##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
 For the quarterly period ended June 30, 2007
 or
 o
    
    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: 001-13867
 
 ALLIED SYSTEMS HOLDINGS, INC.
  DELAWARE
    
    58-0360550(State or other jurisdiction of
    
    (I.R.S. Employer Identificationincorporation or organization)
    
    Number)
 Suite 200, 160 Clairemont Avenue, Decatur, Georgia 30030
 (404) 373-4285  (Registrants telephone number, including area code)
 www.alliedholdings.com  (Web Page)
 þ o
  o o þ
 o þ
 þ o




---



##### 



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets -June 30, 2007 (Successor) and December 31, 2006 (Predecessor)  unaudited
    
    
    1Consolidated Statements of Operations -One Month Ended June 30, 2007 (Successor), Two Months Ended May 31, 2007 (Predecessor)
and Three Months Ended June 30, 2006 (Predecessor)  unaudited
    
    
    2One Month Ended June 30, 2007 (Successor), Five Months Ended May 31, 2007 (Predecessor)
and Six Months Ended June 30, 2006 (Predecessor)  unaudited
    
    
    3Consolidated Statements of Cash Flows One Month Ended June 30, 2007 (Successor), Five Months Ended May 31, 2007 (Predecessor)
and Six Months Ended June 30, 2006 (Predecessor)  unaudited
    
    
    4Notes to the Consolidated Financial Statements (unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    34Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    51Item 4. Controls and Procedures
    
    
    51PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    51Item 1A. Risk Factors
    
    
    51Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    57Item 6. Exhibits
    
    
    57SIGNATURES
    
    
    59EX-31.1 CERTIFICATION OF MARK J. GENDREGSKEEX-31.2 CERTIFICATION OF THOMAS H. KINGEX-32.1 SECTION SECTION 1350 CERTIFICATION BY MARK J. GENDREGSKEEX-32.2 SECTION 1350 CERTIFICATION BY MARK J. GENDREGSKE




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Financial Statements
 ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 (Unaudited)
 Successor
    
    
    
    PredecessorJune 30, 2007
    
    
    
    December 31, 2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    24,258
    
    
    
    $
    2,314Restricted cash, cash equivalents and other time deposits
    
    
    29,508
    
    
    
    
    32,436Receivables, net of allowances of $1,425 and $1,701 as of June 30, 2007
and December 31, 2006, respectively
    
    
    47,369
    
    
    
    
    52,427Inventories
    
    
    4,878
    
    
    
    
    4,916Deferred income taxes
    
    
    8,742
    
    
    
    
    1,907Prepayments and other current assets
    
    
    12,429
    
    
    
    
    21,463Total current assets
    
    
    127,184
    
    
    
    
    115,463Property and equipment, net of accumulated depreciation
    
    
    190,581
    
    
    
    
    129,231Goodwill
    
    
    85,912
    
    
    
    
    3,545Other intangible assets, net
    
    
    27,260
    
    
    
    
    Other assets:Restricted cash, cash equivalents and other time deposits
    
    
    68,851
    
    
    
    
    65,857Other noncurrent assets
    
    
    25,109
    
    
    
    
    24,672Total other assets
    
    
    93,960
    
    
    
    
    90,529Total assets
    
    $
    524,897
    
    
    
    $
    338,768LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities not subject to compromise:Current maturities of long-term debt
    
    $
    1,800
    
    
    
    $
    Debtor-in-possession credit facility
    
    
    
    
    
    
    
    161,357Accounts and notes payable
    
    
    34,257
    
    
    
    
    26,364Accrued liabilities
    
    
    65,391
    
    
    
    
    74,439Deferred income taxes
    
    
    134
    
    
    
    
    106Total current liabilities
    
    
    101,582
    
    
    
    
    262,266Long-term liabilities not subject to compromise:Long-term debt, less current maturities
    
    
    227,708
    
    
    
    
    Postretirement benefits other than pensions
    
    
    13,205
    
    
    
    
    14,227Deferred income taxes
    
    
    29,351
    
    
    
    
    1,926Other long-term liabilities, principally insurance and claims
    
    
    54,781
    
    
    
    
    65,269Total long-term liabilities
    
    
    325,045
    
    
    
    
    81,422Liabilities subject to compromise
    
    
    
    
    
    
    
    199,212Commitments and contingencies
    
    
    
    
    
    
    
    Stockholders equity (deficit):Predecessor preferred stock, no par value. Authorized 5,000,000 shares; none
outstanding
at December 31, 2006
    
    
    
    
    
    
    
    Predecessor common stock, no par value. Authorized 20,000,000 shares; 8,980,000
shares
outstanding at December 31, 2006
    
    
    
    
    
    
    
    Successor preferred stock, $0.01 par value. Authorized 10,000,000 shares; none
issued and outstanding at June 30, 2007
    
    
    
    
    
    
    
    Successor common stock, $0.01 par value. Authorized 100,000,000 shares; 10,000,000
shares outstanding at June 30, 2007 (including 2,964,899 withheld for future
issuance)
    
    
    100
    
    
    
    
    Additional paid-in capital
    
    
    97,900
    
    
    
    
    49,081Treasury stock, 139,000 shares at cost
    
    
    
    
    
    
    
    (707
    )Retained earnings (accumulated deficit)
    
    
    343
    
    
    
    
    (228,432
    )Accumulated other comprehensive loss, net of tax
    
    
    (73
    )
    
    
    
    (24,074
    )Total stockholders equity (deficit)
    
    
    98,270
    
    
    
    
    (204,132
    )Total liabilities and stockholders equity (deficit)
    
    $
    524,897
    
    
    
    $
    338,768
  1




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (Unaudited)
 Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Two Months Ended
    
    
    Three Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Revenues
    
    $
    73,347
    
    
    
    $
    149,121
    
    
    $
    245,382Operating expenses:Salaries, wages and fringe benefits
    
    
    34,362
    
    
    
    
    74,991
    
    
    
    114,863Operating supplies and expenses
    
    
    16,383
    
    
    
    
    31,521
    
    
    
    50,341Purchased transportation
    
    
    9,199
    
    
    
    
    17,319
    
    
    
    32,670Insurance and claims
    
    
    3,224
    
    
    
    
    7,273
    
    
    
    10,235Operating taxes and licenses
    
    
    2,268
    
    
    
    
    4,706
    
    
    
    7,355Depreciation and amortization
    
    
    3,852
    
    
    
    
    5,490
    
    
    
    7,283Rents
    
    
    542
    
    
    
    
    1,432
    
    
    
    1,739Communications and utilities
    
    
    508
    
    
    
    
    978
    
    
    
    1,501Other operating expenses
    
    
    1,416
    
    
    
    
    1,887
    
    
    
    1,983Loss (gain) on disposal of operating assets, net
    
    
    
    
    
    
    
    31
    
    
    
    (201
    )Total operating expenses
    
    
    71,754
    
    
    
    
    145,628
    
    
    
    227,769Operating income
    
    
    1,593
    
    
    
    
    3,493
    
    
    
    17,613Other income (expense):Interest expense (excludes contractual interest of $2,156 in the
two months ended May 31, 2007 and $3,234 in the three months
ended June 30, 2006)
    
    
    (2,498
    )
    
    
    
    (13,597
    )
    
    
    (9,525
    )Investment income
    
    
    522
    
    
    
    
    965
    
    
    
    1,212Foreign exchange gains, net
    
    
    772
    
    
    
    
    3,683
    
    
    
    1,755Total other income (expense)
    
    
    (1,204
    )
    
    
    
    (8,949
    )
    
    
    (6,558
    )Income (loss) before reorganization items and income taxes
    
    
    389
    
    
    
    
    (5,456
    )
    
    
    11,055Reorganization items
    
    
    
    
    
    
    
    236,734
    
    
    
    (4,707
    )Income before income taxes
    
    
    389
    
    
    
    
    231,278
    
    
    
    6,348Income tax expense
    
    
    (46
    )
    
    
    
    (13,360
    )
    
    
    (63
    )Net income
    
    $
    343
    
    
    
    $
    217,918
    
    
    $
    6,285Basic and diluted earnings per common share:Net income:Basic and diluted
    
    $
    0.03
    
    
    
    $
    24.27
    
    
    $
    0.70Weighted-average number of common shares outstanding:Basic and diluted
    
    
    10,000
    
    
    
    
    8,980
    
    
    
    8,980
  2




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (Unaudited)
 Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Five Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Revenues
    
    $
    73,347
    
    
    
    $
    342,242
    
    
    $
    486,210Operating expenses:Salaries, wages and fringe benefits
    
    
    34,362
    
    
    
