |      | 1,534   |      |  |   | 1,725   |   |  |   | 2,874   |  
|                                 |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|                                 |  | $                  | 15,281  |                  |  | $    | 15,393  |      |  | $ | 30,305  |   |  | $ | 30,635  |  
|                                 |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Operating (loss) profit:         |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|                                
|                                
|                                
|                                
|Allied Automotive Group          |  | $                  | (922    | )                |  | $    | 18,446  |      |  | $ | (17,218 | ) |  | $ | 25,612  |  
|                                
|                                
|                                
|                                
|Axis Group                       |  |                    | 850     |                  |  |      | 441     |      |  |   | 398     |   |  |   | 138     |  
|                                
|                                
|                                
|                                
|Corporate/other                  |  |                    | (3,535  | )                |  |      | (1,691  | )    |  |   | (10,133 | ) |  |   | (4,490  | )
|                                 |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|                                 |  |                    | (3,607  | )                |  |      | 17,196  |      |  |   | (26,953 | ) |  |   | 21,260  |  

14



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|                                  |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |         |  
|--------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                  |  | Three Months Ended |        | Six Months Ended
|                                  |  | June 30,           |        | June 30,        
|                                  |  |                    |        |                 
|                                  |  | 2001               |        | 2000             |  | 2001 |        | 2000
|                                  |  |                    |        |                  |  |      |        |     
|                                 
|                                 
|                                 
|                                 
|Reconciling items:                |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |         |  
|                                 
|                                 
|                                 
|                                 
|Equity income in joint ventures   |  | $                  | 1,330  |                  |  | $    | 1,798  |      |  | $ | 2,539   |   |  | $ | 2,699   |  
|                                 
|                                 
|                                 
|                                 
|Gain (loss) on sale of assets     |  |                    | 2,576  |                  |  |      | 91     |      |  |   | 2,743   |   |  |   | (12     | )
|                                 
|                                 
|                                 
|                                 
|Interest expense                  |  |                    | (9,387 | )                |  |      | (8,348 | )    |  |   | (17,853 | ) |  |   | (16,749 | )
|                                 
|                                 
|                                 
|                                 
|Interest income                   |  |                    | 626    |                  |  |      | 689    |      |  |   | 1,590   |   |  |   | 2,009   |  
|                                  |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |         |  
|(Loss) income before income taxes |  | $                  | (8,462 | )                |  | $    | 11,426 |      |  | $ | (37,934 | ) |  | $ | 9,207   |  
|                                  |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |         |  
|Capital expenditures:             |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |         |  
|                                 
|                                 
|                                 
|                                 
|Allied Automotive Group           |  | $                  | 8,072  |                  |  | $    | 3,295  |      |  | $ | 15,060  |   |  | $ | 5,018   |  
|                                 
|                                 
|                                 
|                                 
|Axis Group                        |  |                    | 1,291  |                  |  |      | 480    |      |  |   | 1,815   |   |  |   | 924     |  
|                                 
|                                 
|                                 
|                                 
|Corporate/other                   |  |                    |       |                  |  |      | 2,063  |      |  |   | 67      |   |  |   | 3,137   |  
|                                  |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |         |  
|                                  |  | $                  | 9,363  |                  |  | $    | 5,838  |      |  | $ | 16,942  |   |  | $ | 9,079   |  
|                                  |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |         |  

|                        |  |          |         |             |  |   |         |  |  |  |  |  |  |  |  | 
|----------------------- |  | -------- | ------- | ----------- |  | - | ------- |  |  |  |  |  |  |  |  | 
|                        |  | June 30, |         | December 31 |  |   |         |  |  |  |  | 
|                        |  | 2001     |         | 2000       
|                        |  |          |         |            
|Total assets:           |  |          |         |             |  |   |         | 
|                       
|                       
|                       
|                       
|Allied Automotive Group |  | $        | 407,471 |             |  | $ | 437,945 | 
|                       
|                       
|                       
|                       
|Axis Group              |  |          | 64,076  |             |  |   | 64,869  | 
|                       
|                       
|                       
|                       
|Corporate/other         |  |          | 120,467 |             |  |   | 107,725 | 
|                        |  |          |         |             |  |   |         | 
|                        |  | $        | 592,014 |             |  | $ | 610,539 | 
|                        |  |          |         |             |  |   |         | 

