10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

or

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-23192

CELADON GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware	13-3361050
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification Number)
9503 East 33rd Street
One Celadon Drive
Indianapolis, IN	46235-4207
(Address of principal executive offices)	(Zip Code)
(317) 972-7000 (Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [   ] Accelerated filer [X] Non-accelerated filer [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act).

Yes [   ] No [X]

As of May 1, 2006 (the latest practicable date), 15,296,510 shares of the registrant’s common stock, par value $0.033 per share, were outstanding.

CELADON GROUP, INC.

Index to

March 31, 2006 Form 10-Q

Part I.	Financial Information
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets at March 31, 2006 (Unaudited) and June 30, 2005	3
		Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2006 and 2005 (Unaudited)	4
		Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2006 and 2005 (Unaudited)	5
		Notes to Condensed Consolidated Financial Statements (Unaudited)	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
	Item 4.	Controls and Procedures	19
Part II.	Other Information
	Item 1.	Legal Proceedings.	21
	Items 2. and 3.		Not Applicable
	Items 4.	Submission of Matters to a Vote of Security Holders	21
	Item 5.		Not Applicable
	Item 6.	Exhibits	21

Part I.  Financial Information

Item 1.  Financial Statements

CELADON GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2006 and June 30, 2005

(Dollars in thousands except per share and par value amounts)

	March 31, 2006			June 30, 2005
	(unaudited)
A S S E T S
Current assets:
Cash and cash equivalents	$	15,324		$	11,115
Trade receivables, net of allowance for doubtful accounts of $1,395 and $1,496 at March 31, 2006 and June 30, 2005		52,584			55,760
Accounts receivable - other		1,414			2,727
Prepaid expenses and other current assets		8,059			3,599
Tires in service		2,800			3,308
Income tax receivable		905			---
Deferred income taxes		2,424			2,424
Total current assets		83,510			78,933
Property and equipment		95,362			88,230
Less accumulated depreciation and amortization		30,430			30,685
Net property and equipment		64,932			57,545
Tires in service		1,483			1,739
Goodwill		19,137			19,137
Other assets		2,201			2,089
Total assets	$	171,263		$	159,443
L I A B I L I T I E S   A N D   S T O C K H O L D E R S’   E Q U I T Y
Current liabilities:
Accounts payable	$	3,962		$	4,465
Accrued salaries and benefits		12,644			11,523
Accrued insurance and claims		7,805			10,021
Accrued fuel expense		5,230			6,104
Other accrued expenses		11,932			11,105
Current maturities of long-term debt		864			1,057
Current maturities of capital lease obligations		306			788
Income tax payable		---			265
Total current liabilities		42,743			45,328
Long-term debt, net of current maturities		4,972			4,239
Capital lease obligations, net of current maturities		1,210			1,260
Deferred income taxes		8,418			10,100
Minority interest		25			25
Stockholders’ equity:
Preferred stock, $1.00 par value, authorized 179,985 shares; no shares issued and outstanding		---			---
Common stock, $0.033 par value, authorized 40,000,000 shares; issued 15,280,010 and 10,050,449 shares at March 31, 2006 and June 30, 2005		504			332
Additional paid-in capital		89,911			89,359
Retained earnings		25,704			11,544
Unearned compensation of restricted stock		---			(711	)
Accumulated other comprehensive loss		(2,224	)		(2,033	)
Total stockholders’ equity		113,895			98,491
Total liabilities and stockholders’ equity	$	171,263		$	159,443

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

3

CELADON GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands except per share amounts)

(Unaudited)

	For the three months ended March 31,						For the nine months ended March 31,
	2006			2005			2006			2005
Revenue:
Freight revenue	$	100,844		$	99,202		$	307,072		$	294,681
Fuel surcharges		14,469			9,331			46,450			25,116
		115,313			108,533			353,522			319,797
Operating expenses:
Salaries, wages, and employee benefits		35,697			33,015			106,028			98,587
Fuel		25,289			21,093			79,436			57,843
Operations and maintenance		7,087			8,279			21,811			26,086
Insurance and claims		3,620			3,597			10,967			9,927
Depreciation and amortization		3,199			3,939			9,283			10,941
Revenue equipment rentals		9,718			9,041			30,344			25,553
Purchased transportation		16,272			17,318			51,935			55,362
Costs of products and services sold		1,349			1,193			3,990			3,509
Professional and consulting fees		644			784			2,197			1,809
Communications and utilities		1,007			1,116			3,050			3,170
Operating taxes and licenses		1,891			2,210			6,104			6,390
General and other operating		1,574			1,624			4,539			4,712
Total operating expenses		107,347			103,209			329,684			303,886
Operating income		7,966			5,324			23,838			15,911
Other (income) expense:
Interest income		(41	)		(1	)		(119	)		(7	)
Interest expense		227			412			727			1,100
Other (income) expense, net		3			2			29			8
Income before income taxes		7,777			4,911			23,201			14,810
Provision for income taxes		3,100			2,169			9,041			6,544
Net income	$	4,677		$	2,742		$	14,160			8,266
Earnings per common share:
Diluted earnings per share (1)	$	0.30		$	0.18		$	0.91		$	0.54
Basic earnings per share (1)	$	0.31		$	0.18		$	0.93		$	0.56
Average shares outstanding:
Diluted (1)		15,664			15,475			15,556			15,316
Basic (1)		15,285			15,038			15,166			14,794

⁽¹⁾ Earnings per share amounts and average number of shares outstanding have been adjusted to give retroactive effect to a three-for-two stock split effected in the form of a 50% stock dividend declared January 18, 2006.

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

4

CELADON GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended March 31, 2006 and 2005

(Dollars in thousands)

(Unaudited)

	2006			2005
Cash flows from operating activities:
Net income	$	14,160		$	8,266
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,283			10,941
Stock based compensation		2,484			607
Benefit for deferred income taxes		(1,682	)		143
Provision for doubtful accounts		556			1,025
Changes in assets and liabilities:
Trade receivables		2,620			(1,692	)
Accounts receivable - other		1,313			2,297
Income tax recoverable		(905	)		---
Tires in service		764			459
Prepaid expenses and other current assets		(4,460	)		815
Other assets		(138	)		89
Accounts payable and accrued expenses		(3,593	)		2,768
Income tax payable		(265	)		(1,511	)
Net cash provided by operating activities		20,137			24,207
Cash flows from investing activities:
Purchase of property and equipment		(47,407	)		(23,079	)
Proceeds on sale of property and equipment		32,447			21,613
Purchase of minority shares of subsidiary		---			(2,495	)
Purchase of a business, net of cash acquired		---			(22,700	)
Net cash used in investing activities		(14,960	)		(26,661	)
Cash flows from financing activities:
Proceeds from issuances of common stock		900			1,814
Proceeds from bank borrowings and debt		---			6,645
Payments on long-term debt		(1,095	)		(2,677	)
Principal payments under capital lease obligations		(773	)		(2,985	)
Net cash (used in) provided by financing activities		(968	)		2,797
Increase in cash and cash equivalents		4,209			343
Cash and cash equivalents at beginning of period		11,115			356
Cash and cash equivalents at end of period	$	15,324		$	699
Supplemental disclosure of cash flow information:
Interest paid	$	717		$	1,058
Income taxes paid	$	12,215		$	7,530
Supplemental disclosure of non-cash flow investing activities:
Lease obligation/debt incurred in the purchase of equipment	$	1,876		$	---
Note payable obligation incurred in purchase of minority shares	$	---		$	910

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

5

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

1.Basis of Presentation

 The accompanying unaudited condensed consolidated financial statements include the accounts of Celadon Group, Inc. and its majority owned subsidiaries (the "Company"). All material intercompany balances and transactions have been eliminated in consolidation.

 The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial statements. Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited financial statements reflect all adjustments (all of a normal recurring nature), which are necessary for a fair presentation of the financial condition and results of operations for these periods. The results of operations for the interim period are not necessarily indicative of the results for a full year. These condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s condensed consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005.

 The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

2.Stock Split

 On January 18, 2006, the Board of Directors approved a three-for-two stock split, effected in the form of a fifty percent (50%) stock dividend. The stock split distribution date was February 15, 2006, to stockholders of record as of the close of business on February 1, 2006.

 Unless otherwise indicated, all share and per share amounts have been adjusted to give retro active effect to this stock-split.

3. Earnings Per Share

 The difference in basic and diluted weighted average shares is due to the assumed exercise of outstanding stock options. A reconciliation of the basic and diluted earnings per share calculation was as follows (amounts in thousands, except per share amounts):

	For three months ended March 31,				For nine months ended March 31,
	2006		2005		2006		2005
Net income	$	4,677	$	2,742	$	14,160	$	8,266
Denominator
Weighted average number of common shares outstanding		15,285		15,038		15,166		14,794
Equivalent shares issuable upon exercise of stock options		379		437		390		522
Diluted shares		15,664		15,475		15,556		15,316
Earnings per share
Basic	$	0.31	$	0.18	$	0.93	$	0.56
Diluted	$	0.30	$	0.18	$	0.91	$	0.54

6

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

4.Segment Information and Significant Customers

The Company operates in two segments, transportation and e-commerce. The Company generates revenue in the transportation segment, primarily by providing truckload-hauling services through its subsidiaries Celadon Trucking Services Inc. ("CTSI"), Servicios de Transportacion Jaguar, S.A. de C.V., ("Jaguar"), and Celadon Canada, Inc. ("CelCan"). The Company provides certain services over the Internet through its e-commerce subsidiary TruckersB2B, Inc. ("TruckersB2B"). The e-commerce segment generates revenue by providing discounted fuel, tires, and other products and services to small and medium-sized trucking companies. The Company evaluates the performance of its operating segments based on operating income (amounts below in thousands).

	Transportation		E-commerce		Consolidated
Three months ended March 31, 2006
Operating revenue	$	113,231	$	2,082	$	115,313
Operating income		7,547		419		7,966
Three months ended March 31, 2005
Operating revenue	$	106,663	$	1,870	$	108,533
Operating income		4,985		339		5,324
Nine months ended March 31, 2006
Operating revenue	$	347,383	$	6,139	$	353,522
Operating income		22,705		1,133		23,838
Nine months ended March 31, 2005
Operating revenue	$	314,000	$	5,797	$	319,797
Operating income		14,721		1,190		15,911

Information as to the Company’s operating revenue by geographic area is summarized below (in thousands). The Company allocates operating revenue based on country of origin of the tractor hauling the freight:

	For the three months ended March 31,				For the nine months ended March 31,
	2006		2005		2006		2005
Operating revenue:
United States	$	95,177	$	89,896	$	289,391	$	261,286
Canada		13,629		13,430		43,364		42,653
Mexico		6,507		5,207		20,767		15,858
Total	$	115,313	$	108,533	$	353,522	$	319,797

No customer accounted for more than 10% of the Company’s total revenue during any of its two most recent fiscal years.

