10-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the year ended December 31, 2003.
o	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 ID Number)

160 Clairemont Avenue, Suite 200, Decatur, Georgia 30030

(Address of principal executive office)

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

Securities registered pursuant to Section 12(b) of the Act:

No par value Common Stock	American Stock Exchange
(Title of Class)	(Name of Exchange on which Registered)

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

      Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes o          No þ

      The number of shares outstanding of the Registrant’s common stock as of March 19, 2004 was 8,854,173.

      The aggregate market value of the common stock held by nonaffiliates of the Registrant, based upon the closing sales price of the common stock as of June 30, 2003 as reported on the American Stock Exchange, was approximately $18.8 million. Shares of the Registrant’s common stock owned by its directors and executive officers were excluded from this aggregate market value calculation; however, shares owned by the Registrant’s institutional shareholders were included.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the proxy statement for Registrant’s 2004 Annual Meeting of Shareholders to be held May 19, 2004 are incorporated by reference in Part III.

ALLIED HOLDINGS, INC.

TABLE OF CONTENTS

		Page
	Caption	Number
PART I
Item 1.	Business		2
Item 2.	Properties		12
Item 3.	Legal Proceedings		13
Item 4.	Submission of Matters to a Vote of Security Holders		13
PART II
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters		14
Item 6.	Selected Consolidated Financial Data		16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		28
Item 8.	Financial Statements and Supplementary Data		28
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		28
Item 9A.	Controls and Procedures		29
PART III
Item 10.	Directors and Executive Officers of the Registrant		29
Item 11.	Executive Compensation		30
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		30
Item 13.	Certain Relationships and Related Transactions		30
Item 14.	Principal Accountant Fees and Services		30
PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K		30
EX-10.13 EMPLOYMENT AGREEMENT
EX-10.17 AGREEMENT BETWEEN COMPANY & GENERAL MOTOR
EX-10.20(A) AMENDMENT NO. 4 TO THE IBM GLOBAL
EX-21.1 SUBSIDIARIES OF ALLIED HOLDINGS, INC.
EX-23.1 CONSENT OF KPMG LLP.
EX-23.2 NOTICE RE: CONSENT OF ARTHUR ANDERSEN LLP
EX-31.1 CERTIFICATION BY HUGH E. SAWYER
EX-31.2 CERTIFICATION BY DAVID A. RAWDEN
EX-32.1 SECTION 1350 CERTIFICATION BY HUGH SAWYER
EX-32.2 SECTION 1350 CERTIFICATION BY DAVID RAWDEN
EX-99.1 CHARTER OF AUDIT COMMITTEE
EX-99.2 CHARTER OF THE COMPENSATION AND NOMINATING
EX-99.3 ALLIED HOLDINGS, INC. CODE OF CONDUCT

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PART I

Item 1. Business

1.     General

      Allied Holdings, Inc. (the “Company” or “Allied”), founded in 1934, is a holding company that operates through its wholly owned subsidiaries. The Company’s principal operating subsidiaries are Allied Automotive Group, Inc. (collectively with its subsidiaries referred to as the “Allied Automotive Group” or “Automotive Group”) and Axis Group, Inc. (“Axis” or the “Axis Group”). Allied Automotive Group is the largest motor carrier in North America specializing in the transportation of new and pre-owned automobiles, sport utility vehicles (“SUVs”), and light trucks utilizing specialized tractor trailers (“Rigs or Rig”) and serves and supports all of the major domestic and foreign automotive manufacturers. The Axis Group provides distribution services to the used and new finished vehicle distribution market and other segments of the automotive industry that complement the Automotive Group’s services.

      Allied Automotive Group offers a full range of automotive delivery services including transporting new, used and off-lease vehicles to dealers from plants, rail ramps, ports and auctions, and providing vehicle rail-car loading and unloading services. Allied Automotive Group represented approximately 97% of the Company’s consolidated 2003 revenues. Allied Automotive Group operates primarily in the short-haul segment of the automotive transportation industry with an average length of haul of less than 200 miles. General Motors, Ford, DaimlerChrysler, Toyota and Honda represent the Company’s largest customers, accounting for in total approximately 86% of 2003 revenues. Allied Automotive Group also provides services to all other major foreign manufacturers, including Mazda, Nissan, Isuzu, Volkswagen, Hyundai, and KIA. All of Allied Automotive Group’s major car hauling competitors are privately held and there is minimal public information available with respect to such companies, but Allied Automotive Group believes that its 2003 revenues were substantially greater than those of its closest competitor.

      The Company provides vehicle distribution and transportation support services to the pre-owned and new vehicle markets through the Axis Group. These services complement Allied Automotive Group’s new vehicle distribution services operations. Axis provides carrier management services for various automotive clients, leases patented-designed equipment for containerized shipment of vehicles, operates a computerized vehicle tracking system for Toyota, and provides vehicle processing services at ports and inland distribution centers. Axis, through its subsidiaries CT Services, Inc. and Axis Canada, provides a variety of related support services to the pre-owned vehicle market, including vehicle inspections, title storage, marshalling and rail yard management. In addition, Axis provides similar logistics and distribution services in Mexico through its subsidiary, Axis Logistica.

2. Services

      Allied Automotive Group is the largest motor carrier in North America specializing in the transportation of new automobiles, SUVs and light trucks for all the major domestic and foreign automotive manufacturers. Allied Automotive Group also believes it can increase the number of secondary market vehicles (used automobiles) it delivers by utilizing its large fleet and expansive terminal network to deliver secondary market vehicles on a backhaul basis.

      The Company provides corresponding services to its customers through its Axis Group subsidiary. Axis Group is aggressively pursuing opportunities to provide distribution and support services to customers in the automotive industry and seeks to leverage its proprietary information systems in order to efficiently provide such services. These services include identifying new and innovative distribution methods for customers, providing solutions to improve the management of inventory of new and used vehicles, and providing reconditioning services to the used and remarketed vehicle market. Axis Group has also targeted growth in the secondary markets through expansion of its carrier management services.

      Information regarding revenues, operating profit and total assets of each operating segment of the Company for the fiscal years 2001 through 2003, and information regarding revenues and long-lived assets of

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the Company attributed to the geographic areas in which the Company conducted business during those fiscal years, is set forth in note 17 of the Company’s consolidated financial statements included in this Annual Report on Form 10-K.

3. Customer Relationships

      Allied Automotive Group has written multi-year contracts with substantially all of its customers. Allied Automotive Group’s contracts with its customers establish rates for the transportation of vehicles and generally are based upon a fixed rate per vehicle transported and a variable rate for each mile a vehicle is transported, including an administrative processing fee. The contracts provide that the rate per vehicle may vary depending on the size and weight of the vehicle and can be terminated by either party upon specified days’ notice. The contracts between Allied Automotive Group and its customers who comprise approximately 59% of the Company’s 2003 revenues, permit Allied Automotive Group to recover for increases in fuel prices. None of Allied Automotive Group’s contracts with its customers allow it to recover increases in fuel taxes or labor costs unless it is mutually agreed to by Allied Automotive Group and its customers.

      Allied Automotive Group operates under a contract with Autogistics for Ford vehicles (with a term of 36 months as to ramp locations and 39 months as to plant locations) which provides that the Allied Automotive Group is the primary carrier for 22 locations in the United States and 10 Canadian locations. This contract expires in September 2005 for ramp locations and December 2005 for plant locations. Each party to the contract has the right to terminate the agreement by location on 75 days’ notice. Allied Automotive Group has a contract with DaimlerChrysler that expires on January 31, 2005, under which it is the primary carrier for 16 locations in the United States and 13 in Canada. This contract may be terminated by location on 150 days’ notice by either party. Allied Automotive Group has a contract with General Motors that expires in March 2006 and provides that Allied Automotive Group is the primary carrier for 36 locations in the United States and Canada. General Motors does not have the right to resource business under the terms of the contract unless Allied Automotive Group fails to comply with service or quality standards, by location, provided the Company has 30 days to cure noncompliance. In the event the Company does not cure noncompliance, General Motors must give 60 days’ notice to terminate at a specific location. Allied Automotive Group operates under an agreement with Toyota that expires in November 2004. This contract may be terminated by either party on 60 days’ notice.

4. Proprietary Management Information Systems

      The Company, through its subsidiaries, has made a long-term commitment to utilize technology to serve its customers. Allied Automotive Group’s advanced management information system is a unique, centralized, fully integrated information system utilizing a mainframe computer together with client servers. The system is based on a company-wide information database, which allows Allied Automotive Group to quickly respond to customer information requests without having to combine data files from several sources. Updates with respect to vehicle load, dispatch and delivery are immediately available for reporting to customers and for better control and tracking of customer vehicle inventories. Through electronic data interchange (EDI), Allied Automotive Group communicates directly with manufacturers in the process of delivering vehicles and electronically bills and collects from manufacturers. Allied Automotive Group also utilizes EDI to communicate with inspection companies, railroads, port processors, and other carriers.

      Subsidiaries of Allied Automotive Group also utilize the information system to allow them to operate their businesses more efficiently. For example, the information systems of Allied Automotive Group automatically design an optimal load for each Rig, taking into account factors such as the capacity of the Rig, the size of the vehicles, the route, the drop points, applicable weight and height restrictions and the formula for paying drivers. The system also determines the most economical and efficient load sequence and drop sequence for the vehicles to be transported. Axis has developed and utilizes a yard management system and a vehicle track and trace system that includes an estimated time of arrival engine to identify product delivery dates to final dealer destinations.

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5. Management Strategy

      The Company has adopted a performance management strategy that it believes contributes to driver productivity, cargo claim prevention, enhanced efficiency, safety, and the stability of its operations. The Company’s management strategy and culture is results-driven and designed to enhance employee performance through high standards, accountability, precise metrics, careful selection, and continuous training of new employees, with individual performance goals established for each employee and performance measured regularly through the Company’s management information system. During 2003, the Company continued to make significant changes and additions to its management team which the Company believes has increased the quality and leadership ability of this group.

      Specifically, David Rawden, who joined Allied Holdings as Senior Vice President in March 2002, was appointed Executive Vice President and Chief Financial Officer in February 2004. Mr. Rawden heads the Company’s corporate finance operations. From March 2002 until February 2004, Mr. Rawden was Senior Vice President of the Company’s Business Process Engineering Department, which is responsible for re-engineering core processes throughout the organization to maximize speed and efficiency. Mr. Rawden was also responsible for the Company’s risk management activities, including cargo claims, workers compensation and traffic accidents, as well as information technology. In October 2003, Robert Chambers was appointed President of Axis Group, Inc. From February 2000 until October 2003, Mr. Chambers was President of certain subsidiaries of Axis. Mr. Chambers was the owner of CT Group, Inc., CT Services, Inc. and Cordin Transportation, Inc. prior to the acquisition of such companies by Axis in February 2000.

      In addition to strategies directly focused on the Company’s management team, Allied Holdings has an Employee Stock Purchase Plan that provides all employees the opportunity to purchase shares of the Company’s common stock. This Plan is intended to provide a strong incentive for employees to achieve the Company’s goals and align the interests of the employees with those of the Company’s shareholders.

      In August 2003, the Company awarded 250 shares of common stock to each full time nonbargaining U.S. employee other than those at the level of Senior Vice President or above. The shares vest one year from the date of issuance. In addition, the Company agreed to award 250 shares of common stock in August 2004 to each full time nonbargaining unit employee in Canada as of August 1, 2003 other than those at the level of Senior Vice President or above.

6. Risk Management and Insurance

      The Company defines its risks and secures appropriate insurance programs and coverages at cost effective rates. Allied Automotive Group utilizes third party administrators to administer workers’ compensation, auto and general liability claims. Allied Automotive Group is self-insured for workers’ compensation claims in Florida, Georgia, Kentucky, Missouri, and Ohio. Liability and workers’ compensation claims are subject to periodic audits by Allied Automotive Group’s commercial insurance carriers. In the United States, the Company retains liability up to $650,000 for each workers’ compensation claim and $500,000 for each claim for automobile and general liability, including personal injury and property damage claims. In addition to the $500,000 per occurrence deductible for automobile liability, there is a $1.5 million aggregate deductible for those claims that exceed the $500,000 per occurrence deductible, subject to a $1.0 million per claim limit. Prior to January 1, 2004, Allied had a $1.0 million inneraggregate limit for losses from $1.0 to $2.0 million, and an additional $4.0 million aggregate limit for losses from $2.0 to $5.0 million. Effective January 1, 2004, Allied retains up to $1.0 million liability for automobile claims with no aggregate and a $7.0 million aggregate deductible for claims that exceed $1.0 million, but are less than $5.0 million per occurrence. Furthermore, the Company retains liability up to $250,000 for each cargo damage claim. In Canada, the Company retains liability up to CDN $500,000 for each claim for personal injury and property damage. Also, in Canada, there is a CDN $500,000 inner aggregate limit for losses from CDN $500,000 to 1.0 million. For cargo damage in Canada, the Company has a CDN $100,000 deductible.

      The Company records the estimated cost of the uninsured portion of the claims. The amount recorded is based on management’s evaluation of the nature and severity of claims and estimates of future claim development based on historical trends.

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      If Allied Automotive Group were to experience a material increase in the frequency or severity of accidents or workers’ compensation claims or unfavorable developments in existing claims, the Company’s operating results could be adversely affected. The Company formed Haul Insurance Limited in December 1995 as a captive insurance subsidiary to provide reinsurance coverage to its licensed insurance carriers for certain types of losses within the retentions indicated, primarily non-self insured workers’ compensation, automobile liability and general liability, as indicated above. Other coverages are provided by nonrelated primary and reinsurance companies.

      The Company is required to provide letters of credit to its insurance companies and various states in order to facilitate the payment of injury, accident, theft, and other loss claims. The Company is required to collateralize these letters of credit. There can be no assurance that the Company will be able to reduce the amount of the letters of credit or underlying collateral.

7. Equipment, Maintenance and Fuel

      Allied Automotive Group has historically invested in both new equipment and remanufacturing of existing equipment, which have served to increase efficiency and extend the useful life of Rigs. Currently, new 75-foot Rigs cost approximately $170,000 and have a useful life of approximately 15 years when properly maintained and remanufactured. Allied Automotive Group operates approximately 3,700 company-owned Rigs with an average age of 7.3 years based on the original purchase date or the remanufacturing date if the Rig has been remanufactured. The average remaining life of the company-owned Rigs, assuming a total useful life of 15 years, is 5 years.

      During 2003, Allied Automotive Group spent approximately $9.4 million on a fleet remanufacturing program, remanufacturing approximately 220 of its owned active Rigs. Remanufacturing a Rig costs approximately $43,000 per Rig compared to a cost per new Rig of approximately $170,000. In addition, in accordance with the fleet remanufacturing program, Allied replaced engines in approximately 280 Rigs during 2003 at an additional cost of $5.4 million. In 2004, Allied Automotive Group expects to spend approximately $25-35 million on its fleet.

      All of Allied Automotive Group’s terminals have access to a central parts warehouse through the management information system. The system calculates maximum and minimum parts inventory quantities based upon usage and automatically reorders parts. Minor modifications of equipment are performed at terminal locations. Major modifications involving change in length, configuration, or load capacity are performed by the trailer manufacturers.

      In order to reduce fuel costs, Allied Automotive Group purchased approximately 37% of its fuel in bulk in 2003. Also, fuel is purchased by drivers on the road from a few major suppliers that offer competitive discounts and central billing.

8. Competition

      After the acquisition of certain subsidiaries of Ryder System, Inc. (Ryder) in 1997, Allied Automotive Group became the largest transporter of new vehicles in the United States and Canada. In the years 1997 through 2001 after the Ryder acquisition, Allied Automotive Group lost market share primarily due to increased non-unionized competition. In 2001, Allied Automotive Group’s market share was also impacted by the decision to close four unprofitable terminal locations. In 2002, Allied Automotive Group’s market share was further affected by its decision to exit substantially all business with Nissan in the United States. In 2003, the Company’s revenues from business gains with existing customers exceeded revenues from business losses, exclusive of revenues lost as a result of the Company’s decisions to return certain business to its customers. Allied Automotive Group continues as the largest motor carrier in North America specializing in the transportation of new automobiles, SUVs and light trucks for all the major domestic and foreign automotive manufacturers.

      Automotive manufacturers are making fundamental changes to their vehicle distribution systems in an effort to increase the speed of delivery of finished vehicles to dealers with a goal of reducing inventory and

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improving the reliability of delivery, including the use of fourth party logistics companies by automotive manufacturers. An example is the relationship between Ford and Autogistics, Inc., a subsidiary of UPS Logistics, whereby Ford has engaged Autogistics to oversee its delivery network. All Ford vehicles in North America are shipped under the direction of Autogistics. In addition, General Motors has formed Vector SCM, a joint venture with CNF, Inc., which is General Motors’ global lead logistics service provider, and DaimlerChrysler has formed Insight, a joint venture with the Union Pacific Railroad. Management of Allied Automotive Group believes that the formation of these joint ventures will provide it with an opportunity to collaborate more directly with logistics professionals. The Company’s aspiration is to increase market share on the basis of superior customer value propositions, and by differentiating itself from its competitors on the basis of its experienced drivers, effective management, productive and service-driven operations, extensive and flexible distribution network, and superior management of risk, particularly in cargo claims, worker injuries and traffic accidents. The Company also desires to differentiate its service based on the speed and reliability of its execution. However, there can be no assurance that the use of fourth party logistics companies by the automotive manufacturer will not have a negative impact on the Allied Automotive Group.

      Major motor carriers specializing in the delivery of new vehicles that are competitors of the Allied Automotive Group include Leaseway, Jack Cooper, Cassens, Hadley and E & L, all of which utilize union labor, and Swift, Wagoneer and Fleet Car, all of which utilize non-union labor. In February 2004, the principal shareholder of Hadley and E & L announced a tentative agreement to acquire Leaseway. The combined entity would be the second largest car haul company in North America. The Company’s competitors may be able to provide similar services to those provided by Allied Automotive Group at lower costs. The number of motor carriers, as well as the market share represented by motor carriers utilizing non-union labor has increased and, as a result, these non-union carriers may be able to provide delivery services at a cost to customers that is less than the cost of Allied’s services.

9. Employees and Owner Operators

      Subsidiaries of the Company have approximately 6,200 employees, including approximately 4,000 drivers, who are employees of Allied Automotive Group. All employee drivers and shop and yard personnel of Allied Automotive Group are currently represented by various labor unions. The majority of the employees of the operating subsidiaries of Allied Automotive Group are covered by a Master Agreement with the International Brotherhood of Teamsters (IBT or Teamsters) in the United States that expires on May 31, 2008. The Master Agreement was negotiated and executed by subsidiaries of Allied Automotive Group and is identical to the agreement with the National Automobile Transporters Labor Division (the NATLD) and the IBT. The Agreement covers all of the terminals and operations of the participants in the United States in this multi-employer, multi-union bargaining unit and provides for increases of 1.1% to 3.0% per year in wages and benefits in excess of the prior contract with the IBT.

      On March 24, 2003 the Company successfully negotiated the renewal of its contract with its employees represented by the Teamsters Union in Eastern Canada. The Company had been operating under a contract that expired on October 31, 2002. The new contract will expire on October 31, 2005. The contract covers the drivers, mechanics and yard personnel represented by the Teamsters Union in the provinces of Ontario and Quebec, and represents approximately 70% of the Company’s total bargaining unit employees in Canada.

      There can be no assurance that negotiation of new union contracts as the current contracts expire will not result in increased labor costs to the Company or work stoppages, which could have a material adverse effect on the Company.

      Subsidiaries of Allied Automotive Group also utilize approximately 630 owner-operators, with approximately 120 of these owner-operators driving exclusively from terminals in Canada for Allied Systems (Canada) Company, a subsidiary of Allied Automotive Group, and approximately 510 driving exclusively from terminals in the United States for Allied Systems, Inc. The owner-operators are either paid a percentage of the revenues they generate or receive normal driver pay plus a truck allowance.

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10. Regulation

      Certain subsidiaries of the Company are regulated in the United States by the United States Department of Transportation (DOT) and various state agencies, and in Canada by the National Transportation Agency of Canada and various provincial transport boards. Truck and trailer length, height, width, maximum weight capacity and other specifications are regulated federally in the United States, as well as by individual states and, in Canada, by provinces. In recent years, the automotive manufacturers have increased the percentage of vehicles that are light trucks and SUVs as well as increased the size and weight of many vehicles. As a result of these increases and because of the regulations on truck and trailer length, height, width, and maximum weight capacity, the number of vehicles Allied Automotive Group delivers per load has decreased. Allied Automotive Group successfully negotiated rate increases on most of its SUV and light truck business in 1999 to account for this reduction in the number of deliveries per load.

      Interstate motor carrier operations are subject to safety requirements prescribed by the DOT. Effective January 1, 2004, the DOT changed the regulations regarding hours of service for drivers of commercial motor vehicles. Because of the relatively short length of the Company’s average haul, the Company expects that approximately 40% of its drivers will be unaffected by the new regulations. For the remaining drivers, the new regulations will increase or decrease the flexibility and hours of service. Where flexibility and hours of service are reduced, the Company may face additional operating costs to maintain current service levels. The Company does not expect the affect of the new regulations to be material to the Company’s results of operations. The DOT also regulates certain safety features incorporated in the design of Rigs. The motor carrier transportation industry is subject to regulatory and legislative changes which can affect the economics of the industry by requiring changes in operating policies or influencing the demand for, and the cost of providing, services to shippers. While the Company believes it is in material compliance with these various regulatory requirements, any failure to so comply, as well as any changes in the regulation of the industry through legislative, judicial, administrative or other action, could have a material adverse effect on the Company.

      In addition, Allied Automotive Group’s terminal operations are subject to environmental laws and regulations enforced by federal, state, provincial, and local agencies, including those related to the treatment, storage and disposal of wastes, and those related to the storage and handling of lubricants. Allied Automotive Group maintains regular ongoing testing programs for those underground storage tanks (USTs) located at its terminals for compliance with environmental laws and regulations.

11. Revenue Variability

      The Company’s revenues are variable and can be impacted by sudden unexpected changes in original equipment manufacturer (“OEM”) production levels or unanticipated changes in product type or configuration. In addition, the Company’s revenues are seasonal, with the second and fourth quarters generally experiencing higher revenues than the first and third quarters. The volume of vehicles shipped during the second and fourth quarters is generally higher due to the introduction of new models which are shipped to dealers during those periods, and the higher spring and early summer sales of automobiles, light trucks and SUVs. During the first and third quarters, vehicle shipments typically decline due to lower sales volume during those periods and scheduled plant shutdowns.

12. Risk Factors

      The Company’s future financial condition and results of operations are subject to a number of risks and uncertainties, including those set forth below and in other sections of this Annual Report on Form 10-K.

Substantial Leverage

      The Company has consolidated indebtedness which is substantial in relation to its stockholders’ equity. As of December 31, 2003, the Company had total long-term debt of approximately $246.5 million, approximately $115.2 million of trade payables and other accrued liabilities, and stockholders’ equity of approximately $8.8 million. In addition, the Company has additional borrowings available under its revolving

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credit facility which is discussed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition, Liquidity and Capital Resources. The Company’s leveraged financial position exposes it to the risk of increased interest rates, may impede its ability to obtain financing in the future for working capital, capital expenditures and general corporate purposes, and may make the Company more vulnerable to economic downturns and limit its ability to withstand competitive pressures.

      The Company’s debt instruments contain a number of affirmative, negative, and financial covenants, which limit the ability of the Company to, among other things, incur debt, incur liens, make investments, make dividend or other distributions or enter into a merger or consolidation transaction. As of December 31, 2003, the Company was in compliance with the terms of its various long-term debt covenants. There can be no assurance, however, that the Company will be able to comply with its debt covenants in the future or that, if it fails to do so, it will be able to obtain amendments to or waivers of such covenants on commercially reasonable terms, if at all. On March 30, 2004, the Company obtained the consent of its lenders under the Credit Facility to deliver its financial statements for the year ended December 31, 2003 on or before April 15, 2004.

      The Company will need to use a large portion of its future earnings to pay principal and interest on its substantial debt obligations, which will reduce the amount of money available for use in its operations, capital reinvestment, or for responding to potential business opportunities as they arise. The ability of the Company to generate the cash necessary to service its debt is subject to a number of external factors beyond its control, and there can be no assurance that the Company will be able to generate sufficient cash through its operations to enable it to meet its obligations. If the Company does not generate enough cash to enable it to meet its debt obligations, it may be required to take actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing its debt or seeking additional equity capital. There can be no assurance that any of these actions could be effected on commercially reasonable terms, if at all, and the terms of existing or future indebtedness may restrict the Company from adopting any of these alternatives.

      Any failure of the Company to comply with the covenants contained in its debt instruments, if not waived, or to adequately service its debt obligations, could result in a default under its debt instruments. If a default occurs under any of the Company’s debt instruments, the lenders thereunder may elect to declare all borrowings outstanding, together with interest and other fees, to be immediately due and payable. Borrowings under the Company’s credit facility are collateralized with substantially all of the assets of the Company and certain of its subsidiaries. If the Company were unable to repay any borrowing under its credit facility when due, the lenders thereunder would have the right to proceed against the collateral granted to them to secure the debt. Any default under the Company’s debt instruments, particularly any default that resulted in acceleration of indebtedness or foreclosure on collateral, would have a material adverse effect on the Company.

Increases in Fuel Prices

      Fuel is a major expense incident to the transportation of automotive vehicles, and the cost and availability of fuel are subject to economic and political factors and events, which the Company can neither control nor accurately predict. The Company attempts to minimize the effect of fuel price fluctuations by periodically purchasing fuel in advance, but there can be no assurance that such activity will effectively manage the Company’s exposure. In addition, the Company has negotiated fuel surcharges with customers who comprise approximately 59% of the Company’s 2003 revenues, which enables it to pass on fuel costs to such customers. Nevertheless, the Company’s remaining revenues are generated from customers which are not contractually required to provide Allied a fuel surcharge, and there can be no assurance that the Company will be able to continue to impose fuel surcharges on these or any of its customers. In addition, the customer fuel surcharges typically reset at the beginning of each quarter based on the fuel prices from the previous quarter. Therefore, there is typically a one-quarter lag between the time fuel prices change and the adjustment to the fuel surcharge. Higher fuel prices resulting from fuel shortages or other factors could materially and adversely affect the Company if the Company is unable to pass on the full amount of fuel price increases to its customers through fuel surcharges or higher rates. In addition, higher fuel prices, even if passed on to customers, or a shortage of supply, could have a detrimental effect on the automotive transportation industry and the business of the Company in general.

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Labor Matters

      There can be no assurance that the Company will be able to negotiate new union contracts as the current contracts expire or that such contracts will be on terms acceptable to the Company or result in increased labor costs to the Company or work stoppages, which could have a material adverse effect on the Company.

Dependence on Automotive Industry

      The automotive transportation industry is dependent upon the volume of new automobiles, SUVs, and light trucks manufactured, imported and sold. The automotive industry is highly cyclical, and the demand for new automobiles, SUVs, and light trucks is directly affected by such external factors as general economic conditions in the United States, unemployment, consumer confidence, federal policies, continuing activities of war, terrorist activities, and the availability of affordable new car financing. As a result, the Company’s results of operations are adversely affected by cyclical downturns in the general economy or in the automotive industry and by consumer preferences in purchasing new automobiles, SUVs, and light trucks. A significant decline in the volume of automobiles, SUVs, and light trucks manufactured as well as sold in North America could have a material adverse effect on the Company.

Self Insurance Claims

      An increase in the number or severity of accidents, stolen equipment, worker injuries or other loss events over those anticipated could have a materially adverse effect on the Company’s profitability and liquidity as the Company is self-insured for a significant portion of its risks. In addition, the insurance market is contracting and it is becoming increasingly more difficult to obtain insurance coverage. While the Company currently has insurance coverage, there can be no more assurance that the Company will be able to obtain insurance coverage in the future or obtain coverage at competitive premium rates.

      Prior to January 1, 2004, Allied had a $1.0 million inneraggregate limit for losses from $1.0 to $2.0 million, and an additional $4.0 million aggregate limit for losses from $2.0 to $5.0 million. Effective January 1, 2004, Allied retains up to $1.0 million liability for automobile claims with no aggregate and a $7.0 million aggregate deductible for claims that exceed $1.0 million, but are less than $5.0 million per occurrence.

Restrictions on Cash and Investments

      The Company uses restricted cash and investments to collateralize letters of credit required by third-party insurance companies for the settlement of insurance claims. These assets are not available for the operations of the Company.

Dependence on Major Customers

      Allied Automotive Group’s business is highly dependent upon General Motors, Ford, DaimlerChrysler, Toyota and Honda, its largest customers. The Company operates under written contracts with General Motors, UPS Autogistics, Inc. on behalf of Ford, DaimlerChrysler, Toyota and Honda. The contract with General Motors expires in March 2006, Ford expires in September 2005 for ramp locations and December 2005 for plant locations, DaimlerChrysler expires January 2005, Toyota expires November 2004, and Honda expires March 2005. The contracts with UPS Autogistics, DaimlerChrysler and Toyota can be terminated by location for any reason or no reason based on 60 to 150 days’ notice. The contract with General Motors can be terminated by location for failure to comply with service and quality standards set forth in the contract. The Company has 30 days to cure any such noncompliance by location and General Motors may terminate by location on 60 days notice following a failure to cure.

      Although Allied Automotive Group believes that its relationships with these customers is mutually satisfactory, there can be no assurance that these relationships will not be terminated in whole or in part in the future. Furthermore, automotive manufacturers are relying increasingly on fourth party logistics companies and re-engineering vehicle delivery practices, which could result in a reduction of services provided by the

9

Company for some or all of its major customers. A significant reduction in the production levels, plant closings, or the imposition of vendor price reductions by these manufacturers, or the loss of General Motors, UPS Autogistics, DaimlerChrysler, Toyota or Honda as a customer, or a significant reduction in the services provided for any of these customers by Allied Automotive Group would have a material adverse effect upon the Company. General Motors, DaimlerChrysler, and Ford, in particular, have publicly announced plans to significantly reduce vendor costs including those costs associated with logistics services. The contract with General Motors that was effective March 2004, includes reductions in the Company’s rates for transportation services.

Competition

      The automotive transportation industry is highly competitive, as Allied Automotive Group currently competes with other motor carriers of varying sizes, as well as with railroads. Allied Automotive Group also competes with non-union motor carriers that may be able to provide services at lower cost. The development of new methods for hauling vehicles could also lead to increased competition.

      Performance Logistics Group, Inc., which owns two competitors of Allied Automotive Group, Inc., E & L Transport Company and Hadley Auto Transport, recently announced it has agreed to acquire Leaseway Auto Carrier Group, another competitor of Allied Automotive Group. Performance Logistics Group, Inc. has indicated that upon consummation of the acquisition, the combined entities will be the second largest provider of vehicle transport services in North America with annual revenues of approximately $350 million. The parties also announced that the acquisition is subject to regulatory approvals and satisfactory or customary closing conditions.

      There has been an increase in the number of carhaul companies that utilize non-union labor, and the market share represented by such companies has increased. Carhaul companies that utilize non-union labor operate at a significant cost advantage as compared to Allied Automotive Group and other union carhaul companies. The cost advantage is primarily a result of lower benefit and pension costs. Non-union competitors also operate without work rules that apply to Allied Automotive Group and other union companies. Non-union companies may be able to provide delivery services at a cost to customers that are less than the cost of Allied Automotive Group’s services. Railroads, which specialize in long-haul transportation, may be able to provide delivery services at a cost to customers that is less than the long-haul delivery cost of Allied Automotive Group’s services.

Foreign Operations

      Although the majority of the Company’s operations are in the United States, the Company derives a portion of its revenues and earnings from operations in foreign countries, primarily Canada. The risks of doing business in foreign countries include potential adverse changes in the political policies of foreign governments and diplomatic relations of foreign countries with the United States, hostility from local populations, adverse effects of currency exchange controls, deterioration of foreign economic conditions, currency rate fluctuations, foreign exchange restrictions and changes in taxation structure. Due to the foregoing risks, any of which, if realized, could have a material adverse effect on the Company, the Company believes that its business activities outside of the United States involve a higher degree of risk than its domestic activities.

Dependence on Key Personnel

      The success of the Company is dependent upon its senior management team, as well as its ability to attract and retain qualified personnel. The Company’s credit facility provides that the facility may be terminated in the event Hugh E. Sawyer ceases to be involved in the day-to-day operation of the Company, unless a successor reasonably acceptable to the lenders is appointed within 90 days of his cessation of involvement with the Company. The Company recently announced that David A. Rawden was appointed Executive Vice President and Chief Financial Officer, replacing Daniel H. Popky. Mr. Popky served as Chief Financial Officer since November 1998. There is no assurance that the Company will be able to retain its existing senior management or to attract additional qualified personnel.

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13. Industry Overview

      The following table summarizes historic new vehicle production and sales in the United States and Canada, the primary sources of the Company’s revenues:

								2003					2002
								vs.					vs.
								2002					2001
				2003		2002		Change			2001		Change
New Vehicle Production (in millions of units)
United States:
	Big Three*				8.9		9.3		(4.3	)%		8.7		6.9	%
	Other				2.9		2.7		7.4	%		2.5		8.0	%
			Total		11.8		12.0		(1.7	)%		11.2		7.1	%
Canada:
	Big Three*				1.8		2.0		(10.0	)%		1.9		5.3	%
	Other				0.7		0.6		16.7	%		0.6		0.0	%
			Total		2.5		2.6		(3.8	)%		2.5		4.0	%
New Vehicle Sales (in millions of units)
United States:
	Big Three*				10.8		11.1		(2.7	)%		11.6		(4.3	)%
	Import				2.7		2.7		0.0	%		2.5		8.0	%
	Transplant				3.2		3.0		6.7	%		3.0		0.0	%
		Total			16.7		16.8		(0.6	)%		17.1		(1.8	)%
Canada:
	Big Three*				1.0		1.3		(23.1	)%		1.1		18.2	%
	Other				0.6		0.4		50.0	%		0.5		(20.0	)%
		Total			1.6		1.7		(5.9	)%		1.6		6.25	%

*  Represents General Motors Corporation, Ford Motor Company and DaimlerChrysler Corporation.

Source: DRI-WEFA

      Domestic automotive manufacturing plants are typically dedicated to manufacturing a particular model or models. Vehicles destined for dealers within a radius of approximately 250 miles from the plant are usually shipped by Rigs. The remaining vehicles are shipped by rail to rail ramps throughout the United States and Canada where trucking companies handle final delivery to dealers. The rail or truck carrier is responsible for loading the vehicles on railcars or trailers and for any damages incurred while the vehicles are in the carrier’s custody. Automobiles manufactured in Europe and Asia are shipped into the United States and Canada and usually are delivered directly to dealers from seaports by truck or shipped by rail to rail ramps and delivered by trucks to dealers. Vehicles transported by ship are normally prepared for delivery in port processing centers, which involves cleaning and may involve installing accessories. The port processor releases the vehicles to the carrier which loads the vehicles and delivers them to a rail ramp or directly to dealers.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

      This Annual Report on Form 10-K contains, and from time to time the Company and its officers, directors, or employees may make other forward-looking statements, including statements regarding, among other items, (i) the Company’s strategy, intentions or expectations, (ii) general industry trends, competitive conditions and customer preferences, (iii) the Company’s management information systems, (iv) the

11

Company’s remanufacturing program, (v) the Company’s efforts to reduce costs, (vi) the adequacy of the Company’s sources of cash to finance its current and future operations and (vii) resolution of litigation without material adverse effect on the Company. This notice is intended to take advantage of the “safe harbor” provided by the Private Securities Litigation Reform Act of 1995 with respect to such forward-looking statements. Without limiting the generality of the foregoing, the words “believe,” “anticipate,” “seek,” “expect,” “estimate,” “intend,” “plan,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve a number of risks and uncertainties. Among others, factors that could cause actual results to differ materially from historical results or results expressed or implied by such forward-looking statements are the following: the ability of the Company to comply with the terms of its current debt agreements and customer contracts; economic recessions or downturns in new vehicle production or sales; war in the Middle East; increases in the cost and availability of fuel; the highly competitive nature of the automotive distribution industry; dependence on the automotive industry and recent initiatives of customers to reduce vendor costs; loss or reduction of revenues generated by the Company’s major customers or the loss of any such customers; the variability of OEM production and seasonality of the automotive distribution industry; the Company’s highly leveraged financial position; the ability of the Company to obtain financing in the future; 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; increased frequency and severity of work related accidents and workers’ compensation claims; availability of appropriate insurance coverages; changes in regulatory requirements which are applicable to the Company’s business; changes in vehicle sizes and weights which may adversely impact vehicle deliveries per load; risks associated with doing business in foreign countries; and other risk factors set forth from time to time in the Company’s Securities and Exchange Commission reports, including but not limited to, this Annual Report on Form 10-K. Many of these factors are beyond the Company’s ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. The Company disclaims any obligation to update or review any forward-looking statements contained in this Annual Report or in any statement referencing the risk factors and other cautionary statements set forth in this Annual Report.

Item 2. Properties

      The Company’s executive offices are located in Decatur, Georgia, a suburb of Atlanta. The Company leases approximately 92,000 square feet of space for its executive offices, which the Company believes is sufficient to permit the Company to conduct its operations. The Company has subleased approximately 7,700 square feet of this space for varying terms. Allied Automotive Group operates from 83 terminals throughout the United States and Canada, which are located at or near manufacturing plants, ports, and railway terminals. Allied Automotive Group currently owns 21 of its terminals and leases the remainder of its facilities. Most of the leased facilities are leased on a year to year basis from railroads at rents that are not individually material to the Company. In addition, Axis Group, Inc. operates from 40 terminals.

      During the 1990’s, changes in governmental regulations have gradually permitted the lengthening of Rigs from 55 to 75 feet. Allied Automotive Group has worked closely with manufacturers to develop specialized equipment to meet the specific needs of its customers. Allied Automotive Group’s Rigs are substantially maintained at 43 Allied garages located throughout the United States and Canada by approximately 520 Allied maintenance personnel, including supervisors. These shops are located in 21 facilities owned by Allied Automotive Group and 22 facilities leased by Allied Automotive Group. Rigs are scheduled for regular preventive maintenance inspections. Each shop is equipped to handle repairs resulting from inspection or driver write up, including repairs to electrical systems, air conditioners, suspension, hydraulic systems, cooling systems, and minor engine repairs. Major engine overhaul and engine replacement are performed by outside vendors. The trend has been to use engine suppliers’ outlets for engine repairs due to the long-term warranties obtained by Allied Automotive Group.

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Item 3. Legal Proceedings

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

      Since its last annual filing, Allied has settled all outstanding litigation with Ryder System, Inc., which litigation and settlement was previously disclosed in the Company’s Form 10-Q for the quarter ended September 30, 2003. See Note (17)(b) of the Company’s consolidated financial statements included in this Annual Report on Form 10-K.

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

None

Executive Officers of the Registrant

      The following table sets forth certain information regarding the executive officers of the Company and certain of its subsidiaries:

Name	Age		Title
Robert J. Rutland		62	Chairman and Director
Hugh E. Sawyer		50	President, Chief Executive Officer, and Director
Guy W. Rutland, IV		40	Senior Vice President and Director
Thomas M. Duffy		43	Executive Vice President, General Counsel and Secretary
David A. Rawden		46	Executive Vice President and Chief Financial Officer
Robert Chambers		56	President of Axis Group, Inc.

      Mr. Rutland has been Chairman of the Company since 1995, and served as Chairman and Chief Executive Officer of the Company from February 2001 to June 2001. Mr. Rutland served as Chairman from December 1995 to December 1999. Mr. Rutland was the President and Chief Executive Officer of the Company from 1986 to December 1995. Prior to October 1993, Mr. Rutland was Chief Executive Officer of each of the Company’s subsidiaries.

      Mr. Sawyer has been President and Chief Executive Officer of the Company since June 2001. Mr. Sawyer served as President and Chief Executive Officer of Aegis Communications Corp. from April 2000 to June 2001. Mr. Sawyer served briefly as President of Allied Automotive Group, Inc., a subsidiary of the Company, from January 2000 to April 2000. Mr. Sawyer was President and Chief Executive Officer of National Linen Service, a subsidiary of National Service Industries, Inc. from 1996 to 2000, and President of Wells Fargo Armored Service Corp., a subsidiary of Borg-Warner Corp., from 1988 to 1995.

      Guy W. Rutland IV has been Senior Vice President since July 2001. Mr. Rutland was Executive Vice President and Chief Operating Officer of Allied Automotive Group from February 2001 to July 2001. Mr. Rutland was Senior Vice President — Operations of Allied Automotive Group from November 1997 to February 2001. Mr. Rutland was Vice President — Reengineering Core Team of Allied Automotive Group from November 1996 to November 1997. From January 1996 to November 1996, Mr. Rutland was Assistant Vice President of the Central and Southeast Region of Operations for Allied Systems, Ltd. From March 1995 to January 1996, Mr. Rutland was Assistant Vice President of the Central Division of Operations for Allied Systems, Ltd. From June 1994 to March 1995, Mr. Rutland was Assistant Vice President of the Eastern Division of Operations for Allied Systems, Ltd. From 1993 to June 1994 Mr. Rutland was assigned to special projects with an assignment in Industrial Relations/ Labor Department and from 1988 to 1993, Mr. Rutland was Director of Performance Management.

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      Mr. Duffy has been Executive Vice President, General Counsel and Secretary of the Company since February 2004, was Senior Vice President, General Counsel and Secretary of the Company from November 2000 until February 2004, and was Vice President, General Counsel and Secretary from June 1998 until November 2000. From May 1997 to June 1998, Mr. Duffy was a partner with the law firm of Troutman Sanders LLP. Prior to May 1997, Mr. Duffy was a partner with the law firm of Peterson Dillard Young Asselin & Powell LLP.

      Mr. Rawden has been Executive Vice President and Chief Financial Officer since February 2004 and was Senior Vice President, Business Process Engineering of the Company from March 2002 until February 2004. Mr. Rawden previously served as a Principal with Jay Alix & Associates in their Turnaround and Crisis Management business unit from November 1990 to March 2002. Mr. Rawden has over eleven years experience in successful turnarounds in a wide variety of industries.

      Mr. Chambers has been President of Axis Group, Inc. since October 2003 and was President of certain subsidiaries of Axis Group from February 2000 until October 2003. Mr. Chambers was the owner of CT Group, Inc., CT Services, Inc. and Cordin Transportation, Inc. prior to the acquisition of such companies by Axis Group in February 2000.

PART II

Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters

      The Company began trading its common stock on the American Stock Exchange (“AMEX”) under the symbol AHI, effective April 8, 2002. The Company’s common stock was listed on the New York Stock Exchange (“NYSE”) from March 3, 1998 until the change to the AMEX. The common stock began trading on September 29, 1993 on the Nasdaq Stock Market until March 3, 1998. Prior to September 29, 1993, there had been no established public trading market for the common stock.

      The following table sets forth the high and low per share sales price of the Company’s common stock for the periods indicated, as reported by the NYSE until April 7, 2002, and as reported by the AMEX from April 8, 2002.

	Year Ended December 31,
	2003				2002
Period:	High		Low		High		Low
First Quarter	$	3.75	$	3.12	$	5.20	$	2.10
Second Quarter	$	3.50	$	3.00	$	5.78	$	4.55
Third Quarter	$	3.73	$	3.27	$	4.85	$	2.50
Fourth Quarter	$	5.00	$	3.50	$	3.70	$	2.46

      As of March 19, 2004, there were approximately 2,500 holders of record of the Company’s common stock. The Company has paid no cash dividends in the last two years.

      The Company is a party to a credit facility with a syndicate of lenders, as well as certain 8 5/8% Senior Notes maturing in 2007, each of which contains covenants restricting the payment of dividends on the Company’s common stock. See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition, Liquidity and Capital Resources.

14

      Equity Compensation Plan Information:

	Number of Securities to be				Number of Securities
	Issued Upon Exercise of		Weighted-Average		Remaining Available for Future
	Outstanding Options,		Exercise Price of		Issuance Under Equity
Plan Category	Warrants and Rights		Outstanding Options		Compensation Plans
Equity compensation plans approved by security holders(1)		1,709,967	$	3.65		486,705	(2)
Equity compensation plans not approved by security holders(3)		—		—		25,250
Total		1,709,967	$	3.65		511,955

(1)	Consists of the Company’s 1993 Long-Term Incentive Plan as adopted in 1993, amended in 2000, amended and restated in 2001, amended in 2002, and amended and restated in 2004. For a description of the Company’s equity compensation plan, see note 18 of the Company’s consolidated financial statements included in this Annual Report on Form 10-K.
(2)	Includes the Company’s Employee Stock Purchase Plan, which has 363,126 shares available for future issuance.
(3)	Consists of the Company’s 2003 Stock Issuance Plan, which was implemented in connection with certain mandated unpaid furloughs to be taken by employees in 2003. The Company granted to each of its full time salaried employees in the United States, and agreed to grant to each of its full time salaried employees in Canada, who were employed as of June 30, 2003 (other than employees at the level of Senior Vice President or above or employees subject to a collective bargaining agreement or otherwise represented by any labor union), 250 shares of Common Stock of the Company. The shares granted to the U.S. employees vest one year from the date of grant and may not be sold or otherwise transferred prior to such date. Canadian participants have the right to receive the shares one year from the date of a stock agreement that provide for the terms and conditions related to the issuance of the shares. A total of 225,000 shares of Common Stock (subject to adjustment under certain circumstances) are available for issuance under the Plan. If a “Change in Control” occurs as determined under the Plan prior to the termination of employment of the participant with the Company, (i) all restrictions on the shares of restricted stock immediately lapse and all such shares immediately vest in the U.S. participant, and (ii) all rights under the 2003 Stock Agreement shall automatically be exchanged for shares of Common Stock, and such shares shall be immediately issuable to the Canadian participant. The Plan terminates immediately upon the issuance of restricted shares of Company Common Stock to each U.S. participant and issuance of shares of Company Common Stock to each Canadian participant, and in any event no later than December 31, 2004.

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Item 6. Selected Consolidated Financial Data

      The following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and notes thereto.

			Year Ended December 31,
			(In thousands except per share amounts)
			2003			2002			2001			2000			1999
Selected Statement of Operations Data:
Revenues			$	865,463		$	898,060		$	896,767		$	1,069,154		$	1,081,309
Operating expenses:
	Salaries, wages and fringe benefits			469,540			483,545			515,916			584,527			585,380
	Operating supplies and expenses			138,512			138,542			149,111			189,136			185,541
	Purchased transportation			99,604			99,109			97,756			104,545			103,967
	Insurance and claims			38,168			43,500			50,837			47,736			48,252
	Operating taxes and licenses			30,376			33,583			33,262			39,389			41,288
	Depreciation and amortization			45,556			54,880			60,358			60,884			58,019
	Rents			6,090			6,342			6,813			8,570			8,974
	Communications and utilities			7,138			6,419			7,022			7,333			9,060
	Other operating expenses			10,671			10,384			16,126			13,636			10,321
	Loss (gain) on sale of operating assets			1,325			748			(2,725	)		1,340			628
		Total operating expenses		846,980			877,052			934,476			1,057,096			1,051,430
Operating income (loss)				18,483			21,008			(37,709	)		12,058			29,879
Other income (expense):
	Equity in earnings (loss) of joint ventures, net of tax			0			0			4,072			5,066			1,733
	Gain on sale of joint ventures			0			0			16,230			0			0
	Writedown of joint venture			0			0			(10,042	)		0			0
	Interest expense			(29,138	)		(30,627	)		(37,574	)		(33,813	)		(32,001	)
	Investment income			3,172			2,463			3,874			5,509			2,112
	Foreign exchange gain (loss)			3,169			108			(829	)		(190	)		4
	Gain on early extinguishment of debt			0			2,750			0			0			0
	Other, net			1,976			(265	)		1,189			0			0
				(20,821	)		(25,571	)		(23,080	)		(23,428	)		(28,152	)
	(Loss) income before income taxes and cumulative effect of change in accounting principle			(2,338	)		(4,563	)		(60,789	)		(11,370	)		1,727
	Income tax benefit (provision)			(6,266	)		1,129			21,293			5,069			(178	)
	(Loss) income before cumulative effect of change in accounting principle			(8,604	)		(3,434	)		(39,496	)		(6,301	)		1,549
	Cumulative effect of change in accounting principle, net of tax			0			(4,092	)		0			0			0
	Net (loss) income		$	(8,604	)	$	(7,526	)	$	(39,496	)	$	(6,301	)	$	1,549
	Net (loss) income per share — basic		$	(1.02	)	$	(0.91	)	$	(4.86	)	$	(0.79	)	$	0.20
	Net (loss) income per share — diluted		$	(1.02	)	$	(0.91	)	$	(4.86	)	$	(0.79	)	$	0.20

16

		Year Ended December 31,
		(In thousands except per share amounts)
		2003		2002		2001		2000		1999
	Weighted average common shares outstanding — basic		8,475		8,301		8,128		7,946		7,810
	Weighted average common shares outstanding — diluted		8,475		8,301		8,128		7,946		7,851
Selected Balance Sheet Data:
	Total assets(1)		455,735		465,983		537,104		610,539		649,920
	Long-term debt & capital lease obligations, including current portion of long-term debt		246,500		223,840		289,158		324,985		330,286
	Stockholders’ equity		8,814		10,314		17,997		59,141		66,914

(1)  The 2002 and 2001 amounts have been restated, see Note (3) in the Consolidated Financial Statements.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

      The Company, through its subsidiaries, generates revenues by providing services to the automotive industry. Allied Automotive Group is the largest motor carrier in North America specializing in the transportation of new and pre-owned automobiles, light trucks and SUVs for all of the major domestic and foreign automotive manufacturers. During 2003, the Company has faced challenges from lower automobile production levels and higher fuel prices; however, the Company has continued to reduce its loss before income taxes and cumulative effect of change in accounting principle by executing internal initiatives related to driver productivity, reduced costs, and risk management performance. In addition, the Company has reduced significant risk factors by amending its senior secured credit facility, renewing contracts with four major customers, and renegotiating agreements with the Teamsters in the United States and Canada.

Results of Operations

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

			Year Ended December 31,
			2003			2002			2001
Revenues				100.0	%		100.0	%		100.0	%
Operating expenses:
	Salaries, wages, and fringe benefits			54.3			53.9			57.5
	Operating supplies and expenses			16.0			15.5			16.6
	Purchased transportation			11.5			11.0			10.9
	Insurance and claims			4.4			4.9			5.7
	Operating taxes and licenses			3.5			3.7			3.7
	Depreciation and amortization			5.3			6.1			6.7
	Rents			0.7			0.7			0.8
	Communications and utilities			0.8			0.7			0.8
	Other operating expenses			1.2			1.1			1.8
	Loss (gain) on disposal of operating assets			0.2			0.1			(0.3	)
		Total operating expenses		97.9			97.7			104.2
	Operating (loss) income			2.1			2.3			(4.2	)

17

		Year Ended December 31,
		2003			2002			2001
Other income (expense):
	Equity in earnings of joint ventures, net of tax		0.0			0.0			0.5
	Gain on sale of joint ventures		0.0			0.0			1.8
	Writedown of joint venture		0.0			0.0			(1.1	)
	Interest expense		(3.4	)		(3.4	)		(4.2	)
	Investment income		0.4			0.3			0.4
	Foreign exchange gain (loss)		0.4			0.0			0.0
	Gain on early extinguishment of debt		0.0			0.3			0.0
	Other, net		0.2			(0.0	)		0.0
			(2.4	)		(2.8	)		(2.6	)
Loss before income taxes and cumulative effect of change in accounting principle			(0.3	)		(0.5	)		(6.8	)
Income tax benefit (provision)			(0.7	)		0.1			2.4
Loss before cumulative effect of change in accounting principle			(1.0	)		(0.4	)		(4.4	)
Cumulative effect of change in accounting principle, net of tax			0.0			(0.4	)		0.0
Net (loss) income			(1.0	)%		(0.8	)%		(4.4	)%

2003 Compared to 2002

      Revenues were $865.5 million in 2003 versus revenues of $898.1 million in 2002, a decrease of $32.6 million or 3.6%. The Company recorded a net loss of $8.6 million in 2003 compared to a net loss of $7.5 million in 2002. Basic and diluted loss per share for 2003 was $1.02, versus basic and diluted loss per share of $0.91 in 2002.

      The decrease in revenues was due primarily to a decline in the number of vehicles delivered. Total vehicle deliveries declined by 6.3% in 2003 versus 2002 and new vehicle production by the automotive manufacturers in the United States and Canada declined 2.1%. The delivery decrease was greater than the production decline due to the Company’s decision to exit non-performing business. In the fourth quarter of 2002, the Company stopped hauling vehicles for Nissan in the United States. In 2003, the Company ceased delivering all of its General Motors traffic at Jessup, Maryland and certain of its General Motors traffic at Spring Hill, Tennessee, each of which had historically generated losses. Historically, annual revenue for the two locations was $16.6 million. The decrease in volume was partially offset by an increase in revenue per vehicle delivered. Revenue per vehicle delivered increased from $91.75 in 2002 to $94.37 in 2003, a 2.9% increase. In the United States, the increase in revenue per vehicle delivered is primarily due to ancillary revenue related to model changeovers and new product launches which causes an increase in revenue without a corresponding increase in the number of vehicles delivered. In addition, the Company obtained rate increases during 2003. In Canada, revenue per vehicle delivered increased primarily due to the higher Canadian dollar exchange rates.

      The net loss for 2003 included a $6.8 million non-cash charge to record a valuation allowance against its net deferred tax assets due to net losses in 2003 and prior years based on management’s conclusion that it is not “more likely than not” that the deferred tax assets will be recovered and a $2.0 million pre-tax gain from the settlement of litigation with Ryder System. The net loss for 2002 included a $2.8 million pre-tax gain on the early extinguishment of the Company’s subordinated notes and a $4.1 million after-tax charge ($5.2 million pre-tax) related to the impairment of goodwill at the Company’s Axis Group subsidiary.

      During 2003, the Company amended its Senior Credit Facility to extend the maturity, increase liquidity, and adjust financial covenants. See an additional discussion of the terms and conditions of the amendment to the Senior Credit Facility under the caption “Financial Condition, Liquidity and Capital Resources” of this section.

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

      Salaries, wages, and fringe benefits increased from 53.9% of revenues in 2002 to 54.3% of revenues in 2003. This increase is primarily due to wage, health, welfare, and pension cost increases in the prior Teamster agreements which expired during 2003 and health, welfare, and pension cost increases in the new Teamster agreements signed in 2003. The increase is partially offset by the Company’s internal initiatives to improve driver productivity and reduce worker injuries.

