##### Table of Contents



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

FORM 10-Q

|    |  |                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934  For the quarterly period ended September 30, 2002

or

|      |  |                                                                                                                                                                            
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934  For the transition period from ______
to ______.Commission File Number: 0-22276

|                                                      
|------------------------------------------------------
|ALLIED HOLDINGS, INC.                                 
|                                                      
|(Exact name of registrant as specified in its charter)

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

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

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

|                                                                                  
|----------------------------------------------------------------------------------
|                                                                                  
|(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 report(s), and (2) has been subject to
such filing requirements for the past 90 days. [X] Yes [ ] No

Outstanding common stock, No par value at October 31, 2002.......................... 8,421,318





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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|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                           
|Item 4. Controls and Procedures                                                              
|Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                                                                                   
|CERTIFICATIONS                                                                               
|EX-10.1 AMENDMENT NO. 2 AGREEMENT                                                            



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##### Table of Contents



INDEX

PART 1

FINANCIAL INFORMATION

|       |                                                                                                              |                      |      | 
|------ | ------------------------------------------------------------------------------------------------------------ | -------------------- | ---- | 
|       |                                                                                                              |                      | PAGE
|       |                                                                                                              |                      |      | 
|ITEM 1 |                                                                                                              | FINANCIAL STATEMENTS |      | 
|       |                                                                                                              |                      |      | 
|       | Consolidated Balance Sheets as of September 30, 2002 and
December 31, 2001                                   |                      | 3   
|       |                                                                                                              |                      |      | 
|       | Consolidated Statements of Operations for the Three and Nine
Month Periods Ended September 30, 2002 and 2001 |                      | 4   
|       |                                                                                                              |                      |      | 
|       | Consolidated Statements of Cash Flows for the Nine
Month Periods Ended September 30, 2002 and 2001           |                      | 5   
|       |                                                                                                              |                      |      | 
|       | Notes to Consolidated Financial Statements                                                                   |                      | 6   
|       |                                                                                                              |                      |      | 
|ITEM 2 |                                                                                                              |                      |      | 
|       |                                                                                                              |                      |      | 
|       | Managements Discussion and Analysis of Financial
Condition and Results of Operations                        |                      | 21  
|       |                                                                                                              |                      |      | 
|ITEM 3 |                                                                                                              |                      |      | 
|       |                                                                                                              |                      |      | 
|       | Quantitative and Qualitative Disclosures about Market Risk                                                   |                      | 28  
|       |                                                                                                              |                      |      | 
|ITEM 4 |                                                                                                              |                      |      | 
|       |                                                                                                              |                      |      | 
|       | Controls and Procedures                                                                                      |                      | 28  
|       |                                                                                                              |                      |      | 
|       |                                                                                                              | PART II              |      | 
|       |                                                                                                              |                      |      | 
|       |                                                                                                              | OTHER INFORMATION    |      | 
|       |                                                                                                              |                      |      | 
|ITEM 6 |                                                                                                              |                      |      | 
|       |                                                                                                              |                      |      | 
|       | Exhibits and Reports on Form 8-K                                                                             |                      | 30  
|       | Signature Page                                                                                               |                      | 31  
|       | Certifications                                                                                               |                      | 32  

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)

|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |              |   |         |  | 
|------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------ | ------- | - | ------------- | ------- | ------------ | - | ------- |  | 
|                                            |                                                                                                                                                    |  |                                            |         |   | September 30, |         | December 31,
|                                            |                                                                                                                                                    |  |                                            |         |   | 2002          |         | 2001        
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  |                                            |         |   | (Unaudited)   |         |              |   |        
|ASSETS                                      |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |              |   |         |  | 
|CURRENT ASSETS:                             |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            | Cash and cash equivalents                                                                                                                          |  | $                                          | 24,925  |   |               | $       | 10,543       |  
|                                            | Short-term investments                                                                                                                             |  |                                            | 62,427  |   |               |         | 64,794       |  
|                                            | Receivables, net of allowance for doubtful accounts of
$5,538 and $11,058, respectively                                                            |  |                                            | 60,112  |   |               |         | 72,292       |  
|                                            | Inventories                                                                                                                                        |  |                                            | 5,301   |   |               |         | 5,349        |  
|                                            | Deferred tax assets                                                                                                                                |  |                                            | 38,344  |   |               |         | 32,403       |  
|                                            | Prepayments and other current assets                                                                                                               |  |                                            | 17,384  |   |               |         | 18,921       |  
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  | Total current assets                       |         |   | 208,493       |         |              |   | 204,302 | 
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|PROPERTY AND EQUIPMENT, NET                 |                                                                                                                                                    |  | 185,212                                    |         |   |               | 214,641 |             
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|OTHER ASSETS:                               |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            | Goodwill, net                                                                                                                                      |  |                                            | 85,212  |   |               |         | 90,230       |  
|                                            | Other                                                                                                                                              |  |                                            | 23,650  |   |               |         | 24,219       |  
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  | Total other assets                         |         |   | 108,862       |         |              |   | 114,449 | 
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  | Total assets                               |         | $ | 502,567       |         |              | $ | 533,392 | 
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|LIABILITIES AND STOCKHOLDERS EQUITY        |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |              |   |         |  | 
|CURRENT LIABILITIES:                        |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            | Current maturities of long-term debt                                                                                                               |  | $                                          | 3,500   |   |               | $       | 2,625        |  
|                                            | Trade accounts payable                                                                                                                             |  |                                            | 36,212  |   |               |         | 40,232       |  
|                                            | Accrued liabilities                                                                                                                                |  |                                            | 89,435  |   |               |         | 82,963       |  
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  | Total current liabilities                  |         |   | 129,147       |         |              |   | 125,820 | 
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|LONG-TERM DEBT, less current maturities     |                                                                                                                                                    |  | 257,660                                    |         |   |               | 286,533 |             
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|POSTRETIREMENT BENEFITS OTHER THAN PENSIONS |                                                                                                                                                    |  | 9,024                                      |         |   |               | 9,363   |             
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|DEFERRED INCOME TAXES                       |                                                                                                                                                    |  | 23,743                                     |         |   |               | 21,383  |             
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|OTHER LONG-TERM LIABILITIES                 |                                                                                                                                                    |  | 74,378                                     |         |   |               | 72,296  |             
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|STOCKHOLDERS EQUITY:                       |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            | Common stock, no par value; 20,000 shares authorized, 8,385
and 8,274 shares outstanding at September 30, 2002
and December 31, 2001, respectively |  |                                            |        |   |               |         |             |  
|                                            | Additional paid-in capital                                                                                                                         |  |                                            | 46,572  |   |               |         | 46,520       |  
|                                            | Treasury stock at cost, 139 shares at September 30, 2002
and December 31, 2001                                                                     |  |                                            | (707    | ) |               |         | (707         | )
|                                            | Retained deficit                                                                                                                                   |  |                                            | (28,515 | ) |               |         | (18,894      | )
|                                            | Accumulated other comprehensive loss, net of tax                                                                                                   |  |                                            | (8,735  | ) |               |         | (8,922       | )
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  | Total stockholders equity                 |         |   | 8,615         |         |              |   | 17,997  | 
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             
|                                            |                                                                                                                                                    |  | Total liabilities and stockholders equity |         | $ | 502,567       |         |              | $ | 533,392 | 
|                                            |                                                                                                                                                    |  |                                            |         |   |               |         |             

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)
(Unaudited)

|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |         |         |  
|------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------------------------ | ------- | -------------------------- | ------- | ------------------------- | -------- | ------- | ------- | ---- | ------- | ------- | ------- | - | -------- | ------- | ------- | -
|                                                                                      |                                                                |                          |         | For the Three Months Ended |         | For the Nine Months Ended
|                                                                                      |                                                                |                          |         | September 30,              |         | September 30,            
|                                                                                      |                                                                |                          |         |                           
|                                                                                      |                                                                |                          |         | 2002                       |         | 2001                      |          | 2002    |         | 2001
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |     
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |         |         |  
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |         |         |  
|REVENUES                                                                              |                                                                | $                        | 212,985 |                            |         | $                         | 204,010  |         |         | $    | 665,228 |         |         | $ | 672,384  |        
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|OPERATING EXPENSES:                                                                   |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|                                                                                      | Salaries, wages and fringe benefits                            |                          |         | 117,804                    |         |                           |          | 118,700 |         |      |         | 363,853 |         |   |          | 391,006 |        
|                                                                                      | Operating supplies and expenses                                |                          |         | 33,257                     |         |                           |          | 33,810  |         |      |         | 100,068 |         |   |          | 115,147 |        
|                                                                                      | Purchased transportation                                       |                          |         | 25,331                     |         |                           |          | 23,228  |         |      |         | 72,438  |         |   |          | 75,190  |        
|                                                                                      | Insurance and claims                                           |                          |         | 10,844                     |         |                           |          | 10,531  |         |      |         | 34,344  |         |   |          | 37,588  |        
|                                                                                      | Operating taxes and licenses                                   |                          |         | 7,638                      |         |                           |          | 7,857   |         |      |         | 24,731  |         |   |          | 24,990  |        
|                                                                                      | Depreciation and amortization                                  |                          |         | 13,142                     |         |                           |          | 15,145  |         |      |         | 40,087  |         |   |          | 45,450  |        
|                                                                                      | Rents                                                          |                          |         | 1,685                      |         |                           |          | 1,691   |         |      |         | 4,895   |         |   |          | 5,353   |        
|                                                                                      | Communications and utilities                                   |                          |         | 1,425                      |         |                           |          | 1,300   |         |      |         | 5,290   |         |   |          | 5,252   |        
|                                                                                      | Other operating expenses                                       |                          |         | 2,892                      |         |                           |          | 3,295   |         |      |         | 7,607   |         |   |          | 10,908  |        
|                                                                                      | Loss (gain) on disposal of operating assets, net               |                          |         | 367                        |         |                           |          | 24      |         |      |         | (347    | )       |   |          | (2,719  | )      
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|                                                                                      |                                                                | Total operating expenses |         |                            | 214,385 |                           |          |         | 215,581 |      |         |         | 652,966 |   |          |         | 708,165 |  
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|                                                                                      |                                                                | Operating (loss) income  |         |                            | (1,400  | )                         |          |         | (11,571 | )    |         |         | 12,262  |   |          |         | (35,781 | )
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|OTHER INCOME (EXPENSE):                                                               |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|                                                                                      | Equity in earnings of UK and Brazil joint ventures, net of tax |                          |         |                           |         |                           |          | 1,054   |         |      |         |        |         |   |          | 3,593   |        
|                                                                                      | Interest expense                                               |                          |         | (7,611                     | )       |                           |          | (9,141  | )       |      |         | (23,343 | )       |   |          | (26,994 | )      
|                                                                                      | Interest income                                                |                          |         | 203                        |         |                           |          | 424     |         |      |         | 1,090   |         |   |          | 2,014   |        
|                                                                                      | Gain on early extinguishment of debt                           |                          |         |                           |         |                           |          |        |         |      |         | 2,750   |         |   |          |        |        
|                                                                                      | Other, net                                                     |                          |         | 100                        |         |                           |          |        |         |      |         | (107    | )       |   |          |        |        
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|                                                                                      |                                                                |                          | (7,308  | )                          |         |                           | (7,663   | )       |         |      | (19,610 | )       |         |   | (21,387  | )      
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|LOSS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE      |                                                                |                          | (8,708  | )                          |         |                           | (19,234  | )       |         |      | (7,348  | )       |         |   | (57,168  | )      
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |         |         |  
|INCOME TAX BENEFIT                                                                    |                                                                |                          | 2,226   |                            |         |                           | 6,588    |         |         |      | 1,819   |         |         |   | 19,944   |        
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|LOSS BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE                       |                                                                |                          | (6,482  | )                          |         |                           | (12,646  | )       |         |      | (5,529  | )       |         |   | (37,224  | )      
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |         |         |  
|CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE,
NET OF TAX                       |                                                                |                          |        |                            |         |                           |         |         |         |      | (4,092  | )       |         |   |         |        
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|NET LOSS                                                                              |                                                                |                          | ($6,482 | )                          |         |                           | ($12,646 | )       |         |      | ($9,621 | )       |         |   | ($37,224 | )      
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|BASIC & DILUTED LOSS PER COMMON SHARE:                                                |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |         |         |  
|LOSS BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE    BASIC AND DILUTED |                                                                |                          | ($0.78  | )                          |         |                           | ($1.56   | )       |         |      | ($0.67  | )       |         |   | ($4.60   | )      
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |         |         |  
|CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET OF TAX    BASIC AND DILUTED |                                                                |                          |        |                            |         |                           |         |         |         |      | ($0.49  | )       |         |   |         |        
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|PER COMMON SHARE    BASIC AND DILUTED                                                |                                                                |                          | ($0.78  | )                          |         |                           | ($1.56   | )       |         |      | ($1.16  | )       |         |   | ($4.60   | )      
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                            |                                                                |                          | 8,324   |                            |         |                           | 8,114    |         |         |      | 8,282   |         |         |   | 8,096    |        
|                                                                                      |                                                                |                          |         |                            |         |                           |          |         |         |      |         |         |         |   |          |        