    
    175,526
    
    
    
    240,476Operating supplies and expenses
    
    
    16,383
    
    
    
    
    74,634
    
    
    
    99,003Purchased transportation
    
    
    9,199
    
    
    
    
    40,226
    
    
    
    63,578Insurance and claims
    
    
    3,224
    
    
    
    
    16,178
    
    
    
    21,168Operating taxes and licenses
    
    
    2,268
    
    
    
    
    11,402
    
    
    
    15,053Depreciation and amortization
    
    
    3,852
    
    
    
    
    13,269
    
    
    
    14,499Rents
    
    
    542
    
    
    
    
    3,328
    
    
    
    3,492Communications and utilities
    
    
    508
    
    
    
    
    2,819
    
    
    
    3,438Other operating expenses
    
    
    1,416
    
    
    
    
    3,992
    
    
    
    4,048Loss (gain) on disposal of operating assets, net
    
    
    
    
    
    
    
    61
    
    
    
    (255
    )Total operating expenses
    
    
    71,754
    
    
    
    
    341,435
    
    
    
    464,500Operating income
    
    
    1,593
    
    
    
    
    807
    
    
    
    21,710Other income (expense):Interest expense (excludes contractual interest of $5,391 in the
five months ended May 31, 2007 and $6,469 in the six months ended June 30, 2006)
    
    
    (2,498
    )
    
    
    
    (21,189
    )
    
    
    (19,066
    )Investment income
    
    
    522
    
    
    
    
    2,167
    
    
    
    2,248Foreign exchange gains, net
    
    
    772
    
    
    
    
    4,026
    
    
    
    1,585Total other income (expense)
    
    
    (1,204
    )
    
    
    
    (14,996
    )
    
    
    (15,233
    )Income (loss) before reorganization items and income taxes
    
    
    389
    
    
    
    
    (14,189
    )
    
    
    6,477Reorganization items
    
    
    
    
    
    
    
    233,066
    
    
    
    (8,290
    )Income (loss) before income taxes
    
    
    389
    
    
    
    
    218,877
    
    
    
    (1,813
    )Income tax expense
    
    
    (46
    )
    
    
    
    (13,555
    )
    
    
    (190
    )Net income (loss)
    
    $
    343
    
    
    
    $
    205,322
    
    
    $
    (2,003
    )Basic and diluted income (loss) per common share:Net income (loss):Basic and diluted
    
    $
    0.03
    
    
    
    $
    22.86
    
    
    $
    (0.22
    )Weighted-average number of common shares outstanding:Basic and diluted
    
    
    10,000
    
    
    
    
    8,980
    
    
    
    8,980
  3




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Five Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Cash flows from operating activities:Net income (loss)
    
    $
    343
    
    
    
    $
    205,322
    
    
    $
    (2,003
    )Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:Reorganization items
    
    
    
    
    
    
    
    (233,066
    )
    
    
    8,290Depreciation and amortization
    
    
    3,852
    
    
    
    
    13,269
    
    
    
    14,499Loss (gain) on disposal of operating assets, net
    
    
    
    
    
    
    
    61
    
    
    
    (255
    )Write-off and amortization of deferred financing costs
    
    
    8
    
    
    
    
    3,082
    
    
    
    5,595Interest expense paid in kind
    
    
    
    
    
    
    
    9,769
    
    
    
    Foreign exchange gains, net
    
    
    (772
    )
    
    
    
    (4,026
    )
    
    
    (1,585
    )Deferred income taxes
    
    
    
    
    
    
    
    15,691
    
    
    
    2Stock-based compensation expense
    
    
    
    
    
    
    
    282
    
    
    
    186Change in operating assets and liabilities:Receivables, net of allowances
    
    
    385
    
    
    
    
    5,727
    
    
    
    7,610Inventories
    
    
    179
    
    
    
    
    (11
    )
    
    
    33Prepayments and other assets
    
    
    1,273
    
    
    
    
    4,809
    
    
    
    17,700Accounts and notes payable
    
    
    1,280
    
    
    
    
    2,062
    
    
    
    866Accrued liabilities
    
    
    (3,965
    )
    
    
    
    (8,317
    )
    
    
    (6,432
    )Net cash provided by operating activities before payment of
reorganization items
    
    
    2,583
    
    
    
    
    14,654
    
    
    
    44,506Reorganization items paid
    
    
    (3,040
    )
    
    
    
    (13,662
    )
    
    
    (6,549
    )Net cash (used in) provided by operating activities
    
    
    (457
    )
    
    
    
    992
    
    
    
    37,957Cash flows from investing activities:Purchases of property and equipment
    
    
    (10,464
    )
    
    
    
    (21,583
    )
    
    
    (12,564
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    
    291
    
    
    
    834(Increase) decrease in restricted cash, cash equivalents and other
time deposits
    
    
    (334
    )
    
    
    
    268
    
    
    
    (265
    )Funds deposited with insurance carriers
    
    
    (71
    )
    
    
    
    (601
    )
    
    
    (698
    )Funds returned from insurance carriers
    
    
    26
    
    
    
    
    1,086
    
    
    
    2,935Net cash used in investing activities
    
    
    (10,843
    )
    
    
    
    (20,539
    )
    
    
    (9,758
    )Cash flows from financing activities:Repayment of original debtor-in-possession revolving credit
facility, net
    
    
    
    
    
    
    
    (45,005
    )
    
    
    (9,596
    )Additions to Canadian revolving credit facility
    
    
    
    
    
    
    
    
    
    
    
    464Additions to new debtor-in-possession facility term borrowings
    
    
    
    
    
    
    
    229,500
    
    
    
    Additions to original debtor-in-possession facility term borrowings
    
    
    
    
    
    
    
    2,000
    
    
    
    Repayment of original debtor-in-possession facility term borrowings
    
    
    
    
    
    
    
    (121,796
    )
    
    
    Payment of financing costs
    
    
    
    
    
    
    
    (8,640
    )
    
    
    Proceeds from insurance financing arrangements
    
    
    
    
    
    
    
    
    
    
    
    178Repayments of insurance financing arrangements
    
    
    (649
    )
    
    
    
    (3,277
    )
    
    
    (19,352
    )Net cash (used in) provided by financing activities
    
    
    (649
    )
    
    
    
    52,782
    
    
    
    (28,306
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    170
    
    
    
    
    488
    
    
    
    (489
    )Net change in cash and cash equivalents
    
    
    (11,779
    )
    
    
    
    33,723
    
    
    
    (596
    )Cash and cash equivalents at beginning of period
    
    
    36,037
    
    
    
    
    2,314
    
    
    
    4,117Cash and cash equivalents at end of period
    
    $
    24,258
    
    
    
    $
    36,037
    
    
    $
    3,521Supplemental cash flow information:Cash paid during the year for:Interest
    
    $
    2,359
    
    
    
    $
    6,669
    
    
    $
    11,600Income taxes, net
    
    
    122
    
    
    
    
    440
    
    
    
    168Supplemental disclosure of noncash financing activity:Interest paid in kind via addition to term debt
    
    $
    
    
    
    
    $
    9,769
    
    
    $
    
   4




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (Throughout this Quarterly Report on Form 10-Q , we will use the terms we, our, us and
Successor to refer to Allied Systems Holdings, Inc. (a Delaware corporation) and its subsidiaries
on a consolidated basis and, as the context requires, to i) Allied Holdings, Inc. (a Georgia
corporation) the Predecessor, and its subsidiaries on a consolidated basis and ii) Allied
Holdings, Inc. and its subsidiaries that filed for Chapter 11 pursuant to the U.S. Bankruptcy
Code.)
 (1) Organization and Operations
 Company Overview
  Chapter 11 Filing and Emergence
     i)
    
    Payment in cash, reinstatement, return of collateral or other treatment of secured
claims, as agreed to with the holder of each such claim;ii)
    
    Distribution of new common stock of Allied Systems Holdings, Inc. on a pro rata basis
to the holders of allowed general unsecured claims;iii)
    
    Cancellation of the common
stock interests in Allied Holdings, Inc. (holders of equity interests received nothing
under the Joint Plan); andiv)
    
    Assumption of selected contracts.
 5




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
   Claims Resolution and Share Distribution
   Unsecured claimants
 Administrative and priority claims
 Leases and executory contracts
   6




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  (2) Accounting and Reporting Policies
 Fresh-Start Reporting
 Financial
Reporting By Entities in Reorganization Under the Bankruptcy Code
 Basis of Presentation
  Use of Estimates and Seasonality
   7




