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

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 — For the quarterly period ended June 30, 2001

or

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

ALLIED HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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

Suite 200, 160 Clairemont Avenue, Decatur, Georgia 30030

(Address of principal executive offices)

(404) 373-4285

(Registrant’s telephone number, including area code)

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

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

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

TOTAL NUMBER OF PAGES INCLUDED IN THIS REPORT: 42

1

TABLE OF CONTENTS

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

INDEX

PART I

FINANCIAL INFORMATION

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

PART II

OTHER INFORMATION

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

2

PART 1 — FINANCIAL INFORMATION
ITEM 1 — FINANCIAL STATEMENTS

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In Thousands)

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

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

3

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

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

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

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

4

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

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

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

5

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

Note 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 for complete financial statements. The statements contained herein reflect all adjustments, all of which are of a normal, recurring nature, which are, in the opinion of management, necessary to present fairly the financial condition, results of operations and cash flows for the periods presented. Operating results for the three and six month periods ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. The interim financial statements should be read in conjunction with the financial statements and notes thereto of Allied Holdings, Inc. and Subsidiaries, (the “Company”) included in the Company’s 2000 Annual Report on Form 10-K.
Note 2.	Long-Term Debt
	On September 30, 1997, the Company issued $150 million of 8 5/8 % senior notes (the “Notes”) through a private placement. Subsequently, the senior notes were registered with the Securities and Exchange Commission. The net proceeds from the Notes were used to fund the acquisition of Ryder Automotive Carrier Services, Inc. and RC Management Corp., pay related fees and expenses, and reduce outstanding indebtedness. The Company’s obligations under the Notes are guaranteed by substantially all of the subsidiaries of the Company (the “Guarantor Subsidiaries”). Haul Insurance Ltd., Arrendadora de Equipo Para el Transporte de Automoviles, S. de R.L. de C.V., Axis Logistica, S. de R.L. de C.V. and Axis Netherlands C.V. do not guarantee the Company’s obligations under the Notes (the “Nonguarantor Subsidiaries”). The following condensed consolidating balance sheets, statements of operations and statements of cash flows present the financial statements of the parent company and the combined financial statements of the Guarantor Subsidiaries and Nonguarantor subsidiaries. The Guarantors are jointly and severally liable for the Company’s obligations under the Notes and there are no restrictions on the ability of the Guarantors to make distributions to the Company.

6

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2001
In Thousands

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

7

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2000
In Thousands

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

8

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

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

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

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

9

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

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

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

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

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

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

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

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

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Note 3. Comprehensive Income

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

Note 4.  Accounting for Derivative Instruments and Hedging Activities

The Financial Accounting Standards Board issued Statement of Financial Accounting Standards “SFAS” No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, the statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting.

From time to time, the Company enters into future contracts to manage the risk associated with changes in fuel prices. Gains and losses from fuel hedging contracts are recognized as part of fuel expense when the Company uses the underlying fuel being hedged. The Company does not enter into fuel hedging contracts for speculative purposes. At June 30, 2001, the Company did not have any outstanding fuel hedging contracts or other derivative instruments that fall under the provisions of SFAS No. 133.

Note 5.  Recent Accounting Pronouncements

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

13

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

Note 6.  Workforce Reduction Expense

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

Note 7.  Segment Reporting

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

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

14

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

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

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

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

Note 8.  Equity Investments

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

Equity in earnings for these joint ventures is recorded net of income taxes in the

15

consolidated statements of operations by the Company. Income taxes related to the joint ventures for the six months ended June 30, 2001, and 2000 were $1,306,000 and $1,153,000, respectively.

The majority of the Company’s equity in earnings of joint ventures in 2001 was derived from its joint venture in the United Kingdom, Ansa Logistics Limited. Summarized financial information of Ansa Logistics Limited for the periods ended June 30, 2001 and 2000 (in thousands):

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

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

Note 9. Litigation

The Company is routinely a party to litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of vehicles. The Company does not believe that any of such pending litigation, if adversely determined, would have a material adverse effect on the Company.

