For More Information: Craig M. Koven Communications Manager (800) CELADON, Ext. 7041 317-972-7041 Direct 317-408-4859 Mobile ckoven@celadongroup.com FOR RELEASE January 21, 2009 4:01 p.m. ET  

CELADON GROUP REPORTS SECOND FISCAL QUARTER FINANCIAL RESULTS

INDIANAPOLIS – Celadon Group, Inc. (NASDAQ:CLDN) today reported its financial and operating results for the three and six months ended December 31, 2008, the second fiscal quarter of the company's fiscal year ending June 30, 2009.

Revenue for the quarter decreased 13.7% to $119.6 million in the 2008 quarter from $138.6 million in the 2007 quarter.  Freight revenue, which excludes fuel surcharges, was down 14.0% to $98.5 million in the 2008 quarter from $114.5 million in the 2007 quarter. Net income was unchanged at $1.7 million in both the 2008 and 2007 quarters. Earnings per diluted share was unchanged at $0.08 in both the 2008 and 2007 quarters.

For the six months ended December 31, 2008 revenue decreased 2.2% to $266.5 million in 2008 from $272.4 million for the same period last year.  Freight revenue, which excludes fuel surcharges, was down 9.0% to $207.8 million in 2008 from $228.4 million for the same period last year.  Net income increased 7.1% to $4.5 million in 2008 from $4.2 million for the same period last year.  Earnings per diluted share increased by 11.1% to $0.20 in 2008 from $0.18 for the same period last year.

Chairman and CEO Steve Russell said, "Since September, we've seen a significant fall off in demand, particularly import volumes out of Mexico, as the weakening U.S. economy has dramatically reduced Mexican exports to the U.S.  Although the devaluation of the Mexican peso and increased costs associated with imported goods from China should make Mexico far more competitive, this change has not yet translated to an increase in Mexican production.  As a consequence of the fall-off in the U.S. economy, we experienced a significant decline in loaded miles run, as well as an increase in empty miles.    We were able to offset the adverse impact of these changes through effective cost management.  A major improvement in miles per gallon has been achieved through lowering tractor speeds, improved tractor aerodynamics, added auxiliary heaters, implementation of a strict tractor idling policy, renegotiation of bulk fuel purchasing arrangements, and counseling of our drivers in more efficient driving patterns.  Further, we have benefited by a decline in diesel prices.  We have also been effective at cost controls in virtually all areas of our business.  Although we have seen a significant reduction in capacity in the truckload industry, through fleet failures and the lack of new class 8 tractors being built, demand has declined at a greater rate.  

"Late in the quarter, we acquired the tractors and trailers of Continental Express Inc. of Little Rock, AR for $24.1 million.  We have been successful at retaining many customers, and added less than half of their drivers.  Continental had about 130 non-driver employees and about thirty of these employees were hired as Celadon employees.  At the same time we were engaged in a comprehensive efficiency effort at Celadon that reduced approximately 35 non-driver employees across the company.  As a result, we added a substantial customer base and the Continental terminal facility in Little Rock without a net increase in our consolidated non-driver employee base.  

"Our balance sheet debt and capital lease obligations have been reduced by over $18 million during the six months ended December 31, 2008.  At December 31, 2008, our balance sheet reflected $84.3 million in borrowings and capitalized leases and $143.8 million of total stockholders' equity.  With $32.3 million available on our bank revolving credit line at December 31, 2008, coupled with our current cash flow from operations, we believe we have adequate liquidity for the foreseeable future."

Conference Call Information

An investor conference call is scheduled for Thursday, January 22, at 10:00 a.m. ET.  Steve Russell and other members of management will discuss the results of the quarter.  To listen and participate in the question-and-answer exchange, dial 866-383-7998 (international calls 617-597-5329), code 23656581 a few minutes prior to the starting time.  A replay will be available through March 22 by dialing 888-286-8010 (international calls 617-801-6888) and entering call back code 86691726.

This call is being webcast by CCBN and can be accessed on Celadon's web site at www.celadongroup.com.  Any statistical and financial information that is discussed during the conference call also will be available.

Celadon Group Inc. (www.celadongroup.com), through its subsidiaries, primarily provides long-haul, full-truckload freight service across the United States, Canada and Mexico. The company also owns TruckersB2B Inc. (www.truckersb2b.com) which provides cost savings to member fleets, and Celadon Dedicated Services, which provides supply chain management solutions, such as warehousing and dedicated fleet services.

This press release and statements made by Celadon in its stockholder reports and public filings, as well as oral public statements by Celadon representatives, contain certain forward-looking information, usually identified by words such as "anticipates," "believes," "estimates," "projects,"  "intends," "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.  In this press release, the statements relating to our liquidity position are forward-looking statements.  Such items have not been subject to all of the review procedures associated with the release of actual financial results and are premised on certain assumptions.  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, border crossing, 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.

