##### 



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 March 31, 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.

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(Exact name of registrant as specified in its charter)


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

Suite 200, 160 Clairemont Avenue, Decatur, Georgia 30030

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(Address of principal executive offices)


(404) 373-4285

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(Registrants telephone number, including area code)




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


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

Outstanding common stock, no par value at April 30, 2002                               8,361,526

1



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##### 



ALLIED HOLDINGS, INC. & SUBSIDIARIES

INDEX

PART I

FINANCIAL INFORMATION

|                             |                                                                                                 |                   |         |    |      |  | 
|---------------------------- | ----------------------------------------------------------------------------------------------- | ----------------- | ------- | -- | ---- |  | 
|                             |                                                                                                 |                   |         |    | PAGE
|ITEM 1: FINANCIAL STATEMENTS |                                                                                                 |                   |         |   
|                             |                                                                                                 |                   |         |   
|                             | Consolidated Balance Sheets as of March 31, 2002 and
December 31, 2001                          |                   |         | 3  |     
|                             |                                                                                                 |                   |         |   
|                             | Consolidated Statements of Operations for the Three
Month Periods Ended March 31, 2002 and 2001 |                   |         | 4  |     
|                             |                                                                                                 |                   |         |   
|                             | Consolidated Statements of Cash Flows for the Three
Month Periods Ended March 31, 2002 and 2001 |                   |         | 5  |     
|                             |                                                                                                 |                   |         |   
|                             | Notes to Consolidated Financial Statements                                                      |                   |         | 6  |     
|                             |                                                                                                 |                   |         |   
|ITEM 2                       |                                                                                                 |                   |         |   
|                             | Managements Discussion and Analysis of Financial
Condition and Results of Operations           |                   |         | 17 |     
|                             |                                                                                                 |                   |         |   
|ITEM 3                       | Quantitative and Qualitative Disclosures about Market Risk                                      |                   |         | 24 |     
|                             |                                                                                                 |                   |         |   
|                             |                                                                                                 |                   | PART II |    |      |  | 
|                             |                                                                                                 |                   |         |   
|                             |                                                                                                 | OTHER INFORMATION |         |    |      | 
|                             |                                                                                                 |                   |         |   
|ITEM 1                      
|                             | Legal Proceedings                                                                               |                   |         | 24 |     
|ITEM 6                      
|                             | Exhibits and Reports on Form 8-K                                                                |                   |         | 25 |     
|                             | Signature Pages                                                                                 |                   |         | 26 |     

2



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##### 



PART 1  FINANCIAL INFORMATION

ITEM 1  FINANCIAL STATEMENTS

ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)

|                                            |                                                                                                                                                |                      |                                            |         |         | March 31    |         |             |         |         |  | 
|------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------------------------ | ------- | ------- | ----------- | ------- | ----------- | ------- | ------- |  | 
|                                            |                                                                                                                                                |                      |                                            |         |         | 2002        |         | December 31
|                                            |                                                                                                                                                |                      |                                            |         |         | (Unaudited) |         | 2001       
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            |                                                                                                                                                |                      |                                            | ASSETS  |         |             |         |             |         |         |  | 
|CURRENT ASSETS:                             |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            | Cash and cash equivalents                                                                                                                      |                      | $                                          | 19,615  |         |             | $       | 10,543      |        
|                                            | Short-term investments                                                                                                                         |                      |                                            | 64,658  |         |             |         | 64,794      |        
|                                            | Receivables, net of allowance for doubtful accounts of
$10,511 and $11,058 at March 31, 2002 and December 31, 2001, respectively               |                      |                                            | 62,684  |         |             |         | 72,292      |        
|                                            | Inventories                                                                                                                                    |                      |                                            | 5,241   |         |             |         | 5,349       |        
|                                            | Deferred tax assets                                                                                                                            |                      |                                            | 34,334  |         |             |         | 32,403      |        
|                                            | Prepayments and other current assets                                                                                                           |                      |                                            | 17,490  |         |             |         | 18,921      |        
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            |                                                                                                                                                | Total current assets |                                            |         | 204,022 |             |         |             | 204,302 |        
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|PROPERTY AND EQUIPMENT, NET                 |                                                                                                                                                |                      | 202,436                                    |         |         |             | 214,641 |            
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|OTHER ASSETS:                               |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            | Goodwill, net                                                                                                                                  |                      |                                            | 90,174  |         |             |         | 90,230      |        
|                                            | Other                                                                                                                                          |                      |                                            | 30,820  |         |             |         | 24,219      |        
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            |                                                                                                                                                | Total other assets   |                                            |         | 120,994 |             |         |             | 114,449 |        
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            |                                                                                                                                                | Total assets         |                                            | $       | 527,452 |             |         | $           | 533,392 |        
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            | LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                           |                      |                                            |         |         |             |         |             |        
|CURRENT LIABILITIES:                        |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            | Current maturities of long-term debt                                                                                                           |                      | $                                          | 3,507   |         |             | $       | 2,625       |        
|                                            | Trade accounts payable                                                                                                                         |                      |                                            | 37,713  |         |             |         | 40,232      |        
|                                            | Accrued liabilities                                                                                                                            |                      |                                            | 88,978  |         |             |         | 82,963      |        
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            |                                                                                                                                                |                      | Total current liabilities                  |         |         | 130,198     |         |             |         | 125,820 | 
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|LONG-TERM DEBT, less current maturities     |                                                                                                                                                |                      | 276,534                                    |         |         |             | 286,533 |            
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|POSTRETIREMENT BENEFITS OTHER THAN PENSIONS |                                                                                                                                                |                      | 9,535                                      |         |         |             | 9,363   |            
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|DEFERRED INCOME TAXES                       |                                                                                                                                                |                      | 21,612                                     |         |         |             | 21,383  |            
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|OTHER LONG-TERM LIABILITIES                 |                                                                                                                                                |                      | 72,803                                     |         |         |             | 72,296  |            
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|STOCKHOLDERS EQUITY:                       |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            | Common stock, no par value; 20,000 shares authorized, 8,252
and 8,274 shares outstanding at March 31,
2002 and December 31, 2001, respectively |                      |                                            |        |         |             |         |            |        
|                                            | Additional paid-in capital                                                                                                                     |                      |                                            | 46,603  |         |             |         | 46,520      |        
|                                            | Treasury stock, 139 shares at cost at March 31, 2002
and December 31, 2001, respectively                                                       |                      |                                            | (707    | )       |             |         | (707        | )      
|                                            | Retained deficit                                                                                                                               |                      |                                            | (20,050 | )       |             |         | (18,894     | )      
|                                            | Accumulated other comprehensive loss, net of tax                                                                                               |                      |                                            | (9,076  | )       |             |         | (8,922      | )      
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            |                                                                                                                                                |                      | Total stockholders equity                 |         |         | 16,770      |         |             |         | 17,997  | 
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            
|                                            |                                                                                                                                                |                      | Total liabilities and stockholders equity |         | $       | 527,452     |         |             | $       | 533,392 | 
|                                            |                                                                                                                                                |                      |                                            |         |         |             |         |            

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

3



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##### 



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)

|                                                               |                                                    |                                                                |         |                            |         |      |         |       |         |  
|-------------------------------------------------------------- | -------------------------------------------------- | -------------------------------------------------------------- | ------- | -------------------------- | ------- | ---- | ------- | ----- | ------- | -
|                                                               |                                                    |                                                                |         | For the Three Months Ended
|                                                               |                                                    |                                                                |         | March 31                  
|                                                               |                                                    |                                                                |         |                           
|                                                               |                                                    |                                                                |         | 2002                       |         | 2001
|                                                               |                                                    |                                                                |         |                            |         |     
|REVENUES                                                       |                                                    | $                                                              | 213,259 |                            |         | $    | 218,179 |      
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|OPERATING EXPENSES:                                            |                                                    |                                                                |         |                            |         |      |         |      
|                                                               |                                                    | Salaries, wages and fringe benefits                            |         |                            | 118,536 |      |         |       | 131,717 |  
|                                                               |                                                    | Operating supplies and expenses                                |         |                            | 30,905  |      |         |       | 41,442  |  
|                                                               |                                                    | Purchased transportation                                       |         |                            | 21,779  |      |         |       | 23,296  |  
|                                                               |                                                    | Insurance and claims                                           |         |                            | 10,571  |      |         |       | 13,289  |  
|                                                               |                                                    | Operating taxes and licenses                                   |         |                            | 8,463   |      |         |       | 8,626   |  
|                                                               |                                                    | Depreciation and amortization                                  |         |                            | 13,663  |      |         |       | 15,191  |  
|                                                               |                                                    | Rents                                                          |         |                            | 1,354   |      |         |       | 2,070   |  
|                                                               |                                                    | Communications and utilities                                   |         |                            | 1,992   |      |         |       | 2,038   |  
|                                                               |                                                    | Other operating expenses                                       |         |                            | 3,260   |      |         |       | 3,856   |  
|                                                               |                                                    | Gain on sale of operating assets                               |         |                            | (1,029  | )    |         |       | (167    | )
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|                                                               |                                                    | Total operating expenses                                       |         |                            | 209,494 |      |         |       | 241,358 |  
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|                                                               |                                                    | Operating income (loss)                                        |         |                            | 3,765   |      |         |       | (23,179 | )
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|OTHER INCOME (EXPENSE):                                        |                                                    |                                                                |         |                            |         |      |         |      
|                                                               |                                                    | Equity in earnings of UK and Brazil joint
ventures, net of tax |         |                            |        |      |         |       | 1,209   |  
|                                                               |                                                    | Interest expense                                               |         |                            | (8,122  | )    |         |       | (8,466  | )
|                                                               |                                                    | Interest income                                                |         |                            | 272     |      |         |       | 964     |  
|                                                               |                                                    | Other                                                          |         |                            | (207    | )    |         |       |        |  
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|                                                               |                                                    |                                                                | (8,057  | )                          |         |      | (6,293  | )    
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|LOSS BEFORE INCOME TAXES & EXTRAORDINARY ITEM                  |                                                    |                                                                | (4,292  | )                          |         |      | (29,472 | )    
|INCOME TAX BENEFIT                                             |                                                    |                                                                | 1,431   |                            |         |      | 10,610  |      
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|NET LOSS BEFORE EXTRAORDINARY ITEM                             |                                                    |                                                                | (2,861  | )                          |         |      | (18,862 | )    
|EXTRAORDINARY GAIN ON EARLY EXTINGUISHMENT OF
DEBT, NET OF TAX |                                                    |                                                                | 1,705   |                            |         |      |        |      
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|NET LOSS                                                       |                                                    | $                                                              | (1,156  | )                          |         | $    | (18,862 | )    
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|BASIC AND DILUTED NET LOSS PER COMMON SHARE:                   |                                                    |                                                                |         |                            |         |      |         |      
|                                                               | NET LOSS BEFORE EXTRAORDINARY ITEM                 |                                                                | $       | (0.35                      | )       |      | $       | (2.35 | )      
|                                                               | EXTRAORDINARY GAIN ON EARLY EXTINGUISHMENT OF DEBT |                                                                |         | 0.21                       |         |      |         |      |        
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|                                                               | NET LOSS                                           |                                                                | $       | (0.14                      | )       |      | $       | (2.35 | )      
|                                                               |                                                    |                                                                |         |                            |         |      |         |      
|COMMON SHARES OUTSTANDING  BASIC AND DILUTED                  |                                                    |                                                                | 8,252   |                            |         |      | 8,020   |      
|                                                               |                                                    |                                                                |         |                            |         |      |         |      