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  (3) Accounting for the Reorganization and Fresh-Start Reporting
 5 8
 Liabilities Subject to Compromise
  December 31,2006Accounts payable
    
    $
    25,156Senior Notes
    
    
    150,000Accrued interest on Senior Notes
    
    
    4,313Multiemployer pension withdrawal liabilities
    
    
    15,847Accrued claims and insurance reserves
    
    
    3,000Other accrued liabilities
    
    
    896$
    199,212
  Fresh-Start Reporting
  8




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Business Combinations. Accounting for Income Taxes.
 Fair
Value Measurements Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87,
88, 106 and 132(R); The Fair Value Option For Financial Assets and Financial
Liabilities, including an Amendment of SFAS No. 115.
 Disclosures about Fair Value of Financial
Instruments,
 ,
   9




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
       10




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
   Fair value at May 31, 2007Based on Quoted Prices
    
    
    Based on
    
    
    Based onin Active Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable
    
    
    Unobservable
    
    
    Total(Liabilities)
    
    
    Inputs
    
    
    Inputs
    
    
    GainsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)(In thouusands)Property and equipment
    
    $
    180,976
    
    
    $
    
    
    
    $
    
    
    
    $
    180,976
    
    
    $
    21,207Goodwill
    
    
    85,912
    
    
    
    
    
    
    
    
    
    
    
    85,912
    
    
    
    82,367Other intangible assets
    
    
    27,400
    
    
    
    
    
    
    
    
    
    
    
    27,400
    
    
    
    27,184Self-insurance liabilities
    
    
    (77,501
    )
    
    
    
    
    
    
    
    
    
    
    (77,501
    )
    
    
    6,173Compensated absences
    
    
    (7,351
    )
    
    
    
    
    
    
    
    
    
    
    (7,351
    )
    
    
    4,028Deferred income taxes
    
    
    (20,743
    )
    
    
    
    
    
    
    
    
    
    
    (20,743
    )
    
    
    (6,523
    )Secured credit facilities
    
    
    (229,500
    )
    
    
    
    
    
    
    (229,500
    )
    
    
    
    
    
    
    (6,625
    )Defined benefit pension
and other postretirement
plans:Plan assets
    
    
    59,427
    
    
    
    59,427
    
    
    
    
    
    
    
    Benefit obligation
    
    
    (67,826
    )
    
    
    
    
    
    
    
    
    
    
    (67,826
    )Funded status
    
    
    (8,399
    )
    
    
    59,427
    
    
    
    
    
    
    
    (67,826
    )
    
    
    4,441Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (339
    )$
    131,913
     11




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Accounting for Compensated
Absences Interim Financial
Reporting
     12




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Fresh-startPredecessor
    
    
    Effects of
    
    
    Reporting
    
    
    SuccessorMay 31, 2007
    
    
    Joint Plan
    
    
    Adjustments
    
    
    May 31, 2007(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    36,037
    
    
    $
    
    
    
    $
    
    
    
    $
    36,037Restricted cash, cash equivalents and other time deposits
    
    
    30,388
    
    
    
    
    
    
    
    
    
    
    
    30,388Receivables, net
    
    
    47,602
    
    
    
    
    
    
    
    
    
    
    
    47,602Inventories
    
    
    5,038
    
    
    
    
    
    
    
    
    
    
    
    5,038Deferred income taxes
    
    
    3,658
    
    
    
    717
    a)
    
    
    4,367
    a)
    
    
    8,742Prepayments and other current assets
    
    
    14,304
    
    
    
    719
    b)
    
    
    (2,641
    ) l)
    
    
    12,382Total current assets
    
    
    137,027
    
    
    
    1,436
    
    
    
    1,726
    
    
    
    140,189Property and equipment, net of accumulated depreciation
    
    
    154,109
    
    
    
    
    
    
    
    26,867
    m)
    
    
    180,976Goodwill
    
    
    3,545
    
    
    
    
    
    
    
    82,367
    t)
    
    
    85,912Other intangible assets
    
    
    
    
    
    
    
    
    
    
    27,400
    n)
    
    
    27,400Other assets:Restricted cash, cash equivalents and other time deposits
    
    
    67,637
    
    
    
    
    
    
    
    
    
    
    
    67,637Other noncurrent assets
    
    
    33,004
    
    
    
    (255
    ) c)
    
    
    (6,837
    ) o)
    
    
    25,912Total other assets
    
    
    100,641
    
    
    
    (255
    )
    
    
    (6,837
    )
    
    
    93,549Total assets
    
    $
    395,322
    
    
    $
    1,181
    
    
    $
    131,523
    
    
    $
    528,026LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities not subject to compromise:Current maturities of long-term debt
    
    $
    1,800
    
    
    $
    
    
    
    $
    
    
    
    $
    1,800Accounts and notes payable
    
    
    43,692
    
    
    
    (9,818
    ) d)
    
    
    
    
    
    
    33,874Accrued liabilities
    
    
    74,588
    
    
    
    (87
    ) e)
    
    
    (5,889
    ) p)
    
    
    68,612Deferred income taxes
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    134Total current liabilities
    
    
    120,214
    
    
    
    (9,905
    )
    
    
    (5,889
    )
    
    
    104,420Long-term liabilities not subject to compromise:Long-term debt, less current maturities
    
    
    227,700
    
    
    
    
    
    
    
    
    
    
    
    227,700Postretirement benefits other than pensions
    
    
    14,244
    
    
    
    
    
    
    
    (1,069
    ) q)
    
    
    13,175Deferred income taxes
    
    
    3,679
    
    
    
    14,782
    a)
    
    
    10,891
    a)
    
    
    29,352Other long-term liabilities
    
    
    61,018
    
    
    
    (1,316
    ) f)
    
    
    (4,323
    ) r)
    
    
    55,379Total long-term liabilities
    
    
    306,641
    
    
    
    13,466
    
    
    
    5,499
    
    
    
    325,606Liabilities subject to compromise
    
    
    198,763
    
    
    
    (198,763
    ) g)
    
    
    
    
    
    
    Stockholders equity (deficit):Predecessor preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Predecessor common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Successor preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Successor common stock
    
    
    
    
    
    
    100
    h)
    
    
    
    
    
    
    100Additional paid-in capital
    
    
    49,363
    
    
    
    97,193
    i)
    
    
    (48,656
    ) s)
    
    
    97,900Treasury stock
    
    
    (707
    )
    
    
    707
    j)
    
    
    
    
    
    
    Accumulated deficit
    
    
    (254,471
    )
    
    
    98,383
    k)
    
    
    156,088
    s)
    
    
    Accumulated other comprehensive loss, net of tax
    
    
    (24,481
    )
    
    
    
    
    
    
    24,481
    s)
    
    
    Total stockholders equity (deficit)
    
    
    (230,296
    )
    
    
    196,383
    
    
    
    131,913
    
    
    
    98,000Total liabilities and stockholders equity (deficit)
    
    $
    395,322
    
    
    $
    1,181
    
    
    $
    131,523
    
    
    $
    528,026
 
 a)
    
    Reflects the effects of the Joint Plan and the fresh-start reporting adjustments on deferred income taxes.b)
    
    Reflects prepayments relating to directors and officers insurance of the Successor, offset by the elimination of prepayments
relating to directors and officers insurance of the Predecessor.c)
    
    Reflects the elimination of deferred financing costs associated with the conversion of the Rig Financing to Successor equity. See Note 11.d)
    
    Is comprised of: Conversion of Rig Financing to Successor equity
    
    $
    (15,000
    )Pre-petition claims to be settled with cash (previously included in liabilities subject to compromise)
    
    
    1,368Advisory fees due upon emergence
    
    
    2,440Premiums payable as of the Effective Date relating to directors and officers insurance of the Successor
    
    
    1,374$
    (9,818
    )
 13




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 e)
    
    Reflects the conversion, to Successor equity, of accrued interest relating to the Rig Financing.f)
    
    Reflects the elimination of tax liabilities, including related interest and penalties, associated with certain uncertain tax positions.g)
    
    Reflects the disposition of liabilities subject to compromise, pursuant to the Joint Plan, as follows:
 To be settled with cash
    
    $
    1,368To be settled by conversion to Successor equity at estimated equity value
    
    
    76,553Gain on debt discharge
    
    
    120,842$
    198,763
 h)
    
    Reflects 10 million shares of Successor common stock at its par value of $0.01i)
    
    Represents Successor equity over par, and elimination of treasury stock:
 General unsecured creditors
    
    $
    76,553In settlement of Rig Financing plus interest
    
    
    21,447Reorganization equity value
    
    
    98,000Less par value of Successor common stock
    
    
    (100
    )97,900Elimination of Predecessor treasury stock
    
    
    (707
    )$
    97,193
 j)
    
    Reflects the elimination of Predecessor treasury stock.k)
    
    Represents reorganization items and interest expense recorded pursuant to the Joint Plan comprised as follows:
 Gain on debt discharge
    
    $
    120,842Advisory fees due upon emergence
    
    
    (2,440
    )Elimination of prepaid insurance related to directors and officers insurance of Predecessor
    
    
    (655
    )Elimination of deferred financing costs of Predecessor
    
    
    (255
    )Interest expense related to the conversion of the Rig Financing to Successor equity
    
    
    (6,325
    )Income tax expense for effects of the Joint Plan
    
    
    (13,350
    )Reversal of interest and penalties associated with the adjustment to the liability for uncertain tax positions.
    