For a more detailed discussion of these factors, please refer to the various disclosures made by the company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission.

- tables follow -

Consolidated Balance Sheets

(Dollars in thousands, except par value)

		December 31, 2008				June 30, 2008
ASSETS		(unaudited)
Current assets:
Cash and cash equivalents		$	82			$	2,325
Trade receivables, net of allowance for doubtful accounts of $1,217 and $1,194 at December 31, 2008 and June 30, 2008, respectively			48,010				69,513
Prepaid expenses and other current assets			11,961				16,697
Tires in service			4,268				3,765
Income tax receivable			2,441				5,846
Deferred income taxes			3,904				3,035
Total current assets			70,666				101,181
Property and equipment			281,407				270,832
Less accumulated depreciation and amortization			71,423				64,633
Net property and equipment			209,984				206,199
Tires in service			1,430				1,483
Goodwill			19,137				19,137
Other assets			1,268				1,335
Total assets		$	302,485			$	329,335
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	6,356			$	6,910
Accrued salaries and benefits			8,906				11,358
Accrued insurance and claims			9,056				9,086
Accrued fuel expense			4,788				12,170
Other accrued expenses			11,532				11,916
Current maturities of long-term debt			5,831				8,290
Current maturities of capital lease obligations			6,545				6,454
Total current liabilities			53,014				66,184
Long-term debt, net of current maturities			33,199				45,645
Capital lease obligations, net of current maturities			38,729				42,117
Deferred income taxes			33,745				31,512
Minority interest			25				25
Stockholders' equity:
Common stock, $0.033 par value, authorized 40,000,000 shares; issued 23,889,936 and 23,704,046 shares at December 31, 2008 and June 30, 2008, respectively			788				782
Treasury stock at cost; 1,772,685 and 1,832,386 shares at December 31, 2008 and June 30, 2008, respectively			(12,221	)			(12,633	)
Additional paid-in capital			96,116				95,173
Retained earnings			65,348				60,881
Accumulated other comprehensive loss			(6,258	)			(351	)
Total stockholders' equity			143,773				143,852
Total liabilities and stockholders' equity		$	302,485			$	329,335

Key Operating Statistics

		For the three months ended								For the six months ended
		December 31,								December 31,
		2008				2007				2008				2007
Average revenue per loaded mile (*)		$	1.485			$	1.499			$	1.492			$	1.502
Average revenue per total mile (*)		$	1.308			$	1.345			$	1.330			$	1.345
Average revenue per tractor per week (*)		$	2,306			$	2,721			$	2,478			$	2,700
Average miles per tractor per week			1,762				2,023				1,862				2,007
Average line-haul tractors			2,758				2,687				2,692				2,695
Tractors at end of period (**)			3,109				2,916				3,109				2,916
Trailers at end of period (**)			10,075				8,848				10,075				8,848
Operating Ratio (*)			95.6	%			95.8	%			94.6	%			95.3	%

*Freight revenue excluding fuel surcharge.

** Total fleet, including equipment operated by independent contractors and our Mexican subsidiary, Jaguar.

CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share amounts)

		For the three months ended December 31,								For the six months ended December 31,
		2008				2007				2008				2007
Revenue:
Freight revenue		$	98,538			$	114,525			$	207,827			$	228,378
Fuel surcharges			21,108				24,084				58,687				44,010
			119,646				138,609				266,514				272,388
Operating expenses:
Salaries, wages, and employee benefits			37,824				38,837				79,154				77,165
Fuel			29,882				37,523				77,948				71,045
Operations and maintenance			8,846				9,165				18,234				17,601
Insurance and claims			3,250				4,507				6,869				8,048
Depreciation and amortization			8,647				7,560				16,679				15,425
Revenue equipment rentals			6,977				6,677				13,040				13,649
Purchased transportation			12,759				21,595				28,520				43,565
Costs of products and services sold			1,566				1,712				3,134				3,436
Communications and utilities			1,131				1,252				2,348				2,483
Operating taxes and licenses			2,340				2,239				4,724				4,400
General and other operating			2,070				2,693				4,558				4,771
Total operating expenses			115,292				133,760				255,208				261,588
Operating income			4,354				4,849				11,306				10,800
Other (income) expense:
Interest income			(5	)			(6	)			(12	)			(25	)
Interest expense			1,022				1,197				2,124				2,511
Other (income) expense, net			(13	)			65				(10	)			109
Income before income taxes			3,350				3,593				9,204				8,205
Provision for income taxes			1,652				1,870				4,737				3,981
Net income		$	1,698			$	1,723			$	4,467			$	4,224
Earnings per common share:
Diluted earnings per share		$	0.08			$	0.08			$	0.20			$	0.18
Basic earnings per share		$	0.08			$	0.08			$	0.21			$	0.18
Average shares outstanding:
Diluted			22,162				22,893				22,096				23,323
Basic			21,746				22,635				21,664				23,050