Geographic financial information for 2001 and 2000 is as follows (in
thousands):

|              |  |                    |         |                  |  |      |         |      |  |   |         |  |  |   |         | 
|------------- |  | ------------------ | ------- | ---------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|              |  | Three Months Ended |         | Six Months Ended
|              |  | June 30,           |         | June 30         
|              |  |                    |         |                 
|              |  | 2001               |         | 2000             |  | 2001 |         | 2000
|              |  |                    |         |                  |  |      |         |     
|Revenues:     |  |                    |         |                  |  |      |         |      |  |   |         |  |  |   |         | 
|             
|             
|             
|             
|United States |  | $                  | 203,969 |                  |  | $    | 242,240 |      |  | $ | 385,267 |  |  | $ | 477,178 | 
|             
|             
|             
|             
|Canada        |  |                    | 46,226  |                  |  |      | 53,657  |      |  |   | 83,107  |  |  |   | 101,603 | 
|              |  |                    |         |                  |  |      |         |      |  |   |         |  |  |   |         | 
|              |  | $                  | 250,195 |                  |  | $    | 295,897 |      |  | $ | 468,374 |  |  | $ | 578,781 | 
|              |  |                    |         |                  |  |      |         |      |  |   |         |  |  |   |         | 

Note 8.  Equity Investments



| |  |  | Axis Group has entered into three joint ventures for the purpose of
managing the distribution of vehicles in the United Kingdom and Brazil.
Axis Group initially invested $10,395,000 in the ventures. The Company
is accounting for the investments under the equity method of accounting
with its share of the ventures earnings or loss reflected as equity in
earnings (loss) of joint ventures in the consolidated statements of
operations. The related equity investments are included in other assets
in the accompanying consolidated balance sheets.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Equity in earnings for these joint ventures is recorded net of income
taxes in the                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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| |  |                                                                                                                                                                                                                                                                                     
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidated statements of operations by the Company.
Income taxes related to the joint ventures for the six months ended June
30, 2001, and 2000 were $1,306,000 and $1,153,000, respectively.                                                                                     
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| |  | The majority of the Companys equity in earnings of joint ventures in
2001 was derived from its joint venture in the United Kingdom, Ansa
Logistics Limited. Summarized financial information of Ansa Logistics
Limited for the periods ended June 30, 2001 and 2000 (in thousands):

|                    |  |              |  |   |        |          |        |              |        |   |        | 
|------------------- |  | ------------ |  | - | ------ | -------- | ------ | ------------ | ------ | - | ------ | 
|                    |  |              |  |   |        | June 30, |        | December 31,
|                    |  |              |  |   |        | 2001     |        | 2000        
|                    |  |              |  |   |        |          |        |             
|Current assets      |  |              |  |   |        | $        | 35,079 |              |        | $ | 34,799 | 
|                   
|                   
|                   
|                   
|Other assets        |  |              |  |   |        |          | 4,022  |              |        |   | 5,019  | 
|                   
|                   
|                   
|                   
|                    |  |              |  |   |        |          |        |             
|                    |  | Total assets |  | $ | 39,101 |          |        | $            | 39,818 |  
|                   
|                   
|                   
|                   
|                    |  |              |  |   |        |          |        |             
|Current liabilities |  |              |  |   |        | $        | 26,289 |              |        | $ | 32,194 | 
|                    |  |              |  |   |        |          |        |             