7

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

5.Stock Based Compensation

In December 2004, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 123-R, "Share-Based Payments, an Amendment of SFAS 123 on Accounting for Stock Based Compensation." SFAS 123-R requires companies to recognize in the income statement the grant date fair value of stock options and other equity-based compensation issued to employees. We adopted this statement effective July 1, 2005. Our adoption of SFAS 123-R impacted our results of operations by increasing salaries, wages, and related expenses. The amount of the impact was immaterial to the Company for the third quarter of fiscal 2006 and the nine months ended March 31, 2006.

The Company estimates the fair value of each grant using the Black-Scholes option-pricing model. In addition, option-pricing models require the input of certain assumptions including the expected stock price volatility.

At March 31, 2006, the Company had 1,019,411 outstanding stock options with an average exercise price of $10.87. There are 568,220 vested options. The stock options have an intrinsic value of $11.2 million based on the March 31, 2006 closing share price of $21.89. The weighted average remaining contractual term on these options is approximately 6.6 years. The total remaining unrecognized compensation cost related to the unvested options is $3.6 million which is expected to be recognized over approximately 3 years. During the third quarter ended March 31, 2006, $282,240 was expensed related to this plan in salaries, wages, and employee benefits.

At March 31, 2006, the Company had 182,820 outstanding nonvested shares with an average exercise price of $13.45. There are 47,100 vested shares. The nonvested shares have an intrinsic value of $1.5 million based on the March 31, 2006 closing share price of $21.89. The weighted average remaining contractual term on these shares is approximately 2.7 years. The total remaining unrecognized compensation cost related to the nonvested shares is $1.9 million which is expected to be recognized over approximately 4 years. During the third quarter ended March 31, 2006, $140,638 was expensed related to this plan, and $328,304 was expensed for the nine months ended of the same period in salaries, wages, and employee benefits.

The Company had 389,771 stock appreciation rights ("SARs") outstanding with an average exercise price of $11.57. These SARs vest annually over a 3 or 4 year term based on grant dates, with grant dates ranging from June 9, 2003 to August 21, 2005. These SARs have an intrinsic value of $4.0 million based on the March 31, 2006 closing share price of $21.89. The weighted average remaining contractual term on these SARs is approximately 2 years. SARs are classified as a liability award and recorded as other accrued expenses. During the third quarter ended March 31, 2006, $312,565 was expenses related to this plan, and $1,949,157 was expensed for the nine months ended of the same period.

For purposes of pro forma disclosure, for the nine months ended March 31, 2005, the estimated fair value of the options are expensed over the vesting period. Under the fair value method, the Company’s net income (in thousands) and earnings per share would have been:

	For the three months ended		For the nine months ended
	March 31, 2005		March 31, 2005
Net income	$	2,742	$	8,266
Stock-based compensation expense (net of tax)		54		213
Pro forma net income	$	2,688	$	8,053
Income per share:
Diluted earnings per share
As reported	$	0.18	$	0.54
Pro forma	$	0.17	$	0.53
Basic earnings per share:
As reported	$	0.18	$	0.56
Pro forma	$	0.18	$	0.54

8

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2006

(Unaudited)

6.Comprehensive Income

Comprehensive income consisted of the following components for the third quarter of fiscal 2006 and 2005, respectively, and the nine months ended March 31, 2006 and 2005, respectively (in thousands):

	Three months ended March 31,					Nine months ended March 31,
	2006			2005		2006			2005
Net income	$	4,677		$	2,742	$	14,160		$	8,266
Foreign currency translation adjustments		(509	)		---		(191	)		165
Total comprehensive income	$	4,168		$	2,742	$	13,969		$	8,431

7.Commitments and Contingencies

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries in the normal course of the operations of its businesses with respect to cargo, auto liability, or income taxes. The Company believes many of these proceedings are covered in whole or in part by insurance and that none of these matters will have a material adverse effect on its consolidated financial position or results of operations in any given period.

8. Reclassification

Certain reclassifications have been made to the March 31, 2005 financial statements to conform to the March 31, 2006 presentation.

9

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

Disclosure Regarding Forward Looking Statements

This Quarterly Report contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, events, performance, or achievements of the Company to be materially different from any future results, events, performance, or achievements expressed in or implied by such forward-looking statements. Such statements may be identified by the fact that they do not relate strictly to historical or current facts. These statements generally use words such as "believe," "expect," "anticipate," "project," "forecast," "should," "estimate," "plan," "outlook," "goal," and similar expressions. While it is impossible to identify all factors that may cause actual results to differ from those expressed in or implied by forward-looking statements, the risks and uncertainties that may affect the Company’s business, performance, and results of operations include the factors listed on Exhibit 99 to this Quarterly Report on Form 10-Q.

All such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. You are cautioned not to place undue reliance on such forward-looking statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in the events, conditions, or circumstances on which any such statement is based.

References to the "Company," "we," "us," "our," and words of similar import refer to Celadon Group, Inc. and its consolidated subsidiaries.

Business Overview

We are one of North America’s fifteen largest truckload carriers as measured by revenue. We generated $436.8 million in operating revenue during our fiscal year ended June 30, 2005. We have grown significantly since our incorporation in 1986 through internal growth and a series of acquisitions since 1995. As a dry van truckload carrier, we generally transport full trailer loads of freight from origin to destination without intermediate stops or handling. Our customer base includes many Fortune 500 shippers.

In our international operations, we offer time-sensitive transportation in North America. We generated approximately one-half of our revenue in fiscal 2005 from international movements, and we believe our annual border crossings make us the largest provider of international truckload movements in North America. We believe that our strategically located terminals and experience with the language, culture, and border crossing requirements of each North American country provide a competitive advantage in the international trucking marketplace.

We believe our international operations, particularly those involving Mexico, offer an attractive business niche for several reasons. The additional complexity of and need to establish cross-border business partners and to develop strong organization and adequate infrastructure in Mexico affords some barriers to competition that are not present in traditional U.S. truckload services.

Our success is dependent upon the success of our operations in Mexico and Canada, and we are subject to risks of doing business internationally, including fluctuations in foreign currencies, changes in the economic strength of the countries in which we do business, difficulties in enforcing contractual obligations and intellectual property rights, burdens of complying with a wide variety of international and United States export and import laws, and social, political, and economic instability. Additional risks associated with our foreign operations, including restrictive trade policies and imposition of duties, taxes, or government royalties by foreign governments, are present but largely mitigated by the terms of NAFTA.

10

In addition to our international business, we offer a broad range of truckload transportation services within the United States, including long-haul, regional, dedicated, and logistics. With the acquisition of certain assets of CX Roberson in January 2005, we expanded our operations and service offerings within the United States and significantly improved our lane density, freight mix, and customer diversity. The CX Roberson acquisition was important to us, and we believe it has contributed to our recent operating improvements.

We also operate TruckersB2B, a profitable marketing business that affords volume purchasing power for items such as fuel, tires, and equipment to approximately 20,000 trucking fleets representing approximately 425,000 tractors. TruckersB2B represents a separate operating segment under generally accepted accounting principles.

For the third quarter of fiscal 2006, operating revenue increased 6.3% to $115.3 million, compared with $108.5 million for the third quarter of fiscal 2005. Net income increased to $4.7 million from $2.7 million, and diluted earnings per share improved to $0.30 from $0.18. We believe that a favorable relationship between freight demand and the industry-wide supply of tractor and trailer capacity, as well as our dedication to pricing discipline, yield management, and customer service, contributed to our increase in earnings for the third quarter of fiscal 2006 compared to the third quarter of fiscal 2005.

We expect our tractor and trailer purchases will be primarily for replacement and will maintain the average age of our tractor fleet at approximately 2.0 years and the average age of our trailer fleet at 4.0 years or less during the 2006 fiscal year. At March 31, 2006, we had future operating lease obligations totaling $199.7 million, including residual value guarantees of approximately $79.1 million.

	March 31, 2006				March 31, 2005
	Tractors		Trailers		Tractors		Trailers
Owned equipment		509		1,144		520		2,020
Capital leased equipment		---		110		20		476
Operating leased equipment		1,715		6,208		1,674		5,389
Independent contractors		347		---		414		---
Total		2,571		7,462		2,628		7,885

11

Results of Operations

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

	For the three months ended March 31,						For the nine months ended March 31,
	2006			2005			2006			2005
Freight revenue(1)		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses:
Salaries, wages, and employee benefits		35.4	%		33.3	%		34.5	%		33.5	%
Fuel(1)		10.7	%		11.9	%		10.7	%		11.1	%
Operations and maintenance		7.0	%		8.3	%		7.1	%		8.9	%
Insurance and claims		3.6	%		3.6	%		3.6	%		3.4	%
Depreciation and amortization		3.2	%		4.0	%		3.0	%		3.7	%
Revenue equipment rentals		9.6	%		9.1	%		9.9	%		8.7	%
Purchased transportation		16.1	%		17.5	%		16.9	%		18.8	%
Costs of products and services sold		1.3	%		1.2	%		1.3	%		1.2	%
Professional and consulting fees		0.6	%		0.8	%		0.7	%		0.6	%
Communications and utilities		1.0	%		1.1	%		1.0	%		1.1	%
Operating taxes and licenses		1.9	%		2.2	%		2.0	%		2.2	%
General and other operating		1.7	%		1.6	%		1.5	%		1.4	%
Total operating expenses		92.1	%		94.6	%		92.2	%		94.6	%
Operating income		7.9	%		5.4	%		7.8	%		5.4	%
Other expense:
Interest expense		0.2	%		0.4	%		0.2	%		0.4	%
Income before income taxes		7.7	%		5.0	%		7.6	%		5.0	%
Provision for income taxes		3.1	%		2.2	%		2.9	%		2.2	%
Net income		4.6	%		2.8	%		4.7	%		2.8	%

⁽¹⁾ Freight revenue is total revenue less fuel surcharges. In this table, fuel surcharges are eliminated from revenue and subtracted from fuel expense. Fuel surcharges were $14.5 million and $9.3 million for the third quarter of fiscal 2006 and 2005, respectively, and $46.5 million and $25.1 million for the nine months ended March 31, 2006 and 2005, respectively.

Comparison of Three Months Ended March 31, 2006 to Three Months Ended March 31, 2005

Operating revenue increased by $6.8 million, or 6.2%, to $115.3 million for the third quarter of fiscal 2006, from $108.5 million for the third quarter of fiscal 2005. Freight revenue increased by $1.6 million, or 1.7%, to $100.8 million for the third quarter of fiscal 2006, from $99.2 million for the third quarter of fiscal 2005. This increase was primarily attributable to a 3.0% improvement in average freight revenue per total mile to $1.36 from $1.32, with the average miles per tractor per week increasing from 2,069 miles to 2,118 miles. The improvement in average revenue per total mile resulted primarily from better overall freight rates driven by a favorable relationship between freight demand and truckload capacity. As a result of the foregoing factors, average freight revenue per tractor per week, which is our primary measure of asset productivity, increased 5.2% to $2,883 in the third quarter of fiscal 2006, from $2,740 for the third quarter of fiscal 2005. Revenue for TruckersB2B was $2.1 million in the third quarter of fiscal 2006, compared to $1.9 million for the third quarter of fiscal 2005.