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

4



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##### 



ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |        |         |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------ | -------------------------- | ------- | ---- | ------- | ------ | ------- | -
|                                                             |                                                                                 |                                                                                     |        | For the Three Months Ended
|                                                             |                                                                                 |                                                                                     |        | March 31                  
|                                                             |                                                                                 |                                                                                     |        |                           
|                                                             |                                                                                 |                                                                                     |        | 2002                       |         | 2001
|                                                             |                                                                                 |                                                                                     |        |                            |         |     
|                                                             |                                                                                 |                                                                                     |        |                            |         |     
|CASH FLOWS FROM OPERATING ACTIVITIES                         |                                                                                 |                                                                                     |        |                            |         |      |         |       
|Net Loss                                                     |                                                                                 | $                                                                                   | (1,156 | )                          |         | $    | (18,862 | )     
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|                                                             | Adjustments to reconcile net loss to net cash
provided by operating activities: |                                                                                     |        |                            |         |      |         |        |        
|                                                             | Gain on early extinguishment of debt                                            |                                                                                     |        | (2,750                     | )       |      |         |       |        
|                                                             |                                                                                 | Depreciation and amortization                                                       |        |                            | 13,663  |      |         |        | 15,191  |  
|                                                             |                                                                                 | Amortization of deferred financing costs                                            |        |                            | 1,045   |      |         |        | 436     |  
|                                                             |                                                                                 | Gain
on sale of assets and other                                                    |        |                            | (822    | )    |         |        | (167    | )
|                                                             |                                                                                 | Deferred income taxes                                                               |        |                            | (722    | )    |         |        | (10,593 | )
|                                                             |                                                                                 | Compensation expense related to stock options and grants                            |        |                            | 59      |      |         |        | 69      |  
|                                                             |                                                                                 | Equity in earnings of joint ventures                                                |        |                            |        |      |         |        | (1,209  | )
|                                                             |                                                                                 | Amortization of Teamsters Union contract costs                                      |        |                            | 600     |      |         |        | 600     |  
|                                                             |                                                                                 | Change in operating assets and liabilities excluding
effect of businesses acquired: |        |                            |         |      |         |        |         |  
|                                                             |                                                                                 | Receivables, net of allowance for doubtful accounts                                 |        |                            | 9,473   |      |         |        | 15,161  |  
|                                                             |                                                                                 | Inventories                                                                         |        |                            | 99      |      |         |        | 232     |  
|                                                             |                                                                                 | Prepayments and other current assets                                                |        |                            | 1,405   |      |         |        | 504     |  
|                                                             |                                                                                 | Trade accounts payable                                                              |        |                            | (2,467  | )    |         |        | (4,348  | )
|                                                             |                                                                                 | Accrued liabilities                                                                 |        |                            | 6,878   |      |         |        | 15,855  |  
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|                                                             |                                                                                 | Total adjustments                                                                   |        |                            | 26,461  |      |         |        | 31,731  |  
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|                                                             |                                                                                 | Net cash provided by operating activities                                           |        |                            | 25,305  |      |         |        | 12,869  |  
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                                 |                                                                                     |        |                            |         |      |         |       
|                                                             | Purchases of property and equipment                                             |                                                                                     |        | (2,626                     | )       |      |         | (7,579 | )      
|                                                             | Proceeds from sale of property and equipment                                    |                                                                                     |        | 2,185                      |         |      |         | 436    |        
|                                                             | Investment in UK and Brazil joint ventures                                      |                                                                                     |        |                           |         |      |         | (464   | )      
|                                                             | Decrease (increase) in short-term investments                                   |                                                                                     |        | 136                        |         |      |         | (8,993 | )      
|                                                             | Decrease (increase) in the cash surrender value of life insurance               |                                                                                     |        | 183                        |         |      |         | (120   | )      
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|                                                             |                                                                                 | Net cash used in investing activities                                               |        |                            | (122    | )    |         |        | (16,720 | )
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                                                 |                                                                                     |        |                            |         |      |         |       
|                                                             | (Repayments) borrowing under revolving credit facilities                        |                                                                                     |        | (49,457                    | )       |      |         | 13,193 |        
|                                                             | Additions to long-term debt                                                     |                                                                                     |        | 82,762                     |         |      |         |       |        
|                                                             | Repayments of long-term debt                                                    |                                                                                     |        | (39,672                    | )       |      |         |       |        
|                                                             | Payment of deferred financing costs                                             |                                                                                     |        | (8,803                     | )       |      |         |       |        
|                                                             | Proceeds from issuance of common stock                                          |                                                                                     |        | 24                         |         |      |         | 85     |        
|                                                             | Other, net                                                                      |                                                                                     |        | (920                       | )       |      |         | (2,863 | )      
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|                                                             |                                                                                 | Net cash (used in) provided by financing activities                                 |        |                            | (16,066 | )    |         |        | 10,415  |  
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS |                                                                                 |                                                                                     | (45    | )                          |         |      | (1,068  | )     
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|NET INCREASE IN CASH AND CASH EQUIVALENTS                    |                                                                                 |                                                                                     | 9,072  |                            |         |      | 5,496   |       
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             |                                                                                 |                                                                                     | 10,543 |                            |         |      | 2,373   |       
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                   |                                                                                 | $                                                                                   | 19,615 |                            |         | $    | 7,869   |       
|                                                             |                                                                                 |                                                                                     |        |                            |         |      |         |       

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

5



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##### 



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

|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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-month period
ended March 31, 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 reporting 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 owners and distribution to owners. The Company had a
comprehensive loss of $1.3 million in the first quarter of 2002 versus a
comprehensive loss of $22.6 million in the first quarter of 2001. The
difference between comprehensive loss and net loss is the foreign currency
translation adjustment and minimum pension liability, 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 requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in the
derivatives fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivatives gains and losses to offset related results on the
hedged item in the income statement, and requires that a company must
formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting.                                                                                                                                                                                                                                       

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 until
August 2002 at determinable prices defined within the agreement. The
Company does not enter into fuel hedging contracts for speculative purposes.
At March 31, 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 and accordingly incurred no amortization expense of goodwill during the
three months ended March 31, 2002. Included in the accompanying
consolidated statements of operations is amortization expense related to
goodwill of approximately $0.9 million, for the three months ended March 31,
2001.                                                                                                                                                                                               
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |  | SFAS No. 142 also establishes a new method of testing goodwill for
impairment on an annual basis or on an interim basis if an event occurs or
circumstances change that would reduce the fair value of a reporting unit
below its carrying value. In accordance with SFAS No. 142, the Company has
six months, subsequent to the adoption of the statement, to complete the
first step of the transitional goodwill impairment test. Pursuant to the
adoption of SFAS No. 142, the Company has established its reporting units
based on its reporting structure in a reasonable and supportable manner.
The Companys reporting units are the Allied Automotive Group subsidiary and
the Axis Group subsidiary. The Company expects to complete the
transitional test within the six-month period and will report the
results of that testing subsequent to its completion. Pursuant to the
adoption of SFAS No. 142, the Company will annually test goodwill for
impairment.
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |  | 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 2003. Management will
evaluate the impact of the adoption of this statement on the consolidated
financial statements during fiscal 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 earnings or financial position 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. Management will evaluate the
impact of the adoption of this statement on the consolidated
financial statements during fiscal 2002.                                                                                                                                                                                                                                                                                                                                               
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6. |  | Workforce Reduction Expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |  | The Company has implemented a program to achieve a significant reduction in
corporate overhead expenses as well as upgrade certain personnel as a result
of turnaround initiatives. Targeted in the plan are workforce reductions
and additional efforts to decrease discretionary spending and eliminate
fixed                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

7



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##### 



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | costs. The Company terminated approximately 76 and 65 corporate and
field employees during the three months ended March 31, 2002 and three
months ended March 31, 2001, respectively. The Company had $2.1 million and
$3.7 million of workforce reduction liabilities at March 31, 2002 and
December 31, 2001, respectively. The
following table summarizes the activity in the accrual for termination
benefits for the three months ended March 31, 2002 and the three months
ended March 31, 2001, (in thousands):

|                                                                 |  |                    |        |          |  |   |        |  
|---------------------------------------------------------------- |  | ------------------ | ------ | -------- |  | - | ------ | -
|                                                                 |  | Three Months Ended
|                                                                 |  |                   
|                                                                 |  | March 31           |        | March 31
|                                                                 |  | 2002               |        | 2001    
|                                                                 |  |                    |        |         
|Beginning balance                                                |  | $                  | 3,700  |          |  | $ | 1,600  |  
|Additions to reserve charged to salaries,
wages, fringe benefits |  |                    | 400    |          |  |   | 5,000  |  
|Cash payments                                                    |  |                    | (2,000 | )        |  |   | (1,900 | )
|                                                                 |  |                    |        |          |  |   |        |  
|Ending balance                                                   |  | $                  | 2,100  |          |  | $ | 4,700  |  
|                                                                 |  |                    |        |          |  |   |        |  

|   |  |                                           
|-- |  | ------------------------------------------
|7. |  | Long-Term Debt                            
|   |  |                                           
|   |  | Long-term debt consisted of the following:

|                                          |  |          |         |             |  |   |         |  
|----------------------------------------- |  | -------- | ------- | ----------- |  | - | ------- | -
|                                          |  | March 31 |         | December 31
|                                          |  | 2002     |         | 2001       
|                                          |  |          |         |            
|Revolving credit facility                 |  | $        | 130,041 |             |  | $ | 98,900  |  
|Senior notes                              |  |          | 150,000 |             |  |   | 150,000 |  
|Senior subordinated notes                 |  |          |        |             |  |   | 40,258  |  
|                                          |  |          |         |             |  |   |         |  
|                                          |  |          | 280,041 |             |  |   | 289,158 |  
|Less current maturities of long-term debt |  |          | (3,507  | )           |  |   | (2,625  | )
|                                          |  |          |         |             |  |   |         |  
|                                          |  | $        | 276,534 |             |  | $ | 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 senior
notes were registered with the Securities and Exchange Commission. The net
proceeds from the Notes were used to fund the acquisition of Ryder
Automotive Carrier Services, Inc. and RC Management Corp., pay related fees
and expenses, and reduce outstanding indebtedness.                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | 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 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 million of senior subordinated notes (the Senior
Subordinated Notes) through a private placement.                                                                                                                                                                                                                                                                                      