      During the second quarter of 2003, the Company began operating under a new five-year agreement with the Teamsters in the United States. The agreement was effective on June 1, 2003 and expires May 31, 2008. The new agreement with the Teamsters in the United States covers approximately 80% of the Company’s U.S. employees. Economic provisions of the new agreement include a wage freeze for the first two years of the agreement and wage increases of approximately 2.0% on June 1, 2005, 2.0% on June 1, 2006, and an additional 2.5% on June 1, 2007. The agreement provides for increases in health, welfare and pension contributions by the Company during each year of the agreement. The economic provisions of the contract are anticipated to increase the Company’s U.S. Teamster labor costs approximately 1.1% in year one of the agreement, 1.3% in year two, 2.5% in year three, 2.5% in year four, and 3.0% in year five of the agreement.

      During March 2003, the Company renegotiated a contract that expired October 31, 2002 with the Teamsters Union in Eastern Canada. The employees governed by this contract, which expires October 31, 2005, represent approximately 70% of the Company’s total bargaining unit employees in Canada. The employees in Eastern Canada agreed to a three-year contract with a wage freeze in the first two years and a 2.5% increase in the third year. Health and welfare costs were frozen for the entire three-year agreement and there were pension increases each year of the new contract. The additional pension contributions will increase the Company’s Canadian Teamster labor costs approximately 0.2% in year one of the agreement and approximately 0.6% in year two of the agreement. The wage and pension increases in year three of the agreement will increase costs approximately 3.2%.

      Operating supplies and expenses increased from 15.5% of revenues in 2002 to 16.0% of revenues in 2003. The increase is primarily due to higher fuel prices in 2003. Fuel costs were $5.7 million higher in 2003 than in 2002. The Company has negotiated fuel surcharges with customers who comprise approximately 59% of the Company’s 2003 revenues. The surcharges allow the Company to pass fuel price increases to the customers; however, there can be up to a one quarter lag between the time that fuel prices change and the adjustment to the fuel surcharge.

      Purchased transportation increased from 11.0% of revenues in 2002 to 11.5% of revenues in 2003. The increase in 2003 over 2002 was due primarily to a continued shift in the mix of owner-operators versus company drivers and an increase in business at locations where owner-operators are utilized for vehicle deliveries. All costs for owner operators are included in purchased transportation expense.

      Insurance and claims expense decreased from 4.9% of revenues in 2002 to 4.4% of revenues in 2003. The decrease was primarily a result of lower cargo claims experienced on shipped vehicles, resulting from the Company’s initiative to reduce claims partially offset by an increase in auto liability claims costs. The number of vehicles delivered damage free increased from 99.56% in 2002 to 99.70% in 2003. The Company is aggressively managing these costs as part of its on-going turnaround initiatives. In addition, the claims review process was re-engineered to review cargo claims reported and deny claims that are not in compliance with the Company’s documentation guidelines.

      Operating taxes and licenses expense decreased from 3.7% of revenues in 2002 to 3.5% of revenues in 2003. The decrease is primarily due to a reduction in the number of Rigs in service and the miles driven which decreased license, registration, and fuel tax costs. Real estate and personal property taxes decreased due to the disposal of non-performing assets in 2002.

      Depreciation and amortization expense decreased from 6.1% of revenues in 2002 to 5.3% of revenues in 2003. The decrease is primarily due to lower capital spending in 2002 and 2003 resulting in depreciation runoff as assets become fully depreciated. The Company has instituted a Rig manufacturing program to remanufacture existing owned Rigs rather than purchasing new Rigs. Remanufacturing existing Rigs requires less capital

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spending than purchasing new Rigs. The first phase of the program began in 2002 and is expected to continue through 2004. As of December 31, 2003 approximately 570 Rigs have been remanufactured and approximately 630 engines have been replaced in tractors. During 2002, the Company recorded a charge of $2.1 million to accelerate the depreciation on Rigs that were not considered viable candidates for remanufacture and were idled for disposal.

      Interest expense decreased from $30.6 million in 2002 to $29.1 million in 2003 due to a reduction in overall interest rates effective with the amendment of the Credit Facility in September 2003 and a reduction in total borrowings.

      Foreign exchange gain increased from $0.1 million in 2002 to $3.2 million in 2003. The increase was due to favorable exchange rate changes related to the Company’s Canadian subsidiary. In 2002, the Canadian dollar increased by 22% compared to the U.S. dollar.

      Other income (loss) increased from a loss of $0.3 million in 2002 to a gain of $2.0 million in 2003. In 2003, the Company recorded $2.0 million in income related to a settlement agreement with Ryder System, Inc.

2002 Compared to 2001

      Revenues were $898.1 million in 2002 versus revenues of $896.8 in 2001, an increase of $1.3 million, or 0.1%. The Company recorded a net loss of $7.5 million in 2002 compared to a net loss of $39.5 million in 2001, an improvement of $32.0 million, or 81.0%. Basic and diluted loss per share for 2002 was $0.91, versus basic and diluted loss per share of $4.86 in 2001.

      The increase in revenues was primarily the result of the price increase implemented in the fall of 2001, which was partially offset by a decline in the number of vehicles delivered. Revenue per vehicle delivered increased from $90.14 in 2001 to $91.75 in 2002, a 1.8% increase. Total vehicle deliveries declined by 2.5% in 2002 versus 2001 while new vehicle production in the United States and Canada increased 6.6%. Allied Automotive Group vehicle deliveries declined versus an increase in production primarily due to the closing of unprofitable terminal locations by the Company in 2001 and in 2002, combined with a drop in market share. During the fourth quarter of 2002, Allied Automotive Group reached a strategic decision to exit substantially all business with Nissan in the United States. Allied Automotive Group’s Nissan business in the United States generated approximately $20.0 million in revenues during 2002. Allied Automotive Group confirmed that Nissan would have required rate reductions in 2003 and Allied Automotive Group was not prepared to grant price concessions. These declines were offset by organic growth within the Allied Automotive Group as a result of aggressively pursuing profitable business in those locations considered to optimize its network of terminals and fleet operations.

      The net loss for 2002 included a $1.7 million after-tax gain on the early extinguishment of the Company’s subordinated notes and a $4.1 million after-tax charge related to the impairment of goodwill at the Company’s Axis Group subsidiary. The impairment charge resulted from the Company’s adoption of SFAS 142 as described below.

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

      Salaries, wages and fringe benefits decreased from 57.5% of revenues in 2001 to 53.9% of revenues in 2002. The decrease was due primarily to continued productivity and efficiency improvements implemented as part of the Company’s turnaround initiatives. These productivity and efficiency improvements included a better day-to-day management of the Company’s labor needs for drivers. The Master Agreement with the IBT allows for temporary layoffs of the driver workforce based on driver requirements. The Company incurred $9.2 million of workforce reduction expenses in 2001 compared to $2.3 million of such expenses in 2002. In addition, the impact of the Company’s turnaround initiative related to workforce reductions decreased in 2002 as compared to 2001.

      Operating supplies and expenses decreased from 16.6% of revenues in 2001 to 15.5% of revenues in 2002. The decrease was due primarily to a reduction in the maintenance costs of Rigs in service. The decreased

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maintenance costs are a result of the Company operating approximately 8.0% fewer Rigs in 2002 as well as improved efficiency in its field operations, including 46 dedicated garage operations managed by the Company. These efforts are consistent with the Company’s turnaround initiatives.

      Purchased transportation increased from 10.9% of revenues in 2001 to 11.0% of revenues in 2002. The increase in 2002 over 2001 was due primarily to a shift in the mix of owner-operators versus company drivers and an increase in business at locations where owner-operators are utilized for vehicle deliveries. All costs for owner operators are included in purchased transportation expense.

      Insurance and claims expense decreased from 5.7% of revenues in 2001 to 4.9% of revenues in 2002. The decrease was primarily a result of lower cargo claims experienced on shipping vehicles as well as a reduction in auto liability claims costs. The number of vehicles damaged in transit declined approximately 15% in 2002 versus 2001 and the number of traffic accidents per million miles driven declined approximately 30.1% in 2002 versus 2001. The Company is aggressively managing these costs as part of its on-going turnaround initiatives.

      Depreciation and amortization expense decreased from 6.7% of revenues in 2001 to 6.1% of revenues in 2002. The decrease is due primarily to the sale of non-performing assets during 2001 and lower capital spending in 2001 and 2002 compared to depreciation expense. The Company has instituted a Rig manufacturing program to remanufacture existing owned Rigs rather than purchasing new Rigs. Remanufacturing existing Rigs requires less capital spending than purchasing new Rigs. As of December 31, 2002 approximately 350 Rigs were remanufactured and approximately 350 engines were replaced in tractors. The remaining decrease is due to the reduction of amortization expense resulting from the Company’s adoption of SFAS No. 142, Goodwill and Other Intangibles, which became effective January 1, 2002. During 2001, the Company recorded $3.5 million of amortization expense related to goodwill. The overall decrease in depreciation and amortization was offset by a charge of $2.1 million to accelerate the depreciation on Rigs that were recently idled.

      Other operating expenses decreased from 1.8% of revenues in 2001 to 1.1% of revenues in 2002. The decrease was due primarily to lower professional fees for consultants. During 2001, the Company engaged outside consultants, including Jay Alix & Associates, to aid in the planning and analysis of its turnaround initiatives and the refinancing of its revolving credit facility and subordinated debt, which was completed in 2002.

      Gain/loss on disposition of assets decreased from a gain of $2.7 million in 2001 to a loss of $748,000 in 2002. As part of the Company’s turnaround initiatives, the Company has disposed of non-performing assets. The asset sales in 2001 generated $11.8 million of cash proceeds versus proceeds of $4.7 million in 2002.

      Equity in earnings of joint ventures, net of tax, decreased from $4.1 million in 2001 to $0 in 2002. The decrease is due to the sale of the Company’s joint venture interest in the United Kingdom in the fourth quarter of 2001 and the sale of its joint venture interest in Brazil in the second quarter of 2002. There were no equity in earnings or losses from the Brazilian joint venture in 2002.

      Interest expense decreased from 4.2% of revenues in 2001 to 3.4% of revenues in 2002. The decrease was due to higher debt levels and effective interest rates in 2001 versus 2002, as well as the incurrence in 2001 of additional costs related to the amendment of the Company’s revolving credit facility and its senior subordinated notes.

      The income tax benefit decreased from $21.3 million in 2001 to $1.1 million in 2002. The decrease was due primarily to a decrease in the pre-tax loss from $60.8 million in 2001 to $4.6 million in 2002.

      The adoption of SFAS No. 142 is a required change in accounting principles, and the cumulative effect of adopting this standard as of January 1, 2002 resulted in a non-cash, after-tax decrease to net income of $4.1 million for the Company. Pursuant to the adoption of SFAS No. 142, the Company ceased amortizing goodwill and annually tests goodwill for impairment. In 2001, the Company recorded $3.5 million of amortization expense related to goodwill.

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

      As part of the Company’s turnaround efforts in the first quarter of 2002, the Allied Holdings Inc. Defined Benefit Pension Plan, (“Plan”), was amended in February 2002 to freeze the Plan. The amendment resulted in a curtailment of the Plan effective April 30, 2002, under which employees do not accumulate any new benefits and new employees are not added to the Plan. The Company’s net pension expense for 2001 was $2.6 million. As a result of freezing the Plan, the Company’s net pension expense was $390,000 for 2002.

Financial Condition, Liquidity and Capital Resources

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

      The Company uses restricted cash and cash equivalents and restricted investments to collateralize letters of credit required by third-party insurance companies for the settlement of insurance claims. These collateral assets are not available for the operations of the Company. The Company has reclassified certain items and restated its consolidated balance sheet for the year ended December 31, 2002, and its consolidated statements of cash flows for the years ended December 31, 2002 and 2001 and will reclassify and restate its statements of cash flows for the first three quarters of 2003 in order to more clearly present its financial position and comply with generally accepted accounting principles.

      The Company reclassified cash and cash equivalents and investments held to collateralize letters of credit required by third party insurance companies for insurance claims. The Company reclassified these assets as restricted cash and cash equivalents and restricted investments and designated a portion as long term as of December 31, 2002. The Company previously disclosed in the footnotes to its financial statements that these cash and cash equivalents and investments are not available for operations of the Company. In addition, the Company reclassified its revolving line of credit at December 31, 2003 from long-term debt to current liabilities as well as reclassified certain pension assets and obligations from current to long-term. At December 31, 2003, the Company also reduced both deferred tax assets and liabilities to be consistent with current year presentation. During 2003, certain reclassifications were also made to the Company’s consolidated cash flow statements for the years ended December 31, 2002 and 2001. These restatements had no impact on the Company’s results of operations or loss per share for the years ended December 31, 2003, 2002 or 2001. In addition, these reclassifications did not affect the Company’s availability under its revolving line of credit or compliance with the financial covenant provisions of its loan facilities during 2003, 2002 or 2001, the Company’s earnings trends over the past two years, or management’s compensation. See Note (3) in Notes to Consolidated Financial Statements.

      Net cash provided by operating activities totaled $35.4 million for 2003, versus $54.4 million for 2002, a decrease of $19.0 million. This change is primarily due to a decrease in cash flows generated from operating assets and liabilities of $12.2 million resulting from additions to working capital including reductions in insurance and claims liabilities of $7.6 million. In addition, the decrease was partially attributable to the decrease in operating income of $2.5 million in 2003 compared to 2002.

      The Company entered into a new contract with General Motors, effective March 2004, that includes reductions in the Company’s rates for transportation services. Allied estimates that the impact to operating income in 2004 as a result of the terms and conditions of the new agreement will be a potential reduction in a range of $3 million to $4 million.

      Net cash used in investing activities totaled $38.4 million in 2003, versus net cash used in investing activities of $2.1 million for 2002. The change is due primarily to a net increase of $20.6 million in restricted cash and cash equivalents and investments, primarily resulting from a change in primary insurance carriers which resulted in increased collateral requirements. In addition, the Company received $3.0 million for the

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sale of the Company’s joint venture in Brazil in 2002 and receipts of $2.6 million in 2002 related to the termination of certain split dollar life insurance arrangements between the Company and certain of its former executives, officers, and directors. Cash received from the sale of property and equipment decreased from $4.7 million in 2002 to $0.7 million in 2003, which is due primarily to the sale of excess real estate and non-performing assets in 2002.

      Net cash used in financing activities totaled $5.6 million in 2003, versus $48.0 million in 2002. During 2003 long-term debt was reduced by $3.0 million, compared to $39.0 million in 2002. The decrease in debt reduction in 2003 was due to reduced operating cash flows, increased working capital requirements, lower cash proceeds from asset sales, and an increase in funding requirements of the Company’s captive insurance company.

      On February 25, 2002, the Company entered into a new credit facility which included four term loans (the “Term Loans”) totaling $82.75 million and a $120 million revolving credit facility. Proceeds from the Term Loans were used to repurchase $40 million of senior subordinated notes for $37.25 million. In conjunction with the extinguishment of these senior subordinated notes, the Company recognized a pre-tax gain of $2.75 million during 2002.

      The Company amended the facility in September 2003 (the Credit Facility and amendments thereto are collectively referred to as the “Credit Facility”). The Credit Facility as amended in September 2003 provides the Company with a $90.0 million revolving credit facility (the “Revolver”) and a $100 million term loan (the “New Term Loan”). As part of the amendment, the maturity date of the Credit Facility was extended to September 2007.

      The interest rate for the Revolver is based upon the prime rate plus 1.5%, or LIBOR plus 4.5%, at management’s discretion, with a minimum interest rate of 6.5%. The Credit Facility, as amended, provides that the New Term Loan bear interest between 8.5% and 11.5% to be determined solely on the Company’s leverage as defined in the agreement. At December 31, 2003, the interest rates on the Revolver and the New Term Loan were 6.5% and 8.5%, respectively. Prior to the amendment, the interest rate on the Term Loans was based solely on a spread over the prime rate. Annual commitment fees are due on the undrawn portion of the commitment.

      The amount available under the $90 million Revolver may be reduced based on a calculation of Revolver collateral. At December 31, 2003, $80.8 million Revolver collateral, which includes portions of the Company’s trade receivables and eligible fleet, was available. Approximately $29.3 million of the Revolver was committed under letters of credit primarily related to the settlement of insurance claims. At December 31, 2003 $0 loans were outstanding. Accordingly, the Company had approximately $51.5 million available under the Revolver as of December 31, 2003.

      Future maturities of long-term debt are as follows at December 31, 2003 (in thousands):

2004	$	16,374
2005		13,500
2006		13,500
2007		203,126
	$	246,500

      The Credit Facility agreement sets forth a number of affirmative, negative and financial covenants binding on the Company. The negative covenants limit the ability of the Company to, among other things, incur debt, incur liens, make investments, sell assets, or declare or pay any dividends on its capital stock. The financial covenants require the Company to maintain minimum consolidated earnings before interest, taxes, depreciation and amortization and also includes leverage and fixed charge coverage ratios. On March 30, 2004, the Company obtained the consent of its lenders under the Credit Facility to deliver its financial statements for the year ended December 31, 2003 on or before April 15, 2004.

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      There can be no assurance that the Company will be able to comply with these or its other debt covenants or that, if it fails to do so, it will be able to obtain amendments to or waivers of such covenants. Failure of the Company to comply with covenants contained in its debt instruments, if not waived, or to adequately service debt obligations, could result in a default under the Credit Facility. Any default under the Company’s debt instruments, particularly any default that results in an acceleration of indebtedness or foreclosure on collateral, could have a material adverse effect on the Company.

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

      In addition to its debt obligations, the Company leases equipment, office space, computer equipment, and certain terminal facilities under noncancelable operating lease agreements, which expire in various years through 2007, and leases certain terminal facilities under month-to-month leases. The Company’s minimal rental commitments are included in a table under the Contractual Obligations section below.

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 investment prices, interest rates, fuel prices, and foreign currency exchange rates.

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. As of December 31, 2003 the Company did not have any investments.

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. The portion of the long-term debt obligation that does not bear a fixed rate of interest, has an interest rate that may fluctuate within a three percentage point range based on the Company’s leverage, as defined in the agreement. The impact to the Company of a 3% increase to such debt would increase interest expense by $2.6 million over the next fiscal year.

Fuel Prices

      Allied Automotive Group is dependent on diesel fuel to operate its fleet of Rigs. Diesel fuel prices are subject to fluctuations due to unpredictable factors such as weather, government policies, and changes in global demand and global production. To reduce price risk caused by market fluctuations, Allied Automotive Group periodically purchases fuel in advance of consumption. A 10% increase in diesel fuel prices would reduce pre-tax income by $6.4 million over the next fiscal year assuming 2003 levels of fuel consumption. These increases would be partially offset by the Company’s fuel surcharge agreements with customers. Fuel prices in the first quarter of 2004 are expected to be 7% higher than fuel prices in the fourth quarter of 2003.

Self Insurance Claims

      An increase in the number or severity of accidents, stolen equipment, or other loss events over those anticipated, or adverse development of existing claims could have a materially adverse effect on the Company’s profitability as the Company is self-insured for a significant portion of its risks. In addition, the insurance market is contracting and it is becoming increasingly more difficult to obtain insurance coverage.

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While the Company currently has insurance coverage, there can be no assurance that the Company will be able to obtain insurance coverage in the future.

      Prior to January 1, 2004, Allied had a $1.0 million inneraggregate limit for losses from $1.0 to $2.0 million, and an additional $4.0 million aggregate limit for losses from $2.0 to $5.0 million. Effective January 1, 2004, Allied retains up to $1.0 million liability for automobile claims with no aggregate and a $7.0 million aggregate deductible for claims that exceed $1.0 million, but are less than $5.0 million per occurrence.

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 year-end exchange rates at December 31, 2003, is $73.1 million. The potential impact on other comprehensive income resulting from a hypothetical 10% change in quoted foreign currency exchange rates amounts to $7.3 million. At December 31, 2003 a payable balance of $22.5 million related to intercompany transactions was recorded on the Company’s Canadian subsidiary. The potential loss from a hypothetical 10% change in quoted foreign currency exchange rates related to this balance amounts to a $2.3 million charge to profit and loss as of December 31, 2003. The Company does not use derivative financial instruments to hedge its exposure to changes in foreign currency exchange rates.

Revenue Variability

      The Company’s revenues are variable and can be impacted by sudden unexpected changes in OEM production levels. In addition, the Company’s revenues are seasonal, with the second and fourth quarters generally experiencing higher revenues than the first and third quarters. The volume of vehicles shipped during the second and fourth quarters is generally higher due to the introduction of new models which are shipped to dealers during those periods and the higher spring and early summer sales of automobiles, SUVs, and light trucks. During the first and third quarters, vehicle shipments typically decline due to lower sales volume during those periods and scheduled plant shut downs. Except for the impact of rising fuel costs discussed herein, inflation has not significantly affected the Company’s results of operations.

Contractual Obligations and Letters of Credit

      Long-term contractual obligations, other than long-term debt obligations, are not recorded in the Company’s consolidated balance sheet. The table below sets forth the Company’s contractual obligations (in thousands):

			Payments Due by Year
			Less Than						More Than
Contractual Obligations	Total		1 Year		1-3 Years		4-5 Years		5 Years
Long-Term Debt Obligations	$	246,500	$	16,374	$	230,126	$	0	$	0
Operating Lease Obligations		34,657		11,374		17,730		5,078		475
Purchase Obligations*		108,558		10,045		20,714		21,347		56,452
	$	389,715	$	37,793	$	268,570	$	26,425	$	56,927

*  In April 2001, the Company entered into a five-year commitment with IBM to provide its mainframe computer processing services. In December 2003, the Company amended the agreement. The amended agreement is a ten-year commitment, commencing February 2004, for IBM to provide additional services to manage applications for EDI, network services, technical services, and applications development and support. The agreement includes outsourcing at determinable prices defined within the agreement.

      At December 31, 2003, the Company has agreements with third parties that provide for $111.4 million of letters of credit primarily relating to settlements of insurance claims and reserves and support for a line of credit at one of the Company’s foreign subsidiaries. $29.3 million of these letters of credit are issued by the

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Company and are secured by available borrowings on the revolving credit agreement and $82.1 million are issued by the Company’s wholly owned captive insurance subsidiary Haul Insurance Limited and are collateralized by $82.1 million of restricted cash and cash equivalents held by the captive. These letters of credit are renewed by the Company annually.

Critical Accounting Policies

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make decisions based upon estimates, assumptions, and factors it considers as relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of management’s estimates and assumptions. Accordingly, actual results could differ from those anticipated.

      A summary of the significant accounting policies followed in preparation of the financial statements is contained in Note 2 of the financial statements attached hereto. Other footnotes describe various elements of the financial statements and the assumptions on which specific amounts were determined.

      The Company’s critical accounting policies include the following:

      CLAIMS AND INSURANCE RESERVES — Reserves for self-insured workers’ compensation, automobile, and general liability losses are subject to management’s evaluation of the nature and severity of claims and actuarial estimates based on historical claims experience adjusted for current industry trends. The Company receives third-party actuarial valuations to assist in the determination of its claims and insurance reserves. The actuarial estimates for self-insured workers compensation and automobile liability are discounted using management’s estimate of weighted risk free interest rates for each claim year to their present values. The claims and insurance reserves are adjusted periodically as such claims mature to reflect changes in actuarial estimates based on actual experience. If management uses different assumptions or if different conditions occur in the future periods, future operating results or liquidity could be materially impacted.

      ACCOUNTS RECEIVABLE VALUATION RESERVES — Substantially all revenue is derived from transporting new automobiles, SUVs, and light trucks from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships. Revenue is recorded when the vehicles are delivered to the dealerships. The Company makes significant estimates to determine the collectibility of its accounts receivable on the balance sheet. Estimates include assessments of the potential for customer billing adjustments based on the timing of delivery, the accuracy of pricing, as well as evaluation of the historical aging of customer accounts. In addition, estimates include periodic evaluations of the credit worthiness of customers including the impact of market and economic conditions on their viability to satisfy amounts owed to the Company. If significant billing adjustments or the financial condition of a major customer was to deteriorate, additional allowances may be required.

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

      Significant management judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the deferred tax assets. The valuation allowance is based on management’s estimate of taxable income by jurisdiction in which the

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Company operates and the period over which the deferred tax assets will be recoverable. At December 31, 2003, the Company has recorded a valuation allowance against its net deferred tax assets due to net losses in 2003 and prior years, based on management’s conclusion that it is not “more likely than not” that the deferred tax assets will be recovered.

      Tax assessments may arise several years after tax returns have been filed. Predicting the outcome of such tax assessments involves uncertainty; however, the Company believes that recorded tax liabilities adequately account for its analysis of probable outcomes.

      PROPERTY AND EQUIPMENT — The Company operates approximately 3,700 company-owned Rigs, “revenue equipment,” in connection with its business. Property and equipment, including revenue equipment, are stated at cost and depreciated using the straight-line method over the estimated useful life down to estimated salvage value. The Company also evaluates the carrying value of long-lived assets for impairment by analyzing the operating performance and future cash flows for those assets, whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable, including the need to adjust the carrying value of the underlying assets if the sum of the expected cash flows is less than the carrying value. Impairment can be impacted by our projection of future cash flows, the level of actual cash flows and salvage values, the methods of estimation used for determining fair values and the impact of guaranteed residuals. Any changes in management’s judgments could result in greater or lesser annual depreciation expense or additional impairment charges in the future.

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

Recent Accounting Pronouncements

      In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the assets. The Company also records a corresponding asset that is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The Company adopted the provisions of SFAS No. 143 effective January 1, 2003. The Statement did not have a material effect on the financial position or results of operations of the Company.

      In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The Statement updates, clarifies and simplifies existing accounting pronouncements. The Statement requires that in certain circumstances previous items classified as extraordinary that do not meet the criteria in Opinion 30 must be reclassified. The Company early adopted this standard in 2002. Accordingly, the after-tax gain on early extinguishment of debt was not reported as an extraordinary item.

      In July 2002, the FASB issued SFAS No. 146, Accounting for Cost Associated with Exit or Disposal Activities. The Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). This Statement requires recognition of a liability for a cost associated with an exit or disposal activity when the liability is incurred, as opposed to when the entity commits to an exit plan under EITF No. 94-3. The Company adopted the provisions of SFAS No. 146 effective January 1, 2003. The adoption of SFAS No. 146 did not have a material effect on the financial position or results of operations of the Company.

27

      In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December 31, 2002. The Company adopted the recognition and measurement provisions of the Interpretation effective January 1, 2003 for guarantees issued or modified after December 31, 2002. The adoption of this Interpretation did not have a material impact on the financial position or results of operations of the Company.

      In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 46, Consolidation of Variable Interest Entities. FIN 46 requires companies to evaluate variable interest entities for specific characteristics to determine whether additional consolidation and disclosure requirements apply. FIN 46 is immediately applicable for variable interest entities created after January 31, 2003, and applies to the first fiscal year or interim period beginning after June 15, 2003 for variable interest entities acquired prior to February 1, 2003. The adoption of FIN 46 did not have a material impact on the financial position or results of operations of the Company. In December 2003, the FASB revised FIN 46 to exempt certain entities from its requirements and to clarify certain issues arising during the implementation of FIN 46. The adoption of this revised interpretation in the first quarter of 2004 is not expected to have a material impact on the Company’s financial statements.

      In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This Statement clarifies under which circumstances a contract with an initial net investment meets the characteristics of a derivative and clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS 149 amends certain other existing pronouncements. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and should be applied prospectively. The adoption of SFAS No. 149 did not have a material impact on the financial position, results of operations or cash flows of the Company.

      In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 also includes required disclosures for financial instruments within its scope. SFAS No. 150 was effective for instruments entered into or modified after May 31, 2003 and otherwise was effective as of the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on the financial position or results of operations of the Company.

      Effective July 1, 2003, the Company prospectively adopted Emerging Issues Task Force (“EITF”) No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. The adoption of EITF No. 00-21 did not have a material effect on the financial position or results of operations of the Company.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      The information required under this item is provided under the caption “Disclosures about Market Risks” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 8. Financial Statements and Supplementary Data

      Financial statements and supplementary data are set forth beginning on page F-1 of this Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      Previously reported on Form 8-K filed with the SEC on April 2, 2002, as amended by Form 8-K/A filed with the SEC on April 19, 2002.

28

Item 9A. Controls and Procedures

      (a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this annual report, the Company, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Sections 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be included in the Company’s periodic Securities and Exchange Commission filings.

      (b) Changes in Internal Controls. In connection with the completion of its audit of, and the issuance of an unqualified report on, the Company’s consolidated financial statements for the year ended December 31, 2003, KPMG LLP advised the Audit Committee and management of certain deficiencies in the Company’s internal control over financial reporting that KPMG considered to be a “reportable condition” under the standards established by the American Institute of Certified Public Accountants. The reportable condition related to the analysis, evaluation and review of financial information included in the Company’s financial reporting. As a result, certain financial information and disclosures were not presented appropriately and required restatement. Certain of these matters relate to the Company’s classification of (1) cash and cash equivalents and short-term investments, (2) its revolving credit facility, (3) certain other items related to its pension assets and obligations, and (4) deferred income taxes.

      KPMG and management discussed the reportable condition with the Audit Committee. As a result, the Company has reclassified certain items and restated its consolidated balance sheet as of December 31, 2002, and its consolidated statements of cash flows for the years ended December 31, 2002 and 2001, and will reclassify and restate its statements of cash flows for the first three quarters of 2003 in order to more clearly present its financial position and comply with generally accepted accounting principles. For additional information regarding the reclassifications made during 2003 to the Company’s consolidated balance sheet as of December 31, 2002 and consolidated cash flow statements for the years ended December 31, 2002 and 2001, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition, Liquidity and Capital Resources and Note (3) in Notes to Consolidated Financial Statements.

      Management believes that these reclassifications and restatements address the financial reporting matters raised by KPMG. The Company plans to continue to monitor the effectiveness of its internal control over financial reporting on an ongoing basis and will take further action, as appropriate to address the reportable condition in its financial reporting process.

      Other than correcting the reportable condition identified above, there were no other changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

      Certain information required by Part III is omitted from this report in that the Company will file with the Securities and Exchange Commission a definitive Proxy Statement pursuant to Regulation 14A (the “Proxy Statement”) not later than 120 days after the end of the fiscal year covered by this report, and certain information included therein is incorporated herein by reference. Only those sections of the Proxy Statement which specifically address the items set forth herein are incorporated by reference. Such information does not include the Compensation Committee Report, the Performance Graph or the Audit Committee Report included in the Proxy Statement.

Item 10. Directors and Executive Officers of the Registrant

      The information concerning the Company’s directors required by this Item is incorporated herein by reference to the Company’s Proxy Statement in the section entitled “Proposal 1. Election of Directors and

29

Information Regarding Directors.” The information concerning the Company’s executive officers required by this Item is incorporated herein by reference to the section in Part I, entitled “Executive Officers of the Registrant.”

      The information regarding compliance with Section 16 of the Securities Exchange Act of 1934, as amended, is incorporated herein by reference to the Company’s Proxy Statement in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance.”

Item 11. Executive Compensation

      The information required by this Item is incorporated herein by reference to the Company’s Proxy Statement in the section entitled “Executive Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

      The information required by this Item is incorporated herein by reference to the Company’s Proxy Statement in the section entitled “Common Stock Ownership by Management and Certain Beneficial Owners” and in the “Equity Compensation Plan Information” subsection of the section entitled “Proposal 2. Approval of Amended and Restated Long-Term Incentive Plan.”

Item 13. Certain Relationships and Related Transactions

      Not applicable.

Item 14. Principal Accountant Fees and Services

      The information required by this Item is incorporated herein by reference to the Company’s Proxy Statement in the section entitled “Independent Public Accountants.”

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following documents are filed as part of this report:

      (1) Financial Statements:

INDEX TO FINANCIAL STATEMENTS

	Page
Independent Auditors’ Report as to Financial Statements and Schedule		F-1
Report of Independent Public Accountants		F-2
Consolidated Balance Sheets at December 31, 2003 and 2002		F-3
Consolidated Statements of Operations for the Years Ended December 31, 2003, 2002, and 2001		F-4
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2003, 2002, and 2001		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002, and 2001		F-6
Notes to Consolidated Financial Statements		F-7

30

      (2) Financial Statement Schedules:

INDEX TO FINANCIAL STATEMENT SCHEDULES

	Page
Report of Independent Public Accountants as to Schedule		S-1
Schedule II — Valuation and Qualifying Accounts for the Years Ended December 31, 2003, 2002, and 2001		S-2

All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

      (3) Exhibits: The list of exhibits required by this item is set forth in “(c) Exhibits” below.

      (b) Reports on Form 8-K.

      During the quarter ended December 31, 2003, the Company filed a current report on Form 8-K on October 29, 2003 pursuant to Items 7 and 12. No financial statements were included in this Form 8-K.

      (c) Exhibits.

      Exhibit Index filed as part of this report

Exhibit
No.			Description
	3	.1	Amended and Restated Articles of Incorporation of the Company (incorporated by reference from Registration Statement on Form S-1 (File Number 33-66620) filed with the Commission on July 28, 1993, as amended on September 2, 1993 and September 17, 1993 and deemed effective on September 29, 1993).
	3	.2	Amended and Restated Bylaws of the Company (incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Commission on April 16, 2001).
	4	.1	Form of certificate representing shares of the Company’s common stock (incorporated by reference from Registration Statement on Form S-1 (File Number 33-66620) filed with the Commission on July 28, 1993, as amended on September 2, 1993 and September 17, 1993 and deemed effective on September 29, 1993).
	4	.2	Indenture by and among the Company, the Guarantors listed therein, and The First National Bank of Chicago, as Trustee, dated September 30, 1997 (incorporated by reference from Registration Statement on Form S-4 (File Number 333-37113) filed with the Commission on October 3, 1997).
	4	.3	Amended and Restated Financing Agreement, dated as of September 4, 2003, by and among Allied Holdings, Inc., Allied Systems, Ltd. (L.P.), each subsidiary of Allied Holdings, Inc. listed as a “Guarantor” on the signature pages thereto, each of the lenders from time to time party thereto as a Lender, Ableco Finance LLC, as collateral agent, and Wells Fargo Foothill, Inc., as administrative agent (incorporated by reference from the Current Report on Form 8-K filed with the Commission on September 5, 2003).
	10	.1†	Amended and Restated Long Term Incentive Plan of Allied Holdings, Inc. (incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Commission on April 16, 2001).
	10	.2†	Allied Holdings, Inc. 401(k) Retirement Plan and Defined Benefit Pension Plan and Trust (incorporated by reference from Registration Statement on Form S-8 (File Number 33-76108) filed with the Commission on March 4, 1994).
	10	.3†	Allied Holdings, Inc. Deferred Compensation Plan (incorporated by reference from Registration Statement on Form S-8 (File Number 333-51102) filed with the Commission on December 1, 2000).
	10	.4†	Allied Holdings, Inc. Amended and Restated 1999 Employee Stock Purchase Plan, as amended through June 19, 2003 (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on August 12, 2003).

31

Exhibit
No.			Description
	10	.5†	Allied Holdings, Inc. 2003 Stock Issuance Plan (incorporated by reference from the Company’s Registration Statement on Form S-8 (File No. 333-107456), filed with the Commission on July 30, 2003).
	10	.6†	Form of Allied Holdings, Inc. 2003 Restricted Stock Agreement for 2003 Stock Issuance Plan (U.S. Employees) (incorporated by reference from the Company’s Registration Statement on Form S-8 (File No. 333-107456), filed with the Commission on July 30, 2003).
	10	.7†	Form of Allied Holdings, Inc. 2003 Stock Agreement for 2003 Stock Issuance Plan (Canadian Employees) (incorporated by reference from the Company’s Registration Statement on Form S-8 (File No. 333-107456), filed with the Commission on July 30, 2003).
	10	.8†	Employment Agreement between Allied Holdings, Inc. and Hugh E. Sawyer (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on August 14, 2001).
	10	.8(a)†	First Amendment to Employment Agreement between Allied Holdings, Inc. and Hugh E. Sawyer (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on May 15, 2002).
	10	.9	Intentionally omitted.
	10	.10†	Employment Agreement between Allied Holdings, Inc. and Thomas Duffy (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on May 15, 2002).
	10	.10(a)†	First Amendment to Employment Agreement between Allied Holdings, Inc. and Thomas Duffy (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on May 15, 2002).
	10	.11†	Employment Agreement between Allied Holdings, Inc. and Robert J. Rutland (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on May 15, 2002).
	10	.12†	Employment Agreement between Allied Holdings, Inc. and David Rawden, as amended (incorporated by reference from the Annual Report on Form 10-K filed with the Commission on March 27, 2003).
	10	.13†*	Employment Agreement among Allied Holdings, Inc., Axis Group, Inc. and Robert Chambers.
	10	.14	Summary of Financial Terms of Collective Bargaining Agreement with the International Brotherhood of Teamsters in the United States, effective June 1, 2003 (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on August 12, 2003).
	10	.15**	Agreement between Allied Automotive Group, Inc. and UPS Autogistics, Inc., as amended (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on November 13, 2001).
	10	.15(a)**	Amendment No. 2 to Agreement between Allied Automotive Group, Inc. and UPS Autogistics, Inc. (incorporated by reference from the Quarterly Report on Form 10-Q filed with the Commission on November 14, 2002).
	10	.16**	Agreement between the Company and DaimlerChrysler Corporation (incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Commission on April 16, 2001).
	10	.16(a)**	Amendment to Agreement between the Company and DaimlerChrysler Corporation (incorporated by reference from the Annual Report on Form 10-K filed with the Commission on March 27, 2003).
	10	.17***	Agreement between the Company and General Motors Corporation.
	10	.18**	Acquisition Agreement among Allied Holdings, Inc., AH Acquisition Corp., Canadian Acquisition Corp., Axis International Incorporated and Ryder System, Inc., dated August 20, 1997 (incorporated by reference from Current Report on Form 8-K filed with the Commission on August 29, 1997).

32

Exhibit
No.			Description
	10	.19	Sale and Purchase Agreement between Allied Holdings, Inc. and AutoLogic Holdings plc, dated November 19, 2001, regarding the sale of the remaining issued share capital of ANSA Logistics Limited, Autocar Logistics Limited and up to an additional 32% of the issued share capital of Vehicle Logistics Corporation BV (incorporated by reference from the Current Report on Form 8-K filed with the Commission on December 20, 2001).
	10	.20	IBM Global Services National Agreement between Allied Holdings, Inc. and International Business Machines Corporation, dated April 1, 2001 (incorporated by reference from the Annual Report on Form 10-K for the year ended December 31, 2001, filed with the Commission on March 27, 2002).
	10	.20(a)*	Amendment No. 4 to the IBM Global Services National Agreement between Allied Holdings, Inc. and International Business Machines Corporation, effective February 1, 2004.
	21	.1*	Subsidiaries of Allied Holdings, Inc.
	23	.1*	Consent of KPMG LLP.
	23	.2*	Notice regarding consent of Arthur Andersen LLP
	24	.1*	Powers of Attorney (included within the signature page of this Report).
	31	.1*	Rule 13a-14(a)/15d-14(a) Certification by Hugh E. Sawyer.
	31	.2*	Rule 13a-14(a)/15d-14(a) Certification by David A. Rawden.
	32	.1*	Section 1350 Certification by Hugh E. Sawyer.
	32	.2*	Section 1350 Certification by David A. Rawden.
	99	.1*	Charter of the Audit Committee of the Board of Directors.
	99	.2*	Charter of the Compensation and Nominating Committee of the Board of Directors.
	99	.3*	Allied Holdings, Inc. Code of Conduct

*  Filed herewith

**  Confidential treatment has been requested and/or granted with respect to portions of this exhibit.

†  Management contract, compensatory plan or arrangement.

      (d) Financial Statement Schedules. The list of exhibits required by this item is set forth above.

33

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) 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.

Date: April 13, 2004

By:  /s/ HUGH E. SAWYER

Hugh E. Sawyer,

President and

Chief Executive Officer

Date: April 13, 2004

By:  /s/ DAVID A. RAWDEN

David A. Rawden,

Executive Vice President and

Chief Financial Officer

(Principal Financial and Accounting Officer)

34

POWER OF ATTORNEY

      KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert J. Rutland and Hugh E. Sawyer, jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities to sign any amendments to this Report on Form 10-K, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ ROBERT J. RUTLAND Robert J. Rutland	Chairman and Director	April 13, 2004
/s/ GUY W. RUTLAND, III Guy W. Rutland, III	Chairman Emeritus and Director	April 13, 2004
/s/ HUGH E. SAWYER Hugh E. Sawyer	President, Chief Executive Officer and Director	April 13, 2004
/s/ DAVID G. BANNISTER David G. Bannister	Director	April 13, 2004
/s/ WILLIAM P. BENTON William P. Benton	Director	April 13, 2004
/s/ THOMAS E. BOLAND Thomas E. Boland	Director	April 13, 2004
/s/ GUY W. RUTLAND, IV Guy W. Rutland, IV	Senior Vice President and Director	April 13, 2004
/s/ J. LELAND STRANGE J. Leland Strange	Director	April 13, 2004
/s/ BERNER F. WILSON, JR. Berner F. Wilson, Jr.	Director	April 13, 2004
/s/ ROBERT R. WOODSON Robert R. Woodson	Director	April 13, 2004

35

INDEPENDENT AUDITORS’ REPORT

The Board of Directors

Allied Holdings, Inc.:

      We have audited the 2003 and 2002 consolidated financial statements of Allied Holdings, Inc. and subsidiaries as listed in the accompanying index included at Item 15(a)(1). In connection with our audits of the 2003 and 2002 consolidated financial statements, we also have audited the 2003 and 2002 financial statement schedule as listed in the accompanying index. These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits. The 2001 consolidated financial statements and the financial statement schedule of Allied Holdings, Inc. and subsidiaries as listed in the accompanying index were audited by other auditors who have ceased operations. Those auditors’ report, dated February 25, 2002 (except with respect to the matter discussed in Note 10, as to which the date is March 27, 2002) on those financial statements and financial statement schedule was unqualified, before the revisions described in Note 3 and 8 to the consolidated financial statements and included an explanatory paragraph that described the fact that the financial statements of Ansa Logistics Limited, an investment recorded using the equity method of accounting was audited by other auditors; the equity investment represented less than 1% of total assets at December 31, 2001 and the equity in net income for the year ended December 31, 2001 was $2,100,000 of the total Company’s net loss of $(39,496,000); the amounts included for Ansa Logistics Limited were based solely on the report of the other auditors.

      We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the 2003 and 2002 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Allied Holdings, Inc. and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related 2003 and 2002 financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

      As discussed in Note 8 to the consolidated financial statements, effective January 1, 2002, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.

      As discussed in Note 3, the 2002 consolidated financial statements have been restated.

      As discussed above, the 2001 consolidated financial statements of Allied Holdings, Inc. and subsidiaries, as listed in the accompanying index, were audited by other auditors who have ceased operations. As described in Note 3, these consolidated financial statements have been restated. We audited the adjustments described in Note 3 that were applied to restate the 2001 financial statements. In our opinion, such adjustments in Note 3 are appropriate and have been properly applied. As described in note 8, these consolidated financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, which was adopted by the Company as of January 1, 2002. In our opinion, the disclosures for 2001 in note 8 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 financial statements of Allied Holdings, Inc. other than with respect to such adjustments and disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001 consolidated financial statements taken as a whole.

/s/ KPMG LLP

Atlanta, Georgia

April 7, 2004

F-1

Note:  The following report of independent accountants is a copy of the report previously issued in connection with the Company’s 2001 Annual Report on Form 10-K and has not been reissued by Arthur Andersen LLP, the Company’s former independent public accountants. The 2001 financial statements have been restated.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Allied Holdings, Inc.:

      We have audited the accompanying consolidated balance sheets of ALLIED HOLDINGS, INC. (a Georgia corporation) AND SUBSIDIARIES as of December 31, 2001 and 2000 and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

      We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion.

      We did not audit the financial statements of Ansa Logistics Limited, the investment in which is reflected in the accompanying financial statements using the equity method of accounting. The investment in Ansa Logistics Limited represents less than 1% of total assets at December 31, 2001 and 2000 and the equity in its net income for the years ended December 31, 2001 and 2000 is $2,100,000 and $2,197,000, respectively, of the total Company’s net loss of $(39,496,000) and $(6,301,000), respectively. The statements of Ansa Logistics Limited were audited by other auditors whose reports have been furnished to us and our opinion, insofar as it relates to the amounts included for Ansa Logistics Limited, is based solely on the report of the other auditors.

      In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Allied Holdings, Inc. and subsidiaries as of December 31, 2001 and 2000 and the results of their operations and their cash flows for the three years ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.

/s/ Arthur Andersen, LLP

Atlanta, Georgia

February 25, 2002

(except with respect to the

matter discussed in the

fourth paragraph of Note 10,

as to which the date

is March 27, 2002)

F-2

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2003 and 2002

(In thousands)

			2003			2002
						(Restated)
ASSETS
Current assets:
	Cash and cash equivalents		$	2,148		$	9,448
	Restricted cash and cash equivalents			26,267			805
	Restricted investments			0			19,502
	Receivables, net of allowance for doubtful accounts of $3,575 and $5,587 in 2003 and 2002, respectively			55,110			58,512
	Inventories			4,983			5,071
	Deferred income taxes			20,213			22,705
	Prepayments and other current assets			12,644			13,717
		Total current assets		121,365			129,760
Property and equipment, net				155,573			176,663
Goodwill, net				90,203			85,241
Other assets:
	Restricted cash and cash equivalents			55,817			0
	Restricted investments			0			41,230
	Other non-current assets			32,777			35,493
		Total other assets		88,594			76,723
		Total assets	$	455,735		$	468,387
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current maturities of long-term debt		$	16,374		$	10,785
	Borrowings under revolving credit facility			0			24,635
	Trade accounts payable			34,272			36,585
	Accrued liabilities			80,937			90,129
		Total current liabilities		131,583			162,134
Long-term debt, less current maturities				230,126			213,055
Postretirement benefits other than pensions				5,302			7,467
Deferred income taxes				20,213			10,625
Other long-term liabilities				59,697			64,792
Commitments and contingencies
Stockholders’ equity:
	Preferred stock, no par value. Authorized 5,000 shares; none outstanding			0			0
	Common stock, no par value. Authorized 20,000 shares; 8,764 and 8,421 outstanding at December 31, 2003 and December 31, 2002, respectively			0			0
	Additional paid-in capital			47,511			46,801
	Treasury stock, 139 shares at cost at December 31, 2003 and 2002			(707	)		(707	)
	Accumulated deficit			(35,024	)		(26,420	)
	Accumulated other comprehensive loss, net of tax			(2,966	)		(9,360	)
		Total stockholders’ equity		8,814			10,314
		Total liabilities and stockholders’ equity	$	455,735		$	468,387

See accompanying notes to consolidated financial statements.

F-3

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2003, 2002, and 2001

(In thousands, except per share data)

			2003			2002			2001
Revenues			$	865,463		$	898,060		$	896,767
Operating expenses:
	Salaries, wages, and fringe benefits			469,540			483,545			515,916
	Operating supplies and expenses			138,512			138,542			149,111
	Purchased transportation			99,604			99,109			97,756
	Insurance and claims			38,168			43,500			50,837
	Operating taxes and licenses			30,376			33,583			33,262
	Depreciation and amortization			45,556			54,880			60,358
	Rents			6,090			6,342			6,813
	Communications and utilities			7,138			6,419			7,022
	Other operating expenses			10,671			10,384			16,126
	Loss (gain) on disposal of operating assets, net			1,325			748			(2,725	)
		Total operating expenses		846,980			877,052			934,476
		Operating income (loss)		18,483			21,008			(37,709	)
Other income (expense):
	Equity in earnings of joint ventures, net of tax			0			0			4,072
	Gain on sale of joint ventures			0			0			16,230
	Write down of joint ventures			0			0			(10,042	)
	Interest expense			(29,138	)		(30,627	)		(37,574	)
	Investment income			3,172			2,463			3,874
	Foreign exchange gain (loss)			3,169			108			(829	)
	Gain on early extinguishment of debt			0			2,750			0
	Other, net			1,976			(265	)		1,189
				(20,821	)		(25,571	)		(23,080	)
Loss before income taxes and cumulative effect of change in accounting principle				(2,338	)		(4,563	)		(60,789	)
Income tax benefit (expense)				(6,266	)		1,129			21,293
Loss before cumulative effect of change in accounting principle				(8,604	)		(3,434	)		(39,496	)
Cumulative effect of change in accounting principle, net of tax				0			(4,092	)		0
		Net loss	$	(8,604	)	$	(7,526	)	$	(39,496	)
Basic and diluted loss per common share:
Loss before cumulative effect of change in accounting principle:
	Basic and diluted		$	(1.02	)	$	(0.41	)	$	(4.86	)
Cumulative effect of change in accounting principle, net of tax:
	Basic and diluted			0			(0.50	)		0
Net loss:
	Basic and diluted		$	(1.02	)	$	(0.91	)	$	(4.86	)
Weighted average common shares outstanding:
	Basic and diluted			8,475			8,301			8,128

See accompanying notes to consolidated financial statements.

F-4

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years Ended December 31, 2003, 2002, and 2001

																				Accumulated
			Comprehensive			Common Stock					Additional						Retained			Other
			Income								Paid-in			Treasury			Earnings			Comprehensive
			(Loss)			Shares			Amount		Capital			Stock			(Deficit)			Income (Loss)			Total
Balance, December 31, 2000							8,187		$	0	$	45,990		$	(707	)	$	20,602		$	(6,744	)	$	59,141
	Net loss		$	(39,496	)		0			0		0			0			(39,496	)		0			(39,496	)
	Other comprehensive loss:
		Foreign currency translation adjustment, net of income taxes of $956		(1,373	)		0			0		0			0			0			(1,373	)		(1,373	)
		Minimum pension liability, net of income taxes of $504		(805	)		0			0		0			0			0			(805	)		(805	)
	Comprehensive loss		$	(41,674	)
	Issuance of common stock						179			0		349			0			0			0			349
	Compensation expense for restricted stock, net of forfeitures						(92	)		0		181			0			0			0			181
Balance, December 31, 2001							8,274			0		46,520			(707	)		(18,894	)		(8,922	)		17,997
	Net loss		$	(7,526	)		0			0		0			0			(7,526	)		0			(7,526	)
	Other comprehensive loss:
		Foreign currency translation adjustment, net of income taxes of $(316)		376			0			0		0			0			0			376			376
		Minimum pension liability, net of income taxes of $509		(814	)		0			0		0			0			0			(814	)		(814	)
	Comprehensive loss		$	(7,964	)
	Issuance of common stock						159			0		338			0			0			0			338
	Compensation expense for restricted stock, net of forfeitures						(12	)		0		(57	)		0			0			0			(57	)
Balance, December 31, 2002							8,421			0		46,801			(707	)		(26,420	)		(9,360	)		10,314
	Net loss		$	(8,604	)		0			0		0			0			(8,604	)		0			(8,604	)
	Other comprehensive loss:
		Foreign currency translation adjustment, net of income taxes of $(3,974)		6,192			0			0		0			0			0			6,192			6,192
		Minimum pension liability, net of income taxes of $(126)		202			0			0		0			0			0			202			202
	Comprehensive income		$	(2,210	)
	Issuance of common stock						161			0		450			0			0			0			450
	Compensation expense for restricted stock, net of forfeitures						182			0		260			0			0			0			260
Balance, December 31, 2003							8,764		$	0	$	47,511		$	(707	)	$	(35,024	)	$	(2,966	)	$	8,814

See accompanying notes to consolidated financial statements.

F-5

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2003, 2002, and 2001

(In thousands)

					2003			2002			2001
								(Restated)			(Restated)
Cash flows from operating activities:
	Net loss				$	(8,604	)	$	(7,526	)	$	(39,496	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Gain on early extinguishment of debt				0			(2,750	)		0
		Interest expense paid in kind				1,065			1,115			248
		Amortization of deferred financing costs				3,697			4,004			4,795
		Depreciation and amortization				45,556			54,880			60,358
		Loss (gain) on disposal of assets and other, net				1,325			1,013			(3,890	)
		Foreign exchange (gain) loss, net				(3,169	)		(108	)		829
		Gain on sale of joint ventures				0			0			(16,230	)
		Write down of joint ventures				0			0			10,042
		Equity in earnings of joint ventures				0			0			(4,072	)
		Cumulative effect of change in accounting principle				0			4,092			0
		Deferred income taxes				6,914			(1,632	)		(21,703	)
		Compensation expense related to stock options and grants				260			(57	)		181
		Amortization of Teamsters Union contract costs				1,000			2,400			2,403
		Change in operating assets and liabilities:
			Receivables, net of allowance for doubtful accounts			5,258			13,667			40,679
			Inventories			272			270			1,980
			Prepayments, other current assets and other assets			1,821			(6,074	)		(3,419	)
			Short-term investments			0			0			1,770
			Trade accounts payable			(3,512	)		(3,603	)		(5,430	)
			Accrued liabilities and other liabilities			(16,486	)		(5,268	)		5,659
				Net cash provided by operating activities		35,397			54,423			34,704
Cash flows from investing activities:
	Purchases of property and equipment					(18,555	)		(21,786	)		(21,463	)
	Proceeds from sale of property and equipment					685			4,725			11,762
	(Increase) decrease in restricted cash and cash equivalents					(81,279	)		5,289			(6,094	)
	(Increase) decrease in restricted investments					60,732			4,062			(6,672	)
	Investment in joint ventures					0			0			(464	)
	Cash received from joint ventures					0			0			8,624
	Proceeds from sale of equity investment in joint venture					0			3,000			20,560
	Decrease in the cash surrender value of life insurance					2			2,641			420
				Net cash (used in) provided by investing activities		(38,415	)		(2,069	)		6,673
Cash flows from financing activities:
	Repayments to revolving credit facility, net					(24,635	)		(74,263	)		(35,966	)
	Additions to long-term debt					99,875			82,750			0
	Repayment of long-term debt					(78,280	)		(47,535	)		(109	)
	Payment of deferred financing costs					(3,038	)		(9,262	)		(3,574	)
	Proceeds from issuance of common stock					450			338			349
	Other, net					0			434			(612	)
				Net cash used in financing activities		(5,628	)		(47,538	)		(39,912	)
Effect of exchange rate changes on cash and cash equivalents						1,346			183			611
				Net change in cash and cash equivalents		(7,300	)		4,999			2,076
Cash and cash equivalents at beginning of year						9,448			4,449			2,373
Cash and cash equivalents at end of year					$	2,148		$	9,448		$	4,449

See accompanying notes to consolidated financial statements.