12

Salaries, wages, and benefits were $35.7 million, or 35.4% of freight revenue, for the third quarter of fiscal 2006, compared to $33.0 million, or 33.3% of freight revenue, for the third quarter of fiscal 2005. The increase in the overall dollar amount was primarily related to an increase in driver payroll resulting from an increase in Company miles. The Company is required to record adjustments to reflect changes in the stock price for stock appreciation rights (“SARS”). Accordingly, our salaries, wages, and benefits will fluctuate as our stock price changes.

Fuel expenses, net of fuel surcharge revenue of $14.5 million and $9.3 million for the third quarter of fiscal 2006 and 2005, respectively, decreased to $10.8 million, or 10.7% of freight revenue, for the third quarter of fiscal 2006, compared to $11.8 million, or 11.9% of freight revenue, for the third quarter of fiscal 2005. This decrease was primarily attributable to average fuel prices that were approximately $2.30 per gallon, or 17.0% higher during the third quarter of fiscal 2006, and an increase in Company miles, which in turn increased fuel usage. The increase in fuel costs, however, was offset by fuel surcharge revenue.Increased fuel prices will increase our operating expenses to the extent they are not offset by surcharges.

Operations and maintenance decreased to $7.1 million for the third quarter of fiscal 2006, from $8.3 million for the third quarter of fiscal 2005. Operations and maintenance decreased to 7.0% of freight revenue, for the third quarter of fiscal 2006, from 8.3% for the third quarter of fiscal 2005. Operations and maintenance consist of direct operating expense, maintenance, and tire expense. Expenses to prepare tractors for trade-in or sale have decreased as we have changed our trade cycle from 4 years to 3 years and the reduction in the average age of tractors and trailers has decreased our repairs. We expect maintenance expense to decrease as a percentage of revenue in future periods as a result of the effects of our fleet upgrade.

Insurance and claims expense was constant at $3.6 million, or 3.6% of freight revenue, for the third quarter of fiscal 2006 and 2005. Insurance consists of premiums for liability, physical damage, and cargo damage insurance. Our insurance program involves self-insurance at various risk retention levels. Claims in excess of these risk levels are covered by insurance in amounts we consider to be adequate. We accrue for the uninsured portion of claims based on known claims and historical experience. We continually revise and change our insurance program to maintain a balance between premium expense and the risk retention we are willing to assume.

Depreciation and amortization, consisting primarily of depreciation of revenue equipment, decreased to $3.2 million from $3.9 million for the third quarter of fiscal 2006, compared to the third quarter of fiscal 2005. Depreciation and amortization decreased to 3.2% of freight revenue in the third quarter of fiscal 2006, compared to 4.0% of freight revenue for the third quarter of fiscal 2005. Revenue equipment held under operating leases is not reflected on our balance sheet and the expenses related to such equipment are reflected on our statements of operations in revenue equipment rentals, rather than in depreciation and amortization and interest expense, as is the case for revenue equipment that is financed with borrowings or capital leases. In the near term we expect to purchase new tractors with cash generated from operations.

Revenue equipment rentals were $9.7 million, or 9.6% of freight revenue, for the third quarter of fiscal 2006, compared to $9.0 million or 9.1% of freight revenue for the third quarter of fiscal 2005. This increase is attributable to an increase in our trailer fleet financed under operating leases. At March 31, 2006, 6,208 trailers, or 83.2% of our Company trailers, were held under operating leases compared to 5,389 trailers, or 68.3% of our trailers, at March 31, 2005. As we expect to finance most of our new trailers under off-balance sheet operating leases, we expect revenue equipment rentals will continue to slightly increase going forward, but at a slower rate as we are now purchasing new tractors with cash generated from operations.

13

Purchased transportation decreased to $16.3 million, or 16.1% of freight revenue, for the third quarter of fiscal 2006, from $17.3 million, or 17.5% of freight revenue, for the third quarter of fiscal 2005. The decrease is primarily related to reduced owner-operator expense, as the percentage of our fleet comprised of owner-operators decreased. It has become difficult to recruit and retain owner-operators due to the challenging operating environment. Owner-operators are independent contractors who cover all their operating expenses (fuel, driver salaries, maintenance, and equipment costs) for a fixed payment per mile. To the extent these operating expenses continue to rise and there is not a corresponding increase in the fixed payment per mile, we expect the percentage of our fleet comprised of owner-operators will continue to decrease.

All of our other operating expenses are relatively minor in amount, and there were no significant changes in such expenses. Accordingly, we have not provided a detailed discussion of such expenses.

Our pretax margin, which we believe is a useful measure of our operating performance because it is neutral with regard to the method of revenue equipment financing that a company uses, improved 270 basis points to 7.7% of freight revenue for the third quarter of fiscal 2006, from 5.0% of freight revenue for the third quarter of fiscal 2005.

Income taxes increased to $3.1 million, with an effective tax rate of 39.9%, for the third quarter of fiscal 2006, from $2.2 million, with an effective tax rate of 44.2%, for the third quarter of fiscal 2005. The effective tax rate decreased as a result of increased earnings which reduced the effect of non-deductible expenses related to our per diem pay structure. As per diem is a non-deductible expense, our effective tax rate will fluctuate as net income fluctuates in the future.

Comparison of Nine Months Ended March 31, 2006 to Nine Months Ended March 31, 2005

Operating revenue increased by $33.7million, or 10.5%, to $353.5 million for the nine months ended March 31, 2006, from $319.8 million for the nine months ended March 31, 2005. This increase was primarily attributable to a 5.4% improvement in average freight revenue per total mile, from $1.31 to $1.37, with the average miles per tractor per week remaining constant at 2,151. The improvement in average revenue per total mile resulted primarily from better overall freight rates driven by a favorable relationship between freight demand and truckload capacity. As a result of the foregoing factors, average freight revenue per tractor per week,which is our primary measure of asset productivity, increased 4.6% to $2,938 for the nine months ended March 31, 2006, from $2,808 for the nine months ended March 31, 2005. Revenue for TruckersB2B was $6.1 million for the nine months ended March 31, 2006, compared to $5.8 million for the nine months ended March 31, 2005.

Salaries, wages, and benefits were $106.0 million, or 34.5% of freight revenue, for the nine months ended March 31, 2006, compared to $98.6 million, or 33.5% of freight revenue, for the nine months ended March 31, 2005. The increase in the overall dollar amount was primarily related to an increase in driver payroll resulting from an increase in Company miles and adjusting the Company’s accrual for outstanding SARs due to an increase in the Company’s stock price. The Company is required to make quarterly adjustments to reflect changes in the stock price. Accordingly, our salaries, wages, and benefits will fluctuate as our stock price changes.

Fuel expenses, net of fuel surcharge revenue of $46.5 million and $25.1 million for the nine months ended March 31, 2006 and 2005, respectively, increased to $33.0 million, or 10.7% of freight revenue, for the nine months ended March 31, 2006, compared to $32.7 million, or 11.1% of freight revenue, for the nine months ended March 31, 2005. The increase in our costs was attributable to average fuel prices that were approximately $2.41 per gallon, or 30.5% higher during the nine months ended March 31, 2006, and an increase in Company miles. The increase in fuel prices was offset by the collection of fuel surcharge revenue. Increased fuel prices will increase our operating expenses to the extent they are not offset by surcharges.

14

               Operations and maintenance decreased to $21.8 million for the nine months ended March 31, 2006, from $26.1 million for the nine months ended March 31, 2005. As a percentage of freight revenue, operations and maintenance decreased to 7.1% for the nine months ended March 31, 2006, from 8.9% for the nine months ended March 31, 2005. Operations and maintenance consist of direct operating expense, maintenance, and tire expense. Expenses to prepare tractors for trade-in or sale have decreased as we have changed our trade cycle from 4 years to 3 years and the reduction in the average age of tractors and trailers has decreased our repairs. We expect maintenance expense to decrease as a percentage of revenue in future periods as a result of the effects of our fleet upgrade.

Insurance and claims expense was $11.0 million, or 3.6% of freight revenue, for the nine months ended March 31, 2006, compared to $9.9 million, or 3.4% of freight revenue, for the nine months ended March 31, 2005. The primary reasons for the increase in insurance and claims were slightly higher cargo claims, workers’ compensation expenses, and increased legal expenses incurred in defense and settlement of various cases. Insurance consists of premiums for liability, physical damage, and cargo damage insurance. Our insurance program involves self-insurance at various risk retention levels. Claims in excess of these risk levels are covered by insurance in amounts we consider to be adequate. We accrue for the uninsured portion of claims based on known claims and historical experience. We continually revise and change our insurance program to maintain a balance between premium expense and the risk retention we are willing to assume.

Depreciation and amortization, consisting primarily of depreciation of revenue equipment, decreased to $9.3 million, or 3.0% of freight revenue, for the nine months ended March 31, 2006, from $10.9 million, or 3.7% of freight revenue, for the nine months ended March 31, 2005. The decrease in depreciation expense is attributed to equipment sold in fiscal year 2005. Revenue equipment held under operating leases is not reflected on our balance sheet and the expenses related to such equipment are reflected on our statements of operations in revenue equipment rentals, rather than in depreciation and amortization and interest expense, as is the case for revenue equipment that is financed with borrowings or capital leases. In the near term we expect to purchase new tractors with cash generated from operations.

Revenue equipment rentals were $30.3 million, or 9.9% of freight revenue, for the nine months ended March 31, 2006, compared to $25.6 million, or 8.7% of freight revenue for the nine months ended March 31, 2005. This increase is attributable to an increased percentage of our trailer fleet held under operating leases for the nine months ended March 31, 2006. At March 31, 2006, 6,208 trailers, or 83.2% of our Company trailers, were held under operating leases compared to 5,389 trailers, or 68.3% of our trailers, at March 31, 2005. As we expect to finance most of our new trailers under off-balance sheet operating leases, we expect revenue equipment rentals will continue to increase going forward, but at a slower rate as we are purchasing tractors using cash generated from operations.

Purchased transportation decreased to $51.9 million, or 16.9% of freight revenue, for the nine months ended March 31, 2006, from $55.4 million, or 18.8% of freight revenue, for the nine months ended March 31, 2005. The decrease is primarily related to reduced owner-operator expense, as the percentage of our fleet comprised of owner-operators decreased. It has become difficult to recruit and retain owner-operators due to the challenging operating environment. Owner-operators are independent contractors who cover all their operating expenses (fuel, driver salaries, maintenance, and equipment costs) for a fixed payment per mile. To the extent these operating expenses continue to rise and there is not a corresponding increase in the fixed payment per mile, we expect the percentage of our fleet comprised of owner-operators will continue to decrease.

All of our other operating expenses are relatively minor in amount, and there were no significant changes in such expenses. Accordingly, we have not provided a detailed discussion of such expenses.

15

Our pretax margin, which we believe is a useful measure of our operating performance because it is neutral with regard to the method of revenue equipment financing that a company uses, improved 260 basis points to 7.6% of freight revenue for the nine months ended March 31, 2006, from 5.0% of freight revenue for the nine months ended March 31, 2005.

