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Allied Holdings Reports Third Quarter Results

DECATUR, Ga., Jan. 10, 2005 -- Allied Holdings, Inc. (AMEX:AHI) reported results for the third quarter ended September 30, 2004. The Company reported a net loss for the third quarter of 2004 of $7.6 million compared to a net loss in the third quarter last year of $2.0 million. Basic and diluted net loss per share in the third quarter of 2004 was $0.87, versus a basic and diluted net loss per share of $0.23 in the third quarter last year.

Revenues for the third quarter of 2004 were $207.6 million compared to revenues of $197.1 million in the third quarter last year, an increase of $10.5 million or 5.3 percent. Earnings before interest, taxes, depreciation and amortization, and gains and losses on disposal of assets (Adjusted EBITDA) for the third quarter of 2004 were $9.0 million compared to $14.3 million of Adjusted EBITDA reported during the third quarter last year, a decline of $5.3 million. Adjusted EBITDA is presented because management believes it provides useful information to investors regarding the Company's ability to generate cash flows that can be used to service debt and provide for capital expenditures. Reconciliations of Adjusted EBITDA to net loss and to operating cash flows are provided in the financial schedules attached to this press release.

The decline in Adjusted EBITDA in the third quarter of 2004 versus the third quarter of 2003 was primarily a result of significantly higher fuel costs net of fuel surcharge recoveries, higher benefits costs related to employees covered by the Company's collective bargaining agreement with the Teamsters, increased risk management costs, higher repair and maintenance costs and reduced operating income at Allied's Axis subsidiary. Increased costs, during the third quarter of 2004 were partially mitigated by higher revenues, higher revenue per unit and reduced overhead costs at the Company's corporate service center and its terminals.

The increase in revenues in the third quarter this year compared to last year was primarily the result of a 2.3 percent increase in vehicle deliveries and a $3.45 increase in revenue per unit. Revenue per unit increased primarily due to longer length of haul, an increase in fuel surcharges that are recorded as a component of revenue, as well as the strengthening of the Canadian dollar relative to the US dollar which affected the Company's Canadian operating subsidiary.

Allied's net loss was greater in the third quarter of 2004 versus the prior year primarily due to lower Adjusted EBITDA for the reasons discussed above, higher interest expense of $1.4 million and income taxes in foreign countries of $0.3 million versus a benefit of $0.7 million in the prior year. Allied's interest expense was higher in the third quarter of 2004 versus the prior year due to higher interest rates, accrued interest on a settlement with the Canadian taxing authorities and interest expense related to increased premium financing of risk management liabilities. These costs were partially offset by increased investment income earned on collateral held by Allied's captive insurance company of $0.6 million in the third quarter versus a loss of $0.4 million in the prior year, and currency exchange gains of $1.7 million related to a strengthening Canadian dollar during the quarter associated with the Company's operations in Canada. Finally, net loss in the third quarter of 2004 was greater than the third quarter of 2003 due to the $2.0 million pretax gain recorded as a result of the settlement of litigation with Ryder Systems in the third quarter of 2003.

During the Company's review of the third quarter of 2004, certain adjustments were identified related to prior quarters of 2004 and prior years. The impact of adjusting these items was a $0.7 million increase in the net loss for the three months ended September 30, 2004 and a $0.7 million decrease in the net loss for the nine months ended September 30, 2004. The Company believes that these adjustments were not material to the consolidated financial statements of any prior period and were not material to the consolidated financial statements for the quarter ended September 30, 2004. However, the rigorous analysis and consideration of these facts contributed to the delay in filing the Company's quarterly report for the third quarter of 2004.

Commenting on the results, Hugh E. Sawyer, Allied's President and Chief Executive Officer, said, "Allied's third quarter 2004 results were adversely impacted by a number of factors including a significant increase in fuel costs which, unfortunately, were not fully recovered through customer fuel surcharges during the quarter. In response we have been working closely with our customers in an attempt to adjust our current fuel surcharges to more adequately reflect the current fuel price situation and obtain additional fuel surcharge agreements with customers. As a result of our efforts we now have in place fuel surcharges with customers who comprise substantially all of our revenues. Therefore, the Company's fuel cost exposure has been materially reduced for the fourth quarter of 2004."