|                                  |  |                    |        |                  |  |          |        |         |  |   |        |  |  |   |        | 
|--------------------------------- |  | ------------------ | ------ | ---------------- |  | -------- | ------ | ------- |  | - | ------ |  |  | - | ------ | 
|                                  |  | Three Months Ended |        | Six Months Ended
|                                  |  |                    |        |                  |  | June 30, |        | June 30 |  |   |        | 
|                                  |  | 2001               |        | 2000             |  | 2001     |        | 2000   
|                                  |  |                    |        |                  |  |          |        |        
|Revenues                          |  | $                  | 29,226 |                  |  | $        | 29,511 |         |  | $ | 57,597 |  |  | $ | 57,994 | 
|                                  |  |                    |        |                  |  |          |        |         |  |   |        |  |  |   |        | 
|Operating Income                  |  | $                  | 1,269  |                  |  | $        | 2,261  |         |  | $ | 5,007  |  |  | $ | 5,495  | 
|                                  |  |                    |        |                  |  |          |        |         |  |   |        |  |  |   |        | 
|Income from
continuing
operations |  | $                  | 1,348  |                  |  | $        | 2,261  |         |  | $ | 5,174  |  |  | $ | 5,495  | 
|                                  |  |                    |        |                  |  |          |        |         |  |   |        |  |  |   |        | 
|Net Income                        |  | $                  | 836    |                  |  | $        | 1,402  |         |  | $ | 3,208  |  |  | $ | 3,407  | 
|                                  |  |                    |        |                  |  |          |        |         |  |   |        |  |  |   |        | 

Note 9. Litigation

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company is routinely a party to litigation incidental to its
business, primarily involving claims for personal injury and property
damage incurred in the transportation of vehicles. The Company does not
believe that any of such pending litigation, if adversely determined,
would have a material adverse effect on the Company.                                                                                                                                                                                                                                                                                                                                    
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| |  | The Company is defending two pieces of related litigation in the Supreme
Court of Erie County, New York: Gateway Development & Manufacturing,
Inc. v. Commercial Carriers, Inc., et al., Index No. 1997/8920 (the
Gateway Case), and Commercial Carriers, Inc., v. Gateway
Development &
Manufacturing, Inc., et al. (the CCI Case), Index No. I2000/8184. The
claims at issue in both the Gateway Case and the CCI Case center around
the contention that the Company breached legal duties with respect to a
failed business transaction involving Gateway Development &
Manufacturing, Inc., Ryder Truck Rental, Inc., and Ryder System, Inc.
In the Gateway Case, the
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| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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| |  | Company has sought and received summary
judgment in its favor on the sole claim (for tortious interference with
contract) asserted against it by Gateway Development & Manufacturing,
Inc., but the court has permitted the filing and service of cross-claims against the Company by the other
defendants in that action. In the CCI Case, the Company has accepted service of a separate complaint asserting claims
against the Company that are virtually identical to the cross-claims
asserted against the Company by the other
defendants in the Gateway Case. It is anticipated that the claims
asserted in both the Gateway Case and the CCI Case will be resolved in a
unified proceeding. With respect to the entirety of this litigation,
the Company intends to continue its vigorous defense against the claims
asserted it, as management believes all of those claims are without
merit. While the ultimate results of this litigation cannot be
predicted, management does not expect that the resolution of these
proceedings will have a material adverse effect on the Companys
consolidated financial position or results of operations.

Note 10. Reclassifications

| |  |                                                                                                                             
| |  | ----------------------------------------------------------------------------------------------------------------------------
| |  | Certain amounts in the prior year financial statements have been
reclassified to conform with the current year presentation.