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

4



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##### Table of Contents



ALLIED HOLDINGS, INC. AND SUBSIDIARIES







CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |             |         |        |         |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------ | ------------------------- | ------- | ----------- | ------- | ------ | ------- | -
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        | For the Nine Months Ended
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        | September 30,            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        | 2002                      |         | 2001       
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        | (Unaudited)               |         | (Unaudited)
|CASH FLOWS FROM OPERATING ACTIVITIES:                        |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             | Net loss                                                                        |                                                          |                                                     | ($9,621                                             | )      |                           |         | ($37,224    | )      
|                                                             | Adjustments to reconcile net loss to net
cash provided by operating activities: |                                                          |                                                     |                                                     |        |                           |         |             |        
|                                                             |                                                                                 | Gain on early extinguishment of debt                     |                                                     |                                                     | (2,750 | )                         |         |             |        |       
|                                                             |                                                                                 | Interest expense paid in kind                            |                                                     |                                                     | 746    |                           |         |             |        |       
|                                                             |                                                                                 | Amortization of deferred financing costs                 |                                                     |                                                     | 3,013  |                           |         |             | 2,906   |       
|                                                             |                                                                                 | Depreciation and amortization                            |                                                     |                                                     | 40,087 |                           |         |             | 45,450  |       
|                                                             |                                                                                 | Gain on disposal of assets and other, net                |                                                     |                                                     | (240   | )                         |         |             | (2,719  | )     
|                                                             |                                                                                 | Cumulative effect of change in accounting principle      |                                                     |                                                     | 5,194  |                           |         |             |        |       
|                                                             |                                                                                 | Deferred income taxes                                    |                                                     |                                                     | (3,671 | )                         |         |             | (19,377 | )     
|                                                             |                                                                                 | Compensation expense related to stock options and grants |                                                     |                                                     | (210   | )                         |         |             | 207     |       
|                                                             |                                                                                 | Equity in earnings of joint ventures                     |                                                     |                                                     |       |                           |         |             | (3,593  | )     
|                                                             |                                                                                 | Amortization of Teamsters Union contract costs           |                                                     |                                                     | 1,800  |                           |         |             | 1,802   |       
|                                                             |                                                                                 | Change in operating assets and liabilities:              |                                                     |                                                     |        |                           |         |             |         |       
|                                                             |                                                                                 |                                                          | Receivables, net of allowance for doubtful accounts |                                                     |        | 12,276                    |         |             |         | 18,190 |        
|                                                             |                                                                                 |                                                          | Inventories                                         |                                                     |        | 55                        |         |             |         | 720    |        
|                                                             |                                                                                 |                                                          | Prepayments and other current assets                |                                                     |        | 1,556                     |         |             |         | (822   | )      
|                                                             |                                                                                 |                                                          | Trade accounts payable                              |                                                     |        | (4,057                    | )       |             |         | (7,021 | )      
|                                                             |                                                                                 |                                                          | Accrued liabilities                                 |                                                     |        | 8,533                     |         |             |         | 6,028  |        
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             |                                                                                 |                                                          |                                                     | Total adjustments                                   |        |                           | 62,332  |             |         |        | 41,771  |  
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             |                                                                                 |                                                          |                                                     | Net cash provided by operating activities           |        |                           | 52,711  |             |         |        | 4,547   |  
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |             |         |        |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             | Purchases of property and equipment                                             |                                                          |                                                     | (13,313                                             | )      |                           |         | (18,274     | )      
|                                                             | Proceeds from sale of property and equipment                                    |                                                          |                                                     | 3,005                                               |        |                           |         | 4,832       |        
|                                                             | Investment in joint ventures                                                    |                                                          |                                                     |                                                    |        |                           |         | (464        | )      
|                                                             | Cash received from joint ventures                                               |                                                          |                                                     |                                                    |        |                           |         | 3,578       |        
|                                                             | Proceeds from sale of equity investment in joint venture                        |                                                          |                                                     | 2,700                                               |        |                           |         |            |        
|                                                             | Decrease (increase) in short-term investments                                   |                                                          |                                                     | 2,367                                               |        |                           |         | (4,864      | )      
|                                                             | Decrease (increase) in the cash surrender value of life insurance               |                                                          |                                                     | 1,341                                               |        |                           |         | (360        | )      
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             |                                                                                 |                                                          |                                                     | Net cash used in investing activities               |        |                           | (3,900  | )           |         |        | (15,552 | )
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |             |         |        |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             | (Repayments) additions to revolving credit facilities, net                      |                                                          |                                                     | (62,384                                             | )      |                           |         | 23,587      |        
|                                                             | Additions to long-term debt                                                     |                                                          |                                                     | 82,750                                              |        |                           |         |            |        
|                                                             | Repayment of long-term debt                                                     |                                                          |                                                     | (46,360                                             | )      |                           |         | (107        | )      
|                                                             | Payment of deferred financing costs                                             |                                                          |                                                     | (9,262                                              | )      |                           |         | (2,663      | )      
|                                                             | Proceeds from issuance of common stock                                          |                                                          |                                                     | 262                                                 |        |                           |         | 303         |        
|                                                             | Other, net                                                                      |                                                          |                                                     | 549                                                 |        |                           |         | (307        | )      
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             |                                                                                 |                                                          |                                                     | Net cash (used in) provided by financing activities |        |                           | (34,445 | )           |         |        | 20,813  |  
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |             |         |        |         |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS |                                                                                 |                                                          | 16                                                  |                                                     |        |                           | 68      |            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |             |         |        |         |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                    |                                                                                 |                                                          | 14,382                                              |                                                     |        |                           | 9,876   |            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |             |         |        |         |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               |                                                                                 |                                                          | 10,543                                              |                                                     |        |                           | 2,373   |            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                   |                                                                                 | $                                                        | 24,925                                              |                                                     |        | $                         | 12,249  |            
|                                                             |                                                                                 |                                                          |                                                     |                                                     |        |                           |         |            

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

5



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##### Table of Contents









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



|1. |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | 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 of America 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 nine month periods ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2002. 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
2001 Annual Report on Form 10-K.
|  
|   |  | Certain amounts in the prior year financial statements have been
reclassified to conform to the current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|2. |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements.
Estimates also affect the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|3. |  | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income, requires companies to report all changes in equity
during a period, except those resulting from investment by stockholders
and distribution to stockholders. The Company had a comprehensive loss of
$8.2 million for the third quarter of 2002 versus a comprehensive loss of
$11.9 million for the third quarter of 2001. For the first nine months of
2002, the Company had a comprehensive loss of $9.4 million, versus a
comprehensive loss of $38.5 million for the first nine months of 2001.
The difference between comprehensive income and net income is the foreign
currency translation adjustment net of income taxes.                                                                                                                                                                                                                                                                                                                                   
|  
|4. |  | Accounting for Derivative Instruments and Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended, establishes accounting and reporting standards
required 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.                                                                                                                                                                                                                                                      

6



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|   |  | 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. During 2001, Allied Automotive
Group entered into a forward purchase commitment to purchase one million
gallons of low sulfur diesel fuel per month at determinable prices defined
within the agreement. This agreement expired in August 2002 and the
Company is evaluating additional forward purchase commitments. The
Company does not enter into fuel hedging contracts for speculative
purposes. At September 30, 2002, the Company did not have any outstanding
fuel hedging contracts or other derivative instruments that fall under the
provisions of SFAS No. 133 as amended by SFAS No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|5. |  | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | In June 2001, the Financial Accounting Standards Board (FASB), issued
SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and
Other Intangible Assets. SFAS No. 141 prospectively prohibits the
pooling-of-interests 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 Company adopted
SFAS No. 142 effective January 1, 2002. For information regarding
goodwill and the impact of adoption of SFAS No. 142 had on the Companys
consolidated financial statements, refer to Note 6. SFAS No. 141 did not
impact the earnings or financial position of the Company.                                                                                                                                                                                                                                         
|  
|   |  | In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which addresses accounting and reporting for
asset retirement costs of long-lived assets resulting from legal
obligations associated with acquisition, construction, or development
transactions. The Company plans to adopt SFAS No. 143 in the first
quarter of fiscal year 2003. Management will evaluate the impact of the
adoption of this standard on the consolidated financial statement during
the fourth quarter of fiscal year 2002.                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which clarifies accounting
and reporting for assets held for sale, scheduled for abandonment or other
disposal, and recognition of impairment loss related to the carrying value
of long-lived assets. The Company adopted this standard on January 1,
2002 and there was no impact on the financial position or results of
operations of the Company as of the date of the adoption.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. The Statement updates, clarifies and simplifies
existing accounting pronouncements. The Statement requires that in
certain circumstances previous items classified as extraordinary that do
not meet the criteria in Opinion 30 must be reclassified. The Statement
is effective for fiscal years beginning after May 15, 2002. The Company
elected early adoption of the standard. Accordingly, the after-tax gain
on early extinguishment of debt that was reported as an extraordinary item
in the first quarter of 2002 has been reclassified and is currently
reported as other income.                                                                                                                                                                                                   
|  
|   |  | In July 2002, the FASB issued SFAS No. 146, Accounting for Cost
Associated with Exit or Disposal Activities. The Statement addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to
Exit an Activity (including Certain Costs Incurred in a Restructuring).
This Statement requires recognition of a liability for a cost associated
with an exit or disposal activity when the liability is incurred, as
opposed to when the entity commits to an exit plan under EITF No. 94-3.
The Statement is effective prospectively for exit or disposal activities
initiated                                                                                                                                                                                                                     

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|   |  | after December 31, 2002. Management does not anticipate that the
Statement will have a material impact on the financial position or results
of operations of the Company as of the date of adoption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|6. |  | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | In accordance with SFAS No. 142, the Company no longer amortizes goodwill
but will review it annually for impairment, or on an interim basis if an
event occurs or circumstances change that would reduce the fair value of
goodwill below its carrying value. Pursuant to the adoption of SFAS No.
142, the Company evaluated its reporting units within the guidance of SFAS
No. 142 and SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information. The Companys reporting units are the Allied
Automotive Group and the Axis Group. The adoption of SFAS No. 142
required the Company to perform an initial impairment assessment on all
goodwill and indefinite lived intangible assets as of January 1, 2002.
The Company compared the fair value of goodwill to current carrying value.
Fair values were derived using discounted cash flow analyses. The
assumptions used in these discounted cash flow analyses were also consistent
with the Companys internal planning and represents the
Companys best estimates. The cumulative effect of this
change in accounting principle was a $5.2 million decrease to the Axis
Group goodwill. The deferred income tax benefit related to this change
was approximately $1.1 million. The $4.1 million cumulative effect of
this change in accounting principle, net of income taxes, is included in
the accompanying statements of operations for the nine months ended
September 30, 2002.
|  
|   |  | The following table sets forth the carrying value of goodwill by reporting
unit as of September 30, 2002 and December 31, 2001 (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                                              |  |            |        |            |  |       |        |   |  |   |        |  
|------------------------------------------------------------- |  | ---------- | ------ | ---------- |  | ----- | ------ | - |  | - | ------ | -
|                                                              |  | Allied     |        |            |  |       |        |   |  |  
|                                                              |  | Automotive |        |            |  |       |        |   |  |  
|                                                              |  | Group      |        | Axis Group |  | Total
|                                                              |  |            |        |            |  |      
|Balance as of December 31, 2001                               |  | $          | 72,839 |            |  | $     | 17,391 |   |  | $ | 90,230 |  
|Increase in carrying amount due to
a change in currency rates |  |            | 175    |            |  |       | 1      |   |  |   | 176    |  
|Impairment loss                                               |  |            |       |            |  |       | (5,194 | ) |  |   | (5,194 | )
|                                                              |  |            |        |            |  |       |        |   |  |   |        |  
|Balance as of September 30, 2002                              |  | $          | 73,014 |            |  | $     | 12,198 |   |  | $ | 85,212 |  
|                                                              |  |            |        |            |  |       |        |   |  |   |        |  



| |  | The following table summarizes and reconciles net loss before the
cumulative effect of the accounting change for the three and nine months
ended September 30, 2002 and 2001, adjusted to exclude amortization
expense recognized in such periods related to goodwill (in thousands):
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                |                       |   |                            |   |                           |   |         |     |      |   |        |   |  |   |         |       | 
|--------------------------------------------------------------- | --------------------- | - | -------------------------- | - | ------------------------- | - | ------- | --- | ---- | - | ------ | - |  | - | ------- | ----- | 
|                                                                |                       |   | For the three months ended |   | For the nine months ended
|                                                                |                       |   | September 30               |   | September 30             
|                                                                |                       |   |                           
|                                                                |                       |   | 2002                       |   | 2001                      |   | 2002    |     | 2001
|                                                                |                       |   |                           
|Reported net loss
before cumulative effect of
accounting change |                       | $ | (6,482                     | ) |                           | $ | (12,646 | )   |      | $ | (5,529 | ) |  | $ | (37,224 | )    
|Add back after-tax amounts:                                     |                       |   |                            |   |                           |   |         |     |      |   |        |   |  |   |         |      
|                                                                | Goodwill amortization |   |                            |  |                           |   |         | 580 |      |   |        |  |  |   |         | 1,730 | 
|                                                                |                       |   |                            |   |                           |   |         |     |      |   |        |   |  |   |         |      
|Adjusted net loss
before cumulative effect of
accounting change |                       | $ | (6,482                     | ) |                           | $ | (12,066 | )   |      | $ | (5,529 | ) |  | $ | (35,494 | )    
|                                                                |                       |   |                            |   |                           |   |         |     |      |   |        |   |  |   |         |      

8



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|                                                 |                   |  |                            |       |                           |  |      |       |      |  |   |       |   |  |   |       |  
|------------------------------------------------ | ----------------- |  | -------------------------- | ----- | ------------------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                 |                   |  | For the three months ended |       | For the nine months ended
|                                                 |                   |  | September 30               |       | September 30             
|                                                 |                   |  |                           
|                                                 |                   |  | 2002                       |       | 2001                      |  | 2002 |       | 2001
|                                                 |                   |  |                            |       |                          
|Loss per share before
accounting change:         |                   |  |                            |       |                           |  |      |       |      |  |   |       |   |  |   |      
|                                                 | Basic and diluted |  | $                          | (0.78 | )                         |  | $    | (1.56 | )    |  | $ | (0.67 | ) |  | $ | (4.60 | )
|Goodwill amortization                           
|                                                 | Basic and diluted |  |                            |      |                           |  |      | .07   |      |  |   |      |   |  |   | 0.22  |  
|                                                 |                   |  |                            |       |                           |  |      |       |      |  |   |       |   |  |   |      
|Adjusted loss per share before
accounting change |                   |  |                            |       |                           |  |      |       |      |  |   |       |   |  |   |      
|                                                 | Basic and diluted |  | $                          | (0.78 | )                         |  | $    | (1.49 | )    |  | $ | (0.67 | ) |  | $ | (4.38 | )
|                                                 |                   |  |                            |       |                           |  |      |       |      |  |   |       |   |  |   |      



|7. |  | Fleet Remanufacturing Program                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | As part of the Companys turnaround plan, the Company is upgrading the
existing fleet through an extensive remanufacturing program which is
expected to increase the useful life of a rig to an average of 15 years.
These upgrades are depreciated over an estimated useful life of 6 years,
using the straight-line method of depreciation. The first phase of the
program began in 2002 and is expected to continue through 2004 at an
approximate total capital investment of $75 to $85 million for the
remanufacturing of approximately 1,500 rigs over the three-year period.
As of September 30, 2002 total capital expenditures related to the
remanufacturing program, including engine replacements, were approximately
$13 million.                                                                                                                                                                                                                                                                                                               
|  
|8. |  | Workforce Reduction and Severance Expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | As part of its turnaround initiatives, the Company implemented a program
to achieve a significant reduction in corporate overhead expenses and to
upgrade certain personnel. Targeted in the plan were workforce reductions
as well as additional efforts to decrease discretionary spending and
eliminate fixed costs. During 2002 the Company has continued to incur
severance expense as part of its ongoing initiative to improve personnel
quality and productivity. Accordingly, the Company terminated the
employment of approximately 110 and 148 corporate and field employees
during the nine months ended September 30, 2002 and the nine months ended
September 30, 2001 respectively. The remaining accrued benefits related to the
terminations are included in accrued liabilities and as such, the Company
expects to pay the accrued benefits within the next 12 months. The
following table summarizes the activity in the accrual for termination
benefits for the three and nine months ended September 30, 2002 and 2001,
(in thousands):

|                                                                   |  |                    |       |                   |  |      |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------ |  | ------------------ | ----- | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                   |  | Three Months Ended |       | Nine Months Ended
|                                                                   |  | September 30       |       | September 30     
|                                                                   |  |                    |       |                  
|                                                                   |  | 2002               |       | 2001              |  | 2002 |        | 2001
|                                                                   |  |                    |       |                  
|                                                                   |  |                    |       |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Beginning balance                                                  |  | $                  | 1,700 |                   |  | $    | 4,000  |      |  | $ | 3,700  |   |  | $ | 1,600  |  
|Additions to reserve charged to
salaries, wages, & fringe
benefits |  |                    | 500   |                   |  |      | 1,600  |      |  |   | 1,400  |   |  |   | 7,200  |  
|Cash payments                                                      |  |                    | (800  | )                 |  |      | (2,600 | )    |  |   | (3,700 | ) |  |   | (5,800 | )
|                                                                   |  |                    |       |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Ending balance                                                     |  | $                  | 1,400 |                   |  | $    | 3,000  |      |  | $ | 1,400  |   |  | $ | 3,000  |  
|                                                                   |  |                    |       |                   |  |      |        |      |  |   |        |   |  |   |        |  