8



---



##### 



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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) (collectively, the Credit Facility).
Proceeds from the Term Loans were used to repurchase the $40
million of Senior Subordinated Notes for $37.25 million. In conjunction
with the extinguishment of debt, the Company recognized an extraordinary
gain of approximately $1.7 million, net of income taxes 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 March 31, 2002, $49.4 million was
outstanding under the Revolver, and approximately $20.5 million was
committed under letters of credit. As of March 31, 2002 the Company had
approximately $33.6 million available under the Revolver.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | 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 $29.25 million Term Loan
D. The Term Loans (except Term Loan D) mature on February 25, 2005.
Term Loan D matures on February 26, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | 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 interest paid in kind of 3.5% that
will be payable upon maturity. The minimum interest 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 interest paid in kind of 5% that will be payable upon
maturity. The minimum interest 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%                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | 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. As
of March 31, 2002, the amount outstanding for the Term Loans was $15.3
million for Term Loan A, $25.0 million for Term Loan B, $11.0 million for
Term Loan C and $29.25 million for Term Loan D.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Borrowings under the Credit Facility are secured by a first priority
security interest on assets of the Company and certain of its subsidiaries,
including a pledge of stock of certain subsidiaries. In addition, certain
subsidiaries of the Company jointly and severally guarantee the obligations
of the Company under the Credit Facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | 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 charge
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 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

9



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##### 



|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|8. |  | 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. The amendment
resulted in a curtailment of the plan effective April 30, 2002. The Companys net pension cost for
2001 was $2.6 million.                                                                                                                                                                                                                                                                                                                                                                                           
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|9. |  | 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 provides
distribution, automobile inspection, auction, and logistics services for the
automotive industry.

|                                                |       |   |                             |         |      |   |         |         |  
|----------------------------------------------- | ----- | - | --------------------------- | ------- | ---- | - | ------- | ------- | -
|                                                |       |   | Three Months Ended March 31
|                                                |       |   |                            
|                                                |       |   | 2002                        |         | 2001
|                                                |       |   |                             |         |     
|Revenuesunaffiliated customers:                |       |   |                             |         |      |   |         |        
|Allied Automotive Group                         |       | $ | 206,610                     |         |      | $ | 212,024 |        
|Axis Group                                      |       |   | 6,649                       |         |      |   | 6,155   |        
|                                                |       |   |                             |         |      |   |         |        
|                                                | Total |   | $                           | 213,259 |      |   | $       | 218,179 |  
|                                                |       |   |                             |         |      |   |         |        
|Depreciation and amortization:                  |       |   |                             |         |      |   |         |        
|Allied Automotive Group                         |       | $ | 12,190                      |         |      | $ | 13,450  |        
|Axis Group                                      |       |   | 707                         |         |      |   | 894     |        
|Corporate/other                                 |       |   | 766                         |         |      |   | 847     |        
|                                                |       |   |                             |         |      |   |         |        
|                                                | Total |   | $                           | 13,663  |      |   | $       | 15,191  |  
|                                                |       |   |                             |         |      |   |         |        
|Operating profit (loss):                        |       |   |                             |         |      |   |         |        
|Allied Automotive Group                         |       | $ | 5,555                       |         |      | $ | (16,129 | )      
|Axis Group                                      |       |   | 163                         |         |      |   | (452    | )      
|Corporate/other                                 |       |   | (1,953                      | )       |      |   | (6,598  | )      
|                                                |       |   |                             |         |      |   |         |        
|                                                | Total |   |                             | 3,765   |      |   |         | (23,179 | )
|Reconciling items:                              |       |   |                             |         |      |   |         |        
|Equity income in UK and Brazil joint
ventures   |       |   |                            |         |      |   | 1,209   |        
|Interest expense                                |       |   | (8,122                      | )       |      |   | (8,466  | )      
|Interest income                                 |       |   | 272                         |         |      |   | 964     |        
|Other, net                                      |       |   | (207)                       |         |      |   |        |        
|                                                |       |   |                             |         |      |   |         |        
|Loss before income taxes and
extraordinary item |       | $ | (4,292                      | )       |      | $ | (29,472 | )      
|                                                |       |   |                             |         |      |   |         |        

10



---



##### 



|                        |       |   |          |         |             |   |         |         | 
|----------------------- | ----- | - | -------- | ------- | ----------- | - | ------- | ------- | 
|                        |       |   | March 31 |         | December 31
|                        |       |   | 2002     |         | 2001       
|                        |       |   |          |         |            
|Total assets:           |       |   |          |         |             |   |         |        
|Allied Automotive Group |       | $ | 332,675  |         |             | $ | 353,558 |        
|Axis Group              |       |   | 40,651   |         |             |   | 43,881  |        
|Corporate/other         |       |   | 154,126  |         |             |   | 135,953 |        
|                        |       |   |          |         |             |   |         |        
|                        | Total |   | $        | 527,452 |             |   | $       | 533,392 | 
|                        |       |   |          |         |             |   |         |        
|Capital expenditures:   |       |   |          |         |             |   |         |        
|Allied Automotive Group |       | $ | 2,608    |         |             | $ | 6,988   |        
|Axis Group              |       |   | 18       |         |             |   | 524     |        
|Corporate/other         |       |   |         |         |             |   | 67      |        
|                        |       |   |          |         |             |   |         |        
|                        | Total |   | $        | 2,626   |             |   | $       | 7,579   | 
|                        |       |   |          |         |             |   |         |        

| |  |                                                                                                                  
| |  | -----------------------------------------------------------------------------------------------------------------
| |  | Geographic financial information for the three months ended March 31, 2002 and 2001
is as follows (in thousands):

|              |       |   |                             |         |      |   |         |         | 
|------------- | ----- | - | --------------------------- | ------- | ---- | - | ------- | ------- | 
|              |       |   | Three Months Ended March 31
|              |       |   |                            
|              |       |   | 2002                        |         | 2001
|              |       |   |                             |         |     
|Revenues:     |       |   |                             |         |      |   |         |        
|United States |       | $ | 178,228                     |         |      | $ | 181,298 |        
|Canada        |       |   | 35,031                      |         |      |   | 36,881  |        
|              |       |   |                             |         |      |   |         |        
|              | Total |   | $                           | 213,259 |      |   | $       | 218,179 | 
|              |       |   |                             |         |      |   |         |        

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | Revenues are attributed to the respective countries based on the location of
the origination terminal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10. |  | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |  | On April 15, 2002, the Company sold its interests in its joint venture in
Brazil to Coimex Empreendimentos E Participacoes Ltda, and Itaguacu Comercio
E Participacoes Ltda for approximately $3 million. $2.7 million of cash was
received at closing and the remaining $0.3 million will be paid to the
Company by December 31, 2002. The joint venture was established in January
1998 and held by the Companys Axis Group subsidiary. The proceeds from the
sale were used to reduce the Companys outstanding debt. The Companys
interest in its joint venture in Brazil was approximately $3.0 million at
March 31, 2002.
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|11. |  | 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.                                                                                                                                                        

11



---



##### 



Supplemental Condensed Consolidating Balance Sheet
March 31, 2002
(In thousands)
(Unaudited)