F-6

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2003, 2002, and 2001

(1) Organization and Operations

      Allied Holdings, Inc. (the Company or Allied), a Georgia corporation, is a holding company which operates through its wholly owned subsidiaries. The principal operating divisions of the Company are Allied Automotive Group, Inc. (Allied Automotive Group) and Axis Group, Inc. (Axis Group). Allied Automotive Group, through its subsidiaries, is engaged in the business of transporting automobiles, light trucks, and SUVs from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships. Axis Group, through its subsidiaries, is engaged in the business of securing and managing vehicle distribution services, automobile inspections, auction and yard management services, intra-modal transport, vehicle tracking, vehicle accessorization, and dealer preparatory services for the automotive industry.

(2) Summary of Significant Accounting Policies

     (a) Principles of Consolidation

   The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. The 2001 and 2002 consolidated financial statements have been restated, see Note (3).

     (b)  Foreign Currency Translation

   The Company’s functional currency is the local currency for each of its subsidiaries. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using current exchange rates in effect at the balance sheet date, and revenues and expenses are translated at average monthly exchange rates. The resulting translation adjustments are recorded as accumulated other comprehensive income (loss) in the accompanying consolidated statements of changes in stockholders’ equity, net of related income taxes.

     (c)  Revenue Recognition

   Substantially all revenue is derived from transporting new automobiles, light trucks, and SUVs from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships, providing vehicle rail-car loading and unloading services, yard management services, and other distribution and transportation support services to the pre-owned and new vehicle market. Revenue is recorded by the Company when the vehicles are delivered to the dealerships or when services are performed. The Company makes estimates to determine the collectibility of its accounts receivable on the balance sheet. These estimates include assessments of the potential for customer billing adjustments based on the timing of delivery, the accuracy of pricing, as well as evaluation of the historical aging of customer accounts.

     (d)  Cash and Cash Equivalents

   The Company considers all highly liquid investments, excluding restricted cash and cash equivalents with an original maturity of three months or less to be cash equivalents.

     (e)  Restricted Cash, Cash Equivalents and Investments

   Restricted cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less. Restricted investments are classified as trading securities and are carried at their fair value based on the quoted market prices of those investments. Net realized and unrealized gains and losses on trading securities are included in net earnings. Amounts are contractually restricted to secure outstanding letters of credit (Note 5).

F-7

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     (f)  Inventories

   Inventories consist primarily of tires, parts, materials, and supplies for servicing the Company’s tractors and trailers. Inventories are recorded at the lower of cost (on a first-in, first-out basis) or market.

     (g)  Tires on Tractors and Trailers

   New tires on tractors and trailers are capitalized and amortized to operating supplies and expenses based on the estimated useful life. The cost of replacement tires is expensed as incurred.

     (h)  Property and Equipment

   Property and equipment are stated at cost. Major property additions, replacements, and betterments are capitalized, while maintenance and repairs which do not extend the useful lives of these assets are expensed currently. Depreciation is provided using the straight-line method for financial reporting and accelerated methods for income tax purposes. The estimated useful lives of property and equipment are: 4 to 10 years for tractors and trailers, 6 years for costs capitalized for the remanufacturing program, 5 to 30 years for buildings, facilities and leasehold improvements, and 3 to 10 years for equipment, furniture and service cars.

   The company evaluates impairment losses on long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

     (i)  Impairment of Long-Lived Assets

   In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

     (j)  Equity Investments

   The Company accounted for its investments under the equity method of accounting with its share of the ventures’ earnings or loss reflected as equity in earnings of joint venture, net of tax, in the consolidated statements of operations.

     (k)  Cash Surrender Value of Life Insurance

   The Company maintains life insurance policies for certain employees, directors and officers of the Company. Under the terms of the policies, the Company records as an asset the lesser of aggregate premiums paid or the cash surrender value amount of the policy, and will receive such amounts upon repayment from or the death of the insured. Any excess proceeds over the Company’s interest in the policies are retained by the employee’s beneficiary. The Company records the increase or decrease in cash surrender value each year as a reduction or increase of premium expense. During 2002, the Company discontinued making premium payments on these policies due to the enactment of the Sarbanes-Oxley Act of 2002 on June 30, 2002 and the

F-8

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

trustees representing the beneficiaries of the policies have been utilizing the cash surrender value to pay the annual premiums due under the policies.

     (l)  Goodwill and Other Intangible Assets

   Goodwill represents the excess of costs over fair value of assets of businesses acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead tested annually for impairment, and tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The fair value of goodwill is derived by using a discounted cash flow analysis. This analysis involves estimates and assumptions by management regarding future revenue streams and expenses. SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144.

   Prior to the adoption of SFAS No. 142 on January 1, 2002, goodwill was amortized on a straight-line basis over the expected periods to be benefited, generally 40 years, and assessed for recoverability by determining whether the amortization of the goodwill balance over its remaining life could be recovered through undiscounted future operating cash flows of the acquired operation. All other intangible assets were amortized on a straight-line basis for 10 years. The amount of goodwill and other intangible asset impairment, if any, was measured based on projected discounted future operating cash flows using a discount rate reflecting the Company’s average cost of funds.

     (m)  Reclassification

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

     (n)  Fair Value of Financial Instruments

   SFAS No. 107, Disclosures About Fair Value of Financial Instruments, requires disclosure of the information below about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of the following disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

   The amounts disclosed represent management’s best estimates of fair value. In accordance with SFAS No. 107, the Company has excluded certain financial instruments and all other assets and liabilities from its disclosure. Accordingly, the aggregate fair value amounts presented are not intended to, and do not, represent the underlying fair value of the Company.

   The methods and assumptions used to estimate fair value are as follows:

•  The carrying amount of cash and cash equivalents and restricted cash and cash equivalents approximates fair value due to the relatively short period to maturity of these instruments.

•  At December 31, 2003, the Company had no securities classified as restricted investments. The Company’s restricted investments as of December 31, 2002 were comprised of debt and equity securities, all classified as trading securities and were carried at their fair value based on the quoted market prices of those investments.

F-9

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•  The carrying amount of the Credit Facility approximates fair value based on the borrowing rates currently available to the Company for borrowings with similar terms and average maturities. The fair value of the Senior Notes is based on the year-end quoted market price.

   The asset and (liability) amounts recorded in the balance sheet and the estimated fair values of financial instruments at December 31, 2003 and 2002 consisted of the following (in thousands):

	Carrying Amount						Fair Value
	2003			2002			2003			2002
Cash and cash equivalents (including restricted amounts)	$	84,232		$	10,253		$	84,232		$	10,253
Restricted investments		0			60,732			0			60,732
Long-term debt (including current maturities)		(246,500	)		(248,475	)		(240,500	)		(202,785	)

     (o)  Claims and Insurance Reserves

   In the United States, the Company retains liability up to $650,000 for each workers’ compensation claim and $500,000 for each automobile and general liability claim, including personal injury and property damage claims. In addition to the $500,000 per occurrence deductible for automobile liability, there is a $1.5 million inneraggregate deductible for those claims that exceed the $500,000 per occurrence deductible, subject to a $1.0 million per claim limit. Allied has a $1.0 million inneraggregate limit for losses from $1.0 to $2.0 million, and an additional $4.0 million inneraggregate limit for losses from $2.0 to $5.0 million. Furthermore, the Company retains liability up to $250,000 for each cargo damage claim. In Canada, the Company retains liability up to CDN $500,000 for each personal injury and property damage claim. Also, in Canada, there is a CDN $500,000 inneraggregate limit for losses from CDN $500,000 to $1.0 million. For cargo damage in Canada, the Company has a CDN $100,000 deductible.

   Reserves for self-insured workers’ compensation, automobile, and general liability losses utilize actuarial estimates that are based on the Company’s historical claims experience adjusted for current industry trends, and discounted to their present values using management’s estimate of weighted average risk free interest rates for each claim year. The discount rates for 2003, 2002, and 2001 were 2.5%, 3.5% and 4.0%, respectively. The undiscounted amount of these reserves at December 31, 2003 and 2002 was approximately $100.9 million and $109.6 million, respectively. These claims and insurance reserves are adjusted periodically as claims mature to reflect changes in actuarial estimates based on actual experience.

      The Company provides reserves primarily on an actuarially determined basis for the estimated automobile, general liability, and workers’ compensation for both reported claims and claims incurred but not reported. The estimated costs of all known and estimated losses are accrued by the Company. In the opinion of management, adequate provision has been made for all incurred claims. Unfavorable developments subsequent to December 31, 2003 could have a material impact on the estimated losses accrued.

     (p)  Stock Option Plan

   The Company applies the intrinsic-value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations to account for its fixed-plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS No. 123, Accounting for Stock-Based Compensation, established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No. 123 and the amended

F-10

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

disclosure requirements of SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of FASB Statement No. 123.

      If the Company applied the fair value method prescribed by SFAS No. 123, net loss and loss per common share would have been changed to the pro forma amounts indicated below at December 31, 2003, 2002, and 2001 (in thousands, except per share data):

			2003			2002			2001
Reported net loss			$	(8,604	)	$	(7,526	)	$	(39,496	)
	Less: stock-based employee compensation included in reported net loss, net of related taxes			250			(43	)		117
	Plus: stock-based employee compensation determined under the fair value method, net of related taxes			(755	)		(669	)		(645	)
Pro forma net loss			$	(9,109	)	$	(8,238	)	$	(40,024	)
Loss per share:
	As reported:
		Basic and diluted	$	(1.02	)	$	(0.91	)	$	(4.86	)
	Pro forma:
		Basic and diluted	$	(1.07	)	$	(0.99	)	$	(4.92	)

   The fair value of the Company’s stock options used to compute pro forma net loss and loss per common share disclosures is the estimated present value at grant date using the Black-Scholes option pricing model with the following weighted average assumptions for 2003, 2002, and 2001: dividend yield of 0%, expected volatility of 71%, 72%, and 85%, respectively, a risk-free interest rate of 2.71%, 3.19%, and 4.30%, respectively, and an expected holding period of seven years.

   The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

     (q)  Income Taxes

   Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

      The Company assesses the recoverability of deferred tax assets based on estimates of future taxable income and establishes a valuation allowance against deferred tax assets to the extent the Company believes that recovery is not “more likely than not.”

F-11

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     (r)  Pension and Other Benefit Plans

   The Company has a defined benefit pension plan for management and office personnel in the United States. The benefits are based on years of service and the employee’s compensation during the five years before retirement. The cost of this program is being funded currently. The Company froze employee participation in this plan during 2002.

   The Company also sponsors a defined benefit health care plan for substantially all employees. The Company measures the amount of its obligation based on its best estimate. The net periodic costs are recognized as employees perform the services necessary to earn the postretirement benefits.

     (s)  Other Postretirement Plans

   The Company sponsors postretirement plans for certain of its retired employees. The cost of these programs is being funded currently.

     (t)  Earnings Per Share

   SFAS No. 128, Earnings Per Share, requires presentation of basic and diluted earnings per share. Basic earnings per share are calculated by dividing net loss available to common stockholders by the weighted average number of common shares outstanding for the years presented. Diluted earnings per share reflect the potential dilution that could occur if securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the earnings of the entity. Total options of 1,709,967, 1,612,300, and 1,020,300 and restricted stock of 170,993, 172,534 and 202,985 shares outstanding at December 31, 2003, 2002, and 2001, respectively, were excluded from the calculation of diluted earnings per share as the impact would have been antidilutive.

     (u)  Commitments and Contingencies

   Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

     (v)  Guarantees and Indemnifications

     Guarantees

   The Company leases office space and certain terminal facilities under noncancelable and cancelable (i.e. month-to-month) operating lease agreements, some of which provide guarantees to third parties. The Company assesses the fair value of its obligation to stand ready to perform under these guarantees by considering the likelihood of the occurrence of the specified triggering events or conditions requiring performance as well as other assumptions and factors. The Company has not entered into any guarantees of significance during the year ended December 31, 2003. Accordingly, no liabilities for guarantees have been recorded at December 31, 2003.

     Indemnifications

   The Company enters into indemnification provisions under its agreements with certain of its customers, suppliers, service providers, and business partners in the ordinary course of business. Under these provisions, subject to various limitations and qualifications, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities. The potential losses primarily relate to obligations that are insured under the Company’s insurance programs. These indemnification provisions generally survive termination of the underlying agreement. The

F-12

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements and does not expect to at this time. The fair value of these agreements is estimated to be minimal. The Company had no liabilities recorded for these agreements at December 31, 2003.

   In addition, the Company is obligated to indemnify its directors and officers who are, or were, serving at the Company’s request in such capacities, subject to the Company’s By-laws. The maximum potential amount of future payments that the Company could be required to make under the By-laws is unlimited; however the Company has Director and Officer insurance policies that, in most cases, would enable it to recover a portion of any future amounts paid. Historically, the Company has not incurred any costs to settle claims related to these indemnifications, and there were no claims outstanding at December 31, 2003. Accordingly, no liabilities for indemnifications have been recorded at December 31, 2003.

     (w)  Derivatives and Hedging Activities

   SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or a 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 statement of operations 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 futures 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. During 2003, 2002, and 2001, the Company did not have any fuel hedging contracts or other derivative instruments that fall under the provisions of SFAS No. 133, as amended.

     (x)  Use of Estimates

   The preparation of the consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include the carrying amount of property, plant and equipment and goodwill; valuation allowances for receivables, inventories and deferred income tax assets; self-insurance reserves; and assets and obligations related to employee benefits. Actual results could differ from those estimates.

     (y)  Other Comprehensive Income

   Accumulated other comprehensive income (loss), net of income taxes of $1.9 million and $6.0 million at December 31, 2003 and 2002, respectively, consists of the following (in thousands):

	Foreign			Minimum			Accumulated
	Currency			Pension			Other
	Translation			Liability			Comprehensive
	Adjustment			Adjustment			Income
Balance, December 31, 2002	$	(7,741	)	$	(1,619	)	$	(9,360	)
Balance, December 31, 2003	$	(1,549	)	$	(1,417	)	$	(2,966	)

F-13

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(3) Restatements

      The Company made certain reclassifications in 2003, resulting in adjustments to restate previously issued financial statements for 2002 and 2001. These reclassifications are as follows:

      The Company evaluated the classification of its cash and investments held for the settlement of insurance claims. As of December 31, 2002, $805,000 of cash and cash equivalents and $60.7 million of investments were pledged to collateralize $61.5 million of letters of credit required by third-party insurance companies for the settlement of insurance claims. The Company concluded that the restriction on certain of its cash and investments as previously disclosed in the footnotes to the Company’s financial statements should have been designated as restricted in the balance sheet as of December 31, 2002 and its statements of cash flows as of December 31, 2002 and 2001. In addition, management further concluded that because the collateral assets are used to secure current and long-term insurance and claims liabilities, a portion of these restricted cash and cash equivalents and restricted investments should be classified as long-term at December 31, 2002. Accordingly, the Company has designated all of the above cash and investments as restricted and therefore not available for operations, and has reclassified $41.2 million of investments from current to long-term investments on its consolidated balance sheet as of December 31, 2002. Further, the Company has excluded restricted cash of $805,000 and $6.1 million from the cash and cash equivalents totals in the consolidated statements of cash flows for the years ended December 31, 2002 and 2001, respectively.

      The Company reclassified its revolving line of credit from long-term debt to borrowings under revolving credit facility. The Company determined that certain terms of its revolving credit agreement, as described in Note (13), include a “subjective acceleration clause” as addressed in EITF No. 95-22 Balance Sheet Classification of Borrowings Outstanding Under Revolving Credit Agreements That Include a Subjective Acceleration Clause and Lock-Box Arrangement. Accordingly, the Company has reclassified $24.6 million in borrowings against the revolving credit agreement from long-term to current debt on its consolidated balance sheet as of December 31, 2002, even though the existing facility does not expire until September 2007.

      In addition, the Company also reclassified certain other items on its consolidated balance sheet at December 31, 2002 related to its pension assets and obligations. These included a reclassification of a $14.9 million prepaid pension asset related to the Allied Defined Benefit Pension Plan from current to long-term assets and a reclassification of net non-bargaining pension plan liabilities of $2.7 million from current to long-term liabilities.

      At December 31, 2003, the Company also reduced both deferred tax assets and liabilities by $17.1 million to be consistent with the current year presentation.

      During 2003, the Company also made an additional reclassification to its consolidated cash flow statements for the years ended December 31, 2002 and 2001. These include separate detail within cash flows from operating activities of $108,000 and ($829,000) for foreign currency gains and (losses) incurred during 2002 and 2001, respectively.

      Accordingly, the Company has restated its consolidated balance sheet for the year ended December 31, 2002 and its consolidated statements of cash flows for the years ended December 31, 2002 and 2001.

F-14

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      A summary of the effects of the restatements on the Company’s consolidated balance sheet as of December 31, 2002 include (in thousands):

		December 31, 2002
		As Previously
		Reported		As Restated
Cash and cash equivalents		$	10,253	$	9,448
Restricted cash and cash equivalents			0		805
Short-term investments			60,732		0
Restricted investments			0		19,502
Deferred income taxes			39,826		22,705
Prepayments and other current assets			28,685		13,717
	Total current assets		203,079		129,760
Non-current restricted investments			0		41,230
Other non-current assets			20,525		35,493
	Total assets		485,508		468,387
Borrowings under revolving credit facility			0		24,635
Accrued liabilities			92,881		90,129
	Total current liabilities		140,251		162,134
Long-term debt, less current maturities			237,690		213,055
Deferred income taxes			27,746		10,625
Other long-term liabilities			62,040		64,792
	Total liabilities and stockholders’ equity		485,508		468,387

      A summary of the effects of the restatements on the Company’s consolidated statements of cash flows for the years ended December 31, 2002 and 2001 include (in thousands):

			December 31, 2002						December 31, 2001
			As						As
			Previously						Previously
			Reported			As Restated			Reported			As Restated
Adjustments to reconcile net loss to net cash provided by operating activities:
	Loss (gain) on disposal of assets and other, net			905			1,013			(3,890	)		(3,890	)
	Foreign exchange (gain) loss, net		$	0		$	(108	)	$	0		$	829
Change in operating assets and liabilities:
	Prepayments, other current assets and other assets			(9,786	)		(6,074	)		293			(3,419	)
	Short-term investments			4,062			0			(4,902	)		1,770
	Accrued liabilities and other liabilities			(1,556	)		(5,268	)		2,776			5,659
		Net cash provided by operating activities		58,485			54,423			28,032			34,704
Cash flows from investing activities:
	(Increase) decrease in restricted cash and cash equivalents			0			5,289			0			(6,094	)
	(Increase) decrease in restricted investments			0			4,062			0			(6,672	)

F-15

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			December 31, 2002						December 31, 2001
			As						As
			Previously						Previously
			Reported			As Restated			Reported			As Restated
		Net cash provided by investing activities		(11,420	)		(2,069	)		19,439			6,673
Cash flows from financing activities:
	Net cash provided by financing activities			(47,538	)		(47,538	)		(39,912	)		(39,912	)
	Net change in cash and cash equivalents			(290	)		4,999			8,170			2,076
Cash and cash equivalents at beginning of year				10,543			4,449			2,373			2,373
Cash and cash equivalents at end of year			$	10,253		$	9,448		$	10,543		$	4,449

(4) Recent Accounting Pronouncements

      In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the assets. The Company also records a corresponding asset that is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The Company adopted the provisions of SFAS No. 143 effective January 1, 2003. The adoption of SFAS No. 143 did not have a material effect on the financial position or results of operations of the Company.

      In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The Statement updates, clarifies and simplifies existing accounting pronouncements. The Statement requires that in certain circumstances previous items classified as extraordinary that do not meet the criteria in Opinion 30 must be reclassified. The Company early adopted this standard in 2002. Accordingly, the after-tax gain on early extinguishment of debt was not reported as an extraordinary item.

      In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. The Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). This Statement requires recognition of a liability for a cost associated with an exit or disposal activity when the liability is incurred, as opposed to when the entity commits to an exit plan under EITF No. 94-3. The Company adopted the provisions of SFAS No. 146 effective January 1, 2003. The adoption of SFAS No. 146 did not have a material effect on the financial position or results of operations of the Company.

      In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its

F-16

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

obligations under guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December 31, 2002. The Company adopted the recognition and measurement provisions of the Interpretation effective January 1, 2003 for guarantees issued or modified after December 31, 2002. The adoption of this Interpretation did not have a material impact on the financial position or results of operations of the Company.

      In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 46, Consolidation of Variable Interest Entities. FIN 46 requires companies to evaluate variable interest entities for specific characteristics to determine whether additional consolidation and disclosure requirements apply. FIN 46 is immediately applicable for variable interest entities created after January 31, 2003, and applies to the first fiscal year or interim period beginning after June 15, 2003 for variable interest entities acquired prior to February 1, 2003. The adoption of FIN 46 did not have a material impact on the financial position or results of operations of the Company. In December 2003, the FASB revised FIN 46 to exempt certain entities from its requirements and to clarify certain issues arising during the implementation of FIN 46. The adoption of this revised interpretation in the first quarter of 2004 is not expected to have a material impact on the Company’s financial statements.

      In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. This Statement clarifies under which circumstances a contract with an initial net investment meets the characteristics of a derivative and clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 amends certain other existing pronouncements. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and should be applied prospectively. The adoption of SFAS No. 149 did not have a material impact on the financial position, results of operations or cash flows of the Company.

      In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 also includes required disclosures for financial instruments within its scope. SFAS No. 150 was effective for instruments entered into or modified after May 31, 2003 and otherwise was effective as of the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on the financial position or results of operations of the Company.

      Effective July 1, 2003, the Company prospectively adopted Emerging Issues Task Force (“EITF”) No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. The adoption of EITF No. 00-21 did not have a material impact on the financial position or results of operations of the Company.

(5) Restricted Cash, Cash Equivalents and Investments

      The Company had $82.1 million and $61.5 million in restricted cash and cash equivalents and investments at December 31, 2003 and 2002, respectively, pledged to collateralize $82.1 million and $61.5 million of letters of credit at December 31, 2003 and 2002, respectively, for the settlement of insurance claims. In 2003, all of the Company’s investments, which consisted of federal, state, and municipal government obligations, corporate securities, and equity securities, were converted to cash and cash equivalents. All of the restricted cash, cash equivalents and investments were not available to the Company for operations in 2003 and 2002. At December 31, 2002, all of the investments were classified as trading securities as defined in SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities and provide collateral for letters of credit required by third-party insurance companies related to the settlement of insurance claims.

F-17

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      A summary of restricted investments at December 31, 2002 is as follows (in thousands):

			2002
					Unrealized Amounts
			Amortized
			Cost		Gains		Losses			Fair Value
Fixed maturities:
	United States government and United States government sponsored agencies		$	20,136	$	857	$	(5	)	$	20,988
	Asset and mortgage-backed securities			3,868		147		(73	)		3,942
	Corporate and other			23,030		1,342		(2	)		24,370
	Foreign government and foreign government sponsored debt securities			398		17		0			415
	Equity securities			11,982		790		(1,755	)		11,017
		Investments carrying value	$	59,414	$	3,153	$	(1,835	)	$	60,732

      The fair value of investment securities is generally based on quoted market prices.

      The cost of securities sold is based on the specific identification method. Sales of securities for the years ended December 31, 2003, 2002, and 2001 are summarized below (in thousands):

		2003			2002			2001
Fixed maturities:
	Cash proceeds	$	78,360		$	29,925		$	117,564
	Gross realized gains		2,206			766			1,407
	Gross realized losses		(616	)		(170	)		(136	)
Equity securities:
	Cash proceeds		13,506			5,889			4,920
	Gross realized gains		2,072			340			493
	Gross realized losses		(1,217	)		(4,057	)		(265	)

      Investment income (loss) consists of the following for the years ended December 31, 2003, 2002, and 2001 (in thousands):

	2003			2002			2001
Interest and dividend income	$	2,045		$	3,266		$	4,019
Realized gains (losses)		2,445			(3,121	)		1,499
Unrealized gains (losses)		(1,318	)		2,318			(1,644	)
	$	3,172		$	2,463		$	3,874

F-18

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(6) Prepayments and Other Current Assets

      Prepayments and other current assets consist of the following at December 31, 2003 and 2002 (in thousands):

	2003		2002
Tires on tractors and trailers	$	6,779	$	7,082
Prepaid insurance		2,067		1,773
Prepaid licenses		1,471		1,438
Other		2,327		3,424
	$	12,644	$	13,717

(7) Property and Equipment

      The detail of property and equipment at December 31, 2003 and 2002 is as follows (in thousands):

	2003		2002		Useful Lives
Tractors and trailers	$	433,627	$	421,615		4 to 10  years
Buildings and facilities (including leasehold improvements)		46,596		44,925		5 to 25  years
Land		12,344		11,958
Furniture, fixtures, and equipment		42,910		41,819		3 to 10  years
Service cars and equipment		3,731		3,111		3 to 10  years
		539,208		523,428
Less accumulated depreciation and amortization		383,635		346,765
	$	155,573	$	176,663

      Depreciation expense amounted to $45.4 million, $54.7 million, and $56.3 million for the years ended December 31, 2003, 2002, and 2001, respectively.

      The Company initiated an extensive remanufacturing program in 2002 in an effort to upgrade the existing fleet. The remanufacturing program includes structural improvements to tractors and trailers as well as engine replacements. The remanufacturing is expected to increase the useful life of a Rig to an average of 15 years. These remanufactured assets are depreciated over an estimated useful life of 6 years, using the straight-line method of depreciation. Total capital expenditures related to the remanufacturing program, including engine replacements, were approximately $14.8 and $19.0 million in 2003 and 2002, respectively.

      During 2002, the Company performed an analysis of certain fleet equipment that was recently idled. The assets were evaluated in order to determine if they were candidates for the fleet remanufacturing and engine replacement program. A total of 978 tractors and trailers were not considered viable candidates for the program and a decision was made that they would not be placed back into operations. As a result, depreciation was accelerated to the reduced useful life resulting in an additional charge of $2.1 million to depreciation expense in 2002. In 2003, disposal was completed for substantially all of the identified tractors and trailers.

(8) Goodwill

      In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, effective January 1, 2002, the Company no longer amortizes goodwill but reviews it annually for impairment, or on an interim basis if an event occurs or circumstances change that would reduce the fair value of goodwill below its carrying value. Goodwill amortization for the year ended December 31, 2001 was $3.5 million.

F-19

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The adoption of SFAS No. 142 required the Company to perform a transitional impairment assessment on all goodwill and indefinite lived intangible assets as of January 1, 2002. The Company compared the fair value of goodwill to carrying value. Fair values were derived using discounted cash flow analyses using a discount rate comparable to market rate of return on assets. The assumptions used in these discounted cash flow analyses were also consistent with the Company’s internal planning and represented the Company’s best estimates. The cumulative effect of this change in accounting principle was a decrease to the Axis Group goodwill due to less than expected performance by one of the business units. The non-cash, after-tax adjustment to net loss of $4.1 million is included in the accompanying statements of operations for the year ended December 31, 2002. The Company completed its annual reviews of goodwill during the fourth quarters of 2002 and 2003. No impairment was indicated.

      The Company’s reporting units are the Allied Automotive Group and the Axis Group. The following table sets forth the carrying value of goodwill by reporting unit as of December 31, 2003 and 2002 (in thousands):

	Allied
	Automotive
	Group		Axis Group		Total
Balance as of December 31, 2002	$	73,043	$	12,198	$	85,241
Increase in carrying amount due to a change in currency rates		4,940		22		4,962
Balance as of December 31, 2003	$	77,983	$	12,220	$	90,203

      The following table summarizes and reconciles net loss before the cumulative effect of the accounting change for the years ended December 31, 2003, 2002, and 2001, adjusted to exclude amortization expense recognized in such periods related to goodwill (in thousands, except per share data):

			2003			2002			2001
Reported net loss before cumulative effect of accounting change			$	(8,604	)	$	(3,434	)	$	(39,496	)
Add back after-tax amounts:
	Goodwill amortization			0			0			2,375
Adjusted net loss before cumulative effect of accounting change			$	(8,604	)	$	(3,434	)	$	(37,121	)
Loss per share before accounting change:
		Basic and diluted	$	(1.02	)	$	(0.41	)	$	(4.86	)
Goodwill amortization:
		Basic and diluted		0			0			0.29
Adjusted loss per share before accounting change:
		Basic and diluted	$	(1.02	)	$	(0.41	)	$	(4.57	)

F-20

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(9) Other Non-Current Assets

      Other non-current assets consist of the following at December 31, 2003 and 2002 (in thousands):

	2003		2002
Cash surrender value of life insurance	$	6,201	$	6,203
Deferred financing costs		9,718		10,377
Prepaid pension cost		14,166		14,968
Deposits and other		2,692		3,945
	$	32,777	$	35,493

(10) Equity Investments

      During 2001, Axis Group had interests in four joint ventures for the purpose of managing the distribution of vehicles in the United Kingdom and Brazil. Axis Group initially invested $10.4 million in the ventures.

      On December 10, 2001, Axis Group completed the sale of its interest in joint ventures held by the Company’s subsidiary, Axis International, Inc., for approximately $20.5 million in cash. The Company sold the following equity interests held by Axis Group: (i) 50% interest in Autocar Logistics Limited, a company registered in England and Wales, (ii) 50% interest in Ansa Logistics Limited, a company registered in England and Wales, and (iii) 32% interest in Vehicle Logistics Corporation BV, a company registered in the Netherlands. The gain on the sale of the Company’s interest in the joint ventures was $16.2 million.

      The Company accounted for the investments under the equity method of accounting with its share of the ventures’ earnings or loss, net of tax, reflected as equity in earnings of joint ventures, net of tax, in the consolidated statements of operations. 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 year ended December 31, 2001 is as follows (in thousands):

		2001
Current assets		$	29,509
Other assets			4,895
	Total assets	$	34,404
Current liabilities		$	30,875
Revenues		$	99,702
Operating income		$	5,974
Income from continuing operations		$	6,207
Net income		$	4,199

      The summarized financial information was derived from financial statements of Ansa Logistics Limited, which were audited by other auditors whose report thereon is dated March 27, 2002.

F-21

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      During 2001, Axis Group recorded an impairment charge of $10.0 million on its equity interest in the Brazilian joint venture. The Company sold its investment in Brazil for $3.0 million in the second quarter of 2002, which approximated the net book value. There was no equity in earnings or losses from this joint venture in 2003 or 2002.

(11) Accrued Liabilities and Other Long-Term Liabilities

      Accrued liabilities consists of the following at December 31, 2003 and 2002 (in thousands):

	2003		2002
Wages and benefits	$	35,180	$	41,903
Claims and insurance reserves		31,425		35,487
Other		14,332		12,739
	$	80,937	$	90,129

      As part of its turnaround initiatives, the Company implemented a program to achieve a significant reduction in corporate overhead expenses and to upgrade certain personnel. Targeted in the plan were workforce reductions as well as additional efforts to decrease discretionary spending and eliminate fixed costs. During 2003, the Company has continued to incur severance costs as part of its ongoing initiative to improve personnel quality and productivity. Accordingly, the Company terminated approximately 86 and 135 corporate and field employees with severance during 2003 and 2002, respectively. The following table summarizes the activity in the accrual for termination benefits for the years ended December 31, 2003 and 2002, (in thousands):

	2003			2002
Beginning balance	$	1,076		$	3,741
Additions to reserve charged to salaries, wages, and fringe benefits		1,043			2,321
Cash payments		(1,311	)		(4,986	)
Ending balance	$	808		$	1,076

      The accrual for termination benefits of $0.8 million and $1.1 million at December 31, 2003 and 2002, respectively, is included in accrued liabilities — wages and benefits above, and as such, the Company expects to pay the accrued benefits within the next twelve months.

      The long-term portion of claims and insurance reserves included in the balance sheets as other long-term liabilities was approximately $57.4 million and $61.0 million at December 31, 2003 and 2002, respectively.

(12) Lease Commitments

      The Company leases equipment, office space, computer equipment, and certain terminal facilities under noncancelable operating lease agreements that expire in various years through 2010. Rental expenses under these leases were approximately $12.3 million, $11.4 million, and $11.3 million for the years ended December 31, 2003, 2002, and 2001, respectively.

      Included in the noncancelable leases discussed above, the Company has operating lease commitments for approximately 387 Rigs. The term of the leases is seven years and expire between 2005 and 2010. The lease agreements contain residual guarantees of up to 20% of the original cost of the Rigs.

      The Company also leases certain terminal facilities under cancelable leases (i.e., month-to-month terms). The total rental expenses under these leases were approximately $2.4 million, $3.5 million, and $4.1 million for the years ended December 31, 2003, 2002, and 2001, respectively.

F-22

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company has sublease agreements with third parties for two leased buildings. The subleases expire between 2004 and 2007. Total sublease income earned during 2003, 2002, and 2001 was approximately $1.1 million, $1.0 million, and $1.0 million, respectively.

      Future minimum rental commitments and related sublease income under all noncancelable operating lease agreements, excluding lease agreements that expire within one year, are as follows as of December 31, 2003 (in thousands):

				Sublease
		Commitments		Income
2004		$	11,374	$	747
2005			10,669		552
2006			7,061		215
2007			4,660		148
2008			418		0
Thereafter			475		0
	Total	$	34,657	$	1,662

(13) Long-Term Debt and Borrowings Under Revolving Credit Facility

      Long-term debt consisted of the following at December 31, 2003 and 2002 (in thousands):

	2003			2002
Term Loan A	$	0		$	7,474
Term Loan B		0			25,684
Term Loan C		0			11,432
Term Loan D		0			29,250
New Term Loan		96,500			0
Senior notes		150,000			150,000
		246,500			223,840
Less current maturities of long-term debt		(16,374	)		(10,785	)
	$	230,126		$	213,055

      On September 30, 1997, the Company issued $150 million of 8 5/8% senior notes (the “Notes”) through a private placement. Subsequently, the Notes were registered with the Securities and Exchange Commission. The net proceeds from the Notes were used to fund the acquisition of Ryder Automotive Carrier Services, Inc. and RC Management Corp., pay related fees and expenses, and reduce outstanding indebtedness. The Notes are payable in quarterly installments of interest only, and mature on October 1, 2007.

      Borrowings under the Notes are general unsecured obligations of the Company. The Company’s obligations under the Notes are guaranteed by substantially all of the subsidiaries of the Company (the “Guarantor Subsidiaries”). Haul Insurance Ltd., Arrendadora de Equipo Para el Transporte de Automoviles, S. de R.L. de C.V. and Axis Logistica, S. de R.L. de C.V. do not guarantee the Company’s obligations under the Notes (the “Nonguarantor Subsidiaries”). There are no restrictions on the ability of Guarantors to make distributions to the Company.

      The Notes set forth a number of negative covenants, which are binding on the Company. The covenants limit the Company’s ability to, among other things, purchase or redeem stock, make dividend or other distributions, make investments, and incur or repay debt (with the exception of payment of interest or principal at stated maturity).

F-23

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      On February 25, 2002, the Company entered into a new credit facility which included four term loans (the “Term Loans”) totaling $82.75 million and a $120 million revolving credit facility. Proceeds from the Term Loans were used to repurchase $40 million of senior subordinated notes for $37.25 million. In conjunction with the extinguishment of these senior subordinated notes, the Company recognized a pre-tax gain of $2.75 million during 2002.

      The Company amended the facility in September 2003 (the Credit Facility and amendments thereto are collectively referred to as the “Credit Facility”). The Credit Facility as amended in September 2003 provides the Company with a $90 million revolving credit facility (the “Revolver”) and a $100 million term loan (the “New Term Loan”) which consolidated amounts outstanding under Term Loans A, B, C, and D as well as some of the borrowings under the existing Revolver. The New Term Loan is payable in quarterly installments of principal and interest. As part of the amendment, the maturity date of the Credit Facility was extended to September 2007. Although the Credit Facility has a maturity date of September 2007, the Company has classified the Revolver as current based on the requirement of EITF Issue No. 95-22, “Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that include both a Subjective Acceleration Clause and a Lock-Box Arrangement”.

      The interest rate for the Revolver is based upon the prime rate plus 1.5%, or LIBOR plus 4.5%, at management’s discretion, with a minimum interest rate of 6.5%. The Credit Facility, as amended, provides that the New Term Loan bears interest between 8.5% and 11.5% to be determined solely on the Company’s leverage as defined in the agreement. At December 31, 2003, the interest rates on the Revolver and the New Term Loan were 6.5% and 8.5%, respectively. Prior to the amendment, the interest rate on the Term Loans was based solely on a spread over the prime rate. Annual commitment fees are due on the undrawn portion of the commitment.

      The amount available under the $90 million Revolver may be reduced based on a calculation of Revolver collateral. At December 31, 2003, $80.8 million Revolver collateral was available. Approximately $29.3 million of the Revolver was committed under letters of credit primarily related to the settlement of insurance claims. At December 31, 2003, $0 loans were outstanding under the Revolver. Accordingly, the Company had approximately $51.5 million available under the Revolver as of December 31, 2003.

      Borrowings under the Company’s Credit Facility are secured by a first priority security interest on assets of the Company and certain of its subsidiaries, including a pledge of stock of certain subsidiaries and excluding restricted cash, cash equivalents and investments. If the Company were unable to repay any borrowing under its Credit Facility when due, the lenders thereunder would have the right to proceed against the collateral granted to them to secure the debt. Any default under the Company’s debt instruments, particularly any default that resulted in acceleration of indebtedness or foreclosure on collateral, would have a material adverse effect on the Company.

      The Credit Facility agreement sets forth a number of affirmative, negative, and financial covenants binding on the Company. The Credit Facility contains a “subjective acceleration clause” which permits the lenders to accelerate the maturity date of the Credit Facility if an event or development occurs which could reasonably be expected to have a “material adverse effect” on the Company, as defined in the Credit Facility. The negative covenants limit the ability of the Company to, among other things, incur debt, incur liens, make investments, sell assets, or declare or pay any dividends on its capital stock. The financial covenants require the Company to maintain a minimum consolidated earnings before interest, taxes, depreciation and amortization, and gains and losses on disposal of operating assets amount and also include a maximum leverage ratio. The Company was in compliance with the various covenants set forth in the Credit Facility at December 31, 2003. On March 30, 2004, the Company obtained the consent of its lenders under the Credit Facility to deliver its financial statements for the year ended December 31, 2003 on or before April 15, 2004.

      There can be no assurance that the Company will be able to comply with these covenants or its other debt covenants or that if it fails to do so, it will be able to obtain amendments to or waivers of such covenants.

F-24

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Failure of the Company to comply with covenants contained in its debt instruments, if not waived, or to adequately service debt obligations, could result in default under the Credit Facility. Any default under the Company’s debt instruments, particularly any default that results in an acceleration of indebtedness or foreclosure on collateral could have a material adverse effect on the Company.

      Future maturities of long-term debt are as follows at December 31, 2003 (in thousands):

2004	$	16,374
2005		13,500
2006		13,500
2007		203,126
	$	246,500

(14) Employee Benefits

     (a)  Pension and Postretirement Benefit Plans

      The Company maintains the Allied Defined Benefit Pension Plan, a trusteed noncontributory defined benefit pension plan for management and office personnel in the United States, under which, benefits are paid to eligible employees upon retirement based primarily on years of service and compensation levels at retirement. Contributions to the Plan reflect benefits attributed to employees’ services to date and services expected to be rendered in the future. The Company’s funding policy is to contribute annually at a rate that is intended to fund future service benefits at a level percentage of pay and past service benefits over a 30-year period. Effective April 30, 2002, the Company froze employee years of service and compensation levels in the Allied Defined Benefit Pension Plan.

      The Company also provides certain health care and life insurance benefits for eligible employees who retired prior to July 1, 1993 and their dependents, and for certain employees participating in the 1999 voluntary early retirement plan. Generally, the health care plan pays a stated percentage of most medical expenses reduced for any deductibles and payments by government programs or other group coverage. The life insurance plan pays a lump-sum death benefit based on the employee’s salary at retirement. These plans are unfunded. Employees retiring after July 1, 1993 are not participants in the 1999 voluntary early retirement plan and are not entitled to any postretirement medical or life insurance benefits, under this plan.

      In 1997, in connection with the Ryder acquisition, the Company assumed the obligations of a postretirement benefit plan to provide retired employees with certain health care and life insurance benefits. Substantially all employees employed at the time of the acquisition and not covered by union-administered medical plans and who had retired as of September 30, 1997 were eligible for these benefits. Benefits were generally provided to qualified retirees under age 65 and eligible dependents. Employees retiring after September 30, 1997 are not entitled to any postretirement medical or life insurance benefits. Furthermore, the Company took over two defined pension plans for a certain terminal, which are currently active. One of the plan’s benefits provides a monthly benefit based on years of service upon retirement. The other plan provides benefits to eligible employees upon retirement based primarily on years of service and compensation levels at retirement.

      All disclosures related to the Company’s pension and postretirement benefit plans have been prepared in accordance with SFAS No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits, as revised in December 2003.

      The Company uses a measurement date of December 31 for the two postretirement benefit plans and for one of the defined benefit pension plans. The Company uses a measurement date of September 30 for the other two defined benefit pension plans.

F-25

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The change in the projected benefit obligation of the defined benefit pension plans and the postretirement benefit plans consisted of the following during fiscal years 2003 and 2002 (in thousands):

			Defined Benefit						Postretirement Benefit
			Pension Plans						Plans
			2003			2002			2003			2002
Change in benefit obligation:
	Benefit obligation at beginning of fiscal year		$	40,170		$	37,306		$	9,911		$	9,626
		Service cost		89			91			52			0
		Interest cost		2,691			2,738			616			636
		Plan amendments and other		0			0			0			(4	)
		Actuarial loss (gain)		3,512			3,192			164			1,099
		Canada Plan vested benefits transfer		0			(20	)		0			0
		Benefits paid		(2,815	)		(3,137	)		(2,133	)		(1,446	)
	Benefit obligation at end of fiscal year		$	43,647		$	40,170		$	8,610		$	9,911

      The change in plan assets and funded status of the defined benefit pension plans and the postretirement benefit plans consisted of the following during fiscal years 2003 and 2002 (in thousands):

			Defined Benefit						Postretirement Benefit
			Pension Plans						Plans
			2003			2002			2003			2002
Change in plan assets:
	Fair value of plan assets at beginning of year		$	38,089		$	33,310		$	0		$	0
		Actual return on plan assets		8,815			(3,749	)		0			0
		Employer contributions		747			11,685			2,133			1,446
		Canada Plan vested benefits transfer		0			(20	)		0			0
		Benefits paid		(2,815	)		(3,137	)		(2,133	)		(1,446	)
	Fair value of plan assets at end of year		$	44,836		$	38,089		$	0		$	0
Reconciliation of funded status:
	Funded status excess (deficiency)			1,189			(2,080	)		(8,610	)		(9,911	)
	Unrecognized actuarial loss			13,256			17,408			1,938			1,844
	Unrecognized prior service cost			183			231			(630	)		(700	)
	Unrecognized transition asset			0			(20	)		0			0
	Additional minimum liability			(2,886	)		(3,323	)		0			0
	Net asset (liability) recognized		$	11,742		$	12,216		$	(7,302	)	$	(8,767	)
Amounts recognized in the consolidated balance sheets consist of:
		Pension asset	$	14,166		$	14,968		$	0		$	0
		Pension and postretirement benefit obligations		(2,424	)		(2,752	)		(7,302	)		(8,767	)
			$	11,742		$	12,216		$	(7,302	)	$	(8,767	)

      The accumulated benefit obligation for the defined benefit pension plans was the same as the projected benefit obligation at December 31, 2003 and 2002.

F-26

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company recognizes a minimum pension liability for under funded pension plans. This liability represents the amount by which the accumulated benefit obligation exceeds the sum of the fair market value of plan assets and accrued amounts previously recorded. The additional liability may be offset by an intangible asset, to the extent of previously unrecognized prior service cost, or a reduction of stockholders’ equity. The Company recorded an additional minimum liability of $2.9 million and $3.3 million as of December 31, 2003 and 2002, respectively. An intangible asset of $0.6 million and $0.7 million was recorded as of December 31, 2003 and 2002, respectively.

      The Company has one defined benefit plan in which the fair value of plan assets exceeds the benefit obligation. The value of the assets and obligation was $39.5 million and $35.9 million, respectively, at December 31, 2003, and $33.7 million and $32.9 million at December 31, 2002. The Company has two defined benefit plans in which the fair values of the plan assets are less than the benefit obligation. The aggregate values of the assets and obligations were $5.4 million and $7.8 million, respectively, at December 31, 2003, and $4.4 million and $7.3 million at December 31, 2002.

      The following assumptions were used in determining the actuarial present value of the projected pension benefit obligation and postretirement benefit obligation at December 31, 2003 and 2002:

	Defined Benefit						Postretirement
	Pension Plans						Benefit Plans
	2003			2002			2003			2002
Weighted average discount rate		6.25% and 6.00	%		6.75	%		6.25	%		6.75	%
Weighted average expected long-term rate of return on assets		8.50	%		8.50	%		N/A			N/A
Weighted average rate of compensation increase		N/A			N/A			N/A			N/A

      The following assumptions were used in determining the net benefit cost at December 31, 2003 and 2002:

	Defined Benefit					Postretirement
	Pension Plans					Benefit Plans
	2003		2002			2003			2002
Weighted average discount rate		6.75%		7.50	%		6.75	%		7.75	%
Weighted average expected long-term rate of return on assets		8.50%		8.50	%		N/A			N/A
Weighted average rate of compensation increase		N/A		N/A			N/A			N/A

      To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio.

F-27

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The net periodic benefit cost recognized for the defined benefit pension plans and the postretirement benefit plans includes the following components at December 31, 2003 and 2002 (in thousands):

			Defined Benefit						Postretirement
			Pension Plans						Benefit Plans
			2003			2002			2003			2002
Components of net periodic benefit cost:
	Service cost		$	89		$	91		$	52		$	0
	Interest cost			2,691			2,738			616			636
	Expected return on plan assets			(3,119	)		(2,754	)		0			0
	Amortization of unrecognized net actuarial loss (gain)			1,415			499			71			(17	)
	Amortization of prior service cost			48			89			(70	)		(35	)
	Amortization of transition asset			(20	)		(50	)		0			0
	Recognized actuarial loss			216			38			0			0
		Net periodic benefit cost	$	1,320		$	651		$	669		$	584

      The weighted average annual assumed rate of increase in the per capita cost of covered benefits (i.e., health care trend rate) for the health plans is 8.33% and 10.33% for participants prior to age 65 and after age 65, respectively, for 2003 grading to 5.5% over 5 years and 8 years, respectively. The weighted average annual assumed rate of increase in the per capital cost of covered benefits (i.e., health care trend rate) for the health plans is 9.0% and 11% for participants prior to age 65 and after age 65, respectively for 2002 grading to 5.5% over 6 years and 9 years, respectively. A 1% change in the assumed trend rate would have the following effect at December 31, 2003 (in thousands):

	1% Increase		1% Decrease
Accumulated postretirement benefit obligation	$	1,035	$	(879	)
Total of service and interest cost	$	64	$	(54	)

      The weighted average asset allocation of the pension and postretirement benefit plans is as follows at December 31, 2003 and 2002:

		Defined Benefit
		Pension Plans
Asset Category		2003			2002
Cash			.9	%		.6	%
Fixed income			25.0	%		22.1	%
Core equity			34.3	%		35.5	%
Real estate investment trust			9.9	%		10.3	%
Small cap			15.9	%		16.5	%
International equity			14.0	%		15.0	%
	Total		100.0	%		100.0	%

      The Company’s investment strategy for the plans is to maximize the long-term rate of return on plan assets within an acceptable level of risk in order to secure its obligation to pay benefits to qualifying employees while minimizing and stabilizing expense and contributions. The asset allocation for each plan is reviewed periodically for balancing of the asset mix within predetermined ranges by asset category. Risk is managed for each plan through these predetermined ranges by asset category, diversification of asset classes, periodic review of the investment policies, and monitoring of fund managers for compliance with policies and performance as compared to a benchmark portfolio.

F-28

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company expects to contribute $0.7 million to its defined benefit pension plans and $2.2 million for its postretirement benefit plans in 2004.

      A substantial number of the Company’s employees are covered by union-sponsored, collectively bargained, multiemployer pension plans. The Company contributed and charged to expense approximately $39.1 million, $40.0 million, and $41.5 million for the years ended December 31, 2003, 2002, and 2001, respectively, for such plans. These contributions are determined in accordance with the provisions of negotiated labor contracts and are generally based on the number of man-hours worked. In the event the Company withdraws from participating in these plans, the Company could incur a withdrawal liability. If withdrawal were to occur, the liability would be actuarially determined based on factors at the time of withdrawal and as such, the liability is not readily determinable as of December 31, 2003. In the opinion of management, the Company has no current intention of withdrawing from the plans.

      Also, a substantial number of the Company’s employees are covered by union-sponsored, collectively bargained, multiemployer health and welfare benefit plans. The Company contributed and charged to expense approximately $44.3 million, $41.1 million, and $40.5 million in 2003, 2002, and 2001, respectively, in connection with these plans. These required contributions are determined in accordance with the provisions of negotiated labor contracts.

     (b)  401(k) Plan

      The Company has a 401(k) plan covering all of its employees in the United States. The Company eliminated its 401(k) employer contribution in 2001, re-instated the employer contribution in 2002 for employees below the level of Vice President, and again eliminated the employer contribution in 2003. The Company contributes the lesser of 3% of participant wages or $1,000 per year for each nonbargaining unit participant in the plan, excluding employees at the Vice President level and above. The Company contributed approximately $0, $400,000, and $0 to the plan during the years ended December 31, 2003, 2002, and 2001, respectively. The Company did not pay administrative expenses for the 401(k) plan in fiscal years 2003, 2002 or 2001.

     (c)  Employee Stock Purchase Plan

      During December 1998, the Company approved an Employee Stock Purchase Plan (the ESPP). The ESPP allows eligible employees, as defined, the right to purchase common stock of the Company on a quarterly basis at 85% of the lower of the fair market value on the first business day of the calendar quarter or on the last business day of the calendar quarter. In 2003 and 2002, there were 1,050,000 and 700,000 shares, respectively, of the Company’s common stock reserved under the ESPP, of which 131,000 and 160,000 shares, respectively, were issued to employees during 2003 and 2002. At December 31, 2003, the remaining shares available under the ESPP are 363,000.

     (d)  Long-term Incentive Plan

      The Company has a long-term incentive plan which allows the issuance of grants or awards of incentive stock options, restricted stock, stock appreciation rights, performance units and performance shares to employees and directors of the Company to acquire up to 2,000,000 shares of the Company’s common stock. See additional disclosure at Note (19).

F-29

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(15) Income Taxes

      The loss before income taxes and cumulative effect of change in accounting principle consisted of the following (in thousands):

		2003			2002			2001
U.S.		$	104		$	(7,224	)	$	(62,872	)
Foreign			(2,442	)		2,661			2,083
	Total loss before tax and cumulative effect of change in accounting principle	$	(2,338	)	$	(4,563	)	$	(60,789	)

      The following summarizes the components of the income tax benefit (in thousands):

			2003			2002			2001
Current:
	Federal		$	5		$	616		$	0
	State			(60	)		342			(38	)
	Foreign			(593	)		(455	)		448
Deferred:
	Federal			6,335			(137	)		(18,015	)
	State			364			(1,720	)		(3,190	)
	Foreign			215			225			(498	)
		Total income tax expense (benefit)	$	6,266		$	(1,129	)	$	(21,293	)

      The provision for income taxes differs from the amounts computed by applying federal statutory rates of 34% due to the following (in thousands):

		2003			2002			2001
Benefit computed at the federal statutory rate		$	(795	)	$	(1,551	)	$	(20,668	)
State income taxes, net of federal income tax effects			200			(909	)		(2,130	)
Tax benefit associated with sale of joint ventures			0			0			(1,151	)
Amortization of goodwill			0			0			524
Nondeductible expenses			415			623			909
Equity income in affiliates, reflected net of tax			0			0			(964	)
Reversal of previously accrued taxes			0			0			(2,221	)
Valuation allowance			6,830			410			4,717
Other, net			(384	)		298			(309	)
	Total income tax expense (benefit)	$	6,266		$	(1,129	)	$	(21,293	)

F-30

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The tax effect of significant temporary differences representing deferred tax assets and liabilities at December 31, 2003 and 2002 is as follows (in thousands):

			2003			2002
Deferred tax assets:
	Claims and insurance expense		$	32,866		$	34,159
	Accrued compensation expense			4,545			5,610
	Postretirement benefits			2,722			3,353
	Other liabilities not currently deductible			3,310			3,567
	Bad debt allowances			1,269			2,078
	Tax carryforwards			18,271			17,167
	Cumulative other comprehensive income			1,889			5,965
	Other, net			552			689
		Total deferred tax assets		65,424			72,588
Valuation allowance				(14,918	)		(7,115	)
Deferred tax liabilities:
	Prepaids currently deductible			(3,373	)		(3,413	)
	Depreciation and amortization			(38,276	)		(42,288	)
	Other, net			(8,857	)		(7,692	)
		Total deferred tax liabilities		(50,506	)		(53,393	)
		Net deferred tax assets (liabilities)	$	0		$	12,080

      The net changes in the total valuation allowance for the years ended December 31, 2003 and 2002 were increases of $7.8 million and $2.4 million, respectively. Included in the 2003 increase is a $6.8 million non-cash charge to record a valuation allowance against its net deferred tax assets due to net losses in 2003 and prior years based on management’s conclusion that it is not “more likely than not” that the deferred tax assets will be recovered.

      At December 31, 2003, the Company had federal net operating loss carryforwards of $16.8 million. The federal and state loss carryforwards expire at various dates up to 2023. The Company had federal capital loss carryforwards of $6.0 million that expire in 2007. In addition, $7.0 million of tax credit carryforwards are available to reduce future income taxes. Of the tax credit carryforwards, $6.3 million consists of foreign tax credits that expire from 2004 to 2008 and $0.7 million consists of alternative minimum tax credits that have no expiration.

      In the normal course of business, we are subject to audits from the federal, state, Canadian provincial and other tax authorities regarding various tax liabilities. The Canadian taxing authorities are currently auditing the years 1998 through 2001 for our Canadian entities. In March 2001, the Internal Revenue Service closed its examination of the Company’s tax returns for years up to and including 1997. The examination did not result in any additional tax liabilities. As a result of completing the audits, the Company reversed a portion of the previously accrued taxes, increasing the tax benefit for the year ended December 31, 2001 by $2.2 million.