9



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|9. |  | Long-Term Debt                                                                                       
|-- |  | -----------------------------------------------------------------------------------------------------
|  
|   |  | Long-term debt consisted of the following at September 30, 2002 and
December 31, 2001 (in thousands):

|                                           |  |               |         |              |  |   |         |  
|------------------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | -
|                                           |  | September 30, |         | December 31,
|                                           |  | 2002          |         | 2001        
|                                           |  |               |         |             
|                                           |  |               |         |              |  |   |         |  
|Credit
Facility                            |  | $             | 111,160 |              |  | $ | 98,900  |  
|Senior notes                               |  |               | 150,000 |              |  |   | 150,000 |  
|Senior subordinated notes                  |  |               |        |              |  |   | 40,258  |  
|                                           |  |               |         |              |  |   |         |  
|                                           |  |               | 261,160 |              |  |   | 289,158 |  
|Less: current maturities of long-term debt |  |               | (3,500  | )            |  |   | (2,625  | )
|                                           |  |               |         |              |  |   |         |  
|                                           |  | $             | 257,660 |              |  | $ | 286,533 |  
|                                           |  |               |         |              |  |   |         |  



| |  | On September 30, 1997, the Company issued $150 million of 8 5/8% senior
notes (the Notes) through a private placement. Subsequently, the 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 Notes mature
on October 1, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Borrowings under the Notes are general unsecured obligations of the
Company. 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. and Axis Logistica, S. de
R.L. de C.V. do not guarantee the Companys obligations under the Notes
(the Nonguarantor Subsidiaries). There are no restrictions on the
ability of Guarantors to make distributions to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | The Notes set forth a number of negative covenants which are binding on
the Company. The covenants limit the Companys ability to, among other
things, purchase or redeem stock, make dividend or other distributions,
make investments, and incur or repay debt (with the exception of payment
of interest or principal at stated maturity).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Concurrent with the issuance of the Notes, the Company closed on a
revolving credit facility (the Revolving Credit Facility). The Company
also previously issued $40.0 million of senior subordinated notes (the
Senior Subordinated Notes) through a private placement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | On February 25, 2002, the Company refinanced the Revolving Credit Facility
and Senior Subordinated Notes with a new credit facility including certain
term loans (the Term Loans) (the new credit facility and the term loans,
collectively, the Credit Facility). Proceeds from the Term Loans were
used to repurchase the $40.0 million of Senior Subordinated Notes for
$37.25 million. In conjunction with the extinguishment of this debt, the
Company recognized a pre-tax gain of $2.75 million, during the first
quarter of 2002. The Credit Facility includes a revolving credit facility
(the Revolver) that allows the Company to borrow under a revolving line
of credit up to the lesser of $120 million or a borrowing base amount as
defined in the Credit Facility. The interest rate for the Revolver is
based upon the prime rate plus 1.5% or LIBOR plus 4.5% at managements
discretion with a minimum interest rate of 6.5%. Annual commitment fees
are due on the undrawn portion of the commitment. At September 30, 2002,
$36.5 million was outstanding under the Revolver, and approximately $24.0
million was committed

10



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|    |  | under letters of credit. As of September 30, 2002 the Company had
approximately $36.7 million available under the Revolver. The Revolver
matures on February 25, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Term Loans are comprised of four loans: $17.5 million Term Loan A,
$25.0 million Term Loan B, $11.0 million Term Loan C, and $29.3 million
Term Loan D. The Term Loans (except Term Loan D) mature on February 25,
2005. Term Loan D matures on February 26, 2005. Cash proceeds from
certain asset sales and other transactions are required to be used to
repay the Term Loans, as specified in the Credit Facility. In addition,
the paid in kind PIK interest on Term Loans B and C to be paid at
maturity is included in the loan balances. As of September 30, 2002, the
amount outstanding for the Term Loans was $8.6 million for Term Loan A,
$25.5 million for Term Loan B, $11.3 million for Term Loan C and $29.3
million for Term Loan D. Borrowings under the Credit Facility are secured
by a first priority security interest on assets of the Company and
substantially all of its subsidiaries, including a pledge of stock of
substantially all of its subsidiaries. In addition, substantially all of
the subsidiaries of the Company jointly and severally guarantee the
obligations of the Company under the Credit Facility.
|   
|    |  | Term Loan A is repayable in installments over three years, with interest
payable monthly based upon the prime rate plus 2.75% with a minimum
interest rate of 7.75%. Term Loan B is repayable in installments over
three years, with interest payable monthly based upon the prime rate plus
6.5%. The interest rate on Term Loan B includes PIK interest of 3.5% that
will be payable upon maturity. The minimum interest rate for Term Loan B
is 11.5%. Term Loan C is payable in full at maturity with interest payable
monthly based upon the prime rate plus 9%. The interest rate on Term Loan
C also includes PIK interest of 5% that will be payable upon maturity. The
minimum interest rate for Term Loan C is 14%. Term Loan D is payable in
full at maturity with interest payable quarterly based upon the prime rate
plus 3.5%.                                                                                                                                                                                                                                                                                                            
|   
|    |  | The Credit Facility agreement sets forth a number of affirmative,
negative, and financial covenants binding on the Company. The negative
covenants limit the ability of the Company to, among other things, incur
debt, incur liens, make investments, or sell assets. The financial
covenants require the Company to maintain a minimum consolidated earnings
before interest, taxes, depreciation and amortization amount and include
leverage and fixed charges coverage ratios.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |  | The Company does not anticipate any covenant violations during 2002. There
can be no assurance, however, that the Company will be able to comply with
these covenants 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 the Credit Facility. Any default under the
Companys debt instruments, particularly any default that results in an
acceleration of indebtedness or foreclosure on collateral could have a
material adverse effect on the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|10. |  | Employee Benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | As part of the Companys turnaround efforts in the first quarter, the
Allied Holdings Inc. Defined Benefit Pension Plan (the Plan) was amended
in February 2002 to freeze the Plan. The amendment resulted in a
curtailment of the Plan effective April 30, 2002, under which employees do
not accumulate any new benefits and new employees are not added to the
Plan. The Companys net pension expense for 2001 was $2.6 million. As a
result of freezing the Plan, the Company expects net pension expense to be
$304,000 for 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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|11. |  | Industry Segment and Geographic Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | 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 is engaging in the business of securing and
managing vehicle distribution services, automobile inspections, auction
and yard management services, intramodal transport, vehicle
accessorization and dealer preparatory services for the automotive
industry.

|                                     |  |                    |         |                   |  |      |         |      |  |   |         |   |  |   |         |  
|------------------------------------ |  | ------------------ | ------- | ----------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                     |  | Three Months Ended |         | Nine Months Ended
|                                     |  | September 30,      |         | September 30,    
|                                     |  |                   
|                                     |  | 2002               |         | 2001              |  | 2002 |         | 2001
|                                     |  |                   
|Revenuesunaffiliated
customers:     |  |                    |         |                   |  |      |         |      |  |   |         |   |  |   |         |  
|Allied Automotive Group              |  | $                  | 205,679 |                   |  | $    | 197,168 |      |  | $ | 643,769 |   |  | $ | 651,982 |  
|Axis Group                           |  |                    | 7,306   |                   |  |      | 6,842   |      |  |   | 21,459  |   |  |   | 20,402  |  
|                                     |  |                   
|                                     |  | $                  | 212,985 |                   |  | $    | 204,010 |      |  | $ | 665,228 |   |  | $ | 672,384 |  
|                                     |  |                   
|Depreciation and amortization:       |  |                    |         |                   |  |      |         |      |  |   |         |   |  |   |         |  
|Allied Automotive Group              |  | $                  | 11,655  |                   |  | $    | 13,343  |      |  | $ | 35,653  |   |  | $ | 40,132  |  
|Axis Group                           |  |                    | 769     |                   |  |      | 977     |      |  |   | 2,206   |   |  |   | 2,768   |  
|Corporate/other                      |  |                    | 718     |                   |  |      | 825     |      |  |   | 2,228   |   |  |   | 2,550   |  
|                                     |  |                   
|                                     |  | $                  | 13,142  |                   |  | $    | 15,145  |      |  | $ | 40,087  |   |  | $ | 45,450  |  
|                                     |  |                   
|Operating (loss) profit:             |  |                    |         |                   |  |      |         |      |  |   |         |   |  |   |         |  
|Allied Automotive Group              |  | $                  | (572    | )                 |  | $    | (10,507 | )    |  | $ | 15,430  |   |  | $ | (25,181 | )
|Axis Group                           |  |                    | 1,320   |                   |  |      | 502     |      |  |   | 2,963   |   |  |   | 1,099   |  
|Corporate/other                      |  |                    | (2,140  | )                 |  |      | (1,566  | )    |  |   | (6,131  | ) |  |   | (11,699 | )
|                                     |  |                   
|                                     |  |                    | (1,400  | )                 |  |      | (11,571 | )    |  |   | 12,262  |   |  |   | (35,781 | )
|Reconciling items:                   |  |                    |         |                   |  |      |         |      |  |   |         |   |  |   |         |  
|Equity income in joint ventures      |  |                    |        |                   |  |      | 1,054   |      |  |   |        |   |  |   | 3,593   |  
|Interest expense                     |  |                    | (7,611  | )                 |  |      | (9,141  | )    |  |   | (23,343 | ) |  |   | (26,994 | )
|Interest income                      |  |                    | 203     |                   |  |      | 424     |      |  |   | 1,090   |   |  |   | 2,014   |  
|Gain on early extinguishment of
debt |  |                    |        |                   |  |      |         |      |  |   | 2,750   |   |  |   |         |  
|Other, net                           |  |                    | (100    | )                 |  |      |        |      |  |   | (107    | ) |  |   |        |  
|                                     |  |                   
|Loss before income taxes             |  | $                  | (8,708  | )                 |  | $    | (19,234 | )    |  | $ | (7,348  | ) |  | $ | (57,168 | )
|                                     |  |                   
|Capital expenditures:                |  |                    |         |                   |  |      |         |      |  |   |         |   |  |   |         |  
|Allied Automotive Group              |  | $                  | 5,739   |                   |  | $    | 1,321   |      |  | $ | 13,125  |   |  | $ | 16,381  |  
|Axis Group                           |  |                    | 98      |                   |  |      | 11      |      |  |   | 182     |   |  |   | 1,826   |  
|Corporate/other                      |  |                    | 6       |                   |  |      |        |      |  |   | 6       |   |  |   | 67      |  
|                                     |  |                   
|                                     |  | $                  | 5,843   |                   |  | $    | 1,332   |      |  | $ | 13,313  |   |  | $ | 18,274  |  
|                                     |  |                   

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|                        |  |               |         |              |  |   |         | 
|----------------------- |  | ------------- | ------- | ------------ |  | - | ------- | 
|                        |  | September 30, |         | December 31,
|                        |  | 2002          |         | 2001        
|                        |  |              
|Total Assets:           |  |               |         |              |  |   |         | 
|Allied Automotive Group |  | $             | 313,250 |              |  | $ | 353,558 | 
|Axis Group              |  |               | 37,215  |              |  |   | 43,881  | 
|Corporate/other         |  |               | 152,102 |              |  |   | 135,953 | 
|                        |  |               |         |              |  |   |         | 
|                        |  | $             | 502,567 |              |  | $ | 533,392 | 
|                        |  |               |         |              |  |   |         | 



| |  | Geographic financial information for 2002 and 2001 is as follows (in
thousands):
| |  | --------------------------------------------------------------------------------

|              |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|------------- |  | ------------------ | ------- | ----------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|              |  | Three Months Ended |         | Nine Months Ended
|              |  | September 30,      |         | September 30,    
|              |  |                   
|              |  | 2002               |         | 2001              |  | 2002 |         | 2001
|              |  |                   
|Revenues:     |  |                    |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|United States |  | $                  | 179,155 |                   |  | $    | 170,222 |      |  | $ | 551,127 |  |  | $ | 555,489 | 
|Canada        |  |                    | 33,830  |                   |  |      | 33,788  |      |  |   | 114,101 |  |  |   | 116,895 | 
|              |  |                   
|              |  | $                  | 212,985 |                   |  | $    | 204,010 |      |  | $ | 665,228 |  |  | $ | 672,384 | 
|              |  |                   



|12. |  | Commitments and Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company is involved in various litigation and environmental matters
relating to employment practices, damages, and other matters arising from
operations in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters, other than those
discussed below, will not have a material adverse effect on the Companys
financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | 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. 12000/8184. 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 Company 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 that ruling was reversed on appeal. While the
appellate court held that summary judgment in favor of the Company was
premature, the Company will be permitted to raise at trial and/or further
dispositive motions the substantive arguments upon which its initial
summary judgment motion was based. Subsequent to its summary judgment
ruling, the trial court 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 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 against it, as management
believes all of those claims are without merit. While the ultimate
results of this litigation cannot be predicted, if this litigation is
resolved in a manner that is adverse to the Company, it could have a
material adverse effect on the Companys consolidated financial position
or results of operations.
|   
|    |  | Ryder System, Inc. v. Allied Holdings, Inc., AH Acquisition Corp. and
Allied Automotive Group, Inc., Case No. 01-3553-CIV-HUCK in the United
States District Court for the Southern District of Florida, relates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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|    |  | to the Companys August 1997 stock acquisition of certain corporations
wholly owned by Ryder. Through that acquisition, the Company agreed to
assume financial responsibility for certain third-party injury claims
arising on or before the August 1997 closing date. Ryders original
complaint was filed on August 16, 2001. In response, the Company moved to
dismiss, and the court granted that motion with leave for Ryder to amend
its complaint. On December 26, 2001, Ryder timely filed its amended
complaint. Following the dismissal with prejudice of one of the counts
asserted by Ryder, Ryder filed, on or about August 1, 2002, a Second
Amended Complaint. Ryders five-count Second Amended Complaint alleges,
in Count one, that the Company breached its agreement with Ryder by
failing to undertake certain actions (including posting letters of credit
and bonds) to substitute the Company for Ryder under an insurance policy
covering third-party claims and with various states agencies that
regulate matters such as self-insured workers compensation. In Counts
two and three, the Second Amended Complaint alleges that if these
obligations are not required by contract, the legal doctrines of
promissory estoppel and negligent misrepresentation created them. In
Count four, the Second Amended Complaint seeks a declaration that the
Company is required to undertake these actions. In Count Five, Ryder
seeks a declaration that the Company is obligated to take certain steps to
transfer from Ryder to the Company the ownership and administrative
responsibility for two pension plans. The Company intends to continue its
vigorous defense against the claims asserted against it, as management
believes all of those claims are without merit. The Company has also
raised several counterclaims. The ultimate results of this litigation
cannot be predicted. However, if Ryder prevails on its claims and the
court orders the Company to substitute itself for Ryder by, among other
things, posting substantial letters of credit, it could have a material
adverse effect on the Companys consolidated financial position or results
of operations.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|13. |  | Supplemental Guarantor Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2002
In Thousands