|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |         |         | 
|------------------------------------------- | --------------------------------------------------- | ------------------------------------------ | ------- | -------- | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------ |  | ------- | -------- | -------- | - | ------- | ------- | ------- | 
|                                            |                                                     |                                            |         | Allied   |         | Guarantor    |         | Nonguarantor |         |              |        |              |        |  |         |         
|                                            |                                                     |                                            |         | Holdings |         | Subsidiaries |         | Subsidiaries |         | Eliminations |        | Consolidated
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |             
|Current assets:                             |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            | Cash and cash equivalents                           |                                            | $       | 517      |         |              | $       | 693          |         |              | $      | 18,405       |        |  | $       |         |          |   | $       | 19,615  |        
|                                            | Short-term investments                              |                                            |         |         |         |              |         |             |         |              |        | 64,658       |        |  |         |         |          |   |         | 64,658  |        
|                                            | Receivables, net of allowance for
doubtful accounts |                                            |         | 11       |         |              |         | 59,317       |         |              |        | 3,356        |        |  |         |         |          |   |         | 62,684  |        
|                                            | Inventories                                         |                                            |         |         |         |              |         | 5,235        |         |              |        | 6            |        |  |         |         |          |   |         | 5,241   |        
|                                            | Deferred tax assetcurrent                          |                                            |         | 33,589   |         |              |         | 494          |         |              |        | 251          |        |  |         |         |          |   |         | 34,334  |        
|                                            | Prepayments and other current assets                |                                            |         | 879      |         |              |         | 16,494       |         |              |        | 117          |        |  |         |         |          |   |         | 17,490  |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total current assets                       |         |          | 34,996  |              |         |              | 82,233  |              |        |              | 86,793 |  |         |          |         |   |         |         | 204,022 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|Property and equipment, net                 |                                                     |                                            | 10,977  |          |         |              | 188,019 |              |         |              | 3,440  |              |        |  |        |          |          |   | 202,436 |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|Other assets:                               |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            | Goodwill, net                                       |                                            |         | 1,515    |         |              |         | 88,659       |         |              |        |             |        |  |         |         |          |   |         | 90,174  |        
|                                            | Other                                               |                                            |         | 21,925   |         |              |         | 4,860        |         |              |        | 4,035        |        |  |         |         |          |   |         | 30,820  |        
|                                            | Deferred tax assetnoncurrent                       |                                            |         | 14,129   |         |              |         |             |         |              |        |             |        |  |         | (14,129  | )        |   |         |        |        
|                                            | Intercompany receivables                            |                                            |         | 26,551   |         |              |         |             |         |              |        |             |        |  |         | (26,551  | )        |   |         |        |        
|                                            | Investment in subsidiaries                          |                                            |         | 70,350   |         |              |         | 8,534        |         |              |        |             |        |  |         | (78,884  | )        |   |         |        |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total other assets                         |         |          | 134,470 |              |         |              | 102,053 |              |        |              | 4,035  |  |         |          | (119,564 | ) |         |         | 120,994 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total assets                               |         | $        | 180,443 |              |         | $            | 372,305 |              |        | $            | 94,268 |  |         | $        | (119,564 | ) |         | $       | 527,452 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|Current liabilities:                        |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            | Current maturities of long-term debt                |                                            | $       |         |         |              | $       | 3,507        |         |              |        |             |        |  | $       |         |          |   | $       | 3,507   |        
|                                            | Trade accounts payable                              |                                            |         | 1,762    |         |              |         | 35,715       |         |              |        | 236          |        |  |         |         |          |   |         | 37,713  |        
|                                            | Intercompany payables                               |                                            |         |         |         |              |         | 21,710       |         |              |        | 4,841        |        |  |         | (26,551  | )        |   |         |        |        
|                                            | Accrued liabilities                                 |                                            |         | 8,366    |         |              |         | 58,879       |         |              |        | 21,733       |        |  |         |         |          |   |         | 88,978  |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total current liabilities                  |         |          | 10,128  |              |         |              | 119,811 |              |        |              | 26,810 |  |         |          | (26,551  | ) |         |         | 130,198 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|Long-term debt, less current maturities     |                                                     |                                            | 150,000 |          |         |              | 126,534 |              |         |              |       |              |        |  |        |          |          |   | 276,534 |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|Postretirement benefits other than pensions |                                                     |                                            |        |          |         |              | 9,535   |              |         |              |       |              |        |  |        |          |          |   | 9,535   |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|Deferred income taxes                       |                                                     |                                            |        |          |         |              | 35,741  |              |         |              |       |              |        |  | (14,129 | )        |          |   | 21,612  |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|Other long-term liabilities                 |                                                     |                                            | 3,545   |          |         |              | 33,694  |              |         |              | 35,564 |              |        |  |        |          |          |   | 72,803  |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|Stockholders equity:                       |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            | Common stock, no par value                          |                                            |         |         |         |              |         |             |         |              |        |             |        |  |         |         |          |   |         |        |        
|                                            | Additional paid-in capital                          |                                            |         | 46,603   |         |              |         | 182,023      |         |              |        | 13,849       |        |  |         | (195,872 | )        |   |         | 46,603  |        
|                                            | Treasury stock                                      |                                            |         | (707     | )       |              |         |             |         |              |        |             |        |  |         |         |          |   |         | (707    | )      
|                                            | Retained (deficit) earnings                         |                                            |         | (20,050  | )       |              |         | (121,573     | )       |              |        | 18,519       |        |  |         | 103,054  |          |   |         | (20,050 | )      
|                                            | Cumulative other comprehensive loss,
net of tax     |                                            |         | (9,076   | )       |              |         | (13,460      | )       |              |        | (474         | )      |  |         | 13,934   |          |   |         | (9,076  | )      
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total stockholders equity                 |         |          | 16,770  |              |         |              | 46,990  |              |        |              | 31,894 |  |         |          | (78,884  | ) |         |         | 16,770  | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total liabilities and
stockholders equity |         | $        | 180,443 |              |         | $            | 372,305 |              |        | $            | 94,268 |  |         | $        | (119,564 | ) |         | $       | 527,452 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        

12



---



##### 



Supplemental Condensed Consolidating Balance Sheet
December 31, 2001
(In thousands)
(Unaudited)

|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |         |         | 
|------------------------------------------- | --------------------------------------------------- | ------------------------------------------ | ------- | -------- | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------ | ------------ | ------ |  | ------- | -------- | -------- | - | ------- | ------- | ------- | 
|                                            |                                                     |                                            |         | 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   |         |              |         | 8,757        |         |              |        |             |        |  |         | (20,454  | )        |   |         |        |        
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total other assets                         |         |          | 275,805 |              |         |              | 103,214 |              |        |              | 4,073  |  |         |          | (268,643 | ) |         |         | 114,449 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total assets                               |         | $        | 320,600 |              |         | $            | 396,249 |              |        | $            | 85,186 |  |         | $        | (268,643 | ) |         | $       | 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   |         |              |         | 90,061       |         |              |        | 13,849       |        |  |         | (103,910 | )        |   |         | 46,520  |        
|                                            | Treasury stock                                      |                                            |         | (707     | )       |              |         |             |         |              |        |             |        |  |         |         |          |   |         | (707    | )      
|                                            | Retained (deficit) earnings                         |                                            |         | (18,894  | )       |              |         | (90,171      | )       |              |        | 20,649       |        |  |         | 69,522   |          |   |         | (18,894 | )      
|                                            | Cumulative other comprehensive loss,
net of tax     |                                            |         | (8,922   | )       |              |         | (12,491      | )       |              |        | (1,443       | )      |  |         | 13,934   |          |   |         | (8,922  | )      
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total stockholders equity                 |         |          | 17,997  |              |         |              | (12,601 | )            |        |              | 33,055 |  |         |          | (20,454  | ) |         |         | 17,997  | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        
|                                            |                                                     | Total liabilities and
stockholders equity |         | $        | 320,600 |              |         | $            | 396,249 |              |        | $            | 85,186 |  |         | $        | (268,643 | ) |         | $       | 533,392 | 
|                                            |                                                     |                                            |         |          |         |              |         |              |         |              |        |              |        |  |         |          |          |   |         |        

13



---



##### 



Supplemental Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2002
(In thousands)
(Unaudited)

|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |         |         | 
|------------------------------------------------------ | ------------------------------------- | ------------------------ | ------ | -------- | ------ | ------------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | - | ------- | ------ | ------- | - | ------- | ------- | ------- | 
|                                                       |                                       |                          |        | Allied   |        | Guarantor    |         | Nonguarantor |         |              |       |              |       |   |         |       
|                                                       |                                       |                          |        | Holdings |        | Subsidiaries |         | Subsidiaries |         | Eliminations |       | Consolidated
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |             
|Revenues                                               |                                       | $                        | 2,535  |          |        | $            | 212,767 |              |         | $            | 9,622 |              |       | $ | (11,665 | )      |         | $ | 213,259 |        
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|Operating expenses:                                    |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                                       | Salaries, wages, and fringe benefits  |                          |        | 1,476    |        |              |         | 117,060      |         |              |       |             |       |   |         |       |         |   |         | 118,536 |        
|                                                       | Operating supplies and expenses       |                          |        | 326      |        |              |         | 30,540       |         |              |       | 39           |       |   |         |       |         |   |         | 30,905  |        
|                                                       | Purchased transportation              |                          |        |         |        |              |         | 21,779       |         |              |       |             |       |   |         |       |         |   |         | 21,779  |        
|                                                       | Insurance and claims                  |                          |        |         |        |              |         | 10,571       |         |              |       | 9,130        |       |   |         | (9,130 | )       |   |         | 10,571  |        
|                                                       | Operating taxes and licenses          |                          |        | 54       |        |              |         | 8,409        |         |              |       |             |       |   |         |       |         |   |         | 8,463   |        
|                                                       | Depreciation and amortization         |                          |        | 766      |        |              |         | 12,778       |         |              |       | 119          |       |   |         |       |         |   |         | 13,663  |        
|                                                       | Rents                                 |                          |        | 423      |        |              |         | 929          |         |              |       | 2            |       |   |         |       |         |   |         | 1,354   |        
|                                                       | Communications and utilities          |                          |        | 185      |        |              |         | 1,804        |         |              |       | 3            |       |   |         |       |         |   |         | 1,992   |        
|                                                       | Other operating expenses              |                          |        | 1,165    |        |              |         | 4,544        |         |              |       | 86           |       |   |         | (2,535 | )       |   |         | 3,260   |        
|                                                       | Gain
on sale of operating assets, net |                          |        |         |        |              |         | (1,029       | )       |              |       |             |       |   |         |       |         |   |         | (1,029  | )      
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                                       |                                       | Total operating expenses |        |          | 4,395  |              |         |              | 207,385 |              |       |              | 9,379 |   |         |        | (11,665 | ) |         |         | 209,494 | 
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                                       |                                       | Operating (loss) income  |        |          | (1,860 | )            |         |              | 5,382   |              |       |              | 243   |   |         |        |        |   |         |         | 3,765   | 
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|Other income (expense):                                |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                                       | Interest expense                      |                          |        | (8,415   | )      |              |         | (5,902       | )       |              |       | (89          | )     |   |         | 6,284  |         |   |         | (8,122  | )      
|                                                       | Interest income                       |                          |        | 6,235    |        |              |         | 14           |         |              |       | 307          |       |   |         | (6,284 | )       |   |         | 272     |        
|                                                       | Other, net                            |                          |        | 160      |        |              |         | (367         | )       |              |       |             |       |   |         |       |         |   |         | (207    | )      
|                                                       | Equity in losses of subsidiaries      |                          |        | (1,166   | )      |              |         |             |         |              |       |             |       |   |         | 1,166  |         |   |         |        |        
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                                       |                                       |                          | (3,186 | )        |        |              | (6,255  | )            |         |              | 218   |              |       |   | 1,166   |        |         |   | (8,057  | )      
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|(Loss)
income before income taxes &
extraordinary item |                                       |                          | (5,046 | )        |        |              | (873    | )            |         |              | 461   |              |       |   | 1,166   |        |         |   | (4,292  | )      
|Income tax benefit (provision)                         |                                       |                          | 2,185  |          |        |              | (26     | )            |         |              | (728  | )            |       |   |        |        |         |   | 1,431   |        
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|Loss before extraordinary item                         |                                       |                          | (2,861 | )        |        |              | (899    | )            |         |              | (267  | )            |       |   | 1,166   |        |         |   | (2,861  | )      
|Extraordinary gain on early
extinguishment of debt     |                                       |                          | 1,705  |          |        |              |        |              |         |              |      |              |       |   |        |        |         |   | 1,705   |        
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|Net loss                                               |                                       | $                        | (1,156 | )        |        | $            | (899    | )            |         | $            | (267  | )            |       | $ | 1,166   |        |         | $ | (1,156  | )      
|                                                       |                                       |                          |        |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        

