8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

October 6, 2006

__________________________________________________________________

CELADON GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-23192	13-3361050
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

9503 East 33rd Street One Celadon Drive, Indianapolis, IN	46235
(Address of principal executive offices)	(Zip Code)

(317) 972-7000

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[   ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[   ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[   ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into a Material Definitive Agreement.

The disclosures set forth under Item 2.01 of this Current Report on Form 8-K are incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On Friday, October 6, 2006, a wholly owned subsidiary of Celadon Group, Inc., a Delaware corporation (the “Company”), entered into and closed an Asset Purchase Agreement (the “Agreement”) with Erin Truckways LTD., d/b/a Digby Truck Lines Inc. (“Digby”). The Agreement provides for the purchase of the truckload business and approximately 270 tractors and 590 trailers of Digby for approximately $21 million. The acquisition was funded with available borrowing under the Company’s revolving line of credit.

There was no material relationship between Digby and the Company or any of the Company’s affiliates, directors, or officers, or any associate of the Company’s directors or officers.

Item 7.01 Regulation FD Disclosure.

On Monday, October 9, 2006, the Company issued a press release announcing the acquisition. The full text of the press release, dated October 9, 2006, is attached as Exhibit 99 to this Current Report on Form 8-K and is incorporated by reference herein. The information in this Item 7.01 and in Exhibit 99 to this report shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

The information in this report and the exhibit hereto may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements are made based on the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results or events may differ from those anticipated by forward-looking statements. Please refer to the last paragraph of the attached press release and various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission for information concerning risks, uncertainties, and other factors that may affect future results.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits.
	EXHIBIT
	NUMBER	EXHIBIT DESCRIPTION
	99	Celadon Group, Inc. press release announcing acquisition

SIGNATURE

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 hereunto duly authorized.

		CELADON GROUP, INC.
Date: October 12, 2006	By:	/s/ Stephen Russell
		Stephen Russell
		Chairman and Chief Executive Officer

EXHIBIT INDEX

EXHIBIT NUMBER	EXHIBIT DESCRIPTION
99	Celadon Group, Inc. press release announcing acquisition

EX-99

Exhibit 99

9503 East 33^rd Street Indianapolis, IN 46235-4207 (800) CELADON (317) 972-7000

For more information:	FOR IMMEDIATE RELEASE
Craig M. Koven	October 9, 2006
Communications Manager
(800) CELADON Ext. 3812
(317) 972-7041 Direct
(317) 408-4859 Mobile
ckoven@celadontrucking.com

CELADON GROUP ANNOUNCES ACQUISITION OF

TRUCKLOAD VAN ASSETS FROM DIGBY TRUCK LINES

INDIANAPOLIS - Celadon Group Inc. (Nasdaq: CLDN) announced that on Friday, Oct. 6, 2006, one of its wholly-owned subsidiaries purchased the truckload business and approximately 270 tractors and 590 trailers of Erin Truckways LTD., d/b/a Digby Truck Lines Inc. (“Digby”) for approximately $21 million. In addition, Celadon offered employment to approximately 150 qualified drivers. According to the seller’s unaudited financial statements, the Nashville, Tennessee-based transportation company generated approximately $48 million in gross revenue in 2005.

Steve Russell, Chairman and Chief Executive Officer, stated, “We are delighted with the Digby acquisition and expect it to follow the pattern established in our CX Roberson and Highway Express acquisitions during the past few years. In those acquisitions, as in this one, our goals are to continue to broaden our customer base with quality customers, add density in our primary traffic lanes, and gain a significant number of experienced drivers.

"Based on our evaluation of the business, we believe Digby had a core group of quality customers and drivers, but suffered from the excessive cost structure that plagues many mid-sized carriers. We expect to integrate the acquired operations promptly. As part of the integration process, we expect to optimize the combined customer, driver, and equipment base to improve asset productivity. We believe we can enhance the service to Digby’s former customers through an upgraded equipment fleet, excellent technology, more available assets for dispatch, and an outstanding safety record.

"At Celadon, our driver turnover has been significantly better than the industry average over the past few years, and we plan to work hard to retain the Digby drivers. To assist in this goal, as well as to adhere to our existing equipment strategy, we plan to retain approximately 90 of the newest tractors and approximately 180 of the newest trailers from the acquisition and dispose of the balance. In the short-term, the additional Digby drivers will retain their units until seated with newer equipment. We believe this strategy will allow us to focus on enhancing our freight mix, assist with driver retention and minimize the risk of unseated tractors following the acquisition. We expect the acquired operations to be accretive beginning in the December 2006 quarter."

Celadon will hold a conference call to discuss its fiscal first quarter financial and operating results and the impact of the acquisition on Friday, Oct. 20, 2006, at 10:00 a.m. ET. Participants may join the conference by dialing 800-510-0178 pin # 22842534 a few minutes prior to the starting time. A replay will be available through Dec. 20, 2006 by dialing 888-286-8010 and entering call back code 24185881.

Founded in 1985, Celadon Group Inc. (www.celadongroup.com) is a truckload carrier headquartered in Indianapolis that operates in the U.S., Canada and Mexico. Celadon also owns TruckersB2B Inc. (www.truckersb2b.com) which provides cost savings to about 20,000 member fleets.

###

This press release and statements made by Celadon in its stockholder reports and public filings, as well as oral public statements by Celadon representatives, may contain certain forward-looking information, usually identified by words such as "anticipates," "believes," "estimates," "projects," "expects," “plans,” or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Celadon's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in forward-looking statements. With respect to the acquisition, the risks and uncertainties include, but are not limited to, the risk that integration of the acquired operation will not proceed as planned; the risk that Celadon will lose key components of the acquired operation, including customers and drivers, none of whom is bound to remain with the acquired operation; the risk that Celadon will not be able to improve the profitability of the acquired operation and operate it near the level of Celadon's profitability; the risk of receiving less than expected for tractors and trailers expected to be disposed of and recording a loss on disposal of such equipment; the risk of unknown liabilities related to the acquired operation; the risk that acquired operations will not be accretive to earnings per share on the schedule or at all; and the risk that integrating and managing the acquired operation will distract management from other operations. With respect to general business operations, the following factors, among others, could cause actual results to differ materially from those in forward-looking statements: 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, or other shipping related facilities; our ability to execute our strategic plan; increases in compensation for and difficulty in attracting and retaining qualified drivers and independent contractors; 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; increases or rapid fluctuations in fuel prices, as well as fluctuations in hedging activities and surcharge collection, the volume and terms of diesel purchase commitments, 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; 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; our ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations; 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; and 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. Readers should review and consider the various disclosures made by Celadon in this press release, stockholder reports, and in its Forms 10-K, 10-Q, and other public filings. Celadon disclaims any such obligation to update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.

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