|                                            |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |         |       |         |         | 
|------------------------------------------- | --------------------------------------------------- | -------------------------- | ------------------------- | ------------------------------------------ | ----- | -------- | ------- | ------------ | ------ | ------------ | ------- | ------------ | ------ | ------------ | ------- | -------- | ------- | ------- | -------- | ------- | ----- | ------- | ------- | 
|                                            |                                                     |                            |                           |                                            |       | ALLIED   |         | GUARANTOR    |        | NONGUARANTOR |         |              |        |              |         |          |         |        
|                                            |                                                     |                            |                           |                                            |       | HOLDINGS |         | SUBSIDIARIES |        | SUBSIDIARIES |         | ELIMINATIONS |        | CONSOLIDATED
|                                            |                                                     |                            |                           |                                            |       |         
|CURRENT ASSETS:                             |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |        
|                                            | Cash and cash equivalents                           |                            | $                         |                                           |       |          | $       | 4,287        |        |              | $       | 20,638       |        |              | $       |         |         |         | $        | 24,925  |      
|                                            | Short-term investments                              |                            |                           |                                           |       |          |         |             |        |              |         | 62,427       |        |              |         |         |         |         |          | 62,427  |      
|                                            | Receivables, net of allowance for doubtful accounts |                            |                           |                                           |       |          |         | 57,382       |        |              |         | 2,730        |        |              |         |         |         |         |          | 60,112  |      
|                                            | Inventories                                         |                            |                           |                                           |       |          |         | 5,301        |        |              |         |             |        |              |         |         |         |         |          | 5,301   |      
|                                            | Deferred tax assets                                 |                            |                           | 30,901                                     |       |          |         | 6,616        |        |              |         | 827          |        |              |         |         |         |         |          | 38,344  |      
|                                            | Prepayments and other current assets                |                            |                           | 1,796                                      |       |          |         | 15,528       |        |              |         | 60           |        |              |         |         |         |         |          | 17,384  |      
|                                            |                                                     |                            |                           |                                            |       |         
|                                            |                                                     |                            |                           | Total current assets                       |       |          | 32,697  |              |        |              | 89,114  |              |        |              | 86,682  |          |         |         |         |         |       |         | 208,493 | 
|                                            |                                                     |                            |                           |                                            |       |         
|PROPERTY AND EQUIPMENT, NET                 |                                                     |                            | 9,523                     |                                            |       |          | 172,407 |              |        |              | 3,282   |              |        |              |        |          |         |         | 185,212  |        
|                                            |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |         |       |         |         | 
|OTHER ASSETS:                               |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |        
|                                            | Goodwill, net                                       |                            |                           | 1,515                                      |       |          |         | 83,697       |        |              |         |             |        |              |         |         |         |         |          | 85,212  |      
|                                            | Other                                               |                            |                           | 19,150                                     |       |          |         | 3,540        |        |              |         | 960          |        |              |         |         |         |         |          | 23,650  |      
|                                            | Deferred tax asset                                  |                            |                           | 12,899                                     |       |          |         |             |        |              |         |             |        |              |         | (12,899  | )       |         |          |        |      
|                                            | Intercompany receivables                            |                            |                           | 46,982                                     |       |          |         |             |        |              |         | 2,573        |        |              |         | (49,555  | )       |         |          |        |      
|                                            | Investment in subsidiaries                          |                            |                           | 47,272                                     |       |          |         | 8,129        |        |              |         |             |        |              |         | (55,401  | )       |         |          |        |      
|                                            |                                                     |                            |                           |                                            |       |         
|                                            |                                                     |                            |                           | Total other assets                         |       |          | 127,818 |              |        |              | 95,366  |              |        |              | 3,533   |          |         |         | (117,855 | )       |       |         | 108,862 | 
|                                            |                                                     |                            |                           |                                            |       |         
|                                            |                                                     |                            |                           | Total assets                               |       | $        | 170,038 |              |        | $            | 356,887 |              |        | $            | 93,497  |          |         | $       | (117,855 | )       |       | $       | 502,567 | 
|                                            |                                                     |                            |                           |                                            |       |         
|CURRENT LIABILITIES:                        |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |        
|                                            | Current maturities of long-term debt                |                            | $                         |                                           |       |          | $       | 3,500        |        |              | $       |             |        |              | $       |         |         |         | $        | 3,500   |      
|                                            | Trade accounts payable                              |                            |                           | 2,801                                      |       |          |         | 33,182       |        |              |         | 229          |        |              |         |         |         |         |          | 36,212  |      
|                                            | Intercompany payables                               |                            |                           |                                           |       |          |         | 49,555       |        |              |         |             |        |              |         | (49,555  | )       |         |          |        |      
|                                            | Accrued liabilities                                 |                            |                           | 5,077                                      |       |          |         | 60,274       |        |              |         | 24,084       |        |              |         |         |         |         |          | 89,435  |      
|                                            |                                                     |                            |                           |                                            |       |         
|                                            |                                                     |                            | Total current liabilities |                                            |       | 7,878    |         |              |        | 146,511      |         |              |        | 24,313       |         |          |         | (49,555 | )        |         |       | 129,147 |        
|                                            |                                                     |                            |                           |                                            |       |         
|LONG-TERM DEBT, less current maturities     |                                                     |                            | 150,000                   |                                            |       |          | 107,660 |              |        |              |        |              |        |              |        |          |         |         | 257,660  |        
|                                            |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |         |       |         |         | 
|POSTRETIREMENT BENEFITS OTHER THAN PENSIONS |                                                     |                            |                          |                                            |       |          | 9,024   |              |        |              |        |              |        |              |        |          |         |         | 9,024    |        
|                                            |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |         |       |         |         | 
|DEFERRED INCOME TAXES                       |                                                     |                            |                          |                                            |       |          | 36,642  |              |        |              |        |              |        |              | (12,899 | )        |         |         | 23,743   |        
|                                            |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |         |       |         |         | 
|OTHER LONG-TERM LIABILITIES                 |                                                     |                            | 3,545                     |                                            |       |          | 32,630  |              |        |              | 38,203  |              |        |              |        |          |         |         | 74,378   |        
|                                            |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |         |       |         |         | 
|STOCKHOLDERS EQUITY:                       |                                                     |                            |                           |                                            |       |          |         |              |        |              |         |              |        |              |         |          |         |         |          |        
|                                            | Common stock, no par value                          |                            |                           |                                           |       |          |         |             |        |              |         |             |        |              |         |         |         |         |          |        |      
|                                            | Additional paid-in capital                          |                            |                           | 46,572                                     |       |          |         | 165,779      |        |              |         | 13,927       |        |              |         | (179,706 | )       |         |          | 46,572  |      
|                                            | Treasury stock                                      |                            |                           | (707                                       | )     |          |         |             |        |              |         |             |        |              |         |         |         |         |          | (707    | )    
|                                            | Retained (deficit) earnings                         |                            |                           | (28,515                                    | )     |          |         | (129,127     | )      |              |         | 17,054       |        |              |         | 112,073  |         |         |          | (28,515 | )    
|                                            | Accumulated other comprehensive loss, net of tax    |                            |                           | (8,735                                     | )     |          |         | (12,232      | )      |              |         |             |        |              |         | 12,232   |         |         |          | (8,735  | )    
|                                            |                                                     |                            |                           |                                            |       |         
|                                            |                                                     | Total stockholders equity |                           |                                            | 8,615 |          |         |              | 24,420 |              |         |              | 30,981 |              |         |          | (55,401 | )       |          |         | 8,615 |        
|                                            |                                                     |                            |                           |                                            |       |         
|                                            |                                                     |                            |                           | Total liabilities and stockholders equity |       | $        | 170,038 |              |        | $            | 356,887 |              |        | $            | 93,497  |          |         | $       | (117,855 | )       |       | $       | 502,567 | 
|                                            |                                                     |                            |                           |                                            |       |         

15



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2001
In Thousands

|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |         |        |         |         | 
|------------------------------------------- | --------------------------------------------------- | -------------------------- | ------------------------- | ------------------------------------------ | ------ | -------- | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------- | -------- | ------- | -------- | -------- | ------- | ------ | ------- | ------- | 
|                                            |                                                     |                            |                           |                                            |        | ALLIED   |         | GUARANTOR    |         | NONGUARANTOR |         |              |        |              |         |          |         |         
|                                            |                                                     |                            |                           |                                            |        | HOLDINGS |         | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |        | CONSOLIDATED
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |             
|CURRENT ASSETS:                             |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            | Cash and cash equivalents                           |                            | $                         | 209                                        |        |          | $       | 1,063        |         |              | $       | 9,271        |        |              | $       |         |         |          | $        | 10,543  |       
|                                            | Short-term investments                              |                            |                           |                                           |        |          |         |             |         |              |         | 64,794       |        |              |         |         |         |          |          | 64,794  |       
|                                            | Receivables, net of allowance for doubtful accounts |                            |                           | 24                                         |        |          |         | 69,112       |         |              |         | 3,156        |        |              |         |         |         |          |          | 72,292  |       
|                                            | Inventories                                         |                            |                           |                                           |        |          |         | 5,344        |         |              |         | 5            |        |              |         |         |         |          |          | 5,349   |       
|                                            | Deferred tax asset  current                        |                            |                           | 31,658                                     |        |          |         | 493          |         |              |         | 252          |        |              |         |         |         |          |          | 32,403  |       
|                                            | Prepayments and other current assets                |                            |                           | 1,161                                      |        |          |         | 17,645       |         |              |         | 115          |        |              |         |         |         |          |          | 18,921  |       
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            |                                                     |                            |                           | Total current assets                       |        |          | 33,052  |              |         |              | 93,657  |              |        |              | 77,593  |          |         |          |         |         |        |         | 204,302 | 
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|PROPERTY AND EQUIPMENT, NET                 |                                                     |                            | 11,743                    |                                            |        |          | 199,378 |              |         |              | 3,520   |              |        |              |        |          |         |          | 214,641  |        
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |         |        |         |         | 
|OTHER ASSETS:                               |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            | Goodwill, net                                       |                            |                           | 1,515                                      |        |          |         | 88,715       |         |              |         |             |        |              |         |         |         |          |          | 90,230  |       
|                                            | Other                                               |                            |                           | 14,404                                     |        |          |         | 5,742        |         |              |         | 4,073        |        |              |         |         |         |          |          | 24,219  |       
|                                            | Deferred tax asset  noncurrent                     |                            |                           | 14,362                                     |        |          |         |             |         |              |         |             |        |              |         | (14,362  | )       |          |          |        |       
|                                            | Intercompany receivables                            |                            |                           | 233,827                                    |        |          |         |             |         |              |         |             |        |              |         | (233,827 | )       |          |          |        |       
|                                            | Investment in subsidiaries                          |                            |                           | 11,697                                     |        |          |         | 8,814        |         |              |         |             |        |              |         | (20,511  | )       |          |          |        |       
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            |                                                     |                            |                           | Total other assets                         |        |          | 275,805 |              |         |              | 103,271 |              |        |              | 4,073   |          |         |          | (268,700 | )       |        |         | 114,449 | 
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            |                                                     |                            |                           | Total assets                               |        | $        | 320,600 |              |         | $            | 396,306 |              |        | $            | 85,186  |          |         | $        | (268,700 | )       |        | $       | 533,392 | 
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|CURRENT LIABILITIES:                        |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            | Current maturities of long-term debt                |                            | $                         | 2,625                                      |        |          | $       |             |         |              | $       |             |        |              | $       |         |         |          | $        | 2,625   |       
|                                            | Trade accounts payable                              |                            |                           | 2,753                                      |        |          |         | 37,326       |         |              |         | 153          |        |              |         |         |         |          |          | 40,232  |       
|                                            | Intercompany payables                               |                            |                           |                                           |        |          |         | 230,040      |         |              |         | 3,787        |        |              |         | (233,827 | )       |          |          |        |       
|                                            | Accrued liabilities                                 |                            |                           | 7,157                                      |        |          |         | 61,460       |         |              |         | 14,346       |        |              |         |         |         |          |          | 82,963  |       
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            |                                                     |                            | Total current liabilities |                                            |        | 12,535   |         |              |         | 328,826      |         |              |        | 18,286       |         |          |         | (233,827 | )        |         |        | 125,820 |        
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|LONG-TERM DEBT, less current maturities     |                                                     |                            | 286,523                   |                                            |        |          | 10      |              |         |              |        |              |        |              |        |          |         |          | 286,533  |        
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |         |        |         |         | 
|POSTRETIREMENT BENEFITS OTHER THAN PENSIONS |                                                     |                            |                          |                                            |        |          | 9,363   |              |         |              |        |              |        |              |        |          |         |          | 9,363    |        
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |         |        |         |         | 
|DEFERRED INCOME TAXES                       |                                                     |                            |                          |                                            |        |          | 35,745  |              |         |              |        |              |        |              | (14,362 | )        |         |          | 21,383   |        
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |         |        |         |         | 
|OTHER LONG-TERM LIABILITIES                 |                                                     |                            | 3,545                     |                                            |        |          | 34,906  |              |         |              | 33,845  |              |        |              |        |          |         |          | 72,296   |        
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |         |        |         |         | 
|STOCKHOLDERS EQUITY:                       |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            | Common stock, no par value                          |                            |                           |                                           |        |          |         |             |         |              |         |             |        |              |         |         |         |          |          |        |       
|                                            | Additional paid-in capital                          |                            |                           | 46,520                                     |        |          |         | 91,548       |         |              |         | 13,849       |        |              |         | (105,397 | )       |          |          | 46,520  |       
|                                            | Treasury stock                                      |                            |                           | (707                                       | )      |          |         |             |         |              |         |             |        |              |         |         |         |          |          | (707    | )     
|                                            | Retained (deficit) earnings                         |                            |                           | (18,894                                    | )      |          |         | (90,158      | )       |              |         | 19,206       |        |              |         | 70,952   |         |          |          | (18,894 | )     
|                                            | Accumulated other comprehensive loss, net of tax    |                            |                           | (8,922                                     | )      |          |         | (13,934      | )       |              |         |             |        |              |         | 13,934   |         |          |          | (8,922  | )     
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            |                                                     | Total stockholders equity |                           |                                            | 17,997 |          |         |              | (12,544 | )            |         |              | 33,055 |              |         |          | (20,511 | )        |          |         | 17,997 |        
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        
|                                            |                                                     |                            |                           | Total liabilities and stockholders equity |        | $        | 320,600 |              |         | $            | 396,306 |              |        | $            | 85,186  |          |         | $        | (268,700 | )       |        | $       | 533,392 | 
|                                            |                                                     |                            |                           |                                            |        |          |         |              |         |              |         |              |        |              |         |          |         |          |          |        

16



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATED INCOME STATEMENT
THREE MONTHS ENDED SEPTEMBER 30, 2002
In Thousands

|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |         |         |  
|--------------------------------- | ------------------------------------------- | ------------------------ | ------ | -------- | ------ | ------------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | - | ------- | ------ | ------- | - | ------- | ------- | ------- | -
|                                  |                                             |                          |        | ALLIED   |        | GUARANTOR    |         | NONGUARANTOR |         |              |       |              |       |   |         |       
|                                  |                                             |                          |        | HOLDINGS |        | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |       | CONSOLIDATED
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |             
|REVENUES                          |                                             | $                        | 6,435  |          |        | $            | 212,625 |              |         | $            | 9,490 |              |       | $ | (15,565 | )      |         | $ | 212,985 |        
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|OPERATING EXPENSES:               |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  | Salaries, wages and fringe benefits         |                          |        | 3,634    |        |              |         | 114,170      |         |              |       |             |       |   |         |       |         |   |         | 117,804 |        
|                                  | Operating supplies and expenses             |                          |        | 1,941    |        |              |         | 31,259       |         |              |       | 57           |       |   |         |       |         |   |         | 33,257  |        
|                                  | Purchased transportation                    |                          |        |         |        |              |         | 25,331       |         |              |       |             |       |   |         |       |         |   |         | 25,331  |        
|                                  | Insurance and claims                        |                          |        |         |        |              |         | 10,844       |         |              |       | 9,130        |       |   |         | (9,130 | )       |   |         | 10,844  |        
|                                  | Operating taxes and licenses                |                          |        | 58       |        |              |         | 7,580        |         |              |       |             |       |   |         |       |         |   |         | 7,638   |        
|                                  | Depreciation and amortization               |                          |        | 718      |        |              |         | 12,306       |         |              |       | 118          |       |   |         |       |         |   |         | 13,142  |        
|                                  | Rents                                       |                          |        | 547      |        |              |         | 1,136        |         |              |       | 2            |       |   |         |       |         |   |         | 1,685   |        
|                                  | Communications and utilities                |                          |        | 541      |        |              |         | 882          |         |              |       | 2            |       |   |         |       |         |   |         | 1,425   |        
|                                  | Other operating expenses                    |                          |        | 1,048    |        |              |         | 8,215        |         |              |       | 64           |       |   |         | (6,435 | )       |   |         | 2,892   |        
|                                  | Loss on disposal of operating assets, net   |                          |        |         |        |              |         | 160          |         |              |       | 207          |       |   |         |       |         |   |         | 367     |        
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                             | Total operating expenses |        |          | 8,487  |              |         |              | 211,883 |              |       |              | 9,580 |   |         |        | (15,565 | ) |         |         | 214,385 |  
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                             | Operating (loss) income  |        |          | (2,052 | )            |         |              | 742     |              |       |              | (90   | ) |         |        |        |   |         |         | (1,400  | )
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|OTHER INCOME (EXPENSE):           |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  | Interest expense                            |                          |        | (9,007   | )      |              |         | (5,581       | )       |              |       | (39          | )     |   |         | 7,016  |         |   |         | (7,611  | )      
|                                  | Interest income                             |                          |        | 6,966    |        |              |         | 1            |         |              |       | 252          |       |   |         | (7,016 | )       |   |         | 203     |        
|                                  | Gain on early extinguishment of debt        |                          |        |         |        |              |         |             |         |              |       |             |       |   |         |       |         |   |         |        |        
|                                  | Other, net                                  |                          |        | (8       | )      |              |         | (41          | )       |              |       | 149          |       |   |         |       |         |   |         | 100     |        
|                                  | Intercompany dividends                      |                          |        | 166      |        |              |         | (166         | )       |              |       |             |       |   |         |       |         |   |         |        |        
|                                  | Equity in (losses) earnings of subsidiaries |                          |        | (5,415   | )      |              |         | 156          |         |              |       |             |       |   |         | 5,259  |         |   |         |        |        
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                             |                          | (7,298 | )        |        |              | (5,631  | )            |         |              | 362   |              |       |   | 5,259   |        |         |   | (7,308  | )      
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|(LOSS) INCOME BEFORE INCOME TAXES |                                             |                          | (9,350 | )        |        |              | (4,889  | )            |         |              | 272   |              |       |   | 5,259   |        |         |   | (8,708  | )      
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |         |         |  
|INCOME TAX BENEFIT (EXPENSE)      |                                             |                          | 2,868  |          |        |              | (39     | )            |         |              | (603  | )            |       |   |        |        |         |   | 2,226   |        
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|NET (LOSS) INCOME                 |                                             | $                        | (6,482 | )        |        | $            | (4,928  | )            |         | $            | (331  | )            |       | $ | 5,259   |        |         | $ | (6,482  | )      
|                                  |                                             |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        