The Company's risk management costs increased in the third quarter primarily due to increases in workers' compensation costs, auto and general liability costs due to an increase in the severity during the third quarter of 2004 of a previously reported claim. The Company's overall damage free delivery rate improved for the nine months ended September 30, 2004 versus the prior year, although cargo claims expense in the third quarter of 2004 increased compared to the prior year period primarily due to damages incurred related to the transportation of a new customer product launch.

Mr. Sawyer added, "Reducing risk management costs will remain a top priority at Allied. As previously reported, the Company has initiated a program to settle and close outstanding aged workers' compensation claims in an effort to reduce self-insurance costs and achieve reductions in total risk management expense. Further, we have maintained our focus on programs to reduce future workers' compensation costs by reducing the severity and frequency of current period worker injuries and accidents."

Revenues for the nine-month period ended September 30, 2004 were $656.5 million, versus $640.8 million for the same nine-month period in 2003, an increase of 2.5 percent. Revenue per unit for the nine-month period ended September 30, 2004 was $96.22 compared to $93.87 for the nine-month period ended September 30, 2003. The increase in revenue per unit was primarily due to longer length of haul, an increase in fuel surcharges that are recorded as a component of revenue, as well as the strengthening of the Canadian dollar relative to the US dollar which affected the Company's Canadian operating subsidiary. Allied experienced a net loss of $20.4 million in the first nine months of 2004, versus a net loss of $4.3 million in the same period of 2003. Adjusted EBITDA for the first nine months of 2004 was $31.5 million, versus $44.3 million of Adjusted EBITDA in the first nine months of 2003, a decrease of $12.8 million. The decline in Adjusted EBITDA for the first nine-months of 2004 as compared to the prior year was primarily the result of significantly higher fuel costs net of fuel surcharge recoveries, higher benefits costs related to employees covered by the Company's collective bargaining agreement with the Teamsters, increased risk management costs, higher repair and maintenance costs and a reduction in operating income at the Company's Axis subsidiary of approximately $1.4 million. These costs were offset by higher revenues, higher revenue per unit and reduced overhead costs at the Company's corporate service center and its terminals.

The increase in the Company's 2004 net loss for the nine-month period versus the prior year period was primarily the result of lower Adjusted EBITDA, for the reasons discussed above, an income tax provision of $0.3 million versus an income tax benefit of $1.6 million in the prior year, a $2.2 million reduction in investment income earned on collateral held by Allied's captive insurance company, and a reduction in currency exchange gains of $1.8 million related to a relatively stronger Canadian dollar since the beginning of each respective nine-month period associated with the Company's operations in Canada.

During the third quarter of 2004, the Company repaid a net $14.7 million under its primary credit facility and capital expenditures were $4.8 million. During the third quarter of 2003, the Company borrowed a net $3.0 million under its primary credit facility and spent $3.1 million on capital expenditures. For the first nine months of 2004, the Company had net borrowings of $3.4 million and capital expenditures were $18.1 million. That compares to net borrowings of $5.8 million and capital expenditures of $11.5 million in the first nine months of 2003. Net borrowings under the primary credit facility for the first nine months of 2004 as compared to 2003 were lower primarily as a result additional cash available from of additional cash available from the release of restrictions on cash held by Allied's captive insurance company due to reductions in collateral required by the captive's prior insurance carrier offset by lower Adjusted EBITDA and increased capital expenditures.

The Company expects to remanufacture approximately 135 rigs during 2004 and currently believes that its 2004 capital expenditures will be in a range of $22 to $23 million, which is a reduction from previous estimates of $24 to $28 million.

The Company also announced that it has successfully renewed its vehicle delivery agreement with Toyota Motor Sales USA. The renewal will extend the Company's agreement with Toyota through December 20, 2005. The contract renewal contains an increase in the underlying base rates.

Mr. Sawyer stated, "Our non-union subsidiary, Axis, is in the midst of a challenging year. A significant portion of Axis' business is related to the inspection of leased vehicles upon the expiration of lease terms. The significant decrease in the number of vehicles leased in the US in the past few years has resulted in a reduction in the number of leased vehicles inspected by Axis, which has adversely affected Axis' financial performance. In addition, during 2004 Axis incurred start up costs related to the provision of vehicle inspection services for General Motors which Axis began providing in 2004. At the same time, Axis has been successful in growing its vehicle inspection business by adding inspection services for new clients, primarily General Motors, in 2004. Overall, we expect that financial results at Axis will improve in 2005."