      These audits may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. The amount ultimately paid upon resolution of issues raised may differ from the amount accrued. We believe that taxes accrued on the consolidated balance sheet fairly represent the amount of future tax liability due.

F-31

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(16) Supplemental Disclosures of Cash Flow Information

	2003			2002		2001
Cash paid during the year for interest	$	24,562		$	26,607	$	37,726
Cash paid during the year for income taxes, net of refunds		(739	)		876		1,520

(17) Commitments and Contingencies

     (a)  Customer Contracts

      The Company negotiates fixed rates with its customers for the delivery of vehicles. The delivery rates are based on contract agreements that expire at various dates through March 2006. During 2001, the Company renegotiated rates for all of its customers to include an administrative processing fee for services provided. In 2004, the Company renewed its vehicle delivery agreement with General Motors Corporation. The renewal extended the expiration date to March 2006. The new contract included certain commitments by both the Company and General Motors. The Company also renewed its contracts with Toyota and Honda for expiration in November 2004 and March 2005, respectively.

      The contracts with UPS Autogistics, DaimlerChrysler and Toyota can be terminated by location for any reason or no reason based on 60 to 150 days’ notice. The contract with General Motors can be terminated by location for failure to comply with service and quality standards set forth in the contract. The Company has 30 days to cure any such noncompliance by location and General Motors may terminate by location on 30 days notice following a failure to cure.

     (b)  Letters of Credit

      At December 31, 2003, the Company has agreements with third parties that provide for $111.4 million of letters of credit primarily relating to settlements of insurance claims and reserves and support for a line of credit at one of the Company’s foreign subsidiaries. $29.3 million of these letters of credit are issued by the Company and are secured by available borrowings on the revolving credit agreement and $82.1 million are issued by the Company’s wholly owned captive insurance subsidiary Haul Insurance Limited and are collateralized by $82.1 million of restricted cash and cash equivalents held by the captive. These letters of credit are renewed by the Company annually.

     (c)  Litigation, Claims, and Assessments

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

      Since its last annual filing, Allied has settled all outstanding litigation with Ryder System, Inc. The litigation was previously disclosed in company filings. The litigation arose in connection with the acquisition by the Company of Ryder Automotive Carrier Services, Inc. and RC Management Corp. from Ryder System, Inc. in September 1997, and consisted of three actions. In Ryder Systems, Inc. v. Allied Holdings, Inc., AH Acquisition Corp. and Allied Automotive Group (the “Ryder Action”), Ryder alleged that the Company failed to substitute itself for Ryder under an insurance policy covering third-party claims and with various state agencies that regulate matters such as self-insured workers’ compensation. Ryder also alleged that the Company was obligated to take certain steps to transfer from Ryder to itself the ownership and administrative responsibility for two pension plans. The other two actions, Gateway Development & Manufacturing, Inc. v. Commercial Carriers, Inc., et al. and Commercial Carriers, Inc. v. Gateway Development & Manufacturing, Inc., et al. (collectively the “Gateway/ CCI Actions”), both centered around the contention

F-32

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

that the Company breached legal duties with respect to a failed business transaction involving Gateway Development, Ryder Truck Rental, Inc., and Ryder System.

      Under terms of the settlement agreement, Ryder System has paid the Company approximately $1.4 million, and Ryder’s insurance carrier has paid the Company approximately $1.6 million. The Company had previously recorded a receivable of $1.0 million from Ryder System, Inc. and its insurance carrier, and recorded the remaining $2.0 million of the amount received as income. The payment from Ryder represents the settlement of various claims and disputes that have arisen since the 1997 acquisition. The payment from Ryder’s insurance carrier represents a reimbursement for amounts paid by the Company in excess of the self-insured retention for workers’ compensation and automobile liability claims assumed in the acquisition of Ryder’s Automotive Carrier Group. The Company and Ryder System have agreed to dismiss all litigation each party had brought against the other as part of the settlement, which has resulted in the complete dismissal of the Ryder Action. Except with respect to expenses already incurred, Ryder has agreed to indemnify Allied for all costs, including legal fees and any potential judgment against Allied, arising out of the Gateway/CCI Actions. Therefore, although the Gateway/CCI Actions remain pending, the settlement will provide Allied with indemnification from Ryder System as to exposure to future legal fees or any potential judgment against the Company.

      As part of the settlement agreement, the Company has issued a letter of credit for $3.5 million in favor of Ryder System and has agreed to increase the letter of credit by $1 million each quarter starting in the fourth quarter 2003 through the third quarter of 2005. The letter of credit may only be drawn by Ryder System if the Company fails to pay workers’ compensation and liability claims assumed by the Company in the Ryder Automotive Carrier Group acquisition. The Company has provided the letter of credit in favor of Ryder System because Ryder has issued a letter of credit to its insurance carrier relating to the workers’ compensation and liability claims assumed by the Company. By September 30, 2005, and periodically thereafter, an actuarial valuation will be made to determine the remaining outstanding amount of workers’ compensation and liability claims assumed by Allied, and the letter of credit issued by the Company in favor of Ryder System will be adjusted accordingly. (See (b) of this Note.)

     (d)  Employment Agreements

      The Company has entered into employment agreements with certain executive officers of the Company. The agreements provide for compensation to the officers in the form of annual base salaries and bonuses based on performance criteria. The employment agreements also provide for severance benefits upon the occurrence of certain events, including a change in control, as defined in such agreements.

     (e)  Purchase and Service Contract Commitments

      In April 2001, the Company entered into a five-year commitment with IBM to provide its mainframe computer processing services. In December 2003, the Company amended the agreement. The amended agreement is a ten-year commitment, commencing February 2004, for IBM to provide additional services to manage applications for EDI, network services, technical services, and applications development and support. Payments under this contract, prior to its amendment, amounted to approximately $5.9 million, $5.3 million, and $4.9 million for the years ended December 31, 2003, 2002 and 2001, respectively. The agreement includes outsourcing at determinable prices defined within the agreement. The purchase commitment over the life of the agreement totals $108.6 million as follows:

			Payments Due by Year
			Less Than						More Than
Contractual Obligations	Total		1 Year		1-3 Years		4-5 Years		5 Years
Purchase Obligations	$	108,558	$	10,045	$	20,714	$	21,347	$	56,452

F-33

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     (f)  Collective Bargaining Agreements

      On March 24, 2003, the Company successfully negotiated the renewal of its contract with its employees represented by the Teamsters Union in Eastern Canada. Allied Systems (Canada) Company and the Teamsters Union in Eastern Canada had been operating under a contract that expired on October 31, 2002. The new contract will expire on October 31, 2005. The contract covers the drivers, mechanics, and yard personnel represented by the Teamsters Union in the provinces of Ontario and Quebec, and represents approximately 70% of the Company’s total bargaining unit employees in Canada.

      Employees of the Company’s subsidiary, Allied Systems, which represents approximately 80% of the Company’s U.S. employees, are represented by the International Brotherhood of Teamsters Union in the United States. A new collective bargaining agreement, which covers the Company’s employees represented by the Teamsters, commenced on June 1, 2003 and will expire on May 31, 2008.

(18) Industry Segment and Geographic Information

      In accordance with the requirements of SFAS No. 131, Disclosure About Segments of an Enterprise and Related Information, the Company has identified two reportable segments through which it conducts its operating activities: Allied Automotive Group and Axis Group. These two segments reflect the internal reporting used by management to assess performance and allocate resources. Allied Automotive Group is engaged in the business of transporting automobiles, light trucks, and SUVs from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships. Axis Group, through its subsidiaries, is engaged in the business of securing and managing vehicle distribution services, automobile inspections, auction and yard management services, intra-modal transport, vehicle tracking, vehicle accessorization, and dealer preparatory services for the automotive industry.

			2003			2002			2001
			(in thousands)
Revenues — unaffiliated customers:
	Allied Automotive Group		$	836,835		$	868,041		$	868,222
	Axis Group			28,628			30,019			28,545
	Corporate/other			0			0			0
		Total	$	865,463		$	898,060		$	896,767
Depreciation and amortization:
	Allied Automotive Group		$	39,427		$	48,984		$	53,187
	Axis Group			2,887			2,956			3,813
	Corporate/other			3,242			2,940			3,358
		Total	$	45,556		$	54,880		$	60,358
Operating profit (loss):
	Allied Automotive Group		$	11,655		$	9,021		$	(48,459	)
	Axis Group			4,476			4,312			1,870
	Corporate/other			2,352			7,675			8,880
		Total		18,483			21,008			(37,709	)
Reconciling items:
	Equity income in joint ventures			0			0			4,072
	Gain on sale of equity investment in joint ventures			0			0			16,230
	Write down of equity investment in joint venture			0			0			(10,042	)
	Interest expense			(29,138	)		(30,627	)		(37,574	)

F-34

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			2003			2002			2001
			(in thousands)
	Investment income			3,172			2,463			3,874
	Foreign exchange gain (loss)			3,169			108			(829	)
	Other, net			1,976			2,485			1,189
		Loss before income taxes and cumulative effect of change in accounting principle	$	(2,338	)	$	(4,563	)	$	(60,789	)
Total Assets:
	Allied Automotive Group		$	279,208		$	299,339		$	353,558
	Axis Group			31,993			35,663			43,881
	Corporate/other			144,534			133,385			135,953
		Total	$	455,735		$	468,387		$	533,392
Capital expenditures:
	Allied Automotive Group		$	17,959		$	21,416		$	19,198
	Axis Group			299			217			2,198
	Corporate/other			297			153			67
		Total	$	18,555		$	21,786		$	21,463

      Geographic financial information for 2003, 2002, and 2001 is as follows (in thousands):

		2003		2002		2001
Revenues:
	United States	$	707,068	$	746,777	$	747,018
	Canada		158,395		151,283		149,749
		$	865,463	$	898,060	$	896,767
Long-lived assets:
	United States	$	212,242	$	239,087	$	269,509
	Canada		66,311		58,310		59,581
		$	278,553	$	297,397	$	329,090

      Revenues are attributed to the respective countries based on the location of the origination terminal.

      Substantially all of the Company’s revenues and receivables are generated from the automotive industry.

      In 2003, 2002, and 2001, approximately 72%, 73%, and 68%, respectively, of the Allied Automotive Group’s revenues were derived from the three largest domestic automobile manufacturers. In 2003, 2002, and 2001, General Motors Corporation accounted for approximately 36%, 36%, and 28%, respectively, of revenues; Ford Motor Company accounted for approximately 23%, 24%, and 25%, respectively, of revenues; and DaimlerChrysler Corporation accounted for approximately 13%, 13%, and 15%, respectively, of revenues. As of December 31, 2003 and 2002, General Motors Corporation accounted for approximately 20% and 26%, respectively, of receivables; Ford Motor Company accounted for approximately 29% and 32%, respectively, of receivables; and DaimlerChrysler Corporation accounted for approximately 10% and 9%, respectively, of receivables.

F-35

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(19) Stockholders’ Equity

      The Company has authorized 5,000,000 shares of preferred stock with no par value. No shares have been issued, and therefore, there were no shares outstanding at December 31, 2003 and 2002. The board of directors has the authority to issue these shares and to fix dividends, voting and conversion rights, redemption provisions, liquidation preferences, and other rights and restrictions.

      In 2003, the Company reserved 225,000 shares of common stock under the 2003 Stock Issuance Plan. In August 2003, the Company awarded 250 shares of common stock to each full time nonbargaining U.S. employee other than those at the level of Senior Vice President or above. The shares vest one year from the date of issuance. In addition, the Company agreed to award 250 shares of common stock in August 2004 to each full time nonbargaining unit employee in Canada as of August 1, 2003 other than those at the level of Senior Vice President or above. In connection with the shares granted, the Company recorded compensation expense of $0.3 million in 2003. Shares granted, net of reductions for employee terminations, were 185,250 as of December 31, 2003, and the shares were valued at $3.42 on the date of grant.

      The Company has a long-term incentive plan which allows the issuance of grants or awards of incentive stock options, restricted stock, stock appreciation rights, performance units, and performance shares to employees and directors of the Company to acquire up to 2,000,000 shares of the Company’s common stock.

      No restricted stock was granted during 2003, 2002, or 2001, other than shares granted under the 2003 Stock Issuance Plan. During 2003, 2002, and 2001, 3,590, 12,478, and 92,094 shares, respectively, of restricted stock were canceled. Compensation expense is recorded net of forfeitures over the vesting period of the restricted stock. In connection with the awards of the restricted stock, the Company recorded compensation (benefit) expense of $0.1 million, ($0.06 million), and $0.2 million, in 2003, 2002, and 2001, respectively. As of December 31, 2003, 2002, and 2001, restricted stock shares outstanding were 170,993, 172,534, and 202,985, respectively.

F-36

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      In addition, the Company has granted nonqualified and incentive stock options under the long-term incentive plan. Options granted become exercisable after one year in 20%, 33 1/3%, or 50% increments per year and expire ten years from the date of the grant.

							Weighted
					Option Price		Average
		Shares			(Per Share)		Exercise Price
Outstanding as of December 31, 2000			290,300		$	7.06 — 17.13	$	8.37
	Granted		850,000		$	1.80 —  2.77	$	2.56
	Canceled		(120,000	)	$	7.06 — 17.13	$	8.03
Outstanding as of December 31, 2001			1,020,300		$	1.80 — 11.75	$	3.56
	Granted		648,000		$	2.60 —  5.15	$	4.01
	Canceled		(56,000	)	$	2.35 — 11.75	$	5.58
Outstanding as of December 31, 2002			1,612,300		$	1.80 — 11.75	$	3.45
	Granted		138,000		$	3.15 —  3.51	$	3.36
	Canceled		(10,333	)	$	2.60 —  5.15	$	4.58
	Exercised		(30,000	)		$3.70	$	3.70
Outstanding as of December 31, 2003			1,709,967		$	1.80 — 11.75	$	3.65

	2003		2002		2001
Options exercisable at year-end		1,122,319		531,631		146,964
Weighted average exercise price of options exercisable at year-end	$	3.67	$	4.31	$	8.85
Per share weighted average fair value of options granted during the year	$	3.36	$	4.01	$	2.57

      The following table sets forth the exercise price range, number of shares, weighted average exercise price, and remaining contractual lives by groups of similar price and grant date:

		Options Outstanding at						Options Exercisable at
		December 31, 2003						December 31, 2003
						Weighted
				Weighted		Average				Weighted
				Average		Remaining				Average
		Number of		Exercise		Contractual		Number of		Exercise
Range of Exercise Prices		Shares		Price		Life		Shares		Price
						(Years)
	$1.80 —  3.70		1,256,000	$	2.76		8.03		867,676	$	2.67
	$4.30 —  7.06		370,667	$	5.31		7.88		171,343	$	5.79
	$9.50 — 11.75		83,300	$	9.72		2.39		83,300	$	9.72
			1,709,967				7.72		1,122,319

F-37

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(20) Quarterly Financial Data (Unaudited)

		2003
		First			Second		Third			Fourth
		(In thousands, except per share amounts)
Revenues		$	213,592		$	230,078	$	197,089		$	224,704
Operating (loss) income			(1,716	)		7,552		3,147			9,500
Net (loss) income			(5,664	)		3,372		(1,975	)		(4,337	)
Net (loss) earnings per share:
	Basic	$	(0.67	)	$	0.40	$	(0.23	)	$	(0.51	)
	Diluted		(0.67	)		0.39		(0.23	)		(0.51	)
Average shares outstanding:
	Basic		8,409			8,462		8,507			8,533
	Diluted		8,409			8,700		8,507			8,533

		2002
		First			Second		Third			Fourth
		(In thousands, except per share amounts)
Revenues		$	213,259		$	238,984	$	212,985		$	232,832
Operating income (loss)			3,765			9,897		(1,400	)		8,746
Net (loss) income(1)			(5,248	)		2,109		(6,482	)		2,095
Net (loss) earnings per share:
	Basic(1)	$	(0.64	)	$	0.25	$	(0.78	)	$	0.25
	Diluted(1)		(0.64	)		0.24		(0.78	)		0.24
Average shares outstanding:
	Basic		8,252			8,300		8,324			8,360
	Diluted		8,252			8,781		8,324			8,646

(1)  The quarter ended March 31, 2002 includes the cumulative effect of a change in accounting principle, net of taxes, of $(4,092), or $(.50) per share.

      Earnings per share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly earnings per share in 2003 and 2002 does not equal the total computed for the year.

(21) Supplemental Guarantor Information

      The following consolidating balance sheet information, statements of operations information, and statements of cash flows information present the financial statement information of the parent company and the combined financial statements information 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. See note (12) for a description of the Notes and a listing of the Nonguarantor subsidiaries.

F-38

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The supplemental consolidating balance sheet information as of December 31, 2003 is as follows (in thousands):

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Current assets:
	Cash and cash equivalents		$	549		$	1,166		$	433		$	0		$	2,148
	Restricted cash and cash equivalents			0			0			26,267			0			26,267
	Receivables, net of allowance for doubtful accounts			0			50,842			4,268			0			55,110
	Inventories			0			4,983			0			0			4,983
	Deferred tax asset — current			17,518			2,695			0			0			20,213
	Prepayments and other current assets			1,750			10,860			34			0			12,644
		Total current assets		19,817			70,546			31,002			0			121,365
Property and equipment, net				6,695			145,912			2,966			0			155,573
	Goodwill, net			1,515			88,688			0			0			90,203
Other assets:
	Restricted cash and cash equivalents			0			0			55,817			0			55,817
	Other			30,327			1,679			771			0			32,777
	Deferred tax asset — noncurrent			14,875			0			0			(14,875	)		0
	Intercompany receivables			63,954			0			(10,677	)		(53,277	)		0
	Investment in subsidiaries			32,631			5,626			0			(38,257	)		0
		Total other assets		141,787			7,305			45,911			(106,409	)		88,594
		Total assets	$	169,814		$	312,451		$	79,879		$	(106,409	)	$	455,735
Current liabilities:
	Current maturities of long-term debt		$	0		$	16,374		$	0		$	0		$	16,374
	Borrowings under revolving credit facility			0			0			0			0			0
	Trade accounts payable			2,175			32,025			72			0			34,272
	Intercompany payables			0			53,277			0			(53,277	)		0
	Accrued liabilities			8,825			56,614			15,498			0			80,937
		Total current liabilities		11,000			158,290			15,570			(53,277	)		131,583
Long-term debt, less current maturities				150,000			80,126			0			0			230,126
Postretirement benefits other than pensions				0			5,302			0			0			5,302
Deferred income taxes				0			35,088			0			(14,875	)		20,213
Other long-term liabilities				0			27,011			32,686			0			59,697
Stockholders’ equity:
	Common stock, no par value			0			0			0			0			0
	Additional paid-in capital			47,511			166,130			2,488			(168,618	)		47,511
	Treasury stock			(707	)		0			0			0			(707	)
	Retained (deficit) earnings			(35,024	)		(148,516	)		29,135			119,381			(35,024	)
	Cumulative other comprehensive loss, net of tax			(2,966	)		(10,980	)		0			10,980			(2,966	)
		Total stockholders’ equity		8,814			6,634			31,623			(38,257	)		8,814
		Total liabilities and stockholders’ equity	$	169,814		$	312,451		$	79,879		$	(106,409	)	$	455,735

F-39

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The supplemental consolidating balance sheet information as of December 31, 2002 is as follows (in thousands):

			Allied		Guarantor		Nonguarantor
			Holdings		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Current assets:
	Cash and cash equivalents		$	7	$	1,936	$	7,505	$	0		$	9,448
	Restricted cash and cash equivalents			0		0		805		0			805
	Restricted short-term investments			0		0		19,502		0			19,502
	Receivables, net of allowance for doubtful accounts			0		56,003		2,509		0			58,512
	Inventories			0		5,071		0		0			5,071
	Deferred tax asset — current			20,494		2,211		0		0			22,705
	Prepayments and other current assets			2,677		10,826		214		0			13,717
		Total current assets		23,178		76,047		30,535		0			129,760
Property and equipment, net				8,957		164,501		3,205		0			176,663
	Goodwill, net			1,515		83,726		0		0			85,241
Other assets:
	Restricted short-term investments			0		0		41,230		0			41,230
	Other			31,828		2,743		922		0			35,493
	Deferred tax asset — noncurrent			7,445		0		0		(7,445	)		0
	Intercompany receivables			55,952		0		91		(56,043	)		0
	Investment in subsidiaries			28,466		5,111		0		(33,577	)		0
		Total other assets		123,691		7,854		42,243		(97,065	)		76,723
		Total assets	$	157,341	$	332,128	$	75,983	$	(97,065	)	$	468,387
Current liabilities:
	Current maturities of long-term debt		$	0	$	10,785	$	0	$	0		$	10,785
	Borrowings under revolving credit facility			0		24,635		0		0			24,635
	Trade accounts payable			3,362		32,930		293		0			36,585
	Intercompany payables			0		56,043		0		(56,043	)		0
	Accrued liabilities			9,755		61,083		19,291		0			90,129
		Total current liabilities		13,117		185,476		19,584		(56,043	)		162,134

F-40

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries		Eliminations			Consolidated
Long-term debt, less current maturities				150,000			63,055			0		0			213,055
Postretirement benefits other than pensions				0			7,467			0		0			7,467
Deferred income taxes				(17,121	)		34,743			448		(7,445	)		10,625
Other long-term liabilities				1,031			34,324			29,437		0			64,792
Stockholders’ equity:
	Common stock, no par value			0			0			0		0			0
	Additional paid-in capital			46,801			166,130			2,488		168,618			46,801
	Treasury stock			(707	)		0			0		0			(707	)
	Retained (deficit) earnings			(26,420	)		(146,278	)		24,026		122,252			(26,420	)
	Cumulative other comprehensive loss, net of tax			(9,360	)		(12,789	)		0		12,789			(9,360	)
		Total stockholders’ equity		10,314			7,063			26,514		(33,577	)		10,314
		Total liabilities and stockholders’ equity	$	157,341		$	332,128		$	75,983	$	(97,065	)	$	468,387

      The supplemental consolidating statement of operations information for the year ended December 31, 2003 is as follows (in thousands):

		Allied		Guarantor		Nonguarantor
		Holdings		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Revenues		$	36,519	$	864,045	$	36,706	$	(71,807	)	$	865,463
Operating expenses:
	Salaries, wages, and fringe benefits		13,174		456,366		0		0			469,540
	Operating supplies and expenses		9,226		129,091		195		0			138,512
	Purchased transportation		0		99,604		0		0			99,604
	Insurance and claims		0		41,163		32,294		(35,288	)		38,168
	Operating taxes and licenses		244		30,132		0		0			30,376
	Depreciation and amortization		3,242		41,843		471		0			45,556
	Rents		1,523		4,561		6		0			6,090
	Communications and utilities		4,451		2,673		14		0			7,138

F-41

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	Other operating expenses			5,066			41,848			276			(36,519	)		10,671
	Loss on disposal of operating assets, net			0			1,325			0			0			1,325
		Total operating expenses		36,926			848,606			33,256			(71,807	)		846,980
		Operating income (loss)		(407	)		15,440			3,450			0			18,483
Other income (expense):
	Interest expense			(7,109	)		(21,780	)		(249	)		0			(29,138	)
	Investment income			0			68			3,104			0			3,172
	Foreign exchange gain (loss)			0			3,203			(34	)		0			3,169
	Other, net			1,976			0			0			0			1,976
	Intercompany dividends			0			0			0			0			0
	Equity in net income of subsidiaries			2,355			515			0			(2,870	)		0
				(2,778	)		(17,994	)		2,821			(2,870	)		(20,821	)
(Loss) income before income taxes				(3,185	)		(2,554	)		6,271			(2,870	)		(2,338	)
Income tax benefit (expense)				(5,419	)		315			(1,162	)		0			(6,266	)
		Net (loss) income	$	(8,604	)	$	(2,239	)	$	5,109		$	(2,870	)	$	(8,604	)

      The supplemental consolidating statement of operations information for the year ended December 31, 2002 is as follows (in thousands):

		Allied		Guarantor		Nonguarantor
		Holdings		Subsidiaries		Subsidiaries		Eliminations			Consolidated
Revenues		$	26,466	$	896,574	$	38,005	$	(62,985	)	$	898,060
Operating expenses:
	Salaries, wages, and fringe benefits		9,162		474,383		0		0			483,545
	Operating supplies and expenses		4,613		133,725		204		0			138,542
	Purchased transportation		0		99,109		0		0			99,109
	Insurance and claims		57		49,104		30,858		(36,519	)		43,500
	Operating taxes and licenses		226		33,357		0		0			33,583
	Depreciation and amortization		2,940		51,469		471		0			54,880
	Rents		1,846		4,489		7		0			6,342
	Communications and utilities		1,401		5,007		11		0			6,419

F-42

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	Other operating expenses			3,841			32,620			389			(26,466	)		10,384
	Loss on disposal of operating assets, net			0			541			207			0			748
		Total operating expenses		24,086			883,804			32,147			(62,985	)		877,052
		Operating income		2,380			12,770			5,858			0			21,008
Other income (expense):
	Interest expense			(8,116	)		(22,482	)		(210	)		181			(30,627	)
	Investment income			1			60			2,583			(181	)		2,463
	Foreign exchange gain (loss)			(8	)		196			(80	)		0			108
	Gain on early extinguishment of debt			2,750			0			0			0			2,750
	Other, net			0			(265	)		0			0			(265	)
	Intercompany dividends			1,144			(1,144	)		0			0			0
	Equity in net (loss) income of subsidiaries			(16,675	)		415			0			16,260			0
				(20,904	)		(23,220	)		2,293			16,260			(25,571	)
(Loss) income before income taxes and cumulative effect of change in accounting principle				(18,524	)		(10,450	)		8,151			16,260			(4,563	)
Income tax benefit (expense)				10,998			704			(10,573	)		0			1,129
Loss before cumulative effect of change in accounting principle				(7,526	)		(9,746	)		(2,422	)		16,260			(3,434	)
Cumulative effect of change in accounting principle, net of tax				0			(4,092	)		0			0			(4,092	)
		Net loss	$	(7,526	)	$	(13,838	)	$	(2,422	)	$	16,260		$	(7,526	)

F-43

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The supplemental consolidating statement of operations information for the year ended December 31, 2001 is as follows (in thousands):

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Revenues			$	30,291		$	895,147		$	37,989		$	(66,660	)	$	896,767
Operating expenses:
	Salaries, wages, and fringe benefits			11,776			504,140			0			0			515,916
	Operating supplies and expenses			1,698			147,287			126			0			149,111
	Purchased transportation			0			97,756			0			0			97,756
	Insurance and claims			53			57,394			29,759			(36,369	)		50,837
	Operating taxes and licenses			119			33,143			0			0			33,262
	Depreciation and amortization			3,358			56,255			745			0			60,358
	Rents			2,034			4,773			6			0			6,813
	Communications and utilities			365			6,645			12			0			7,022
	Other operating expenses			8,134			37,991			292			(30,291	)		16,126
	Gain on disposal of operating assets, net			0			(2,725	)		0			0			(2,725	)
		Total operating expenses		27,537			942,659			30,940			(66,660	)		934,476
		Operating income (loss)		2,754			(47,512	)		7,049			0			(37,709	)
Other income (expense):
	Equity in earnings of joint ventures, net of tax			0			3,897			175			0			4,072
	Gain on sale of joint ventures			0			16,230			0			0			16,230
	Write down of joint ventures			0			(1,518	)		(8,524	)		0			(10,042	)
	Interest expense			(4,982	)		(32,425	)		(219	)		52			(37,574	)
	Investment income			91			183			3,652			(52	)		3,874
	Foreign exchange gain (loss)			0			(835	)		6			0			(829	)
	Other, net			0			1,195			(6	)		0			1,189
	Intercompany dividends			6,215			(6,215	)		0			0			0
	Equity in net loss of subsidiaries			(65,769	)		0			0			65,769			0
				(64,445	)		(19,488	)		(4,916	)		65,769			(23,080	)
(Loss) income before income taxes				(61,691	)		(67,000	)		2,133			65,769			(60,789	)
Income tax benefit (expense)				22,195			2,674			(3,576	)		0			21,293
		Net loss	$	(39,496	)	$	(64,326	)	$	(1,443	)	$	65,769		$	(39,496	)

F-44

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The supplemental consolidating statement of cash flows information for the year ended December 31, 2003 is as follows (in thousands):

					Allied			Guarantor			Nonguarantor
					Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
	Net (loss) income				$	(8,604	)	$	(2,239	)	$	5,109		$	(2,870	)	$	(8,604	)
	Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
		Interest expense paid in kind				0			1,065			0			0			1,065
		Amortization of deferred financing costs				3,697			0			0			0			3,697
		Depreciation and amortization				3,242			41,843			471			0			45,556
		Loss on disposal of assets and other, net				0			1,325			0			0			1,325
		Foreign exchange gain (loss), net				0			(3,203	)		34			0			(3,169	)
		Deferred income taxes				17,250			(9,888	)		(448	)		0			6,914
		Compensation expense related to stock options and grants				260			0			0			0			260
		Amortization of Teamsters Union contract costs				0			1,000			0			0			1,000
		Equity in earnings of subsidiaries				(2,355	)		(515	)		0			2,870			0
		Change in operating assets and liabilities:
			Receivables, net of allowance for doubtful accounts			0			7,017			(1,759	)		0			5,258
			Inventories			0			272			0			0			272
			Prepayments and other current assets			1,767			(126	)		180			0			1,821
			Trade accounts payable			(1,187	)		(2,104	)		(221	)		0			(3,512	)
			Intercompany receivables (payables), net			(8,002	)		(2,766	)		10,768			0			0
			Accrued liabilities			(1,961	)		(13,981	)		(544	)		0			(16,486	)
				Net cash provided by (used in) operating activities		4,107			17,700			13,590			0			35,397
Cash flows from investing activities:
	Purchases of property and equipment					(297	)		(18,143	)		(115	)		0			(18,555	)
	Intercompany sale of property and equipment					(682	)		682			0			0			0
	Proceeds from sale of property and equipment					0			685			0			0			685

F-45

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations		Consolidated
	(Increase) Decrease in restricted cash and cash equivalents			0			0			(81,279	)		0		(81,279	)
	(Increase) Decrease in restricted investments			0			0			60,732			0		60,732
	Capital contribution			0			0			0			0		0
	Return of capital			0			0			0			0		0
	Decrease in cash surrender value of life insurance			2			0			0			0		2
		Net cash (used in) provided by investing activities		(977	)		(16,776	)		(20,662	)		0		(38,415	)
Cash flows from financing activities:
	(Repayment) additions to revolving credit facility, net		$	0		$	(24,635	)	$	0		$	0	$	(24,635	)
	Additions to long-term debt			0			99,875			0			0		99,875
	Repayment of long-term debt			0			(78,280	)		0			0		(78,280	)
	Payment of deferred financing costs			(3,038	)		0			0			0		(3,038	)
	Proceeds from issuance of common stock			450			0			0			0		450
		Net cash used in financing activities		(2,588	)		(3,040	)		0			0		(5,628	)
Effect of exchange rate changes on cash and cash equivalents				0			1,346			0			0		1,346
		Net (decrease) increase in cash and cash equivalents		542			(770	)		(7,072	)		0		(7,300	)
Cash and cash equivalents at beginning of year				7			1,936			7,505			0		9,448
Cash and cash equivalents at end of year			$	549		$	1,166		$	433		$	0	$	2,148

      The supplemental consolidating statement of cash flows information for the year ended December 31, 2002 is as follows (in thousands):

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
	Net loss		$	(7,526	)	$	(13,838	)	$	(2,422	)	$	16,260	$	(7,526	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Gain on early extinguishment of debt		(2,750	)		0			0			0		(2,750	)
		Interest expense paid in kind		0			1,115			0			0		1,115
		Amortization of deferred financing costs		4,004			0			0			0		4,004

F-46

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

					Allied			Guarantor			Nonguarantor
					Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
		Depreciation and amortization				2,940			51,469			471			0			54,880
		Loss on disposal of assets and other, net				0			806			207			0			1,013
		Foreign exchange loss (gain), net				0			(108	)		0			0			(108	)
		Cumulative effect of change in accounting principle				0			4,092			0			0			4,092
		Deferred income taxes				454			(2,786	)		700			0			(1,632	)
		Compensation expense related to stock options and grants				(57	)		0			0			0			(57	)
		Amortization of Teamsters Union contract costs				0			2,400			0			0			2,400
		Equity in net loss (income) of subsidiaries				16,675			(415	)		0			(16,260	)		0
		Change in operating assets and liabilities:
			Receivables, net of allowance for doubtful accounts			24			13,296			347			0			13,667
			Inventories			0			265			5			0			270
			Prepayments and other current assets			(12,772	)		6,797			(99	)		0			(6,074	)
			Trade accounts payable			609			(4,385	)		173			0			(3,603	)
			Intercompany receivables (payables), net			176,797			(170,385	)		(6,412	)		0			0
			Accrued liabilities			(3,628	)		(1,971	)		331			0			(5,268	)
				Net cash provided by (used in) operating activities		174,770			(113,648	)		(6,699	)		0			54,423
Cash flows from investing activities:
	Purchases of property and equipment					(152	)		(21,629	)		(5	)		0			(21,786	)
	Intercompany sale of property and equipment					(2	)		2			0			0			0
	Proceeds from sale of property and equipment					0			4,725			0			0			4,725
	(Increase) Decrease in restricted cash and cash equivalents					0			0			5,289			0			5,289
	(Increase) Decrease in restricted investments					0			0			4,062			0			4,062
	Proceeds from sale of joint ventures					0			0			3,000			0			3,000
	Capital contribution					(73,178	)		73,100			78			0			0
	Return of capital					40,881			(39,484	)		(1,397	)		0			0
	Decrease in cash surrender value of life insurance					2,641			0			0			0			2,641

F-47

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries		Eliminations		Consolidated
		Net cash (used in) provided by investing activities		(29,810	)		16,714			11,027		0		(2,069	)
Cash flows from financing activities:
	(Repayment) additions to revolving credit facility, net		$	(98,900	)	$	24,637		$	0	$	0	$	(74,263	)
	Additions to long-term debt			0			82,750			0		0		82,750
	Repayment of long-term debt			(37,498	)		(10,037	)		0		0		(47,535	)
	Payment of deferred financing costs			(9,262	)		0			0		0		(9,262	)
	Proceeds from issuance of common stock			338			0			0		0		338
	Other, net			160			274			0		0		434
		Net cash (used in) provided by financing activities		(145,162	)		97,624			0		0		(47,538	)
Effect of exchange rate changes on cash and cash equivalents				0			183			0		0		183
		Net increase (decrease) in cash and cash equivalents		(202	)		873			4,328		0		4,999
Cash and cash equivalents at beginning of year				209			1,063			3,177		0		4,449
Cash and cash equivalents at end of year			$	7		$	1,936		$	7,505	$	0	$	9,448

      The supplemental consolidating statement of cash flows information for the year ended December 31, 2001 is as follows (in thousands):

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
	Net loss		$	(39,496	)	$	(64,326	)	$	(1,443	)	$	65,769	$	(39,496	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Interest expense paid in kind		248			0			0			0		248
		Amortization of deferred financing costs		4,795			0			0			0		4,795
		Depreciation and amortization		3,358			56,255			745			0		60,358
		Gain on disposal of assets and other, net		0			(3,890	)		0			0		(3,890	)
		Foreign exchange (gain) loss, net		0			829			0			0		829
		Gain on sale of joint ventures		0			(16,230	)		0			0		(16,230	)
		Write down of joint ventures		0			1,518			8,524			0		10,042
		Deferred income taxes		(19,471	)		(2,562	)		330			0		(21,703	)
		Compensation expense related to stock options and grants		181			0			0			0		181

F-48

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

					Allied			Guarantor			Nonguarantor
					Holdings			Subsidiaries			Subsidiaries			Eliminations			Consolidated
		Equity in earnings of joint ventures				0			(3,897	)		(175	)		0			(4,072	)
		Amortization of Teamsters Union contract costs				0			2,403			0			0			2,403
		Equity in net loss of subsidiaries				65,769			0			0			(65,769	)		0
Change in operating assets and liabilities:
			Receivables, net of allowance for doubtful accounts		$	781		$	42,469		$	(2,571	)	$	0		$	40,679
			Inventories			0			1,985			(5	)		0			1,980
			Prepayments and other current assets			(2,899	)		(2,779	)		2,259			0			(3,419	)
			Short-term investments			0			0			1,770			0			1,770
			Trade accounts payable			1,163			(5,836	)		(757	)		0			(5,430	)
			Intercompany receivables (payables), net			27,023			(29,228	)		2,205			0			0
			Accrued liabilities			(2,983	)		4,596			4,046			0			5,659
				Net cash provided by (used in) operating activities		38,469			(18,693	)		14,928			0			34,704
Cash flows from investing activities:
	Purchases of property and equipment					(67	)		(20,741	)		(655	)		0			(21,463	)
	Intercompany sale of property and equipment					1,423			(1,423	)		0			0			0
	Proceeds from sale of property and equipment					0			11,762			0			0			11,762
	(Increase) Decrease in restricted cash and cash equivalents					0			0			(6,094	)		0			(6,094	)
	(Increase) Decrease in restricted investments					0			0			(6,672	)		0			(6,672	)
	Investment in joint ventures					0			0			(464	)		0			(464	)
	Cash received from joint ventures					0			8,624			0			0			8,624
	Proceeds from sale of joint ventures					0			20,560			0			0			20,560
	Decrease in cash surrender value of life insurance					420			0			0			0			420
				Net cash provided by (used in) investing activities		1,776			18,782			(13,885	)		0			6,673
Cash flows from financing activities:
	Repayments to revolving credit facility, net					(35,528	)		(438	)		0			0			(35,966	)
	Repayment of long-term debt					0			(109	)		0			0			(109	)
	Payment of deferred financing costs					(3,574	)		0			0			0			(3,574	)
	Proceeds from exercise of stock options					349			0			0			0			349

F-49

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Allied			Guarantor			Nonguarantor
			Holdings			Subsidiaries			Subsidiaries		Eliminations		Consolidated
	Other, net			(70	)		(1,153	)		611		0		(612	)
		Net cash used in financing activities		(38,823	)		(1,700	)		611		0		(39,912	)
Effect of exchange rate changes on cash and cash equivalents				0			611			0		0		611
		Net increase (decrease) in cash and cash equivalents		1,422			(1,000	)		1,654		0		2,076
Cash and cash equivalents at beginning of year				(1,213	)		2,063			1,523		0		2,373
Cash and cash equivalents at end of year			$	209		$	1,063		$	3,177	$	0	$	4,449

F-50

      This is a copy of the report previously issued in connection with the Company’s 2001 Annual Report and has not been reissued by Arthur Andersen LLP. The 2001 financial statements have been restated.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE

To Allied Holdings, Inc.:

      We have audited in accordance with auditing standards generally accepted in the United States, the consolidated financial statements included in Allied Holdings, Inc.’s 2001 annual report to stockholders and this Form 10-K, and have issued our report thereon dated February 25, 2002, except with respect to the matter discussed in the fourth paragraph of Note 10, as to which the date is March 27, 2002. Our audit was made for the purpose of forming an opinion on those financial statements taken as a whole. The schedule listed in Item 14 of this Form 10-K is the responsibility of the Company’s management, is presented for purposes of complying with the Securities and Exchange Commission’s rules, and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen, LLP

Atlanta, Georgia

February 25, 2002

(except with respect to the

matter discussed in the

fourth paragraph of Note 10

of the financial

statements referred to

above, as to which the date is

March 27, 2002)

S-1

ALLIED HOLDINGS, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2003, 2002, and 2001

				Additions(a)
		Balance at		Charged to
		Beginning of		Costs and					Balance at
Classification		Period		Expense		Deductions(b)			End of Year
		(In thousands)
Allowance for doubtful accounts:
	Year ended December 31, 2003	$	5,587		2,024		(4,036	)	$	3,575
	Year ended December 31, 2002		11,058		1,517		(6,988	)		5,587
	Year ended December 31, 2001		4,071		7,250		(263	)		11,058

(a)	Additions are recorded as reduction of revenue as they primarily represent billing adjustments.
(b)	Write-off of uncollectible accounts.