Income taxes resulted in expense of $9.0 million with an effective tax rate of 39.0%, for the nine months ended March 31, 2006, compared to $6.5 million, with an effective tax rate of 44.2%, for the nine months ended March 31, 2004. As per diem is a non-deductible expense our effective tax rate will fluctuate as net income fluctuates in the future.

Liquidity and Capital Resources

Trucking is a capital-intensive business. We require cash to fund our operating expenses (other than depreciation and amortization), to make capital expenditures, acquisitions, and to repay debt. Other than ordinary operating expenses, we anticipate that capital expenditures for the acquisition of revenue equipment will constitute our primary cash requirement over the next twelve months. Our principal sources of liquidity are cash generated from operations, bank borrowings, lease financing of revenue equipment, proceeds from the sale of used revenue equipment, and, to a lesser extent, the sale of shares of our common stock.

Cash Flows

Cash provided by operations was $20.1 million for the nine months ended March 31, 2006, compared to $24.2 million for the nine months ended March 31, 2005. The primary changes in operating assets and liabilities related to increased prepaid expenses due to payment of fiscal 2006 insurance premiums at the beginning of the year whereas installment payments were made historically, prepayment of heavy vehicle use tax (historically paid quarterly), and payment on license renewals, as well as a decrease in accounts payable and accrued expenses due to settlement of many large liability claims.

Investing activities consumed $15.0 million for the nine months ended March 31, 2006, compared to $26.7 million for the nine months ended March 31, 2005. Capital expenditures were $47.4 million for the nine months ended March 31, 2006, primarily related to the purchase of 548 tractors and 346 trailers (from lease buyouts and new equipment purchases). Capital expenditures were $23.1 million for the nine months ended March 31, 2005, primarily related to the purchase of 21 tractors and 621 trailers (from lease buyouts and new equipment purchases). Proceeds from the sale of property and equipment were $32.4 million and $21.6 million for the nine months ended March 31, 2006 and March 31, 2005, respectively, related to assets retired when new equipment was purchased.

Financing activities consumed $1.0 million for the nine months ended March 31, 2006, compared to cash provided of $2.8 million for the nine months ended March 31, 2005. Financing activity represents borrowings (new borrowings, net of repayment) and payments of the principal component of capital lease obligations. Although capital expenditures increased for the nine months ended March 31, 2006, we used cash on hand for a greater percentage of our financing activities, rather than borrowing.

16

Off-Balance Sheet Arrangements

Prior to our fiscal 2006 purchase of new tractors with cash generated from operations, we historically have financed many of our new tractors and trailers under operating leases, which are not reflected on our balance sheet. The use of operating leases also affects our statements of cash flows. For assets subject to these operating leases, we do not record depreciation as an increase to net cash provided by operations, nor do we record any entry with respect to investing activities or financing activities.

Our operating leases include some under which we do not guarantee the value of the asset at the end of the lease term ("walk-away leases") and some under which we do guarantee the value of the asset at the end of the lease term. At March 31, 2006, we had future operating lease obligations totaling $199.7 million, including residual value guarantees of approximately $79.1 million. We were obligated for residual value payments related to operating leases of $79.1 million and $62.6 million at March 31, 2006 and 2005, respectively. A portion of these amounts is covered by repurchase and/or trade agreements we have with the equipment manufacturer. We believe that any residual payment obligations that are not covered by the manufacturer will be satisfied, in the aggregate, by the value of the related equipment at the end of the lease. We anticipate that in the short term we will continue to use operating leases to finance the acquisition of trailers and we will use cash generated from operations to purchase tractors.

The tractors on order are not protected by manufacturers’ repurchase arrangements and are not subject to "walk-away" leases under which we can return the equipment without liability regardless of its market value at the time of return. Therefore, we are subject to the risk that equipment values may decline, in which case we would suffer a loss upon disposition and be required to make cash payments because of the residual value guarantees we provide to our equipment lessors.

PrimaryCredit Agreement

               On September 26, 2005, the Company, CTSI, and TruckersB2B entered into an unsecured Credit Agreement with LaSalle Bank National Association, as administrative agent, and LaSalle Bank National Association, Fifth Third Bank (Central Indiana), and JPMorgan Chase Bank, N.A., as lenders, which matures on September 24, 2010 (the "Credit Agreement"). The Credit Agreement was used to refinance the Company’s existing credit facility and is intended to provide for ongoing working capital needs and general corporate purposes. Borrowings under the Credit Agreement are based, at the option of the Company, on a base rate equal to the greater of the federal funds rate plus 0.5% and the administrative agent’s prime rate or LIBOR plus an applicable margin between 0.75% and 1.125% that is adjusted quarterly based on cash flow coverage. The Credit Agreement is guaranteed by Celadon E-Commerce, Inc., CelCan, and Jaguar, each of which is a subsidiary of the Company.

The Credit Agreement has a maximum revolving borrowing limit of $50.0 million, and the Company may increase the revolving borrowing limit by an additional $20.0 million, to a total of $70.0 million. Letters of credit are limited to an aggregate commitment of $15.0 million and a swing line facility has a limit of $5.0 million. A commitment fee that is adjusted quarterly between 0.15% and 0.225% per annum based on cash flow coverage is due on the daily unused portion of the Credit Agreement. The Credit Agreement contains certain restrictions and covenants relating to, among other things, dividends, tangible net worth, cash flow, mergers, consolidations, acquisitions and dispositions, and total indebtedness. We were in compliance with these covenants at March 31, 2006, and expect to remain in compliance for the foreseeable future. At March 31, 2006, none of our credit facility was utilized as outstanding borrowings and $5.6 million was utilized for standby letters of credit.

We believe we will be able to fund our operating expenses, as well as our current commitments for the acquisition of revenue equipment in connection with our fleet upgrade over the next twelve months with a combination of cash generated from operations, borrowings available under our primary credit facility, and lease financing arrangements. We will continue to have significant capital requirements over the long term, and the availability of the needed capital will depend upon our financial condition and operating results and numerous other factors over which we have limited or no control, including prevailing market conditions and the market price of our common stock. However, based on our improving operating results, anticipated future cash flows, current availability under our credit facility, and sources of equipment lease financing that we expect will be available to us, we do not expect to experience significant liquidity constraints in the foreseeable future.

17

Contractual Obligations and Commercial Commitments

As of March 31, 2006, our operating leases, capitalized leases, other debts, and future commitments have stated maturities or minimum annual payments as follows:

	Annual Cash Requirements as of March 31, 2006 (in thousands) Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating lease obligations	$	120,627	$	38,341	$	42,523	$	21,427	$	18,336
Lease residual value guarantees		79,121		14,195		32,161		5,261		27,503
Capital lease obligations(1)		1,717		382		671		665		---
Long-term debt(1)(1)		6,726		1,260		4,204		1,262		---
Sub-total	$	208,191	$	54,178	$	79,559	$	28,615	$	45,839
Future purchase of revenue equipment	$	90,826	$	35,234	$	48,988	$	1,597	$	5,006
Employment and consulting agreements(2)		1,142		891		251		---		---
Standby Letters of Credit		5,600		5,600		---		---		---
Total	$	305,759	$	95,903	$	128,798	$	30,212	$	50,845

(1)	Includes interest.
(2)	The amounts reflected in the table do not include amounts that could become payable to our Chief Executive Officer and Chief Financial Officer under certain circumstances if their employment by the Company is terminated.

Seasonality

The truckload industry historically is affected by economic seasonality. During the winter months, there is generally a slow start down after the holiday season. Seasonality generally follows the retail buying seasons and building and construction seasons.

Inflation

Many of our operating expenses, including fuel costs, revenue equipment, and driver compensation, are sensitive to the effects of inflation, which result in higher operating costs and reduced operating income. The effects of inflation on our business during the past three years were most significant in fuel. The effects of inflation on revenue were not material in the past three years. We have limited the effects of inflation through increases in freight rates and fuel surcharges.

18

Item 3.Quantitative and Qualitative Disclosures about Market Risk

We experience various market risks, including changes in interest rates, foreign currency exchange rates, and fuel prices. We do not enter into derivatives or other financial instruments for trading or speculative purposes, nor when there are no underlying related exposures.

Interest Rate Risk. At March 31, 2006, we have no debt outstanding on our primary credit facility, and therefore, we have no market risk related to debt. All other debt is fixed rate debt, therefore, we have no market risk related to that debt.

Foreign Currency Exchange Rate Risk. We are subject to foreign currency exchange rate risk, specifically in connection with our Canadian operations. While virtually all of the expenses associated with our Canadian operations, such as independent contractor costs, Company driver compensation, and administrative costs, are paid in Canadian dollars, a significant portion of our revenue generated from those operations is billed in U.S. dollars because many of our customers are U.S. shippers transporting goods to or from Canada. As a result, increases in the Canadian dollar exchange rate adversely affect the profitability of our Canadian operations. Assuming revenue and expenses for our Canadian operations identical to that in the nine months ended March 31, 2006 (both in terms of amount and currency mix), we estimate that a $0.01 increase in the Canadian dollar exchange rate would reduce our annual net income by approximately $232,000.

We generally do not face the same magnitude of foreign currency exchange rate risk in connection with our intra-Mexico operations conducted through our Mexican subsidiary, Jaguar, because our foreign currency revenues are generally proportionate to our foreign currency expenses for those operations. For purposes of consolidation, however, the operating results earned by our subsidiaries, including Jaguar, in foreign currencies are converted into United States dollars. As a result, a decrease in the value of the Mexican peso could adversely affect our consolidated results of operations. Assuming revenue and expenses for our Mexican operations identical to that in the nine months ended March 31, 2006 (both in terms of amount and currency mix), we estimate that a $0.01 decrease in the Mexican peso exchange rate would reduce our annual net income by approximately $63,000.

In response to increases in Canadian dollar exchange rates, we have from time-to-time entered into derivative financial instruments to reduce our exposure to currency fluctuations. In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments and Certain Hedging Activities." In June 2000, the FASB issued SFAS 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activity, an Amendment of SFAS 133." SFAS 133 and SFAS 138 require that all derivative instruments be recorded on the balance sheet at their respective fair values. Derivatives that are not hedges must be adjusted to fair value through earnings. As of March 31, 2006, we had no currency derivatives in place.

Commodity Price Risk. As of March 31, 2006, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.

Item 4. Controls and Procedures

As required by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company has carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. This evaluation was carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q. There were no changes in the Company’s internal control over financial reporting that occurred during the third quarter of fiscal 2006 that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

19

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding disclosures.

The Company has confidence in its disclosure controls and procedures. Nevertheless, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all errors or intentional fraud. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

20

Part II.   Other Information

Item 1.Legal Proceedings

There are various claims, lawsuits, and pending actions against the Company and its subsidiaries which arose in the normal course of the operations of its business. The Company believes many of these proceedings are covered in whole or in part by insurance and that none of these matters will have a material adverse effect on its consolidated financial position or results of operations in any given period.