SUPPLEMENTAL CONDENSED CONSOLIDATED INCOME STATEMENT
THREE MONTHS ENDED SEPTEMBER 30, 2001
In Thousands

|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |         |         |  
|--------------------------------- | ------------------------------------------------ | ------------------------ | ------- | -------- | ------ | ------------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | - | ------- | ------ | ------- | - | ------- | ------- | ------- | -
|                                  |                                                  |                          |         | ALLIED   |        | GUARANTOR    |         | NONGUARANTOR |         |              |       |              |       |   |         |       
|                                  |                                                  |                          |         | HOLDINGS |        | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |       | CONSOLIDATED
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |             
|REVENUES                          |                                                  | $                        | 2,475   |          |        | $            | 203,586 |              |         | $            | 9,517 |              |       | $ | (11,568 | )      |         | $ | 204,010 |        
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|OPERATING EXPENSES:               |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  | Salaries, wages and fringe benefits              |                          |         | 345      |        |              |         | 118,355      |         |              |       |             |       |   |         |       |         |   |         | 118,700 |        
|                                  | Operating supplies and expenses                  |                          |         | 341      |        |              |         | 33,437       |         |              |       | 32           |       |   |         |       |         |   |         | 33,810  |        
|                                  | Purchased transportation                         |                          |         |         |        |              |         | 23,228       |         |              |       |             |       |   |         |       |         |   |         | 23,228  |        
|                                  | Insurance and claims                             |                          |         |         |        |              |         | 10,680       |         |              |       | 8,944        |       |   |         | (9,093 | )       |   |         | 10,531  |        
|                                  | Operating taxes and licenses                     |                          |         | 1        |        |              |         | 7,856        |         |              |       |             |       |   |         |       |         |   |         | 7,857   |        
|                                  | Depreciation and amortization                    |                          |         | 825      |        |              |         | 14,137       |         |              |       | 183          |       |   |         |       |         |   |         | 15,145  |        
|                                  | Rents                                            |                          |         | 544      |        |              |         | 1,146        |         |              |       | 1            |       |   |         |       |         |   |         | 1,691   |        
|                                  | Communications and utilities                     |                          |         | 106      |        |              |         | 1,192        |         |              |       | 2            |       |   |         |       |         |   |         | 1,300   |        
|                                  | Other operating expenses                         |                          |         | 1,612    |        |              |         | 4,120        |         |              |       | 38           |       |   |         | (2,475 | )       |   |         | 3,295   |        
|                                  | Loss on disposal of operating assets, net        |                          |         |         |        |              |         | 24           |         |              |       |             |       |   |         |       |         |   |         | 24      |        
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                  | Total operating expenses |         |          | 3,774  |              |         |              | 214,175 |              |       |              | 9,200 |   |         |        | (11,568 | ) |         |         | 215,581 |  
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                  | Operating (loss) income  |         |          | (1,299 | )            |         |              | (10,589 | )            |       |              | 317   |   |         |        |        |   |         |         | (11,571 | )
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|OTHER INCOME (EXPENSE):           |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  | Equity in earnings of joint ventures, net of tax |                          |         |         |        |              |         | 862          |         |              |       | 192          |       |   |         |       |         |   |         | 1,054   |        
|                                  | Interest expense                                 |                          |         | (8,442   | )      |              |         | (8,204       | )       |              |       | (61          | )     |   |         | 7,566  |         |   |         | (9,141  | )      
|                                  | Interest income                                  |                          |         | 7,536    |        |              |         | 43           |         |              |       | 411          |       |   |         | (7,566 | )       |   |         | 424     |        
|                                  | Equity in (losses) earnings of subsidiaries      |                          |         | (17,366  | )      |              |         | 359          |         |              |       |             |       |   |         | 17,007 |         |   |         |        |        
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                  |                          | (18,272 | )        |        |              | (6,940  | )            |         |              | 542   |              |       |   | 17,007  |        |         |   | (7,663  | )      
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|(LOSS) INCOME BEFORE INCOME TAXES |                                                  |                          | (19,571 | )        |        |              | (17,529 | )            |         |              | 859   |              |       |   | 17,007  |        |         |   | (19,234 | )      
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |         |         |  
|INCOME TAX BENEFIT (EXPENSE)      |                                                  |                          | 6,925   |          |        |              | (85     | )            |         |              | (252  | )            |       |   |        |        |         |   | 6,588   |        
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|NET (LOSS) INCOME                 |                                                  | $                        | (12,646 | )        |        | $            | (17,614 | )            |         | $            | 607   |              |       | $ | 17,007  |        |         | $ | (12,646 | )      
|                                  |                                                  |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        

17



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATED INCOME STATEMENT
NINE MONTHS ENDED SEPTEMBER 30, 2002
In Thousands

|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |         |         | 
|--------------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------ | ------- | -------- | ------ | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                        |                                             |                          |         | ALLIED   |        | GUARANTOR    |         | NONGUARANTOR |         |              |        |              |        |   |         |        
|                                                                                        |                                             |                          |         | HOLDINGS |        | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |        | CONSOLIDATED
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |             
|REVENUES                                                                                |                                             | $                        | 11,505  |          |        | $            | 664,108 |              |         | $            | 28,509 |              |        | $ | (38,894 | )       |         | $ | 665,228 |        
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|OPERATING EXPENSES:                                                                     |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                                                                        | Salaries, wages and fringe benefits         |                          |         | 7,069    |        |              |         | 356,784      |         |              |        |             |        |   |         |        |         |   |         | 363,853 |        
|                                                                                        | Operating supplies and expenses             |                          |         | 2,728    |        |              |         | 97,198       |         |              |        | 142          |        |   |         |        |         |   |         | 100,068 |        
|                                                                                        | Purchased transportation                    |                          |         |         |        |              |         | 72,438       |         |              |        |             |        |   |         |         |         |   |         | 72,438  |        
|                                                                                        | Insurance and claims                        |                          |         |         |        |              |         | 34,342       |         |              |        | 27,391       |        |   |         | (27,389 | )       |   |         | 34,344  |        
|                                                                                        | Operating taxes and licenses                |                          |         | 166      |        |              |         | 24,565       |         |              |        |             |        |   |         |        |         |   |         | 24,731  |        
|                                                                                        | Depreciation and amortization               |                          |         | 2,228    |        |              |         | 37,504       |         |              |        | 355          |        |   |         |        |         |   |         | 40,087  |        
|                                                                                        | Rents                                       |                          |         | 1,394    |        |              |         | 3,496        |         |              |        | 5            |        |   |         |        |         |   |         | 4,895   |        
|                                                                                        | Communications and utilities                |                          |         | 867      |        |              |         | 4,415        |         |              |        | 8            |        |   |         |        |         |   |         | 5,290   |        
|                                                                                        | Other operating expenses                    |                          |         | 2,904    |        |              |         | 15,923       |         |              |        | 285          |        |   |         | (11,505 | )       |   |         | 7,607   |        
|                                                                                        | Gain on disposal of operating assets, net   |                          |         |         |        |              |         | (554         | )       |              |        | 207          |        |   |         |        |         |   |         | (347    | )      
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                                                                        |                                             | Total operating expenses |         |          | 17,356 |              |         |              | 646,111 |              |        |              | 28,393 |   |         |         | (38,894 | ) |         |         | 652,966 | 
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                                                                        |                                             | Operating (loss) income  |         |          | (5,851 | )            |         |              | 17,997  |              |        |              | 116    |   |         |         |        |   |         |         | 12,262  | 
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|OTHER INCOME (EXPENSE):                                                                 |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                                                                        | Interest expense                            |                          |         | (29,136  | )      |              |         | (13,763      | )       |              |        | (171         | )      |   |         | 19,727  |         |   |         | (23,343 | )      
|                                                                                        | Interest income                             |                          |         | 19,580   |        |              |         | 35           |         |              |        | 1,202        |        |   |         | (19,727 | )       |   |         | 1,090   |        
|                                                                                        | Gain on early extinguishment of debt        |                          |         | 2,750    |        |              |         |             |         |              |        |             |        |   |         |        |         |   |         | 2,750   |        
|                                                                                        | Other, net                                  |                          |         | (8       | )      |              |         | (41          | )       |              |        | (58          | )      |   |         |        |         |   |         | (107    | )      
|                                                                                        | Intercompany dividends                      |                          |         | 1,144    |        |              |         | (1,144       | )       |              |        |             |        |   |         |        |         |   |         |         |        
|                                                                                        | Equity in (losses) earnings of subsidiaries |                          |         | (1,175   | )      |              |         | 289          |         |              |        |             |        |   |         | 886     |         |   |         |        |        
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                                                                        |                                             |                          | (6,845  | )        |        |              | (14,624 | )            |         |              | 973    |              |        |   | 886     |         |         |   | (19,610 | )      
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|(LOSS) INCOME
BEFORE INCOME TAXES & CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE |                                             |                          | (12,696 | )        |        |              | 3,373   |              |         |              | 1,089  |              |        |   | 886     |         |         |   | (7,348  | )      
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |         |         | 
|INCOME TAX BENEFIT (EXPENSE)                                                            |                                             |                          | 3,075   |          |        |              | 933     |              |         |              | (2,189 | )            |        |   |        |         |         |   | 1,819   |        
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|(LOSS) INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE                |                                             |                          | (9,621  | )        |        |              | 4,306   |              |         |              | (1,100 | )            |        |   | 886     |         |         |   | (5,529  | )      
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |         |         | 
|CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX                         |                                             |                          |        |          |        |              | (4,092  | )            |         |              |       |              |        |   |        |         |         |   | (4,092  | )      
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|NET (LOSS) INCOME                                                                       |                                             | $                        | (9,621  | )        |        | $            | 214     |              |         | $            | (1,100 | )            |        | $ | 886     |         |         | $ | (9,621  | )      
|                                                                                        |                                             |                          |         |          |        |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        

18



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATED INCOME STATEMENT
NINE MONTHS ENDED SEPTEMBER 30, 2001
In Thousands

|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |         |         |  
|--------------------------------- | ------------------------------------------------ | ------------------------ | ------- | -------- | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                  |                                                  |                          |         | ALLIED   |         | GUARANTOR    |         | NONGUARANTOR |         |              |        |              |        |   |         |        
|                                  |                                                  |                          |         | HOLDINGS |         | SUBSIDIARIES |         | SUBSIDIARIES |         | ELIMINATIONS |        | CONSOLIDATED
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |             
|REVENUES                          |                                                  | $                        | 7,425   |          |         | $            | 671,111 |              |         | $            | 28,550 |              |        | $ | (34,702 | )       |         | $ | 672,384 |        
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|OPERATING EXPENSES:               |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                  | Salaries, wages and fringe benefits              |                          |         | 7,791    |         |              |         | 383,215      |         |              |        |             |        |   |         |        |         |   |         | 391,006 |        
|                                  | Operating supplies and expenses                  |                          |         | 1,316    |         |              |         | 113,746      |         |              |        | 85           |        |   |         |        |         |   |         | 115,147 |        
|                                  | Purchased transportation                         |                          |         |         |         |              |         | 75,190       |         |              |        |             |        |   |         |        |         |   |         | 75,190  |        
|                                  | Insurance and claims                             |                          |         |         |         |              |         | 38,382       |         |              |        | 26,483       |        |   |         | (27,277 | )       |   |         | 37,588  |        
|                                  | Operating taxes and licenses                     |                          |         | 94       |         |              |         | 24,896       |         |              |        |             |        |   |         |        |         |   |         | 24,990  |        
|                                  | Depreciation and amortization                    |                          |         | 2,550    |         |              |         | 42,361       |         |              |        | 539          |        |   |         |        |         |   |         | 45,450  |        
|                                  | Rents                                            |                          |         | 1,585    |         |              |         | 3,764        |         |              |        | 4            |        |   |         |        |         |   |         | 5,353   |        
|                                  | Communications and utilities                     |                          |         | 218      |         |              |         | 5,026        |         |              |        | 8            |        |   |         |        |         |   |         | 5,252   |        
|                                  | Other operating expenses                         |                          |         | 5,218    |         |              |         | 12,943       |         |              |        | 172          |        |   |         | (7,425  | )       |   |         | 10,908  |        
|                                  | Gain on disposal of operating assets, net        |                          |         |         |         |              |         | (2,719       | )       |              |        |             |        |   |         |        |         |   |         | (2,719  | )      
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                  |                                                  | Total operating expenses |         |          | 18,772  |              |         |              | 696,804 |              |        |              | 27,291 |   |         |         | (34,702 | ) |         |         | 708,165 |  
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                  |                                                  | Operating (loss) income  |         |          | (11,347 | )            |         |              | (25,693 | )            |        |              | 1,259  |   |         |         |        |   |         |         | (35,781 | )
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|OTHER INCOME (EXPENSE):           |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                  | Equity in earnings of joint ventures, net of tax |                          |         |         |         |              |         | 3,299        |         |              |        | 294          |        |   |         |        |         |   |         | 3,593   |        
|                                  | Interest expense                                 |                          |         | (25,511  | )       |              |         | (24,336      | )       |              |        | (157         | )      |   |         | 23,010  |         |   |         | (26,994 | )      
|                                  | Interest income                                  |                          |         | 23,031   |         |              |         | 155          |         |              |        | 1,838        |        |   |         | (23,010 | )       |   |         | 2,014   |        
|                                  | Intercompany dividends                           |                          |         | 1,980    |         |              |         | (1,980       | )       |              |        |             |        |   |         |        |         |   |         |        |        
|                                  | Equity in (losses) earnings of subsidiaries      |                          |         | (45,483  | )       |              |         | 775          |         |              |        |             |        |   |         | 44,708  |         |   |         |        |        
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|                                  |                                                  |                          | (45,983 | )        |         |              | (22,087 | )            |         |              | 1,975  |              |        |   | 44,708  |         |         |   | (21,387 | )      
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|(LOSS) INCOME BEFORE INCOME TAXES |                                                  |                          | (57,330 | )        |         |              | (47,780 | )            |         |              | 3,234  |              |        |   | 44,708  |         |         |   | (57,168 | )      
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |         |         |  
|INCOME TAX BENEFIT (EXPENSE)      |                                                  |                          | 20,106  |          |         |              | 827     |              |         |              | (989   | )            |        |   |        |         |         |   | 19,944  |        
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        
|NET (LOSS) INCOME                 |                                                  | $                        | (37,224 | )        |         | $            | (46,953 | )            |         | $            | 2,245  |              |        | $ | 44,708  |         |         | $ | (37,224 | )      
|                                  |                                                  |                          |         |          |         |              |         |              |         |              |        |              |        |   |         |         |         |   |         |        