S-2 EX-10.13 3 g87601exv10w13.txt EX-10.13 EMPLOYMENT AGREEMENT EXHIBIT 10.13 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the ______ day of October, 2003, to be effective as of the 6th day of October, 2003 (the "Effective Date"), by and between ROBERT CHAMBERS ("Employee") and AXIS GROUP, INC., a Georgia corporation ("Employer"). WITNESSETH: WHEREAS, Employer, through the Affiliates (as hereinafter defined), is engaged in the transportation of automobiles and light trucks from the manufacturer to retailers and others, including nontraditional car haulers involved in the vehicle distribution process and providing logistics and distribution services to the new and used vehicle distribution market and other segments of the automotive industry (the "Business"); WHEREAS, Employee has management skills of which Employer desires to avail itself; and WHEREAS, Employer and Employee deem it to their respective best interest to outline the duties and obligations, each to the other, by executing this Employment Agreement, NOW, THEREFORE, for and in consideration of the covenants and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer and Employee hereby mutually agree as follows: 1. DEFINITIONS. (a) "Affiliate" means Allied Holdings, Inc., CT Group, Inc., CT Services, Inc., Cordin Transport, Inc., Axis North America, Inc., Axis (Canada) Company, and the other subsidiaries of Axis Group, Inc. (b) "Base Salary" means the annual salary payable, and as adjusted, pursuant to paragraph 4. (c) "Cause" means (i) the commission by Employee of an act of fraud, misappropriation, dishonesty, embezzlement gross negligence, or willful misconduct in connection with Employee's employment hereunder; (ii) criminal conduct of Employee which results in a felony conviction of such Employee, or the Employee's offering a plea of nolo contendre to a felony; (iii) Employee's continuing and/or willful failure to perform Employee's duties or obligations for Employer as outlined in this Agreement, or Employee's breach of this Agreement; (iv) Employees prolonged absence, without the consent of Employer, other than as a result of Employee's Disability or permitted absence or vacation, which is not cured within ten (10) days after written notice from Employer's Board of Directors thereof; (v) engaging in activities prohibited by Paragraphs 1 11,12,13, or 14 hereof; (vi) engaging in any activity which could constitute grounds for termination for cause by Employer or any of its subsidiaries or affiliates. (d) "Disability," with respect to Employee, shall conclusively be deemed to have occurred (i) if Employee shall be receiving payments pursuant to a policy of long-term disability income insurance; or (ii) if Employee shall have no disability income coverage then in force, then if any insurance company insuring Employee's life shall agree to waive the premiums due on such policy pursuant to a disability waiver of premium provision in the contract of life insurance; or (iii) if Employee shall have no disability waiver of premium provision in any contract of life insurance, then if Employee shall be receiving disability benefits from or through the Social Security Administration; provided, however, that in the event Employee's disability shall, otherwise and in good faith, come into question (and, for purposes of this provision, "disability" shall mean the permanent and continuous inability of Employee to perform substantially all of the duties being performed immediately prior to Employee's disability coming into question) for a period of not less than one hundred twenty (120) consecutive days, and a dispute shall arise with respect thereto, then Employee (or Employee's personal representatives) shall appoint a medical doctor, Employer shall appoint a medical doctor, and said two (2) doctors shall, in turn, appoint a third party medical doctor who shall examine Employee to determine the question of disability and whose determination shall be binding upon all parties to this Agreement. (e) "Restricted Period" means the period commencing as of the date hereof and ending on that date twelve (12) months after the termination of Employee's employment with Employer for any reason, whether voluntary or involuntary. 2. TERM. Subject to the provisions hereinafter set forth, the term of this Agreement shall commence as of the Effective Date and shall expire two years after the Effective Date (the "Initial Term") and shall extend for additional terms of one (1) year (the "Renewal Term") provided either party may give written notice of termination not less than (90) days prior to the end of a Term unless the Agreement is terminated pursuant to paragraph 8 of this Agreement. As used herein, "Term" shall mean the then current Initial Term or Renewal Term, as the case may be. 3. DUTIES. (a) Employee shall, during the Term, serve as and be designated President of Employer having duties, responsibilities, powers and authority which shall include operating control and profit and loss statement responsibility for Employer, including its operating subsidiaries, preparing budgets, responsibility for organic sales growth, recommendations related to capital 2 expenditures and new business opportunities, employee selection, retention, dismissal and promotion and customer relationship management, and related matters which are consistent with a position of like designation, but subject to the direction of the President and Chief Executive Officer of Allied Holdings, Inc. The Employee shall perform such executive, managerial and administrative duties as the President and Chief Executive Officer of Allied Holdings, Inc. may, from time to time, reasonably request. Employee shall not be required to permanently relocate outside the Detroit, MI area. (b) During the Term, Employee shall devote substantially all of Employee's business time, energy and skill to performing the duties of Employee's employment (vacations as provided hereunder and reasonable absences because of illness excepted), shall faithfully and industriously perform such duties, and shall use Employee's best efforts to follow and implement all management policies and decisions of Employer. Employee shall not become personally involved in the management or operations of any other company, partnership, proprietorship or other entity, other than any Affiliate, without the prior written consent of Employer; provided, however, that so long as it does not interfere with Employee's employment hereunder, Employee may (i) serve as a director, officer or partner in a company that does not compete with the Business of Employer and the Affiliates so long as the aggregate amount of time spent by Employee in all such capacities shall not exceed twenty (20) hours per month, and (ii) serve as an officer or director of, or otherwise participate in, educational, welfare, social, religious, civic, trade and industry-related organizations. 4. BASE SALARY. For and in consideration of the services to be rendered by Employee pursuant to this Agreement, Employer shall pay to Employee, for each year during the Term, an annual salary of Three Hundred Forty Thousand Dollars ($340,000) (the "Base Salary"), in installments in accordance with Employer's payroll practices. Employee's salary shall be reviewed by the Board of Directors of Employer annually and may be increased, but not decreased, at the sole discretion of the Board. 5. BONUS COMPENSATION. (a) Employee shall be eligible to participate in Employer's bonus plan. The target bonus of Employee for 2003 shall be 75% of Employee's base salary which will be based on 15% of the financial results of Allied Holdings and 85% or the financial results of Axis and any other joint venture or other arrangement entered into by Axis. Notwithstanding the foregoing, Employer shall pay to Employee a guaranteed bonus payout for the calendar year ending December 31, 2004 in the amount of Fifty Thousand Dollars ($50,000), to be paid no earlier than January 1, 2005 and no later than January 15, 2005, with such amount to be credited 3 against any bonus which may be due Employee for the year ending December 31, 2004 under the Employer's bonus plan. The target bonus for year 2004 and 2005 shall be 100% of Employee's base salary which will be based on 15% of the financial results of Allied Holdings and 85% or the financial results of Axis and any other joint venture or other arrangement entered into by Axis. Such bonuses shall be paid no later than March 31, 2005 and March 31, 2006. (b) Employee shall be entitled to participate in all long term incentive plans, including the amended and restated long term incentive plan and similar plans as are now or hereafter provided by Employer or its Affiliates in accordance with the terms of such plans and consistent with persons serving in a senior management capacity. 6. OTHER BENEFITS. During the Term, Employer shall provide the following benefits to Employee: (a) Employee and Employee's immediate family shall be entitled to participate in all group benefit programs, including, without limitation, medical and hospitalization benefit programs, dental care, life insurance or other group benefit plans of Employer as are now or hereafter provided by Employer or any Affiliate, in each case in accordance with the terms and conditions of each such plan; (b) Employee shall be supplied with a Company vehicle or in the alternative be provided with a monthly car allowance in the amount of $700.00 per month; and (c) Employee shall be reimbursed for actual, reasonable, ordinary and necessary business expenses incurred in the performance of Employee's duties hereunder including country club expenses expended in connection with the entertaining of clients. Employee shall be reimbursed for such expenses upon presentation and approval of expense statements or written vouchers or other supporting documents as may be reasonably requested in advance by Employer and in accordance with Employer's practices in effect from time to time. (d) Employer shall reimburse Employee for actual and reasonable expenses incurred by Employee in the event Employee voluntarily relocates to metropolitan Atlanta, GA during the term of this Agreement in accordance with the Company's moving and relocation policies as provided to Employee. Employee shall be reimbursed for such expenses upon presentation and approval of expense statements or written vouchers or other supporting documents as may be reasonably requested in advance by Employer which approval shall not be unreasonably withheld or delayed; and 4 (e) Employer shall pay to Employee an additional payment (the "Gross-Up Payment") in an amount sufficient to fully reimburse Employee with respect to all federal, state and local taxes actually paid by Employee with respect to the payment set forth in clause (d) hereof to the extent the payment represents reimbursement for actual and reasonable relocation expenses. The Gross-Up Payment shall not be unreasonably withheld or delayed by Employer. 7. VACATION. Employee shall receive no fewer than five (5) weeks paid vacation for each year during the Term. Scheduling of vacation shall be subject to the prior approval of Employer's President (which approval shall not be unreasonably withheld). Vacation time shall not accrue, and in the event any vacation time for any year shall not be used by Employee prior to the end of such year or prior to termination of employment, it shall be forfeited, unless vacation time not taken is directed by the President. 8. TERMINATION. Anything herein to the contrary notwithstanding in Section 2 or any other Section of this Agreement, Employee's employment hereunder shall terminate upon the first to occur of any of the following events: (a) Employee's Disability; or (b) Employee's death; or (c) Employer terminating Employee's employment without Cause hereunder prior to expiration of the Term or ten (10) days prior written notice; or (d) Employee voluntarily terminating his employment for any reason or no reason upon thirty (30) days prior written notice to Employer. (e) Employee being terminated for Cause; or (f) Employer filing a petition for protection or relief from creditors under the Federal Bankruptcy Law, or any petition shall be filed against Employer under the Federal Bankruptcy Law, or Employer shall admit in writing its inability to pay its debts or shall make an assignment for the benefit of creditors, or a petition or application for the appointment of a receiver or liquidator or custodian of Employer is filed, or Employer shall seek a composition with creditors. (g) Any material change by Employer in Employee's function, duties, and responsibility, from the position and attributes described in Paragraph 3 hereof, unless agreed to by Employee, or any requirement that Employee perform substantially all of his duties outside the metropolitan Detroit, Michigan area, unless Employee voluntarily elects to relocate to the Metropolitan Atlanta, Georgia area, provided however that Employee's office shall continue to be located in the metropolitan Detroit, Michigan area until such time as he has voluntarily elected to relocate his residence to the Metropolitan Atlanta, Georgia area. 5 9. SEVERANCE BENEFITS. (a) In the event Employee's employment is terminated (1) by Employer without Cause pursuant to Paragraph 8(c) hereunder, (2) pursuant to Section 8(e), (3) pursuant to Section 8(f) (4) because Employer elects not to renew this Agreement beyond the Initial Term or any Renewal Term, or (5) by Employer within one (1) year following any "change of control" of Employer for any reason other than a conviction involving a felony, Employee shall be entitled to severance benefits in an amount equal to the greater of i) fifty-two (52) weeks of Base Salary, or(ii) the severance amount due to Employee in accordance with the severance plan or guidelines of Employer in effect on the date of termination. For purposes of this Agreement, change of control shall mean any change in control or ownership whereby Employer is reorganized, merged, or consolidated with one or more corporations as a result of which the owners of all of the outstanding shares of common stock immediately prior to such reorganization, merger or consolidation own in the aggregate less than seventy percent (70%) of the outstanding shares of common stock of the Employer or any other entity into which Employer shall be merged or consolidated immediately following the consummation thereof (hereinafter, "Employer's successor-in-interest"), or (ii) the sale, transfer or other disposition of all or substantially all of the assets or more than thirty percent (30%) of the then outstanding shares of common stock of Employer is effectuated, other than as a result of a merger or other combination of Employer and an Affiliate, or (iii) the acquisition by any "person" as used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 of beneficial ownership (within the meaning of Rule 13d_3 promulgated under the Exchange Act) of twenty percent (20%) or more of the combined voting power of Employer's then outstanding voting securities is effectuated; or (iv) the individuals who, as of the date of execution of this Agreement, are members of the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least two-thirds (2/3) of the Board; provided, however, that if the election, or nomination for election by the shareholders of any new director was approved by a vote of at least two-thirds (2/3) of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board. (b) In the event Employee's employment is terminated (1) by Employer without Cause pursuant to 8(c), (2) pursuant to Section 8(e), (3) pursuant to Section 8(f), (4) because Employer elects not to renew this Agreement upon the expiration of the Initial Term or any Renewal Term, or (5) by Employer within one (1) year following any "change of control" of Employer for any reason other than a conviction involving a felony, Employee shall be entitled to continue medical and dental coverage as in effect on the last day of employment. Employer shall provide coverage by 6 paying Employee's COBRA premiums for Employee and covered dependents (if any) for eighteen (18) months. Continuation coverage will terminate in the event Employee becomes covered under any other comparable group health plan (as an employee or otherwise), unless the new group health plan contains any exclusions or limitations with respect to any pre-existing condition Employee or covered dependent(s) may have. Employee must notify the Employer promptly should Employee become covered under any other plan. (c) If employment is terminated for any reason other than (1) by Employer without Cause, (2) pursuant to Section 8(e), (3) pursuant to Section 8(f), (4) pursuant to Section 8(d) or (5) by Employer within one (1) year following any "change of control" of Employer for any reason other than a conviction involving a felony, no severance benefits shall be due to Employee; (d) Severance payments shall include the car allowance provided for under this Agreement in addition to the benefits listed above. (e) Employer will provide Employee with a six-month individual program of professional outplacement services. (f) Notwithstanding the foregoing, the severance payments due from the Employer to the Employee pursuant to this Agreement including the benefits under section 9(a) and section 9(b) shall be mitigated and reduced by the amount of any consideration paid to Employee by any other person or entity for services rendered following the date of termination of employment and the following fifty-two (52) weeks thereafter, regardless of how such compensation is characterized, including, but not limited to, consulting fees or other fees for any services rendered by Employee. The Employee must provide the Employer a copy of any employment agreement, offer letter, or consulting agreement disclosing total compensation to be paid to the Employee for services rendered following the termination date through fifty-two (52) weeks following the termination date. Subject to the remaining terms of this Agreement, Employer will pay Employee at least 33% of the amount to be paid under this Paragraph 9 notwithstanding any such mitigation. In the event Employee fails to notify Employer that he has accepted employment or is otherwise performing services after the date of termination of employment and the following fifty-two (52) weeks thereafter with any person or entity, or that he has entered into any form of agreement or arrangement, including, but not limited to, a consulting arrangement whereby Employee is paid for Employee's services, then all severance benefits provided under this Agreement will cease immediately and all liabilities and obligations of Employer hereunder shall terminate. 7 Notwithstanding anything in the Agreement to the contrary, in the event Employee obtains a full_time position with the Employer or any of its subsidiaries or affiliates after the execution of this Agreement but prior to the last day on which severance payments are due under this Agreement, Employee understands and agrees that all severance payments will cease immediately and that all liabilities and obligations of the Employer hereunder shall terminate. 10. CONDITIONS TO BENEFITS. Anything in this Agreement to the contrary notwithstanding: (a) To receive the benefits enumerated in Paragraph 9, Employee shall execute and agree to be bound by a release agreement substantially in the form attached to this Agreement as Exhibit A: and (b) Employee's right to receive any of the benefits provided for in Paragraph 9 or otherwise in this Agreement following termination of employment shall immediately cease and be of no further force or effect if Employee violates any of the covenants contained in Paragraphs 11, 12,13, or 14. 11. COVENANT NOT TO SOLICIT. Employer and Employee acknowledge that, during Employee's employment, Employer will spend considerable amounts of time, effort and resources in providing Employee with knowledge relating to the business affairs of Employer and the Affiliates, including Employer's and the Affiliates' trade secrets, proprietary information and other information concerning Employer's and the Affiliates' financing sources, finances, customer lists, customer records, prospective customers, staff, contemplated acquisitions (whether of business or assets), ideas, methods, marketing investigations, surveys, research, customers' records and any other information relating to Employer's and the Affiliates' Business. To protect Employer from Employee's solicitation of business from customers during the Restricted Period, Employee agrees that he shall not, directly or indirectly, for any person (including Employee himself), corporation, firm, partnership, proprietorship or other entity, other than Employer or an Affiliate, engaged in the Business, solicit transportation, logistics or other business of the type provided by Employer for any customer with whom the Employee had material contact during the twelve (12) month period immediately preceding the termination of Employee's employment. Material contact includes personal contact with customers, the supervision of the efforts of others who have personal contact with the customers, and the receipt of confidential information of customers of Employer. This Paragraph 11 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 12. COVENANT NOT TO DISCLOSE. Employee agrees that during employment with Employer and for a period of three (3) years following the cessation of that employment for any reason, Employee shall not directly or indirectly divulge or make use of any Confidential Information or Trade Secrets (so long as the information remains a Trade Secret or remains confidential) without prior written consent of Employer. Employee further agrees that if 8 Employee is questioned about information subject to this agreement by anyone not authorized to receive such information, Employee will promptly notify Employee's supervisor(s) or an officer of Employer. This Agreement does not limit the remedies available under common or statutory law, which may impose longer duties of non-disclosure. For purposes of this Agreement, the following definition shall apply: "Confidential Information" means information about Employer and its Employees, Customers and/or Suppliers which is not generally known outside of Employer, which employee learns of in connection with employee's employment with Employer, and which would be useful to competitors of Employer. Confidential Information includes, but is not limited to: (1) business and employment policies, marketing methods and the targets of those methods, finances, business plans, promotional materials and price lists; (2) the terms upon which Employer obtains products or services from its vendors and sells them to customers; (3) the nature, origin, composition and development of Employer's products; (4) the manner in which Employer provides products and services to its customers. 13. COVENANT NOT TO INDUCE. Employee covenants and agrees that during the Restricted Period, he will not, directly or indirectly, on Employee's own behalf or in the service or on behalf of others, solicit, induce or attempt to solicit or induce an employee or other personnel of Employer and the Affiliates to terminate employment with such party. This Paragraph 13 shall, except as otherwise provided in this Agreement, survive the termination of this Agreement. 14. COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee agrees that he shall not, at any time during or following the Term, make any remarks disparaging the conduct or character of Employer or any of its current or former Affiliates, agents, employees, officers, directors, shareholders, successors or assigns (in the aggregate, such persons and entities are referred to herein as the "Protected Persons"); provided, however, that during the Term, Employer acknowledges and agrees that Employee may be required from time to time to make such remarks about Protected Persons for legitimate business purposes and if consistent with the discharge of Employees duties hereunder. In addition, following termination of Employee's employment hereunder, Employee agrees to reasonably cooperate with Employer, at no extra cost, in any litigation or administrative proceedings (e.g., EEOC charges) involving any matters with which Employee was involved during Employee's employment with Employer. Employer shall reimburse Employee for travel and other related expenses approved by Employer incurred in providing such assistance. This Section 14 shall survive the termination of this Agreement. 15. SPECIFIC ENFORCEMENT. Employer and Employee expressly agree that a violation of the covenants contained in Paragraphs 11, 12, 13, and 14 hereof or any provision thereof, shall cause irreparable injury to Employer and that, accordingly, Employer shall be entitled, in addition to any other rights and remedies it may have at law or in equity, to an injunction enjoining and restraining Employee from doing or continuing to do any such act and any other violation or threatened violation of said Paragraphs 11, 12, 13 and 14 hereof. 9 16. SEVERABILITY. In the event any provision of this Agreement shall be found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same effect as though the void part were deleted; provided, however, if Paragraphs 11, 12, 13, and 14 shall be declared invalid, in whole or in part, Employee shall execute, as soon as possible, a supplemental agreement with Employer, granting Employer, to the extent legally possible, the protection afforded by said Paragraphs. It is expressly understood and agreed by the parties hereto that Employer shall not be barred from enforcing the restrictive covenants contained in each of Paragraphs 11, 12, 13, and 14 as each are separate and distinct, so that the invalidity of any one or more of said covenants shall not affect the enforceability and validity of the other covenants. 17. INCOME TAX WITHHOLDING. Employer or any other payor may withhold from any compensation or benefits payable under this Agreement such Federal, State, City or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 18. WAIVER. The waiver of a breach of any term of this Agreement by any of the parties hereto shall not operate or be construed as a waiver by such party of the breach of any other term of this Agreement or as a waiver of a subsequent breach of the same term of this Agreement. 19. RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as notice of termination of this Agreement is given, Employee shall immediately cease all contact regarding the business with customers of Employer during the restricted period and shall forthwith surrender to Employer all customer lists, documents and other property of Employer then in Employee's possession, compliance with which shall not be deemed to be a breach of this Agreement by Employee. Pending the surrender of all such customer lists, documents and other property to Employer, Employer may hold in abeyance any payments due Employee pursuant to this Agreement. 20. ASSIGNMENT. (a) Employee shall not assign, transfer or convey this Agreement, or in any way encumber the compensation or other benefits payable to him hereunder, except with the prior written consent of Employer or upon Employee's death. (b) The covenants, terms and provisions set forth herein shall be binding upon and shall inure to the benefit of, and be enforceable by, Employer and its successors and assigns; provided, Employer shall require any successor (whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of property or stock, liquidation or otherwise) to all or a substantial portion of its assets, by agreement in form and substance reasonably satisfactory to Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Employer would be required to perform this Agreement if no 10 such succession had taken place. Regardless of whether such an agreement is executed, this Agreement shall be binding upon any successor of Employer in accordance with the operation of law, and such successor shall be deemed the "Employer" for purposes of this Agreement. 21. NOTICES. All notices required herein shall be in writing and shall be deemed to have been given when delivered personally or five (5) days after the date on which such notice is deposited in the U.S. Mail, certified or registered, postage prepaid, return receipt requested, addressed as follows, to wit: If to Employer at: 160 Clairemont Avenue, Suite 200 Decatur, Georgia 30030 Attn: Thomas M. Duffy, General Counsel Chambers If to Employee at: Robert Chambers 30 Oak Hollow, Suite 240 Southfield, MI 48034 or at such other addresses as may, from time to time, be furnished to Employer by Employee, or by Employer to Employee on the terms of this Paragraph. 22. BINDING EFFECT. This Agreement shall be binding on the parties hereto and on their respective heirs, administrators, executors, successors and permitted assigns. 23. ENFORCEABILITY. This Agreement contains the entire understanding of the parties and may be altered, amended or modified only by a writing executed by both of the parties hereto. This Agreement supersedes all prior agreements and understandings by and between Employer and Employee relating to Employee's employment. Employer and Employee acknowledge and agree that that certain Restrictive Covenant Agreement by and among Employee and Employer dated on or about February 28, 2000, is and shall remain in full force and effect upon execution of this Agreement. 24. APPLICABLE LAW. This Agreement and the rights and liabilities of the parties hereto shall be governed by, and construed and interpreted in accordance with, the laws of the State of Georgia. 25. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute but a single document. 11 26. D&O INSURANCE; INDEMNIFICATION. Employer shall maintain, for the benefit of Employee, director and officer liability insurance, in form at least as comprehensive as, and in an amount that is equal to, that maintained by Employer on the Effective Date, provided, however, that Employer's Board of Directors or chief senior Executive Officer shall have the discretion to modify such coverage so long as such modification applies to all officers and directors. In addition, Employer shall indemnify Employee against liability as an officer and director of Employer to the same extent as other officers and directors of Employer in accordance with the constituent and organizational documents of Employer and consistent with applicable law. Employee's rights under this Section 26 shall continue so long as he may be subject to such liability, whether or not this Agreement may have been terminated prior hereto. IN WITNESS WHEREOF, Employee has hereunder set Employee's hand and seal, and Employer has caused this Agreement to be executed and delivered by its duly authorized officers, all as of the day and year first above written. _______________________________ __________________________(SEAL) WITNESS ROBERT CHAMBERS ATTEST: AXIS GROUP, INC. BY: ____________________________ BY: _______________________ Its ___________ secretary Its _________________ [CORPORATE SEAL] 12 EX-10.17 4 g87601exv10w17.txt EX-10.17 AGREEMENT BETWEEN COMPANY & GENERAL MOTOR EXHIBIT 10.17 CONTRACT FOR MOTOR TRANSPORTATION This Contract for Motor Transportation (this "Agreement") is made as of January 2, 2004 (the "Effective Date") by and between Allied Automotive Group, Inc., with its principal location at 160 Clairemont Avenue, Decatur, Georgia 30030 ("Service Provider"), and General Motors Corporation, a Delaware corporation, with a principal location at 100 Renaissance Center, Detroit, Michigan 48265 ("GM"). A. This Agreement sets forth the terms pursuant to which Service Provider shall provide Transportation Service (as defined in Section 1.00 below) to GM. B. GM requires Service Provider's efficient, prompt and high-quality delivery of finished vehicles to, from or between its various dealers, and other origins and destinations that GM may, from time to time, designate to Service Provider. C. Service Provider is prepared to provide Transportation Service for GM as contemplated in this Agreement. Now, therefore, for good and valuable consideration, the receipt and adequacy of which is acknowledged, the parties agree as follows: 1. TRANSPORTATION SERVICE. During the Term (as defined in Section 16.00), Service Provider shall furnish to GM those delivery and transportation services, including, but not necessarily limited to, plant releasing, loading motor vehicles onto rail cars and vehicle haul-away, that Service Provider provides to GM in the United States and Canada as of the Effective Date (collectively, "Transportation Service"). 2. VEHICLES; DRIVERS, ETC. Service Provider shall be responsible for all facilities, properly licensed drivers and other personnel and equipment necessary to perform Transportation Service in a safe and efficient manner. Service Provider, including Service Provider's affiliated companies, if applicable, shall also provide, operate and maintain, in good working condition, the motor vehicles, trailers and related equipment necessary for the performance of Transportation Service. Service Provider shall also ensure, to GM's reasonable satisfaction, that contracted third party carriers operate and maintain, in good working condition, the motor vehicles, trailers and related equipment necessary for the performance of Transportation Service pursuant to this Agreement. 3. CONTROL OF TRANSPORTATION SERVICE. Service Provider shall have sole and exclusive control over the manner in which Service Provider and its employees, agents and subcontractors (collectively, "Service Provider Employees") perform Transportation Service. Service Provider shall employ those Service Provider Employees it deems necessary in connection therewith. Notwithstanding anything herein to the contrary, Service Provider Employees shall be considered employees or subcontractors of Service Provider only and shall be subject to employment, discharge, discipline and control, solely and exclusively by Service Provider. While on GM property, Service Provider Employees must follow applicable GM rules provided and/or communicated to Service Provider and/or Service Provider Employees by GM, including GM's plant security and dock personnel. GM reserves the right, in its sole discretion, to instruct Service Provider to remove any Service Provider Employee from Transportation Service at GM locations. 4. QUALITY SERVICE REQUIREMENTS. During the Term, Service Provider shall: A. Follow GM's Vehicle Logistics Common Quality Processes (collectively, the "Common Process") including GM's: (i) Damage Elimination Teams (ii) Transportation Acceptance Process ("TAP") (iii) Transportation Self-Audit Process (iv) Early production Shipping Verification Process (v) Key Handling Process (vi) Vehicle Logistics Problem Reporting/Resolution ("PRR") Process (available on "gmsupplypower.com") B. Process transportation claims through the Common Process. C. Follow the Common Process when filing supplemental inspections. D. Achieve an annual damage frequency of [XXXXXXX] or less for shuttle moves and an annual damage frequency of [XXXXXXX] or less for non-shuttle moves for calendar year 2003. During the remainder of the Term, the damage frequency shall be reduced by [XXXXXXX] per calendar year, respectively. GM, in its sole discretion, may impose a penalty equal to [XXXXXXXXXX] of the total annual invoiced amount for failure to achieve the annual target. GM shall compile the assessment for this penalty annually in August. Service Provider shall monitor and report to GM monthly the damage frequency by location. The [XXXXXXXXXXXXXXX]. Service Provider must remit payment within thirty (30) days after this assessment. E. Ship all vehicles in accordance with the latest revision of GM'S Vehicle Shipping Manual (as set forth and available on "gmsupplypower.com"). F. If performance falls below the damage frequency target (as set forth in Section 4.00(D) hereof), Service Provider shall be given one week, following receipt of written notice from GM, to provide to GM a written corrective action plan per the PRR process. Service Provider shall have thirty (30) days, from the date on which GM, in writing, approves Service Provider's written corrective action plan to cure the noncompliance at the location subject to the corrective action plan. In the event Service Provider fails to timely submit a corrective action plan or if a corrective action plan is timely submitted, but Service Provider fails to timely cure the noncompliance, upon failure to timely submit the 2 corrective action plan or expiration of thirty (30) day cure period, whichever is applicable, at GM's sole option, GM may resource its business at such location, in addition to exercising other remedies to which GM is entitled under this Agreement, by providing Service Provider with sixty (60) days prior written notice of GM's intent to resource. G. Contract with an inspection agency selected by GM for third party inspection. A third party inspection is required before and after all shuttle moves. Service Provider may negotiate with the other service providers (i.e., the serving railroad) for the cost of the third party inspection. This cost is typically allocated by volume between the individual service providers; provided, however, as between Service Provider and GM, Service Provider retains sole responsibility for the cost of such inspections irrespective of Service Provider's ability to allocate the inspection cost among other service providers. Service Provider is responsible to ensure adequate lighting exists for inspections. H. Assign a loading supervisor to cover all hours of loading operation. All loads are to be audited one hundred percent (100%). I. Submit an appraisal of equipment and maintenance plan, each in accordance with GM's Haul-Away Equipment Appearance Initiative. J. Provide twenty-four hour security for Service Provider's operations. Service Provider shall select, and GM shall approve, which approval shall not be unreasonably withheld, a security company, the cost will be borne by Service Provider. Security is required for all assembly center yard areas for which Service Provider is responsible. K. Obtain GM's approval for all facility layout changes. L. Obtain ISO 9001:2000 certification for Service Provider, its agents and subcontractors. M. Obtain GM's approval for all second tier suppliers used for trip leasing. N. Perform routine maintenance, including, but not limited to, yard stripping, pavement sealing, etc., to the extent Service Provider is the rail loading and/or unloading contractor. 5. OPERATIONAL REQUIREMENTS. During the Term, Service Provider shall perform Transportation Service in accordance with the operational requirements set forth in this Section 5.00. 5.01 All vehicles must be dispatched within the target dispatch requirement for each demand area existing as of the Effective Date, or as mutually agreed by the parties. For each vehicle not meeting this requirement, GM may, in its sole discretion, assess Service Provider a [XXXXXXXXX]; provided, however, the maximum amount of penalties which may be assessed against Service Provider by GM under this Section 5.01 and under Section 4.00(D) hereof, in the aggregate, shall be capped at [XXXXX] on an annual basis (with the first twelve (12) month period commencing on the Effective Date). Without waiving any other rights or remedies under this Agreement, GM agrees to waive all claims for penalties under this Section 5.01 and under Section 4.00(D) for periods prior to March 7, 2004. All accrued assessments resulting from noncompliance shall be billed on a monthly basis (VIN 3 detail will be supplied at billing). If a force majeure event prevents delivery, Service Provider must invoke Section 19.00 of this Agreement. GM, in its sole discretion, may grant other exceptions for noncompliance if a timely request is submitted in writing to GM. GM agrees to use reasonable efforts to cooperate with Service Provider in order that Service Provider achieves the performance standards set forth in this Agreement, and to investigate the feasibility and potential benefits of adjusting demand area standards in order to improve order to delivery performance in a manner acceptable to GM and Service Provider. 5.02 If Service Provider's performance at any location falls below [XXXXXXXXX] compliance with GM's weekly dispatch requirements, or any unit dwells longer than [XXXXXXXXX], Service Provider shall submit, within seven (7) days of GM's written notification to Service Provider identifying Service Provider's noncompliance, a written corrective action plan to GM (the format of said action plan will be provided by GM). Service Provider shall have thirty (30) days from the date on which GM, in writing, approves Service Provider's written corrective action plan to cure noncompliance at the location subject to the corrective action plan. In the event Service Provider fails to timely submit a written corrective action plan or if a corrective action plan is timely submitted, but Service Provider fails to timely cure the noncompliance, upon failure to timely submit the corrective action plan or expiration of the thirty (30) day cure period, whichever is applicable, at GM's sole option, GM may resource its business at such location, in addition to any other remedies to which GM may be entitled under this Agreement, by providing Service Provider with sixty (60) days' prior written notice of GM's intent to resource. Notwithstanding anything to contrary, Service Provider acknowledges and agrees that Service Provider shall be limited to one (1) cure period per location during each twelve (12) month period of this Agreement (with the first such twelve (12) month period commencing on the Effective Date) for a breach of either Section 5.01 or Section 4.00(D) of this Agreement, after which GM shall be free to resource its business at the location at which Service Provider's noncompliance occurs. 5.03 Service Provider must appropriately fleet size its operations for both equipment and drivers based on a quarterly forecast provided by GM and a quarterly capacity review between Service Provider and the GM NAO Vehicle Logistics Operations Manager. 5.04 Service Provider must implement a "24 hour, 7 days a week" delivery program to dealers participating in the "24 hour, 7 days a week" program. 6. PROPERTY DAMAGE AND LOSS. Service Provider shall have exclusive care, custody and control of all goods hereunder, including motor vehicles and related components, from the time GM delivers to Service Provider until delivery to a consignee named by GM, in the case of truck haul-away, or until properly loaded and otherwise delivered to the rail carrier in the case of rail shipment. Service Provider assumes full responsibility for any and all loss or damage to GM's property while in Service Provider's care, custody or control, unless such loss or damage is caused by the acts or omissions of GM, its consignees, agents or employees, rail carriers, or by a force majeure event as defined in Section 19.00; provided, however, if insurance coverage is in place regarding a force majeure loss, Service Provider shall make and reasonably pursue a claim to the extent of such coverage and to the extent Service Provider 4 receives insurance proceeds from a third party insurance provider for loss or damage to GM's property caused by a force majeure event described in Section 19.00 hereof, then Service Provider shall turn over such proceeds to GM. Service Provider shall ensure that its affiliated and nonaffiliated subcontracted truck haul-away providers adhere to the applicable vehicle care and loss and damage requirements of this Agreement, including insurance and indemnification, and such affiliated and nonaffiliated subcontracted truck haul-away carriers or other subcontractors shall be responsible for administrating any loss or damage suffered with respect to GM property while in the care, custody or control of such haul-away carriers or other subcontractors. The value of said goods shall be based on the normal GM invoice price thereof plus freight charges, with the exception of certain major vehicle damage claims described in Section 6.01. 6.01 Service Provider agrees to the following process for Major Vehicle Damage Claims. (A) As to vehicles sustaining damage under Service Provider's custody or control, to the extent that such damage affects the merchantability, safety, durability or reliability of the vehicle, such claims shall be handled as major transportation damage claims. (B) GM, in its sole discretion, shall determine whether a damaged vehicle is capable of restoration to a marketable condition, complying with all applicable government motor vehicle standards. (C) If GM determines that a vehicle is not reparable, Service Provider shall immediately return the vehicle to GM. GM shall process a claim utilizing the vehicle's dealer net price, minus [XXXXXXXXX] as the salvage value, plus Destination Freight Charge. (D) All major damage claims will be reviewed and either paid or rejected by Service Provider within thirty (30) days of transmittal to Service Provider. 6.02 Service Provider shall accept all claims, including Major Vehicle Damage Claims, for loss or damage submitted in writing or via electronic transmission for a period of nine (9) months following delivery as follows: (A) Claims received at the GM Corporate Claim Center within nine (9) months after delivery of lost or damaged motor vehicles or related components shall be deemed accepted by Service Provider, including its subcontractors, provided any such claim is transmitted to Service Provider within nine (9) months after scheduled delivery. (B) Claims filed against one Service Provider on a joint line, or joint line cross-border movement, shall be deemed a filing against all connecting Service Providers within the time limits in (A) above. 6.03 Service Provider shall render payment, or provide written reasons for any nonpayment, of any claim within thirty (30) days of Service Provider's receipt of such claims in accordance with Section 6.02 herein. 5 7. STANDARD INSURANCE REQUIREMENTS. During the Term, Service Provider shall obtain and maintain, at its sole expense, the following types of insurance coverage, with minimum limits as set forth below, unless increased types and amounts are required due to the equipment of service requirements in specific Appendices and Service Provider shall ensure that all subcontractors, including owner operators and independent carriers in its employ, shall maintain the same coverage: A. Commercial General Liability, covering liability arising from premises, operations, independent contractors, products-completed operations, personal and advertising injury, and liability assumed under an insured contract - $2,000,000 each occurrence. B. Commercial Automobile Liability, covering all owned, hired, and non-owned vehicles - $2,000,000 each occurrence, including all statutory coverage for all states of operation. C. Workers Compensation, in an amount not less than the statutory limits for all states of operation. D. Employers Liability, $500,000 each employee for bodily injury by accident and $500,000 each employee for bodily injury by disease. E. Cargo Insurance, including loading and unloading, with a limit equal at least to the value of the property shipped and in any event not less than $250,000 per occurrence. F. Any insurance coverage required by any government body for the types of Transportation Service specified in the Appendices. G. Any deductible or self-insured retention in excess of existing retention limits must be declared to and approved by GM. H. Service Provider shall provide GM with a certificate of insurance evidencing compliance with the insurance requirements set forth above. Each certificate shall name GM as (or provide that GM shall have the benefits of) an additional insured for liability and loss payee for damage to GM's vehicles or property, each arising from the operations of the Service Provider on all policies (except Cargo Insurance, Workers' Compensation and Employers Liability) and state that the above required coverage shall apply as primary insurance with respect to any other insurance or self-insurance programs afforded to GM. Each certificate shall provide that GM shall receive thirty (30) days' prior written notice from the insurer of any termination or reduction in the amount or scope of coverage. I. Each certificate shall be in a form acceptable to, and underwritten by, insurance company(ies) reasonably satisfactory to GM. The purchase of appropriate insurance coverage by Service Provider or the furnishing of certificate(s) of insurance shall not release Service Provider from its respective obligations or liabilities under this Agreement. These insurance requirements shall be applicable to subcontractors performing services as directed by Service Provider under this Agreement. 6 8. RATES; BRIDGE PAYMENTS; REDUCTIONS; 2003 REBATE; CANADA. 8.01 During the Term, GM shall pay Service Provider for Transportation Service performed in either the United States or Canada, pursuant to the rates (including the Administrative Processing Fee in existence on the Effective Date) that are in effect between the parties on the Effective Date, subject to the modifications as required by Section 8.02 and Section 8.03 hereof. For clarity, GM will not reimburse the Service Provider for overtime due to weekend activity, which weekend operations are scheduled at GM's discretion. Service Provider shall be solely responsible for payments to Service Provider's agents and subcontractors. 8.02 During the Term, GM shall pay Service Provider a [XXXXXXXXX] for Transportation Service performed in the United States. 8.03 During the Term, Service Provider and GM agree to the [XXXXXXXXX] for Transportation Service performed in the United States, as set forth in Exhibit 8.03 to this Agreement. 8.04 On or before January 2, 2004, Service Provider shall [XXXXXXXXX]. On the Transfer Date (as defined in Section 13.01 hereof), Service Provider shall [XXXXXXXXX]. 8.05 The rates on Transportation Service performed from the points of origin set forth on the attached Exhibit 8.05 shall not be reduced and shall remain as currently in effect on the Effective Date. 9. OVERCHARGES AND UNDERCHARGES. Service Provider shall file any overcharges or undercharge claims within one hundred and twenty (120) days from the time GM receives a valid and acceptable electronic delivery record. Service Provider's failure to timely file will waive any such claims by Service Provider, including its agents and subcontractors. 10. PAYMENT SUNSET. Service Provider shall, within nine (9) months from date of delivery or date service was performed, manually or electronically transmit a delivery record to GM. Service Provider's failure to so transmit a delivery record will waive any future claims for payment by Service Provider, including its agents and subcontractors. 11. EFT; PAYMENT - ELECTRONIC DATA INTERCHANGE - (EDI). 11.01 Service Provider and GM acknowledge that the existing EFT agreement shall continue in full force and effect during the Term. Service Provider agrees to hold GM harmless for uncollected funds not properly or timely transferred from bank or depository in accordance with EFT or Appendices. 11.02 After GM receives a valid and acceptable electronic service record, GM will transmit to the Service Provider an EDI 820 Transaction Set (Advance Payment Notification). GM shall transfer funds electronically (pay) to the bank designated by the Service Provider in the 7 applicable wire transfer agreement or Appendix on the twenty-fifth (25th) (or following business day) of the following month from the date that service was performed. Balance Due payments will fall under the same rules as do original payments. 12. NEW BUSINESS; FUEL SURCHARGE PROGRAM; DISCONTINUATION OF YARD MANAGEMENT. 12.01 GM and Service Provider acknowledge and agree that GM has awarded to Service Provider the new business for Transportation Service set forth on Exhibit 12.01 attached hereto, which new business, subject to volume fluctuations, is projected to result in annual revenue of [XXXXXXXXX] (the "New Business Award"). GM and Service Provider further acknowledge and agree the above projection is only an estimate, and, as a result, the actual revenue will be based upon the sales of those vehicles subject to the Transportation Service set forth on Exhibit 12.01. GM and Service Provider acknowledge and agree (i) Service Provider shall begin providing the Transportation Service in respect of the New Business Award on or before March 7, 2004, and (ii) Service Provider will provide Transportation Service with respect to the New Business Award pursuant to the rates set forth on Exhibit 12.01 exclusively and without the rate reductions contemplated by Section 8.03 hereof, but otherwise subject to the terms of this Agreement and Exhibit 12.01. 12.02 GM agrees that Service Provider will participate, on the same terms and conditions on which other haul-away service providers participate, in any fuel surcharge program or allowance provided by GM during the Term; provided, however, the maximum amount of such fuel allowance shall be capped at [XXXXXXXXX] on an annual basis (with the first such twelve (12) month period commencing on the Effective Date). 12.03 GM agrees to use best reasonable efforts to discontinue all services related to GM yard operations effective March 7, 2004, or as soon thereafter as GM contracts with an alternate service provider to provide such yard operations. 13. JANESVILLE PROPERTY; [XXX] SPECIALIZED EQUIPMENT. 13.01 Service Provider shall transfer clear and marketable title to GM, free and clear of all liens, claims, encumbrances or security interests, but subject, however, to applicable building and zoning laws and existing utility easements, to the land, buildings, fixtures and personal property located at 544 Kellogg Avenue, Janesville, Wisconsin (the "Janesville Property") utilized to perform Transportation Service for GM. In consideration of such transfer, and immediately upon the Transfer Date (as defined below), GM agrees to pay to Service Provider the sum of [XXXXXXXXX]. Service Provider agrees to enter into GM's standard form lease agreement, a copy of which is attached to this Agreement as Exhibit 13.01, pursuant to which GM shall lease the Janesville Property to Service Provider at the rate of $1.00 per year for so long as Service Provider provides Transportation Service to GM at the Janesville Property. Service Provider and GM further agree to enter into customary documentation evidencing the sale and lease-back of the Janesville Property, all on terms satisfactory to each of GM and Allied, by January 31, 2004, or as soon as reasonably practicable thereafter (the "Transfer Date"). 13.02 Upon GM's request, following a termination or expiration of Service Provider's provision of Transportation Service at the [XXXXXXXXX] location with respect to the [XXXXXXXXX], Service Provider agrees to cooperate in good faith to enable GM, at its 8 election, to either purchase the equipment Service Provider utilizes to transport the [XXXXXXXXX] product at [XXXXXXXXX] or assign all of Service Provider's rights under the Master Lease (as defined below) to GM. GM acknowledges and agrees that the [XXXXXXXXX] is subject to that certain Master Lease Agreement dated September 19, 2003 with Merrill Lynch Capital, including Schedule No. 001 and Schedule No. 002 attached thereto (collectively, the "Master Lease"), and GM's purchase, if any, of the [XXXXXXXXX] pursuant to this Section 13.02 shall be subject to and in accordance with the Master Lease. 14. FINANCIAL REPORTING; REFINANCE PLAN; ACCESS. 14.01 Service Provider shall provide to GM the same monthly financial reporting package Service Provider provides to Service Provider's senior secured debt holders, excluding any information Service Provider reasonably determines as confidential, including information relating to Service Provider's customers, other than GM. Service Provider shall provide to GM such monthly financial reporting package simultaneously with providing same to Service Provider's senior secured debt holders. 14.02 Service Provider shall present, within eighteen (18) months from March 7, 2004, a refinancing plan (the "Refinancing Plan") demonstrating to GM's satisfaction Service Provider's long-term viability beyond the expiry of Service Provider's senior secured credit facilities in September, 2007. The Refinancing Plan shall indicate that the consolidated EBITDA interest coverage shall exceed [XXXX] and the Total Debt to EBITDA ratio shall not exceed [XXXX]. Each ratio shall be calculated in accordance with Standard and Poor's. The Refinancing Plan shall indicate the effective date by which the refinancing will be implemented, and that such date shall be no less than one hundred twenty (120) days before the expiry of the senior credit facilities. Service Provider's failure to deliver a Refinancing Plan in accordance with this Section 14.02 shall not constitute a breach of this Agreement. 14.03 Service Provider shall grant to GM and its designees (including, but not limited to, BBK, Ltd.) access to Service Provider's books, records, officers, employees and business operations, upon reasonable request and prior notice, to monitor Service Provider's compliance with and performance under this Agreement. Service Provider agrees to use reasonable best efforts to fully cooperate with the agents, representatives, consultants, officers and employees of GM and its designees to effectuate this right of access. 15. NOTICES. All notices under the terms of this Agreement shall be in writing, signed by or on behalf of the party giving such notice, and sent by certified mail, or via facsimile and first class mail, to the following addresses: 9 If to GM: General Motors Corporation 30009 Van Dyke Road Mail Code: 480-206-315 Warren, Michigan 48090 Attn: Jeff Bullard Director, Vehicle Logistics Facsimile: (586) 575-0272 With a copy to: Honigman Miller Schwartz and Cohn LLP 2290 First National Building 660 Woodward Avenue Detroit, Michigan 48226 Attn: Robert B. Weiss, Esq. Facsimile: (313) 465-7597 If to Service Provider: Allied Automotive Group, Inc. 160 Clairemont Avenue, Suite 200 Decatur, Georgia 30030 Attn: Thomas M. Duffy Senior Vice President, General Counsel Facsimile: (404) 370-4206 With a copy to: Troutman Sanders LLP Bank of America Plaza 600 Peachtree Street, N.E. - Suite 5200 Atlanta, Georgia 30308-2216 Attn: Robert W. Grout, Esq. Facsimile: (404) 885-3900 16. TERM; REMEDIES; COOPERATION IN RESOURCING. 16.01 Unless otherwise terminated in accordance with the provisions of this Agreement, the term of this Agreement (the "Term") shall commence on the Effective Date and continue until March 7, 2006. If, during the Term, Service Provider has (i) complied in all material respects, as determined by GM in its sole discretion, with all of the terms and conditions of this Agreement, including the Quality Service Requirements set forth in Section 4.00 and the Operational Requirements set forth in Section 5.00 above; and (ii) complied with Section 14.02 of this Agreement, then, upon satisfaction of each of the foregoing conditions, the Term, upon the mutual written agreement of GM and Service Provider, shall be extended for an additional one (1) year. 16.02 Upon any breach of this Agreement by Service Provider with respect to the Quality Service Requirements set forth in Section 4.00 or the Operational Requirements set forth in Section 5.00, GM's remedy with respect thereto shall be as set forth in Section 4.00 hereof with respect to breaches of the Quality Service Requirements and as set forth in Section 5.00 hereof with respect to breaches of Operational Requirements. Without limiting the foregoing, upon written notice from GM, GM shall have the right to terminate this Agreement in the event Service Provider's action or inaction, as the case may be, results in a substantial discontinuation of Transportation Service that threatens operations at any one 10 or more of GM's assembly plants or vehicle distribution centers; provided, however, GM's written notice terminating the Agreement shall be effective only if given during the occurrence of such substantial discontinuation of Transportation Service. 16.03 Upon any breach of this Agreement by Service Provider, excluding breaches of the Quality Service Requirements and the Operational Requirements, the consequences of which are addressed in Section 16.02 of this Agreement, GM shall provide written notice to Service Provider identifying the breach. Service Provider shall have sixty (60) days following the receipt of such written notice from GM to cure such breach. In the event Service Provider fails to cure such breach to the satisfaction of GM during such sixty (60) day period, GM shall have all rights and remedies available to GM under applicable law, including the right to terminate this Agreement and immediately, without further notice to Service Provider, which right is expressly waived, commence resourcing all or any portion of the Transportation Service; provided, however GM will not have the right to terminate this Agreement and commence resourcing all or any portion of the Transportation Service unless Service Provider's breach is material. 16.04 In addition to any right GM may have to terminate this Agreement, GM may terminate this Agreement if: (a) Service Provider becomes insolvent; (b) Service Provider files a voluntary bankruptcy petition; (c); a receiver or trustee is appointed over Service Provider's assets; or (d) Service Provider executes an assignment for the benefit of Service Provider's creditors. 16.05 Notwithstanding anything in this Agreement to the contrary, this Agreement shall automatically terminate if ten percent (10%) or more of the voting shares of Service Provider become owned or controlled, directly or indirectly, by a competitor of GM, or entity in which competitor owns fifty percent (50%) or more or otherwise controls such entity, in the business of manufacturing motor vehicles. 16.06 In the event a competitor of GM in the business of manufacturing motor vehicles acquires any interest in Service Provider (directly or indirectly), Service Provider shall provide GM with reasonable assurances that Service Provider will utilize its commercially reasonable efforts to preserve the confidentiality of all information related to Transportation Service performed by Service Provider for GM. 16.07 Upon the expiration or termination of the Term, Service Provider agrees to cooperate with GM in resourcing the Transportation Service from Service Provider. 17. INDEMNIFICATION. Except for the penalties in Sections 4.00(D) and 5.01, and the damage claims in Section 6.00 for which Service Provider is responsible in accordance with those respective sections, Service Provider shall indemnify, defend and hold GM (including its officers, directors, employees, subcontractors and agents) harmless from and against any and all liabilities, damages, fines, penalties, costs, claims, demands and expenses (including costs of defense, settlement, and reasonable attorney's fees) of whatever type or nature, including damage or destruction of any property, or injury (including death) to any person, arising out of (a) any act or omission by Service Provider or Service Provider Employees, (b) any claims or actions by Service Provider Employees, or (c) the failure of Service Provider or 11 Service Provider Employees to comply with this Agreement, the Appendices hereto, or any applicable federal, provincial, and/or local law, statute, regulation, rule, ordinance, or government directive which may directly or indirectly regulate or affect the obligations of Service Provider hereunder; provided, however, the foregoing agreement to indemnify and hold GM harmless shall not be applicable to the extent that such liabilities, damages, fines, penalties, costs, claims, demands or expenses are attributable to the negligence or willful misconduct of GM, its officers, directors, employees, subcontractors or agents. 18. COMPLIANCE WITH LAWS. Service Provider agrees to comply with all applicable provisions of federal, provincial, state and/or local law or ordinance and all lawful orders, rules and regulations issued thereunder. 19. FORCE MAJEURE. Except as otherwise provided in this Agreement, Service Provider's obligation to furnish the Transportation Service shall be temporarily suspended during any period(s) in which Service Provider is unable to comply with the requirements of this Agreement, as a result of an event or occurrence beyond the reasonable control of Service Provider and without its fault or negligence, including, but not limited to, acts of God, actions by any governmental authority (whether valid or invalid), fires, floods, windstorms, explosions, riots, natural disasters, wars, or court injunction or order; provided, however written notice of such delay (including the anticipated duration of the delay) shall be given by Service Provider to GM as soon as Service Provider knows or reasonably anticipates the possibility of the force majeure condition. If requested by GM, Service Provider shall, within ten (10) days, provide adequate assurances that the delay shall not exceed thirty (30) days. If the term of the delay exceeds thirty (30) days, or Service Provider does not provide adequate assurance that the delay will cease within thirty (30) days, GM may, in its sole discretion, terminate this Agreement. The suspension of any obligations owing to force majeure shall neither cause the Term of this Agreement to be extended nor affect any rights accrued under this Agreement prior to the force majeure condition. 20. SYSTEM REQUIREMENTS. All Events (as defined below) must be reported into VTIMS (General Motors Vehicle Transportation Information Management System) and/or to GM's designated supply chain management contractor or the supply chain management's contractor's chosen data service provider. Events include, but are not necessarily limited to, receipt, dispatch, delivery, and start of storage. Payment for each service is based on event reporting. VTIMS reporting must be completed the day the event occurs or as signified below. In being given access to VTIMS reporting as required, the Service Provider recognizes that unauthorized use of or contribution to the unauthorized use of computer facilities and/or GM data constitutes a violation of this Agreement. Service Provider recognizes its responsibility to maintain the confidentiality of GM information to which Service Provider has access during the Term of this Agreement, and failure to comply with these responsibilities is considered a material breach of this Agreement. Service Provider systems must possess the following electronic capabilities: 12 (a) Receive advance shipping notices (ASN's). (b) Record receipt of vehicle and bay locations and communicate event (EV4B) to VTIMS. (c) Confirm routing based on response from VTIMS to reported EV4B. (d) Build loads to conform to operational and quality guidelines. (e) Transmit receipt (EV4B) and dispatch (EV42) within one hour of actual event. (f) Deliveries should be reported within four hours of actual event. (g) Other reporting as required: 1. Vehicle on hold (EV4D) 2. Return to plant (EV4P) 3. Downloading and responding to re-consignments in VTIMS 4. Inspection transmissions and DECS (claims) (h) Reporting will be in LU6.2. a system to system protocol. (i) Limited transactions and EDI are to be communicated via batch EDS ELITE. (j) Service Provider shall provide data transmissions to GM and GM's designated supply chain management contractor, or the supply chain management's contractor's chosen data service provider at no additional cost. (k) Service Provider shall request VTIMS Online access for select employees to facilitate reporting error corrections. The Service Provider shall also request deletion of employee access upon reassignment or termination such that their access to VTIMS is no longer required. 21. MISCELLANEOUS. 21.01 Amendments. No amendment to this Agreement shall be binding upon either Service Provider or GM, unless such amendment is in writing and it is signed by a duly authorized representative of each of Service Provider and GM. 21.02 Assignments. GM, in its sole discretion, reserves the right to assign or delegate its obligations under this Agreement to Vector SCM, LLC in accord with GM's realignment of its global logistics management; provided, no such assignment or delegation shall operate as a release of GM with respect to its payment and other obligations hereunder. GM shall provide written notification to the Service Provider of its intent to do so. Otherwise, this Agreement shall be binding upon and inure to the benefit of the parties, and their respective successors and permitted assigns, but no rights, interests, or obligations of either party herein may be assigned without the prior written consent of GM. For purposes of this Section 21.02, a merger of Service Provider with an affiliated entity or a sale of less than ten (10%) of Service Provider's voting shares shall not constitute an assignment. 21.03 Severability. If any provision of this Agreement, or any portion thereof, is invalid or unenforceable under any statute, regulation, ordinance, executive order or other rule of law, such provision, or portion, thereof, shall be deemed reformed or deleted, but only to the extent necessary to comply with such statute, regulation, ordinance, order or rule, and the remaining provisions of this Agreement shall remain in full force and effect. 21.04 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Michigan, excluding its conflicts of law rules. Each party consents, for purposes of enforcing this Agreement, to non-exclusive personal jurisdiction, service of 13 process and venue in any state or federal court within the State of Michigan having jurisdiction over the subject matter. 21.05 Counterparts. This Agreement may be executed by the parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. All signatures of any party may be transmitted by facsimile, and a facsimile will for all purposes be deemed to be the original signature of the person whose signature it reproduces and will be binding upon that person and on the party on whose behalf that person signed. 21.06 Waiver. Any extension or waiver will be valid only if set forth in a written instrument signed by the party sought to be bound. No failure or delay on the part of any party in the exercise of any right or remedy under this Agreement will impair that right or remedy or be construed to be a waiver of, or acquiescence in, any inaccuracy or breach of any representation, warranty or agreement in this Agreement, nor will any single or partial exercise of any right or remedy preclude other or further exercise of that right or remedy, or of any other right or remedy. 21.07 Modifications. If, during the Term of this Agreement, either party requires any material modifications to the terms of this Agreement, although neither party is under an obligation to agree to any such modifications, should a party agree to modifications, the party requesting such modifications shall be responsible for any fees, including, but not limited to, attorneys' and professional fees relating to such modification. 21.08 Time of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT AND EACH OF ITS PROVISIONS. 21.09 Headings. The headings contained in this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 21.10 Incorporation of Appendices and Exhibits. The Appendices and Exhibits identified in this Agreement are incorporated in this Agreement by reference and made a part of this Agreement. 21.11 Non-Waiver - Applicable Law. Notwithstanding anything herein to the contrary, it is not the intent of the parties to waive any rights each party has under applicable law in connection with this Agreement, which rights are hereby expressly reserved. 21.12 Confidentiality. Except as otherwise provided in Section 21.12 hereof, GM and Service Provider acknowledge and agree that the terms of this Agreement are and shall remain confidential. 21.13 Public Announcements. Subject to a party's legal obligation to disclose the existence of this Agreement and/or the terms hereof, neither party shall make any public disclosure regarding this Agreement or its terms without the prior written consent of the other party, and any such public disclosure shall be mutually agreed upon by both parties to this Agreement. 14 21.14 Consultation with Counsel. THE PARTIES ACKNOWLEDGE THAT THEY HAVE BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH COUNSEL BEFORE EXECUTING THIS AGREEMENT AND ARE EXECUTING THIS AGREEMENT WITHOUT DURESS OR COERCION AND WITHOUT RELIANCE ON ANY REPRESENTATIONS, WARRANTIES OR COMMITMENTS OTHER THAN THOSE REPRESENTATIONS, WARRANTIES AND COMMITMENTS SET FORTH IN THIS AGREEMENT. 22. ENTIRE AGREEMENT. This Agreement, together with any Appendices and Exhibits attached hereto or to be attached hereto, constitute the entire agreement and understanding between the parties concerning the Transportation Service, and cancels and supersedes any and all prior agreements and discussions between the parties prior to the Effective Date. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. ALLIED AUTOMOTIVE GROUP, INC. GENERAL MOTORS CORPORATION By: ________________________________ By: ______________________________ Title: ______________________________ Title: Director, Vehicle Logistics Date: January 2, 2004 Date: January 2, 2004 - ------------------ [XXXXX] Represents material deleted per the Company's request for Confidential Treatment and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. 15 EX-10.20(A) 5 g87601exv10w20xay.txt EX-10.20(A) AMENDMENT NO. 4 TO THE IBM GLOBAL EXHIBIT 10.20(a) [LOGO] IBM/Allied Holdings AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS This Amendment No. 4 (this "Amendment"), effective February 1, 2004 , amends the IBM Global Services National Agreement between Allied Holdings ,Inc. ("Allied Holdings") and International Business Machines Corporation ("IBM") effective April 1, 2001 (the "Agreement"). The terms and conditions of the Agreement remain in full force and effect unless specifically amended or supplemented herein. I.0 REVISIONS TO THE AGREEMENT BASE TERMS SECTION 1.0 DEFINITIONS DELETE: 1.0 (b) Additional Resource Charge or ASC means the charges, as set forth in Schedule C (Charges), to Allied Holdings if Allied Holdings' usage of Resource Units is above the applicable Baseline. 1.0 (l) ARC Invoice has the meaning set forth in Schedule 6.1 (Charges) of this Agreement. 1.0 (aaa) Reduced Resource Credit or RRC means the credit, as set forth in Schedule C (Charges), to Allied Holdings if Allied Holdings' usage of a Resource Unit is less than the applicable Baseline. ADD: 1.0 (zzz) Amended Effective Date means February 1, 2004, 0000 hours Eastern Standard Time. 1.0 (aaaa) Amended Expiration Date means January 31, 2014, 2359 hours Eastern Standard Time. REPLACE: 1.0 (s) Critical Success Factors Results means the report produced by Allied Holdings that will be used to document the level of System Availability Allied Holdings has achieved in the six months prior to the Effective Date as verified by IBM. 1.0 (jjj) Service Recipients means the entities receiving Services at Allied Holdings' request and listed in Schedule K (Service Recipients) as of the Amended Effective Date or as it may be updated from time to time by Allied Holdings. 1.0 (ggg) Services means the services and functions provided by IBM to Allied Holdings and the Services Recipients pursuant to this Agreement, as more fully described in Schedule A, A-1, A-2 and A-3 (Services). SECTION 2.0 TERM Replace with: "This Amendment No. 4 begins on the Amended Effective Date and expires on the Amended Expiration Date, except as earlier terminated or extended in accordance with the terms of this Agreement. The period of this Amendment No. 4 in effect, as of the Amended Effective Date, is referred to herein as the "Term". SECTION 4.4 PERSONNEL Add Section 4.4 (e) "Subject to Section 6.4 (New Services) and all other terms of the Agreement, including but not limited to Section 8 (Confidentiality), IBM agrees to provide reasonable assistance to a Third Party hired by Allied Holdings that is hired to perform a service related to the Services." Allied Holdings/IBM Page 1 of 7 Amendment No. 4 [LOGO] IBM/Allied Holdings AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS SECTION 4.5 PROCEDURES Add Section 4.5 (d) as follows: "Notwithstanding the definition designating the Procedural Manual as a Type II Material, IBM's use of the Procedure Manual is subject to the confidentiality terms contained in Section 8." SECTION 5.2 TRANSITION OF SERVICES Section 5.2.a. Change "Effective Date" to "Amended Effective Date". SECTION 6.1 CHARGES Section 6.1.a. is replaced with: a. Annual Services Charges IBM will invoice Allied Holdings twice each month of the Term, for the current month and beginning on the Amended Effective Date, for the Annual Services Charge, prorated in equal bi-monthly payments (the ASC Invoice). Section 6.1 b. is deleted in its entirety Section 6.2.a. is deleted in its entirety. SECTION 6.3 PAYMENTS Section 6.3.a.1. is replaced with: The Payable Date for the ASC Invoice will be the 15th and 30th day of the calendar month in which Allied Holdings receives the ASC Invoice from IBM, provided Allied Holdings receives such ASC Invoice on or before the fifth and the tenth days of the month for payment due on the 15th and 30th, respectively, of that month. If Allied Holdings receives the ASC Invoice after the respective fifth or tenth day of the month, the Payable Date for such ASC Invoice will be 30 days after Allied Holdings' receipt of such ASC Invoice SECTION 7.2 TERMINATION FOR CONVENIENCE Amend 7.2.a.1 replace as follows: "no earlier than the third anniversary after the Amended Effective Date, and" 7.3 TERMINATION FOR CAUSE Section 7.3 is replaced in its entirety as follows: a. Allied Holdings or IBM (the NONBREACHING PARTY) may elect to terminate this Agreement because of a material breach of this Agreement by the other (the BREACHING PARTY) by following the process set forth in this Section. b. The Nonbreaching Party will provide the Breaching Party with written notice of such material breach within 60 days after the material breach or the date the Nonbreaching Party becomes aware of such material breach, describing in detail the specific nature and dates of the Allied Holdings/IBM Page 2 of 7 Amendment No. 4 [LOGO] IBM/Allied Holdings AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS material breach, and will provide the Breaching Party with the opportunity to cure the material breach as follows: 1. In the event of a failure to pay any amount due on the Payable Date, ten days; and 2. in the event of any other material breach, 45 days. If the nature of any nonmonetary breach is such that it would be unreasonable to expect a cure within 45 days, an additional 15 days will be allowed provided that the Breaching Party exercises all reasonable efforts to cure such material breach within such additional 15 day period. c. If the material breach for failure to pay any amount due on the payable date is not cured during the ten day cure period set forth above, the Nonbreaching Party may terminate this Agreement for material breach by providing the Breaching Party with written notice within 60 days after the expiration of the ten day cure period specified above, declaring termination of this Agreement for material breach under this Section, effective on the date stated in such notice. However, if the Dispute Resolution Process is instituted prior to the effective date on the notice, such effective date will be no later than 15 days after the Breaching Party's receipt of such notice of termination for material breach. d. In the event of any breach, other than nonpayment, if the material breach is not cured during the applicable cure period set forth above, the Nonbreaching Party may terminate this Agreement for material breach by providing the Breaching Party with written notice within 60 days after the expiration of the cure period specified above, declaring termination of this Agreement for material breach under this Section, effective on the later of the date stated in such notice or five (5) days following completion of the Dispute Resolution Process, if instituted. Such effective date will be no later than 90 days after the Breaching Party's receipt of such notice of termination for material breach. SECTION 7.3.1. IS ADDED TO THE AGREEMENT AS FOLLOWS: 7.3.1 CREDIT ASSESSMENT "Allied Holdings may notify IBM anytime during the Term if Allied Holdings' current published Standard and Poor (S&P) and Moody's credit rating exceeds a S&P "BB" rating or a Moody's "BA2" rating, respectively. Upon IBM's verification of Allied Holdings' notification of credit rating, IBM shall issue an Amendment to this Agreement to reinstate the mutually agreed language for Section 7.3 entitled "Termination for Cause" in the initial Agreement executed on April 1, 2001." SECTION 7.5 TRANSFER ASSISTANCE Section 7.5. (f) is replaced as follows: "If IBM terminates this Agreement for Allied Holdings' material breach, IBM will provide Allied Holdings with Transfer Assistance if Allied Holdings pays for such Transfer Assistance in advance. SECTION 7.6 OTHER RIGHTS UPON EXPIRATION OR TERMINATION Section 7.6. (a) is replaced as follows: "Provided as a New Service, IBM will provide the additional assistance set forth in this Section upon expiration or termination of this Agreement." SECTION 9.0 INTELLECTUAL PROPERTY Allied Holdings/IBM Page 3 of 7 Amendment No. 4 [LOGO] IBM/Allied Holdings AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS Replace Section 9.0 (b) as follows: Type I Materials are copyrighted materials owned by Allied Holdings or any other party, and Derivative Works thereof, including, without limitation, those copyright items described in Section 9.0 e. SECTION 10.0 INDEMNIFICATION Replace Section 10.0 (a) 1 with the following: "that an IBM Product or Service provided to Allied Holdings by IBM under this Agreement infringes such Third Party's patent, copyright or other intellectual property rights under U.S. or Canadian law; provided that IBM will not have and obligation to indemnify Allied for such Third Party Infringement to the extent the infringing Service was being provided by Allied Holding prior to the Amended Effective Date or is caused by specifications provided to IBM by Allied Holdings." SECTION 13.8 GEOGRAPHIC SCOPE OF SERVICES IS REPLACED AS FOLLOWS: "IBM is providing the Services under this Agreement in the United States. In the event Allied Holdings requires certain tasks within the scope of the Services to be performed outside the United States, the Parties agree to implement such work in a Change Order." SECTION 13.11 JOINT VERIFICATION Amend the first sentence of Section 13.11 to read: "During the six months after the Amended Effective Date (the JOINT VERIFICATION PERIOD), Allied Holdings and IBM reserve the right to inventory and validate any information that is reflected in or omitted from this Agreement." SECTION 13.14 NOTIFICATIONS AND APPROVALS Replace the notification points of contact under Section 13.14.d.1 and 2 as follows: d. IBM and Allied Holdings will provide notifications Agreement to the following: 1. In the event of breach, the Nonbreaching Party will notify the Breaching Party via electronic and courier or certified mail. Such notice will be deemed given upon the earlier of either notification in accordance with Section 13.14.c. For termination, breach or default: If to IBM: Vice President, Travel and Transportation Industry IBM Global Services Dwayne Ingram 3031 N. Rocky Point Drive W. Tampa, FL 33607 Telephone: 813-356-5100 Facsimile: 813-356-3411 Allied Holdings/IBM Page 4 of 7 Amendment No. 4 IBM/Allied Holdings [LOGO] AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS With a copy to: IBM Project Executive Nancy Deal 235 Meridian Hills Road Tallahassee, FL 32312 Telephone/Facsimile: 850-906-0510 and General Counsel, IBM Global Services Route 100 Somers, New York 10589 Telephone: 914-766-4165 Facsimile: 914-766-8444 If to Allied Holdings: Sr. Vice President Business Processing Engineering David A. Rawden 160 Clairemont Ave, Suite 200 Decatur, GA 30030 Telephone: 404 687-5905 Facsimile: 404 370-4206 With a copy to: Allied Holdings Project Executive Vice President, Communications & Technical Services Information Technology Larry G. Parks 160 Clairemont Ave, Decatur, GA 30030 Telephone: 404-687-6269 Facsimile 404 370-4312 and Senior Vice President Corporate Affairs and General Counsel Tommy Duffy 160 Clairemont Ave, Suite 200 Decatur, GA 30030 Telephone: 404 370-4225 Facsimile: 404 370-4312 2. For all other notices: If to IBM: IBM Project Executive Nancy Deal 235 Meridian Hills Road Tallahassee, FL 32312 Telephone/Facsimile: 850-906-0510 Allied Holdings/IBM Page 5 of 7 Amendment No. 4 [LOGO] IBM/Allied Holdings AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS If to Allied Holdings: Allied Holdings Project Executive Vice President, Communications & Technical Services Information Technology Larry G. Parks 160 Clairemont Ave, Decatur, GA 30030 Telephone: 404-687-6269 Facsimile 404 370-4312 This Amendment No. 4 Schedules A-1, A-2, A-3 and B-1 are additional addendums to the existing respective Schedules. Schedules B, C, D, F, G, H, I and L are amended and restated in their entirety. 2.0 ATTACHMENTS Schedule A-1 Services Schedule A-2 Peoplesoft Services Schedule A-3 AMS Services Schedule B-1 AMS Service Levels Schedule B Service Levels Schedule C Charges Schedule D Transition Schedule F Software Schedule G Machines Schedule H Standards Schedule I Facilities Schedule L Employees THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THE AMENDMENTS, 2) THE SCHEDULES, AND 3) THE AGREEMENT. THIS STATEMENT OF THE AMENDMENT SUPERSEDES ALL PROPOSALS OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER DESCRIBED IN THIS AMENDMENT. Allied Holdings/IBM Page 6 of 7 Amendment No. 4 [LOGO] IBM/Allied Holdings AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS Accepted by: Accepted by: INTERNATIONAL BUSINESS MACHINES CORPORATION ALLIED HOLDINGS, INC. By: /s/ Dwayne Ingram By: /s/ David A. Rawden --------------------------------------- --------------------------- Authorized Signature Authorized Signature Dwayne Ingram David A. Rawden Vice President, Sr. Vice President, Travel and Business Processing Engineering Transportation Date Date Allied Holdings/IBM Page 7 of 7 Amendment No. 4 EX-21.1 6 g87601exv21w1.txt EX-21.1 SUBSIDIARIES OF ALLIED HOLDINGS, INC. EXHIBIT 21.1 SUBSIDIARIES OF ALLIED HOLDINGS, INC. The subsidiaries of Allied Holdings, Inc. and the place of incorporation or organization are as follows: Allied Automotive Group, Inc. Georgia Axis Group, Inc. Georgia Allied Systems, Ltd., LP Georgia Allied Systems (Canada) Company Nova Scotia Kar-Tainer International, LLC Delaware GACS Incorporated Georgia Allied Freight Broker, LLC Delaware QAT, Inc. Florida Terminal Services, LLC Delaware F.J. Boutell Driveaway, LLC Delaware RMX, LLC Delaware Transport Support, LLC Delaware Commercial Carriers, Inc. Michigan Haul Insurance Limited Cayman Islands AH Industries, Inc. Alberta Kar-Tainer International Limited Bermuda Axis Netherlands, LLC Georgia Axis Areta, LLC Georgia Arrendadora de Equipo para el Mexico Transporte de Automoviles, s. de R.L. de C.V. Axis Logistica, S. de R.L. de C.V. Mexico Logistic Technology, LLC - Georgia Georgia Logistic Systems, LLC Georgia Kar-Tainer International (Pty) Ltd. South Africa Axis Canada Company Nova Scotia CT Services, Inc. Michigan Cordin Transport, LLC Delaware EX-23.1 7 g87601exv23w1.txt EX-23.1 CONSENT OF KPMG LLP. EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors Allied Holdings, Inc.: We consent to the incorporation by reference in the registration statements on Form S-8 (nos. 333-72053, 333-51104, 333-62440, 333-91942, 333-107455, and 333-107456) and form S-4 (No. 333-37113), of Allied Holdings, Inc. of our report dated April 7, 2004, with respect to the consolidated balance sheets of Allied Holdings, Inc. and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended and the related financial statement schedule, which report appears in the Allied Holdings, Inc. 2003 Annual Report on Form 10-K. Our report refers to a change in accounting to adopt the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" in 2002. Our report refers to our audit of the adjustments that were applied and disclosures added to restate the 2002 and 2001 consolidated financial statements. Our report also refers to our audit of the transitional disclosures required by Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets", to revise the 2001 consolidated financial statements. However, we were not engaged to audit, review or apply any procedures to the 2001 consolidated financial statements other than with respect to such adjustments and disclosures. /s/ KPMG LLP Atlanta, Georgia April 7, 2004 EX-23.2 8 g87601exv23w2.txt EX-23.2 NOTICE RE: CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.2 NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP Section 11(a) of the Securities Act of 1933, as amended (the "Securities Act"), provides that if any part of a registration statement at the time such part becomes effective contains an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring a security pursuant to such registration statement (unless it is proved that at the time of such acquisition such person knew of such untruth or omission) may sue, among others, every accountant who has consented to be named as having prepared or certified any part of the registration statement, or as having prepared or certified any report or valuation which is used in connection with the registration statement, with respect to the statement in such registration statement, report or valuation which purports to have been prepared or certified by the accountant. This Form 10-K is incorporated by reference into the following previously filed registration statements of Allied Holdings, Inc.: Registration Statements on Form S-8 file numbers 333-72053, 333-51102, 333-51104, 333-62440, and 333-91942 and Registration Statement on Form S-4 file number 333-37113 (collectively, the "Registration Statements") and, for purposes of determining liability under the Securities Act, is deemed to be a new registration statement for each Registration Statement into which it is incorporated by reference. On April 2, 2002, Allied Holdings, Inc. dismissed Arthur Andersen LLP ("Arthur Andersen") as its independent public accountant and appointed KPMG LLP to replace Arthur Andersen. Both the engagement partner and the manager for Allied Holdings's prior fiscal year audit are no longer with Arthur Andersen. As a result, Allied Holdings has been unable to obtain Arthur Andersen's written consent to incorporate by reference into the Registration Statements Arthur Andersen's audit report regarding Allied Holding's consolidated financial statements as of December 31, 2001 and for the year then ended. Under these circumstances, Rule 437a under the Securities Act and Rule 2-02 of Regulation S-X promulgated by the Securities and Exchange Commission permit Allied Holdings, Inc. to file this Form 10-K without a written consent from Arthur Andersen. As a result, however, Arthur Andersen will have no liability under Section 11(a) of the Securities Act for any untrue statements of a material fact contained in the financial statements audited by Arthur Andersen or any omissions of a material fact required to be stated therein. Accordingly, you would be unable to assert a claim against Arthur Andersen under Section 11(a) of the Securities Act for any purchases of securities under the Registration Statements made on or after the date of the Form 10-K. However, to the extent provided in Section 11(b)(3)(C) of the Securities Act, other persons who are liable under Section 11(a) of the Securities Act, including Allied Holdings's officers and directors, may still rely on Arthur Andersen's original audit reports as being made by an expert for purposes of establishing a due diligence defense under Section 11(b) of the Securities Act. EX-31.1 9 g87601exv31w1.htm EX-31.1 CERTIFICATION BY HUGH E. SAWYER

EXHIBIT 31.1

CERTIFICATION

I, Hugh E. Sawyer, certify that:

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

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 13, 2004
/s/ HUGH E. SAWYER
Hugh E. Sawyer

Chief Executive Officer and President

EX-10.13

                                                                   EXHIBIT 10.13

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is made and entered into as of the ______ day
of October, 2003, to be effective as of the 6th day of October, 2003 (the
"Effective Date"), by and between ROBERT CHAMBERS ("Employee") and AXIS GROUP,
INC., a Georgia corporation ("Employer").