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

The Company held its regular Annual Meeting of Stockholders (the "Annual Meeting") on January 12, 2006. At the Annual Meeting, stockholders representing 9,203,579 shares or 91.27% of the total outstanding shares of Common Stock were present in person or by proxy at the Annual Meeting and voted on three proposals. All share numbers set forth in this Item 4 have not been adjusted to give effect to our three-for-two stock dividend declared on January 18, 2006.  A tabulation of the votes with respect to each proposal follows:

Proposal 1 - Election of Directors (to serve a one-year term)

	Voted For	Vote Withheld
Stephen Russell	8,059,998	1,143,581
Paul A. Biddelman	8,061,287	1,142,292
Michael Miller	8,239,928	963,651
Anthony Heyworth	8,033,237	1,170,342

Proposal 2 - Adoption of the 2006 Omnibus Incentive Plan

Voted For	Voted Against	Abstain
6,407,845	1,014,819	10,415

Proposal 3 - Adoption of the Amended and Restated Certificate of Incorporation

Voted For	Voted Against	Abstain
5,288,807	3,904,527	10,245

Item 6. Exhibits

3.1	Amended and Restated Certificate of Incorporation of the Company. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ending December 31, 2005, filed with the SEC on January 30, 2006.)
3.2	Certificate of Designation for Series A Junior Participating Preferred Stock. (Incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2000, filed with the SEC on September 28, 2000.)
3.3	By-laws. (Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, Registration No. 33-72128, filed with the SEC on November 24, 1993.)
4.1	Amended and Restated Certificate of Incorporation of the Company.
4.2	Certificate of Designation for Series A Junior Participating Preferred Stock. (Incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2000, filed with the SEC on September 28, 2000.)
4.3	Rights Agreement, dated as of July 20, 2000, between Celadon Group, Inc. and Fleet National Bank, as Rights Agent. (Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A, filed with the SEC on July 20, 2000.)
4.4	By-laws. (Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, Registration No. 33-72128, filed with the SEC on November 24, 1993.)
10.22	Celadon Group, Inc., 2006 Omnibus Incentive Plan. (Incorporated by reference to Annex A to the Company’s definitive proxy statement, filed with the SEC on December 19, 2005.)
10.23	Celadon Group, Inc. Award Notice for Employees for Restricted Stock Awards.*

21

10.24	Celadon Group, Inc. Award Notice for Stephen Russell for Restricted Stock Award.*
10.25	Celadon Group, Inc. Award Notice for Employees for Incentive Stock Option Grants.*
10.26	Celadon Group, Inc. Award Notice for Non-Employee Directors for Non-Qualified Stock Option Grants.*
31.1	Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Stephen Russell, the Company’s Chief Executive Officer.*
31.2	Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Paul Will, the Company’s Chief Financial Officer.*
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Stephen Russell, the Company’s Chief Executive Officer.*
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Paul Will, the Company’s Chief Financial Officer.*
99	Private Securities Litigation Reform Act of 1995 Safe Harbor Compliance Statement for Forward-Looking Statements.*
________________________
* Filed herewith

22

SIGNATURES

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

	Celadon Group, Inc.
	(Registrant)
	/s/ Stephen Russell
	Stephen Russell
	Chairman of the Board and Chief Executive Officer
	/s/ Paul Will
	Paul Will
	Chief Financial Officer, Executive Vice President, Treasurer, and Assistant Secretary
Date:May 4, 2006

EX-10.23

Exhibit 10.23

CELADON GROUP, INC.

2006 OMNIBUS INCENTIVE PLAN

AWARD NOTICE

GRANTEE:
TYPE OF AWARD:	Restricted Stock Award
NUMBER OF SHARES:
DATE OF GRANT:

 1.Grant of Restricted Stock. This Award Notice serves to notify you that Celadon Group, Inc., a Delaware corporation (the “Company”), hereby grants to you, under the Company’s 2006 Omnibus Incentive Plan (the “Plan”), a Restricted Stock Award (the “Award”), on the terms and conditions set forth in this Award Notice and the Plan, of the number of shares set forth above (“Restricted Shares”) of the Company’s common stock, par value $0.033 per share (the “Common Stock”), set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available from the Company’s Chief Financial Officer upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice are defined in the Plan.

 2.Restrictions and Vesting. Subject to the terms and conditions set forth in this Award Notice and the Plan, provided you are still in the employment or service of the Company or any Subsidiary at that time, one or more portions of the Restricted Shares shall vest, and the restrictions thereon shall lapse, as of the dates specified in the table below (the “Vesting Dates”) if (and only if) the Company achieves at least the Adjusted Earnings Per Share (as defined below) indicated on the table below for the performance period applicable to each such Vesting Date. Any fractional share resulting from proration shall vest on the last Vesting Date. To the extent the Company achieves Adjusted Earnings Per Share equal to or greater than the target for any subsequent Vesting Date, then all shares eligible for vesting at such higher target level shall immediately vest; provided, however, with the exception of a Permitted Tax Sale (as hereinafter defined) any Restricted Shares that vest prior to the applicable regularly scheduled Vesting Date set forth below must be held by you (you cannot sell, transfer, or otherwise dispose such Restricted Shares) until after such regularly scheduled Vesting Date. A “Permitted Tax Sale” shall mean a sale of that number of Restricted Shares sufficient to pay taxes on the Restricted Shares that vested at an assumed 45% tax rate. Any Restricted Shares that do not vest as of a particular Vesting Date nevertheless shall be eligible for vesting, and shall vest, if the Company achieves the applicable Adjusted Earnings Per Share target for a subsequent Vesting Date.

  Adjusted EPS Performance Target       Vesting Date and Performance Period Percentage of Shares Subject to Vesting and Release from Restrictions for the Performance Period Ended on the Vesting Date

 For purposes of this Award Notice, “Adjusted Earnings Per Share” means the Company’s consolidated diluted earnings per share for the just completed fiscal year as set forth in the final audit for the Company’s consolidated group and adjusted up or down by the amount compensation expense is increased or decreased in such audit by changes in the Common Stock price reported by NASDAQ and the effect of any accelerated vesting of restricted stock awards.

 3.Determination of Vesting. Between the end of fiscal___ and ____ and the Vesting Date, the Company’s Compensation Committee (the “Committee”) shall review the Company’s financial statements to determine the Adjusted Earnings Per Share. Based upon that review and determination, the Committee shall then instruct the Company as to whether any of the Restricted Shares shall vest and be released from the restrictions thereon.

 4. Adjustment for Certain Events. The Yearly Performance Goal and number of Restricted Shares will be adjusted ratably in accordance with Section 6.2 of the Plan.

 5. Effect of Death or Other Termination of Employment. In the event of your death or the termination of your employment or service to the Company or any Subsidiary for any reason prior to the complete vesting of the Restricted Shares, including the review and determination of results by the Committee as provided in Section 3, the unvested portion of the Restricted Shares shall be forfeited as of the date of your death or such termination.

 6. Effect of Change In Control.

  (a)In General. Upon the occurrence of a Change In Control (as defined below), any unvested portion of the Restricted Shares shall immediately vest as of the date of the occurrence of such event.

2

  (b)“Change In Control” Defined. The term “Change In Control” means a change in control of the Company of a nature that would be required to be reported in response to Item 5.01 of a Current Report on Form 8-K, as in effect on December 31, 2004, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:

 (i)Any “person” within the meaning of Section 14(d)(2) of the Exchange Act and Section 13(d)(3) of the Exchange Act, other than a Permitted Holder becomes the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of fifty percent (50%) or more of the combined voting power of the outstanding securities of the Company ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such acquisition, more than seventy-five percent (75%) of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of the Company ordinarily having the right to vote in the election of directors;

 (ii)Individuals who constitute the Board on January 12, 2006, (the “Incumbent Board”) have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director after January 12, 2006, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least three-fourths (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director without objection to such nomination (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened “election contest” relating to the election of directors of the Company, as such terms are used in Rule 14a-11 under the Exchange Act as in effect on January 23, 2000, or “tender offer,” as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;

 (iii)Upon the consummation by the Company of a reorganization, merger, or consolidation, other than one with respect to which all or substantially all of those persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of the Company ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than seventy-five percent (75%) of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or

 (iv) Upon the approval by the Company’s stockholders of a complete liquidation and dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company other than to a Subsidiary.

  (c)“Permitted Holder” Defined. The term “Permitted Holder” means: (i) the Company or a Subsidiary or (ii) any employee benefit plan sponsored by the Company or any Subsidiary.

3

 7.Book-Entry Registration. The Restricted Shares initially will be evidenced by book-entry registration only, without the issuance of a certificate representing the Restricted Shares.

 8.Issuance of Shares. Subject to Sections 9 and 13 of this Award Notice, upon the vesting of any Restricted Shares pursuant to this Award Notice, the Company shall issue a certificate representing such vested Restricted Shares as promptly as practicable following the date of vesting. The Restricted Shares may be issued during your lifetime only to you, or after your death to your designated beneficiary, or, in the absence of such beneficiary, to your duly qualified personal representative.

 9.Withholding. You shall pay to the Company, or make other arrangements satisfactory to the Company regarding the payment of, any federal, state, or local taxes of any kind required by applicable law to be withheld with respect to the Restricted Shares awarded under this Award Notice. Your right to receive the Restricted Shares under this Award Notice is subject to, and conditioned on, your payment of such withholding amounts.

 10.Nonassignability. The Restricted Shares and the right to vote such shares and to receive dividends thereon, may not, except as otherwise provided in the Plan, be sold, assigned, transferred, pledged, or encumbered in any way prior to the vesting of such shares, whether by operation of law or otherwise, except by will or the laws of descent and distribution. After vesting, the sale or other transfer of the shares of Common Stock shall be subject to applicable laws, regulations, and stock exchange or quotation system rules.

 11. Rights as a Stockholder; Limitation on Rights. Unless the Award is cancelled as provided in Section 5 or 6 of this Award Notice, prior to the vesting of the Restricted Shares, you will have all of the other rights of a stockholder with respect to the Restricted Shares so awarded, including, but not limited to, the right to receive such cash dividends, if any, as may be declared on such shares from time to time and the right to vote (in person or by proxy) such shares at any meeting of stockholders of the Company. Neither the Plan, the granting of the Award, nor this Award Notice gives you any right to remain in the employment or service of the Company or any Subsidiary.

 12.Rights of the Company and Subsidiaries. This Award Notice does not affect the right of the Company or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize, or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.

 13.Restrictions on Issuance of Shares. If at any time the Company determines that the listing, registration, or qualification of the Restricted Shares upon any securities exchange or quotation system, or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the issuance of a certificate representing any vested Restricted Shares, such issuance may not be made in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to the Company.

4

 14.Plan Controls. This Award is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules, and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.

 15.Amendment. Except as otherwise provided by the Plan, the Company may only alter, amend, or terminate this Award with your consent.

 16.Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of Delaware, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.

 17.Notices. All notices and other communications to the Company required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to the Company’s office at 9503 East 33^rd Street, One Celadon Drive, Indianapolis, Indiana 46235, Attn: Chief Financial Officer. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answer back is received.