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

Results of Operations

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Revenues were $250.2 million for the second quarter of 2001 versus
revenues of $295.9 million for the second quarter of 2000, a decrease of
15.4%. For the six-month period ended June 30, 2001, revenues were $468.4
million, versus revenues of $578.8 million for the six-month period ended
June 30, 2000, a decrease of 19.1%. The decrease in revenues is
primarily due to lower vehicle delivery volumes resulting from reduced
new vehicle production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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| |  | The net loss was $5.7 million during the second quarter of 2001 versus
net income of $6.9 million during the second quarter of 2000. Basic and
diluted loss per share in the second quarter of 2001 were $0.71, versus
basic and diluted earnings per share of $0.87 in the second quarter of
2000. For the six-month period ended June 30, 2001, the net loss was
$24.6 million, versus net income of $5.9 million for the six-month ended
June 30, 2000. Basic and diluted loss per share for the six-month period
ended June 30, 2001 were $3.04 versus basic and diluted earnings per
share of $0.74 for the six-month period ended June 30, 2000.                                                                                                                                                                                                                                                                                  
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| |  | In April 2001 the Company amended its revolving credit facility and its
senior subordinated notes to avoid defaults relating to its financial
covenants. The maturity date of the amended revolving credit facility
has been accelerated from September 30, 2002 to January 31, 2002. The
Company is engaged in discussions with a number of lenders to replace its
revolving credit facility, and completion of the financing is anticipated
by year-end. The Company expensed approximately $0.5 million, or $0.6 per
share, of administrative costs related to the amendments during the first
quarter of 2001 and expensed approximately $1.0 million, or $0.12 per
share, of costs resulting from the amendments during the second quarter
of 2001.                                                                                                                                                                                
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| |  | As discussed above, the Company in April 2001 negotiated amendments to
certain affirmative, negative and financial covenants of the Revolving
Credit Facility and the Senior Subordinated Notes. As a result of the
amendments, the Company does not anticipate any covenant violations
during 2001. There can be no assurance, however, that the Company will
be able to comply with these or its other debt covenants or that, if it
fails to do so, it will be able to obtain amendments to or waivers of
such covenants. Failure of the Company to comply with covenants
contained in its debt instruments, if not waived, or to adequately
service debt obligations, could result in default under its debt
instruments. Any default under the Companys debt instruments,
particularly any default that results in acceleration of indebtedness or
foreclosure on collateral, could have a material adverse effect on the
Company.

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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| |  | The following is a discussion of the changes in the Companys major
expense categories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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| |  | Salaries, wages and fringe benefits increased from 52.1 % of revenues in
the second quarter of 2000 to 56.2 % of revenues in the second quarter of
2001, and from 53.4% of revenues for the first six months of 2000 to
58.1% of revenues for the first six months of 2001. The increase was due
in part to severance charged to expense of $4.3 million in the first
quarter of 2001 and $0.6 million in the second quarter of 2001 that was
part of the Companys workforce and overhead reduction program, as well
as annual wage increases for remaining employees. In addition, the
significant drop in vehicle deliveries caused operating inefficiencies
that increased salaries, wages, and fringe benefits as a percentage of
revenues.    
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| |  | Operating supplies and expenses decreased from 16.3% of revenues in the
second quarter of 2000 to 15.3% of revenues in the second quarter of
2001, and decreased from 17.3% for the first six months of 2000 to 17.0%
for the first six months of 2001. The decrease was due primarily to a
decrease in parts and maintenance expense related to vigorous expense
reduction programs and decreasing volumes, combined with lower fuel
costs.                                                                                                                                                                                                                                                                                                        
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| |  | Purchased transportation increased from 9.9% of revenues in the second
quarter of 2000 to 11.5% of revenues in the second quarter of 2001, and
increased from 9.8% of revenues for the first six months of 2000 to
11.1% of revenues for the first six months of 2001. As volumes decline,
units are hauled by drivers with the highest seniority. The number of
owner operators stayed relatively constant from year to year while the
number of company drivers decreased, resulting in higher purchased
transportation for 2001 compared to 2000.                                                                                                                                                                                                
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| |  | Insurance and claims expense increased from 4.4% of revenues in the
second quarter of 2000 to 5.5% of revenues in the second quarter of 2001,
and increased from 4.3% of revenue for the first six months of 2000 to
5.8% of revenues for the first six months of 2001. The increase was a
result of an increase in cargo claims expense and costs related to higher
auto, general liability and property insurance premiums that were
unaffected by the decline in vehicles delivered.                                                                                                                                                                                                                                                             
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| |  | Depreciation and amortization expense increased from 5.2% of revenues in
the second quarter of 2000 to 6.1% of revenues in the second quarter of
2001, and increased from 5.3% of revenues for the first six months of
2000 to 6.5% of revenues for the first six months of 2001. The increase
as a percentage of revenues was due primarily to a sharp decline in
vehicles delivered which reduced revenues. Depreciation and amortization
expense stayed relatively constant in 2001 versus 2000; depreciation and
amortization expense was $15.3 million in the second quarter of 2001 and
$15.4 million in the second quarter of 2000, and $30.3 million for the
first six months of 2001 versus $30.6 million for the first six months of
2000.
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| |  | Gain on sale of assets increased from $91,000 in the second quarter of
2000 to $2,576,000 in the second quarter of 2001, and increased from a
loss of $12,000 for the first six months of 2000 to a gain of $2,743,000
for the first six months of 2001. The increase was due primarily to the
disposition of excess real estate and other assets in Canada during the
second quarter of 2001.                                                                                                                                                                                                                                                                                                                                                      