                                   WITNESSETH:

         WHEREAS, Employer, through the Affiliates (as hereinafter defined), is
engaged in the transportation of automobiles and light trucks from the
manufacturer to retailers and others, including nontraditional car haulers
involved in the vehicle distribution process and providing logistics and
distribution services to the new and used vehicle distribution market and other
segments of the automotive industry (the "Business");

         WHEREAS, Employee has management skills of which Employer desires to
avail itself; and

         WHEREAS, Employer and Employee deem it to their respective best
interest to outline the duties and obligations, each to the other, by executing
this Employment Agreement,

         NOW, THEREFORE, for and in consideration of the covenants and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employer and Employee
hereby mutually agree as follows:

         1.       DEFINITIONS.

                  (a)      "Affiliate" means Allied Holdings, Inc., CT Group,
                           Inc., CT Services, Inc., Cordin Transport, Inc., Axis
                           North America, Inc., Axis (Canada) Company, and the
                           other subsidiaries of Axis Group, Inc.

                  (b)      "Base Salary" means the annual salary payable, and as
                           adjusted, pursuant to paragraph 4.

                  (c)      "Cause" means (i) the commission by Employee of an
                           act of fraud, misappropriation, dishonesty,
                           embezzlement gross negligence, or willful misconduct
                           in connection with Employee's employment hereunder;
                           (ii) criminal conduct of Employee which results in a
                           felony conviction of such Employee, or the Employee's
                           offering a plea of nolo contendre to a felony; (iii)
                           Employee's continuing and/or willful failure to
                           perform Employee's duties or obligations for Employer
                           as outlined in this Agreement, or Employee's breach
                           of this Agreement; (iv) Employees prolonged absence,
                           without the consent of Employer, other than as a
                           result of Employee's Disability or permitted absence
                           or vacation, which is not cured within ten (10) days
                           after written notice from Employer's Board of
                           Directors thereof; (v) engaging in activities
                           prohibited by Paragraphs

                                       1



                           11,12,13, or 14 hereof; (vi) engaging in any activity
                           which could constitute grounds for termination for
                           cause by Employer or any of its subsidiaries or
                           affiliates.

                  (d)      "Disability," with respect to Employee, shall
                           conclusively be deemed to have occurred (i) if
                           Employee shall be receiving payments pursuant to a
                           policy of long-term disability income insurance; or
                           (ii) if Employee shall have no disability income
                           coverage then in force, then if any insurance company
                           insuring Employee's life shall agree to waive the
                           premiums due on such policy pursuant to a disability
                           waiver of premium provision in the contract of life
                           insurance; or (iii) if Employee shall have no
                           disability waiver of premium provision in any
                           contract of life insurance, then if Employee shall be
                           receiving disability benefits from or through the
                           Social Security Administration; provided, however,
                           that in the event Employee's disability shall,
                           otherwise and in good faith, come into question (and,
                           for purposes of this provision, "disability" shall
                           mean the permanent and continuous inability of
                           Employee to perform substantially all of the duties
                           being performed immediately prior to Employee's
                           disability coming into question) for a period of not
                           less than one hundred twenty (120) consecutive days,
                           and a dispute shall arise with respect thereto, then
                           Employee (or Employee's personal representatives)
                           shall appoint a medical doctor, Employer shall
                           appoint a medical doctor, and said two (2) doctors
                           shall, in turn, appoint a third party medical doctor
                           who shall examine Employee to determine the question
                           of disability and whose determination shall be
                           binding upon all parties to this Agreement.

                  (e)      "Restricted Period" means the period commencing as of
                           the date hereof and ending on that date twelve (12)
                           months after the termination of Employee's employment
                           with Employer for any reason, whether voluntary or
                           involuntary.

         2.       TERM. Subject to the provisions hereinafter set forth, the
term of this Agreement shall commence as of the Effective Date and shall expire
two years after the Effective Date (the "Initial Term") and shall extend for
additional terms of one (1) year (the "Renewal Term") provided either party may
give written notice of termination not less than (90) days prior to the end of a
Term unless the Agreement is terminated pursuant to paragraph 8 of this
Agreement. As used herein, "Term" shall mean the then current Initial Term or
Renewal Term, as the case may be.

         3.       DUTIES.

                  (a)      Employee shall, during the Term, serve as and be
                           designated President of Employer having duties,
                           responsibilities, powers and authority which shall
                           include operating control and profit and loss
                           statement responsibility for Employer, including its
                           operating subsidiaries, preparing budgets,
                           responsibility for organic sales growth,
                           recommendations related to capital

                                       2



                           expenditures and new business opportunities, employee
                           selection, retention, dismissal and promotion and
                           customer relationship management, and related matters
                           which are consistent with a position of like
                           designation, but subject to the direction of the
                           President and Chief Executive Officer of Allied
                           Holdings, Inc. The Employee shall perform such
                           executive, managerial and administrative duties as
                           the President and Chief Executive Officer of Allied
                           Holdings, Inc. may, from time to time, reasonably
                           request. Employee shall not be required to
                           permanently relocate outside the Detroit, MI area.

                  (b)      During the Term, Employee shall devote substantially
                           all of Employee's business time, energy and skill to
                           performing the duties of Employee's employment
                           (vacations as provided hereunder and reasonable
                           absences because of illness excepted), shall
                           faithfully and industriously perform such duties, and
                           shall use Employee's best efforts to follow and
                           implement all management policies and decisions of
                           Employer. Employee shall not become personally
                           involved in the management or operations of any other
                           company, partnership, proprietorship or other entity,
                           other than any Affiliate, without the prior written
                           consent of Employer; provided, however, that so long
                           as it does not interfere with Employee's employment
                           hereunder, Employee may (i) serve as a director,
                           officer or partner in a company that does not compete
                           with the Business of Employer and the Affiliates so
                           long as the aggregate amount of time spent by
                           Employee in all such capacities shall not exceed
                           twenty (20) hours per month, and (ii) serve as an
                           officer or director of, or otherwise participate in,
                           educational, welfare, social, religious, civic, trade
                           and industry-related organizations.

         4.       BASE SALARY. For and in consideration of the services to be
rendered by Employee pursuant to this Agreement, Employer shall pay to Employee,
for each year during the Term, an annual salary of Three Hundred Forty Thousand
Dollars ($340,000) (the "Base Salary"), in installments in accordance with
Employer's payroll practices. Employee's salary shall be reviewed by the Board
of Directors of Employer annually and may be increased, but not decreased, at
the sole discretion of the Board.

         5.       BONUS COMPENSATION.

                  (a)      Employee shall be eligible to participate in
                           Employer's bonus plan. The target bonus of Employee
                           for 2003 shall be 75% of Employee's base salary which
                           will be based on 15% of the financial results of
                           Allied Holdings and 85% or the financial results of
                           Axis and any other joint venture or other arrangement
                           entered into by Axis. Notwithstanding the foregoing,
                           Employer shall pay to Employee a guaranteed bonus
                           payout for the calendar year ending December 31, 2004
                           in the amount of Fifty Thousand Dollars ($50,000), to
                           be paid no earlier than January 1, 2005 and no later
                           than January 15, 2005, with such amount to be
                           credited

                                       3



                           against any bonus which may be due Employee for the
                           year ending December 31, 2004 under the Employer's
                           bonus plan. The target bonus for year 2004 and 2005
                           shall be 100% of Employee's base salary which will be
                           based on 15% of the financial results of Allied
                           Holdings and 85% or the financial results of Axis and
                           any other joint venture or other arrangement entered
                           into by Axis. Such bonuses shall be paid no later
                           than March 31, 2005 and March 31, 2006.

                  (b)      Employee shall be entitled to participate in all long
                           term incentive plans, including the amended and
                           restated long term incentive plan and similar plans
                           as are now or hereafter provided by Employer or its
                           Affiliates in accordance with the terms of such plans
                           and consistent with persons serving in a senior
                           management capacity.

         6.       OTHER BENEFITS. During the Term, Employer shall provide the
following benefits to Employee:

                  (a)      Employee and Employee's immediate family shall be
                           entitled to participate in all group benefit
                           programs, including, without limitation, medical and
                           hospitalization benefit programs, dental care, life
                           insurance or other group benefit plans of Employer as
                           are now or hereafter provided by Employer or any
                           Affiliate, in each case in accordance with the terms
                           and conditions of each such plan;

                  (b)      Employee shall be supplied with a Company vehicle or
                           in the alternative be provided with a monthly car
                           allowance in the amount of $700.00 per month; and

                  (c)      Employee shall be reimbursed for actual, reasonable,
                           ordinary and necessary business expenses incurred in
                           the performance of Employee's duties hereunder
                           including country club expenses expended in
                           connection with the entertaining of clients. Employee
                           shall be reimbursed for such expenses upon
                           presentation and approval of expense statements or
                           written vouchers or other supporting documents as may
                           be reasonably requested in advance by Employer and in
                           accordance with Employer's practices in effect from
                           time to time.

                  (d)      Employer shall reimburse Employee for actual and
                           reasonable expenses incurred by Employee in the event
                           Employee voluntarily relocates to metropolitan
                           Atlanta, GA during the term of this Agreement in
                           accordance with the Company's moving and relocation
                           policies as provided to Employee. Employee shall be
                           reimbursed for such expenses upon presentation and
                           approval of expense statements or written vouchers or
                           other supporting documents as may be reasonably
                           requested in advance by Employer which approval shall
                           not be unreasonably withheld or delayed; and

                                       4



                  (e)      Employer shall pay to Employee an additional payment
                           (the "Gross-Up Payment") in an amount sufficient to
                           fully reimburse Employee with respect to all federal,
                           state and local taxes actually paid by Employee with
                           respect to the payment set forth in clause (d) hereof
                           to the extent the payment represents reimbursement
                           for actual and reasonable relocation expenses. The
                           Gross-Up Payment shall not be unreasonably withheld
                           or delayed by Employer.

         7.       VACATION. Employee shall receive no fewer than five (5) weeks
paid vacation for each year during the Term. Scheduling of vacation shall be
subject to the prior approval of Employer's President (which approval shall not
be unreasonably withheld). Vacation time shall not accrue, and in the event any
vacation time for any year shall not be used by Employee prior to the end of
such year or prior to termination of employment, it shall be forfeited, unless
vacation time not taken is directed by the President.

         8.       TERMINATION. Anything herein to the contrary notwithstanding
in Section 2 or any other Section of this Agreement, Employee's employment
hereunder shall terminate upon the first to occur of any of the following
events:

                  (a)      Employee's Disability; or (b) Employee's death; or

                  (c)      Employer terminating Employee's employment without
                           Cause hereunder prior to expiration of the Term or
                           ten (10) days prior written notice; or

                  (d)      Employee voluntarily terminating his employment for
                           any reason or no reason upon thirty (30) days prior
                           written notice to Employer.

                  (e)      Employee being terminated for Cause; or

                  (f)      Employer filing a petition for protection or relief
                           from creditors under the Federal Bankruptcy Law, or
                           any petition shall be filed against Employer under
                           the Federal Bankruptcy Law, or Employer shall admit
                           in writing its inability to pay its debts or shall
                           make an assignment for the benefit of creditors, or a
                           petition or application for the appointment of a
                           receiver or liquidator or custodian of Employer is
                           filed, or Employer shall seek a composition with
                           creditors.

                  (g)      Any material change by Employer in Employee's
                           function, duties, and responsibility, from the
                           position and attributes described in Paragraph 3
                           hereof, unless agreed to by Employee, or any
                           requirement that Employee perform substantially all
                           of his duties outside the metropolitan Detroit,
                           Michigan area, unless Employee voluntarily elects to
                           relocate to the Metropolitan Atlanta, Georgia area,
                           provided however that Employee's office shall
                           continue to be located in the metropolitan Detroit,
                           Michigan area until such time as he has voluntarily
                           elected to relocate his residence to the Metropolitan
                           Atlanta, Georgia area.

                                       5



         9.       SEVERANCE BENEFITS.

                  (a)      In the event Employee's employment is terminated (1)
                           by Employer without Cause pursuant to Paragraph 8(c)
                           hereunder, (2) pursuant to Section 8(e), (3) pursuant
                           to Section 8(f) (4) because Employer elects not to
                           renew this Agreement beyond the Initial Term or any
                           Renewal Term, or (5) by Employer within one (1) year
                           following any "change of control" of Employer for any
                           reason other than a conviction involving a felony,
                           Employee shall be entitled to severance benefits in
                           an amount equal to the greater of i) fifty-two (52)
                           weeks of Base Salary, or(ii) the severance amount due
                           to Employee in accordance with the severance plan or
                           guidelines of Employer in effect on the date of
                           termination. For purposes of this Agreement, change
                           of control shall mean any change in control or
                           ownership whereby Employer is reorganized, merged, or
                           consolidated with one or more corporations as a
                           result of which the owners of all of the outstanding
                           shares of common stock immediately prior to such
                           reorganization, merger or consolidation own in the
                           aggregate less than seventy percent (70%) of the
                           outstanding shares of common stock of the Employer or
                           any other entity into which Employer shall be merged
                           or consolidated immediately following the
                           consummation thereof (hereinafter, "Employer's
                           successor-in-interest"), or (ii) the sale, transfer
                           or other disposition of all or substantially all of
                           the assets or more than thirty percent (30%) of the
                           then outstanding shares of common stock of Employer
                           is effectuated, other than as a result of a merger or
                           other combination of Employer and an Affiliate, or
                           (iii) the acquisition by any "person" as used for
                           purposes of Section 13(d) or 14(d) of the Securities
                           Exchange Act of 1934 of beneficial ownership (within
                           the meaning of Rule 13d_3 promulgated under the
                           Exchange Act) of twenty percent (20%) or more of the
                           combined voting power of Employer's then outstanding
                           voting securities is effectuated; or (iv) the
                           individuals who, as of the date of execution of this
                           Agreement, are members of the Board of Directors (the
                           "Incumbent Board") cease for any reason to constitute
                           at least two-thirds (2/3) of the Board; provided,
                           however, that if the election, or nomination for
                           election by the shareholders of any new director was
                           approved by a vote of at least two-thirds (2/3) of
                           the Incumbent Board, such new director shall, for
                           purposes of this Agreement, be considered as a member
                           of the Incumbent Board.

                  (b)      In the event Employee's employment is terminated (1)
                           by Employer without Cause pursuant to 8(c), (2)
                           pursuant to Section 8(e), (3) pursuant to Section
                           8(f), (4) because Employer elects not to renew this
                           Agreement upon the expiration of the Initial Term or
                           any Renewal Term, or (5) by Employer within one (1)
                           year following any "change of control" of Employer
                           for any reason other than a conviction involving a
                           felony, Employee shall be entitled to continue
                           medical and dental coverage as in effect on the last
                           day of employment. Employer shall provide coverage by

                                       6



                           paying Employee's COBRA premiums for Employee and
                           covered dependents (if any) for eighteen (18) months.
                           Continuation coverage will terminate in the event
                           Employee becomes covered under any other comparable
                           group health plan (as an employee or otherwise),
                           unless the new group health plan contains any
                           exclusions or limitations with respect to any
                           pre-existing condition Employee or covered
                           dependent(s) may have. Employee must notify the
                           Employer promptly should Employee become covered
                           under any other plan.

                  (c)      If employment is terminated for any reason other than
                           (1) by Employer without Cause, (2) pursuant to
                           Section 8(e), (3) pursuant to Section 8(f), (4)
                           pursuant to Section 8(d) or (5) by Employer within
                           one (1) year following any "change of control" of
                           Employer for any reason other than a conviction
                           involving a felony, no severance benefits shall be
                           due to Employee;

                  (d)      Severance payments shall include the car allowance
                           provided for under this Agreement in addition to the
                           benefits listed above.

                  (e)      Employer will provide Employee with a six-month
                           individual program of professional outplacement
                           services.

                  (f)      Notwithstanding the foregoing, the severance payments
                           due from the Employer to the Employee pursuant to
                           this Agreement including the benefits under section
                           9(a) and section 9(b) shall be mitigated and reduced
                           by the amount of any consideration paid to Employee
                           by any other person or entity for services rendered
                           following the date of termination of employment and
                           the following fifty-two (52) weeks thereafter,
                           regardless of how such compensation is characterized,
                           including, but not limited to, consulting fees or
                           other fees for any services rendered by Employee. The
                           Employee must provide the Employer a copy of any
                           employment agreement, offer letter, or consulting
                           agreement disclosing total compensation to be paid to
                           the Employee for services rendered following the
                           termination date through fifty-two (52) weeks
                           following the termination date. Subject to the
                           remaining terms of this Agreement, Employer will pay
                           Employee at least 33% of the amount to be paid under
                           this Paragraph 9 notwithstanding any such mitigation.
                           In the event Employee fails to notify Employer that
                           he has accepted employment or is otherwise performing
                           services after the date of termination of employment
                           and the following fifty-two (52) weeks thereafter
                           with any person or entity, or that he has entered
                           into any form of agreement or arrangement, including,
                           but not limited to, a consulting arrangement whereby
                           Employee is paid for Employee's services, then all
                           severance benefits provided under this Agreement will
                           cease immediately and all liabilities and obligations
                           of Employer hereunder shall terminate.

                                       7



                           Notwithstanding anything in the Agreement to the
                           contrary, in the event Employee obtains a full_time
                           position with the Employer or any of its subsidiaries
                           or affiliates after the execution of this Agreement
                           but prior to the last day on which severance payments
                           are due under this Agreement, Employee understands
                           and agrees that all severance payments will cease
                           immediately and that all liabilities and obligations
                           of the Employer hereunder shall terminate.

         10.      CONDITIONS TO BENEFITS. Anything in this Agreement to the
contrary notwithstanding:

                  (a)      To receive the benefits enumerated in Paragraph 9,
                           Employee shall execute and agree to be bound by a
                           release agreement substantially in the form attached
                           to this Agreement as Exhibit A: and

                  (b)      Employee's right to receive any of the benefits
                           provided for in Paragraph 9 or otherwise in this
                           Agreement following termination of employment shall
                           immediately cease and be of no further force or
                           effect if Employee violates any of the covenants
                           contained in Paragraphs 11, 12,13, or 14.

         11.      COVENANT NOT TO SOLICIT. Employer and Employee acknowledge
that, during Employee's employment, Employer will spend considerable amounts of
time, effort and resources in providing Employee with knowledge relating to the
business affairs of Employer and the Affiliates, including Employer's and the
Affiliates' trade secrets, proprietary information and other information
concerning Employer's and the Affiliates' financing sources, finances, customer
lists, customer records, prospective customers, staff, contemplated acquisitions
(whether of business or assets), ideas, methods, marketing investigations,
surveys, research, customers' records and any other information relating to
Employer's and the Affiliates' Business.

                  To protect Employer from Employee's solicitation of business
from customers during the Restricted Period, Employee agrees that he shall not,
directly or indirectly, for any person (including Employee himself),
corporation, firm, partnership, proprietorship or other entity, other than
Employer or an Affiliate, engaged in the Business, solicit transportation,
logistics or other business of the type provided by Employer for any customer
with whom the Employee had material contact during the twelve (12) month period
immediately preceding the termination of Employee's employment. Material contact
includes personal contact with customers, the supervision of the efforts of
others who have personal contact with the customers, and the receipt of
confidential information of customers of Employer. This Paragraph 11 shall,
except as otherwise provided in this Agreement, survive the termination of this
Agreement.

         12.      COVENANT NOT TO DISCLOSE. Employee agrees that during
employment with Employer and for a period of three (3) years following the
cessation of that employment for any reason, Employee shall not directly or
indirectly divulge or make use of any Confidential Information or Trade Secrets
(so long as the information remains a Trade Secret or remains confidential)
without prior written consent of Employer. Employee further agrees that if

                                       8



Employee is questioned about information subject to this agreement by anyone not
authorized to receive such information, Employee will promptly notify Employee's
supervisor(s) or an officer of Employer. This Agreement does not limit the
remedies available under common or statutory law, which may impose longer duties
of non-disclosure. For purposes of this Agreement, the following definition
shall apply:

                  "Confidential Information" means information about Employer
                  and its Employees, Customers and/or Suppliers which is not
                  generally known outside of Employer, which employee learns of
                  in connection with employee's employment with Employer, and
                  which would be useful to competitors of Employer. Confidential
                  Information includes, but is not limited to: (1) business and
                  employment policies, marketing methods and the targets of
                  those methods, finances, business plans, promotional materials
                  and price lists; (2) the terms upon which Employer obtains
                  products or services from its vendors and sells them to
                  customers; (3) the nature, origin, composition and development
                  of Employer's products; (4) the manner in which Employer
                  provides products and services to its customers.

         13.      COVENANT NOT TO INDUCE. Employee covenants and agrees that
during the Restricted Period, he will not, directly or indirectly, on Employee's
own behalf or in the service or on behalf of others, solicit, induce or attempt
to solicit or induce an employee or other personnel of Employer and the
Affiliates to terminate employment with such party. This Paragraph 13 shall,
except as otherwise provided in this Agreement, survive the termination of this
Agreement.

         14.      COVENANT OF NON-DISPARAGEMENT AND COOPERATION. Employee agrees
that he shall not, at any time during or following the Term, make any remarks
disparaging the conduct or character of Employer or any of its current or former
Affiliates, agents, employees, officers, directors, shareholders, successors or
assigns (in the aggregate, such persons and entities are referred to herein as
the "Protected Persons"); provided, however, that during the Term, Employer
acknowledges and agrees that Employee may be required from time to time to make
such remarks about Protected Persons for legitimate business purposes and if
consistent with the discharge of Employees duties hereunder. In addition,
following termination of Employee's employment hereunder, Employee agrees to
reasonably cooperate with Employer, at no extra cost, in any litigation or
administrative proceedings (e.g., EEOC charges) involving any matters with which
Employee was involved during Employee's employment with Employer. Employer shall
reimburse Employee for travel and other related expenses approved by Employer
incurred in providing such assistance. This Section 14 shall survive the
termination of this Agreement.

         15.      SPECIFIC ENFORCEMENT. Employer and Employee expressly agree
that a violation of the covenants contained in Paragraphs 11, 12, 13, and 14
hereof or any provision thereof, shall cause irreparable injury to Employer and
that, accordingly, Employer shall be entitled, in addition to any other rights
and remedies it may have at law or in equity, to an injunction enjoining and
restraining Employee from doing or continuing to do any such act and any other
violation or threatened violation of said Paragraphs 11, 12, 13 and 14 hereof.

                                       9



         16.      SEVERABILITY. In the event any provision of this Agreement
shall be found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void part were
deleted; provided, however, if Paragraphs 11, 12, 13, and 14 shall be declared
invalid, in whole or in part, Employee shall execute, as soon as possible, a
supplemental agreement with Employer, granting Employer, to the extent legally
possible, the protection afforded by said Paragraphs. It is expressly understood
and agreed by the parties hereto that Employer shall not be barred from
enforcing the restrictive covenants contained in each of Paragraphs 11, 12, 13,
and 14 as each are separate and distinct, so that the invalidity of any one or
more of said covenants shall not affect the enforceability and validity of the
other covenants.

         17.      INCOME TAX WITHHOLDING. Employer or any other payor may
withhold from any compensation or benefits payable under this Agreement such
Federal, State, City or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

         18.      WAIVER. The waiver of a breach of any term of this Agreement
by any of the parties hereto shall not operate or be construed as a waiver by
such party of the breach of any other term of this Agreement or as a waiver of a
subsequent breach of the same term of this Agreement.

         19.      RIGHTS AND LIABILITIES UPON NOTICE OF TERMINATION. As soon as
notice of termination of this Agreement is given, Employee shall immediately
cease all contact regarding the business with customers of Employer during the
restricted period and shall forthwith surrender to Employer all customer lists,
documents and other property of Employer then in Employee's possession,
compliance with which shall not be deemed to be a breach of this Agreement by
Employee. Pending the surrender of all such customer lists, documents and other
property to Employer, Employer may hold in abeyance any payments due Employee
pursuant to this Agreement.

         20.      ASSIGNMENT.

                  (a)      Employee shall not assign, transfer or convey this
                           Agreement, or in any way encumber the compensation or
                           other benefits payable to him hereunder, except with
                           the prior written consent of Employer or upon
                           Employee's death.

                  (b)      The covenants, terms and provisions set forth herein
                           shall be binding upon and shall inure to the benefit
                           of, and be enforceable by, Employer and its
                           successors and assigns; provided, Employer shall
                           require any successor (whether direct or indirect, by
                           purchase, merger, reorganization, consolidation,
                           acquisition of property or stock, liquidation or
                           otherwise) to all or a substantial portion of its
                           assets, by agreement in form and substance reasonably
                           satisfactory to Employee, expressly to assume and
                           agree to perform this Agreement in the same manner
                           and to the same extent that Employer would be
                           required to perform this Agreement if no

                                       10



                           such succession had taken place. Regardless of
                           whether such an agreement is executed, this Agreement
                           shall be binding upon any successor of Employer in
                           accordance with the operation of law, and such
                           successor shall be deemed the "Employer" for purposes
                           of this Agreement.

         21.      NOTICES. All notices required herein shall be in writing and
shall be deemed to have been given when delivered personally or five (5) days
after the date on which such notice is deposited in the U.S. Mail, certified or
registered, postage prepaid, return receipt requested, addressed as follows, to
wit:

                  If to Employer at:

                  160 Clairemont Avenue, Suite 200
                  Decatur, Georgia 30030
                  Attn: Thomas M. Duffy, General Counsel Chambers

                  If to Employee at:

                  Robert Chambers
                  30 Oak Hollow, Suite 240
                  Southfield, MI  48034

or at such other addresses as may, from time to time, be furnished to Employer
by Employee, or by Employer to Employee on the terms of this Paragraph.

         22.      BINDING EFFECT. This Agreement shall be binding on the parties
hereto and on their respective heirs, administrators, executors, successors and
permitted assigns.

         23.      ENFORCEABILITY. This Agreement contains the entire
understanding of the parties and may be altered, amended or modified only by a
writing executed by both of the parties hereto. This Agreement supersedes all
prior agreements and understandings by and between Employer and Employee
relating to Employee's employment. Employer and Employee acknowledge and agree
that that certain Restrictive Covenant Agreement by and among Employee and
Employer dated on or about February 28, 2000, is and shall remain in full force
and effect upon execution of this Agreement.

         24.      APPLICABLE LAW. This Agreement and the rights and liabilities
of the parties hereto shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Georgia.

         25.      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute but a single document.

                                       11



         26.      D&O INSURANCE; INDEMNIFICATION. Employer shall maintain, for
the benefit of Employee, director and officer liability insurance, in form at
least as comprehensive as, and in an amount that is equal to, that maintained by
Employer on the Effective Date, provided, however, that Employer's Board of
Directors or chief senior Executive Officer shall have the discretion to modify
such coverage so long as such modification applies to all officers and
directors. In addition, Employer shall indemnify Employee against liability as
an officer and director of Employer to the same extent as other officers and
directors of Employer in accordance with the constituent and organizational
documents of Employer and consistent with applicable law. Employee's rights
under this Section 26 shall continue so long as he may be subject to such
liability, whether or not this Agreement may have been terminated prior hereto.

         IN WITNESS WHEREOF, Employee has hereunder set Employee's hand and
seal, and Employer has caused this Agreement to be executed and delivered by its
duly authorized officers, all as of the day and year first above written.

_______________________________             __________________________(SEAL)
WITNESS                                     ROBERT CHAMBERS

ATTEST:                                     AXIS GROUP, INC.

BY: ____________________________            BY: _______________________

       Its ___________ secretary            Its _________________

[CORPORATE SEAL]

                                       12

EX-10.17

                                                                   EXHIBIT 10.17

                        CONTRACT FOR MOTOR TRANSPORTATION

         This Contract for Motor Transportation (this "Agreement") is made as of
January 2, 2004 (the "Effective Date") by and between Allied Automotive Group,
Inc., with its principal location at 160 Clairemont Avenue, Decatur, Georgia
30030 ("Service Provider"), and General Motors Corporation, a Delaware
corporation, with a principal location at 100 Renaissance Center, Detroit,
Michigan 48265 ("GM").

         A.       This Agreement sets forth the terms pursuant to which Service
Provider shall provide Transportation Service (as defined in Section 1.00 below)
to GM.

         B.       GM requires Service Provider's efficient, prompt and
high-quality delivery of finished vehicles to, from or between its various
dealers, and other origins and destinations that GM may, from time to time,
designate to Service Provider.

         C.       Service Provider is prepared to provide Transportation Service
for GM as contemplated in this Agreement.

         Now, therefore, for good and valuable consideration, the receipt and
adequacy of which is acknowledged, the parties agree as follows:

         1.       TRANSPORTATION SERVICE.

                  During the Term (as defined in Section 16.00), Service
                  Provider shall furnish to GM those delivery and transportation
                  services, including, but not necessarily limited to, plant
                  releasing, loading motor vehicles onto rail cars and vehicle
                  haul-away, that Service Provider provides to GM in the United
                  States and Canada as of the Effective Date (collectively,
                  "Transportation Service").

         2.       VEHICLES; DRIVERS, ETC.

                  Service Provider shall be responsible for all facilities,
                  properly licensed drivers and other personnel and equipment
                  necessary to perform Transportation Service in a safe and
                  efficient manner. Service Provider, including Service
                  Provider's affiliated companies, if applicable, shall also
                  provide, operate and maintain, in good working condition, the
                  motor vehicles, trailers and related equipment necessary for
                  the performance of Transportation Service. Service Provider
                  shall also ensure, to GM's reasonable satisfaction, that
                  contracted third party carriers operate and maintain, in good
                  working condition, the motor vehicles, trailers and related
                  equipment necessary for the performance of Transportation
                  Service pursuant to this Agreement.

         3.       CONTROL OF TRANSPORTATION SERVICE.

                  Service Provider shall have sole and exclusive control over
                  the manner in which Service Provider and its employees, agents
                  and subcontractors (collectively, "Service Provider
                  Employees") perform Transportation Service. Service Provider
                  shall employ those Service Provider Employees it deems
                  necessary in connection therewith. Notwithstanding anything



                  herein to the contrary, Service Provider Employees shall be
                  considered employees or subcontractors of Service Provider
                  only and shall be subject to employment, discharge, discipline
                  and control, solely and exclusively by Service Provider. While
                  on GM property, Service Provider Employees must follow
                  applicable GM rules provided and/or communicated to Service
                  Provider and/or Service Provider Employees by GM, including
                  GM's plant security and dock personnel. GM reserves the right,
                  in its sole discretion, to instruct Service Provider to remove
                  any Service Provider Employee from Transportation Service at
                  GM locations.

         4.       QUALITY SERVICE REQUIREMENTS.

                  During the Term, Service Provider shall:

         A.       Follow GM's Vehicle Logistics Common Quality Processes
                  (collectively, the "Common Process") including GM's:

                  (i)      Damage Elimination Teams

                  (ii)     Transportation Acceptance Process ("TAP")

                  (iii)    Transportation Self-Audit Process

                  (iv)     Early production Shipping Verification Process

                  (v)      Key Handling Process

                  (vi)     Vehicle Logistics Problem Reporting/Resolution
                           ("PRR") Process (available on "gmsupplypower.com")

         B.       Process transportation claims through the Common Process.

         C.       Follow the Common Process when filing supplemental
                  inspections.

         D.       Achieve an annual damage frequency of [XXXXXXX] or less for
                  shuttle moves and an annual damage frequency of [XXXXXXX] or
                  less for non-shuttle moves for calendar year 2003. During the
                  remainder of the Term, the damage frequency shall be reduced
                  by [XXXXXXX] per calendar year, respectively. GM, in its sole
                  discretion, may impose a penalty equal to [XXXXXXXXXX] of the
                  total annual invoiced amount for failure to achieve the annual
                  target. GM shall compile the assessment for this penalty
                  annually in August. Service Provider shall monitor and report
                  to GM monthly the damage frequency by location. The
                  [XXXXXXXXXXXXXXX]. Service Provider must remit payment within
                  thirty (30) days after this assessment.

         E.       Ship all vehicles in accordance with the latest revision of
                  GM'S Vehicle Shipping Manual (as set forth and available on
                  "gmsupplypower.com").

         F.       If performance falls below the damage frequency target (as set
                  forth in Section 4.00(D) hereof), Service Provider shall be
                  given one week, following receipt of written notice from GM,
                  to provide to GM a written corrective action plan per the PRR
                  process. Service Provider shall have thirty (30) days, from
                  the date on which GM, in writing, approves Service Provider's
                  written corrective action plan to cure the noncompliance at
                  the location subject to the corrective action plan. In the
                  event Service Provider fails to timely submit a corrective
                  action plan or if a corrective action plan is timely
                  submitted, but Service Provider fails to timely cure the
                  noncompliance, upon failure to timely submit the

                                       2



                  corrective action plan or expiration of thirty (30) day cure
                  period, whichever is applicable, at GM's sole option, GM may
                  resource its business at such location, in addition to
                  exercising other remedies to which GM is entitled under this
                  Agreement, by providing Service Provider with sixty (60) days
                  prior written notice of GM's intent to resource.

         G.       Contract with an inspection agency selected by GM for third
                  party inspection. A third party inspection is required before
                  and after all shuttle moves. Service Provider may negotiate
                  with the other service providers (i.e., the serving railroad)
                  for the cost of the third party inspection. This cost is
                  typically allocated by volume between the individual service
                  providers; provided, however, as between Service Provider and
                  GM, Service Provider retains sole responsibility for the cost
                  of such inspections irrespective of Service Provider's ability
                  to allocate the inspection cost among other service providers.
                  Service Provider is responsible to ensure adequate lighting
                  exists for inspections.

         H.       Assign a loading supervisor to cover all hours of loading
                  operation. All loads are to be audited one hundred percent
                  (100%).

         I.       Submit an appraisal of equipment and maintenance plan, each in
                  accordance with GM's Haul-Away Equipment Appearance
                  Initiative.

         J.       Provide twenty-four hour security for Service Provider's
                  operations. Service Provider shall select, and GM shall
                  approve, which approval shall not be unreasonably withheld, a
                  security company, the cost will be borne by Service Provider.
                  Security is required for all assembly center yard areas for
                  which Service Provider is responsible.

         K.       Obtain GM's approval for all facility layout changes.

         L.       Obtain ISO 9001:2000 certification for Service Provider, its
                  agents and subcontractors.

         M.       Obtain GM's approval for all second tier suppliers used for
                  trip leasing.

         N.       Perform routine maintenance, including, but not limited to,
                  yard stripping, pavement sealing, etc., to the extent Service
                  Provider is the rail loading and/or unloading contractor.

         5.       OPERATIONAL REQUIREMENTS.

                  During the Term, Service Provider shall perform Transportation
                  Service in accordance with the operational requirements set
                  forth in this Section 5.00.

         5.01     All vehicles must be dispatched within the target dispatch
                  requirement for each demand area existing as of the Effective
                  Date, or as mutually agreed by the parties. For each vehicle
                  not meeting this requirement, GM may, in its sole discretion,
                  assess Service Provider a [XXXXXXXXX]; provided, however, the
                  maximum amount of penalties which may be assessed against
                  Service Provider by GM under this Section 5.01 and under
                  Section 4.00(D) hereof, in the aggregate, shall be capped at
                  [XXXXX] on an annual basis (with the first twelve (12) month
                  period commencing on the Effective Date). Without waiving any
                  other rights or remedies under this Agreement, GM agrees to
                  waive all claims for penalties under this Section 5.01 and
                  under Section 4.00(D) for periods prior to March 7, 2004. All
                  accrued assessments resulting from noncompliance shall be
                  billed on a monthly basis (VIN

                                       3


                  detail will be supplied at billing). If a force majeure event
                  prevents delivery, Service Provider must invoke Section 19.00
                  of this Agreement. GM, in its sole discretion, may grant other
                  exceptions for noncompliance if a timely request is submitted
                  in writing to GM. GM agrees to use reasonable efforts to
                  cooperate with Service Provider in order that Service Provider
                  achieves the performance standards set forth in this
                  Agreement, and to investigate the feasibility and potential
                  benefits of adjusting demand area standards in order to
                  improve order to delivery performance in a manner acceptable
                  to GM and Service Provider.

         5.02     If Service Provider's performance at any location falls below
                  [XXXXXXXXX] compliance with GM's weekly dispatch requirements,
                  or any unit dwells longer than [XXXXXXXXX], Service Provider
                  shall submit, within seven (7) days of GM's written
                  notification to Service Provider identifying Service
                  Provider's noncompliance, a written corrective action plan to
                  GM (the format of said action plan will be provided by GM).
                  Service Provider shall have thirty (30) days from the date on
                  which GM, in writing, approves Service Provider's written
                  corrective action plan to cure noncompliance at the location
                  subject to the corrective action plan. In the event Service
                  Provider fails to timely submit a written corrective action
                  plan or if a corrective action plan is timely submitted, but
                  Service Provider fails to timely cure the noncompliance, upon
                  failure to timely submit the corrective action plan or
                  expiration of the thirty (30) day cure period, whichever is
                  applicable, at GM's sole option, GM may resource its business
                  at such location, in addition to any other remedies to which
                  GM may be entitled under this Agreement, by providing Service
                  Provider with sixty (60) days' prior written notice of GM's
                  intent to resource. Notwithstanding anything to contrary,
                  Service Provider acknowledges and agrees that Service Provider
                  shall be limited to one (1) cure period per location during
                  each twelve (12) month period of this Agreement (with the
                  first such twelve (12) month period commencing on the
                  Effective Date) for a breach of either Section 5.01 or Section
                  4.00(D) of this Agreement, after which GM shall be free to
                  resource its business at the location at which Service
                  Provider's noncompliance occurs.

         5.03     Service Provider must appropriately fleet size its operations
                  for both equipment and drivers based on a quarterly forecast
                  provided by GM and a quarterly capacity review between Service
                  Provider and the GM NAO Vehicle Logistics Operations Manager.

         5.04     Service Provider must implement a "24 hour, 7 days a week"
                  delivery program to dealers participating in the "24 hour, 7
                  days a week" program.

         6.       PROPERTY DAMAGE AND LOSS.

                  Service Provider shall have exclusive care, custody and
                  control of all goods hereunder, including motor vehicles and
                  related components, from the time GM delivers to Service
                  Provider until delivery to a consignee named by GM, in the
                  case of truck haul-away, or until properly loaded and
                  otherwise delivered to the rail carrier in the case of rail
                  shipment. Service Provider assumes full responsibility for any
                  and all loss or damage to GM's property while in Service
                  Provider's care, custody or control, unless such loss or
                  damage is caused by the acts or omissions of GM, its
                  consignees, agents or employees, rail carriers, or by a force
                  majeure event as defined in Section 19.00; provided, however,
                  if insurance coverage is in place regarding a force majeure
                  loss, Service Provider shall make and reasonably pursue a
                  claim to the extent of such coverage and to the extent Service
                  Provider

                                       4


                  receives insurance proceeds from a third party insurance
                  provider for loss or damage to GM's property caused by a force
                  majeure event described in Section 19.00 hereof, then Service
                  Provider shall turn over such proceeds to GM. Service Provider
                  shall ensure that its affiliated and nonaffiliated
                  subcontracted truck haul-away providers adhere to the
                  applicable vehicle care and loss and damage requirements of
                  this Agreement, including insurance and indemnification, and
                  such affiliated and nonaffiliated subcontracted truck
                  haul-away carriers or other subcontractors shall be
                  responsible for administrating any loss or damage suffered
                  with respect to GM property while in the care, custody or
                  control of such haul-away carriers or other subcontractors.
                  The value of said goods shall be based on the normal GM
                  invoice price thereof plus freight charges, with the exception
                  of certain major vehicle damage claims described in Section
                  6.01.

         6.01     Service Provider agrees to the following process for Major
                  Vehicle Damage Claims.

                  (A)      As to vehicles sustaining damage under Service
                           Provider's custody or control, to the extent that
                           such damage affects the merchantability, safety,
                           durability or reliability of the vehicle, such claims
                           shall be handled as major transportation damage
                           claims.

                  (B)      GM, in its sole discretion, shall determine whether a
                           damaged vehicle is capable of restoration to a
                           marketable condition, complying with all applicable
                           government motor vehicle standards.

                  (C)      If GM determines that a vehicle is not reparable,
                           Service Provider shall immediately return the vehicle
                           to GM. GM shall process a claim utilizing the
                           vehicle's dealer net price, minus [XXXXXXXXX] as the
                           salvage value, plus Destination Freight Charge.

                  (D)      All major damage claims will be reviewed and either
                           paid or rejected by Service Provider within thirty
                           (30) days of transmittal to Service Provider.

         6.02     Service Provider shall accept all claims, including Major
                  Vehicle Damage Claims, for loss or damage submitted in writing
                  or via electronic transmission for a period of nine (9) months
                  following delivery as follows:

                  (A)      Claims received at the GM Corporate Claim Center
                           within nine (9) months after delivery of lost or
                           damaged motor vehicles or related components shall be
                           deemed accepted by Service Provider, including its
                           subcontractors, provided any such claim is
                           transmitted to Service Provider within nine (9)
                           months after scheduled delivery.

                  (B)      Claims filed against one Service Provider on a joint
                           line, or joint line cross-border movement, shall be
                           deemed a filing against all connecting Service
                           Providers within the time limits in (A) above.

         6.03     Service Provider shall render payment, or provide written
                  reasons for any nonpayment, of any claim within thirty (30)
                  days of Service Provider's receipt of such claims in
                  accordance with Section 6.02 herein.

                                       5


         7.       STANDARD INSURANCE REQUIREMENTS.

                  During the Term, Service Provider shall obtain and maintain,
                  at its sole expense, the following types of insurance
                  coverage, with minimum limits as set forth below, unless
                  increased types and amounts are required due to the equipment
                  of service requirements in specific Appendices and Service
                  Provider shall ensure that all subcontractors, including owner
                  operators and independent carriers in its employ, shall
                  maintain the same coverage:

         A.       Commercial General Liability, covering liability arising from
                  premises, operations, independent contractors,
                  products-completed operations, personal and advertising
                  injury, and liability assumed under an insured contract -
                  $2,000,000 each occurrence.

         B.       Commercial Automobile Liability, covering all owned, hired,
                  and non-owned vehicles - $2,000,000 each occurrence, including
                  all statutory coverage for all states of operation.

         C.       Workers Compensation, in an amount not less than the statutory
                  limits for all states of operation.

         D.       Employers Liability, $500,000 each employee for bodily injury
                  by accident and $500,000 each employee for bodily injury by
                  disease.

         E.       Cargo Insurance, including loading and unloading, with a limit
                  equal at least to the value of the property shipped and in any
                  event not less than $250,000 per occurrence.

         F.       Any insurance coverage required by any government body for the
                  types of Transportation Service specified in the Appendices.

         G.       Any deductible or self-insured retention in excess of existing
                  retention limits must be declared to and approved by GM.

         H.       Service Provider shall provide GM with a certificate of
                  insurance evidencing compliance with the insurance
                  requirements set forth above. Each certificate shall name GM
                  as (or provide that GM shall have the benefits of) an
                  additional insured for liability and loss payee for damage to
                  GM's vehicles or property, each arising from the operations of
                  the Service Provider on all policies (except Cargo Insurance,
                  Workers' Compensation and Employers Liability) and state that
                  the above required coverage shall apply as primary insurance
                  with respect to any other insurance or self-insurance programs
                  afforded to GM. Each certificate shall provide that GM shall
                  receive thirty (30) days' prior written notice from the
                  insurer of any termination or reduction in the amount or scope
                  of coverage.

         I.       Each certificate shall be in a form acceptable to, and
                  underwritten by, insurance company(ies) reasonably
                  satisfactory to GM. The purchase of appropriate insurance
                  coverage by Service Provider or the furnishing of
                  certificate(s) of insurance shall not release Service Provider
                  from its respective obligations or liabilities under this
                  Agreement. These insurance requirements shall be applicable to
                  subcontractors performing services as directed by Service
                  Provider under this Agreement.

                                       6


         8.       RATES; BRIDGE PAYMENTS; REDUCTIONS; 2003 REBATE; CANADA.

         8.01     During the Term, GM shall pay Service Provider for
                  Transportation Service performed in either the United States
                  or Canada, pursuant to the rates (including the Administrative
                  Processing Fee in existence on the Effective Date) that are in
                  effect between the parties on the Effective Date, subject to
                  the modifications as required by Section 8.02 and Section 8.03
                  hereof. For clarity, GM will not reimburse the Service
                  Provider for overtime due to weekend activity, which weekend
                  operations are scheduled at GM's discretion. Service Provider
                  shall be solely responsible for payments to Service Provider's
                  agents and subcontractors.

         8.02     During the Term, GM shall pay Service Provider a [XXXXXXXXX]
                  for Transportation Service performed in the United States.

         8.03     During the Term, Service Provider and GM agree to the
                  [XXXXXXXXX] for Transportation Service performed in the United
                  States, as set forth in Exhibit 8.03 to this Agreement.

         8.04     On or before January 2, 2004, Service Provider shall
                  [XXXXXXXXX]. On the Transfer Date (as defined in Section 13.01
                  hereof), Service Provider shall [XXXXXXXXX].

         8.05     The rates on Transportation Service performed from the points
                  of origin set forth on the attached Exhibit 8.05 shall not be
                  reduced and shall remain as currently in effect on the
                  Effective Date.

         9.       OVERCHARGES AND UNDERCHARGES.

                  Service Provider shall file any overcharges or undercharge
                  claims within one hundred and twenty (120) days from the time
                  GM receives a valid and acceptable electronic delivery record.
                  Service Provider's failure to timely file will waive any such
                  claims by Service Provider, including its agents and
                  subcontractors.

         10.      PAYMENT SUNSET.

                  Service Provider shall, within nine (9) months from date of
                  delivery or date service was performed, manually or
                  electronically transmit a delivery record to GM. Service
                  Provider's failure to so transmit a delivery record will waive
                  any future claims for payment by Service Provider, including
                  its agents and subcontractors.

         11.      EFT; PAYMENT - ELECTRONIC DATA INTERCHANGE - (EDI).

         11.01    Service Provider and GM acknowledge that the existing EFT
                  agreement shall continue in full force and effect during the
                  Term. Service Provider agrees to hold GM harmless for
                  uncollected funds not properly or timely transferred from bank
                  or depository in accordance with EFT or Appendices.

         11.02    After GM receives a valid and acceptable electronic service
                  record, GM will transmit to the Service Provider an EDI 820
                  Transaction Set (Advance Payment Notification). GM shall
                  transfer funds electronically (pay) to the bank designated by
                  the Service Provider in the

                                       7


                  applicable wire transfer agreement or Appendix on the
                  twenty-fifth (25th) (or following business day) of the
                  following month from the date that service was performed.
                  Balance Due payments will fall under the same rules as do
                  original payments.

         12.      NEW BUSINESS; FUEL SURCHARGE PROGRAM; DISCONTINUATION OF YARD
                  MANAGEMENT.

         12.01    GM and Service Provider acknowledge and agree that GM has
                  awarded to Service Provider the new business for
                  Transportation Service set forth on Exhibit 12.01 attached
                  hereto, which new business, subject to volume fluctuations, is
                  projected to result in annual revenue of [XXXXXXXXX] (the "New
                  Business Award"). GM and Service Provider further acknowledge
                  and agree the above projection is only an estimate, and, as a
                  result, the actual revenue will be based upon the sales of
                  those vehicles subject to the Transportation Service set forth
                  on Exhibit 12.01. GM and Service Provider acknowledge and
                  agree (i) Service Provider shall begin providing the
                  Transportation Service in respect of the New Business Award on
                  or before March 7, 2004, and (ii) Service Provider will
                  provide Transportation Service with respect to the New
                  Business Award pursuant to the rates set forth on Exhibit
                  12.01 exclusively and without the rate reductions contemplated
                  by Section 8.03 hereof, but otherwise subject to the terms of
                  this Agreement and Exhibit 12.01.

