Celadon Group Reports Q1 EPS 2 Cents vs. Year-Earlier Loss.

Business Editors

INDIANAPOLIS--(BUSINESS WIRE)--Oct. 31, 2001

Celadon Group Reports Q1 EPS 2 Cents vs. Year-Earlier Loss

-- Revenue Of $82.9 Million Up 6% From Adjusted Prior-Year Level

-- Revenue Miles Increase About 4%

-- TruckersB2B Posts Operating Profit Vs. Loss

Celadon Group, Inc. (Nasdaq: CLDN) today reported net income for the quarter ended September 30, 2001, increased to $141,000, or two cents per diluted share, compared with a loss of $470,000, or six cents per diluted share, in the prior year's comparable period. Consolidated revenue for the three months ended September 30, 2001 was $82.9 million, about a 6 percent increase over an adjusted $78.3 million reported for the same period a year earlier. Including revenues from the recently divested flatbed division and higher pass-through revenues related to U.S. border-crossing costs, reported revenue in the prior year's comparable period was $88.4 million.

Celadon Group reported income before taxes of $401,000 for the quarter ended September 30, 2001, compared to a loss before taxes of $595,000 in the prior-year September quarter, an improvement of $996,000. Approximately $380,000 of this improvement in income before taxes is a result of the Company's early adoption of the provisions of Financial Accounting Standards Board "FASB" Statement No. 142, effective July 1, 2001. This statement requires that goodwill no longer be amortized over an arbitrary useful life, as it was in the corresponding quarter of the prior year. The Company is in the process of reviewing the value of its recorded goodwill in accordance with this statement. Due to non-deductible expenses, which increase the effective tax rate on income when profits are at the current level, income taxes represented 65 percent of pre-tax earnings, rather than approximately 40 percent that is the Company's statutory rate.

Trucking, TruckersB2B Operating Income Up

Trucking operating income increased from $2.2 million in the September 2000 quarter, excluding Cheetah, to $2.4 million in the September 2001 quarter. TruckersB2B generated operating income of $111,000 in the September 2001 period compared with a loss of $686,000 in the prior year's comparable quarter.

"Despite a much more difficult economic climate in the United States in 2001, we were able to grow revenue miles by close to 4 percent, and revenue on an adjusted basis by 6 percent for the quarter ended September 30, 2001," said Steve Russell, Chairman and Chief Executive Officer. "A broadened customer base, caused in part by the exiting of between 5 and 10 percent of industry capacity due to a 'Perfect Storm' that the industry suffered in the past two years, bodes well for the Company, assuming the U.S. economy does not sink further. Further, significant fuel price declines that began late in the September 2001 quarter have continued through October. We are also hopeful that the Mexican border will open to allow Mexican drivers into the U.S. in January 2002."

Russell added, "Insurance costs increased as a result of higher reinsurance premiums, despite a recent report that ranked the Company best of the twelve largest publicly traded truckload carriers from a Department of Transportation ratings standpoint."

Revenue at TruckersB2B increased by 39 percent to $1.3 million in the September 2001 quarter, from $0.9 million in the September 2000 quarter. Michael Dunlap, COO of TruckersB2B, said, "Revenue continued to grow in the current quarter due to growth in existing fleets as well as from the addition of new fleets. Revenue represents only rebates and fees. The amount of product moved through our network totaled about $40 million in the quarter. EBITDA was over $145,000, and we have now demonstrated six months of consistent profitability."

Cost Controls, Operating Improvement Help Reduce Debt

Paul Will, Chief Financial Officer, added, "We have continued to control costs and make positive changes in the business that have allowed us to pay down our debt by over $23 million in the past twelve months, while operating in a difficult economic environment. We feel that our reduced debt level, lower fuel and interest costs as well as decreased capacity in the marketplace, will allow us to continue to improve our profitability during the remaining part of our fiscal year 2002."

Celadon reported that TruckersB2B now has over 310,000 member trucks enrolled, represented by over 9,600 separate companies in the U.S. and Canada.

Celadon Group Inc., is a trucking and e-commerce company headquartered in Indianapolis, IN. The Company operates approximately 2,400 line haul tractors and 6,900 trailers. Please visit the company's websites at: www.celadontrucking.com and www.truckersb2b.com.

Conference Call Information

An investor conference call is scheduled for today, October 31, 2001, at 11:00 a.m. (Eastern). Stephen Russell will discuss the year end results, as well as the outlook for the rest of the year. To listen and participate in a questions-and-answers exchange, simply dial [phone] at least five minutes prior to the start time. Otherwise, you may listen to the call via website: http://www.tirc.com/invest/celadon/index.htm.

The discussion set forth above as well as oral statements made by officers of the company relating thereto, may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such comments are based upon information currently available to management and management's perception thereof as of the date of this press release. Actual results of the company's operations could materially differ from those forward-looking statements. Such differences could be caused by a number of factors including, but not limited to, potential adverse affects of regulation; changes in competition and the effects of such changes; increased competition; change in fuel prices; changes in economic, political or regulatory environments; changes in the availability of a stable labor force; ability of the company to hire drivers meeting company standards; changes in management strategies; environmental or tax matters; and risks described from time to time in reports filed by the company with the Securities and Exchange Commission. Readers should take these factors into account in evaluating any such forward-looking statements.

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For additional information on Celadon Group, Inc. free of charge via the Internet, please go to http://www.tirc.com/invest/celadon/index.htm

                  Celadon Group, Inc. (Nasdaq: CLDN)
                    Consolidated Operating Results
                              (Unaudited)
               (In thousands, except per share amounts)

                                                Three Months Ended
                                             9/30/01         9/30/00

Revenue
Truckload                                 $   81,609      $   87,518
  TruckersB2B                                  1,261             909
                                           ---------       ---------
Total Revenue                                 82,870          88,427

Operating income (loss)
  Truckload                                    2,376           2,435
  TruckersB2B                                    111            (686)
                                           ---------       ---------
Total operating income                         2,487           1,749

Other (income) expense:
  Other expense                                    7              33
  Interest expense                             2,109           2,359
  Interest income                                (30)            (36)
  Minority interest in subsidiary                ---             (12)
                                           ---------       ---------
    Income (loss) before tax                     401            (595)
    Provision for income taxes (benefit)         260            (125)
                                           ---------       ---------

  Net income (loss)                       $      141      $    (470)
                                           =========       =========

Earnings (loss) per Common Share:
  Diluted                                 $     0.02      $    (0.06)
                                           =========       =========
  Basic                                   $     0.02      $    (0.06)
                                           =========       =========

Weighted average number of
 Common Shares outstanding
  Diluted                                  7,563,519       7,783,603
                                           =========       =========
  Basic                                    7,739,642       7,783,603
                                           =========       =========


                          Balance Sheet Data
                            (In thousands)

                                             As of           As of
                                            9/30/01         6/30/01
                                          (Unaudited)

Total assets                              $  187,314      $  194,916

Total Debt (current and long-term)        $   99,344      $  105,245

Stockholders' equity                      $   51,925      $   52,063