5

ACKNOWLEDGEMENT

The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him or her and the Company regarding the Restricted Stock granted by this Award Notice and that this Award Notice and the Plan supersede all prior oral and written agreements on that subject.

Dated: _______________, 20___
	Grantee:
	Celadon Group, Inc.
	By:
	Name:
	Title:

Back to Form 10-Q

6

EX-10.24

Exhibit 10.24

CELADON GROUP, INC.

2006 OMNIBUS INCENTIVE PLAN

AWARD NOTICE

GRANTEE:	Stephen Russell
TYPE OF AWARD:
NUMBER OF SHARES:
DATE OF GRANT:

 1.Grant of Restricted Stock. This Award Notice serves to notify you that Celadon Group, Inc., a Delaware corporation (the “Company”), hereby grants to you, under the Company’s 2006 Omnibus Incentive Plan (the “Plan”), a Restricted Stock Award (the “Award”), on the terms and conditions set forth in this Award Notice and the Plan, of the number of shares set forth above (“Restricted Shares”) of the Company’s common stock, par value $0.033 per share (the “Common Stock”), set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available from the Company’s Chief Financial Officer upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice and not otherwise defined herein are defined in the Plan.

 2. Restrictions and Vesting. Subject to the terms and conditions set forth in this Award Notice and the Plan, provided you are still in the employment or service of the Company or any Subsidiary at that time, one or more portions of the Restricted Shares shall vest, and the restrictions thereon shall lapse, as of the dates specified in the table below (the “Performance Period”) if (and only if) the Company achieves at least the Adjusted Earnings Per Share (as defined below) indicated on the table below for the performance period applicable to each such Performance Period. Any fractional share resulting from proration shall vest on the last Vesting Date. To the extent the Company achieves Adjusted Earnings Per Share equal to or greater than the target for any subsequent Vesting Date, then all shares eligible for vesting at such higher target level shall immediately vest; provided, however, with the exception of a Permitted Tax Sale (as hereinafter defined) any Restricted Shares that vest prior to the applicable regularly scheduled Vesting Date set forth below must be held by you (you cannot sell, transfer, or otherwise dispose such Restricted Shares) until after such regularly scheduled Vesting Date. A “Permitted Tax Sale” shall mean a sale of that number of Restricted Shares sufficient to pay taxes on the Restricted Shares that vested at an assumed 45% tax rate. Any Restricted Shares that do not vest as of a particular Vesting Date nevertheless shall be eligible for vesting, and shall vest, if the Company achieves the applicable Adjusted Earnings Per Share target for a subsequent Vesting Date.

Adjusted EPS Performance Target       Vesting Date and Performance Period Percentage of Shares Subject to Vesting and Release from Restrictions for the Performance Period Ended on the Vesting Date

 For purposes of this Award Notice, “Adjusted Earnings Per Share” means the Company’s consolidated diluted earnings per share for the just completed fiscal year as set forth in the final audit for the Company’s consolidated group and adjusted up or down by the amount compensation expense is increased or decreased in such audit by changes in the Common Stock price reported by NASDAQ and the effect of any accelerated vesting of restricted stock awards.

 3.Determination of Vesting. Between the end of fiscal___ and ___ and the Vesting Date, the Company’s Compensation Committee (the “Committee”) shall review the Company’s financial statements to determine the Adjusted Earnings Per Share. Based upon that review and determination, the Committee shall then instruct the Company as to whether any of the Restricted Shares shall vest and be released from the restrictions thereon.

 4.Adjustment for Certain Events. The Adjusted Earnings Per Share and number of Restricted Shares will be adjusted ratably in accordance with Section 6.2 of the Plan.

 5.Effect of Death or Other Termination of Employment. Anything to the contrary notwithstanding, if you are an employee for any portion of a fiscal year, and you die or become Disabled (as hereinafter defined) (an "Extraordinary Event") prior to the vesting date for such fiscal year, you (or if deceased or incapacitated your estate or representative or guardian) shall receive (i) all shares of restricted stock that have vested prior to the Extraordinary Event but have not yet been delivered; (ii) all shares of restricted stock that have not vested prior to the Extraordinary Event, but for which the related Performance Period has ended and the Committee subsequently determines the Adjusted Earnings Per Share target for such Performance Period is met; (iii) all shares of restricted stock that are eligible for regularly scheduled vesting for the Performance Period in which the Extraordinary Event takes place; and (iv) to the extent accelerated as a result of performance for the Performance Period in which year of Extraordinary Event takes place, all shares that became

2

accelerated. “Disabled” shall mean the Committee’s good faith determination that you are unable to perform your assigned duties due to physical or mental illness or disease for 120 substantially consecutive days, or 180 days in any twelve month period. The shares under items (i) and (iii) shall be delivered promptly following the Extraordinary Event and the shares under items (ii) and (iv) shall be delivered promptly following determination that such acceleration was earned. Any shares received as a result of an Extraordinary Event shall be immediately transferable.

 6. Effect of Change In Control.

  (a)In General. Upon the occurrence of a Change In Control (as defined below), any unvested portion of the Restricted Shares shall immediately vest as of the date of the occurrence of such event.

  (b) “Change In Control” Defined. The term “Change In Control” means a change in control of the Company of a nature that would be required to be reported in response to Item 5.01 of a Current Report on Form 8-K, as in effect on December 31, 2004, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:

 (i)Any “person” within the meaning of Section 14(d)(2) of the Exchange Act and Section 13(d)(3) of the Exchange Act, other than a Permitted Holder becomes the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of fifty percent (50%) or more of the combined voting power of the outstanding securities of the Company ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such acquisition, more than seventy-five percent (75%) of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of the Company ordinarily having the right to vote in the election of directors;

 (ii)Individuals who constitute the Board on January 12, 2006, (the “Incumbent Board”) have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director after January 12, 2006, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least three-fourths (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director without objection to such nomination (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened “election contest” relating to the election of directors of the Company, as such terms are used in Rule 14a-11 under the Exchange Act as in effect on January 23, 2000, or “tender offer,” as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;

3

 (iii)Upon the consummation by the Company of a reorganization, merger, or consolidation, other than one with respect to which all or substantially all of those persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of the Company ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than seventy-five percent (75%) of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or

 (iv) Upon the approval by the Company’s stockholders of a complete liquidation and dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company other than to a Subsidiary.

  (c)“Permitted Holder” Defined. The term “Permitted Holder” means: (i) the Company or a Subsidiary or (ii) any employee benefit plan sponsored by the Company or any Subsidiary.

 7. Book-Entry Registration. The Restricted Shares initially will be evidenced by book-entry registration only, without the issuance of a certificate representing the Restricted Shares.

 8.Issuance of Shares. Subject to Sections 9 and 13 of this Award Notice, upon the vesting of any Restricted Shares pursuant to this Award Notice, the Company shall issue a certificate representing such vested Restricted Shares as promptly as practicable following the date of vesting. The Restricted Shares may be issued during your lifetime only to you, or after your death to your designated beneficiary, or, in the absence of such beneficiary, to your duly qualified personal representative.

 9.Withholding. You shall pay to the Company, or make other arrangements satisfactory to the Company regarding the payment of, any federal, state, or local taxes of any kind required by applicable law to be withheld with respect to the Restricted Shares awarded under this Award Notice. Your right to receive the Restricted Shares under this Award Notice is subject to, and conditioned on, your payment of such withholding amounts.

 10. Nonassignability. The Restricted Shares and the right to vote such shares and to receive dividends thereon, may not, except as otherwise provided in the Plan, be sold, assigned, transferred, pledged, or encumbered in any way prior to the vesting of such shares, whether by operation of law or otherwise, except by will or the laws of descent and distribution. After vesting, the sale or other transfer of the shares of Common Stock shall be subject to applicable laws, regulations, and stock exchange or quotation system rules.

 11.Rights as a Stockholder; Limitation on Rights. Unless the Award is cancelled as provided in Section 5 or 6 of this Award Notice, prior to the vesting of the Restricted Shares, you will have all of the other rights of a stockholder with respect to the Restricted Shares so awarded, including, but not limited to, the right to receive such cash dividends, if any, as may be declared on such shares from time to time and the right to vote (in person or by proxy) such shares at any meeting of stockholders of the Company. Neither the Plan, the granting of the Award, nor this Award Notice gives you any right to remain in the employment or service of the Company or any Subsidiary.

4

 12.Rights of the Company and Subsidiaries. This Award Notice does not affect the right of the Company or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize, or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.

 13. Restrictions on Issuance of Shares. If at any time the Company determines that the listing, registration, or qualification of the Restricted Shares upon any securities exchange or quotation system, or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the issuance of a certificate representing any vested Restricted Shares, such issuance may not be made in whole or in part unless and until such listing, registration, qualification or approval shall have been effected or obtained free of any conditions not acceptable to the Company.

 14.Plan Controls. This Award is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules, and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.

 15.Amendment. Except as otherwise provided by the Plan, the Company may only alter, amend, or terminate this Award with your consent.

 16.Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of Delaware, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.

 17. Notices. All notices and other communications to the Company required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to the Company’s office at 9503 East 33^rd Street, One Celadon Drive, Indianapolis, Indiana 46235, Attn: Chief Financial Officer. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answer back is received.

5

ACKNOWLEDGEMENT

The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him or her and the Company regarding the Restricted Stock granted by this Award Notice and that this Award Notice and the Plan supersede all prior oral and written agreements on that subject.

Dated: _______________, 20___
	Grantee:
	Celadon Group, Inc.
	By:
	Name:
	Title:

Back to Form 10-Q

6

EX-10.25

Exhibit 10.25

CELADON GROUP, INC.

2006 OMNIBUS INCENTIVE PLAN

AWARD NOTICE

GRANTEE:
TYPE OF AWARD:	Incentive Stock Option (See below and refer to the Plan and your Section 10(a) prospectus for limitations)
NUMBER OF SHARES:
EXERCISE PRICE PER SHARE:
DATE OF GRANT:
EXPIRATION DATE:

 1.Grant of Option. This Award Notice serves to notify you that Celadon Group, Inc., a Delaware corporation (the “Company”), hereby grants to you, under the Company’s 2006 Omnibus Incentive Plan (the “Plan”), an option (the “Option”) to purchase, on the terms and conditions set forth in this Award Notice and the Plan, up to the number of shares set forth above (the “Option Shares”) of the Company’s Common Stock, par value $0.033 per share (the “Common Stock”), at the price per Share set forth above. It is the Company's intention that the Option qualify as an incentive stock option, as defined in Section 422A of the Code to the extent possible. To the extent the entire Option will not so qualify (for example because the value of the portion of the Option first vesting in any year exceeds the dollar limitation for incentive stock options) then the maximum portion of the Option (each year) shall be deemed an incentive stock option and the remainder shall be deemed a non-qualified stock option. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available from the Company’s Accounting Department upon request. You should review the terms of this Award Notice and the Plan carefully. The capitalized terms used in this Award Notice are defined in the Plan.

 2.Term. Unless the Option is previously terminated pursuant to the terms of the Plan, the Option will expire at the close of business on the expiration date set forth above (the “Expiration Date”).