    
    566$
    98,383
 l)
    
    Reflects the impact, on the current portion of tires on tractors and trailers, of the change in accounting policy.m)
    
    Reflects the revaluation adjustment required for property and equipment to be stated at estimated fair value.n)
    
    Reflects the estimated fair value of customer relationships, developed technology, trademarks and trade names.o)
    
    Represents the impact of the following:
 Write-off of deferred financing costs of Predecessor
    
    $
    (6,500
    )Impact, on the noncurrent portion of tires on tractors and
trailers, of the change in accounting policy
    
    
    (3,144
    )Write-off of royalties, which are now accounted for in
other intangible assets above
    
    
    (216
    )Fair value adjustments related to defined benefit pension
plans
    
    
    3,023$(6,837
    )
 p)
    
    Reflects the effect on current liabilities of discounting insurance liabilities and the fair value adjustments
to accruals for compensated absences.q)
    
    Reflects the fair value adjustments related to postretirement benefit plans.r)
    
    Reflects the effect on noncurrent liabilities of discounting insurance liabilities for fresh-start reporting.s)
    
    Represents the elimination of historical accumulated deficit and other equity accounts and the gain
resulting from the application of fresh-start reporting.t)
    
    Reflects the elimination of historical goodwill and the recording of goodwill for the amount of reorganization
value in excess of the amount allocable to specifically identifiable assets and liabilities.
 Reorganization items
  14




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 PredecessorTwo Months Ended
    
    
    Three Months Ended
    
    
    Five Months Ended
    
    
    Six Months EndedMay 31, 2007
    
    
    June 30, 2006
    
    
    May 31, 2007
    
    
    June 30, 2006Gain on debt discharge
    
    $
    120,842
    
    
    $
    
    
    
    $
    120,842
    
    
    $
    Fair value adjustments
    
    
    131,913
    
    
    
    
    
    
    
    131,913
    
    
    
    Substantial contribution fee due to Yucaipa upon
emergence
    
    
    (6,606
    )
    
    
    
    
    
    
    (6,606
    )
    
    
    Other advisory fees due upon emergence
    
    
    (2,440
    )
    
    
    
    
    
    
    (2,440
    )
    
    
    Legal and professional fees
    
    
    (4,636
    )
    
    
    (3,849
    )
    
    
    (7,840
    )
    
    
    (6,528
    )Employee retention plan
    
    
    (1,386
    )
    
    
    (773
    )
    
    
    (1,746
    )
    
    
    (1,589
    )Other reorganization items
    
    
    (953
    )
    
    
    (85
    )
    
    
    (1,057
    )
    
    
    (173
    )$
    236,734
    
    
    $
    (4,707
    )
    
    $
    233,066
    
    
    $
    (8,290
    )
  (4) Prepayments and Other Current Assets
  Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Prepaid insurance
    
    $
    7,688
    
    
    
    $
    14,689Tires on tractors and trailers
    
    
    
    
    
    
    
    2,360Prepaid licenses
    
    
    2,815
    
    
    
    
    1,285Other
    
    
    1,926
    
    
    
    
    3,129$
    12,429
    
    
    
    $
    21,463
 (5) Property and Equipment
  Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Tractors and trailers
    
    $
    143,496
    
    
    
    $
    423,899Buildings and facilities (including leasehold improvements)
    
    
    25,749
    
    
    
    
    45,360Furniture, fixtures and equipment
    
    
    4,666
    
    
    
    
    44,286Land
    
    
    18,373
    
    
    
    
    9,786Service cars and equipment
    
    
    2,011
    
    
    
    
    4,513194,295
    
    
    
    
    527,844Less accumulated depreciation
    
    
    (3,714
    )
    
    
    
    (398,613
    )$
    190,581
    
    
    
    $
    129,231
  
    
    2 to 8 years for tractors and trailers;
    
    2 to 35 years for buildings and facilities;
    
    2 to 14 years for furniture, fixtures, service cars and equipment;
and
    
    over the shorter of the estimated useful life or the term of the
lease for leasehold improvements.
 15




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
      16




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
   (6) Goodwill and Other Intangible Assets
  Goodwill and Other Intangible Assets,
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Customer Relationships
  
    
    There must be an established relationship between the vendor and customer such that both
parties are aware of the identity and history of one another;
    
    Data must be available that documents the relationship and transactions between the
vendor and customer; and
    
    There should be an identifiable income stream that is generated by the customer
relationship.
  
    
    The remaining useful lives of the customer relationships, considering their current
terms and the renewal probability based on a customer historical attrition analysis; and
    
    The debt-free net cash flow expected to be generated by the customer relationships over
their remaining estimated useful lives.
 17




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Developed Technology
   Trade Names and Trademarks
   Intangible assets not subject to amortization:
 18




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 Successor
    
    
    
    PredecessorJune 30, 2007
    
    
    
    December 31, 2006Gross carrying amount
    
    
    
    Gross carrying amountAllied
    
    
    
    
    
    
    
    
    
    
    
    AlliedAutomotive
    
    
    Axis
    
    
    
    
    
    
    
    Automotive
    
    
    AxisGroup
    
    

Group
    
    

Total
    
    
    

Group
    
    

Group
    
    

TotalGoodwill
    
    $
    80,722
    
    
    $
    5,190
    
    
    $
    85,912
    
    
    
    $
    
    
    
    $
    3,545
    
    
    $
    3,545Trademarks and Trade Names
    
    
    13,000
    
    
    
    900
    
    
    
    13,900
    
    
    
    
    
    
    
    
    
    
    
    
    $
    93,722
    
    
    $
    6,090
    
    
    $
    99,812
    
    
    
    $
    
    
    
    $
    3,545
    
    
    $
    3,545
 Intangible assets subject to amortization:
 SuccessorJune 30, 2007Gross
    
    
    
    
    
    
    NetEstimated
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingLife
    
    
    Amount
    
    
    Amortization
    
    
    AmountCustomer relationships:Allied Automotive Group
    
    15 years
    
    $
    2,000
    
    
    $
    10
    
    
    $
    1,990Axis Group
    
    10 years
    
    
    5,700
    
    
    
    48
    
    
    
    5,652$
    7,700
    
    
    $
    58
    
    
    $
    7,642Developed technology:Allied Automotive Group
    
    5 years
    
    $
    2,700
    
    
    $
    45
    
    
    $
    2,655Axis Group
    
    7 years
    
    
    3,100
    
    
    
    37
    
    
    
    3,063$
    5,800
    
    
    $
    82
    
    
    $
    5,718Total
    
    
    
    
    
    $
    13,500
    
    
    $
    140
    
    
    $
    13,360
   Six months ending December 31, 2007
    
    $
    8432008
    
    
    1,6862009
    
    
    1,6862010
    
    
    1,6862011
    
    
    1,6862012
    
    
    1,371
 19




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 (7) Other Noncurrent Assets
  Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Deposits with insurance companies
    
    $
    10,572
    
    
    
    $
    10,547Deferred financing costs
    
    
    
    
    
    
    
    124Interest in split-dollar life insurance policies
    
    
    5,951
    
    
    
    
    5,973Tires on tractors and trailers
    
    
    
    
    
    
    
    2,950Overfunded pension plans
    
    
    6,143
    
    
    
    
    2,473Other deposits
    
    
    2,443
    
    
    
    
    2,336Other
    
    
    
    
    
    
    
    269$
    25,109
    
    
    
    $
    24,672
  PredecessorDecember 31,2006Cost
    
    $
    345Accumulated amortization
    
    
    (221
    )$
    124
  (8) Accounts and Notes Payable and Accrued Liabilities
   Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Insurance and claims
    
    $
    30,877
    
    
    