         12.02    GM agrees that Service Provider will participate, on the same
                  terms and conditions on which other haul-away service
                  providers participate, in any fuel surcharge program or
                  allowance provided by GM during the Term; provided, however,
                  the maximum amount of such fuel allowance shall be capped at
                  [XXXXXXXXX] on an annual basis (with the first such twelve
                  (12) month period commencing on the Effective Date).

         12.03    GM agrees to use best reasonable efforts to discontinue all
                  services related to GM yard operations effective March 7,
                  2004, or as soon thereafter as GM contracts with an alternate
                  service provider to provide such yard operations.

         13.      JANESVILLE PROPERTY; [XXX] SPECIALIZED EQUIPMENT.

         13.01    Service Provider shall transfer clear and marketable title to
                  GM, free and clear of all liens, claims, encumbrances or
                  security interests, but subject, however, to applicable
                  building and zoning laws and existing utility easements, to
                  the land, buildings, fixtures and personal property located at
                  544 Kellogg Avenue, Janesville, Wisconsin (the "Janesville
                  Property") utilized to perform Transportation Service for GM.
                  In consideration of such transfer, and immediately upon the
                  Transfer Date (as defined below), GM agrees to pay to Service
                  Provider the sum of [XXXXXXXXX]. Service Provider agrees to
                  enter into GM's standard form lease agreement, a copy of which
                  is attached to this Agreement as Exhibit 13.01, pursuant to
                  which GM shall lease the Janesville Property to Service
                  Provider at the rate of $1.00 per year for so long as Service
                  Provider provides Transportation Service to GM at the
                  Janesville Property. Service Provider and GM further agree to
                  enter into customary documentation evidencing the sale and
                  lease-back of the Janesville Property, all on terms
                  satisfactory to each of GM and Allied, by January 31, 2004, or
                  as soon as reasonably practicable thereafter (the "Transfer
                  Date").

         13.02    Upon GM's request, following a termination or expiration of
                  Service Provider's provision of Transportation Service at the
                  [XXXXXXXXX] location with respect to the [XXXXXXXXX], Service
                  Provider agrees to cooperate in good faith to enable GM, at
                  its

                                       8


                  election, to either purchase the equipment Service Provider
                  utilizes to transport the [XXXXXXXXX] product at [XXXXXXXXX]
                  or assign all of Service Provider's rights under the Master
                  Lease (as defined below) to GM. GM acknowledges and agrees
                  that the [XXXXXXXXX] is subject to that certain Master Lease
                  Agreement dated September 19, 2003 with Merrill Lynch Capital,
                  including Schedule No. 001 and Schedule No. 002 attached
                  thereto (collectively, the "Master Lease"), and GM's purchase,
                  if any, of the [XXXXXXXXX] pursuant to this Section 13.02
                  shall be subject to and in accordance with the Master Lease.

         14.      FINANCIAL REPORTING; REFINANCE PLAN; ACCESS.

         14.01    Service Provider shall provide to GM the same monthly
                  financial reporting package Service Provider provides to
                  Service Provider's senior secured debt holders, excluding any
                  information Service Provider reasonably determines as
                  confidential, including information relating to Service
                  Provider's customers, other than GM. Service Provider shall
                  provide to GM such monthly financial reporting package
                  simultaneously with providing same to Service Provider's
                  senior secured debt holders.

         14.02    Service Provider shall present, within eighteen (18) months
                  from March 7, 2004, a refinancing plan (the "Refinancing
                  Plan") demonstrating to GM's satisfaction Service Provider's
                  long-term viability beyond the expiry of Service Provider's
                  senior secured credit facilities in September, 2007. The
                  Refinancing Plan shall indicate that the consolidated EBITDA
                  interest coverage shall exceed [XXXX] and the Total Debt to
                  EBITDA ratio shall not exceed [XXXX]. Each ratio shall be
                  calculated in accordance with Standard and Poor's. The
                  Refinancing Plan shall indicate the effective date by which
                  the refinancing will be implemented, and that such date shall
                  be no less than one hundred twenty (120) days before the
                  expiry of the senior credit facilities. Service Provider's
                  failure to deliver a Refinancing Plan in accordance with this
                  Section 14.02 shall not constitute a breach of this Agreement.

         14.03    Service Provider shall grant to GM and its designees
                  (including, but not limited to, BBK, Ltd.) access to Service
                  Provider's books, records, officers, employees and business
                  operations, upon reasonable request and prior notice, to
                  monitor Service Provider's compliance with and performance
                  under this Agreement. Service Provider agrees to use
                  reasonable best efforts to fully cooperate with the agents,
                  representatives, consultants, officers and employees of GM and
                  its designees to effectuate this right of access.

         15.      NOTICES.

                  All notices under the terms of this Agreement shall be in
                  writing, signed by or on behalf of the party giving such
                  notice, and sent by certified mail, or via facsimile and first
                  class mail, to the following addresses:

                                       9


                  If to GM:                  General Motors Corporation
                                             30009 Van Dyke Road
                                             Mail Code: 480-206-315
                                             Warren, Michigan 48090
                                             Attn: Jeff Bullard
                                             Director, Vehicle Logistics
                                             Facsimile: (586) 575-0272

                  With a copy to:            Honigman Miller Schwartz and Cohn
                                              LLP
                                             2290 First National Building
                                             660 Woodward Avenue
                                             Detroit, Michigan  48226
                                             Attn: Robert B. Weiss, Esq.
                                             Facsimile: (313) 465-7597

                  If to Service Provider:    Allied Automotive Group, Inc.
                                             160 Clairemont Avenue, Suite 200
                                             Decatur, Georgia  30030
                                             Attn: Thomas M. Duffy
                                             Senior Vice President, General
                                              Counsel
                                             Facsimile: (404) 370-4206

                  With a copy to:            Troutman Sanders LLP
                                             Bank of America Plaza
                                             600 Peachtree Street, N.E. - Suite
                                              5200
                                             Atlanta, Georgia  30308-2216
                                             Attn: Robert W. Grout, Esq.
                                             Facsimile:  (404) 885-3900

         16.      TERM; REMEDIES; COOPERATION IN RESOURCING.

         16.01    Unless otherwise terminated in accordance with the provisions
                  of this Agreement, the term of this Agreement (the "Term")
                  shall commence on the Effective Date and continue until March
                  7, 2006. If, during the Term, Service Provider has (i)
                  complied in all material respects, as determined by GM in its
                  sole discretion, with all of the terms and conditions of this
                  Agreement, including the Quality Service Requirements set
                  forth in Section 4.00 and the Operational Requirements set
                  forth in Section 5.00 above; and (ii) complied with Section
                  14.02 of this Agreement, then, upon satisfaction of each of
                  the foregoing conditions, the Term, upon the mutual written
                  agreement of GM and Service Provider, shall be extended for an
                  additional one (1) year.

         16.02    Upon any breach of this Agreement by Service Provider with
                  respect to the Quality Service Requirements set forth in
                  Section 4.00 or the Operational Requirements set forth in
                  Section 5.00, GM's remedy with respect thereto shall be as set
                  forth in Section 4.00 hereof with respect to breaches of the
                  Quality Service Requirements and as set forth in Section 5.00
                  hereof with respect to breaches of Operational Requirements.
                  Without limiting the foregoing, upon written notice from GM,
                  GM shall have the right to terminate this Agreement in the
                  event Service Provider's action or inaction, as the case may
                  be, results in a substantial discontinuation of Transportation
                  Service that threatens operations at any one

                                       10


                  or more of GM's assembly plants or vehicle distribution
                  centers; provided, however, GM's written notice terminating
                  the Agreement shall be effective only if given during the
                  occurrence of such substantial discontinuation of
                  Transportation Service.

         16.03    Upon any breach of this Agreement by Service Provider,
                  excluding breaches of the Quality Service Requirements and the
                  Operational Requirements, the consequences of which are
                  addressed in Section 16.02 of this Agreement, GM shall provide
                  written notice to Service Provider identifying the breach.
                  Service Provider shall have sixty (60) days following the
                  receipt of such written notice from GM to cure such breach. In
                  the event Service Provider fails to cure such breach to the
                  satisfaction of GM during such sixty (60) day period, GM shall
                  have all rights and remedies available to GM under applicable
                  law, including the right to terminate this Agreement and
                  immediately, without further notice to Service Provider, which
                  right is expressly waived, commence resourcing all or any
                  portion of the Transportation Service; provided, however GM
                  will not have the right to terminate this Agreement and
                  commence resourcing all or any portion of the Transportation
                  Service unless Service Provider's breach is material.

         16.04    In addition to any right GM may have to terminate this
                  Agreement, GM may terminate this Agreement if: (a) Service
                  Provider becomes insolvent; (b) Service Provider files a
                  voluntary bankruptcy petition; (c); a receiver or trustee is
                  appointed over Service Provider's assets; or (d) Service
                  Provider executes an assignment for the benefit of Service
                  Provider's creditors.

         16.05    Notwithstanding anything in this Agreement to the contrary,
                  this Agreement shall automatically terminate if ten percent
                  (10%) or more of the voting shares of Service Provider become
                  owned or controlled, directly or indirectly, by a competitor
                  of GM, or entity in which competitor owns fifty percent (50%)
                  or more or otherwise controls such entity, in the business of
                  manufacturing motor vehicles.

         16.06    In the event a competitor of GM in the business of
                  manufacturing motor vehicles acquires any interest in Service
                  Provider (directly or indirectly), Service Provider shall
                  provide GM with reasonable assurances that Service Provider
                  will utilize its commercially reasonable efforts to preserve
                  the confidentiality of all information related to
                  Transportation Service performed by Service Provider for GM.

         16.07    Upon the expiration or termination of the Term, Service
                  Provider agrees to cooperate with GM in resourcing the
                  Transportation Service from Service Provider.

         17.      INDEMNIFICATION.

                  Except for the penalties in Sections 4.00(D) and 5.01, and the
                  damage claims in Section 6.00 for which Service Provider is
                  responsible in accordance with those respective sections,
                  Service Provider shall indemnify, defend and hold GM
                  (including its officers, directors, employees, subcontractors
                  and agents) harmless from and against any and all liabilities,
                  damages, fines, penalties, costs, claims, demands and expenses
                  (including costs of defense, settlement, and reasonable
                  attorney's fees) of whatever type or nature, including damage
                  or destruction of any property, or injury (including death) to
                  any person, arising out of (a) any act or omission by Service
                  Provider or Service Provider Employees, (b) any claims or
                  actions by Service Provider Employees, or (c) the failure of
                  Service Provider or

                                       11


                  Service Provider Employees to comply with this Agreement, the
                  Appendices hereto, or any applicable federal, provincial,
                  and/or local law, statute, regulation, rule, ordinance, or
                  government directive which may directly or indirectly regulate
                  or affect the obligations of Service Provider hereunder;
                  provided, however, the foregoing agreement to indemnify and
                  hold GM harmless shall not be applicable to the extent that
                  such liabilities, damages, fines, penalties, costs, claims,
                  demands or expenses are attributable to the negligence or
                  willful misconduct of GM, its officers, directors, employees,
                  subcontractors or agents.

         18.      COMPLIANCE WITH LAWS.

                  Service Provider agrees to comply with all applicable
                  provisions of federal, provincial, state and/or local law or
                  ordinance and all lawful orders, rules and regulations issued
                  thereunder.

         19.      FORCE MAJEURE.

                  Except as otherwise provided in this Agreement, Service
                  Provider's obligation to furnish the Transportation Service
                  shall be temporarily suspended during any period(s) in which
                  Service Provider is unable to comply with the requirements of
                  this Agreement, as a result of an event or occurrence beyond
                  the reasonable control of Service Provider and without its
                  fault or negligence, including, but not limited to, acts of
                  God, actions by any governmental authority (whether valid or
                  invalid), fires, floods, windstorms, explosions, riots,
                  natural disasters, wars, or court injunction or order;
                  provided, however written notice of such delay (including the
                  anticipated duration of the delay) shall be given by Service
                  Provider to GM as soon as Service Provider knows or reasonably
                  anticipates the possibility of the force majeure condition. If
                  requested by GM, Service Provider shall, within ten (10) days,
                  provide adequate assurances that the delay shall not exceed
                  thirty (30) days. If the term of the delay exceeds thirty (30)
                  days, or Service Provider does not provide adequate assurance
                  that the delay will cease within thirty (30) days, GM may, in
                  its sole discretion, terminate this Agreement. The suspension
                  of any obligations owing to force majeure shall neither cause
                  the Term of this Agreement to be extended nor affect any
                  rights accrued under this Agreement prior to the force majeure
                  condition.

         20.      SYSTEM REQUIREMENTS.

                  All Events (as defined below) must be reported into VTIMS
                  (General Motors Vehicle Transportation Information Management
                  System) and/or to GM's designated supply chain management
                  contractor or the supply chain management's contractor's
                  chosen data service provider. Events include, but are not
                  necessarily limited to, receipt, dispatch, delivery, and start
                  of storage. Payment for each service is based on event
                  reporting. VTIMS reporting must be completed the day the event
                  occurs or as signified below. In being given access to VTIMS
                  reporting as required, the Service Provider recognizes that
                  unauthorized use of or contribution to the unauthorized use of
                  computer facilities and/or GM data constitutes a violation of
                  this Agreement. Service Provider recognizes its responsibility
                  to maintain the confidentiality of GM information to which
                  Service Provider has access during the Term of this Agreement,
                  and failure to comply with these responsibilities is
                  considered a material breach of this Agreement. Service
                  Provider systems must possess the following electronic
                  capabilities:

                                       12


                  (a)      Receive advance shipping notices (ASN's).

                  (b)      Record receipt of vehicle and bay locations and
                           communicate event (EV4B) to VTIMS.

                  (c)      Confirm routing based on response from VTIMS to
                           reported EV4B.

                  (d)      Build loads to conform to operational and quality
                           guidelines.

                  (e)      Transmit receipt (EV4B) and dispatch (EV42) within
                           one hour of actual event.

                  (f)      Deliveries should be reported within four hours of
                           actual event.

                  (g)      Other reporting as required:

                           1.       Vehicle on hold (EV4D)

                           2.       Return to plant (EV4P)

                           3.       Downloading and responding to
                                    re-consignments in VTIMS

                           4.       Inspection transmissions and DECS (claims)

                  (h)      Reporting will be in LU6.2. a system to system
                           protocol.

                  (i)      Limited transactions and EDI are to be communicated
                           via batch EDS ELITE.

                  (j)      Service Provider shall provide data transmissions to
                           GM and GM's designated supply chain management
                           contractor, or the supply chain management's
                           contractor's chosen data service provider at no
                           additional cost.

                  (k)      Service Provider shall request VTIMS Online access
                           for select employees to facilitate reporting error
                           corrections. The Service Provider shall also request
                           deletion of employee access upon reassignment or
                           termination such that their access to VTIMS is no
                           longer required.

         21.      MISCELLANEOUS.

         21.01    Amendments. No amendment to this Agreement shall be binding
                  upon either Service Provider or GM, unless such amendment is
                  in writing and it is signed by a duly authorized
                  representative of each of Service Provider and GM.

         21.02    Assignments. GM, in its sole discretion, reserves the right to
                  assign or delegate its obligations under this Agreement to
                  Vector SCM, LLC in accord with GM's realignment of its global
                  logistics management; provided, no such assignment or
                  delegation shall operate as a release of GM with respect to
                  its payment and other obligations hereunder. GM shall provide
                  written notification to the Service Provider of its intent to
                  do so. Otherwise, this Agreement shall be binding upon and
                  inure to the benefit of the parties, and their respective
                  successors and permitted assigns, but no rights, interests, or
                  obligations of either party herein may be assigned without the
                  prior written consent of GM. For purposes of this Section
                  21.02, a merger of Service Provider with an affiliated entity
                  or a sale of less than ten (10%) of Service Provider's voting
                  shares shall not constitute an assignment.

         21.03    Severability. If any provision of this Agreement, or any
                  portion thereof, is invalid or unenforceable under any
                  statute, regulation, ordinance, executive order or other rule
                  of law, such provision, or portion, thereof, shall be deemed
                  reformed or deleted, but only to the extent necessary to
                  comply with such statute, regulation, ordinance, order or
                  rule, and the remaining provisions of this Agreement shall
                  remain in full force and effect.

         21.04    Governing Law. This Agreement shall be construed and enforced
                  in accordance with the laws of the State of Michigan,
                  excluding its conflicts of law rules. Each party consents, for
                  purposes of enforcing this Agreement, to non-exclusive
                  personal jurisdiction, service of

                                       13


                  process and venue in any state or federal court within the
                  State of Michigan having jurisdiction over the subject matter.

         21.05    Counterparts. This Agreement may be executed by the parties in
                  separate counterparts, each of which when so executed and
                  delivered shall be an original, but all such counterparts
                  shall together constitute one and the same instrument. All
                  signatures of any party may be transmitted by facsimile, and a
                  facsimile will for all purposes be deemed to be the original
                  signature of the person whose signature it reproduces and will
                  be binding upon that person and on the party on whose behalf
                  that person signed.

         21.06    Waiver. Any extension or waiver will be valid only if set
                  forth in a written instrument signed by the party sought to be
                  bound. No failure or delay on the part of any party in the
                  exercise of any right or remedy under this Agreement will
                  impair that right or remedy or be construed to be a waiver of,
                  or acquiescence in, any inaccuracy or breach of any
                  representation, warranty or agreement in this Agreement, nor
                  will any single or partial exercise of any right or remedy
                  preclude other or further exercise of that right or remedy, or
                  of any other right or remedy.

         21.07    Modifications. If, during the Term of this Agreement, either
                  party requires any material modifications to the terms of this
                  Agreement, although neither party is under an obligation to
                  agree to any such modifications, should a party agree to
                  modifications, the party requesting such modifications shall
                  be responsible for any fees, including, but not limited to,
                  attorneys' and professional fees relating to such
                  modification.

         21.08    Time of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT
                  AND EACH OF ITS PROVISIONS.

         21.09    Headings. The headings contained in this Agreement are
                  inserted for convenience only and do not constitute a part of
                  this Agreement.

         21.10    Incorporation of Appendices and Exhibits. The Appendices and
                  Exhibits identified in this Agreement are incorporated in this
                  Agreement by reference and made a part of this Agreement.

         21.11    Non-Waiver - Applicable Law. Notwithstanding anything herein
                  to the contrary, it is not the intent of the parties to waive
                  any rights each party has under applicable law in connection
                  with this Agreement, which rights are hereby expressly
                  reserved.

         21.12    Confidentiality. Except as otherwise provided in Section 21.12
                  hereof, GM and Service Provider acknowledge and agree that the
                  terms of this Agreement are and shall remain confidential.

         21.13    Public Announcements. Subject to a party's legal obligation to
                  disclose the existence of this Agreement and/or the terms
                  hereof, neither party shall make any public disclosure
                  regarding this Agreement or its terms without the prior
                  written consent of the other party, and any such public
                  disclosure shall be mutually agreed upon by both parties to
                  this Agreement.

                                       14


         21.14    Consultation with Counsel. THE PARTIES ACKNOWLEDGE THAT THEY
                  HAVE BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH COUNSEL BEFORE
                  EXECUTING THIS AGREEMENT AND ARE EXECUTING THIS AGREEMENT
                  WITHOUT DURESS OR COERCION AND WITHOUT RELIANCE ON ANY
                  REPRESENTATIONS, WARRANTIES OR COMMITMENTS OTHER THAN THOSE
                  REPRESENTATIONS, WARRANTIES AND COMMITMENTS SET FORTH IN THIS
                  AGREEMENT.

         22.      ENTIRE AGREEMENT.

                  This Agreement, together with any Appendices and Exhibits
                  attached hereto or to be attached hereto, constitute the
                  entire agreement and understanding between the parties
                  concerning the Transportation Service, and cancels and
                  supersedes any and all prior agreements and discussions
                  between the parties prior to the Effective Date.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.

ALLIED AUTOMOTIVE GROUP, INC.                 GENERAL MOTORS CORPORATION

By: ________________________________          By: ______________________________

Title: ______________________________         Title: Director, Vehicle Logistics

Date: January 2, 2004                         Date: January 2, 2004

- ------------------

[XXXXX]           Represents material deleted per the Company's request for
                  Confidential Treatment and filed separately with the
                  Securities and Exchange Commission pursuant to Rule 24b-2
                  under the Securities Exchange Act of 1934.

                                       15

EX-10.20(A)

                                                                EXHIBIT 10.20(a)

                                                                          [LOGO]

IBM/Allied Holdings

AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL
AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS

This Amendment No. 4 (this "Amendment"), effective February 1, 2004 , amends
the IBM Global Services National Agreement between Allied Holdings ,Inc.
("Allied Holdings") and International Business Machines Corporation ("IBM")
effective April 1, 2001 (the "Agreement"). The terms and conditions of the
Agreement remain in full force and effect unless specifically amended or
supplemented herein.

I.0 REVISIONS TO THE AGREEMENT BASE TERMS

SECTION 1.0 DEFINITIONS

DELETE:

1.0 (b) Additional Resource Charge or ASC means the charges, as set forth in
Schedule C (Charges), to Allied Holdings if Allied Holdings' usage of Resource
Units is above the applicable Baseline.

1.0 (l) ARC Invoice has the meaning set forth in Schedule 6.1 (Charges) of this
Agreement.

1.0 (aaa) Reduced Resource Credit or RRC means the credit, as set forth in
Schedule C (Charges), to Allied Holdings if Allied Holdings' usage of a Resource
Unit is less than the applicable Baseline.

ADD:

1.0 (zzz) Amended Effective Date means February 1, 2004, 0000 hours Eastern
Standard Time.

1.0 (aaaa) Amended Expiration Date means January 31, 2014, 2359 hours Eastern
Standard Time.

REPLACE:

1.0 (s) Critical Success Factors Results means the report produced by Allied
Holdings that will be used to document the level of System Availability Allied
Holdings has achieved in the six months prior to the Effective Date as verified
by IBM.

1.0 (jjj) Service Recipients means the entities receiving Services at Allied
Holdings' request and listed in Schedule K (Service Recipients) as of the
Amended Effective Date or as it may be updated from time to time by Allied
Holdings.

1.0 (ggg) Services means the services and functions provided by IBM to Allied
Holdings and the Services Recipients pursuant to this Agreement, as more fully
described in Schedule A, A-1, A-2 and A-3 (Services).

SECTION 2.0 TERM

Replace with:

"This Amendment No. 4 begins on the Amended Effective Date and expires on the
Amended Expiration Date, except as earlier terminated or extended in accordance
with the terms of this Agreement. The period of this Amendment No. 4 in effect,
as of the Amended Effective Date, is referred to herein as the "Term".

SECTION 4.4 PERSONNEL

Add Section 4.4 (e)

"Subject to Section 6.4 (New Services) and all other terms of the Agreement,
including but not limited to Section 8 (Confidentiality), IBM agrees to provide
reasonable assistance to a Third Party hired by Allied Holdings that is hired
to perform a service related to the Services."

Allied Holdings/IBM                                                 Page 1 of 7
                                Amendment No. 4


                                                                          [LOGO]

IBM/Allied Holdings

AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL
AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS


SECTION 4.5 PROCEDURES

Add Section 4.5 (d) as follows:

"Notwithstanding the definition designating the Procedural Manual as a Type II
Material, IBM's use of the Procedure Manual is subject to the confidentiality
terms contained in Section 8."

SECTION 5.2 TRANSITION OF SERVICES

Section 5.2.a. Change "Effective Date" to "Amended Effective Date".

SECTION 6.1 CHARGES

Section 6.1.a. is replaced with:

a. Annual Services Charges

IBM will invoice Allied Holdings twice each month of the Term, for the current
month and beginning on the Amended Effective Date, for the Annual Services
Charge, prorated in equal bi-monthly payments (the ASC Invoice).

Section 6.1 b. is deleted in its entirety

Section 6.2.a. is deleted in its entirety.

SECTION 6.3 PAYMENTS

Section 6.3.a.1. is replaced with:

The Payable Date for the ASC Invoice will be the 15th and 30th day of the
calendar month in which Allied Holdings receives the ASC Invoice from IBM,
provided Allied Holdings receives such ASC Invoice on or before the fifth and
the tenth days of the month for payment due on the 15th and 30th, respectively,
of that month. If Allied Holdings receives the ASC Invoice after the respective
fifth or tenth day of the month, the Payable Date for such ASC Invoice will be
30 days after Allied Holdings' receipt of such ASC Invoice

SECTION 7.2 TERMINATION FOR CONVENIENCE

Amend 7.2.a.1 replace as follows:

"no earlier than the third anniversary after the Amended Effective Date, and"

7.3 TERMINATION FOR CAUSE

Section 7.3 is replaced in its entirety as follows:

a.       Allied Holdings or IBM (the NONBREACHING PARTY) may elect to terminate
this Agreement because of a material breach of this Agreement by the other (the
BREACHING PARTY) by following the process set forth in this Section.

b.       The Nonbreaching Party will provide the Breaching Party with written
notice of such material breach within 60 days after the material breach or the
date the Nonbreaching Party becomes aware of such material breach, describing
in detail the specific nature and dates of the

Allied Holdings/IBM                                                 Page 2 of 7
                                Amendment No. 4


                                                                          [LOGO]

IBM/Allied Holdings

AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL
AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS

material breach, and will provide the Breaching Party with the opportunity to
cure the material breach as follows:

1.       In the event of a failure to pay any amount due on the Payable Date,
ten days; and

2.       in the event of any other material breach, 45 days. If the nature of
any nonmonetary breach is such that it would be unreasonable to expect a cure
within 45 days, an additional 15 days will be allowed provided that the
Breaching Party exercises all reasonable efforts to cure such material breach
within such additional 15 day period.

c.       If the material breach for failure to pay any amount due on the
payable date is not cured during the ten day cure period set forth above, the
Nonbreaching Party may terminate this Agreement for material breach by
providing the Breaching Party with written notice within 60 days after the
expiration of the ten day cure period specified above, declaring termination of
this Agreement for material breach under this Section, effective on the date
stated in such notice. However, if the Dispute Resolution Process is instituted
prior to the effective date on the notice, such effective date will be no later
than 15 days after the Breaching Party's receipt of such notice of termination
for material breach.

d.       In the event of any breach, other than nonpayment, if the material
breach is not cured during the applicable cure period set forth above, the
Nonbreaching Party may terminate this Agreement for material breach by
providing the Breaching Party with written notice within 60 days after the
expiration of the cure period specified above, declaring termination of this
Agreement for material breach under this Section, effective on the later of the
date stated in such notice or five (5) days following completion of the Dispute
Resolution Process, if instituted. Such effective date will be no later than 90
days after the Breaching Party's receipt of such notice of termination for
material breach.

SECTION 7.3.1. IS ADDED TO THE AGREEMENT AS FOLLOWS:

7.3.1 CREDIT ASSESSMENT

         "Allied Holdings may notify IBM anytime during the Term if Allied
         Holdings' current published Standard and Poor (S&P) and Moody's credit
         rating exceeds a S&P "BB" rating or a Moody's "BA2" rating,
         respectively. Upon IBM's verification of Allied Holdings' notification
         of credit rating, IBM shall issue an Amendment to this Agreement to
         reinstate the mutually agreed language for Section 7.3 entitled
         "Termination for Cause" in the initial Agreement executed on April 1,
         2001."

SECTION 7.5 TRANSFER ASSISTANCE

Section 7.5. (f) is replaced as follows:

"If IBM terminates this Agreement for Allied Holdings' material breach, IBM
will provide Allied Holdings with Transfer Assistance if Allied Holdings pays
for such Transfer Assistance in advance.

SECTION 7.6 OTHER RIGHTS UPON EXPIRATION OR TERMINATION

Section 7.6. (a) is replaced as follows:

"Provided as a New Service, IBM will provide the additional assistance set
forth in this Section upon expiration or termination of this Agreement."

SECTION 9.0 INTELLECTUAL PROPERTY


Allied Holdings/IBM                                                 Page 3 of 7
                                Amendment No. 4


                                                                          [LOGO]

IBM/Allied Holdings

AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL
AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS


Replace Section 9.0 (b) as follows:

Type I Materials are copyrighted materials owned by Allied Holdings or any
other party, and Derivative Works thereof, including, without limitation, those
copyright items described in Section 9.0 e.

SECTION 10.0 INDEMNIFICATION
Replace Section 10.0 (a) 1 with the following:

"that an IBM Product or Service provided to Allied Holdings by IBM under this
Agreement infringes such Third Party's patent, copyright or other intellectual
property rights under U.S. or Canadian law; provided that IBM will not have and
obligation to indemnify Allied for such Third Party Infringement to the extent
the infringing Service was being provided by Allied Holding prior to the
Amended Effective Date or is caused by specifications provided to IBM by Allied
Holdings."

SECTION 13.8 GEOGRAPHIC SCOPE OF SERVICES IS REPLACED AS FOLLOWS:

"IBM is providing the Services under this Agreement in the United States. In
the event Allied Holdings requires certain tasks within the scope of the
Services to be performed outside the United States, the Parties agree to
implement such work in a Change Order."

SECTION 13.11 JOINT VERIFICATION
Amend the first sentence of Section 13.11 to read:

"During the six months after the Amended Effective Date (the JOINT
VERIFICATION PERIOD), Allied Holdings and IBM reserve the right to inventory
and validate any information that is reflected in or omitted from this
Agreement."

SECTION 13.14 NOTIFICATIONS AND APPROVALS

Replace the notification points of contact under Section 13.14.d.1 and 2 as
follows:

d.       IBM and Allied Holdings will provide notifications Agreement to the
         following:

         1.       In the event of breach, the Nonbreaching Party will notify
                  the Breaching Party via electronic and courier or certified
                  mail. Such notice will be deemed given upon the earlier of
                  either notification in accordance with Section 13.14.c.

         For termination, breach or default:

If to IBM:
                            Vice President, Travel and Transportation Industry
                            IBM Global Services
                            Dwayne Ingram
                            3031 N. Rocky Point Drive W.
                            Tampa, FL  33607

                            Telephone: 813-356-5100
                            Facsimile: 813-356-3411


Allied Holdings/IBM                                                 Page 4 of 7
                                Amendment No. 4



IBM/Allied Holdings                                                       [LOGO]

AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL
AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS


With a copy to:
                            IBM Project Executive
                            Nancy Deal
                            235 Meridian Hills Road
                            Tallahassee, FL 32312

                            Telephone/Facsimile: 850-906-0510

                            and
                            General Counsel, IBM Global Services
                            Route 100
                            Somers, New York 10589

                            Telephone: 914-766-4165
                            Facsimile: 914-766-8444
If to Allied Holdings:

                            Sr. Vice President Business Processing Engineering
                            David A. Rawden
                            160 Clairemont  Ave, Suite 200
                            Decatur, GA 30030

                            Telephone: 404 687-5905
                            Facsimile: 404 370-4206
With a copy to:
                            Allied Holdings Project Executive
                            Vice President, Communications & Technical Services
                            Information Technology
                            Larry G. Parks
                            160 Clairemont Ave,
                            Decatur, GA 30030

                            Telephone: 404-687-6269
                            Facsimile 404 370-4312
                            and
                            Senior Vice President Corporate Affairs and General
                            Counsel
                            Tommy Duffy
                            160 Clairemont Ave, Suite 200
                            Decatur, GA 30030

                            Telephone: 404 370-4225
                            Facsimile: 404 370-4312

     2.    For all other notices:

If to IBM:
                            IBM Project Executive
                            Nancy Deal
                            235 Meridian Hills Road
                            Tallahassee, FL 32312

                            Telephone/Facsimile: 850-906-0510


Allied Holdings/IBM                                                 Page 5 of 7
                                Amendment No. 4


                                                                          [LOGO]
IBM/Allied Holdings

AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL
AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS


If to Allied Holdings:      Allied Holdings Project Executive
                            Vice President, Communications & Technical Services
                            Information Technology
                            Larry G. Parks
                            160 Clairemont Ave,
                            Decatur, GA 30030

                            Telephone: 404-687-6269
                            Facsimile 404 370-4312

This Amendment No. 4 Schedules A-1, A-2, A-3 and B-1 are additional addendums
to the existing respective Schedules. Schedules B, C, D, F, G, H, I and L are
amended and restated in their entirety.

2.0  ATTACHMENTS

Schedule A-1 Services
Schedule A-2 Peoplesoft Services
Schedule A-3 AMS Services
Schedule B-1 AMS Service Levels
Schedule B Service Levels
Schedule C Charges
Schedule D Transition
Schedule F Software
Schedule G Machines
Schedule H Standards
Schedule I Facilities
Schedule L Employees

THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AMENDMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THE AMENDMENTS, 2) THE SCHEDULES,
AND 3) THE AGREEMENT. THIS STATEMENT OF THE AMENDMENT SUPERSEDES ALL PROPOSALS
OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS
BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER DESCRIBED IN THIS AMENDMENT.


Allied Holdings/IBM                                                 Page 6 of 7
                                Amendment No. 4


                                                                          [LOGO]
IBM/Allied Holdings

AMENDMENT NO. 4 TO THE IBM GLOBAL SERVICES NATIONAL
AGREEMENT BETWEEN IBM AND ALLIED HOLDINGS

                                             
Accepted by:                                    Accepted by:
INTERNATIONAL BUSINESS MACHINES CORPORATION     ALLIED HOLDINGS, INC.




By:  /s/ Dwayne Ingram                          By:  /s/ David A. Rawden
     ---------------------------------------         ---------------------------
            Authorized Signature                         Authorized Signature

Dwayne Ingram                                   David A. Rawden
Vice President,                                 Sr. Vice President,
Travel and                                      Business Processing Engineering
Transportation                                  Date
Date



Allied Holdings/IBM                                                 Page 7 of 7
                                Amendment No. 4

EX-21.1

                                                                    EXHIBIT 21.1

                      SUBSIDIARIES OF ALLIED HOLDINGS, INC.


The subsidiaries of Allied Holdings, Inc. and the place of incorporation or
organization are as follows:

                                                              
Allied Automotive Group, Inc.                                    Georgia
Axis Group, Inc.                                                 Georgia
Allied Systems, Ltd., LP                                         Georgia
Allied Systems (Canada) Company                                  Nova Scotia
Kar-Tainer International, LLC                                    Delaware
GACS Incorporated                                                Georgia
Allied Freight Broker, LLC                                       Delaware
QAT, Inc.                                                        Florida
Terminal Services, LLC                                           Delaware
F.J. Boutell Driveaway, LLC                                      Delaware
RMX, LLC                                                         Delaware
Transport Support, LLC                                           Delaware
Commercial Carriers, Inc.                                        Michigan
Haul Insurance Limited                                           Cayman Islands
AH Industries, Inc.                                              Alberta
Kar-Tainer International Limited                                 Bermuda
Axis Netherlands, LLC                                            Georgia
Axis Areta, LLC                                                  Georgia
Arrendadora de Equipo para el                                    Mexico
  Transporte de Automoviles, s. de R.L.
  de C.V.
Axis Logistica, S. de R.L. de C.V.                               Mexico
Logistic Technology, LLC - Georgia                               Georgia
Logistic Systems, LLC                                            Georgia
Kar-Tainer International (Pty) Ltd.                              South Africa
Axis Canada Company                                              Nova Scotia
CT Services, Inc.                                                Michigan
Cordin Transport, LLC                                            Delaware

EX-23.1

                                                                    EXHIBIT 23.1


                         INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Allied Holdings, Inc.:

We consent to the incorporation by reference in the registration statements on
Form S-8 (nos. 333-72053, 333-51104, 333-62440, 333-91942, 333-107455, and
333-107456) and form S-4 (No. 333-37113), of Allied Holdings, Inc. of our report
dated April 7, 2004, with respect to the consolidated balance sheets of Allied
Holdings, Inc. and subsidiaries as of December 31, 2003 and 2002, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended and the related financial statement schedule,
which report appears in the Allied Holdings, Inc. 2003 Annual Report on Form
10-K. Our report refers to a change in accounting to adopt the provisions of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" in 2002.

Our report refers to our audit of the adjustments that were applied and
disclosures added to restate the 2002 and 2001 consolidated financial
statements. Our report also refers to our audit of the transitional disclosures
required by Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets", to revise the 2001 consolidated financial statements.
However, we were not engaged to audit, review or apply any procedures to the
2001 consolidated financial statements other than with respect to such
adjustments and disclosures.



                                       /s/ KPMG LLP


Atlanta, Georgia
April 7, 2004

EX-23.2

                                                                    EXHIBIT 23.2


                 NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP

         Section 11(a) of the Securities Act of 1933, as amended (the
"Securities Act"), provides that if any part of a registration statement at the
time such part becomes effective contains an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, any person acquiring a security
pursuant to such registration statement (unless it is proved that at the time of
such acquisition such person knew of such untruth or omission) may sue, among
others, every accountant who has consented to be named as having prepared or
certified any part of the registration statement, or as having prepared or
certified any report or valuation which is used in connection with the
registration statement, with respect to the statement in such registration
statement, report or valuation which purports to have been prepared or certified
by the accountant.

         This Form 10-K is incorporated by reference into the following
previously filed registration statements of Allied Holdings, Inc.: Registration
Statements on Form S-8 file numbers 333-72053, 333-51102, 333-51104, 333-62440,
and 333-91942 and Registration Statement on Form S-4 file number 333-37113
(collectively, the "Registration Statements") and, for purposes of determining
liability under the Securities Act, is deemed to be a new registration statement
for each Registration Statement into which it is incorporated by reference.

         On April 2, 2002, Allied Holdings, Inc. dismissed Arthur Andersen LLP
("Arthur Andersen") as its independent public accountant and appointed KPMG LLP
to replace Arthur Andersen. Both the engagement partner and the manager for
Allied Holdings's prior fiscal year audit are no longer with Arthur Andersen. As
a result, Allied Holdings has been unable to obtain Arthur Andersen's written
consent to incorporate by reference into the Registration Statements Arthur
Andersen's audit report regarding Allied Holding's consolidated financial
statements as of December 31, 2001 and for the year then ended.

         Under these circumstances, Rule 437a under the Securities Act and Rule
2-02 of Regulation S-X promulgated by the Securities and Exchange Commission
permit Allied Holdings, Inc. to file this Form 10-K without a written consent
from Arthur Andersen. As a result, however, Arthur Andersen will have no
liability under Section 11(a) of the Securities Act for any untrue statements of
a material fact contained in the financial statements audited by Arthur Andersen
or any omissions of a material fact required to be stated therein. Accordingly,
you would be unable to assert a claim against Arthur Andersen under Section
11(a) of the Securities Act for any purchases of securities under the
Registration Statements made on or after the date of the Form 10-K. However, to
the extent provided in Section 11(b)(3)(C) of the Securities Act, other persons
who are liable under Section 11(a) of the Securities Act, including Allied
Holdings's officers and directors, may still rely on Arthur Andersen's original
audit reports as being made by an expert for purposes of establishing a due
diligence defense under Section 11(b) of the Securities Act.

EX-31.1

exv31w1

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David A. Rawden, certify that:

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

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 13, 2004 /s/ DAVID A. RAWDEN
David A. Rawden

Executive Vice President and
Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO § 906 OF

THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. § 1350)

      The undersigned, as the President and Chief Executive Officer of Allied Holdings, Inc., certifies that, to the best of his knowledge and belief, the Annual Report on Form 10-K for the year ended December 31, 2003, which accompanies this certification fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of Allied Holdings, Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose.

      This 13th day of April, 2004.

/s/ HUGH E. SAWYER

Hugh E. Sawyer

President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Allied Holdings, Inc. and will be retained by Allied Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The information in this Exhibit 32.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. EX-32.2 12 g87601exv32w2.htm EX-32.2 SECTION 1350 CERTIFICATION BY DAVID RAWDEN

EXHIBIT 32.2

CERTIFICATION PURSUANT TO § 906 OF

THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. § 1350)

      The undersigned, as the Executive Vice President and Chief Financial Officer of Allied Holdings, Inc., certifies that, to the best of his knowledge and belief, the Annual Report on Form 10-K for the year ended December 31, 2003, which accompanies this certification fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of Allied Holdings, Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose.

      This 13th day of April, 2004.

/s/ DAVID A. RAWDEN

David A. Rawden

Executive Vice President and

Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Allied Holdings, Inc. and will be retained by Allied Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