Supplemental Condensed Consolidating Statement of Operations
Three Months Ended March 31, 2001
(In thousands)
(Unaudited)

|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |         |         |  
|--------------------------------- | --------------------------------------------------------------------- | ------------------------ | ------- | -------- | ------ | ------------ | ------- | ------------ | ------- | ------------ | ----- | ------------ | ----- | - | ------- | ------ | ------- | - | ------- | ------- | ------- | -
|                                  |                                                                       |                          |         | Allied   |        | Guarantor    |         | Nonguarantor |         |              |       |              |       |   |         |       
|                                  |                                                                       |                          |         | Holdings |        | Subsidiaries |         | Subsidiaries |         | Eliminations |       | Consolidated
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |             
|Revenues                          |                                                                       | $                        | 2,475   |          |        | $            | 217,776 |              |         | $            | 9,495 |              |       | $ | (11,567 | )      |         | $ | 218,179 |        
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|Operating expenses:               |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  | Salaries, wages, and fringe benefits                                  |                          |         | 5,121    |        |              |         | 126,596      |         |              |       |             |       |   |         |       |         |   |         | 131,717 |        
|                                  | Operating supplies and expenses                                       |                          |         | 903      |        |              |         | 40,536       |         |              |       | 3            |       |   |         |       |         |   |         | 41,442  |        
|                                  | Purchased transportation                                              |                          |         |         |        |              |         | 23,296       |         |              |       |             |       |   |         |       |         |   |         | 23,296  |        
|                                  | Insurance and claims                                                  |                          |         |         |        |              |         | 13,802       |         |              |       | 8,579        |       |   |         | (9,092 | )       |   |         | 13,289  |        
|                                  | Operating taxes and licenses                                          |                          |         | 47       |        |              |         | 8,579        |         |              |       |             |       |   |         |       |         |   |         | 8,626   |        
|                                  | Depreciation and amortization                                         |                          |         | 847      |        |              |         | 14,177       |         |              |       | 167          |       |   |         |       |         |   |         | 15,191  |        
|                                  | Rents                                                                 |                          |         | 532      |        |              |         | 1,538        |         |              |       |             |       |   |         |       |         |   |         | 2,070   |        
|                                  | Communications and utilities                                          |                          |         | 14       |        |              |         | 2,024        |         |              |       |             |       |   |         |       |         |   |         | 2,038   |        
|                                  | Other operating expenses                                              |                          |         | 1,760    |        |              |         | 4,531        |         |              |       | 40           |       |   |         | (2,475 | )       |   |         | 3,856   |        
|                                  | Gain
on sale of operating assets, net                                 |                          |         |         |        |              |         | (167         | )       |              |       |             |       |   |         |       |         |   |         | (167    | )      
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                                       | Total operating expenses |         |          | 9,224  |              |         |              | 234,912 |              |       |              | 8,789 |   |         |        | (11,567 | ) |         |         | 241,358 |  
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                                       | Operating (loss) income  |         |          | (6,749 | )            |         |              | (17,136 | )            |       |              | 706   |   |         |        |        |   |         |         | (23,179 | )
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|Other income (expense):           |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  | Equity in earnings (loss) of UK and
Brazil joint ventures, net of tax |                          |         |         |        |              |         | 1,219        |         |              |       | (10          | )     |   |         |       |         |   |         | 1,209   |        
|                                  | Interest expense                                                      |                          |         | (8,023   | )      |              |         | (8,059       | )       |              |       | (40          | )     |   |         | 7,656  |         |   |         | (8,466  | )      
|                                  | Interest income                                                       |                          |         | 7,710    |        |              |         | 63           |         |              |       | 847          |       |   |         | (7,656 | )       |   |         | 964     |        
|                                  | Intercompany dividends                                                |                          |         | 251      |        |              |         | (251         | )       |              |       |             |       |   |         |       |         |   |         |        |        
|                                  | Equity in net loss of subsidiaries                                    |                          |         | (22,879  | )      |              |         |             |         |              |       |             |       |   |         | 22,879 |         |   |         |        |        
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|                                  |                                                                       |                          | (22,941 | )        |        |              | (7,028  | )            |         |              | 797   |              |       |   | 22,879  |        |         |   | (6,293  | )      
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|(Loss) income before income taxes |                                                                       |                          | (29,690 | )        |        |              | (24,164 | )            |         |              | 1,503 |              |       |   | 22,879  |        |         |   | (29,472 | )      
|Income tax benefit (provision)    |                                                                       |                          | 10,828  |          |        |              | 216     |              |         |              | (434  | )            |       |   |        |        |         |   | 10,610  |        
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        
|Net loss                          |                                                                       | $                        | (18,862 | )        |        | $            | (23,948 | )            |         | $            | 1,069 |              |       | $ | 22,879  |        |         | $ | (18,862 | )      
|                                  |                                                                       |                          |         |          |        |              |         |              |         |              |       |              |       |   |         |        |         |   |         |        

14



---



##### 



Supplemental Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2002
(In thousands)
(Unaudited)

|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |        |        |         |  
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------------------------------------- | --------------------------------------------------- | ------ | -------- | -------- | ------------ | ------ | ------------ | -------- | ------------ | --- | ------------ | ------ | ----- | ------ | - | ------ | ------- | ------ | ------ | ------- | -
|                                                             |                                                                                           |                                                          |                                          |                                                     |        | Allied   |          | Guarantor    |        | Nonguarantor |          |              |     |              |        |       |        |  
|                                                             |                                                                                           |                                                          |                                          |                                                     |        | Holdings |          | Subsidiaries |        | Subsidiaries |          | Eliminations |     | Consolidated
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |             
|Cash flows from operating activities:                        |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |        
|                                                             | Net loss                                                                                  |                                                          | $                                        | (1,156                                              | )      |          | $        | (899         | )      |              | $        | (267         | )   |              | $      | 1,166 |        |   | $      | (1,156  | )     
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|                                                             | Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities: |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|                                                             |                                                                                           | Gain
on early extinguishment of debt                     |                                          |                                                     | (2,750 | )        |          |              |       |              |          |              |    |              |        |       |       |   |        |         | (2,750 | )     
|                                                             |                                                                                           | Depreciation and amortization                            |                                          |                                                     | 766    |          |          |              | 12,778 |              |          |              | 119 |              |        |       |       |   |        |         | 13,663 |       
|                                                             |                                                                                           | Amortization of deferred
financing costs                 |                                          |                                                     | 1,045  |          |          |              |       |              |          |              |    |              |        |       |       |   |        |         | 1,045  |       
|                                                             |                                                                                           | Gain
on sale of assets and other                         |                                          |                                                     |       |          |          |              | (822   | )            |          |              |    |              |        |       |       |   |        |         | (822   | )     
|                                                             |                                                                                           | Deferred income taxes                                    |                                          |                                                     | (626   | )        |          |              | (97    | )            |          |              | 1   |              |        |       |        |   |        |         | (722   | )     
|                                                             |                                                                                           | Compensation expense related
to stock options and grants |                                          |                                                     | 59     |          |          |              |       |              |          |              |    |              |        |       |       |   |        |         | 59     |       
|                                                             |                                                                                           | Amortization of Teamsters
Union contract costs           |                                          |                                                     |       |          |          |              | 600    |              |          |              |    |              |        |       |       |   |        |         | 600    |       
|                                                             |                                                                                           | Equity in net losses of
subsidiaries                     |                                          |                                                     | 1,166  |          |          |              |       |              |          |              |    |              |        |       | (1,166 | ) |        |         |       |       
|                                                             |                                                                                           | Change in operating assets
and liabilities:              |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |        |       
|                                                             |                                                                                           |                                                          | Receivables, net of
allowance for        |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |        |        |        
|                                                             |                                                                                           |                                                          | doubtful accounts                        |                                                     |        | 13       |          |              |        | 9,660        |          |              |     | (200         | )      |       |        |  |        |         |        | 9,473  |        
|                                                             |                                                                                           |                                                          | Inventories                              |                                                     |        |         |          |              |        | 100          |          |              |     | (1           | )      |       |        |  |        |         |        | 99     |        
|                                                             |                                                                                           |                                                          | Prepayments and other
current assets     |                                                     |        | 282      |          |              |        | 1,125        |          |              |     | (2           | )      |       |        |  |        |         |        | 1,405  |        
|                                                             |                                                                                           |                                                          | Trade accounts payable                   |                                                     |        | (991     | )        |              |        | (1,559       | )        |              |     | 83           |        |       |        |  |        |         |        | (2,467 | )      
|                                                             |                                                                                           |                                                          | Intercompany
receivables
(payables), net |                                                     |        | 207,276  |          |              |        | (208,330     | )        |              |     | 1,054        |        |       |        |  |        |         |        |       |        
|                                                             |                                                                                           |                                                          | Accrued liabilities                      |                                                     |        | 1,209    |          |              |        | (3,437       | )        |              |     | 9,106        |        |       |        |   |        |         |        | 6,878  |        
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|                                                             |                                                                                           |                                                          |                                          | Total adjustments                                   |        |          | 207,449  |              |        |              | (189,982 | )            |     |              | 10,160 |       |        |   | (1,166 | )       |        |        | 26,461  |  
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|                                                             |                                                                                           |                                                          |                                          | Net cash provided
by (used in)
operating
activities |        |          | 206,293  |              |        |              | (190,881 | )            |     |              | 9,893  |       |        |   |       |         |        |        | 25,305  |  
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|Cash flows from investing activities:                        |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |        
|                                                             | Purchases of property and equipment                                                       |                                                          |                                          |                                                    |        |          |          | (2,587       | )      |              |          | (39          | )   |              |        |      |        |   |        | (2,626  | )     
|                                                             | Proceeds from sale of property and
equipment                                              |                                                          |                                          |                                                    |        |          |          | 2,185        |        |              |          |             |     |              |        |      |        |   |        | 2,185   |       
|                                                             | Investment in UK and Brazil joint
ventures                                                |                                                          |                                          |                                                    |        |          |          | 464          |        |              |          | (464         | )   |              |        |      |        |   |        |        |       
|                                                             | Intercompany dividend (paid) received                                                     |                                                          |                                          | (60,000                                             | )      |          |          | 60,000       |        |              |          |             |     |              |        |      |        |   |        |        |       
|                                                             | Decrease in short-term investments                                                        |                                                          |                                          |                                                    |        |          |          |             |        |              |          | 136          |     |              |        |      |        |   |        | 136     |       
|                                                             | Decrease in cash surrender value of
life insurance                                        |                                                          |                                          | 183                                                 |        |          |          |             |        |              |          |             |     |              |        |      |        |   |        | 183     |       
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|                                                             |                                                                                           |                                                          |                                          | Net cash (used
in) provided by
investing
activities |        |          | (59,817  | )            |        |              | 60,062   |              |     |              | (367   | )     |        |   |       |         |        |        | (122    | )
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|Cash flows from financing activities:                        |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |        
|                                                             | (Repayments
of) borrowing under revolving credit facilities                               |                                                          |                                          | (98,900                                             | )      |          |          | 49,443       |        |              |          |             |     |              |        |      |        |   |        | (49,457 | )     
|                                                             | Additions
to long-term debt                                                               |                                                          |                                          |                                                    |        |          |          | 82,762       |        |              |          |             |     |              |        |      |        |   |        | 82,762  |       
|                                                             | Repayments
of long-term debt                                                              |                                                          |                                          | (37,498                                             | )      |          |          | (2,174       | )      |              |          |             |     |              |        |      |        |   |        | (39,672 | )     
|                                                             | Payment
of deferred financing costs                                                       |                                                          |                                          | (8,803                                              | )      |          |          |             |        |              |          |             |     |              |        |      |        |   |        | (8,803  | )     
|                                                             | Proceeds
from issuance of common stock                                                    |                                                          |                                          | 24                                                  |        |          |          |             |        |              |          |             |     |              |        |      |        |   |        | 24      |       
|                                                             | Other,
net                                                                                |                                                          |                                          | (991                                                | )      |          |          | 2,278        |        |              |          | (2,207       | )   |              |        |      |        |   |        | (920    | )     
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|                                                             |                                                                                           |                                                          |                                          | Net cash (used
in) provided by
financing
activities |        |          | (146,163 | )            |        |              | 132,309  |              |     |              | (2,207 | )     |        |   |       |         |        |        | (16,066 | )
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|Effect of exchange rate changes on cash
and cash equivalents |                                                                                           |                                                          |                                         |                                                     |        |          | (1,860   | )            |        |              | 1,815    |              |     |              |       |       |        |   | (45    | )      
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|Net increase (decrease) in cash and cash
equivalents         |                                                                                           |                                                          | 308                                      |                                                     |        |          | (370     | )            |        |              | 9,134    |              |     |              |       |       |        |   | 9,072  |        
|Cash and cash equivalents at beginning of
year               |                                                                                           |                                                          | 209                                      |                                                     |        |          | 1,063    |              |        |              | 9,271    |              |     |              |       |       |        |   | 10,543 |        
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       
|Cash and cash equivalents at end of year                     |                                                                                           | $                                                        | 517                                      |                                                     |        | $        | 693      |              |        | $            | 18,405   |              |     | $            |       |       |        | $ | 19,615 |        
|                                                             |                                                                                           |                                                          |                                          |                                                     |        |          |          |              |        |              |          |              |     |              |        |       |        |   |        |         |       