    $
    38,786Wages and benefits
    
    
    23,765
    
    
    
    
    27,272Accrued taxes
    
    
    3,753
    
    
    
    
    3,797Accrued interest
    
    
    1,898
    
    
    
    
    738Purchased transportation
    
    
    3,657
    
    
    
    
    2,723Other
    
    
    1,441
    
    
    
    
    1,123$
    65,391
    
    
    
    $
    74,439
 20




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 (9) Insurance and Claims
     Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Accrued liabilities  current
    
    $
    30,877
    
    
    
    $
    38,786Other long-term liabilities  noncurrent
    
    
    53,418
    
    
    
    
    64,30784,295
    
    
    
    
    103,093Liabilities subject to compromise
    
    
    
    
    
    
    
    3,000Total liability included in the consolidated balance sheets
    
    $
    84,295
    
    
    
    $
    106,093
   (10) Employee Benefit Plans
 (a) Pension and Postretirement Benefit Plans
 21




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
  Defined Benefit
    
    
    Postretirement BenefitPension Plans
    
    
    PlansSuccessor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Two Months Ended
    
    
    Three Months Ended
    
    
    One Month Ended
    
    
    
    Two Months Ended
    
    
    Three Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006
    
    
    June 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Service cost
    
    $
    5
    
    
    
    $
    12
    
    
    $
    23
    
    
    $
    5
    
    
    
    $
    12
    
    
    $
    14Interest cost
    
    
    264
    
    
    
    
    515
    
    
    
    762
    
    
    
    66
    
    
    
    
    124
    
    
    
    164Expected return on plan assets
    
    
    (392
    )
    
    
    
    (741
    )
    
    
    (1,014
    )
    
    
    
    
    
    
    
    
    
    
    
    Amortization of:Unrecognized net actuarial loss
    
    
    
    
    
    
    
    217
    
    
    
    524
    
    
    
    
    
    
    
    
    122
    
    
    
    169Prior service cost (credits)
    
    
    
    
    
    
    
    8
    
    
    
    12
    
    
    
    
    
    
    
    
    (51
    )
    
    
    (82
    )Net periodic benefit cost
    
    $
    (123
    )
    
    
    $
    11
    
    
    $
    307
    
    
    $
    71
    
    
    
    $
    207
    
    
    $
    265
 Defined Benefit
    
    
    Postretirement BenefitPension Plans
    
    
    PlansSuccessor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Five Months Ended
    
    
    Six Months Ended
    
    
    One Month Ended
    
    
    
    Five Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006
    
    
    June 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Service cost
    
    $
    5
    
    
    
    $
    30
    
    
    $
    46
    
    
    $
    5
    
    
    
    $
    29
    
    
    $
    28Interest cost
    
    
    264
    
    
    
    
    1,288
    
    
    
    1,524
    
    
    
    66
    
    
    
    
    309
    
    
    
    328Expected return on plan assets
    
    
    (392
    )
    
    
    
    (1,853
    )
    
    
    (2,028
    )
    
    
    
    
    
    
    
    
    
    
    
    Amortization of:Unrecognized net actuarial loss
    
    
    
    
    
    
    
    542
    
    
    
    1,048
    
    
    
    
    
    
    
    
    306
    
    
    
    338Prior service cost (credits)
    
    
    
    
    
    
    
    20
    
    
    
    24
    
    
    
    
    
    
    
    
    (127
    )
    
    
    (164
    )Net periodic benefit cost
    
    $
    (123
    )
    
    
    $
    27
    
    
    $
    614
    
    
    $
    71
    
    
    
    $
    517
    
    
    $
    530
    (b) Employee Retention Plan
  22




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
  (c) 401(k) Plan
  (11) Debt
  Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Current liabilities not subject to compromise:Original DIP Revolver
    
    $
    
    
    
    
    $
    45,005Original DIP
Facility - Term Loan A
    
    
    
    
    
    
    
    20,000Original DIP
Facility - Term Loan B
    
    
    
    
    
    
    
    85,709Original DIP
Facility - Term Loan C
    
    
    
    
    
    
    
    10,643$
    
    
    
    
    $
    161,357Noncurrent liabilities not subject to compromise:Senior secured credit facilities: First Lien Term Facility
    
    $
    180,000
    
    
    
    $
     Second Lien Facility
    
    
    50,000
    
    
    
    
     Unamortized Debt Discount
    
    
    (492
    )
    
    
    
    229,508
    
    
    
    
    Less current maturities
    
    
    (1,800
    )
    
    
    
    $
    227,708
    
    
    
    $
    Liabilities subject to compromise:Senior Notes
    
    $
    
    
    
    
    $
    150,000
 Original DIP Facility
 The Wall Street Journal
 23




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
  New DIP Facility
  1 2
  24




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
   Senior Secured Credit Facilities
   
    
    First Lien Term Loan Facility  At our option, either the Base Rate (which is equal to the
greater of the prime rate as published from time to time in The Wall Street Journalor the
federal funds rate plus one-half of 1%) plus 3.0%, or the Adjusted Eurodollar Rate plus 4.0%;
 
    
    Second Lien Term Loan Facility  At our option, either the Base Rate plus 6.5%, or the
Adjusted Eurodollar Rate plus 7.5%; and
 
    
    First Lien Revolver  At our option, either the Base Rate plus 1.0%, or the Adjusted
Eurodollar Rate plus 2.0%.
      25




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
     Six months ending December 31, 2007
    
    $
    9002008
    
    
    1,8002009
    
    
    1,8002010
    
    
    1,8002011
    
    
    1,8002012
    
    
    221,900$
    230,000
 Canadian Revolving Credit Facility
  Rig Financing
  26




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
  Senior Notes
 5
 (12) Income Taxes
     (13) Commitments and Contingencies
 27




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 (a) Chapter 11 Filing and Emergence
    (b) Letters of Credit
  (c) Litigation, Claims, Assessments
    (d) Purchase and Service Contract Commitments
  28




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
  (e) Leases
   (f) Collective Bargaining Agreements
  
    
    Total U.S. wage concessions of 15%, limited to $35 million per year during the three-year
duration of the agreement;
    
    The elimination of future Teamster wage increases contained
in the Master Agreement;
    
    A wage freeze relating to the salaries of management and other nonbargaining employees
during the three-year duration of the agreement, subject to certain exceptions;
    
    The right of the Teamsters in the U.S. to receive a portion of earnings before interest,
taxes, depreciation and amortization (EBITDA) in excess of the projections included in the
Disclosure Statement for the Joint Plan;
    
    A requirement that a new Chief Executive Officer be appointed by the Effective Date; and.
    
    A requirement that within ninety days of the Effective Date, Allied and the IBT reach an
agreement regarding the potential to have the employees of the Axis Group who perform carhaul
work be represented by the IBT and have all carhaul work controlled by the Axis Group
assigned by right of first refusal to our Automotive Group or another carhaul company subject
to the Master Agreement. Allied and the IBT have agreed to an extension of the period to
reach an agreement on this matter through December 27, 2007. If Allied and the IBT can not
reach a mutual agreement on this matter within the extended period, we will have four months
to sell those operations within the Axis Group.
  29




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
  (g) Employee Agreements with Certain Executive Officers
    (14) Earnings (Loss) Per Common Share
 Earnings Per Share,
   30




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 (15) Stock-Based Compensation
  Share-Based Payment
   (16) Other Comprehensive Income (Loss)
  Successor
    
    
    
    Predecessor
    
    
    PredecessorOne
Month Ended
    
    
    

Two
Months Ended
    
    

Three
Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Net income
    
    $
    343
    
    
    
    $
    217,918
    
    
    $
    6,285Reclassification
adjustment of
amounts recognized
as components of
net periodic
benefit cost, net
of taxes of $0
    
    
    
    
    
    
    
    296
    
    
    
    Foreign currency
translation
adjustments, net of
taxes of $0
    
    
    (73
    )
    
    
    
    (702
    )
    
    
    (455
    )$
    270
    
    
    
    $
    217,512
    
    
    $
    5,830
 31




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 Successor
    
    
    
    Predecessor
    
    
    PredecessorOne
Month Ended
    
    
    

Five
Months Ended
    
    

Six
Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Net income (loss)
    
    $
    343
    
    
    
    $
    205,322
    
    
    $
    (2,003
    )Reclassification
adjustment of
amounts recognized
as components of
net periodic
benefit cost, net
of taxes of $0
    
    
    
    
    
    
    
    740
    
    
    
    Foreign currency
translation
adjustments, net of
taxes of $0
    
    
    (73
    )
    
    
    
    (1,047
    )
    