Mr. Sawyer concluded, "Despite significant challenges related to unprecedented fuel cost increases and the variability of OEM production levels, we believe that second half Adjusted EBITDA performance in 2004 will exceed the Company's first half Adjusted EBITDA results. Fortunately, Allied's revenues increased during the quarter and increased costs were partially mitigated by higher revenue per unit, improved productivity and lower overhead costs. We believe that our year-end Adjusted EBITDA results will be largely dependent upon the impact of the Company's initiative to settle and close aged workers' compensation claims in order to reduce workers' compensation costs. Although we are disappointed with our results during the first nine months of 2004, we have taken aggressive steps to position the Company for improved performance in the years ahead."

About Allied Holdings

Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing distribution and transportation services of new and used vehicles to the automotive industry. The services of Allied's subsidiaries span the finished vehicle distribution continuum, and include car-hauling, intramodal transport, inspection, accessorization, and dealer prep. Allied, through its subsidiaries, is the leading company in North America specializing in the delivery of new and used vehicles.

Statements in this press release that are not strictly historical are "forward-looking" statements. Such statements include, without limitations, any statements containing the words "believe," "anticipate," "estimate," "expect," "intend," "plan," "seek," and similar expressions. Investors are cautioned that such statements, including statements regarding the usefulness of the presentation of Adjusted EBITDA continued growth through growth initiatives, the benefits resulting from fuel surcharges, the ability of management to reduce costs and liability exposures, the financial effect of Axis' new customer arrangements, the amount of the Company's capital expenditures related to rig remanufacturing, whether second half Adjusted EBITDA will exceed first half Adjusted EBITDA, and other matters; are subject to certain risks and uncertainties that could cause actual results to differ materially. Without limitation, these risks and uncertainties include economic recessions or extended or more severe downturns in new vehicle production or sales, the highly competitive nature of the automotive distribution industry, the ability of the Company to comply with the terms of its current debt and customer agreements, the Company's ability to successfully implement internal controls and procedures that remediate the material weakness and insure timely effective accurate financial reports, the ability of the Company to obtain financing in the future and the Company's highly leveraged financial position. Investors are urged to carefully review and consider the various disclosures made by the Company in this press release and in the Company's reports filed with the Securities and Exchange Commission.

NOTE: The information in this press release will be discussed by management on a conference call that can be accessed at the following links: http://www.companyboardroom.com/ or http://www.alliedholdings.com/ beginning at 10:30 a.m. EST on January 11, 2005.

                  ALLIED HOLDINGS, INC. AND SUBSIDIARIES
                   2004 THIRD QUARTER EARNINGS RELEASE
                  (In Thousands, Except Per Share Data)
                               (Unaudited)

                                                For the Three Months Ended
                                                       September 30,
                                                  2004              2003

  Revenues                                      $207,599          $197,089

  Net loss                                       ($7,634)          ($1,975

  Loss per share:
      Basic and Diluted                           ($0.87)           ($0.23)

  Weighted average common shares outstanding:
      Basic and Diluted                            8,791             8,507

                                                 For the Nine Months Ended
                                                       September 30,
                                                  2004              2003

  Revenues                                      $656,459          $640,759

  Net loss                                      ($20,435)          ($4,267)

  Loss per share:
      Basic and diluted                           ($2.35)           ($0.50)

  Weighted average common shares outstanding:
      Basic and diluted                            8,705             8,459

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

                                             September 30,      December 31,
                                                 2004               2003
                                              (Unaudited)
                   ASSETS

  CURRENT ASSETS:
     Cash and cash equivalents                    $6,902           $2,148
     Restricted cash and cash equivalents         26,453           26,267
     Receivables, net of allowance for doubtful
      accounts of $3,107 and $3,575 respectively  52,379           55,110
     Inventories                                   5,031            4,983
     Deferred income taxes                        14,960           20,213
     Prepayments and other current assets         18,726           12,644
        Total current assets                     124,451          121,365

  PROPERTY AND EQUIPMENT, NET                    142,974          155,573

  GOODWILL, NET                                   90,739           90,203

  OTHER ASSETS:
     Restricted cash and cash equivalents         56,213           55,817
     Other non-current assets                     31,931           32,777
         Total other assets                       88,144           88,594
         Total assets                           $446,308         $455,735

      LIABILITIES AND STOCKHOLDERS' EQUITY

  CURRENT LIABILITIES:
     Current maturities of long-term debt        $13,500          $16,374
     Borrowings under revolving credit facility   18,226             -
     Accounts and notes payable                   33,960           34,272
     Accrued liabilities                          89,730           80,937
        Total current liabilities                155,416          131,583