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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| |  | Interest expense increased from 2.8% of revenues during the second
quarter of 2000 to 3.8% of revenues in the second quarter of 2001, and
increased from 2.9% of revenues for the first six months of 2000 to 3.8%
of revenues for the first six months of 2001. The increase was due to
higher interest rates in 2001 versus 2000, higher long-term debt levels
and additional costs related to the amendment of the Companys revolving
credit facility and its senior subordinated notes.

Financial Condition, Liquidity and Capital Resources

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net cash provided by operating activities totaled $16.6 million for the
six-month period ended June 30, 2001, versus $27.1 million provided by
operating activities for the six-month period ended June 30, 2000. The
decline in cash provided by operating activities was due primarily to
reduced earnings during the first six months of 2001 versus 2000, offset
with a favorable change in operating assets and liabilities as the
Company has implemented measures to improve asset utilization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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| |  | Net cash used in investing activities totaled $15.5 million for the
six-month period ended June 30, 2001, versus $29.3 million for the
six-month period ended June 30, 2000. The decrease was due primarily to
the purchase of CT Group, a logistics service group, in February 2000 for
$8.2 million, combined with a change in the investment portfolio mix of
the Companys captive insurance company which increased short-term
investments by $11.9 million and reduced cash and cash equivalents by a
like amount in 2000. These changes were offset by an increase in capital
spending in the first six months of 2001 versus 2000. The increase is due
to the timing of capital expenditures. In 2000, capital expenditures of
$32.3 million were weighted to the last half of the year. Planned capital
expenditures have been reduced to $20-25 million for 2001. As vehicle
delivery volumes have declined, older rigs have been taken out of service
and not replaced, which will allow the Company to reduce capital
expenditures without materially increasing the average age of the fleet.
The number of active rigs declined from 4,867 rigs in the second quarter
of 2000 to 4,222 rigs in the second quarter of 2001.
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| |  | Net cash provided by financing activities totaled $11.4 million for the
six-month period ended June 30, 2001, versus cash used by financing
activities of $6.8 million for the six-month period ended June 30, 2000.
The increase was due to an increase in borrowings during 2001 as a result
of the lower operating cash flow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        




Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Disclosures About Market Risks

| |  |                                                                                                                                                                                                                                                
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The market risk inherent in the Companys market risk sensitive
instruments and positions is the potential loss arising from adverse
changes in short-term investment prices, interest rates, fuel prices, and
foreign currency exchange rates.