The information in this Exhibit 32.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. EX-99.1 13 g87601exv99w1.txt EX-99.1 CHARTER OF AUDIT COMMITTEE EXHIBIT 99.1 ALLIED HOLDINGS, INC AUDIT COMMITTEE CHARTER PURPOSE The primary purpose of the Audit Committee (the "Committee") is to assist the Board of Directors (the "Board") in its oversight of: - the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company, - the independent accountants their report on the financial reports of the Company, and - the adequacy of the system of internal controls and compliance with material policies and laws, including the Company's Code of Conduct; The function of the Committee is one of oversight and review. Management of the Company is responsible for the preparation of the Company's financial statements and the independent auditors are responsible for auditing those financial statements. The Committee and the Board of Directors (the "Board") recognize that management (including the internal audit staff) and the independent auditors have more resources and time, and more detailed knowledge and information regarding the Company's accounting, auditing, internal control and financial reporting than the Committee does; accordingly, the Committee's oversight role does not provide any expert or special assurance as to the financial statement and other financial information provided by the Company to its shareholders and others. The ultimate accountability of the independent accountants is to the Committee, and the Committee ultimately has the authority and responsibility to select, evaluate and, where appropriate, replace the independent accountants. COMPOSITION AND STRUCTURE The Committee shall consist of not less than three directors designated by the Board. The Board must affirmatively determine that the members of the Committee meet the independence and qualification requirements of the American Stock Exchange (the "AMEX"), Section 10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), and the rules and regulations of the Securities and Exchange Commission (the "SEC"). If the Board seeks to appoint one director to the Committee who is not independent under AMEX listing standards but who does satisfy the requirements of Rule 10A-3 under the Exchange Act, the Company may appoint such person to the Committee in exceptional and limited circumstances as long as the Board determines that membership on the Committee by the individual is in the best interests of the Company and its shareholders. The Company must disclose the identity of this individual, the nature of the relationship that makes that individual - 1 - not independent and the reasons for the Board's determination. Such a member may not serve for a period of time in excess of two consecutive years and may not serve as chair of the Committee. Disclosure will be made in the proxy statement regarding the independence of Committee members pursuant to AMEX listing standards. One member of the Committee may be designated by the Company's Board of Directors as an "audit committee financial expert" (as defined by the rules and regulations of the SEC), and the identity of such member shall be disclosed in the Company's proxy statement. If no member of the Committee qualifies as an audit committee financial expert, the Company must disclose this fact in its proxy statement and state why the Committee does not have a member who meets applicable standards. At least one member of the Committee must be "financially sophisticated" in that he or she has past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual's financial sophistication, including but not limited to being or having been a chief executive officer, chief financial officer, or other senior officer with financial oversight responsibilities. A director who qualifies as an audit committee financial expert is presumed to qualify as financially sophisticated. Each Committee member must be able to read and understand fundamental financial statements, including a company's balance sheet, income statement and cash flow statement. MEETINGS The Committee may meet as often as necessary, but not less than on a quarterly basis. One member of the Committee shall be appointed as chairperson (the "Chairperson"). The Chairperson shall be responsible for leadership of the Committee, including scheduling and presiding over meetings, preparing agendas, and making regular reports to the Board. The Chairperson will also maintain regular liaison with the Chief Executive Officer, Chief Financial Officer, the General Counsel of the Company, the lead independent audit partner and the director of Internal Audit. A member of the Committee who is determined by the Board to be not independent may serve as Chairperson of the Committee. RESPONSIBILITIES AND AUTHORITY The following functions shall be common recurring activities of the Committee in carrying out its purpose set forth in this Charter. These functions should serve as a guide with the understanding that the Committee may carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal or other conditions. The Committee shall also carryout any other - 2 - responsibilities and duties delegated to it by the Board from time to time related to the purpose of the Committee outlined in this Charter. The Committee, in discharging its oversight role, is empowered to study or investigate any matter of interest or concern within the purpose of the Committee that the Committee deems appropriate or necessary. The Committee shall have the authority to engage independent counsel and other advisers, as it determines necessary to carry out its duties, and the Company shall provide for appropriate funding, as determined by the Committee for the payment of (a) compensation to the independent auditor(s) engaged for the purpose of preparing or issuing the audit report or performing other audit, review or attest services for the Company, (b) compensation to any independent advisors employed by the Committee and (c) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties. To fulfill its responsibilities and duties, the Committee shall: The Independent Auditor 1. The Committee shall be directly responsible for the appointment (subject, at the discretion of the Board, to shareholder ratification), compensation, retention and oversight of the work of the registered public accounting firm engaged (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing another audit, review or attest services for the Company, and each such registered public accounting firm must report directly to the Committee. 2. Oversee the independence of the auditor by: - Ensuring that the independent auditors prepare and deliver on an annual basis a formal written statement delineating all relationships between the independent auditors and the Company, consistent with Independence Standards Board Standard 1, and reviewing and discussing with the independent auditor, on a periodic basis, any disclosed relationships or services that may impact the objectivity and independence of the auditor. - Pre-approving all audit and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor, subject to and in accordance with Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 and the Committee's pre-approval policy, as it may be amended from time to time. Financial Reporting 1. The Committee shall discuss with the independent auditor the (i) results of its audits, including the auditor's judgment about the quality, and not just the acceptability under Generally Accepted Accounting Principles, of the Company's accounting principles as - 3 - applied in its financial reporting, (ii) all critical accounting policies and practices to be used, and (iii) all material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences. 2. The Committee shall review with management and the independent auditor (i) major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company's selection or application of accounting principles, and major issues as the adequacy of the Company's internal controls and any special audit steps adopted in light of material deficiencies, (ii) analyses prepared by management and the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of alternative GAAP methods on the financial statements, and (iii) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company. 3. The Committee shall discuss with the Company's General Counsel any legal matters that may have a material impact on the Company's financial statements, and any material reports or inquiries from regulatory or governmental agencies. 4. The Committee shall review management's evaluation of the adequacy of the Company's internal control structure and the extent to which major recommendations made by the independent auditors and the internal auditors have been implemented. 5. The Committee shall review the services provided by the internal auditing functions, including: - The planned scope for the internal audit program, its objectives, and the staff required to attain these objectives. - The report which details the activities of the internal auditing department of the preceding period. - The working relationship between the internal auditing department and independent auditors. 6. The Committee shall review with the independent auditor any problems or difficulties encountered during the course of the review or audit, including any restrictions on the scope or work or access to required information and management's response. 7. The Committee shall review disclosures made to the Committee by the Company's Chief Executive Officer and Chief Financial Officer regarding: (i) any significant deficiencies in the design or operation of internal controls of the Company which could adversely affect the Company's ability to record, process, summarize and report financial data; and (ii) any fraud, material or otherwise, that involves management or others. - 4 - Ethical and Legal Compliance/General 1. The Committee shall be responsible for establishing procedures for: - The receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and - The confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. 2. Review and approve in advance any proposed "related party" transactions required to be disclosed pursuant to Item 404 of Regulation S-K. 3. The Committee shall monitor compliance with the Company's Code of Conduct. Reports 1. The Committee shall prepare the report of the Committee to be included in the Company's annual proxy statement. 2. The Committee shall report regularly to the Board (i) with respect to such matters as are relevant to the Committee's discharge of its responsibilities, (ii) with respect to such recommendations as the Committee may deem appropriate, and (iv) the Committee's conclusions with respect to the independent auditor. The report to the Board may take the form of an oral report by the chair or any other member of the Committee designated by the Committee to make such report. REVIEW AND APPROVAL OF CHARTER The Committee shall review and reassess the adequacy of this charter annually and recommend modifications to the Board as needed. - 5 - EX-99.2 14 g87601exv99w2.txt EX-99.2 CHARTER OF THE COMPENSATION AND NOMINATING EXHIBIT 99.2 CHARTER OF THE COMPENSATION AND NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS I. PURPOSE The Compensation and Nominating Committee of Allied Holdings, Inc. (the "Company") shall carry out the overall responsibility of the Board of Directors (the "Board") relating to executive compensation and shall provide assistance to the Board in fulfilling its responsibilities to the shareholders by: - Assisting the Board with respect to the Company's compensation programs and compensation of the Company's executives; - Producing an annual report of the Compensation and Nominating Committee on executive compensation for inclusion in the Company's annual proxy statement, in accordance with applicable rules and regulations; and - Identifying individuals qualified to become directors, consistent with criteria approved by Board, and recommending to the Board for selection the candidates for all directorships to be filled by the Board or by the shareholders. II. STRUCTURE AND OPERATIONS Composition and Qualifications All members of the Compensation and Nominating Committee shall meet the independence requirements of the American Stock Exchange LLC ("AMEX"), Section 10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), the rules and regulations of the Securities and Exchange Commission (the "SEC"), including Rule 16b-3(d)(1), and Section 162(m) of the Internal Revenue Code. Appointment and Removal The members of the Compensation and Nominating Committee shall be designated by the Board annually and each member shall serve until such member's successor is duly designated or until such member's earlier resignation or removal. Any member of the Compensation and Nominating Committee may be removed from the Committee, with or without cause, by a majority vote of the Board. Unless a Chairperson is designated by the Board, the members of the Compensation and Nominating Committee shall designate a Chairperson by majority vote of the full Compensation and Nominating Committee membership. The Chairperson will chair all sessions of the Compensation and Nominating Committee and set the agendas for Compensation and Nominating Committee meetings. Delegation to Subcommittees In fulfilling its responsibilities, the Compensation and Nominating Committee may delegate its responsibilities to a subcommittee of the Compensation and Nominating Committee and, to the extent not expressly reserved to the Compensation and Nominating Committee by the Board or by applicable law, rule or regulation, to any other committee consisting entirely of directors who meet the independence requirements of the AMEX, Section 10A(m)(3) of the Exchange Act, the rules and regulations of the SEC and Section 162(m) of the Internal Revenue Code. III. MEETINGS The Compensation and Nominating Committee shall ordinarily meet at least two times annually, or more frequently as circumstances dictate. Any member of the Compensation and Nominating Committee may call meetings of the Compensation and Nominating Committee. Any director of the Company who is not a member of the Compensation and Nominating Committee may attend meetings of the Compensation and Nominating Committee; provided, however, that any director who is not a member of the Compensation and Nominating Committee may not vote on any matter coming before the Compensation and Nominating Committee for a vote. The Compensation and Nominating Committee also may invite to its meetings any member of management of the Company and such other persons as it deems appropriate in order to carry out its responsibilities. The Compensation and Nominating Committee may meet in executive session, as the Compensation and Nominating Committee deems necessary or appropriate. IV. RESPONSIBILITIES AND DUTIES The following functions shall be the common recurring activities of the Compensation and Nominating Committee in carrying out its purpose as set forth in Section I of this Charter. These functions should serve as a guide with the understanding that the Compensation and Nominating Committee may carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal or other conditions. The Compensation and Nominating Committee shall also carry out any other responsibilities and duties delegated to it by the Board from time to time related to the purpose of the Compensation and Nominating Committee outlined in Section I of this Charter. To fulfill its responsibilities and duties, the Compensation and Nominating Committee shall: Compensation for Executive Officers/Officer Selection (1) Establish and review the overall executive compensation philosophy of the Company. (2) Review and approve the Company goals and objectives relevant to the compensation of the Chief Executive Officer ("CEO") and other executive officers' compensation, including annual performance objectives. 2 (3) Evaluate the performance of the CEO and other executive officers in light of established goals and objectives and, based on such evaluation, determine and approve the compensation, including annual salary, bonus, stock options, other incentive awards and other benefits, direct and indirect, of the CEO and other executive officers. (4) Oversee the development of executive succession plans. (5) Review and recommend to the full Board, or approve as appropriate, new executive compensation plans, incentive-compensation plans and equity based plans and any amendments to or modifications of such plans. (6) Establish and periodically review policies in the area of senior management perquisites. Monitoring Incentive and Equity-Based Compensation Plans (1) Perform duties delegated to the Compensation and Nominating Committee by the Board under various executive compensation plans. (2) Review and make recommendations to the full Board, or approve, as appropriate, all awards of stock, stock options and other incentive compensation awards to executive officers pursuant to the Company's executive plans. (3) Monitor compliance by executives with the terms and conditions of the Company's executive compensation plans. (4) Select, retain, terminate and/or replace, as needed, compensation and benefits consultants and other outside experts to provide independent advice to the Compensation and Nominating Committee. In that connection, in the event the Compensation and Nominating Committee retains a compensation consultant or other expert, or if the Company should retain a compensation consultant or other expert to assist in the evaluation of the CEO or senior executive compensation, the Compensation and Nominating Committee shall have the sole authority to approve such consultant's or expert's fees and other retention terms. Board Composition, Evaluation and Compensation (1) Establish criteria or factors to consider for the selection of new directors to serve on the Board. (2) Identify individuals believed to be qualified as candidates to serve on the Board and recommend that the Board select the candidates for all directorships to be filled by the Board or by the shareholders at an annual or special meeting. In addition, the Compensation and Nominating Committee shall review and make 3 recommendations to the Board whether members of the Board should stand for re-election. (3) Conduct all necessary and appropriate inquiries into the backgrounds and qualifications of possible candidates as directors. In that connection, the Compensation and Nominating Committee shall have sole authority to retain and to terminate any search firm to be used to assist it in identifying candidates to serve as directors of the Company, including sole authority to approve the fees payable to such search firm and any other terms of retention. (4) Review and make recommendations, as the Compensation and Nominating Committee deems appropriate, regarding the qualifications for Board membership and the composition and size of the Board in order to ensure the Board has the requisite expertise and its membership consists of persons with sufficiently diverse and independent backgrounds. (5) Recommend each year to the Board compensation and benefits for directors. (6) Select, retain, terminate and/or replace, as needed, recruiters to assist the Compensation and Nominating Committee in identifying candidates. In that connection, in the event the Compensation and Nominating Committee retains a recruiter, the Compensation and Nominating Committee shall have the sole authority to approve such recruiter's fees and other retention terms. Committee Selection and Composition (1) Recommend members of the Board to serve on the committees of the Board, giving consideration to rotation of committee membership and the criteria for service on each committee as set forth in the charter for such committee, as well as to any factors the Compensation and Nominating Committee deems relevant, and where appropriate, make recommendations regarding the removal of any member of any committee. Reports (1) Prepare an annual report on executive compensation for inclusion in the Company's proxy statement, in accordance with applicable rules and regulations. (2) Report regularly to the Board (i) following meetings of the Compensation and Nominating Committee, (ii) with respect to such other matters as are relevant to the Compensation and Nominating Committee's discharge of its responsibilities and (iii) with respect to such recommendations as the Compensation and Nominating Committee may deem appropriate. The report to the Board may take the form of an oral report by the Chairperson or any other member of the Compensation and Nominating Committee designated by the Compensation and Nominating Committee to make such report. 4 (3) Maintain minutes and other records of meetings and activities of the Compensation and Nominating Committee, as appropriate under applicable law. V. ANNUAL EVALUATION The Compensation and Nominating Committee shall review and reassess, at least annually, the adequacy of this Charter and recommend to the Board any improvements to this Charter that the Compensation and Nominating Committee considers necessary or appropriate. 5 EX-99.3 15 g87601exv99w3.txt EX-99.3 ALLIED HOLDINGS, INC. CODE OF CONDUCT EXHIBIT 99.3 ALLIED HOLDING, INC. and subsidiary companies Code of Conduct December 17, 2003 -1- CODE OF CONDUCT The loyalty and integrity of our employees is a long-standing tradition. Your faithful adherence to the standards of conduct set forth by the Company and its subsidiaries has fostered the fair and ethical relationships that exist between the Company and its employees, shareholders, customers, suppliers and competitors. It is a long-established policy that the Company and its employees observe and comply with all laws and regulations of federal, state, provincial and local governments, and applicable foreign laws, affecting the Company and its employees. All employees must avoid activities which could lead to involvement of the Company or themselves in any unlawful or unethical practice. This Code of Conduct and the standards it sets for ethical conduct, legal compliance and financial integrity, applies to our people on all levels - including the Board of Directors, the CEO, senior financial officers and others in senior management. PRINCIPLES AND GUIDELINES This policy restates and reaffirms the Company's various principles and guidelines with respect to legal responsibilities and ethical business conduct. The Company's requirements also are reflected in other statements of policies and procedures. The Company expects its employees to observe the highest standards of integrity and remain free of interests and relationships which are potentially detrimental to the Company's best interests. In day-to-day activities, all employees should assess their actions to assure that they are not inconsistent with the intention of this policy. A good test before any action is planned or taken is to determine whether full disclosure of the facts surrounding the action would be regarded by the general public to justify the action on business and ethical grounds. COMPLIANCE To ensure continuing observance of this policy, the Board of Directors requires that employees periodically review these guidelines and acknowledge their understanding and adherence in writing. The Company's Compliance Officer and the Audit Committee of the Board of Directors have the overall responsibility for providing guidance in matters of conduct and business ethics. Further, the Audit Committee is charged with monitoring compliance with this policy and the applicable laws to assure consistency with the Company's overall objective of promoting fair and ethical actions and relationships in all of the Company's activities. In performing that responsibility, the committee utilizes the services of the Company's independent public accountants and the Company's Internal Audit Department. -2- DEFINITIONS For the purposes of this policy, the term "employees" refers to all non-union salaried employees, non-union hourly employees, officers and directors of the Company and its subsidiaries. In Canada, this policy applies to all non-union employees, whether salaried or hourly. "Gifts and gratuities" include money, favors, entertainment, personal discounts, hospitality, transportation, loans, future employment or any other tangible or intangible items, regardless of value. GIFTS AND ENTERTAINMENT Generally, gifts and gratuities may not be given or received unless they are of a nominal value and consistent with the following guidelines. Employees are responsible for ensuring that any meals, refreshments, gifts or entertainment that they provide to or accept from those people with whom the Company has business contacts conform to the Company's ethical standards. GIVING OF GIFTS AND ENTERTAINMENT BY THE COMPANY - Gifts and entertainment may only be given to customers and suppliers if all the following conditions are met: - They are consistent with accepted business practices; - They are of sufficiently limited value and in a form that will not be construed as influencing or rewarding a particular course of action; - They are not in violation of applicable law and generally accepted ethical standards; - Public disclosure will not embarrass the Company; and - They will not be used to influence the customer or supplier improperly or to knowingly violate the customer's or supplier's own rules against acceptance of gifts or entertainment. ACCEPTANCE OF GIFTS AND GRATUITIES BY EMPLOYEES - Employees may not receive, directly or indirectly, from an organization, government agency, or individual who has, or seeks to have, a business relationship with the Company, any commissions, fees, bonuses, compensation, loans (other than those made on customary terms from a bank or other financial institution), advances or anything of value except as outlined in this policy. Employees may not accept gifts or other gratuities which go beyond a moderate and reasonable value or are given under circumstances that place the employee or the Company under any obligation or which may tend to influence business relationships. Employees who receive, or whose families receive, gifts or gratuities which go beyond a moderate and reasonable value, either in terms of cash value or frequency, should immediately return the gift to the donor with a letter outlining Company policy and make a full report of the matter to the Compliance Officer. -3- It is absolutely forbidden to accept gifts in the form of cash (or gifts immediately convertible to cash, such as gold or bank accounts in an employee's name). ENTERTAINMENT - Employees may not accept unusual or extended hospitality in any form, including entertainment at a resort or similar accommodation, or payment of personal business expenses, from any organization or individual who has, or who seeks to have, a business relationship with the Company; however, the normal working relationship between the Company and its customers or suppliers may lead to occasions which necessitate certain authorized employees as representatives of the Company to accept offers of transportation, food, lodging and entertainment in conjunction with appropriate business activities of the customer or supplier. In these instances only, the Company will reimburse the employee for related expenses which are not included as part of its customer's or supplier's offer. Local entertainment such as golf outings, theater, dinners, sporting events, etc., are considered acceptable business courtesies so long as the frequency and the cost to the donor is within reason. Certain business courtesies, such as payment for lunch or dinner in connection with a business meeting, are not discouraged. RELATIONSHIPS WITH OUTSIDE BUSINESSES DEALING WITH CUSTOMERS, CONSULTANTS AND SUPPLIERS Employees who deal with customers, consultants, or suppliers have an obligation of fair and impartial dealing with respect to these outside firms. Employees engaged in the sale and marketing of the Company's services are obligated to provide clear, accurate and concise service and pricing information. Contractual obligations between customers and the Company should be clearly defined. All employees are responsible for ensuring the integrity of the Company's services and accuracy of internal documentation and records, as well as documentation used in dealing with outside firms. The Company will comply in all of its activities with antitrust laws. EMPLOYEE INTERESTS IN OUTSIDE BUSINESSES No transaction with an outside business organization that furnishes goods or services to the Company shall be influenced by an employee's personal interests or relationships. Accordingly, employees shall have no material direct or indirect interests in or material relationships with any such organization that would reasonably be said to affect the objectivity and independence of their judgment or conduct in carrying out their duties and responsibilities to the Company, or embarrass the Company because its effect may reasonably be misunderstood by others. Employees should not own a material financial interest or have an association that would reasonably be construed as a material financial interest in any business organization -4- that does or seeks to do business with the Company, or is a competitor of the Company unless such interest has been fully disclosed in writing to the Company's Compliance Officer, and, if deemed necessary by the Audit Committee, approved by the Board of Directors. Employees shall not serve as a director, partner or consultant in a non-affiliated business organization which does a material amount of business with or is a competitor of the Company without first obtaining the approval of the Company's Compliance Officer, and if deemed necessary by the Audit Committee, approved by the Board of Directors. Employees who are in positions which in any way could influence the purchase of goods or services for the Company may not conduct or direct another to conduct business on behalf of the Company with a member of their family (relatives by blood or marriage) or business organization in which the employee or a member of the employer's family has significant financial interest. Any exception must be approved by the Company's Compliance Officer, and, if deemed necessary by the Audit Committee, approved by the Board of Directors. OTHER OUTSIDE BUSINESS RELATIONSHIPS - Employees are expected to serve the Company with their maximum skills, judgment, discretion and integrity in fulfilling their duties. All employees are expected to act in the best interest of the Company in all matters connected with their position: - Employees may not render professional service, consult for or engage in any outside employment which might affect the independence of their judgment and performance of their duties and responsibilities to the company or which might embarrass the company. - Those engaged in or knowing of other employees who are or may be engaged in potential outside conflicts of interest should disclose this information to the Company's Compliance Officer or to the Company's Ethical Questions and Compliance Hotline. - Employees may not engage in any outside employment which conflicts with scheduled hours, overtime hours, when required or the performance of Company assignments. CONFLICT OF INTEREST THROUGH A THIRD PARTY - Anything that would constitute a conflict of interest or unethical conduct on the part of an employee would also create conflict when an employee knowingly engages in such activity through a third party such as a spouse, a member of one's family or other persons or organizations. IMPROPER USE OF COMPANY POSITION, INFORMATION, OR RESOURCES UNAUTHORIZED DISCLOSURE - Employees are not permitted to make disclosure of confidential or proprietary Company information which could in any manner adversely affect the interests of the Company. For example, information concerning Company plans, facilities, sales, costs, financial data and procedures may also involve elements of significant competitive value and must not be disclosed outside the Company without specific advance written approval of the president. The same standards should be applied with respect to material information about customers, suppliers or related companies gained as a result of the employee's position with the Company. -5- The insider trading laws of the United States prohibit buying or selling a Company's securities while in possession of material non-public information about that Company. You can also violate these laws by disclosing material non-public information to another person if, as a result, that person - or any other person - buys or sells a security on the basis of that information. If you make such a disclosure, you can be punished even if you, yourself, have no financial gain. Many other countries have similar laws. "Material" information is generally regarded as information that a reasonable investor would think important in deciding whether to buy, hold or sell the security; in short, it is any information that could reasonably affect the price of the security. Examples of possible material information are sales, earnings, dividend actions, strategic plans, important personnel changes, acquisition and divestiture plans, marketing plans and joint ventures, and government actions. "Non-public" means information that has not been made public. In addition to fines of up to $1 million and lengthy prison terms, a violator in the U.S. or one who trades on a U.S. stock exchange can pay civil penalties of up to three times the profit gained, or loss avoided, by the unlawful transaction or disclosure. The Company may also have to pay substantial fines. You may not buy or sell securities while knowing material non-public information about the Company. Also, you may not engage in any other action to take advantage or pass on to others material non-public information. This policy also applies to having or selling securities of any other Company while you have material non-public information about it that you learned in the course of your job. The same restrictions apply to family members and others living in your household; you are expected to be responsible for compliance by them. This policy applies to all Company employees wherever they are located, even if the activity does not violate the law of the country where they live. MISUSE OF COMPANY PROPERTY, RECORDS AND FUNDS - Preventing the loss, damage, misuse of theft of Company property, computer systems, records and funds is a matter of personal responsibility which employees must accept as part of their job. Company property is to be used exclusively for conducting business and should not be used personally, sold or given away without proper authorization. Property of vendors, customers, or the government should be protected as if it were Company property. The misuse, theft, damage or unauthorized destruction of Company computer hardware, software or data (on tape, disk backup or within the computer system) as well as procedures and documentation is prohibited. Company policy also requires that all employees must follow the proper procedures for disbursing, receiving and reporting funds. -6- CORPORATE OPPORTUNITIES - Employees are prohibited from taking for themselves personally opportunities that are discovered through the use of Company property, information or position. SEC REPORTING - The Company is committed to full, fair, accurate, timely and understandable disclosure in the reports it files with the Securities and Exchange Commission and in other public communications made by the Company. The Company is committed to integrity in its books and records, accounting practices, financial controls and auditing. COPYRIGHT PROTECTION - Unauthorized duplication, distribution or use of printed materials, films, tapes, proprietary software or documentation of the Company or other outside parties is expressly prohibited except as provided by copyright laws or licensing agreements accompanying software products. Unlicensed use of software or use by a non-Company employee is prohibited. Each employee is personally responsible for ensuring compliance with the terms of licensing, trademark agreements and copyright laws. TRANSACTIONS - All employees involved in transactions between the U.S. and Canada and any foreign country must be aware of and adhere to customs regulations, export licensing regulations and trade agreements involving that country PARTICIPANTS IN CIVIC AND POLITICAL ACTIVITIES - The Company, as a socially responsible corporate citizen, actively supports civic, social and community projects and organizations. The Company encourages its employees to actively participate in community affairs, including political activities and social welfare efforts. Such service can appropriately include both volunteer work in the private sector or, in public affairs, the holding of elective or appointive office. EMPLOYEES SERVING IN PUBLIC OFFICE - Employees who run for office must represent themselves as individual citizens and must not represent the Company in any way in carrying out public duties. The Company will observe the utmost care that it takes no action with respect to employees as office-holders that may be construed as an attempt to influence them in the exercise of their duties as a public servant. Employees who consider running for or accepting public office should be made aware of Company and public policy regarding conflict of interest. Employees shall inform the president as soon as possible when considering running for or accepting a public position. FOREIGN CORRUPT PRACTICES ACT - The U.S. Foreign Corrupt Practices Act prohibits corporations and individuals from doing certain things, directly or indirectly, to obtain or retain business or to influence a person working in an official capacity. It is illegal to pay, offer to pay or authorize the payment of anything of value to any non-U.S. government office, government employee, political party or political candidate for these purposes. No employee shall make any payment or other action that is prohibited by the Act. -7- Prohibited payments include cash, gifts and free samples, use of automobiles and aircraft, payment of non-essential travel and entertainment expenses, overbilling of sales with the expectation that part of the sale price will be returned to the buyer, and making contribution to "charities" chosen by an official. Offers to pay can be punished even if they are not accepted or never paid. The Act does not prohibit customary tips or gratuities to lower-level non-U.S. government employees to ensure they perform their routine duties in a prompt and proper way. However, Tommy Duffy should be consulted before determining whether any proposed payment fits squarely within this narrow exception to the law or whether it violates local law. In addition, in Canada conduct of this nature is governed by the Canadian Criminal Code. Pursuant to the Criminal Code, employees are guilty of an indictable offense, and liable to imprisonment for a term not exceeding five (5) years if they bribe (or engage in similar activities, such as influence peddling) a government official or a family member of such officials. POLITICAL CONTRIBUTIONS - Consistent with the laws of the United States, the Company prohibits the use of corporate funds or assets, cash or otherwise, for political contributions to candidates for federal offices. Where political contributions are legally permitted by state or local law or the laws of Canada, any proposal for such contributions must be approved by the Company's Compliance Officer. This covers not only direct contributions, but indirect support of candidates of political parties; for example, a loan or donation to an employee for purposes of making a political contribution, the purchase of tickets for special dinners or other fund-raising events, the loan of employees to political parties or committees, or the furnishing of transportation, special duplicating services, etc. Unauthorized solicitation of political contributions on Company premises is prohibited. In addition, political contributions in Canada are regulated by both federal and provincial laws. Under federal law, individuals may contribute to a federal political party at any time, as may corporations incorporated under either the laws of Canada or a province. However, a candidate for federal office may only receive a political contribution during a federal election campaign. In the province of Ontario, political contributions may be made during provincial elections by any person normally resident in Ontario, and by corporations that carry on active business in Ontario. Contributions from outside Ontario are prohibited. Contribution limits apply. VALUES It is the Company's desire that its employees will conduct their lives in accordance with the highest moral and ethical standards. The Company believes that work performance is directly affected by behaviors and habits outside of the office and, while the Company -8- cannot monitor or regulate conduct outside of the employment context, it is anticipated that each employee will act accordingly. [In keeping with Company values, it is the Company's policy that on Company premises or where Company business is being performed, there shall be no consumption or serving of alcoholic beverages, there shall be no gambling, and there shall be no sexual activities of any kind. At Company-sponsored functions or in the presence of customers of the Company where business is not being performed, there shall be no consumption of hard liquor, there shall be no gambling, and there shall be no other inappropriate activities. When entertaining a customer, there shall be no consumption of hard liquor by the employee, there shall be no gambling, and there shall be no other inappropriate activities.] RESPONSIBILITIES All employees are expected to adhere to these policies and principles, and all applicable laws, and to carry them out in their day-to-day business activities. These guidelines will not provide an answer to every problem that arises. The absence of a Company guideline covering a particular situation does not relieve an employee from the responsibility of exercising the highest ethical standards. Employees are expected to seek guidance when there are questions or concerns about compliance with laws or regulations or with Company policies and procedures. Any violations, or suspected violations, must be reported immediately to appropriate Company personnel. There will be no retaliation for such reporting. The responsibility for administering and complying with this policy is delegated to operating heads of various departments with respect to the employees within their jurisdiction. They should be fully aware of the practices and procedures being followed by employees and take steps to ensure that employees measure up to expected standards of behavior as they carry out their duties. All questions regarding the application of Company policy to particular situations should be submitted to the Company's Compliance Officer who will provide any guidance and interpretations required concerning this policy. DISCIPLINARY ACTIONS Employees who fail to disclose reportable interests or relationships, who knowingly make a false report or who fail to comply with the provisions set forth in this policy may be subject to disciplinary action, including, where appropriate, suspension or termination of employment. Any disciplinary action taken by the Company does not waive the Company's right to take appropriate legal action or to assist any local, state, provincial or federal law enforcement agencies in the prosecution of employees who violate the laws and agreements covered in this policy. The Company will not be obligated to reimburse employees for any fines or legal costs incurred by them or on their behalf. -9- DISCLOSURE AND COMPLIANCE By signing the Code of Conduct Statement, employees are certifying that they have reviewed the Code of Conduct policy statement and are complying with all Company policies regarding their business conduct and responsibilities. Any interests or relationships that might be in violation of this policy, as well as any potential policy violations, must be reported, and all employees are expected to cooperate in any subsequent investigation. Any violations, or suspected or potential violations, of this Code or applicable laws and regulations, must be reported promptly, and all employees are expected to cooperate in any subsequent investigation. Transactions, interests or relationships that might give rise to a conflict of interest also must be reported. Reports should be made in writing to the Company's Compliance Officer, and sent to the following address, or you may call Tommy Duffy directly at 404-370-4225. As an alternative, employees may use the Company's Ethical Questions and Compliance Hotline to report problems, raise concerns or ask questions about ethics and legal compliance matters. Employees may contact the hotline by phone, in writing, or by email. Those contacting the hotline may choose to identify themselves or remain anonymous. Tommy Duffy Senior Vice President, Secretary, General Counsel and Compliance Officer Allied Holdings, Inc. 160 Clairemont Avenue Decatur, GA 30030 -10- -----END PRIVACY-ENHANCED MESSAGE-----

EX-32.2

exv32w2

EX-99.1

                                                                    EXHIBIT 99.1

                              ALLIED HOLDINGS, INC

                             AUDIT COMMITTEE CHARTER

PURPOSE

The primary purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") in its oversight of:

         -        the accounting and financial reporting processes of the
                  Company and the audits of the financial statements of the
                  Company,

         -        the independent accountants their report on the financial
                  reports of the Company, and

         -        the adequacy of the system of internal controls and compliance
                  with material policies and laws, including the Company's Code
                  of Conduct;

The function of the Committee is one of oversight and review. Management of the
Company is responsible for the preparation of the Company's financial statements
and the independent auditors are responsible for auditing those financial
statements. The Committee and the Board of Directors (the "Board") recognize
that management (including the internal audit staff) and the independent
auditors have more resources and time, and more detailed knowledge and
information regarding the Company's accounting, auditing, internal control and
financial reporting than the Committee does; accordingly, the Committee's
oversight role does not provide any expert or special assurance as to the
financial statement and other financial information provided by the Company to
its shareholders and others.

The ultimate accountability of the independent accountants is to the Committee,
and the Committee ultimately has the authority and responsibility to select,
evaluate and, where appropriate, replace the independent accountants.

COMPOSITION AND STRUCTURE

The Committee shall consist of not less than three directors designated by the
Board. The Board must affirmatively determine that the members of the Committee
meet the independence and qualification requirements of the American Stock
Exchange (the "AMEX"), Section 10A(m)(3) of the Securities Exchange Act of 1934
(the "Exchange Act"), and the rules and regulations of the Securities and
Exchange Commission (the "SEC").

If the Board seeks to appoint one director to the Committee who is not
independent under AMEX listing standards but who does satisfy the requirements
of Rule 10A-3 under the Exchange Act, the Company may appoint such person to the
Committee in exceptional and limited circumstances as long as the Board
determines that membership on the Committee by the individual is in the best
interests of the Company and its shareholders. The Company must disclose the
identity of this individual, the nature of the relationship that makes that
individual

                                     - 1 -



not independent and the reasons for the Board's determination. Such a member may
not serve for a period of time in excess of two consecutive years and may not
serve as chair of the Committee.

Disclosure will be made in the proxy statement regarding the independence of
Committee members pursuant to AMEX listing standards.

One member of the Committee may be designated by the Company's Board of
Directors as an "audit committee financial expert" (as defined by the rules and
regulations of the SEC), and the identity of such member shall be disclosed in
the Company's proxy statement. If no member of the Committee qualifies as an
audit committee financial expert, the Company must disclose this fact in its
proxy statement and state why the Committee does not have a member who meets
applicable standards.

At least one member of the Committee must be "financially sophisticated" in that
he or she has past employment experience in finance or accounting, requisite
professional certification in accounting, or any other comparable experience or
background which results in the individual's financial sophistication, including
but not limited to being or having been a chief executive officer, chief
financial officer, or other senior officer with financial oversight
responsibilities. A director who qualifies as an audit committee financial
expert is presumed to qualify as financially sophisticated.

Each Committee member must be able to read and understand fundamental financial
statements, including a company's balance sheet, income statement and cash flow
statement.

MEETINGS

The Committee may meet as often as necessary, but not less than on a quarterly
basis.

One member of the Committee shall be appointed as chairperson (the
"Chairperson"). The Chairperson shall be responsible for leadership of the
Committee, including scheduling and presiding over meetings, preparing agendas,
and making regular reports to the Board. The Chairperson will also maintain
regular liaison with the Chief Executive Officer, Chief Financial Officer, the
General Counsel of the Company, the lead independent audit partner and the
director of Internal Audit. A member of the Committee who is determined by the
Board to be not independent may serve as Chairperson of the Committee.

RESPONSIBILITIES AND AUTHORITY

The following functions shall be common recurring activities of the Committee in
carrying out its purpose set forth in this Charter. These functions should serve
as a guide with the understanding that the Committee may carry out additional
functions and adopt additional policies and procedures as may be appropriate in
light of changing business, legislative, regulatory, legal or other conditions.
The Committee shall also carryout any other

                                     - 2 -



responsibilities and duties delegated to it by the Board from time to time
related to the purpose of the Committee outlined in this Charter.

The Committee, in discharging its oversight role, is empowered to study or
investigate any matter of interest or concern within the purpose of the
Committee that the Committee deems appropriate or necessary. The Committee shall
have the authority to engage independent counsel and other advisers, as it
determines necessary to carry out its duties, and the Company shall provide for
appropriate funding, as determined by the Committee for the payment of (a)
compensation to the independent auditor(s) engaged for the purpose of preparing
or issuing the audit report or performing other audit, review or attest services
for the Company, (b) compensation to any independent advisors employed by the
Committee and (c) ordinary administrative expenses of the Committee that are
necessary or appropriate in carrying out its duties.

To fulfill its responsibilities and duties, the Committee shall:

The Independent Auditor

1.       The Committee shall be directly responsible for the appointment
         (subject, at the discretion of the Board, to shareholder ratification),
         compensation, retention and oversight of the work of the registered
         public accounting firm engaged (including resolution of disagreements
         between management and the auditor regarding financial reporting) for
         the purpose of preparing or issuing an audit report or performing
         another audit, review or attest services for the Company, and each such
         registered public accounting firm must report directly to the
         Committee.

2.       Oversee the independence of the auditor by:

                  -        Ensuring that the independent auditors prepare and
                           deliver on an annual basis a formal written statement
                           delineating all relationships between the independent
                           auditors and the Company, consistent with
                           Independence Standards Board Standard 1, and
                           reviewing and discussing with the independent
                           auditor, on a periodic basis, any disclosed
                           relationships or services that may impact the
                           objectivity and independence of the auditor.

                  -        Pre-approving all audit and permitted non-audit
                           services (including the fees and terms thereof) to be
                           performed for the Company by its independent auditor,
                           subject to and in accordance with Section
                           10A(i)(1)(B) of the Securities Exchange Act of 1934
                           and the Committee's pre-approval policy, as it may be
                           amended from time to time.

Financial Reporting

1.       The Committee shall discuss with the independent auditor the (i)
         results of its audits, including the auditor's judgment about the
         quality, and not just the acceptability under Generally Accepted
         Accounting Principles, of the Company's accounting principles as

                                     - 3 -



         applied in its financial reporting, (ii) all critical accounting
         policies and practices to be used, and (iii) all material written
         communications between the independent auditor and management, such as
         any management letter or schedule of unadjusted differences.

2.       The Committee shall review with management and the independent auditor
         (i) major issues regarding accounting principles and financial
         statement presentation, including any significant changes in the
         Company's selection or application of accounting principles, and major
         issues as the adequacy of the Company's internal controls and any
         special audit steps adopted in light of material deficiencies, (ii)
         analyses prepared by management and the independent auditor setting
         forth significant financial reporting issues and judgments made in
         connection with the preparation of alternative GAAP methods on the
         financial statements, and (iii) the effect of regulatory and accounting
         initiatives, as well as off-balance sheet structures, on the financial
         statements of the Company.

3.       The Committee shall discuss with the Company's General Counsel any
         legal matters that may have a material impact on the Company's
         financial statements, and any material reports or inquiries from
         regulatory or governmental agencies.

4.       The Committee shall review management's evaluation of the adequacy of
         the Company's internal control structure and the extent to which major
         recommendations made by the independent auditors and the internal
         auditors have been implemented.

5.       The Committee shall review the services provided by the internal
         auditing functions, including:

                  -        The planned scope for the internal audit program, its
                           objectives, and the staff required to attain these
                           objectives.

                  -        The report which details the activities of the
                           internal auditing department of the preceding period.

                  -        The working relationship between the internal
                           auditing department and independent auditors.

6.       The Committee shall review with the independent auditor any problems or
         difficulties encountered during the course of the review or audit,
         including any restrictions on the scope or work or access to required
         information and management's response.

7.       The Committee shall review disclosures made to the Committee by the
         Company's Chief Executive Officer and Chief Financial Officer
         regarding: (i) any significant deficiencies in the design or operation
         of internal controls of the Company which could adversely affect the
         Company's ability to record, process, summarize and report financial
         data; and (ii) any fraud, material or otherwise, that involves
         management or others.

                                     - 4 -



Ethical and Legal Compliance/General

1.       The Committee shall be responsible for establishing procedures for:

                  -        The receipt, retention, and treatment of complaints
                           received by the Company regarding accounting,
                           internal accounting controls, or auditing matters;
                           and

                  -        The confidential, anonymous submission by employees
                           of the Company of concerns regarding questionable
                           accounting or auditing matters.

2.       Review and approve in advance any proposed "related party" transactions
         required to be disclosed pursuant to Item 404 of Regulation S-K.

3.       The Committee shall monitor compliance with the Company's Code of
         Conduct.

Reports

1.       The Committee shall prepare the report of the Committee to be included
         in the Company's annual proxy statement.

2.       The Committee shall report regularly to the Board (i) with respect to
         such matters as are relevant to the Committee's discharge of its
         responsibilities, (ii) with respect to such recommendations as the
         Committee may deem appropriate, and (iv) the Committee's conclusions
         with respect to the independent auditor. The report to the Board may
         take the form of an oral report by the chair or any other member of the
         Committee designated by the Committee to make such report.

REVIEW AND APPROVAL OF CHARTER

The Committee shall review and reassess the adequacy of this charter annually
and recommend modifications to the Board as needed.

                                     - 5 -

EX-99.2

                                                                    EXHIBIT 99.2

              CHARTER OF THE COMPENSATION AND NOMINATING COMMITTEE
                            OF THE BOARD OF DIRECTORS

I.       PURPOSE

The Compensation and Nominating Committee of Allied Holdings, Inc. (the
"Company") shall carry out the overall responsibility of the Board of Directors
(the "Board") relating to executive compensation and shall provide assistance to
the Board in fulfilling its responsibilities to the shareholders by:

         -        Assisting the Board with respect to the Company's compensation
                  programs and compensation of the Company's executives;

         -        Producing an annual report of the Compensation and Nominating
                  Committee on executive compensation for inclusion in the
                  Company's annual proxy statement, in accordance with
                  applicable rules and regulations; and

         -        Identifying individuals qualified to become directors,
                  consistent with criteria approved by Board, and recommending
                  to the Board for selection the candidates for all
                  directorships to be filled by the Board or by the
                  shareholders.

II.      STRUCTURE AND OPERATIONS

Composition and Qualifications

All members of the Compensation and Nominating Committee shall meet the
independence requirements of the American Stock Exchange LLC ("AMEX"), Section
10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), the rules
and regulations of the Securities and Exchange Commission (the "SEC"), including
Rule 16b-3(d)(1), and Section 162(m) of the Internal Revenue Code.

Appointment and Removal

The members of the Compensation and Nominating Committee shall be designated by
the Board annually and each member shall serve until such member's successor is
duly designated or until such member's earlier resignation or removal. Any
member of the Compensation and Nominating Committee may be removed from the
Committee, with or without cause, by a majority vote of the Board.

Unless a Chairperson is designated by the Board, the members of the Compensation
and Nominating Committee shall designate a Chairperson by majority vote of the
full Compensation and Nominating Committee membership. The Chairperson will
chair all sessions of the Compensation and Nominating Committee and set the
agendas for Compensation and Nominating Committee meetings.



Delegation to Subcommittees

In fulfilling its responsibilities, the Compensation and Nominating Committee
may delegate its responsibilities to a subcommittee of the Compensation and
Nominating Committee and, to the extent not expressly reserved to the
Compensation and Nominating Committee by the Board or by applicable law, rule or
regulation, to any other committee consisting entirely of directors who meet the
independence requirements of the AMEX, Section 10A(m)(3) of the Exchange Act,
the rules and regulations of the SEC and Section 162(m) of the Internal Revenue
Code.

III.     MEETINGS

The Compensation and Nominating Committee shall ordinarily meet at least two
times annually, or more frequently as circumstances dictate. Any member of the
Compensation and Nominating Committee may call meetings of the Compensation and
Nominating Committee.

Any director of the Company who is not a member of the Compensation and
Nominating Committee may attend meetings of the Compensation and Nominating
Committee; provided, however, that any director who is not a member of the
Compensation and Nominating Committee may not vote on any matter coming before
the Compensation and Nominating Committee for a vote. The Compensation and
Nominating Committee also may invite to its meetings any member of management of
the Company and such other persons as it deems appropriate in order to carry out
its responsibilities. The Compensation and Nominating Committee may meet in
executive session, as the Compensation and Nominating Committee deems necessary
or appropriate.

IV.      RESPONSIBILITIES AND DUTIES

The following functions shall be the common recurring activities of the
Compensation and Nominating Committee in carrying out its purpose as set forth
in Section I of this Charter. These functions should serve as a guide with the
understanding that the Compensation and Nominating Committee may carry out
additional functions and adopt additional policies and procedures as may be
appropriate in light of changing business, legislative, regulatory, legal or
other conditions. The Compensation and Nominating Committee shall also carry out
any other responsibilities and duties delegated to it by the Board from time to
time related to the purpose of the Compensation and Nominating Committee
outlined in Section I of this Charter.

To fulfill its responsibilities and duties, the Compensation and Nominating
Committee shall:

Compensation for Executive Officers/Officer Selection

         (1)      Establish and review the overall executive compensation
                  philosophy of the Company.

         (2)      Review and approve the Company goals and objectives relevant
                  to the compensation of the Chief Executive Officer ("CEO") and
                  other executive officers' compensation, including annual
                  performance objectives.

                                       2



         (3)      Evaluate the performance of the CEO and other executive
                  officers in light of established goals and objectives and,
                  based on such evaluation, determine and approve the
                  compensation, including annual salary, bonus, stock options,
                  other incentive awards and other benefits, direct and
                  indirect, of the CEO and other executive officers.

         (4)      Oversee the development of executive succession plans.

         (5)      Review and recommend to the full Board, or approve as
                  appropriate, new executive compensation plans,
                  incentive-compensation plans and equity based plans and any
                  amendments to or modifications of such plans.

         (6)      Establish and periodically review policies in the area of
                  senior management perquisites.

Monitoring Incentive and Equity-Based Compensation Plans

         (1)      Perform duties delegated to the Compensation and Nominating
                  Committee by the Board under various executive compensation
                  plans.

         (2)      Review and make recommendations to the full Board, or approve,
                  as appropriate, all awards of stock, stock options and other
                  incentive compensation awards to executive officers pursuant
                  to the Company's executive plans.

         (3)      Monitor compliance by executives with the terms and conditions
                  of the Company's executive compensation plans.

         (4)      Select, retain, terminate and/or replace, as needed,
                  compensation and benefits consultants and other outside
                  experts to provide independent advice to the Compensation and
                  Nominating Committee. In that connection, in the event the
                  Compensation and Nominating Committee retains a compensation
                  consultant or other expert, or if the Company should retain a
                  compensation consultant or other expert to assist in the
                  evaluation of the CEO or senior executive compensation, the
                  Compensation and Nominating Committee shall have the sole
                  authority to approve such consultant's or expert's fees and
                  other retention terms.

Board Composition, Evaluation and Compensation

         (1)      Establish criteria or factors to consider for the selection of
                  new directors to serve on the Board.

         (2)      Identify individuals believed to be qualified as candidates to
                  serve on the Board and recommend that the Board select the
                  candidates for all directorships to be filled by the Board or
                  by the shareholders at an annual or special meeting. In
                  addition, the Compensation and Nominating Committee shall
                  review and make

                                       3



                  recommendations to the Board whether members of the Board
                  should stand for re-election.

         (3)      Conduct all necessary and appropriate inquiries into the
                  backgrounds and qualifications of possible candidates as
                  directors. In that connection, the Compensation and Nominating
                  Committee shall have sole authority to retain and to terminate
                  any search firm to be used to assist it in identifying
                  candidates to serve as directors of the Company, including
                  sole authority to approve the fees payable to such search firm
                  and any other terms of retention.

         (4)      Review and make recommendations, as the Compensation and
                  Nominating Committee deems appropriate, regarding the
                  qualifications for Board membership and the composition and
                  size of the Board in order to ensure the Board has the
                  requisite expertise and its membership consists of persons
                  with sufficiently diverse and independent backgrounds.

         (5)      Recommend each year to the Board compensation and benefits for
                  directors.

         (6)      Select, retain, terminate and/or replace, as needed,
                  recruiters to assist the Compensation and Nominating Committee
                  in identifying candidates. In that connection, in the event
                  the Compensation and Nominating Committee retains a recruiter,
                  the Compensation and Nominating Committee shall have the sole
                  authority to approve such recruiter's fees and other retention
                  terms.

Committee Selection and Composition

         (1)      Recommend members of the Board to serve on the committees of
                  the Board, giving consideration to rotation of committee
                  membership and the criteria for service on each committee as
                  set forth in the charter for such committee, as well as to any
                  factors the Compensation and Nominating Committee deems
                  relevant, and where appropriate, make recommendations
                  regarding the removal of any member of any committee.

Reports

         (1)      Prepare an annual report on executive compensation for
                  inclusion in the Company's proxy statement, in accordance with
                  applicable rules and regulations.

         (2)      Report regularly to the Board (i) following meetings of the
                  Compensation and Nominating Committee, (ii) with respect to
                  such other matters as are relevant to the Compensation and
                  Nominating Committee's discharge of its responsibilities and
                  (iii) with respect to such recommendations as the Compensation
                  and Nominating Committee may deem appropriate. The report to
                  the Board may take the form of an oral report by the
                  Chairperson or any other member of the Compensation and
                  Nominating Committee designated by the Compensation and
                  Nominating Committee to make such report.

                                       4



         (3)      Maintain minutes and other records of meetings and activities
                  of the Compensation and Nominating Committee, as appropriate
                  under applicable law.

V.       ANNUAL EVALUATION

The Compensation and Nominating Committee shall review and reassess, at least
annually, the adequacy of this Charter and recommend to the Board any
improvements to this Charter that the Compensation and Nominating Committee
considers necessary or appropriate.

                                       5

EX-99.3

                                                                    EXHIBIT 99.3

                              ALLIED HOLDING, INC.
                            and subsidiary companies

                                 Code of Conduct

                                                               December 17, 2003

                                      -1-


                                 CODE OF CONDUCT

         The loyalty and integrity of our employees is a long-standing
tradition. Your faithful adherence to the standards of conduct set forth by the
Company and its subsidiaries has fostered the fair and ethical relationships
that exist between the Company and its employees, shareholders, customers,
suppliers and competitors.

         It is a long-established policy that the Company and its employees
observe and comply with all laws and regulations of federal, state, provincial
and local governments, and applicable foreign laws, affecting the Company and
its employees. All employees must avoid activities which could lead to
involvement of the Company or themselves in any unlawful or unethical practice.

         This Code of Conduct and the standards it sets for ethical conduct,
legal compliance and financial integrity, applies to our people on all levels -
including the Board of Directors, the CEO, senior financial officers and others
in senior management.

PRINCIPLES AND GUIDELINES

         This policy restates and reaffirms the Company's various principles and
guidelines with respect to legal responsibilities and ethical business conduct.
The Company's requirements also are reflected in other statements of policies
and procedures.

         The Company expects its employees to observe the highest standards of
integrity and remain free of interests and relationships which are potentially
detrimental to the Company's best interests.

         In day-to-day activities, all employees should assess their actions to
assure that they are not inconsistent with the intention of this policy. A good
test before any action is planned or taken is to determine whether full
disclosure of the facts surrounding the action would be regarded by the general
public to justify the action on business and ethical grounds.

COMPLIANCE

         To ensure continuing observance of this policy, the Board of Directors
requires that employees periodically review these guidelines and acknowledge
their understanding and adherence in writing.

         The Company's Compliance Officer and the Audit Committee of the Board
of Directors have the overall responsibility for providing guidance in matters
of conduct and business ethics. Further, the Audit Committee is charged with
monitoring compliance with this policy and the applicable laws to assure
consistency with the Company's overall objective of promoting fair and ethical
actions and relationships in all of the Company's activities. In performing that
responsibility, the committee utilizes the services of the Company's independent
public accountants and the Company's Internal Audit Department.

                                      -2-


DEFINITIONS

         For the purposes of this policy, the term "employees" refers to all
non-union salaried employees, non-union hourly employees, officers and directors
of the Company and its subsidiaries. In Canada, this policy applies to all
non-union employees, whether salaried or hourly.

         "Gifts and gratuities" include money, favors, entertainment, personal
discounts, hospitality, transportation, loans, future employment or any other
tangible or intangible items, regardless of value.

GIFTS AND ENTERTAINMENT

         Generally, gifts and gratuities may not be given or received unless
they are of a nominal value and consistent with the following guidelines.

         Employees are responsible for ensuring that any meals, refreshments,
gifts or entertainment that they provide to or accept from those people with
whom the Company has business contacts conform to the Company's ethical
standards.

         GIVING OF GIFTS AND ENTERTAINMENT BY THE COMPANY - Gifts and
entertainment may only be given to customers and suppliers if all the following
conditions are met:

         -        They are consistent with accepted business practices;

         -        They are of sufficiently limited value and in a form that will
                  not be construed as influencing or rewarding a particular
                  course of action;

         -        They are not in violation of applicable law and generally
                  accepted ethical standards;

         -        Public disclosure will not embarrass the Company; and

         -        They will not be used to influence the customer or supplier
                  improperly or to knowingly violate the customer's or
                  supplier's own rules against acceptance of gifts or
                  entertainment.

         ACCEPTANCE OF GIFTS AND GRATUITIES BY EMPLOYEES - Employees may not
receive, directly or indirectly, from an organization, government agency, or
individual who has, or seeks to have, a business relationship with the Company,
any commissions, fees, bonuses, compensation, loans (other than those made on
customary terms from a bank or other financial institution), advances or
anything of value except as outlined in this policy.

         Employees may not accept gifts or other gratuities which go beyond a
moderate and reasonable value or are given under circumstances that place the
employee or the Company under any obligation or which may tend to influence
business relationships.

         Employees who receive, or whose families receive, gifts or gratuities
which go beyond a moderate and reasonable value, either in terms of cash value
or frequency, should immediately return the gift to the donor with a letter
outlining Company policy and make a full report of the matter to the Compliance
Officer.

                                      -3-


         It is absolutely forbidden to accept gifts in the form of cash (or
gifts immediately convertible to cash, such as gold or bank accounts in an
employee's name).

         ENTERTAINMENT - Employees may not accept unusual or extended
hospitality in any form, including entertainment at a resort or similar
accommodation, or payment of personal business expenses, from any organization
or individual who has, or who seeks to have, a business relationship with the
Company; however, the normal working relationship between the Company and its
customers or suppliers may lead to occasions which necessitate certain
authorized employees as representatives of the Company to accept offers of
transportation, food, lodging and entertainment in conjunction with appropriate
business activities of the customer or supplier. In these instances only, the
Company will reimburse the employee for related expenses which are not included
as part of its customer's or supplier's offer.

         Local entertainment such as golf outings, theater, dinners, sporting
events, etc., are considered acceptable business courtesies so long as the
frequency and the cost to the donor is within reason.

         Certain business courtesies, such as payment for lunch or dinner in
connection with a business meeting, are not discouraged.

RELATIONSHIPS WITH OUTSIDE BUSINESSES

DEALING WITH CUSTOMERS, CONSULTANTS AND SUPPLIERS

         Employees who deal with customers, consultants, or suppliers have an
obligation of fair and impartial dealing with respect to these outside firms.

         Employees engaged in the sale and marketing of the Company's services
are obligated to provide clear, accurate and concise service and pricing
information. Contractual obligations between customers and the Company should be
clearly defined.

         All employees are responsible for ensuring the integrity of the
Company's services and accuracy of internal documentation and records, as well
as documentation used in dealing with outside firms.

         The Company will comply in all of its activities with antitrust laws.

EMPLOYEE INTERESTS IN OUTSIDE BUSINESSES

         No transaction with an outside business organization that furnishes
goods or services to the Company shall be influenced by an employee's personal
interests or relationships. Accordingly, employees shall have no material direct
or indirect interests in or material relationships with any such organization
that would reasonably be said to affect the objectivity and independence of
their judgment or conduct in carrying out their duties and responsibilities to
the Company, or embarrass the Company because its effect may reasonably be
misunderstood by others.

         Employees should not own a material financial interest or have an
association that would reasonably be construed as a material financial interest
in any business organization

                                      -4-


that does or seeks to do business with the Company, or is a competitor of the
Company unless such interest has been fully disclosed in writing to the
Company's Compliance Officer, and, if deemed necessary by the Audit Committee,
approved by the Board of Directors.

         Employees shall not serve as a director, partner or consultant in a
non-affiliated business organization which does a material amount of business
with or is a competitor of the Company without first obtaining the approval of
the Company's Compliance Officer, and if deemed necessary by the Audit
Committee, approved by the Board of Directors.

         Employees who are in positions which in any way could influence the
purchase of goods or services for the Company may not conduct or direct another
to conduct business on behalf of the Company with a member of their family
(relatives by blood or marriage) or business organization in which the employee
or a member of the employer's family has significant financial interest. Any
exception must be approved by the Company's Compliance Officer, and, if deemed
necessary by the Audit Committee, approved by the Board of Directors.

         OTHER OUTSIDE BUSINESS RELATIONSHIPS - Employees are expected to serve
the Company with their maximum skills, judgment, discretion and integrity in
fulfilling their duties. All employees are expected to act in the best interest
of the Company in all matters connected with their position:

         -        Employees may not render professional service, consult for or
                  engage in any outside employment which might affect the
                  independence of their judgment and performance of their duties
                  and responsibilities to the company or which might embarrass
                  the company.

         -        Those engaged in or knowing of other employees who are or may
                  be engaged in potential outside conflicts of interest should
                  disclose this information to the Company's Compliance Officer
                  or to the Company's Ethical Questions and Compliance Hotline.

         -        Employees may not engage in any outside employment which
                  conflicts with scheduled hours, overtime hours, when required
                  or the performance of Company assignments.

         CONFLICT OF INTEREST THROUGH A THIRD PARTY - Anything that would
constitute a conflict of interest or unethical conduct on the part of an
employee would also create conflict when an employee knowingly engages in such
activity through a third party such as a spouse, a member of one's family or
other persons or organizations.

IMPROPER USE OF COMPANY POSITION, INFORMATION, OR RESOURCES

         UNAUTHORIZED DISCLOSURE - Employees are not permitted to make
disclosure of confidential or proprietary Company information which could in any
manner adversely affect the interests of the Company. For example, information
concerning Company plans, facilities, sales, costs, financial data and
procedures may also involve elements of significant competitive value and must
not be disclosed outside the Company without specific advance written approval
of the president. The same standards should be applied with respect to material
information about customers, suppliers or related companies gained as a result
of the employee's position with the Company.

                                      -5-


         The insider trading laws of the United States prohibit buying or
selling a Company's securities while in possession of material non-public
information about that Company. You can also violate these laws by disclosing
material non-public information to another person if, as a result, that person -
or any other person - buys or sells a security on the basis of that information.

         If you make such a disclosure, you can be punished even if you,
yourself, have no financial gain. Many other countries have similar laws.

         "Material" information is generally regarded as information that a
reasonable investor would think important in deciding whether to buy, hold or
sell the security; in short, it is any information that could reasonably affect
the price of the security.

         Examples of possible material information are sales, earnings, dividend
actions, strategic plans, important personnel changes, acquisition and
divestiture plans, marketing plans and joint ventures, and government actions.
"Non-public" means information that has not been made public.

         In addition to fines of up to $1 million and lengthy prison terms, a
violator in the U.S. or one who trades on a U.S. stock exchange can pay civil
penalties of up to three times the profit gained, or loss avoided, by the
unlawful transaction or disclosure. The Company may also have to pay substantial
fines.

         You may not buy or sell securities while knowing material non-public
information about the Company. Also, you may not engage in any other action to
take advantage or pass on to others material non-public information. This policy
also applies to having or selling securities of any other Company while you have
material non-public information about it that you learned in the course of your
job.

         The same restrictions apply to family members and others living in your
household; you are expected to be responsible for compliance by them. This
policy applies to all Company employees wherever they are located, even if the
activity does not violate the law of the country where they live.

         MISUSE OF COMPANY PROPERTY, RECORDS AND FUNDS - Preventing the loss,
damage, misuse of theft of Company property, computer systems, records and funds
is a matter of personal responsibility which employees must accept as part of
their job.

         Company property is to be used exclusively for conducting business and
should not be used personally, sold or given away without proper authorization.

         Property of vendors, customers, or the government should be protected
as if it were Company property.

         The misuse, theft, damage or unauthorized destruction of Company
computer hardware, software or data (on tape, disk backup or within the computer
system) as well as procedures and documentation is prohibited. Company policy
also requires that all employees must follow the proper procedures for
disbursing, receiving and reporting funds.

                                      -6-


         CORPORATE OPPORTUNITIES - Employees are prohibited from taking for
themselves personally opportunities that are discovered through the use of
Company property, information or position.

         SEC REPORTING - The Company is committed to full, fair, accurate,
timely and understandable disclosure in the reports it files with the Securities
and Exchange Commission and in other public communications made by the Company.
The Company is committed to integrity in its books and records, accounting
practices, financial controls and auditing.

         COPYRIGHT PROTECTION - Unauthorized duplication, distribution or use of
printed materials, films, tapes, proprietary software or documentation of the
Company or other outside parties is expressly prohibited except as provided by
copyright laws or licensing agreements accompanying software products.
Unlicensed use of software or use by a non-Company employee is prohibited.

         Each employee is personally responsible for ensuring compliance with
the terms of licensing, trademark agreements and copyright laws.

         TRANSACTIONS - All employees involved in transactions between the U.S.
and Canada and any foreign country must be aware of and adhere to customs
regulations, export licensing regulations and trade agreements involving that
country

         PARTICIPANTS IN CIVIC AND POLITICAL ACTIVITIES - The Company, as a
socially responsible corporate citizen, actively supports civic, social and
community projects and organizations.

         The Company encourages its employees to actively participate in
community affairs, including political activities and social welfare efforts.
Such service can appropriately include both volunteer work in the private sector
or, in public affairs, the holding of elective or appointive office.

         EMPLOYEES SERVING IN PUBLIC OFFICE - Employees who run for office must
represent themselves as individual citizens and must not represent the Company
in any way in carrying out public duties. The Company will observe the utmost
care that it takes no action with respect to employees as office-holders that
may be construed as an attempt to influence them in the exercise of their duties
as a public servant.

         Employees who consider running for or accepting public office should be
made aware of Company and public policy regarding conflict of interest.
Employees shall inform the president as soon as possible when considering
running for or accepting a public position.

         FOREIGN CORRUPT PRACTICES ACT - The U.S. Foreign Corrupt Practices Act
prohibits corporations and individuals from doing certain things, directly or
indirectly, to obtain or retain business or to influence a person working in an
official capacity.

         It is illegal to pay, offer to pay or authorize the payment of anything
of value to any non-U.S. government office, government employee, political party
or political candidate for these purposes. No employee shall make any payment or
other action that is prohibited by the Act.

                                      -7-


         Prohibited payments include cash, gifts and free samples, use of
automobiles and aircraft, payment of non-essential travel and entertainment
expenses, overbilling of sales with the expectation that part of the sale price
will be returned to the buyer, and making contribution to "charities" chosen by
an official. Offers to pay can be punished even if they are not accepted or
never paid.

         The Act does not prohibit customary tips or gratuities to lower-level
non-U.S. government employees to ensure they perform their routine duties in a
prompt and proper way. However, Tommy Duffy should be consulted before
determining whether any proposed payment fits squarely within this narrow
exception to the law or whether it violates local law.

         In addition, in Canada conduct of this nature is governed by the
Canadian Criminal Code. Pursuant to the Criminal Code, employees are guilty of
an indictable offense, and liable to imprisonment for a term not exceeding five
(5) years if they bribe (or engage in similar activities, such as influence
peddling) a government official or a family member of such officials.

         POLITICAL CONTRIBUTIONS - Consistent with the laws of the United
States, the Company prohibits the use of corporate funds or assets, cash or
otherwise, for political contributions to candidates for federal offices. Where
political contributions are legally permitted by state or local law or the laws
of Canada, any proposal for such contributions must be approved by the Company's
Compliance Officer.

         This covers not only direct contributions, but indirect support of
candidates of political parties; for example, a loan or donation to an employee
for purposes of making a political contribution, the purchase of tickets for
special dinners or other fund-raising events, the loan of employees to political
parties or committees, or the furnishing of transportation, special duplicating
services, etc.

         Unauthorized solicitation of political contributions on Company
premises is prohibited.

         In addition, political contributions in Canada are regulated by both
federal and provincial laws. Under federal law, individuals may contribute to a
federal political party at any time, as may corporations incorporated under
either the laws of Canada or a province. However, a candidate for federal office
may only receive a political contribution during a federal election campaign.

         In the province of Ontario, political contributions may be made during
provincial elections by any person normally resident in Ontario, and by
corporations that carry on active business in Ontario. Contributions from
outside Ontario are prohibited. Contribution limits apply.

VALUES

         It is the Company's desire that its employees will conduct their lives
in accordance with the highest moral and ethical standards. The Company believes
that work performance is directly affected by behaviors and habits outside of
the office and, while the Company

                                      -8-


cannot monitor or regulate conduct outside of the employment context, it is
anticipated that each employee will act accordingly.

         [In keeping with Company values, it is the Company's policy that on
Company premises or where Company business is being performed, there shall be no
consumption or serving of alcoholic beverages, there shall be no gambling, and
there shall be no sexual activities of any kind. At Company-sponsored functions
or in the presence of customers of the Company where business is not being
performed, there shall be no consumption of hard liquor, there shall be no
gambling, and there shall be no other inappropriate activities. When
entertaining a customer, there shall be no consumption of hard liquor by the
employee, there shall be no gambling, and there shall be no other inappropriate
activities.]

RESPONSIBILITIES

         All employees are expected to adhere to these policies and principles,
and all applicable laws, and to carry them out in their day-to-day business
activities. These guidelines will not provide an answer to every problem that
arises. The absence of a Company guideline covering a particular situation does
not relieve an employee from the responsibility of exercising the highest
ethical standards.

         Employees are expected to seek guidance when there are questions or
concerns about compliance with laws or regulations or with Company policies and
procedures. Any violations, or suspected violations, must be reported
immediately to appropriate Company personnel. There will be no retaliation for
such reporting.

         The responsibility for administering and complying with this policy is
delegated to operating heads of various departments with respect to the
employees within their jurisdiction. They should be fully aware of the practices
and procedures being followed by employees and take steps to ensure that
employees measure up to expected standards of behavior as they carry out their
duties.

         All questions regarding the application of Company policy to particular
situations should be submitted to the Company's Compliance Officer who will
provide any guidance and interpretations required concerning this policy.

DISCIPLINARY ACTIONS

         Employees who fail to disclose reportable interests or relationships,
who knowingly make a false report or who fail to comply with the provisions set
forth in this policy may be subject to disciplinary action, including, where
appropriate, suspension or termination of employment.

         Any disciplinary action taken by the Company does not waive the
Company's right to take appropriate legal action or to assist any local, state,
provincial or federal law enforcement agencies in the prosecution of employees
who violate the laws and agreements covered in this policy. The Company will not
be obligated to reimburse employees for any fines or legal costs incurred by
them or on their behalf.

                                      -9-


DISCLOSURE AND COMPLIANCE

         By signing the Code of Conduct Statement, employees are certifying that
they have reviewed the Code of Conduct policy statement and are complying with
all Company policies regarding their business conduct and responsibilities.

         Any interests or relationships that might be in violation of this
policy, as well as any potential policy violations, must be reported, and all
employees are expected to cooperate in any subsequent investigation.

         Any violations, or suspected or potential violations, of this Code or
applicable laws and regulations, must be reported promptly, and all employees
are expected to cooperate in any subsequent investigation.

         Transactions, interests or relationships that might give rise to a
conflict of interest also must be reported.

         Reports should be made in writing to the Company's Compliance Officer,
and sent to the following address, or you may call Tommy Duffy directly at
404-370-4225. As an alternative, employees may use the Company's Ethical
Questions and Compliance Hotline to report problems, raise concerns or ask
questions about ethics and legal compliance matters. Employees may contact the
hotline by phone, in writing, or by email. Those contacting the hotline may
choose to identify themselves or remain anonymous.

                                   Tommy Duffy
    Senior Vice President, Secretary, General Counsel and Compliance Officer
                              Allied Holdings, Inc.
                              160 Clairemont Avenue
                                Decatur, GA 30030

                                      -10-