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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002
In Thousands

|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |         |        |        |         |  
|------------------------------------------------------------ | -------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------ | -------- | -------- | ------------ | ------ | ------------ | -------- | ------------ | ---- | ------------ | ----- | --- | ---- | - | ------ | ------- | ------ | ------ | ------- | -
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        | ALLIED   |          | GUARANTOR    |        | NONGUARANTOR |          |              |      |              |       |     |      |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        | HOLDINGS |          | SUBSIDIARIES |        | SUBSIDIARIES |          | ELIMINATIONS |      | CONSOLIDATED
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |             
|CASH FLOWS FROM OPERATING ACTIVITIES                         |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             | Net (loss) income                                                                                  |                                                          | $                                                   | (9,621                                              | )      |          | $        | 214          |        |              | $        | (1,100       | )    |              | $     | 886 |      |   | $      | (9,621  | )     
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             | Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities: |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |         |       
|                                                             |                                                                                                    | Gain on early extinguishment of debt                     |                                                     |                                                     | (2,750 | )        |          |              |       |              |          |              |     |              |       |     |     |   |        |         | (2,750 | )     
|                                                             |                                                                                                    | Interest expense paid in kind                            |                                                     |                                                     |       |          |          |              | 746    |              |          |              |     |              |       |     |     |   |        |         | 746    |       
|                                                             |                                                                                                    | Amortization of deferred financing costs                 |                                                     |                                                     | 3,013  |          |          |              |       |              |          |              |     |              |       |     |     |   |        |         | 3,013  |       
|                                                             |                                                                                                    | Depreciation and amortization                            |                                                     |                                                     | 2,228  |          |          |              | 37,504 |              |          |              | 355  |              |       |     |     |   |        |         | 40,087 |       
|                                                             |                                                                                                    | Gain on disposal of assets and other, net                |                                                     |                                                     |       |          |          |              | (240   | )            |          |              |     |              |       |     |     |   |        |         | (240   | )     
|                                                             |                                                                                                    | Cumulative effect of change in accounting principle      |                                                     |                                                     |       |          |          |              | 5,194  |              |          |              |     |              |       |     |     |   |        |         | 5,194  |       
|                                                             |                                                                                                    | Deferred income taxes                                    |                                                     |                                                     | 704    |          |          |              | (3,800 | )            |          |              | (575 | )            |       |     |     |   |        |         | (3,671 | )     
|                                                             |                                                                                                    | Compensation expense related to stock options and grants |                                                     |                                                     | (210   | )        |          |              |       |              |          |              |     |              |       |     |     |   |        |         | (210   | )     
|                                                             |                                                                                                    | Equity in earnings of joint ventures                     |                                                     |                                                     |       |          |          |              |       |              |          |              |     |              |       |     |     |   |        |         |       |       
|                                                             |                                                                                                    | Equity in earnings of subsidiaries                       |                                                     |                                                     | 1,175  |          |          |              | (289   | )            |          |              |     |              |       |     | (886 | ) |        |         |       |       
|                                                             |                                                                                                    | Amortization of Teamsters Union signing bonus            |                                                     |                                                     |       |          |          |              | 1,800  |              |          |              |     |              |       |     |     |   |        |         | 1,800  |       
|                                                             |                                                                                                    | Change in operating assets and liabilities:              |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |         |        |       
|                                                             |                                                                                                    |                                                          | Receivables, net of allowance for doubtful accounts |                                                     |        | 24       |          |              |        | 11,826       |          |              |      | 426          |       |     |      |  |        |         |        | 12,276 |        
|                                                             |                                                                                                    |                                                          | Inventories                                         |                                                     |        |         |          |              |        | 50           |          |              |      | 5            |       |     |      |  |        |         |        | 55     |        
|                                                             |                                                                                                    |                                                          | Prepayments and other current assets                |                                                     |        | (635     | )        |              |        | 2,136        |          |              |      | 55           |       |     |      |  |        |         |        | 1,556  |        
|                                                             |                                                                                                    |                                                          | Trade accounts payable                              |                                                     |        | 48       |          |              |        | (4,181       | )        |              |      | 76           |       |     |      |  |        |         |        | (4,057 | )      
|                                                             |                                                                                                    |                                                          | Intercompany payables                               |                                                     |        | 186,845  |          |              |        | (180,485     | )        |              |      | (6,360       | )     |     |      |  |        |         |        |       |        
|                                                             |                                                                                                    |                                                          | Accrued liabilities                                 |                                                     |        | (2,080   | )        |              |        | (3,483       | )        |              |      | 14,096       |       |     |      |  |        |         |        | 8,533  |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     | Total adjustments                                   |        |          | 188,362  |              |        |              | (133,222 | )            |      |              | 8,078 |     |      |   | (886   | )       |        |        | 62,332  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash provided by (used in) operating activities |        |          | 178,741  |              |        |              | (133,008 | )            |      |              | 6,978 |     |      |   |       |         |        |        | 52,711  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             | Purchases of property and equipment                                                                |                                                          |                                                     | (6                                                  | )      |          |          | (13,303      | )      |              |          | (4           | )    |              |       |    |      |   |        | (13,313 | )     
|                                                             | Intercompany sale of property and equipment                                                        |                                                          |                                                     | (2                                                  | )      |          |          | 2            |        |              |          |             |      |              |       |    |      |   |        |        |       
|                                                             | Proceeds from sale of property and equipment                                                       |                                                          |                                                     |                                                    |        |          |          | 3,005        |        |              |          |             |      |              |       |    |      |   |        | 3,005   |       
|                                                             | Proceeds from sale of equity investment in joint venture                                           |                                                          |                                                     |                                                    |        |          |          |             |        |              |          | 2,700        |      |              |       |    |      |   |        | 2,700   |       
|                                                             | Capital contribution                                                                               |                                                          |                                                     | (73,178                                             | )      |          |          | 73,100       |        |              |          | 78           |      |              |       |     |      |   |        |        |       
|                                                             | Return of capital                                                                                  |                                                          |                                                     | 40,881                                              |        |          |          | (39,829      | )      |              |          | (1,052       | )    |              |       |     |      |   |        |        |       
|                                                             | Increase in short-term investments                                                                 |                                                          |                                                     |                                                    |        |          |          |             |        |              |          | 2,367        |      |              |       |    |      |   |        | 2,367   |       
|                                                             | Increase in cash surrender value of life insurance                                                 |                                                          |                                                     | 1,341                                               |        |          |          |             |        |              |          |             |      |              |       |    |      |   |        | 1,341   |       
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash provided by (used in) investing activities |        |          | (30,964  | )            |        |              | 22,975   |              |      |              | 4,089 |     |      |   |       |         |        |        | (3,900  | )
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             | (Repayments) additions to revolving credit facilities, net                                         |                                                          |                                                     | (98,900                                             | )      |          |          | 36,516       |        |              |          |             |      |              |       |    |      |   |        | (62,384 | )     
|                                                             | Additions to long-term debt                                                                        |                                                          |                                                     |                                                    |        |          |          | 82,750       |        |              |          |             |      |              |       |    |      |   |        | 82,750  |       
|                                                             | Repayment of long-term debt                                                                        |                                                          |                                                     | (37,498                                             | )      |          |          | (8,862       | )      |              |          |             |      |              |       |    |      |   |        | (46,360 | )     
|                                                             | Payment of deferred financing costs                                                                |                                                          |                                                     | (9,262                                              | )      |          |          |             |        |              |          |             |      |              |       |    |      |   |        | (9,262  | )     
|                                                             | Proceeds from issuance of common stock                                                             |                                                          |                                                     | 262                                                 |        |          |          |             |        |              |          |             |      |              |       |    |      |   |        | 262     |       
|                                                             | Other, net                                                                                         |                                                          |                                                     | (2,588                                              | )      |          |          | 2,837        |        |              |          | 300          |      |              |       |    |      |   |        | 549     |       
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash (used in) provided by financing activities |        |          | (147,986 | )            |        |              | 113,241  |              |      |              | 300   |     |      |   |       |         |        |        | (34,445 | )
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS |                                                                                                    |                                                          |                                                    |                                                     |        |          | 16       |              |        |              |         |              |      |              |      |     |      |   | 16     |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|NET INCREASE IN CASH AND CASH EQUIVALENTS                    |                                                                                                    |                                                          | (209                                                | )                                                   |        |          | 3,224    |              |        |              | 11,367   |              |      |              |      |     |      |   | 14,382 |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               |                                                                                                    |                                                          | 209                                                 |                                                     |        |          | 1,063    |              |        |              | 9,271    |              |      |              |      |     |      |   | 10,543 |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                   |                                                                                                    | $                                                        |                                                    |                                                     |        | $        | 4,287    |              |        | $            | 20,638   |              |      | $            |      |     |      | $ | 24,925 |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |          |              |        |              |          |              |      |              |       |     |      |   |        |        

19



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##### Table of Contents



SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2001
In Thousands

|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |         |         |        |         |  
|------------------------------------------------------------ | -------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------- | -------- | ------- | ------------ | ------ | ------------ | ------- | ------------ | ---- | ------------ | ------ | ------ | ------- | - | ------- | ------- | ------- | ------ | ------- | -
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         | ALLIED   |         | GUARANTOR    |        | NONGUARANTOR |         |              |      |              |        |        |         |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         | HOLDINGS |         | SUBSIDIARIES |        | SUBSIDIARIES |         | ELIMINATIONS |      | CONSOLIDATED
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |             
|CASH FLOWS FROM OPERATING ACTIVITIES                         |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             | Net (loss) income                                                                                  |                                                          | $                                                   | (37,224                                             | )       |          | $       | (46,953      | )      |              | $       | 2,245        |      |              | $      | 44,708 |         |   | $       | (37,224 | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             | Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities: |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |         |        
|                                                             |                                                                                                    | Amortization of deferred financing costs                 |                                                     |                                                     | 2,906   |          |         |              |       |              |         |              |     |              |        |        |        |   |         |         | 2,906   |       
|                                                             |                                                                                                    | Depreciation and amortization                            |                                                     |                                                     | 2,550   |          |         |              | 42,361 |              |         |              | 539  |              |        |        |        |   |         |         | 45,450  |       
|                                                             |                                                                                                    | Gain on sale of property and equipment                   |                                                     |                                                     |        |          |         |              | (2,719 | )            |         |              |     |              |        |        |        |   |         |         | (2,719  | )     
|                                                             |                                                                                                    | Deferred income taxes                                    |                                                     |                                                     | (19,657 | )        |         |              | (51    | )            |         |              | 331  |              |        |        |        |   |         |         | (19,377 | )     
|                                                             |                                                                                                    | Compensation expense related to stock options and grants |                                                     |                                                     | 207     |          |         |              |       |              |         |              |     |              |        |        |        |   |         |         | 207     |       
|                                                             |                                                                                                    | Equity in earnings of joint ventures                     |                                                     |                                                     |        |          |         |              | (3,299 | )            |         |              | (294 | )            |        |        |        |   |         |         | (3,593  | )     
|                                                             |                                                                                                    | Equity in losses of subsidiaries                         |                                                     |                                                     | 45,483  |          |         |              | (775   | )            |         |              |     |              |        |        | (45,483 | ) |         |         |        |       
|                                                             |                                                                                                    | Amortization of Teamsters Union signing bonus            |                                                     |                                                     |        |          |         |              | 1,802  |              |         |              |     |              |        |        |        |   |         |         | 1,802   |       
|                                                             |                                                                                                    | Change in operating assets and liabilities:              |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |         |         |       
|                                                             |                                                                                                    |                                                          | Receivables, net of allowance for doubtful accounts |                                                     |         | 782      |         |              |        | 20,102       |         |              |      | (2,694       | )      |        |         |  |         |         |         | 18,190 |        
|                                                             |                                                                                                    |                                                          | Inventories                                         |                                                     |         |         |         |              |        | 730          |         |              |      | (10          | )      |        |         |  |         |         |         | 720    |        
|                                                             |                                                                                                    |                                                          | Prepayments and other current assets                |                                                     |         | 212      |         |              |        | (3,215       | )       |              |      | 2,181        |        |        |         |  |         |         |         | (822   | )      
|                                                             |                                                                                                    |                                                          | Trade accounts payable                              |                                                     |         | 1,291    |         |              |        | (7,950       | )       |              |      | (362         | )      |        |         |  |         |         |         | (7,021 | )      
|                                                             |                                                                                                    |                                                          | Intercompany payables                               |                                                     |         | (13,610  | )       |              |        | 12,878       |         |              |      | 732          |        |        |         |  |         |         |         |       |        
|                                                             |                                                                                                    |                                                          | Accrued liabilities                                 |                                                     |         | (716     | )       |              |        | (4,592       | )       |              |      | 11,336       |        |        |         |  |         |         |         | 6,028  |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Total adjustments                                   |         |          | 19,448  |              |        |              | 55,272  |              |      |              | 11,759 |        |         |   | (45,483 | )       |         |        | 41,771  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash (used in) provided by operating activities |         |          | (17,776 | )            |        |              | 8,319   |              |      |              | 14,004 |        |         |   | (775    | )       |         |        | 4,547   |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             | Purchases of property and equipment                                                                |                                                          |                                                     | (67                                                 | )       |          |         | (17,552      | )      |              |         | (655         | )    |              |        |       |         |   |         | (18,274 | )      
|                                                             | Intercompany sale of property and equipment                                                        |                                                          |                                                     | 1,403                                               |         |          |         | (1,403       | )      |              |         |             |      |              |        |       |         |   |         |        |        
|                                                             | Proceeds from sale of property and equipment                                                       |                                                          |                                                     |                                                    |         |          |         | 4,832        |        |              |         |             |      |              |        |       |         |   |         | 4,832   |        
|                                                             | Investment in joint venture                                                                        |                                                          |                                                     |                                                    |         |          |         |             |        |              |         | (464         | )    |              |        |       |         |   |         | (464    | )      
|                                                             | Cash received from joint ventures                                                                  |                                                          |                                                     |                                                    |         |          |         | 3,578        |        |              |         |             |      |              |        |       |         |   |         | 3,578   |        
|                                                             | Intercompany dividend received (paid)                                                              |                                                          |                                                     | 1,980                                               |         |          |         | (1,980       | )      |              |         |             |      |              |        |       |         |   |         |        |        
|                                                             | Increase in short-term investments                                                                 |                                                          |                                                     |                                                    |         |          |         |             |        |              |         | (4,864       | )    |              |        |       |         |   |         | (4,864  | )      
|                                                             | Increase in cash surrender value of life insurance                                                 |                                                          |                                                     | (360                                                | )       |          |         |             |        |              |         |             |      |              |        |       |         |   |         | (360    | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash provided by (used in) investing activities |         |          | 2,956   |              |        |              | (12,525 | )            |      |              | (5,983 | )      |         |   |        |         |         |        | (15,552 | )
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             | (Repayments) additions to revolving credit facilities, net                                         |                                                          |                                                     | 21,739                                              |         |          |         | 1,848        |        |              |         |             |      |              |        |       |         |   |         | 23,587  |        
|                                                             | Additions to long-term debt                                                                        |                                                          |                                                     |                                                    |         |          |         |             |        |              |         |             |      |              |        |       |         |   |         |        |        
|                                                             | Repayment of long-term debt                                                                        |                                                          |                                                     |                                                    |         |          |         | (107         | )      |              |         |             |      |              |        |       |         |   |         | (107    | )      
|                                                             | Payment of deferred financing costs                                                                |                                                          |                                                     | (2,663                                              | )       |          |         |             |        |              |         |             |      |              |        |       |         |   |         | (2,663  | )      
|                                                             | Proceeds from issuance of common stock                                                             |                                                          |                                                     | 303                                                 |         |          |         |             |        |              |         |             |      |              |        |       |         |   |         | 303     |        
|                                                             | Other, net                                                                                         |                                                          |                                                     | (3,488                                              | )       |          |         | 2,498        |        |              |         | 683          |      |              |        |       |         |   |         | (307    | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash provided by financing activities           |         |          | 15,891  |              |        |              | 4,239   |              |      |              | 683    |        |         |   |        |         |         |        | 20,813  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                            
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS |                                                                                                    |                                                          |                                                    |                                                     |         |          | 303     |              |        |              | (235    | )            |      |              |       |        |         |   | 68      |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS         |                                                                                                    |                                                          | 1,071                                               |                                                     |         |          | 336     |              |        |              | 8,469   |              |      |              | (775   | )      |         |   | 9,876   |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               |                                                                                                    |                                                          | (1,213                                              | )                                                   |         |          | 2,063   |              |        |              | 1,523   |              |      |              |       |        |         |   | 2,373   |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                   |                                                                                                    | $                                                        | (142                                                | )                                                   |         | $        | 2,399   |              |        | $            | 9,992   |              |      | $            |       |        |         | $ | 12,249  |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |         |          |         |              |        |              |         |              |      |              |        |        |         |   |         |        