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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| |  | Short-term Investments The Company does not use derivative financial
instruments in its investment portfolio. The Company places its
investments in instruments that meet high credit quality standards, as
specified in the Companys investment policy guidelines. The policy also
limits the amount of credit exposure to any one issue, issuer, and type
of instrument. Short-term investments at June 30, 2001, which are
recorded at fair value of $62.5 million, have exposure to price risk.
This risk is estimated as the potential loss in fair value resulting from
a hypothetical 10% adverse change in quoted prices and amounts to $6.3
million.                                                                                                                                                                                                                                                                                                             
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| |  | Interest Rates The Company primarily issues long-term debt obligations
to support general corporate purposes including capital expenditures and
working capital needs. The majority of the Companys long-term debt
obligations bear a fixed rate of interest. A one-percentage point
increase in interest rates affecting the Companys floating rate
long-term debt would reduce pre-tax income by $1.5 million over the next
fiscal year. A one-percentage point change in interest rates would not
have a material effect on the fair value of the Companys fixed rate
long-term debt.                                                                                                                                                                                                                                                                                                                                                                                
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| |  | Fuel Prices The Company is dependent on diesel fuel to operate its
fleet of rigs. Diesel fuel prices are subject to fluctuations due to
unpredictable factors such as weather, government policies, changes in
global demand, and global production. To reduce price risk caused by
market fluctuations, the Company generally follows a policy of hedging a
portion of its anticipated diesel fuel consumption. The instruments used
are principally readily marketable exchange traded futures contracts that
are designated as hedges. The changes in market value of such contracts
have a high correlation to the price changes of diesel fuel. Gains and
losses resulting from fuel hedging transactions are recognized when the
underlying fuel being hedged is used. A 10% increase in diesel fuel
prices would reduce pre-tax income by $5.0 million over the next fiscal
year. At June 30, 2001, the Company did not have any outstanding fuel
hedging contracts.
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| |  | Foreign Currency Exchange Rates Although the majority of the Companys
operations are in the United States, the Company does have foreign
subsidiaries (primarily Canada). The net investments in foreign
subsidiaries translated into dollars using exchange rates at June 30,
2001, are $100.5 million. The potential loss in fair value impacting
other comprehensive income resulting from a hypothetical 10% change in
quoted foreign currency exchange rates amounts to $10.1 million. The
Company does not use derivative financial instruments to hedge its
exposure to changes in foreign currency exchange rates.                                                                                                                                                                                                                                                                                                                                                
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| |  | Seasonality and Inflation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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| |  | The Companys revenues are seasonal, with the second and fourth quarters
generally experiencing higher revenues than the first and third quarters.
The volume of vehicles shipped during the second and fourth quarters is
generally higher due to the introduction of new models which are shipped
to dealers during those periods and the higher spring and early summer
sales of automobiles and light trucks. During the first and third                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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| |  | quarters, vehicle shipments typically decline due to lower sales volume
during those periods and scheduled plant shut downs. Inflation has not
significantly affected the Companys results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
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| |  | Cautionary Notice Regarding Forward-Looking Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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| |  | Statements in this quarterly report on Form 10-Q contains forward-looking
statements, including statements regarding, among other items, (i) the
Companys plans, intentions or expectations, (ii) general industry
trends, competitive conditions and customer preferences, (iii) the
Companys management information systems, and its ability to resolve any
Year 2000 issues related thereto (iv) the Companys efforts to reduce
costs, (v) the adequacy of the Companys sources of cash to finance its
current and future operations and (vi) resolution of litigation without
material adverse effect on the Company. This notice is intended to take
advantage of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to such forward-looking
statements. These forward-looking statements involve a number of risks
and uncertainties. Among others, factors that could cause actual results
to differ materially are the following: economic recessions or downturns
in new vehicle production or sales; the highly competitive nature of the
automotive distribution industry; dependence on the automotive industry;
loss or reduction of revenues generated by the Companys major customers;
the variability of quarterly results and seasonality of the automotive
distribution industry; labor disputes involving the Company or its
significant customers; the dependence on key personnel who have been
hired or retained by the Company; the availability of strategic
acquisitions or joint venture partners; changes in regulatory
requirements which are applicable to the Companys business; changes in
vehicle sizes and weights which may adversely impact vehicle deliveries
per load; the ability to increase the rates charged to customers; risks
associated with doing business in foreign countries; problems related to
information technology systems and computations that must be made by the
Company or its customers and vendors in 2000, 2001 or beyond; and the
risk factors listed herein from time to time in the Companys Securities
and Exchange Commission reports, including but not limited to, its Annual
Reports on Form 10-K or 10-Q.

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##### Table of Contents






PART II




OTHER INFORMATION




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

On May 15, 2001 the Annual Meeting of Shareholders was held. The following
Directors were elected for terms that will expire on the date of the annual
meeting in the year indicated below. The number of shares voted for, against
and abstentions are also indicated.