  LONG-TERM DEBT, less current maturities        218,208          230,126

  POSTRETIREMENT BENEFITS OTHER THAN PENSIONS      4,921            5,302

  DEFERRED INCOME TAXES                           14,960           20,213

  OTHER LONG-TERM LIABILITIES                     62,526           59,697

  STOCKHOLDERS' EQUITY (DEFICIT):
     Preferred stock, no par value; 5,000
      shares authorized, none outstanding           -                -
     Common stock, no par value; 20,000
      shares authorized, 8,889 and 8,764 shares
      outstanding at September 30, 2004
      and December 31, 2003, respectively           -                -
     Additional paid-in capital                   48,512           47,511
     Treasury stock at cost, 139 shares at
      September 30, 2004 and December 31, 2003      (707)            (707)
     Accumulated deficit                         (55,459)         (35,024)
     Accumulated other comprehensive loss,
      net of tax                                  (2,069)          (2,966)
        Total stockholders' (deficit) equity      (9,723)           8,814
        Total liabilities and stockholders'
         (deficit) equity                       $446,308         $455,735

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

                                    For the Three Months For the Nine Months
                                           Ended               Ended
                                        September 30,       September 30,
                                       2004      2003      2004      2003

  REVENUES                           $207,599  $197,089  $656,459  $640,759

  OPERATING EXPENSES:
     Salaries, wages and fringe
      benefits                        111,298   107,369   359,163   348,446
     Operating supplies and expenses   36,371    29,960   114,930   103,108
     Purchased transportation          27,072    24,082    81,566    74,632
     Insurance and claims              11,401     8,260    30,205    29,094
     Operating taxes and licenses       6,848     6,992    21,503    22,989
     Depreciation and amortization      9,517    11,011    29,832    34,688
     Rents                              2,008     1,579     5,753     4,819
     Communications and utilities       1,455     1,745     4,760     5,213
     Other operating expenses           2,105     2,791     7,056     8,175
     Loss (gain) on disposal of
      operating assets, net               305       153      (705)      612
         Total operating expenses     208,380   193,942   654,063   631,776
         Operating income                (781)    3,147     2,396     8,983

  OTHER INCOME (EXPENSE):
     Interest expense                  (8,754)   (7,366)  (23,699)  (22,120)
     Investment income (loss)             567      (398)      755     2,935
     Foreign exchange gain (loss), net  1,735       (62)      614     2,386
     Other, net                           (91)    1,976      (191)    1,976
                                       (6,543)   (5,850)  (22,521)  (14,823)

  LOSS BEFORE INCOME TAXES             (7,324)   (2,703)  (20,125)   (5,840)

  INCOME TAX (PROVISION) BENEFIT         (310)      728      (310)    1,573

  NET LOSS                             (7,634)   (1,975)  (20,435)   (4,267)

  LOSS PER COMMON SHARE:
      BASIC AND DILUTED                ($0.87)   ($0.23)   ($2.35)   ($0.50)

  WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING:
      BASIC AND DILUTED                 8,791     8,507     8,705     8,459

                  ALLIED HOLDINGS, INC. AND SUBSIDIARIES
                   2004 THIRD QUARTER EARNINGS RELEASE
                              OPERATING DATA
                               (Unaudited)

                         THREE MONTHS ENDED          NINE MONTHS ENDED
                            SEPTEMBER 30,               SEPTEMBER 30,
                         2004          2003          2004          2003

  AAG, INCLUDING ALLIED HOLDINGS

  REVENUES           $201,846,000  $190,532,000  $637,518,000  $619,832,000

  OPERATING INCOME      ($631,000)   $2,261,000    $1,253,000    $6,433,000

  OPERATING RATIO          100.31%        98.81%        99.80%        98.96%

  VEHICLES DELIVERED    2,003,671     1,958,442     6,625,472     6,602,668

  LOADS DELIVERED         259,531       253,541       860,476       857,861

  VEHICLES PER LOAD          7.72          7.72          7.70          7.70

  REVENUE PER VEHICLE     $100.74        $97.29        $96.22        $93.87

  PERCENT DAMAGE FREE
   DELIVERY                 99.73%        99.70%        99.74%        99.70%

  AVERAGE NUMBER OF
   ACTIVE RIGS              3,567         3,376         3,675         3,722

  AVERAGE NUMBER OF
   EMPLOYEES:
     DRIVERS                3,726         3,726         3,865         4,030
     OTHERS                 1,852         1,954         1,907         1,986

  AXIS GROUP:

  REVENUES             $5,753,000    $6,557,000   $18,941,000   $20,927,000

  OPERATING INCOME      ($150,000)     $886,000    $1,143,000    $2,550,000

  CERTAIN AMOUNTS IN THE INFORMATION PRESENTED ABOVE HAVE BEEN RECLASSIFIED
  TO CONFORM TO THE CURRENT YEAR PRESENTATION.