20



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##### Table of Contents









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

Results of Operations

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

|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |      |       | 
|-------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------ | ----- | ------------------ | ------ | ----------------- | ----- | ---- | ------ | ---- | ----- | ---- | ----- | - | ----- | ---- | ----- | 
|                                                                                 |                                                  |                          |       | Three Months Ended |        | Nine Months Ended
|                                                                                 |                                                  |                          |       | September 30       |        | September 30     
|                                                                                 |                                                  |                          |       |                    |        |                  
|                                                                                 |                                                  |                          |       | 2002               |        | 2001              |       | 2002 |        | 2001
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |     
|Revenues                                                                         |                                                  |                          | 100.0 | %                  |        |                   | 100.0 | %    |        |      | 100.0 | %    |       |   | 100.0 | %   
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|Operating expenses:                                                              |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|                                                                                 | Salaries, wages and fringe benefits              |                          |       | 55.3               |        |                   |       | 58.2 |        |      |       | 54.7 |       |   |       | 58.1 |      
|                                                                                 | Operating supplies and expenses                  |                          |       | 15.6               |        |                   |       | 16.6 |        |      |       | 15.1 |       |   |       | 17.1 |      
|                                                                                 | Purchased transportation                         |                          |       | 11.9               |        |                   |       | 11.4 |        |      |       | 10.9 |       |   |       | 11.2 |      
|                                                                                 | Insurance and claims                             |                          |       | 5.1                |        |                   |       | 5.2  |        |      |       | 5.2  |       |   |       | 5.6  |      
|                                                                                 | Operating taxes and licenses                     |                          |       | 3.6                |        |                   |       | 3.9  |        |      |       | 3.7  |       |   |       | 3.7  |      
|                                                                                 | Depreciation and amortization                    |                          |       | 6.2                |        |                   |       | 7.4  |        |      |       | 6.0  |       |   |       | 6.8  |      
|                                                                                 | Rents                                            |                          |       | 0.8                |        |                   |       | 0.8  |        |      |       | 0.8  |       |   |       | 0.8  |      
|                                                                                 | Communications and utilities                     |                          |       | 0.7                |        |                   |       | 0.6  |        |      |       | 0.8  |       |   |       | 0.8  |      
|                                                                                 | Other operating expenses                         |                          |       | 1.3                |        |                   |       | 1.6  |        |      |       | 1.1  |       |   |       | 1.6  |      
|                                                                                 | Loss (gain) on sale of operating assets          |                          |       | 0.2                |        |                   |       | 0.0  |        |      |       | (0.1 | )     |   |       | (0.4 | )    
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|                                                                                 |                                                  | Total operating expenses |       |                    | (100.7 | )                 |       |      | (105.7 | )    |       |      | (98.2 | ) |       |      | 105.3 | 
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|Operating (loss) income                                                          |                                                  |                          | (0.7  | )                  |        |                   | (5.7  | )    |        |      | 1.8   |      |       |   | (5.3  | )   
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|Other income (expense):                                                          |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|                                                                                 | Equity in earnings of joint ventures, net of tax |                          |       | 0.0                |        |                   |       | 0.5  |        |      |       | 0.0  |       |   |       | 0.5  |      
|                                                                                 | Interest expense                                 |                          |       | (3.5               | )      |                   |       | (4.4 | )      |      |       | (3.5 | )     |   |       | (4.0 | )    
|                                                                                 | Interest income                                  |                          |       | 0.1                |        |                   |       | 0.2  |        |      |       | 0.2  |       |   |       | 0.3  |      
|                                                                                 | Gain on early extinguishment of debt             |                          |       | 0.0                |        |                   |       | 0.0  |        |      |       | 0.4  |       |   |       | 0.0  |      
|                                                                                 | Other, net                                       |                          |       | 0.0                |        |                   |       | 0.0  |        |      |       | 0.0  |       |   |       | 0.0  |      
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|                                                                                 |                                                  |                          | (3.4  | )                  |        |                   | (3.7  | )    |        |      | (2.9  | )    |       |   | (3.2  | )   
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|Loss before income taxes and cumulative
effect of change in accounting principle |                                                  |                          | (4.1  | )                  |        |                   | (9.4  | )    |        |      | (1.1  | )    |       |   | (8.5  | )   
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|Income tax benefit                                                               |                                                  |                          | 1.1   |                    |        |                   | 3.2   |      |        |      | 0.3   |      |       |   | 3.0   |     
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|Loss before cumulative effect of change in
accounting principle                  |                                                  |                          | (3.0  | )                  |        |                   | (6.2  | )    |        |      | (0.8  | )    |       |   | (5.5  | )   
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|Cumulative effect of change in accounting
Principle, net of tax                  |                                                  |                          | 0.0   |                    |        |                   | 0.0   |      |        |      | (0.6  | )    |       |   | 0.0   |     
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     
|Net loss                                                                         |                                                  |                          | (3.0  | )%                 |        |                   | (6.2  | )%   |        |      | (1.4  | )%   |       |   | (5.5  | )%  
|                                                                                 |                                                  |                          |       |                    |        |                   |       |      |        |      |       |      |       |   |       |     

Three and Nine Months Ended September 30, 2002 compared to Three and Nine Months Ended September 30, 2001

Revenues were $213.0 million for the third quarter of 2002 versus revenues of
$204.0 million for the third quarter of 2001, an increase of $9.0 million, or
4.4%. For the nine-month period ended September 30, 2002, revenues were $665.2
million, versus revenues of $672.4 million for the nine-month period ended
September 30, 2001, a decrease of $7.2 million, or 1.1%.

The increase in revenues in the third quarter of 2002 over the third quarter of
2001 was due to an increase in the number of vehicle deliveries, which resulted
from higher original equipment manufacturer (OEM) production

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as well as from new market share obtained in 2002. The decrease in revenues
for the nine-month period ended September 30, 2002 versus the nine-month period
ended September 30, 2001 was due to a decline in vehicle deliveries overall
which resulted primarily from the decision to exit non-performing locations
(locations with financial losses and/or high risk management exposure) in 2001
and during 2002. Offsetting the impact on revenues from the volume decline was
an increase in the Allied Automotive Group revenue per unit. This increase is
primarily the result of the implementation by Allied Automotive Group of a new
administrative processing fee in September 2001.

The net loss was $6.5 million during the third quarter of 2002 versus a net
loss of $12.6 million during the third quarter of 2001. Basic and diluted loss
per share in the third quarter of 2002 were $0.78 versus basic and diluted loss
per share of $1.56 in the third quarter of 2001. For the nine-month period
ended September 30, 2002, the Company experienced a net loss of $9.6 million
versus a net loss of $37.2 million for the nine-month period ended September
30, 2001. Basic and diluted loss per share were $0.67 for the nine-month
period ended September 30, 2002 versus basic and diluted loss per share of
$4.60 for the nine-month period ended September 30, 2001. The net loss for the
nine-month period ended September 30, 2002 included a $1.7 million after-tax
gain on the early extinguishment of the Companys subordinated notes and a $4.1
million after-tax charge related to the impairment of goodwill at the Companys Axis
Group subsidiary. The impairment charge resulted from the Companys adoption
of SFAS 142 as described below. The net loss for the nine month period ended
September 30, 2001 included after-tax charges of $4.6 million for severance and
workforce reduction expenses as well as an after-tax gain of $1.5 million on
the disposition of excess real estate and other assets in Canada.

Earnings before interest, taxes, depreciation and amortization, and gains and
losses on disposal of assets (EBITDA) were $12.1 million during the third
quarter of 2002 versus $3.6 million during the third quarter of 2001. For the
nine-month period ended September 30, 2002 EBITDA was $52.0 million versus $7.0
million for the nine-month period ended September 30, 2001. The significant
improvement in EBITDA was due primarily to the ongoing execution of the
Companys turnaround initiatives related to improved revenue quality, driver
productivity, workforce reductions, the elimination of non-contributory
expenses and assets, and improvement in workers compensation and cargo claims
expenses.

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

Salaries, wages and fringe benefits decreased from 58.2% of revenues in the
third quarter of 2001 to 55.3% of revenues in the third quarter of 2002, and
from 58.1% of revenues for the nine-month period ended September 30, 2001 to
54.7% of revenues for the nine-month period ended September 30, 2002. The
decrease was primarily due to continued productivity and efficiency
improvements implemented as part of the Companys turnaround initiatives. In
addition, the Company incurred $7.2 million of workforce reduction expenses for
the nine-month period ended September 30, 2001 compared to $1.4 million of such
expenses in 2002. The workforce reduction expense was part of the Companys
turnaround initiatives.

Operating supplies and expenses decreased from 16.6% of revenues in the third
quarter of 2001 to 15.6% of revenues in the third quarter of 2002, and
decreased from 17.1% of revenues for the nine-month period ended September 30,
2001 to 15.1% of revenues for the nine-month period ended September 30, 2002.
The decrease was due primarily to a decrease in fuel costs experienced in the
first nine months of 2002 versus 2001, combined with a reduction in the
maintenance costs of rigs in service. The decreased maintenance costs are a
result of the Company operating approximately 9.1% fewer rigs in the third
quarter of 2002 as well as improved efficiency in its field operations,
including 46 dedicated garage operations managed by the Company. These efforts
are consistent with the Companys turnaround initiatives.

Purchased transportation increased from 11.4% of revenues in the third quarter
of 2001 to 11.9% of revenues in the third quarter of 2002, and decreased from
11.2% of revenues for the nine-month period ended September 30, 2001 to 10.9%
of revenues for the nine-month period ended September 30, 2002. The increase
in the third

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quarter 2002 over the third quarter of 2001 was due to a shift in the mix of
owner-operators versus company drivers and an increase in business at locations
where owner-operators are utilized for vehicle deliveries. The decrease for
the nine-month period ended September 30, 2002 versus the nine-month period
ended September 30, 2001 was due primarily to a decrease in the number of
owner-operators overall, which resulted from the closing of unprofitable
terminals in the fourth quarter of 2001 that utilized owner-operators.

Insurance and claims expense decreased from 5.2% of revenues in the third
quarter of 2001 to 5.1% of revenues in the third quarter of 2002, and decreased
from 5.6% of revenues for the nine-month period ended September 30, 2001 to
5.2% of revenues for the nine-month period ended September 30, 2002. The
decrease was a result of lower cargo claims experienced on shipping vehicles as
well as a reduction in auto liability claims costs. The Company is
aggressively managing these costs as part of its on-going turnaround plan.

Depreciation and amortization expense decreased from 7.4% of revenues in the
third quarter of 2001 to 6.2% of revenues in the third quarter of 2002, and
decreased from 6.8% of revenues for the nine-month period ended September 30,
2001 to 6.0% of revenues for the nine-month period ended September 30, 2002.
The decrease is due primarily to the sale of non-performing assets during 2001
and reduced capital expenditures in 2002. The remaining decrease is due to the
reduction of amortization expense resulting from the Companys adoption of SFAS
No. 142, Goodwill and Other Intangibles which became effective January 1,
2002. During the third quarter of 2001, the Company recorded $0.9 million of
amortization expense and $2.7 million for the nine-month period ended September
30, 2001 related to goodwill.

Other operating expenses decreased from 1.6% of revenues in the third quarter
of 2001 to 1.3% of revenues in the third quarter of 2002, and decreased from
1.6% of revenues for the nine-month period ended September 30, 2001 to 1.1% of
revenues for the nine-month period ended September 30, 2002. The decrease was
due primarily to overall lower professional fees for consultants. During 2001,
the Company engaged outside consultants, including Jay Alix and Associates, to
aid in the planning and analysis of its turnaround initiatives and the
refinancing of its revolving credit facility and subordinated debt.

Gain/loss on disposition of assets increased from a loss of $24 thousand in the
third quarter of 2001 to a loss of $367 thousand in the third quarter of 2002,
and decreased from a gain of $2.7 million for the nine-month period ended
September 30, 2001 to a gain of $300 thousand for the nine-month period ended
September 30, 2002. As part of the Companys turnaround initiatives, the
Company has disposed of non-performing assets, primarily in the second quarter
of 2001.

Equity in earnings of joint ventures, net of tax, decreased to $0 in the third
quarter of 2002 and for the nine-month period ended September 30, 2002, from
earnings of $1.1 million in the third quarter of 2001 and $3.6 million for the
nine-month period ended September 30, 2001. The decrease is due to the sale of
the Companys joint venture interest in the United Kingdom in the fourth
quarter of 2001 and the sale of its joint venture interest in Brazil in the
second quarter of 2002.

Interest expense decreased from 4.4% of revenues in the third quarter of 2001
to 3.5% of revenues in the third quarter of 2002, and decreased from 4.0% of
revenues for the nine-month period ended September 30, 2001 to 3.5% of revenues
for the nine-month period ended September 30, 2002. The decrease was due to
higher debt levels and effective interest rates in 2001 versus 2002, as well as
the incurrence in 2001 of additional costs related to the amendment of the
Companys revolving credit facility and its senior subordinated notes.

The income tax benefit decreased from $6.6 million in the third quarter of 2001
to $2.2 million in the third quarter of 2002, and decreased from $19.9 million
for the nine-month period ended September 30, 2001 to $1.8 million, excluding
taxes on extraordinary item, for the nine-month period ended September 30,
2002. The decrease was due to increased pre-tax income and a change in the
effective tax rate resulting from additional valuation allowances that were
established in relation to foreign tax credits that are not expected to be
realized.

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The adoption of SFAS No. 142 is a required change in accounting principle, and
the cumulative effect of adopting this standard as of January 1, 2002 resulted
in a non-cash, after-tax decrease to net income of $4.1 million for the
Company. Pursuant to the adoption of SFAS No. 142, the Company will annually
test goodwill for impairment.

The adoption of SFAS No. 145 required that the after-tax gain of $1.7 million
on the early extinguishment of debt the Company recorded during the first
quarter of 2002 be reclassified from an extraordinary item, net of tax, to
other income of $2.8 million, before tax.

As part of the Companys turnaround efforts in the first quarter of 2002, the
Allied Holdings Inc. Defined Benefit Pension Plan was amended in February 2002
to freeze the Plan. The amendment resulted in a curtailment of the Plan
effective April 30, 2002, under which employees do not accumulate any new
benefits and new employees are not added to the Plan. The Companys net pension
expense for 2001 was $2.6 million. As a result of freezing the Plan, the
Company expects net pension expense to be $304,000 for 2002.

Financial Condition, Liquidity and Capital Resources

The Companys sources of liquidity are funds provided by operations and
borrowings under its revolving credit facility with a syndicate of lenders. The
Companys primary liquidity needs are for the remanufacturing and maintenance
of rigs and terminal facilities, the payment of operating expenses and the
payment of interest and principal associated with long-term debt.