Proposal I (Election of Directors)

|                      |  |     |           |         |  |      |         |  |  |  |      | 
|--------------------- |  | --- | --------- | ------- |  | ---- | ------- |  |  |  | ---- | 
|                      |  | FOR |           | AGAINST |  | TERM
|                      |  |     |           |         |  |     
|Joseph W. Collier     |  |     | 5,897,245 |         |  |      | 80,537  |  |  |  | 2004 | 
|                     
|                     
|                     
|                     
|Guy W. Rutland, IV    |  |     | 5,867,672 |         |  |      | 110,110 |  |  |  | 2004 | 
|                     
|                     
|                     
|                     
|Berner F. Wilson, Jr. |  |     | 5,902,905 |         |  |      | 74,876  |  |  |  | 2004 | 

The following Directors terms will continue as indicated.

|                    |  |  |      | 
|------------------- |  |  | ---- | 
|Robert J. Rutland   |  |  | 2003 | 
|                   
|                   
|                   
|                   
|William P. Benton   |  |  | 2003 | 
|                   
|                   
|                   
|                   
|David G. Bannister  |  |  | 2003 | 
|                   
|                   
|                   
|                   
|Bernard O. De Wulf  |  |  | 2002 | 
|                   
|                   
|                   
|                   
|Guy W. Rutland, III |  |  | 2002 | 
|                   
|                   
|                   
|                   
|Robert R. Woodson   |  |  | 2002 | 
|                   
|                   
|                   
|                   
|Hugh E. Sawyer      |  |  | 2003 | 

Proposal II (Amend the Companys Employee Stock Purchase Plan to increase the
number of shares subject to the Plan by 350,000)

|          |  |         |         |         |  |  |        | 
|--------- |  | ------- | ------- | ------- |  |  | ------ | 
|FOR       |  | AGAINST |         | ABSTAIN
|          |  |         |         |        
|6,338,666 |  |         | 144,620 |         |  |  | 10,317 | 

Proposal III (To appoint Arthur Andersen LLP as independent public accountants)

|          |  |         |        |         |  |  |       | 
|--------- |  | ------- | ------ | ------- |  |  | ----- | 
|FOR       |  | AGAINST |        | ABSTAIN
|          |  |         |        |        
|6,454,218 |  |         | 37,560 |         |  |  | 1,824 | 




Item 5.    Other Information.

On June 18, 2001, Hugh E. Sawyer joined the Company as President and Chief
Executive Officer and as a member of the Board of Directors. Mr. Sawyer
entered into an employment agreement with the Company which is included as an
exhibit to this report.

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##### Table of Contents



On July 13, 2001, the Company announced that it had been advised by the New
York Stock Exchange (NYSE) that the Company currently falls below the
continued listing standard requiring stockholders equity of not less than $50
million and total market capitalization of not less than $50 million.

As required by the NYSE, Allied has submitted a detailed plan to the Listing
and Compliance Committee of the NYSE demonstrating how the Company plans to be
in compliance with the continued listing standard on or before November 29,
2002, the deadline set by the NYSE. Based on internal estimates, and execution
of planned corporation transactions, Allied believes it will satisfy the
continued listing standard by the NYSE deadline. After reviewing the plan, the
Committee will either accept it (following which the Company will be subject to
quarterly monitoring for compliance with the plan) or not (in which event the
Company will be subject to NYSE trading suspension and delisting). Should the
Companys shares cease being traded on the NYSE, the Company believes that an
alternative trading venue will be available.




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

|   |  |                                                                                              
|-- |  | ---------------------------------------------------------------------------------------------
|a) |  | Exhibits
10.1 Employment agreement between the Company and Hugh E. Sawyer
Dated June 18, 2001
|  
|  
|  
|  
|b) |  | Reports on Form 8-K: None                                                                    

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SIGNATURES

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

|                      |  |                                                                                                                         
|--------------------- |  | ------------------------------------------------------------------------------------------------------------------------
|                      |  | Allied Holdings, Inc.                                                                                                   
|                     
|August 14, 2001(Date) |  | /s/ Hugh E. SawyerHugh E. Sawyer
on behalf of Registrant as President and
Chief Executive Officer                       
|                     
|August 14, 2001(Date) |  | /s/ Daniel H. PopkyDaniel H. Popky
on behalf of Registrant as Senior Vice President, Finance and Chief Financial Officer

25