15



---



##### 



Supplemental Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2001
(In thousands)
(Unaudited)

|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |         |        |         |  
|------------------------------------------------------------ | -------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------ | -------- | ------- | ------------ | ------- | ------------ | ------ | ------------ | --- | ------------ | ------- | ------ | ------- | - | ------- | ------- | ------- | ------ | ------- | -
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        | Allied   |         | Guarantor    |         | Nonguarantor |        |              |     |              |         |        |         |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        | Holdings |         | Subsidiaries |         | Subsidiaries |        | Eliminations |     | Consolidated
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |             
|Cash flows from operating activities:                        |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |        
|                                                             | Net (loss) income                                                                                  |                                                          | $                                                   | (18,862                                             | )      |          | $       | (23,948      | )       |              | $      | 1,069        |     |              | $       | 22,879 |         |   | $       | (18,862 | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|                                                             | Adjustments to reconcile net (loss)
income to net cash (used in) provided by
operating activities: |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|                                                             |                                                                                                    | Depreciation and amortization                            |                                                     |                                                     | 847    |          |         |              | 14,177  |              |        |              | 167 |              |         |        |        |   |         |         | 15,191  |       
|                                                             |                                                                                                    | Gain on sale of property and
equipment                   |                                                     |                                                     |       |          |         |              | (167    | )            |        |              |    |              |         |        |        |   |         |         | (167    | )     
|                                                             |                                                                                                    | Amortization
of deferred financing costs                 |                                                     |                                                     | 436    |          |         |              |        |              |        |              |    |              |         |        |        |   |         |         | 436     |       
|                                                             |                                                                                                    | Deferred income taxes                                    |                                                     |                                                     |       |          |         |              | (10,593 | )            |        |              |    |              |         |        |        |   |         |         | (10,593 | )     
|                                                             |                                                                                                    | Compensation expense related to
stock options and grants |                                                     |                                                     | 69     |          |         |              |        |              |        |              |    |              |         |        |        |   |         |         | 69      |       
|                                                             |                                                                                                    | Equity in losses of joint ventures                       |                                                     |                                                     |       |          |         |              | (1,219  | )            |        |              | 10  |              |         |        |        |   |         |         | (1,209  | )     
|                                                             |                                                                                                    | Amortization of Teamsters Union
contract costs           |                                                     |                                                     |       |          |         |              | 600     |              |        |              |    |              |         |        |        |   |         |         | 600     |       
|                                                             |                                                                                                    | Equity in net income of
subsidiaries                     |                                                     |                                                     | 22,879 |          |         |              |        |              |        |              |    |              |         |        | (22,879 | ) |         |         |        |       
|                                                             |                                                                                                    | Change in operating assets and
liabilities:              |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |         |       
|                                                             |                                                                                                    |                                                          | Receivables, net of
allowance for doubtful
accounts |                                                     |        | 772      |         |              |         | 17,533       |        |              |     | (3,144       | )       |        |         |  |         |         |         | 15,161 |        
|                                                             |                                                                                                    |                                                          | Inventories                                         |                                                     |        |         |         |              |         | 232          |        |              |     |             |         |        |         |  |         |         |         | 232    |        
|                                                             |                                                                                                    |                                                          | Prepayments and other
current assets                |                                                     |        | 101      |         |              |         | (1,590       | )      |              |     | 1,993        |         |        |         |  |         |         |         | 504    |        
|                                                             |                                                                                                    |                                                          | Intercompany receivables
and payables               |                                                     |        | (13,299  | )       |              |         | 11,240       |        |              |     | 2,059        |         |        |         |  |         |         |         |       |        
|                                                             |                                                                                                    |                                                          | Trade accounts payable                              |                                                     |        | 60       |         |              |         | (5,431       | )      |              |     | 1,023        |         |        |         |  |         |         |         | (4,348 | )      
|                                                             |                                                                                                    |                                                          | Accrued liabilities                                 |                                                     |        | (5,096   | )       |              |         | 12,357       |        |              |     | 8,594        |         |        |         |  |         |         |         | 15,855 |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Total adjustments                                   |        |          | 6,769   |              |         |              | 37,139 |              |     |              | 10,702  |        |         |   | (22,879 | )       |         |        | 31,731  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash (used in)
provided by operating
activities |        |          | (12,093 | )            |         |              | 13,191 |              |     |              | 11,771  |        |         |   |        |         |         |        | 12,869  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|Cash flows from investing activities:                        |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |        
|                                                             | Purchases of property and equipment                                                                |                                                          |                                                     | (63                                                 | )      |          |         | (6,907       | )       |              |        | (609         | )   |              |         |       |         |   |         | (7,579  | )      
|                                                             | Proceeds from sale of property and
equipment                                                       |                                                          |                                                     |                                                    |        |          |         | 436          |         |              |        |             |     |              |         |       |         |   |         | 436     |        
|                                                             | Investment
in UK and Brazil joint ventures                                                         |                                                          |                                                     |                                                    |        |          |         |             |         |              |        | (464         | )   |              |         |       |         |   |         | (464    | )      
|                                                             | Intercompany dividend received (paid)                                                              |                                                          |                                                     | 251                                                 |        |          |         | (251         | )       |              |        |             |     |              |         |       |         |   |         |        |        
|                                                             | Increase in short-term investments                                                                 |                                                          |                                                     |                                                    |        |          |         |             |         |              |        | (8,993       | )   |              |         |       |         |   |         | (8,993  | )      
|                                                             | Increase in cash surrender value of life
insurance                                                 |                                                          |                                                     | (120                                                | )      |          |         |             |         |              |        |             |     |              |         |       |         |   |         | (120    | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash provided by
(used in) investing
activities |        |          | 68      |              |         |              | (6,722 | )            |     |              | (10,066 | )      |         |   |        |         |         |        | (16,720 | )
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|Cash flows from financing activities:                        |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |        
|                                                             | Proceeds from (repayment of) long-term
debt, net                                                   |                                                          |                                                     | 13,675                                              |        |          |         | (482         | )       |              |        |             |     |              |         |       |         |   |         | 13,193  |        
|                                                             | Proceeds from issuance of common stock                                                             |                                                          |                                                     | 85                                                  |        |          |         |             |         |              |        |             |     |              |         |       |         |   |         | 85      |        
|                                                             | Other, net                                                                                         |                                                          |                                                     | (446                                                | )      |          |         | (3,666       | )       |              |        | 1,249        |     |              |         |       |         |   |         | (2,863  | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|                                                             |                                                                                                    |                                                          |                                                     | Net cash provided by
(used in) financing
activities |        |          | 13,314  |              |         |              | (4,148 | )            |     |              | 1,249   |        |         |   |        |         |         |        | 10,415  |  
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|Effect of exchange rate changes on cash and
cash equivalents |                                                                                                    |                                                          |                                                    |                                                     |        |          | (458    | )            |         |              | (610   | )            |     |              |        |        |         |   | (1,068  | )      
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|Net increase in cash and cash equivalents                    |                                                                                                    |                                                          | 1,289                                               |                                                     |        |          | 1,863   |              |         |              | 2,344  |              |     |              |        |        |         |   | 5,496   |        
|Cash and cash equivalents at beginning of year               |                                                                                                    |                                                          | (1,213                                              | )                                                   |        |          | 2,063   |              |         |              | 1,523  |              |     |              |        |        |         |   | 2,373   |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        
|Cash and cash equivalents at end of year                     |                                                                                                    | $                                                        | 76                                                  |                                                     |        | $        | 3,926   |              |         | $            | 3,867  |              |     | $            |        |        |         | $ | 7,869   |        
|                                                             |                                                                                                    |                                                          |                                                     |                                                     |        |          |         |              |         |              |        |              |     |              |         |        |         |   |         |         |        

