INDIANAPOLIS, Ind. — Celadon Group Inc. today reported a revenue increase of 12.9% for the three months ended September 30, 2005, the first fiscal quarter of the Company’s fiscal year

Revenue for the quarter rose to $117.9 million in the 2005 quarter from $104.4 million in the 2004 quarter.

Freight revenue, which excludes fuel surcharges, was up 5.3% to $103.3 million in the 2005 quarter from $98.1 million in the 2004 quarter. Net income increased 67.9% to $4.7 million in the 2005 quarter from $2.8 million for the same quarter last year. Diluted earnings per share improved by 66.7% to $0.45 in the 2005 quarter from $0.27 for the same quarter last year.

The September quarter marked the highest earnings per share in the history of the Company.

“The September quarter reflected accelerating profitability through improved freight mix, higher average freight revenue per mile, lower maintenance costs as a consequence of reduced average age of equipment and continued success in driver retention. Freight demand was good during the quarter,” said Chairman and CEO Steve Russell. “In addition, we believe industry capacity continues to be constrained by the ongoing driver shortage, as well as by the financial constraints that high fuel prices place on many small to mid-sized carriers that lack buying power and adequate fuel surcharge programs. These factors contributed to a 7.3% increase in average freight revenue per loaded mile, to $1.48 in the September 2005 quarter from $1.38 in the same quarter last year. Average freight revenue per tractor per week improved 3.9%, to $2,976 from $2,864.”

Russell said the favorable freight market also helped Celadon to continue to diversify its customer base.

“Our largest customer during the quarter represented only 3% of our business. Our top 50 customers represented approximately 50% of our business,” he noted.

During the quarter driver turnover was below 70% on an annualized basis in the September 2005 quarter. This level compares with an industry average large fleet driver turnover rate of 125%, according to the American Trucking Associations.

Higher revenue per truck and continued focus on safety and cost controls allowed Celadon to improve its operating ratio by 240 basis points to 92.2% in the September 2005 quarter from 94.6% in the September 2004 quarter, according to Russell.

“In addition, the September 2005 operating ratio of 92.2% represents a sequential improvement over the June 2005 operating ratio of 92.9%, we define as total operating expenses, net of fuel surcharges, as a percentage of freight revenue,” he said.

At September 30, 2005, Celadon had $6.3 million in cash and cash equivalents, $7.4 million in balance sheet borrowing and capitalized leases, and $103.7 million in stockholders’ equity, for a ratio of net debt-to-total capitalization of 1.0%.

“During 2006, we intend to maintain the average age of our tractor fleet to afford us flexibility in addressing possible cost, and fuel mileage, and reliability issues involving tractor engines designed to comply with stricter emissions requirements in 2007,” Russell said.