Net cash provided by operating activities totaled $52.7 million for the
nine-month period ended September 30, 2002, versus $4.5 million for the
nine-month period ended September 30, 2001. The increase was due primarily to
improved results from operations that decreased the loss before income taxes
and cumulative change in accounting principle of $57.2 million for the first
nine months of 2001 to $7.3 million for the first nine months of 2002.

Net cash used in investing activities totaled $3.9 million for the nine-month
period ended September 30, 2002, versus $15.6 million for the nine-month period
ended September 30, 2001. Cash paid to purchase capital items decreased from
$18.3 million in the first nine months of 2001 to $13.3 million in the first
nine months of 2002. The Company has embarked on a significant fleet
remanufacturing program that is expected to enable the Company to upgrade up to
15% of its active fleet in 2002. The fleet remanufacturing program is being
implemented slowly to ensure quality of the remanufactured rigs and therefore
capital expenditures are weighted more towards the end of the year. The
Company anticipates capital expenditures of approximately $25 million in
calendar year 2002, which is driven primarily by the fleet remanufacturing
program, compared to capital expenditures of $21.5 million in 2001. In
addition, short-term investments held by the Companys captive insurance
company increased by $4.9 million during the first nine months of 2001, but
decreased by $2.4 million during the first nine months of 2002. During 2002,
the captive insurance company has maintained a larger percentage of its assets
in cash and cash equivalents versus short-term investments.

Net cash used in financing activities totaled $34.4 million for the nine-month
period ended September 30, 2002, versus net cash provided by financing
activities of $20.8 million for the nine-month period ended September 30, 2001.
During the first nine months of 2002, long-term debt was reduced by $28.0
million, compared to borrowings of long-term debt of $23.5 million in the first
nine-months of 2001. The repayment of debt was primarily due to a reduction in
the net loss experienced by the Company and lower working capital requirements.
Contributing to the increase in cash provided by operations were the proceeds
from the sale of the investment in the joint venture in Brazil and $1.3 million
received from the conversion of insurance policies.

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The Company also paid $9.2 million in deferred financing costs related to the
refinancing of its revolving credit facility and the repurchase of its senior
subordinated notes.

As part of the Companys Credit Facility, as described in Note 9, the Revolver
and Term Loans A, B, and C mature on February 25, 2005. Term Loan D matures on
February 26, 2005 and the Notes mature on October 1, 2007. As part of the debt
agreements governing these Term Loans, the repayment of Term Loan A includes
eleven installment payments with the outstanding balance due at maturity and
the repayment of Term Loan B includes 5 installment payments with the
outstanding balance due at maturity. Term Loans C and D, as well as the Notes,
are to be repaid in full at maturity. For more comprehensive information
regarding the outstanding balances at September 30, 2002 and the related
interest rates, refer to Note 9.

The Company began trading its common stock on the American Stock Exchange
(AMEX) under the symbol AHI, effective April 8, 2002. The Companys common
stock was previously listed on the New York Stock Exchange (NYSE). As
previously announced, the Company no longer met the NYSEs requirements for
continued listing and had been operating under a plan that was approved by the
NYSE in August 2001. The plan was to bring the Companys total market
capitalization and shareholders equity above NYSEs continued listing
requirement of $50 million by November 29, 2002. The Company believes,
however, that the change to AMEX better allows for management of the business
without the uncertainty and distractions associated with meeting NYSE
standards. Management does not expect a significant change in shareholder
liquidity as a result of the move to the AMEX.

Management anticipates that the Companys existing capital resources, cash flow
generated from future operations and drawings under the Credit Facility will
enable it to maintain its planned operations, capital expenditures and debt
service for the foreseeable future. Also, as described further in Part II of
this report, the Company is involved in various litigation matters, including
the Gateway Development & Manufacturing case and the Commercial Carriers, Inc.
case. While it is not possible to predict the outcome of litigation against
the Company and while the Company believes that these claims are without merit,
if this litigation is resolved in a manner that is adverse to the Company, it
could have a material adverse effect on the Companys consolidated financial
position and significantly increase the Companys need for additional
liquidity.

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.

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 September 30, 2002, which are recorded at fair value of $62.4
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 $6.2 million as of September 30, 2002.

Interest Rates The Company primarily issues long-term debt obligations to
support general corporate purposes including capital expenditures and working
capital needs. The Senior Notes of the Companys long-term debt obligations
bear a fixed rate of interest while the rates for the Revolving Credit Facility
and Term Loans are variable, based on a fixed percent and the prime rate. A
one-percentage point increase in interest rates affecting the Companys
floating rate long-term debt would reduce pre-tax income by $1.1 million over
the next

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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.

Fuel Prices Allied Automotive Group 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, Allied Automotive Group periodically purchases fuel in advance of
consumption. A 10% increase in diesel fuel prices would reduce pre-tax income
by $3.6 million over the next fiscal year assuming 2002 levels of fuel
consumption.

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 September 30, 2002, are $73.5 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 $7.4 million as of September 30, 2002. At September 30, 2002 a
receivable balance of $13.3 million related to intercompany transactions was
recorded on the Companys Canadian subsidiary. The potential loss from a
hypothetical 10% change in quoted foreign currency exchange rates related to
this balance amounts to $1.3 million as of September 30, 2002. The Company
does not use derivative financial instruments to hedge its exposure to changes
in foreign currency exchange rates.

Revenue Variability The Companys revenues are variable and can be impacted
by sudden unexpected changes in Original Equipment Manufacturer production
levels. In addition, 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 generally higher spring and early summer
sales of automobiles and light trucks. During the first and third quarters,
vehicle shipments typically decline due to lower sales volume during those
periods and scheduled plant shut downs. Except for the impact of fuel cost
fluctuations discussed herein, inflation has not significantly affected the
Companys results of operations.

Critical Accounting Policies

The Company has certain critical accounting policies that are important to the
portrayal of financial condition and results of operation. These critical
accounting policies require subjective or complex judgments. The Companys
critical accounting policies include claims and insurance reserves, accounts
receivable valuation reserves and the income tax valuation reserve.

CLAIMS AND INSURANCE RESERVES  Reserves for self-insured workers
compensation, automobile, and general liability losses are subject to actuarial
estimates based on historical claims experience adjusted for current industry
trends. The Company receives third-party actuarial valuations to assist in the
determination of its claims and insurance reserves. The actuarial estimates for
self-insured workers compensation and automobile liability are
discounted using managements estimate of weighted risk free
interest rates for each claim year to their present values. The claims and insurance reserves are
adjusted periodically as such claims mature to reflect changes in actuarial
estimates based on actual experience.

ACCOUNTS RECEIVABLE VALUATION RESERVES  Substantially all revenue is derived
from transporting new automobiles and light trucks from manufacturing plants,
ports, auctions, and railway distribution points to automobile dealerships.
Revenue is recorded when the vehicles are delivered to the dealerships. The
Company makes significant estimates to determine the collectibility of its
accounts receivable on the balance sheet. Estimates include periodic
evaluations of the credit worthiness of customers including the impact of
market and economic conditions on their viability to satisfy amounts owed to
the Company. In

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addition, estimates include assessments of the potential for customer billing
adjustments based on the timing of delivery, the accuracy of pricing, as well
as evaluation of the historical aging of customer accounts.

ACCOUNTING FOR INCOME TAXES  As part of the process of preparing the Companys
consolidated financial statements the Company is required to estimate income
taxes in each of the jurisdictions in which the Company operates. This process
involves estimating actual current tax exposure, together with assessing
temporary differences resulting from differing treatment of items, such as
deferred revenue, for tax and accounting purposes. These differences result in
deferred tax assets and liabilities, which are included within the Companys
consolidated balance sheet. The Company must then assess the likelihood that
the deferred tax assets will be recovered from future taxable income and to the
extent the Company believes that recovery is not likely, the Company must
establish a valuation allowance. To the extent the Company establishes a
valuation allowance or increases this allowance in a period, the Company must
include an expense within the tax provision in the statements of operations.

Significant management judgment is required in determining the Companys
provision for income taxes, deferred tax assets and liabilities and any
valuation allowance recorded against the net deferred tax assets. The Company
has recorded a valuation allowance of $5.3 million as of September 30, 2002 due
to uncertainties related to the Companys ability to utilize some of the
deferred tax assets, primarily consisting of certain net operating losses
carried forward and foreign tax credits, before they expire. The valuation
allowance is based on managements estimate of taxable income by jurisdiction
in which the Company operates and the period over which the deferred tax assets
will be recoverable. In the event that actual results differ from these
estimates or the Company adjusts these estimates in future periods, the Company
may need to establish an additional valuation allowance, which could materially
impact the financial position and results of operations.

The net deferred tax asset as of September 30, 2002 was $14.6 million, net of a
valuation allowance of $5.3 million.

GOODWILL  The Company adopted SFAS 142 as of January 1, 2002. Pursuant to
adoption, goodwill is no longer amortized but is evaluated annually for
impairment, or on an interim basis if an event occurs or circumstances change
that would reduce the fair value of goodwill below its carrying value. The
fair value of goodwill is derived by using a discounted cash flow analysis.
This analysis involves estimates and assumptions by management regarding future
revenue streams and expenses. Changes to these assumptions and estimates could
have a material effect on the carrying value of goodwill and result in an
impairment charge in the Companys consolidated statements of operations.

Cautionary Notice Regarding Forward-Looking Statements- This Quarterly Report
on Form 10-Q contains, and from time to time the Company and its officers,
directors or employees may make other 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, (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. Without limiting the generality of the foregoing, the words
believe, anticipate, seek, expect, estimate, intend, plan, and
similar expressions are intended to identify 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 from
historical results or results expressed or implied by such forward-looking
statements 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; the impact of
recent price increases implemented by the Company on the Companys market
share; loss or reduction of revenues generated by the Companys major customers
or the loss of any such customers; ability of the

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Company to negotiate contracts expiring in the future with customers and Union
representatives of its employees on terms favorable to the Company; the
variability of quarterly results and seasonality of the automotive distribution
industry; the Companys highly leveraged financial position; 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; increases in fuel prices;
increased frequency and severity of work related accidents and workers
compensation claims; availability of appropriate insurance coverage; increased
expenses due to layoffs of employees; changes in regulatory requirements,
including environmental regulations, which are applicable to the Companys
business; changes in vehicle sizes and weights which may adversely impact
vehicle deliveries per load; risks associated with doing business in foreign
countries; and other risk factors set forth from time to time in the Companys
Securities and Exchange Commission reports, including but not limited to, this
Quarterly Report on Form 10-Q and the Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2001. Many of these factors are beyond the
Companys ability to control or predict, and readers are cautioned not to put
undue reliance on such forward-looking statements. The Company disclaims any
obligation to update or review any forward-looking statements contained in this
Quarterly Report or in any statement referencing the risk factors and other
cautionary statements set forth in this Quarterly Report.







Item 3. Quantitative and Qualitative Disclosures about Market Risk

The information required under this item is provided under the caption
Disclosures about Market Risks under Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations.







Item 4. Controls and Procedures

The Company maintains a system of disclosure controls and procedures (as
defined in Rules 13a  14(c) and 15d  14(c) under the Securities Exchange Act
of 1934) designed to provide reasonable assurance as to the reliability of the
financial statements and other disclosures included in this report, as well as
to safeguard assets from unauthorized use or disposition. The Companys Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of
the Companys disclosure controls within 90 days prior to the filing date of
this report. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Companys disclosure controls and
procedures are effective in alerting them in a timely manner of material
information required to be included in the Companys periodic Securities and
Exchange Commission filings. Since the evaluation date, no significant changes
were made to the Companys internal controls or other factors that could
significantly affect these controls.

PART II  OTHER INFORMATION
Item 1.  LEGAL PROCEEDINGS

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

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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.
12000/8184. 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 Company 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 that ruling was reversed on
appeal. While the appellate court held that summary judgment in favor of the
Company was premature, the Company will be permitted to raise at trial and/or
further dispositive motions the substantive arguments upon which its initial
summary judgment motion was based. Subsequent to its summary judgment ruling,
the trial court 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 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
against it, as management believes all of those claims are without merit.
While the ultimate results of this litigation cannot be predicted, if this
litigation is resolved in a manner that is adverse to the Company, it could
have a material adverse effect on the Companys consolidated financial position
or results of operations.

Ryder System, Inc. v. Allied Holdings, Inc., AH Acquisition Corp. and Allied
Automotive Group, Inc.,Case No. 01-3553-CIV-HUCK in the United States District
Court for the Southern District of Florida, relates to the Companys August
1997 stock acquisition of certain corporations wholly owned by Ryder. Through
that acquisition, the Company agreed to assume financial responsibility for
certain third-party injury claims arising on or before the August 1997 closing
date. Ryders original complaint was filed on August 16, 2001. In response,
the Company moved to dismiss, and the court granted that motion with leave for
Ryder to amend its complaint. On December 26, 2001, Ryder timely filed its
amended complaint. Following the dismissal with prejudice of one of the counts
asserted by Ryder, Ryder filed, on or about August 1, 2002, a Second Amended
Complaint. Ryders five-count Second Amended Complaint alleges, in Count one,
that the Company breached its agreement with Ryder by failing to undertake
certain actions (including posting letters of credit and bonds) to substitute
the Company for Ryder under an insurance policy covering third-party claims and
with various states agencies that regulate matters such as self-insured
workers compensation. In Counts two and three, the Second Amended Complaint
alleges that if these obligations are not required by contract, the legal
doctrines of promissory estoppel and negligent misrepresentation created them.
In Count four, the Second Amended Complaint seeks a declaration that the
Company is required to undertake these actions. In Count Five, Ryder seeks a
declaration that the Company is obligated to take certain steps to transfer
from Ryder to the Company the ownership and administrative responsibility for
two pension plans. The Company intends to continue its vigorous defense
against the claims asserted against it, as management believes all of those
claims are without merit. The Company has also raised several counterclaims.
The ultimate results of this litigation cannot be predicted. However, if Ryder
prevails on its claims and the court orders the Company to substitute itself
for Ryder by, among other things, posting substantial letters of credit, it
could have a material adverse effect on the Companys consolidated financial
position or results of operations.

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##### Table of Contents



PART II

OTHER INFORMATION







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

|             |  |                                                                                                                        
|------------ |  | -----------------------------------------------------------------------------------------------------------------------
|            
|(a) Exhibits |  | Description                                                                                                            
|            
|10.1*        |  | Amendment No. 2 to Agreement between Allied Automotive Group,
Inc. and UPS Autogistics, Inc., dated September 30, 2002.
|            



| |  |  | * Confidential treatment requested as to certain omitted portions of
this exhibit, which portions have been filed separately with the SEC.                                                                                                                                 
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | (b) Reports on Form 8-K:                                                                                                                                                                                                                                                   
|
| |  |  | On July 3, 2002, the Allied Holdings, Inc. 401(k) Retirement Plan filed
with the Commission a Current Report on Form 8-K regarding the dismissal
of its independent public accountants, Arthur Andersen LLP and the
engagement of KPMG LLP as its new independent auditors.

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##### Table of Contents









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.                                                                                                  
|                
|11/13/2002(Date) |  | /s/Hugh E. SawyerHugh E. Sawyer
on behalf of Registrant as
President and
Chief Executive Officer                       
|                
|11/13/2002(Date) |  | /s/Daniel H. PopkyDaniel H. Popky
on behalf of Registrant as
Senior Vice President, Finance
And Chief Financial Officer

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##### Table of Contents









CERTIFICATIONS

I, Daniel H. Popky, certify that:



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

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|         |  |                                    
|-------- |  | -----------------------------------
|11/13/02 |  | /s/  Daniel H.
Popky               
|Date     |  | Daniel H. Popky                    
|         |  | Senior Vice President              
|         |  | Finance and Chief Financial Officer

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##### Table of Contents



CERTIFICATIONS

I, Hugh E. Sawyer, certify that:



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

|
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|         |  |                                      
|-------- |  | -------------------------------------
|11/13/02 |  | /s/  Hugh E. Sawyer                  
|Date     |  | Hugh E. Sawyer                       
|         |  | President and Chief Executive Officer

33