    
    (399
    )$
    270
    
    
    
    $
    205,015
    
    
    $
    (2,402
    )
  Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Foreign currency translation adjustments
    
    $
    (73
    )
    
    
    $
    156Pension and other postretirement benefit plan adjustments
    
    
    
    
    
    
    
    (24,230
    )$
    (73
    )
    
    
    $
    (24,074
    )
  (17) Industry Segment and Geographic Information
 Disclosure About Segments of an Enterprise and
Related Information
  Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Two Months Ended
    
    
    Three Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Revenues   unaffiliated customers:Allied Automotive Group
    
    $
    71,175
    
    
    
    $
    143,865
    
    
    $
    238,421Axis Group
    
    
    2,172
    
    
    
    
    5,256
    
    
    
    6,961Total
    
    $
    73,347
    
    
    
    $
    149,121
    
    
    $
    245,382Operating income:Allied Automotive Group
    
    $
    2,151
    
    
    
    $
    3,126
    
    
    $
    16,547Axis Group
    
    
    378
    
    
    
    
    1,327
    
    
    
    1,770Corporate/other
    
    
    (936
    )
    
    
    
    (960
    )
    
    
    (704
    )Total
    
    
    1,593
    
    
    
    
    3,493
    
    
    
    17,613Reconciling items:Interest expense
    
    
    (2,498
    )
    
    
    
    (13,597
    )
    
    
    (9,525
    )Investment income
    
    
    522
    
    
    
    
    965
    
    
    
    1,212Foreign exchange gains, net
    
    
    772
    
    
    
    
    3,683
    
    
    
    1,755Income (loss) before reorganization items and income taxes
    
    
    389
    
    
    
    
    (5,456
    )
    
    
    11,055Reorganization items
    
    
    
    
    
    
    
    236,734
    
    
    
    (4,707
    )Income before income taxes
    
    $
    389
    
    
    
    $
    231,278
    
    
    $
    6,348
 32




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Five Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Revenues   unaffiliated customers:Allied Automotive Group
    
    $
    71,175
    
    
    
    $
    329,386
    
    
    $
    471,833Axis Group
    
    
    2,172
    
    
    
    
    12,856
    
    
    
    14,377Total
    
    $
    73,347
    
    
    
    $
    342,242
    
    
    $
    486,210Operating income:Allied Automotive Group
    
    $
    2,151
    
    
    
    $
    184
    
    
    $
    20,001Axis Group
    
    
    378
    
    
    
    
    2,799
    
    
    
    3,331Corporate/other
    
    
    (936
    )
    
    
    
    (2,176
    )
    
    
    (1,622
    )Total
    
    
    1,593
    
    
    
    
    807
    
    
    
    21,710Reconciling items:Interest expense
    
    
    (2,498
    )
    
    
    
    (21,189
    )
    
    
    (19,066
    )Investment income
    
    
    522
    
    
    
    
    2,167
    
    
    
    2,248Foreign exchange gains, net
    
    
    772
    
    
    
    
    4,026
    
    
    
    1,585Income (loss) before
reorganization items and income
taxes
    
    
    389
    
    
    
    
    (14,189
    )
    
    
    6,477Reorganization items
    
    
    
    
    
    
    
    233,066
    
    
    
    (8,290
    )Income (loss) before income taxes
    
    $
    389
    
    
    
    $
    218,877
    
    
    $
    (1,813
    )
  Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Total assets:Allied Automotive Group
    
    $
    350,201
    
    
    
    $
    201,040Axis Group
    
    
    34,074
    
    
    
    
    23,532Corporate/other
    
    
    140,622
    
    
    
    
    114,196Total
    
    $
    524,897
    
    
    
    $
    338,768
  Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Two Months Ended
    
    
    Three Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Revenues:United States
    
    $
    55,615
    
    
    
    $
    110,699
    
    
    $
    187,129Canada
    
    
    17,328
    
    
    
    
    37,605
    
    
    
    57,461Other foreign operations
    
    
    404
    
    
    
    
    817
    
    
    
    792Total
    
    $
    73,347
    
    
    
    $
    149,121
    
    
    $
    245,382
 33




---



##### Table of Contents



ALLIED SYSTEMS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
 Successor
    
    
    
    PredecessorOne Month Ended
    
    
    
    Five Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    
    May 31, 2007
    
    
    June 30, 2006Revenues:United States
    
    $
    55,615
    
    
    
    $
    257,893
    
    
    $
    378,169Canada
    
    
    17,328
    
    
    
    
    81,985
    
    
    
    106,191Other foreign operations
    
    
    404
    
    
    
    
    2,364
    
    
    
    1,850Total
    
    $
    73,347
    
    
    
    $
    342,242
    
    
    $
    486,210
 Successor
    
    
    
    PredecessorJune 30,
    
    
    
    December 31,2007
    
    
    
    2006Long-lived assets:United States
    
    $
    143,107
    
    
    
    $
    93,805Canada
    
    
    40,661
    
    
    
    
    31,431Other foreign operations
    
    
    6,813
    
    
    
    
    3,995Total
    
    $
    190,581
    
    
    
    $
    129,231
   Successor
    
    
    PredecessorOne Month Ended
    
    
    Two Months Ended
    
    Five Months EndedJune 30, 2007
    
    
    May 31, 2007
    
    May 31, 2007General Motors
    
    
    38
    %
    
    
    
    36
    %
    
    
    36
    %Ford
    
    
    22
    %
    
    
    
    23
    %
    
    
    22
    %Chrysler
    
    
    13
    %
    
    
    
    15
    %
    
    
    14
    %73
    %
    
    
    
    74
    %
    
    
    72
    %
  34




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 You should read the discussion and analysis in this section in conjunction with the consolidated
financial statements and accompanying notes included in Item 1. Financial Statements of this
Quarterly Report on Form 10-Q and the consolidated financial statements, related notes and other
financial information included in our Annual Report on Form 10-K for the year ended December 31,
2006. In addition, we use forward-looking statements in the discussion that follows.
Forward-looking statements by nature involve risks and uncertainties and hence our actual results
could differ materially from our expectations as a result of various factors, some of which we
discuss in Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q.
 As more fully discussed in Note 2 to the unaudited consolidated financial statements included in
Item 1. Financial Statements, on our emergence from Chapter 11 and on the application of
fresh-start reporting, a new reporting entity was deemed to be formed and as a result, the
financial statements of the Successor are not comparable to the financial statements of the
Predecessor.
 However, the discussion of results of operations in this section compares the three months ended
June 30, 2007 with the three months ended June 30, 2006 and the six months ended June 30, 2007 with
the six months ended June 30, 2006. Our discussion of operating, investing and financing
activities compares the six months ended June 30, 2007 with the six months ended June 30, 2006. We
believe that for purposes of managements discussion and analysis in this Quarterly Report on Form
10-Q, this presentation provides management and investors with a better perspective of trends and
of our ongoing financial and operational performance. In addition, the application of fresh-start
reporting does not significantly impact factors such as seasonality of revenues. Further, though
having a significant noncash impact on our current and future results of operations, fresh-start
reporting will have no impact on underlying cash flows.
 Executive Overview
   i)
    
    Payment in cash, reinstatement, return of collateral or other treatment of secured
claims, as agreed with the holder of each such claim;ii)
    
    Distribution of new common stock of Allied Systems Holdings, Inc on a pro rata basis to
the holders of allowed general unsecured claims;iii)
    
    Cancellation of the existing common stock interests in Allied Holdings, Inc. (holders
of equity interests received nothing under the Joint Plan); andiv)
    
    Assumption of selected contracts.
  35




---



##### Table of Contents




    
    Results of Operations;
    
    Liquidity and Capital Resources;
    
    Off-Balance Sheet Arrangements;
    
    Disclosures About Market Risks;
    
    Critical Accounting Policies and Estimates;
    
    Recent Accounting Pronouncements;
    
    Factors Which May Affect Future Results; and
    
    Cautionary Notice Regarding Forward-looking Statements.
 Results of Operations
 Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
  36




---



##### Table of Contents



As a % of revenuesThree Months ended June 30,2007
    
    2006Revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Salaries, wages, and fringe benefits
    