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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 March 31
|                                                               |                                                  |                          |       |                            
|                                                               |                                                  |                          |       | 2002                        |      | 2001
|                                                               |                                                  |                          |       |                             |      |     
|Revenues                                                       |                                                  |                          | 100.0 | %                           |      |      | 100.0 | %   
|                                                               |                                                  |                          |       |                             |      |      |       |     
|Operating expenses:                                            |                                                  |                          |       |                             |      |      |       |     
|                                                               | Salaries, wages and fringe benefits              |                          |       | 55.6                        |      |      |       | 60.4 |      
|                                                               | Operating supplies and expenses                  |                          |       | 14.5                        |      |      |       | 19.0 |      
|                                                               | Purchased transportation                         |                          |       | 10.2                        |      |      |       | 10.7 |      
|                                                               | Insurance and claims                             |                          |       | 5.0                         |      |      |       | 6.1  |      
|                                                               | Operating taxes and licenses                     |                          |       | 4.0                         |      |      |       | 4.0  |      
|                                                               | Depreciation and amortization                    |                          |       | 6.4                         |      |      |       | 7.0  |      
|                                                               | Rents                                            |                          |       | 0.6                         |      |      |       | 0.9  |      
|                                                               | Communications and utilities                     |                          |       | 0.9                         |      |      |       | 0.9  |      
|                                                               | Other operating expenses                         |                          |       | 1.5                         |      |      |       | 1.7  |      
|Gain
on sale of operating assets                               |                                                  |                          | (0.5  | )                           |      |      | (0.1  | )   
|                                                               |                                                  |                          |       |                             |      |      |       |     
|                                                               |                                                  | Total operating expenses |       |                             | 98.2 |      |       |      | 110.6 | 
|                                                               |                                                  |                          |       |                             |      |      |       |     
|Operating income (loss)                                        |                                                  |                          | 1.8   |                             |      |      | (10.6 | )   
|                                                               |                                                  |                          |       |                             |      |      |       |     
|Other income (expense):                                        |                                                  |                          |       |                             |      |      |       |     
|                                                               | Equity in earnings of joint ventures, net of tax |                          |       |                            |      |      |       | 0.6  |      
|                                                               | Interest expense                                 |                          |       | (3.8                        | )    |      |       | (3.9 | )    
|                                                               | Interest income                                  |                          |       | 0.1                         |      |      |       | 0.4  |      
|                                                               | Other, net                                       |                          |       | (0.1                        | )    |      |       |     |      
|                                                               |                                                  |                          |       |                             |      |      |       |     
|                                                               |                                                  |                          | (3.8  | )                           |      |      | (2.9  | )   
|                                                               |                                                  |                          |       |                             |      |      |       |     
|Loss before income taxes & extraordinary item                  |                                                  |                          | (2.0  | )                           |      |      | (13.5 | )   
|Income tax benefit                                             |                                                  |                          | 0.7   |                             |      |      | 4.9   |     
|                                                               |                                                  |                          |       |                             |      |      |       |     
|Loss before extraordinary item                                 |                                                  |                          | (1.3  | )                           |      |      | (8.6  | )   
|Extraordinary gain on early extinguishment of debt, net of tax |                                                  |                          | 0.8   |                             |      |      |      |     
|                                                               |                                                  |                          |       |                             |      |      |       |     
|Net loss                                                       |                                                  |                          | (0.5  | )%                          |      |      | (8.6  | )%  
|                                                               |                                                  |                          |       |                             |      |      |       |     

Three Months Ended March 31, 2002 Compared to Three Months Ended March
31, 2001

Revenues were $213.3 million in the first quarter of 2002 compared to
revenues of $218.2 million in the first quarter of 2001, a decrease of
2.2%. The Company experienced a net loss of $1.2 million in the first
quarter of 2002 versus a net loss of $18.9 million in the first quarter
of 2001. Basic and diluted loss per share in the first quarter of 2002
were $0.14 versus basic and diluted loss per share of $2.35 in the first
quarter of 2001. The first quarter 2002 net loss included a $1.7 million
after-tax gain on the early extinguishment of the Companys subordinated
notes ($0.21 per share basic and diluted) and a $550,000 after-tax gain
on the sale of assets. The first quarter 2001 net loss included an
after-tax charge of $3.2 million for severance and workforce reduction
expenses.

The decrease in revenues was due to a 6.9% decline in vehicle deliveries
primarily resulting from the closing of unprofitable terminals in the
fourth quarter of 2001 together with a decrease in market share.
Offsetting the impact on revenues from the volume decline was a 4.7%
increase in the Allied Automotive
Group revenue per unit, which increased from $89.71 in the first quarter
of 2001 to $93.91 in the first quarter of 2002. This increase is
primarily the result of the implementation by Allied Automotive Group of
a new administrative processing fee in September 2001.

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

Salaries, wages and fringe benefits decreased from 60.4% of revenues in
the first quarter of 2001 to 55.6% of revenues in the first quarter of
2002. The decrease was primarily due to continued

17



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productivity and
efficiency improvements implemented by the Companys turnaround
initiatives. In addition, the Company incurred $5.0 million of workforce
reduction expenses in the first quarter of 2001 compared to $0.4 million
of workforce reduction or severance expenses which were related to the
upgrade of personnel as part of the turnaround initiatives in the first
quarter of 2002.

Operating supplies and expenses decreased from 19.0% of revenues in the
first quarter of 2001 to 14.5% of revenues in the first quarter of 2002.
The decrease was primarily due to a decrease in fuel costs experienced
in the first quarter of 2002 versus the first quarter of 2001 together
with a reduction in the maintenance costs of rigs in service. The
decreased maintenance costs are a result of the Company operating
approximately 10% fewer rigs in the first quarter of 2002 as well as managements efforts to
aggressively reduce overhead costs and unnecessary spending. These
efforts are consistent with the Companys turnaround initiatives.

Purchased transportation decreased from 10.7% of revenues in the first
quarter of 2001 to 10.2% of revenues in the first quarter of 2002. The
decrease was due primarily to a decrease in the number of owner-operators
resulting from the closing of unprofitable terminals in the fourth
quarter of 2001. The decrease was offset by an increase in the mix of
loads hauled by owner-operators versus company drivers. All costs for
owner-operators are included in purchased transportation expense.

Insurance and claims expense decreased from 6.1% of revenues in the first
quarter of 2001 to 5.0% of revenues in the first quarter of 2002. The
decrease was a result of lower cargo claims experienced on shipped
vehicles as well as a reduction in auto self-insurance claims. Allied
Automotive Group is aggressively managing its insurance costs as part of
its turnaround plan.

Depreciation and amortization decreased from 7.0% of revenues in the
first quarter of 2001 to 6.4% of revenues in the first quarter of 2002.
Depreciation and amortization expense was $13.7 million in the first
quarter of 2002 compared to $15.2 in the first quarter of 2001. The
decline is primarily due 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 first
quarter 2001, the Company recorded $0.9 million of amortization expense
related to goodwill. The remaining decrease is primarily due to the sale
of non-performing assets during 2001.

Rents decreased from 0.9% of revenues in the first quarter of 2001 to
0.6% of revenues in the first quarter of 2002. This decline is primarily
due to the closing of unprofitable terminal locations in the fourth
quarter of 2001.

Other operating expenses decreased from 1.7% of revenues in the first
quarter of 2001 to 1.5% of revenues in the first quarter of 2002. The
decrease was primarily due to overall lower professional fees for
consultants.

During the first quarter of 2002, Allied Automotive Group disposed of
surplus real estate as part of its turnaround initiative plan. The
Company recorded a $1.0 million pre-tax gain on the sale of this
property.

Equity in earnings of joint ventures, net of tax, decreased to $0 in the
first quarter of 2002 from earnings of $1.2 million in the first quarter
of 2001. The decrease is attributable primarily to the sale of the
Companys joint ventures in the United Kingdom in the fourth quarter of
2001.

Axis Group completed the sale of its joint venture interest in Brazil
during April 2002 for $3.0 million. The joint venture was established in
January 1998. Equity in earnings of the Brazil joint venture was $0
during each of the three months ended March 31, 2002 and 2001. The
proceeds from the sale were used to reduce the Companys outstanding
debt.

Interest expense decreased from $8.5 million, or 3.9% of revenues, in the
first quarter of 2001 to $8.1 million, or 3.8% of revenues, in the first
quarter of 2002. The decrease was primarily due to

18



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##### 



lower debt balances
in the first quarter of 2002 compared to the first quarter of 2001
together with lower effective interest rates as a result of the new
credit facility.

Interest income decreased from $1.0 million in the first quarter of 2001
to $0.3 million in the first quarter of 2002. The decrease was due to
lower investment income as a result of market performance on its
short-term investments from the Companys captive insurance subsidiary
Haul Insurance Limited.

In June 2001, the 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 142 effective January 1, 2002 and accordingly incurred no
amortization expense of goodwill during the three months ended March 31,
2002. Included in the accompanying consolidated statements of operations
is amortization expense related to goodwill of approximately $0.9
million, for the three months ended March 31, 2001.

SFAS No. 142 also establishes a new method of testing goodwill for
impairment on an annual basis or on an interim basis if an event occurs
or circumstances change that would reduce the fair value of a reporting
unit below its carrying value. In accordance with SFAS No. 142, the
Company has six months, subsequent to the adoption of the statement, to
complete the first step of the transitional goodwill impairment test.
Pursuant to the adoption of SFAS No. 142, the Company has established its
reporting units based on its reporting structure in a reasonable and
supportable manner. The Company expects to complete the transitional test
within the six-month period and will report the results of that testing
subsequent to its completion. The Companys preliminary analysis
indicates that a range of impairment between $3.0 and $5.0 million
after tax may require a
corresponding reduction in the fair value of goodwill related to the
Companys Axis Group subsidiary. Pursuant to the adoption of SFAS No.
142, the Company will annually test goodwill for impairment on the
anniversary of the transitional goodwill impairment test.