                  ALLIED HOLDINGS, INC. AND SUBSIDIARIES
                   2004 THIRD QUARTER EARNINGS RELEASE
                      NON-GAAP FINANCIAL INFORMATION
                               (Unaudited)

                         THREE MONTHS ENDED          NINE MONTHS ENDED
                             SEPTEMBER 30,              SEPTEMBER 30,
                          2004         2003          2004         2003
  RECONCILIATION OF
   NET LOSS TO
   ADJUSTED EBITDA:

  NET LOSS           ($7,634,000) ($1,975,000) ($20,435,000) ($4,267,000)

  INCOME TAX
   EXPENSE (BENEFIT)     310,000     (728,000)      310,000   (1,573,000)

  INTEREST EXPENSE     8,754,000    7,366,000    23,699,000   22,120,000

  INVESTMENT
   (INCOME) LOSS        (567,000)     398,000      (755,000)  (2,935,000)

  FOREIGN
   EXCHANGE (GAINS)
   LOSSES, NET        (1,735,000)      62,000      (614,000)  (2,386,000)

  OTHER, NET              91,000   (1,976,000)      191,000   (1,976,000)

  LOSS (GAIN) ON
   DISPOSAL OF
   OPERATING ASSETS      305,000      153,000      (705,000)     612,000

  DEPRECIATION AND
   AMORTIZATION        9,517,000   11,011,000    29,832,000   34,688,000

  ADJUSTED EBITDA     $9,041,000  $14,311,000   $31,523,000  $44,283,000

                        THREE MONTHS ENDED         NINE MONTHS ENDED
                            SEPTEMBER 30,             SEPTEMBER 30,
                         2004         2003         2004         2003
  RECONCILIATION OF                (Restated)                (Restated)
   OPERATING CASH FLOWS
   TO ADJUSTED EBITDA:

  CASH PROVIDED BY
   OPERATIONS        $15,453,000   $8,809,000  $12,577,000  $25,551,000

  ADJUSTMENTS:

    INTEREST EXPENSE   8,754,000    7,366,000   23,699,000   22,120,000

    INTEREST PAID
     IN KIND                   -     (340,000)           -   (1,065,000)

    INVESTMENT
     LOSSES (INCOME)    (567,000)     398,000     (755,000)  (2,935,000)

    AMORTIZATION OF
     DEFERRED FINANCING
     COSTS              (692,000)    (953,000)  (2,094,000)  (3,007,000)

    INCOME TAX
     (BENEFIT) EXPENSE   310,000     (728,000)     310,000   (1,573,000)

    DEFERRED INCOME
     TAXES                     -    2,731,000            -    3,402,000

    AMORTIZATION OF
     TEAMSTER UNION
     CONTRACT COSTS            -            -            -   (1,000,000)

    COMPENSATION EXPENSE
     RELATED TO STOCK
     OPTIONS AND GRANTS  (85,000)    (170,000)    (475,000)    (290,000)

    OTHER, NET            91,000   (1,976,000)     191,000   (1,976,000)

    NET CHANGE IN
     OPERATING ASSETS
     AND LIABILITIES (14,223,000)    (826,000)  (1,930,000)   5,056,000

  ADJUSTED EBITDA     $9,041,000  $14,311,000  $31,523,000  $44,283,000

Adjusted EBITDA is presented because management believes it provides useful information to investors regarding the Company's ability to generate cash flows that can be used to service debt and provide for capital expenditures. Adjusted EBITDA, with certain additional modifications, is also a component of certain financial covenants in the Company's debt agreements. The Company's net income (loss) and net cash provided by operating activities are the closest measure in the Company's financial statements prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), in terms of comparability to Adjusted EBITDA. As such, a reconciliation of Adjusted EBITDA to the net income (loss) and net cash provided by operating activities for the three and nine months ended September 30, 2004 and 2003 are provided above. Because Adjusted EBITDA is not a measure determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures used by other companies.