    
    49.2
    %
    
    
    46.8
    %Operating supplies and expenses
    
    
    21.5
    %
    
    
    20.5
    %Purchased transportation
    
    
    11.9
    %
    
    
    13.3
    %Insurance and claims
    
    
    4.7
    %
    
    
    4.2
    %Operating taxes and licenses
    
    
    3.1
    %
    
    
    3.0
    %Depreciation and amortization
    
    
    4.2
    %
    
    
    3.0
    %Rents
    
    
    0.9
    %
    
    
    0.7
    %Communications and utilities
    
    
    0.7
    %
    
    
    0.6
    %Other operating expenses
    
    
    1.5
    %
    
    
    0.8
    %Loss (gain) on disposal of operating assets, net
    
    
    0.0
    %
    
    
    (0.1
    )%Total operating expenses
    
    
    97.7
    %
    
    
    92.8
    %Operating income
    
    
    2.3
    %
    
    
    7.2
    %Other income (expense):Interest expense
    
    
    (7.2
    )%
    
    
    (3.9
    )%Investment income
    
    
    0.7
    %
    
    
    0.5
    %Foreign exchange gains, net
    
    
    2.0
    %
    
    
    0.7
    %Total other income (expense):
    
    
    (4.5
    )%
    
    
    (2.7
    )%(Loss) income before reorganization items and income taxes
    
    
    (2.2
    )%
    
    
    4.5
    %Reorganization items
    
    
    106.4
    %
    
    
    (1.9
    )%Income before income taxes
    
    
    104.2
    %
    
    
    2.6
    %Income tax expense
    
    
    (6.0
    )%
    
    
    (0.0
    )%Net income (loss)
    
    
    98.2
    %
    
    
    2.6
    %
 Revenues
      37




---



##### Table of Contents



Salaries, wages and fringe benefits
  
    
    The decrease in the number of vehicles delivered in the second quarter of 2007 compared to
the second quarter of 2006, which resulted in a decrease in bargaining wages and benefits of
approximately $8.9 million. Driver pay is based primarily on the number of miles driven to
deliver vehicles and is affected by changes in revenue related to changes in volume.
 
    
    Lower workers compensation expense of $3.4 million due to the effect of lower premiums for
2007 coverage.
   38




---



##### Table of Contents



Operating supplies and expenses
    
    
    A decrease of $1.7 million in fuel expense due primarily to the lower number of vehicles
delivered, partially offset by an increase in the average price of fuel to us. We estimate
that the lower number of vehicles delivered resulted in a reduction in fuel expense of $1.9
million which was partially offset by approximately $0.2 million due to the increase in the
price of fuel to us. Though fuel prices in the second quarter of 2007
were generally lower than fuel
prices in the second quarter of 2006, the cost of
fuel to us was higher due to factors such as the volume purchased prior to the reduction in
prices as well as the location of purchase.
 
    
    A decrease of $0.5 million in repairs and maintenance primarily as a result of the lower
number of miles driven to deliver vehicles, partially offset by an increase in the frequency
and nature of vehicle repairs; and
 
    
    A decrease of $0.3 million in the costs of tolls and motels as a result of the decrease in
the number of miles driven and vehicles delivered.
 Purchased transportation
  39




---



##### Table of Contents



Insurance and claims
  Depreciation and amortization
  Other operating expenses
  Interest expense
  
    
    The equity value received by Yucaipa and the other participants in the Rig Financing
exceeded the carrying amount of the Rig Financing by $6.3 million, which was recognized
as interest expense;
    
    Higher amortization of deferred financing costs of $0.9 million, principally the
result of a shorter amortization period (six months) for the deferred financing costs
related to the New DIP Facility which was entered into at the end of March 2007 and which
was scheduled to mature in September 2007, as well as higher deferred financing costs
related to the New DIP Facility compared to the deferred financing costs related to the
Original DIP Facility; and
    
    An increase in the average outstanding debt in the second quarter of 2007 compared to
the second quarter of 2006. The average outstanding debt increased by $70.3 million in
the second quarter of 2007 compared to the second quarter of 2006, which resulted in an
increase in interest expense of approximately $1.7 million.
  40




---



##### Table of Contents




    
    A decrease in the effective interest rate. Average interest rates were approximately
3.9% lower in the second quarter of 2007 versus the second quarter of 2006 resulting in a
decrease in interest expense of approximately $1.5 million; and
    
    Lender fees of approximately $0.8 million incurred in the second quarter of 2006
related to forbearance agreements negotiated in that quarter in relation to the Original
DIP Facility.
 Investment income
  Foreign exchange gains, net
  Reorganization items
  
    
    Bankruptcy court-approved fees of approximately $6.6 million incurred in May 2007 to
Yucaipa for their substantial contribution to the development of the Joint Plan;
    
    Higher fees for legal and reorganization consulting services incurred to comply with
the Joint Plan; and
    
    Severance of $1.1 million paid to the Companys former CEO.
 Income taxes
  41




---



##### Table of Contents



Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
  As a % of revenuesSix Months ended June 30,2007
    
    2006Revenues
    
    
    100.0
    %
    
    
    100.0
    %Operating expenses:Salaries, wages, and fringe benefits
    
    
    50.5
    %
    
    
    49.5
    %Operating supplies and expenses
    
    
    21.9
    %
    
    
    20.4
    %Purchased transportation
    
    
    11.9
    %
    
    
    13.1
    %Insurance and claims
    
    
    4.7
    %
    
    
    4.4
    %Operating taxes and licenses
    
    
    3.3
    %
    
    
    3.1
    %Depreciation and amortization
    
    
    4.1
    %
    
    
    3.0
    %Rents
    
    
    0.9
    %
    
    
    0.7
    %Communications and utilities
    
    
    0.8
    %
    
    
    0.7
    %Other operating expenses
    
    
    1.3
    %
    
    
    0.8
    %Loss (gain) on disposal of operating assets, net
    
    
    0.0
    %
    
    
    (0.1
    )%Total operating expenses
    
    
    99.4
    %
    
    
    95.6
    %Operating income
    
    
    0.6
    %
    
    
    4.4
    %Other income (expense):Interest expense
    
    
    (5.7
    )%
    
    
    (3.9
    )%Investment income
    
    
    0.6
    %
    
    
    0.5
    %Foreign exchange gains, net
    
    
    1.2
    %
    
    
    0.3
    %Total other income (expense):
    
    
    (3.9
    )%
    
    
    (3.1
    )%(Loss) income before reorganization items and income taxes
    
    
    (3.3
    )%
    
    
    1.3
    %Reorganization items
    
    
    56.1
    %
    
    
    (1.7
    )%Income (loss) before income taxes
    
    
    52.8
    %
    
    
    (0.4
    )%Income tax expense
    
    
    (3.3
    )%
    
    
    (0.0
    )%Net income (loss)
    
    
    49.5
    %
    
    
    (0.4
    )%
 Revenues
    42




---



##### Table of Contents



Salaries, wages and fringe benefits
  
    
    The decrease in the number of vehicles delivered in the six months ended June 30, 2007
compared to the six months ended June 30, 2006, which resulted in a decrease in bargaining
wages and benefits of approximately $26.9 million.
    
    Lower workers compensation expense of $9.1 million due to the effect of lower premiums
for 2007 coverage; and
    
    A reduction in non-bargaining salaries and benefits of $0.6 million due primarily to a
5.2% reduction in the average head count for the six months ended June 30, 2007 versus the
six months ended June 30, 2006 and lower costs for employee medical claims, partially
offset by the unpaid furloughs discussed in the quarter over quarter comparison.
    Operating supplies and expenses
   43




---



##### Table of Contents




    
    A decrease of $4.8 million in fuel expense due primarily to the lower number of
vehicles delivered, partially offset by an increase in the average price of fuel to us.
We estimate that the lower number of vehicles delivered resulted in a reduction in fuel
expense of $6.1 million which was partially offset by approximately $1.3 million due to
the increase in the price of fuel to us. Though fuel prices in the six months ended June
30, 2007 were lower than fuel prices in the six months ended June 30, 2006 for both our
U.S and Canadian operations, the cost of fuel to us was higher due to factors such as the
volume purchased prior to the reduction in prices as well as the location of purchase.
    
    A decrease of $3.4 million in repairs and maintenance primarily as a result of the
lower number of miles driven to deliver vehicles.
    
    A decrease of $1.0 million in the costs of tolls, travel and meals as a result of the
decrease in the number of miles driven and vehicles delivered.
  Purchased transportation
  Insurance and claims
  Depreciation and amortization
  Other operating expenses
  Interest expense
   44




---



##### Table of Contents




    
    The equity value received by Yucaipa and the other participants in the Rig Financing
exceeded the carrying amount of the Rig Financing by $6.3 million, which was recognized as
interest expense;
    
    An increase in the average outstanding debt during the six months ended June 30, 2007
compared to the six months ended June 30, 2006. The average outstanding debt increased by
$36.4 million in the six months ended June 30, 2007 compared to the six months ended June
30, 2006, which resulted in additional interest expense of approximately $2.0 million;
    
    A prepayment penalty of $1.1 million, incurred during the six months ended June 30,
2007, related to the Original DIP Facility; and
    
    Legal and other fees of approximately $0.6 million incurred during the six months ended
June 30, 2007 related to the repayment of the Original DIP Facility and entering into the
New DIP Facility.
  