 3.Vesting. Subject to the terms and conditions set forth in this Award Notice and the Plan, the Option will vest and become exercisable commencing on ___________, in accordance with the following schedule:

  Vesting Date Cumulative Percentage of Option Shares Vested

 4.Exercise.

  (a)Method of Exercise. To the extent exercisable under Section 3, the Option may be exercised in whole or in part, provided that the Option may not be exercised for less than one (1) share of Common Stock in any single transaction. The Option shall be exercised by your giving written notice of such exercise to the Company specifying the number of Option Shares that you elect to purchase and the Exercise Price to be paid. Upon determining that compliance with this Award Notice has occurred, including compliance with such reasonable requirements as the Company may impose pursuant to the Plan and payment of the Exercise Price, the Company shall issue to you a certificate for the Option Shares purchased on the earliest practicable date (as determined by the Company) thereafter.

  (b)Payment of Exercise Price. To the extent permissible under the Plan, the Exercise Price may be paid as follows:

 (i)  In United States dollars in cash or by check, bank draft, or money order payable to the Company;

 (ii) At the sole discretion of the Company’s Compensation Committee (the “Committee”), through the delivery of shares of Common Stock with an aggregate Fair Market Value at the date of such delivery equal to the Purchase Price;

(iii) At the sole discretion of the Committee, through a surrender of part of the Option or other exercisable options having a difference between (A) the exercise price of such surrendered Options and (B) the Fair market Value of the Common Stock equal to the Exercise Price; or

 (iv) At the sole discretion of the Committee, in any combination of Sections 4(b)(i), 4(b)(ii), and 4(b)(iii) above.

The Committee in its sole discretion shall determine acceptable methods for surrendering Common Stock or options as payment upon exercise of the Option and may impose such limitations and conditions on the use of Common Stock or options to exercise the Option as it deems appropriate. Among other factors, the Committee will consider the restrictions of Rule 16b-3 of the Exchange Act and Section 402 of the Sarbanes-Oxley Act, and any successor laws, rules, or regulations.

2

  (c) Withholding. The exercise of the Option is conditioned upon your making arrangements satisfactory to the Company for the payment to the Company of the amount of all taxes required by any governmental authority to be withheld and paid over by the Company to the governmental authority on account of the exercise. The payment of such withholding taxes to the Company may be made by one or any combination of the following methods: (a) in cash or by check, or (b) by the Company withholding such taxes from any other compensation owed to you by the Company or any Subsidiary.

 5.Effect of Death. In the event of your death prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within one (1) year after the date of your death, but only: (a) by the beneficiary designated on your beneficiary designation form filed with the Company, or in the absence of same, by your estate or by or on behalf of the person or persons to whom the Option passes under your will or the laws of descent and distribution, (b) to the extent that the Option was vested and exercisable on the date of your death, and (c) prior to the close of business on the Expiration Date of the Option.

 6.Effect of Disability. In the event of your Disability (as defined below) prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within one (1) year after the date of your Disability, but only: (a) to the extent that the Option was vested and exercisable on the date of your Disability, and (b) prior to the close of business on the Expiration Date of the Option. The term “Disability” means you are permanently and totally disabled within the meaning of Section 22(e)(3) of the Code.

 7. Effect of Other Termination.

  (a) With Cause. Upon your termination by the Company for Cause (as defined below) prior to the complete exercise of the Option, the remaining portion of the Option, whether or not then exercisable, shall be forfeited as of the date of such termination and shall no longer be exercisable on or after such date of termination.

  (b)Without Cause. Upon your termination for a reason other than death, Disability, or Cause (as defined below) prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within three (3) months after the date of such termination, but only: (i) to the extent that the Option was vested and exercisable on the date such termination, and (ii) prior to the Expiration Date of the Option.

  (c)“Cause” Defined. The term “Cause” means (i) your willful and continued failure to substantially perform your duties with the Company or a Subsidiary after written warnings identifying the lack of substantial performance are delivered to you to specifically identify the manner in which the Company or a Subsidiary believes that you have not substantially performed

3

your duties, (ii) your willful engaging in illegal conduct which is materially and demonstrably injurious to the Company or any Subsidiary, (iii) your commission of a felony, (iv) your material breach of a fiduciary duty owed by you to the Company or any Subsidiary, (v) your intentional, unauthorized disclosure to any person of confidential information or trade secrets of a material nature relating to the business of the Company or any Subsidiary, or (vi) your engaging in any conduct that the Company’s or a Subsidiary’s written rules, regulations, or policies specify as constituting grounds for discharge.

 8. Effect of Change In Control.

  (a) In General. Upon the occurrence of a Change In Control (as defined below), the unvested portion of the Option shall immediately vest and become exercisable as of the date of the occurrence of such event.

  (b) “Change In Control” Defined. The term “Change In Control” means a change in control of the Company of a nature that would be required to be reported in response to Item 5.01 of a Current Report on Form 8-K, as in effect on December 31, 2004, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:

 (i) Any “person” within the meaning of Section 14(d)(2) of the Exchange Act and Section 13(d)(3) of the Exchange Act, other than a Permitted Holder becomes the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of fifty percent (50%) or more of the combined voting power of the outstanding securities of the Company ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such acquisition, more than seventy-five percent (75%) of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of the Company ordinarily having the right to vote in the election of directors;

 (ii) Individuals who constitute the Board on January 12, 2006, (the “Incumbent Board”) have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to January 12, 2006 whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least three-fourths (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director without objection to such nomination (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened “election contest” relating to the election of directors of the Company, as such terms are used in Rule 14a-11 under the Exchange Act as in effect on January 23, 2000, or “tender offer,” as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;

4

 (iii) Upon the consummation by the Company of a reorganization, merger, or consolidation, other than one with respect to which all or substantially all of those persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of the Company ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than seventy-five percent (75%) of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or

 (iv) Upon the approval by the Company’s stockholders of a complete liquidation and dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company other than to a Subsidiary.

  (c) “Permitted Holder” Defined. The term “Permitted Holder” means: (i) the Company or a Subsidiary or (ii) any employee benefit plan sponsored by the Company or any Subsidiary.

 9. Notice of Disposition of Shares. You hereby agree that you shall promptly notify the Company of the disposition of any of the Option Shares acquired upon exercise of the Option, including a disposition by sale, exchange, gift, or transfer of legal title, if such disposition occurs within two (2) years from the Date of Grant or within one (1) year from the date that you exercise the Option and acquire such Option Shares.

 10.  Nonassignability. The Option may not be alienated, transferred, assigned, or pledged (except by will or the laws of descent and distribution). Except as otherwise provided by Section 5 of this Award Notice, the Option is only exercisable by you during your lifetime.

 11.  Limitation of Rights. You will not have any rights as a stockholder with respect to the Option Shares until you become the holder of record of such shares by exercising the Option. Neither the Plan, the granting of the Option, nor this Award Notice gives you any right to remain in the employment of the Company or any Subsidiary.

 12. Rights of the Company and Subsidiaries. This Award Notice does not affect the right of the Company or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize, or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock, or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.

 13. Restrictions on Issuance of Shares. If at any time the Company determines that the listing, registration, or qualification of the Option Shares upon any securities exchange or quotation system, or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the exercise of the Option, the Option may not be exercised in whole or in part unless and until such listing, registration, qualification, or approval shall have been effected or obtained free of any conditions not acceptable to the Company.

5

 14. Plan Controls. The Option is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules, and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.

 15. Amendment. Except as otherwise provided by the Plan, the Company may only alter, amend, or terminate the Option with your consent.

 16.  Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of Delaware, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.

 17. Notices. All notices and other communications to the Company required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to the Company’s office at 9503 East 33^rd Street, One Celadon Drive, Indianapolis, Indiana 46235, Attention: Chief Financial Officer. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answer back is received.

* * * * * * * * * *

6

ACKNOWLEDGEMENT

The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him or her and the Company regarding the incentive stock options granted by this Award Notice and that this Award Notice and the Plan supercede all prior oral and written agreements on that subject.

Dated: _______________, 20___
	Grantee:
	Celadon Group, Inc.
	By:
	Name:
	Title:

Back to Form 10-Q

7

EX-10.26

Exhibit 10.26

CELADON GROUP, INC.

2006 OMNIBUS INCENTIVE PLAN

AWARD NOTICE

GRANTEE:
TYPE OF AWARD:	Non-Qualified Stock Option (Non-employee Directors)
NUMBER OF SHARES:
EXERCISE PRICE PER SHARE:
DATE OF GRANT:
EXPIRATION DATE:

 1. Grant of Option. This Award Notice serves to notify you that Celadon Group, Inc., a Delaware corporation (the “Company”), hereby grants to you, under the Company’s 2006 Omnibus Incentive Plan (the “Plan”), an option (the “Option”) to purchase, on the terms and conditions set forth in this Award Notice and the Plan, up to the number of shares set forth above (the “Option Shares”) of the Company’s Common Stock, par value $0.033 per share (the “Common Stock”), at the price per Share set forth above. The Plan is incorporated herein by reference and made a part of this Award Notice. A copy of the Plan is available from the Company’s Accounting Department upon request. You should review the terms of this Award Notice and not otherwise defined herein and the Plan carefully. The capitalized terms used in this Award Notice are defined in the Plan.

 2. Term. Unless the Option is previously terminated pursuant to the terms of the Plan, the Option will expire at the close of business on the expiration date set forth above (the “Expiration Date”).

 3. Vesting. Subject to the terms and conditions set forth in this Award Notice and the Plan, the Option will vest and become exercisable commencing on__________, in accordance with the following schedule:

  Vesting Date Cumulative Percentage of Option Shares Vested

 4. Exercise.

  (a)  Method of Exercise. To the extent exercisable under Section 3, the Option may be exercised in whole or in part, provided that the Option may not be exercised for less than one (1) share of Common Stock in any single transaction. The Option shall be exercised by your giving written notice of such exercise to the Company specifying the number of Option Shares that you elect to purchase and the Exercise Price to be paid. Upon determining that compliance with this Award Notice has occurred, including compliance with such reasonable requirements as the Company may impose pursuant to the Plan and payment of the Exercise Price, the Company shall issue to you a certificate for the Option Shares purchased on the earliest practicable date (as determined by the Company) thereafter.

  (b)  Payment of Exercise Price. To the extent permissible under the Plan, the Exercise Price may be paid as follows:

 (i)In United States dollars in cash or by check, bank draft, or money order payable to the Company;

 (ii) At the sole discretion of the Company’s Compensation Committee (the “Committee”), through the delivery of shares of Common Stock with an aggregate Fair Market Value at the date of such delivery equal to the Purchase Price;

 (iii) At the sole discretion of the Committee, through the surrender of part of the Option or other exercisable options having a difference between (A) the exercise price of such surrendered Options and (B) the Fair Market Value of the Common Stock equal to the Exercise Price; or

 (iv) At the sole discretion of the Committee, in any combination of Sections 4(b)(i), 4(b)(ii), and 4(b)(iii) above.