The Company is defending two pieces of related litigation in the Supreme Court of Erie County, New York: Gateway Development & Manufacturing, Inc. v. Commercial Carriers, Inc., et al., Index No. 1997/8920 (the “Gateway Case”), and Commercial Carriers, Inc., v. Gateway Development & Manufacturing, Inc., et al. (the “CCI Case”), Index No. I2000/8184. The claims at issue in both the Gateway Case and the CCI Case center around the contention that the Company breached legal duties with respect to a failed business transaction involving Gateway Development & Manufacturing, Inc., Ryder Truck Rental, Inc., and Ryder System, Inc. In the Gateway Case, the

16

Company has sought and received summary judgment in its favor on the sole claim (for tortious interference with contract) asserted against it by Gateway Development & Manufacturing, Inc., but the court has permitted the filing and service of cross-claims against the Company by the other defendants in that action. In the CCI Case, the Company has accepted service of a separate complaint asserting claims against the Company that are virtually identical to the cross-claims asserted against the Company by the other defendants in the Gateway Case. It is anticipated that the claims asserted in both the Gateway Case and the CCI Case will be resolved in a unified proceeding. With respect to the entirety of this litigation, the Company intends to continue its vigorous defense against the claims asserted it, as management believes all of those claims are without merit. While the ultimate results of this litigation cannot be predicted, management does not expect that the resolution of these proceedings will have a material adverse effect on the Company’s consolidated financial position or results of operations.

Note 10. Reclassifications

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

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

Results of Operations

Revenues were $250.2 million for the second quarter of 2001 versus revenues of $295.9 million for the second quarter of 2000, a decrease of 15.4%. For the six-month period ended June 30, 2001, revenues were $468.4 million, versus revenues of $578.8 million for the six-month period ended June 30, 2000, a decrease of 19.1%. The decrease in revenues is primarily due to lower vehicle delivery volumes resulting from reduced new vehicle production.

The net loss was $5.7 million during the second quarter of 2001 versus net income of $6.9 million during the second quarter of 2000. Basic and diluted loss per share in the second quarter of 2001 were $0.71, versus basic and diluted earnings per share of $0.87 in the second quarter of 2000. For the six-month period ended June 30, 2001, the net loss was $24.6 million, versus net income of $5.9 million for the six-month ended June 30, 2000. Basic and diluted loss per share for the six-month period ended June 30, 2001 were $3.04 versus basic and diluted earnings per share of $0.74 for the six-month period ended June 30, 2000.

In April 2001 the Company amended its revolving credit facility and its senior subordinated notes to avoid defaults relating to its financial covenants. The maturity date of the amended revolving credit facility has been accelerated from September 30, 2002 to January 31, 2002. The Company is engaged in discussions with a number of lenders to replace its revolving credit facility, and completion of the financing is anticipated by year-end. The Company expensed approximately $0.5 million, or $0.6 per share, of administrative costs related to the amendments during the first quarter of 2001 and expensed approximately $1.0 million, or $0.12 per share, of costs resulting from the amendments during the second quarter of 2001.

As discussed above, the Company in April 2001 negotiated amendments to certain affirmative, negative and financial covenants of the Revolving Credit Facility and the Senior Subordinated Notes. As a result of the amendments, the Company does not anticipate any covenant violations during 2001. There can be no assurance, however, that the Company will be able to comply with these or its other debt covenants or that, if it fails to do so, it will be able to obtain amendments to or waivers of such covenants. Failure of the Company to comply with covenants contained in its debt instruments, if not waived, or to adequately service debt obligations, could result in default under its debt instruments. Any default under the Company’s debt instruments, particularly any default that results in acceleration of indebtedness or foreclosure on collateral, could have a material adverse effect on the Company.

18

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

Salaries, wages and fringe benefits increased from 52.1 % of revenues in the second quarter of 2000 to 56.2 % of revenues in the second quarter of 2001, and from 53.4% of revenues for the first six months of 2000 to 58.1% of revenues for the first six months of 2001. The increase was due in part to severance charged to expense of $4.3 million in the first quarter of 2001 and $0.6 million in the second quarter of 2001 that was part of the Company’s workforce and overhead reduction program, as well as annual wage increases for remaining employees. In addition, the significant drop in vehicle deliveries caused operating inefficiencies that increased salaries, wages, and fringe benefits as a percentage of revenues.

Operating supplies and expenses decreased from 16.3% of revenues in the second quarter of 2000 to 15.3% of revenues in the second quarter of 2001, and decreased from 17.3% for the first six months of 2000 to 17.0% for the first six months of 2001. The decrease was due primarily to a decrease in parts and maintenance expense related to vigorous expense reduction programs and decreasing volumes, combined with lower fuel costs.

Purchased transportation increased from 9.9% of revenues in the second quarter of 2000 to 11.5% of revenues in the second quarter of 2001, and increased from 9.8% of revenues for the first six months of 2000 to 11.1% of revenues for the first six months of 2001. As volumes decline, units are hauled by drivers with the highest seniority. The number of owner operators stayed relatively constant from year to year while the number of company drivers decreased, resulting in higher purchased transportation for 2001 compared to 2000.

Insurance and claims expense increased from 4.4% of revenues in the second quarter of 2000 to 5.5% of revenues in the second quarter of 2001, and increased from 4.3% of revenue for the first six months of 2000 to 5.8% of revenues for the first six months of 2001. The increase was a result of an increase in cargo claims expense and costs related to higher auto, general liability and property insurance premiums that were unaffected by the decline in vehicles delivered.