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. The amendment
resulted in a curtailment of the Plan effective April 30, 2002. The Companys net
pension cost for 2001 was $2.6 million.

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 refurbishment
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
$25.3 million in the
first three months of 2002 versus $12.9 million for the same period in
2001. The increase was primarily due to a decrease in net loss from $18.9
million in the first quarter of 2001 to $1.2 million in the first quarter
of 2002. In addition, the Company generated favorable changes in
operating assets and liabilities of $12.8 million during the first
quarter of 2002. The improvements in working capital were primarily the
result of aggressively implemented measures to improve asset utilization
during the last six

19



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##### 



months of 2001 and the first three months of 2002.
These measures included a reduction in outstanding accounts receivable at
March 31, 2002 versus December 31, 2001.

Net cash used in investing activities totaled $0.1 for the first quarter
of 2002 versus $16.7 million for the first quarter of 2001. Cash paid to
purchase capital items decreased $5.0 million to $2.6 million in the
first quarter of 2002 from $7.6 million in the first quarter of 2001.
The decrease in capital spending reflects the Companys strategy to
reduce capital expenditures through its new fleet refurbishment program.
Instead of purchasing new rigs, the Company embarked on a significant
fleet refurbishment program that is expected to enable the Company to
refurbish approximately 15% of its active fleet in 2002. The decrease in
cash used in investing activities was further enhanced by the change in
the investment portfolio mix of the Companys captive insurance company,
which increased short-term investments by $9.0 million in the first
quarter of 2001. These decreases were offset by the receipt of $2.2
million of proceeds from the sale of assets in the first quarter of 2002
compared to $0.4 million in the first quarter of 2001.

Net cash used in financing activities totaled $16.1 million in 2002
versus net cash provided by financing activities of $10.9 million in
2001. During the first quarter of 2002, long-term debt was reduced by
$9.1 million, compared to borrowings of long-term debt of $13.2
million in the first quarter of 2001. The reduction of long-term debt
in the first quarter of 2002 included the gain on early
extinguishment of the Senior Subordinated Notes of approximately
$2.8 million. The repayment of debt was
primarily due to a reduction in the net loss experienced by the Company
together with lower working capital requirements and the cash received
from the sale of assets. In addition, the Company paid $8.8 million in
deferred financing costs relating to the refinancing.

On February 25, 2002, the Company refinanced its revolving credit
facility and $40 million Senior Subordinated Notes with the Credit
Facility. Proceeds from the term loans were used to repurchase the $40
million of Senior Subordinated Notes for $37.25 million. In conjunction
with the extinguishment of debt, the Company recognized an extraordinary
gain of $1.7 million, net of income taxes. The Credit Facility includes
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 agreement. The interest rate for the
Revolver is based upon the prime rate plus 1.5% or LIBOR plus 4.5% with a
minimum interest rate of 6.5%. Annual commitment fees are due on the
undrawn portion of the commitment. At March 31, 2002, $49.4 million was
outstanding under the Revolver, and approximately $20.5 million was
committed under letters of credit. As of March 31, 2002, the Company had
approximately $33.6 million available under the Revolver.

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 $29.25 million Term
Loan D. The Term Loans (except Term Loan D) mature on February 25,
2005. Term Loan D matures on February 26, 2005.

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
6.50%. The interest rate on Term Loan B includes interest paid in kind of
3.50% that will be payable upon maturity. The minimum interest for Term
Loan B is 11.50%. Term Loan C is payable in full at maturity with
interest payable monthly based upon the prime rate plus 9.00%. The
interest rate on Term Loan C also includes interest paid in kind of 5.00%
that will be payable upon maturity. The minimum interest for Term Loan C
is 14.00%. Term Loan D is payable in full
at maturity with interest payable quarterly based upon the prime rate
plus 3.50%. In addition, the Company currently has outstanding
indebtedness of $150 million under a series of 8 5/8% Senior Notes
maturing in 2007.

20



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##### 



The Credit Facility agreement and the Senior Notes set forth a number of
affirmative, negative and financial covenants binding on the Company. The
negative covenants limit the ability of the Company to, among other
things, incur or repay debt, incur liens, make investments, purchase or
redeem stock, make dividends or other distributions or sell assets. The
financial covenants set forth in the Credit Facility require the Company
to maintain minimum consolidated earnings before interest, taxes,
depreciation and amortization and also includes leverage and fixed charge
coverage ratios. The Company anticipates limiting capital expenditures to
a range of $20 to $30 million in 2002, which is within covenant
limitations.

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 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 a 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.

Borrowings under the Credit Facility are secured by a first priority
security interest on assets of the Company and certain of its
subsidiaries, including a pledge of stock of certain subsidiaries. In
addition, certain subsidiaries of the Company jointly and severally
guarantee the obligations of the Company under the Credit Facility.

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 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 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.

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 March 31, 2002, which are
recorded at a fair value of $64.7 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 $6.5
million.

Interest Rates- The Company primarily issues long-term debt obligations
to support general corporate purposes including capital expenditures and
working capital needs. The majority of the
Companys long-term debt obligations bear a fixed rate of interest. A
one-percentage point increase in interest rates affecting the Companys
floating rate long-term debt would reduce pre-tax income by $1.3 million
over the next fiscal year. A one-percentage point change in interest

21



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##### 



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. During 2001 Allied Automotive
Group entered into a forward purchase commitment to purchase one million
gallons of low sulfur diesel fuel per month until August 2002 at
determinable prices defined within the agreement. A 10% increase in
diesel fuel prices would reduce pre-tax income by $1.7 million over the
next fiscal year assuming 2001 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 March 31,
2002, are $72.5 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 $7.3 million. 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
rising fuel costs 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 are discounted at 6% to their present
value. 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

22



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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 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.

INCOME TAX VALUATION RESERVE  The Company recognizes deferred tax
liabilities and assets, including certain foreign tax credits, for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. As a result of the Companys
operating loss position, expected insufficient future foreign source
income, and limited foreign tax credit expirations, the foreign tax
credits are not expected to be realized. The Company provides for a
valuation allowance for these and any other net deferred tax assets or
credits not expected to be realized in the future. However, utilization
of remaining deferred tax assets at March 31, 2002 is based on
managements assessment of the Companys earnings history, the actions
the Company has taken and will continue to take to improve its financial
performance, expectations of future taxable income, and other relevant
considerations.

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; 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 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.

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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.

PART 2  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.

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 has sought
and received summary judgment in its favor on the sole claim (for
tortious interference with contract) asserted against it by Gateway
Development & Manufacturing, Inc., but that ruling has been appealed. A
decision on that appeal is expected later this year. In the interim, the
trial court has permitted the filing and service of cross-claims against
the Company by the other defendants in that action. In the CCI Case, the
Company has accepted service of a separate complaint asserting claims
against the Company 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 Systems, 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. Ryders five-count 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 through four, the amended complaint alleges that if these obligations
are not required by contract, the legal doctrines of promissory estoppel,
good faith, fair dealing and negligent misrepresentation created them.
In Count five, the amended complaint seeks a declaration that the Company
is required to undertake these actions. The Company intends to continue
its vigorous
defense against the claims asserted against it, as management believes
all

24



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of those claims are without merit. It has moved to dismiss the first
four counts, answered the declaratory judgment count, and 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.

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

|         |  |                                                                                          
|-------- |  | -----------------------------------------------------------------------------------------
|(a)      |  | Exhibits:                                                                                
|         |  |                                                                                          
|Exhibit  |  | Description                                                                              
|         |  |                                                                                          
|10.1    |  | First Amendment to Employment Agreement between Allied Holdings, Inc.
and Hugh E. Sawyer 
|         |  |                                                                                          
|10.2    |  | Employment Agreement between Allied Holdings, Inc. and Daniel H. Popky                   
|         |  |                                                                                          
|10.2(a) |  | First Amendment to Employment Agreement between Allied Holdings, Inc.
and Daniel H. Popky
|         |  |                                                                                          
|10.3    |  | Employment Agreement between Allied Holdings, Inc. and Thomas M. Duffy                   
|         |  |                                                                                          
|10.3(a) |  | First Amendment to Employment Agreement between Allied Holdings, Inc.
and Thomas M. Duffy
|         |  |                                                                                          
|10.4    |  | Employment Agreement between Allied Holdings, Inc. and Robert J. Rutland                 
|         |  |                                                                                          
|10.5    |  | Employment Agreement among Axis Group, Inc., Allied Holdings, Inc. and
Jack Gross        



---

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

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Reports on Form 8-K:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |  | On April 2, 2002, the Company 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 which Current Report was amended on
April 19, 2002.                                                                                                                                                                                                                  
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |  | On February 27, 2002, the Company filed with the Commission a Current
Report on form 8-K to announce the successful completion of the
refinancing of its revolving credit facility as well as its
subordinated debt on February 26, 2002.                                                                                                                                                                                                                                                                  
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |  | On February 21, 2002, the Company filed an amendment to a Current
Report on Form 8-K filed with the Commission December 20, 2001
relative to the sale of the Companys interest in the United Kingdom
joint venture to provide the Companys unaudited pro forma condensed
consolidated balance sheet and statement of operations as of and for
the nine
month period ending September 30, 2001 and unaudited proforma
condensed consolidated statement of operations for the year ended
December 31, 2001.
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |  | On February 14, 2002, the Company filed with the Commission a Current
Report on Form 8-K announcing that the Company had reached an
agreement on February 12, 2002 with the Companys subordinated debt
holders extending the February 15 interest payment date under the
Companys $40 million subordinated debt facility to March 1, 2002.                                                                                                                                                               

25



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SIGNATURES

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

|             |  |                                                                                                      
|------------ |  | -----------------------------------------------------------------------------------------------------
|             |  | Allied Holdings, Inc.                                                                                
|             |  |                                                                                                      
|May 15, 2002 |  | /s/ HUGH E. SAWYER                                                                                   
|             |  |                                                                                                      
|(Date)       |  | Hugh E. Sawyer
on behalf of Registrant as
President and
Chief Executive Officer                      
|             |  |                                                                                                      
|May 15, 2002 |  | /s/ DANIEL H. POPKY                                                                                  
|             |  |                                                                                                      
|(Date)       |  | Daniel H. Popky
on behalf of Registrant as
Senior Vice President, Finance
and Chief Financial Officer

26