    
    A decrease in the effective interest rate  average interest rates were approximately
1.7% lower in the six months ended June 30, 2007 versus the six months ended June 30, 2006
resulting in a decrease in interest expense of approximately $1.3 million;
    
    Lender fees of $0.8 million incurred in the six months ended June 30, 2006 related to
forbearance agreements negotiated in that period in relation to the Original DIP Facility;
    
    Lower interest of $0.8 million related to insurance financing arrangements as a result
of lower insurance borrowings in 2007 compared to 2006; and
    
    Lower amortization of deferred financing costs of $2.6 million in the six months ended
June 30, 2007 compared to the six months ended June 30, 2006. This was due to the
revision in March 2006 of the end of the amortization period of the deferred financing
costs related to the Original DIP Facility from February 2, 2007, the original maturity
date, to May 18, 2006, the end of the forbearance period for certain covenant violations
that had occurred. The effect of this revision on interest expense, period over period
was partially offset by the effect of the shorter amortization period used to amortize the
deferred financing costs related to the New DIP Facility in the six months ended June 30,
2007.
 Investment income
  Foreign exchange gains, net
  45




---



##### Table of Contents



Reorganization items
  Income taxes
  Liquidity and Capital Resources
  Operating Activities
  Investing Activities
  46




---



##### Table of Contents



Financing Activities
  
    
    Net borrowings under our credit facilities were approximately
$64.7 million in the six
months ended June 30, 2007. In the six months ended June 30, 2006, we had net repayments
of $9.1 million under the then revolving credit facility;
    
    During the six months ended June 30, 2007, the repayments under insurance financing
arrangements were $15.4 million lower than the repayments during the six months ended June
30, 2006 since more premiums were financed for the 2006 coverage; and
    
    In the six months ended June 30, 2007, we paid financing
costs of $8.6 million related
to the New DIP Facility, partially offsetting the other increases.
 Debt and Letters of Credit
   
    
    First Lien Term Loan Facility  At our option, either the Base Rate (which is equal to the
greater of the prime rate as published from time to time in The Wall Street Journalor the
federal funds rate plus one-half of 1%) plus 3.0%, or the Adjusted Eurodollar Rate
plus 4.0%;
 
    
    Second Lien Term Loan Facility  At our option, either the Base Rate plus 6.5%, or the
Adjusted Eurodollar Rate plus 7.5%; and
 
    
    First Lien Revolver  At our option, either the Base Rate plus 1.0%, or the
Adjusted Eurodollar Rate plus 2.0%.
   47




---



##### Table of Contents



Contractual Obligations
  
    
    The Original DIP Facility was replaced by the New DIP Facility, which was later
restructured and converted to senior secured credit facilities upon our emergence from
Chapter 11. See Note 11 for further discussion of these facilities.
    
    As holders of allowed general unsecured claims, holders of the Senior Notes are
entitled to receive new common stock of Allied Systems Holdings, Inc. on a pro rata basis
in exchange for the cancellation of the debt pursuant to the Joint Plan as of the
Effective Date.
 Off-Balance Sheet Arrangements
  Disclosures About Market Risks
  Fuel Prices
 48




---



##### Table of Contents



Interest Rates
   Risk Management Retention
    Foreign Currency Exchange Rates
  49




---



##### Table of Contents



Inflation
  Critical Accounting Policies and Estimates
     Recent Accounting Pronouncements
  Factors Which May Affect Future Results
 Our business is subject to certain risks, including the risks set forth in Part II, Item 1A. Risk
Factors. Readers of this Quarterly Report on Form 10-Q should take such risks into account in
evaluating any investment decision involving our securities. More detailed information concerning
these and other risks is contained in other sections of this Quarterly Report on Form 10-Q and our
other reports filed with the Securities and Exchange Commission (SEC).
 Cautionary Notice Regarding Forward-Looking Statements
  50




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 (b) Changes in Internal Control Over Financial Reporting.
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
    
 Item 1A. Risk Factors
 
 51




---



##### Table of Contents



Our actual financial results and financial condition could significantly vary from the projections
provided to the Bankruptcy Court and investors are cautioned not to place undue reliance on this
information.
  Our net operating loss carry forwards may be limited
  We have a significant amount of debt and substantially all our assets are pledged as collateral for
debt obligations, which could limit our operational flexibility and customer relationships or
otherwise adversely affect our financial condition.
  
    
    We may not be able to repay, refinance or extend our debt as it matures.
    
    If we are not able to refinance or extend our debt when it matures, we may not be able
to repay the debt;
    
    Substantially all our assets are pledged as collateral for our debt and as a result we
are limited in our ability to sell assets to generate additional cash;
    
    Our flexibility in responding to changes in the business and industry may be reduced;
    
    We may be more vulnerable to economic downturns;
    
    We may be unable to invest in our fleet of Rigs;
    
    We may be unable to meet customer demands; and
    
    We may be limited in our ability to withstand competitive pressures.
 The terms of the senior secured credit facilities place restrictions on us, which create risks of
default and limits our flexibility.
   52




---



##### Table of Contents



We will be required to make significant capital expenditures on our Rigs in the coming years and we
may not be able to maintain our current level of terminal operations or customer relationships.
   If we are not able to renegotiate our union contracts on terms favorable to us as they expire, or
if work stoppages or other labor disruptions occur during such negotiations, it could have a
material adverse effect on our operations.
  Rising interest rates could adversely affect our cash flow and interest expense.
   A shortage of fuel or higher fuel prices resulting from fuel shortages or other factors could have
a detrimental effect on the automotive industry or the automotive transportation industry and could
materially and adversely affect our operations.
  53




---



##### Table of Contents



A further decline in the automotive industry could have a material adverse effect on our
operations.
  The internal strategies of our largest customers could have a material effect on our performance.
  Losses may exceed our insurance coverage or reserves.
    We have a history of losses and may not be able to improve our performance to achieve
profitability.
 54




---



##### Table of Contents



Our restricted cash, cash equivalents and other time deposits are not available for use in our
operations even if they were needed to fund our operations.
  If we do not maintain our relationships with major customers or these relationships are terminated,
reduced or redesigned, our operations could be materially and adversely affected.
   Competition in the automotive transportation industry could result in a loss of our market share or
a reduction in our rates, which could have a material adverse effect on our operations.
  55




---



##### Table of Contents



Our common stock is not currently listed on a national securities exchange, which could make it
more difficult for investors to liquidate their shares, result in a decline in the stock price and
make it difficult for us to raise additional capital.
  We intend to terminate our SEC reporting obligations, which could make an investment in our
common stock less liquid.
  Adverse changes in the foreign business climate, primarily in Canada, could adversely affect our
operations.
  Major changes in key personnel on whom we depend could adversely affect our operations.
  The loss of our Teamster drivers and mechanics could adversely affect our operations.
  56




---



##### Table of Contents



We have previously had material weaknesses in our internal control over financial reporting, and
any unidentified material weaknesses could cause us to fail to meet our SEC and other reporting
requirements.
     
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 6. Exhibits
 (a) Exhibit Index
 Exhibit No.
    
    Description31.1
    
    Rule 13a-14(a)/15d-14(a) Certification by Mark J. Gendregske.31.2
    
    Rule 13a-14(a)/15d-14(a) Certification by Thomas H. King.32.1
    
    Section 1350 Certification by Mark J. Gendregske.32.2
    
    Section 1350 Certification by Thomas H. King.
 57




---



##### Table of Contents



SIGNATURES
  ALLIED
    
    SYSTEMS HOLDINGS, INC.Date: November 14, 2007
    
    By:
    
    /s/ Mark J. GendregskeMark J. Gendregske,President and Chief Executive OfficerDate: November 14, 2007By:
    
    /s/ Thomas H. KingThomas H. King,Executive Vice President and Chief FinancialOfficer (Principal Financial and AccountingOfficer)
 58




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    Rule 13a-14(a)/15d-14(a) Certification by Mark J. Gendregske.31.2
    
    Rule 13a-14(a)/15d-14(a) Certification by Thomas H. King.32.1
    
    Section 1350 Certification by Mark J. Gendregske.32.2
    
    Section 1350 Certification by Thomas H. King.
 59