Depreciation and amortization expense increased from 5.2% of revenues in the second quarter of 2000 to 6.1% of revenues in the second quarter of 2001, and increased from 5.3% of revenues for the first six months of 2000 to 6.5% of revenues for the first six months of 2001. The increase as a percentage of revenues was due primarily to a sharp decline in vehicles delivered which reduced revenues. Depreciation and amortization expense stayed relatively constant in 2001 versus 2000; depreciation and amortization expense was $15.3 million in the second quarter of 2001 and $15.4 million in the second quarter of 2000, and $30.3 million for the first six months of 2001 versus $30.6 million for the first six months of 2000.

Gain on sale of assets increased from $91,000 in the second quarter of 2000 to $2,576,000 in the second quarter of 2001, and increased from a loss of $12,000 for the first six months of 2000 to a gain of $2,743,000 for the first six months of 2001. The increase was due primarily to the disposition of excess real estate and other assets in Canada during the second quarter of 2001.

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

Financial Condition, Liquidity and Capital Resources

Net cash provided by operating activities totaled $16.6 million for the six-month period ended June 30, 2001, versus $27.1 million provided by operating activities for the six-month period ended June 30, 2000. The decline in cash provided by operating activities was due primarily to reduced earnings during the first six months of 2001 versus 2000, offset with a favorable change in operating assets and liabilities as the Company has implemented measures to improve asset utilization.

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

Net cash provided by financing activities totaled $11.4 million for the six-month period ended June 30, 2001, versus cash used by financing activities of $6.8 million for the six-month period ended June 30, 2000. The increase was due to an increase in borrowings during 2001 as a result of the lower operating cash flow.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Disclosures About Market Risks

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

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Short-term Investments – The Company does not use derivative financial instruments in its investment portfolio. The Company places its investments in instruments that meet high credit quality standards, as specified in the Company’s investment policy guidelines. The policy also limits the amount of credit exposure to any one issue, issuer, and type of instrument. Short-term investments at June 30, 2001, which are recorded at fair value of $62.5 million, have exposure to price risk. This risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in quoted prices and amounts to $6.3 million.

Interest Rates – The Company primarily issues long-term debt obligations to support general corporate purposes including capital expenditures and working capital needs. The majority of the Company’s long-term debt obligations bear a fixed rate of interest. A one-percentage point increase in interest rates affecting the Company’s floating rate long-term debt would reduce pre-tax income by $1.5 million over the next fiscal year. A one-percentage point change in interest rates would not have a material effect on the fair value of the Company’s fixed rate long-term debt.

Fuel Prices – The Company is dependent on diesel fuel to operate its fleet of rigs. Diesel fuel prices are subject to fluctuations due to unpredictable factors such as weather, government policies, changes in global demand, and global production. To reduce price risk caused by market fluctuations, the Company generally follows a policy of hedging a portion of its anticipated diesel fuel consumption. The instruments used are principally readily marketable exchange traded futures contracts that are designated as hedges. The changes in market value of such contracts have a high correlation to the price changes of diesel fuel. Gains and losses resulting from fuel hedging transactions are recognized when the underlying fuel being hedged is used. A 10% increase in diesel fuel prices would reduce pre-tax income by $5.0 million over the next fiscal year. At June 30, 2001, the Company did not have any outstanding fuel hedging contracts.

Foreign Currency Exchange Rates – Although the majority of the Company’s operations are in the United States, the Company does have foreign subsidiaries (primarily Canada). The net investments in foreign subsidiaries translated into dollars using exchange rates at June 30, 2001, are $100.5 million. The potential loss in fair value impacting other comprehensive income resulting from a hypothetical 10% change in quoted foreign currency exchange rates amounts to $10.1 million. The Company does not use derivative financial instruments to hedge its exposure to changes in foreign currency exchange rates.

Seasonality and Inflation

The Company’s revenues are seasonal, with the second and fourth quarters generally experiencing higher revenues than the first and third quarters. The volume of vehicles shipped during the second and fourth quarters is generally higher due to the introduction of new models which are shipped to dealers during those periods and the higher spring and early summer sales of automobiles and light trucks. During the first and third

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quarters, vehicle shipments typically decline due to lower sales volume during those periods and scheduled plant shut downs. Inflation has not significantly affected the Company’s results of operations.

Cautionary Notice Regarding Forward-Looking Statements

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

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PART II

OTHER INFORMATION

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

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

Proposal I (Election of Directors)

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

     The following Directors’ terms will continue as indicated.

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

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

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

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

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

Item 5.    Other Information.

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

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

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

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

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

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SIGNATURES

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

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

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