The Committee in its sole discretion shall determine acceptable methods for surrendering Common Stock or options as payment upon exercise of the Option and may impose such limitations and conditions on the use of Common Stock or options to exercise the Option as it deems appropriate. Among other factors, the Committee will consider the restrictions of Rule 16b-3 of the Exchange Act and Section 402 of the Sarbanes-Oxley Act, and any successor laws, rules, or regulations.

  (c) Withholding. The exercise of the Option is conditioned upon your making arrangements satisfactory to the Company for the payment to the Company of the amount of all taxes required by any governmental authority to be withheld and paid over by the Company to the governmental authority on account of the exercise. The payment of such withholding taxes to the Company may be made by one or any combination of the following methods: (a) in cash or by check, or (b) by the Company withholding such taxes from any other compensation owed to you by the Company or any Subsidiary.

 5. Effect of Death. In the event of your death prior to the complete exercise of the Option, the remaining portion of the Option may be exercised in whole or in part, subject to all of the conditions on exercise imposed by the Plan and this Award Notice, within one (1) year after the date of your death, but only: (a) by the beneficiary designated on your beneficiary designation form filed with the Company, or in the absence of same, by your estate or by or on behalf of the person or persons to whom the Option passes under your will or the laws of descent and distribution, (b) to the extent that the Option was vested and exercisable on the date of your death, and (c) prior to the close of business on the Expiration Date of the Option.

 6.  Effect of Change In Control.

  (a) In General. Upon the occurrence of a Change In Control (as defined below), the unvested portion of the Option shall immediately vest and become exercisable as of the date of the occurrence of such event.

  (b) “Change In Control” Defined. The term “Change In Control” means a change in control of the Company of a nature that would be required to be reported in response to Item 5.01 of a Current Report on Form 8-K, as in effect on December 31, 2004, pursuant to Section 13 or 15(d) of the Exchange Act; provided that, without limitation, a Change In Control shall be deemed to have occurred at such time as:

 (i)  Any “person” within the meaning of Section 14(d)(2) of the Exchange Act and Section 13(d)(3) of the Exchange Act, other than a Permitted Holder becomes the “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of fifty percent (50%) or more of the combined voting power of the outstanding securities of the Company ordinarily having the right to vote in the election of directors; provided, however, that the following will not constitute a Change In Control: any acquisition by any corporation if, immediately following such acquisition, more than seventy-five percent (75%) of the outstanding securities of the acquiring corporation (or the parent thereof) ordinarily having the right to vote in the election of directors is beneficially owned by all or substantially all of those persons who, immediately prior to such acquisition, were the beneficial owners of the outstanding securities of the Company ordinarily having the right to vote in the election of directors;

 (ii)  Individuals who constitute the Board on January 12, 2006 (the “Incumbent Board”) have ceased for any reason to constitute at least a majority thereof, provided that any person becoming a director after January 12, 2006 whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least three-fourths (3/4) of the directors comprising the Incumbent Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director without objection to such nomination (other than an election or nomination of an

2

individual whose initial assumption of office is in connection with an actual or threatened “election contest” relating to the election of directors of the Company, as such terms are used in Rule 14a-11 under the Exchange Act, as in effect on January 23, 2000, or “tender offer,” as such term is used in Section 14(d) of the Exchange Act), shall be, for purposes of the Plan, considered as though such person were a member of the Incumbent Board;

 (iii) Upon the consummation by the Company of a reorganization, merger, or consolidation, other than one with respect to which all or substantially all of those persons who were the beneficial owners, immediately prior to such reorganization, merger or consolidation, of outstanding securities of the Company ordinarily having the right to vote in the election of directors own, immediately after such transaction, more than seventy-five percent (75%) of the outstanding securities of the resulting corporation ordinarily having the right to vote in the election of directors; or

 (iv)  Upon the approval by the Company’s stockholders of a complete liquidation and dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company other than to a Subsidiary.

 (c)  “Permitted Holder” Defined. The term “Permitted Holder” means: (i) the Company or a Subsidiary or (ii) any employee benefit plan sponsored by the Company or any Subsidiary.

 7.  Nonassignability. The Option may not be alienated, transferred, assigned, or pledged (except by will or the laws of descent and distribution). Except as otherwise provided by Section 5 of this Award Notice, the Option is only exercisable by you during your lifetime.

 8. Limitation of Rights. You will not have any rights as a stockholder with respect to the Option Shares until you become the holder of record of such shares by exercising the Option.

 9. Rights of the Company and Subsidiaries. This Award Notice does not affect the right of the Company or any Subsidiary to take any corporate action whatsoever, including without limitation its right to recapitalize, reorganize, or make other changes in its capital structure or business, merge or consolidate, issue bonds, notes, shares of Common Stock, or other securities, including preferred stock, or options therefor, dissolve or liquidate, or sell or transfer any part of its assets or business.

 10. Restrictions on Issuance of Shares. If at any time the Company determines that the listing, registration, or qualification of the Option Shares upon any securities exchange or quotation system, or under any state or federal law, or the approval of any governmental agency, is necessary or advisable as a condition to the exercise of the Option, the Option may not be exercised in whole or in part unless and until such listing, registration, qualification, or approval shall have been effected or obtained free of any conditions not acceptable to the Company.

 11. Plan Controls. The Option is subject to all of the provisions of the Plan, which is hereby incorporated by reference, and is further subject to all the interpretations, amendments, rules, and regulations that may from time to time be promulgated and adopted by the Committee pursuant to the Plan. In the event of any conflict among the provisions of the Plan and this Award Notice, the provisions of the Plan will be controlling and determinative.

3

 12. Amendment. Except as otherwise provided by the Plan, the Company may only alter, amend, or terminate the Option with your consent.

 13. Governing Law. This Award Notice shall be governed by and construed in accordance with the laws of the State of Delaware, except as superseded by applicable federal law, without giving effect to its conflicts of law provisions.

 14. Notices. All notices and other communications to the Company required or permitted under this Award Notice shall be written, and shall be either delivered personally or sent by registered or certified first-class mail, postage prepaid and return receipt requested, or by telex or telecopier, addressed to the Company’s office at 9503 East 33^rd Street, One Celadon Drive, Indianapolis, Indiana 46235, Attention: Chief Financial Officer. Each such notice and other communication delivered personally shall be deemed to have been given when delivered. Each such notice and other communication delivered by mail shall be deemed to have been given when it is deposited in the United States mail in the manner specified herein, and each such notice and other communication delivered by telex or telecopier shall be deemed to have been given when it is so transmitted and the appropriate answer back is received.

* * * * * * * * * *

4

ACKNOWLEDGEMENT

The undersigned acknowledges receipt of, and understands and agrees to be bound by, this Award Notice and the Plan. The undersigned further acknowledges that this Award Notice and the Plan set forth the entire understanding between him or her and the Company regarding the incentive stock options granted by this Award Notice and that this Award Notice and the Plan supercede all prior oral and written agreements on that subject.

Dated: _______________, 20___
	Grantee:
	Celadon Group, Inc.
	By:
	Name:
	Title:

Back to Form 10-Q

5

EX-31.1

Exhibit 31.1

I, Stephen Russell, certify that:

1.   I have reviewed this Form 10-Q of Celadon Group, 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 (c)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

 (d)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 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: May 4, 2006	/s/ Stephen Russell
	Stephen Russell
	Chairman of the Board and Chief Executive Officer

Back to Form 10-Q

EX-31.2

Exhibit 31.2

I, Paul Will, certify that:

1.  I have reviewed this Form 10-Q of Celadon Group, 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 (c)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

 (d)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 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: May 4, 2006	/s/ Paul Will
	Paul Will
	Chief Financial Officer, Executive Vice President, Treasurer, and Assistant Secretary

Back to Form 10-Q

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Celadon Group, Inc., a Delaware corporation (the "Company"), on Form 10-Q for the period ending March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen Russell, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

	/s/ Stephen Russell
	Stephen Russell
	Chairman of the Board and Chief Executive Officer
Date: May 4, 2006

Back to Form 10-Q

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Celadon Group, Inc., a Delaware corporation (the "Company"), on Form 10-Q for the period ending March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul Will, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

	/s/ Paul Will
	Paul Will
	Chief Financial Officer, Executive Vice President, Treasurer, and Assistant Secretary
Date: May 4, 2006

Back to Form 10-Q

EX-99

Exhibit 99

Private Securities Litigation Reform Act of 1995

Safe Harbor Compliance Statement for Forward-Looking Statements 

This Quarterly Report contains certain statements that may be considered "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may be identified by the use of words such as "believe," "expect," "anticipate," "intend," "project," "forecast," "may," "will," "should," "could," "estimate," "plan," "outlook," "goal," "potential," "continue," "future," and similar expressions. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Actual results may differ from those set forth in the forward-looking statements.

Important factors currently known to management that could cause actual results or events to differ materially from those expressed in or implied by forward-looking statements include, but are not limited to, the following: excess tractor and trailer capacity in the trucking industry; decreased demand for our services or loss of one or more of our major customers; surplus inventories; recessionary economic cycles and downturns in customers’ business cycles; strikes, work slow downs, or work stoppages at our facilities, or at customer, port, border crossing, or other shipping related facilities; increases or rapid fluctuations in fuel prices, as well as fluctuations in hedging activities and surcharge collection, and the volume and terms of diesel purchase commitments; increase in interest rates, fuel taxes, tolls, and license and registration fees; fluctuations in foreign currency exchange rates; increases in the prices paid for new revenue equipment; increases in interest rates or decreased availability of capital or other sources of financing for revenue equipment; decreases in the resale value of our used equipment and our increased exposure to losses upon disposition on the growing percentage of our tractor fleet not covered by manufacturer commitments; increases in compensation for and difficulty in attracting and retaining qualified drivers and independent contractors, including challenges associated with immigration restrictions; increases in insurance premiums and deductible amounts; elevated experience in the frequency or severity of claims relating to accident, cargo, workers’ compensation, health, and other matters; fluctuations in claims expenses that result from high self-insured retention amounts and differences between estimates used in establishing and adjusting claims reserves and actual results over time; seasonal factors such as harsh weather conditions that increase operating costs; competition from trucking, rail, and intermodal competitors; regulatory requirements that increase costs or decrease efficiency, including revised hours-of-service requirements for drivers and new emissions control regulations; our ability to identify acceptable acquisition candidates, consummate acquisitions, integrate acquired operations; and retain the customers and drivers of acquired companies, the timing of, and any rules relating to, the opening of the border to Mexican drivers; challenges associated with doing business internationally; our ability to retain key employees; the effects of actual or threatened military action or terrorist attacks or responses, including security measures that may impede shipping efficiency, especially at border crossings; and our ability to execute our strategic plan.

For a more detailed discussion of these factors, please refer to the "Factors that May Affect Future Results" section of Celadon’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005, filed with the Securities and Exchange Commission on August 26, 2005.

Forward-looking statements express expectations of future results or events. All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events, conditions and circumstances and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those expressed in or implied by forward looking statements. Due to these inherent uncertainties, the investment community is urged not to place undue reliance on forward-looking statements. In addition, Celadon undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in projections over time.

Back to Form 10-Q