<PAGE>

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                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

           [ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                     For the fiscal year ended June 30, 2003
         [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of the
                         SECURITIES EXCHANGE ACT OF 1934
            For the transition period from ________ to ______________

                         Commission file number: 0-23192

                               CELADON GROUP, INC.
             (Exact name of Registrant as specified in its charter)

           DELAWARE                                          13-3361050
(State or other jurisdiction of                           (I.R.S. Employer
 Incorporation or organization)                        Identification Number)

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

       Registrant's telephone number, including area code: (317) 972-7000
        Securities registered pursuant to Section 12(b) of the Act: NONE
           Securities registered pursuant to Section 12(g) of the Act:

                         COMMON STOCK ($0.033 PAR VALUE)
          SERIES A JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS

Indicate by check mark whether the registrant (1) has filed all reports required
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]

The aggregate market value of the Common Stock ($0.033 par value) held by
non-affiliates of the registrant (6,052,468 shares) was approximately
$81,345,170 (based upon the closing price of such stock on September 18, 2003).
The exclusion from such amount of the market value of the shares owned by any
person shall not be deemed an admission by the registrant that such person is an
affiliate of the registrant. The number of shares outstanding of the Common
Stock of the registrant as of the close of business on September 18, 2003 was
7,789,764.

                       Documents Incorporated by Reference
   Part III of Form 10-K - Portions of Definitive Proxy Statement for the 2003
                         Annual Meeting of Stockholders

<PAGE>

                               CELADON GROUP, INC.
                                    FORM 10-K

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                  ----
<S>                                                                               <C>
PART I

      ITEM 1.    Business.......................................................    3
      ITEM 2.    Properties.....................................................    9
      ITEM 3.    Legal Proceedings..............................................   10
      ITEM 4.    Submission of Matters to a Vote of Security Holders............   10

PART II

      ITEM 5.    Market for Registrant's Common Stock and Related
                     Stockholder Matters........................................   11
      ITEM 6.    Selected Financial Data........................................   12
      ITEM 7.    Management's Discussion and Analysis of Financial
                     Condition and Results of Operations........................   13
      ITEM 7A.   Quantitative and Qualitative Disclosures About
                     Market Risk................................................   20
      ITEM 8.    Financial Statements and Supplementary Data....................   21
      ITEM 9.    Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosure........................   50
      ITEM 9A.   Controls and Procedures........................................   50

PART III

      ITEM 10.   Directors and Executive Officers of the Registrant.............   50
      ITEM 11.   Executive Compensation.........................................   50
      ITEM 12.   Security Ownership of Certain Beneficial Owners
                        And Management Related to Stockholder Matters...........   50
      ITEM 13.   Certain Relationships and Related Transactions.................   50
      ITEM 14.   Principal Accountant Fees and Services.........................   50

PART IV

      ITEM 15.   Exhibits, Financial Statement Schedules
                        and Reports On Form 8-K.................................   51

INDEX TO EXHIBITS...............................................................   52

SIGNATURES......................................................................   54
</TABLE>

                                      - 2 -

<PAGE>

                                     PART I

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

         The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information in Items 1, 3, 7, 7A
and 8 of this Form 10-K constitutes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and, as such,
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. You can identify such statements by
the fact that they do not relate strictly to historical or current facts. These
statements use words such as "believe", "expect", "should", "estimates",
"planned", "outlook", "goal" and "anticipate." Because forward-looking
statements involve risks and uncertainties, the Company's actual results may
differ materially from the results expressed or implied by the forward-looking
statements. While it is impossible to identify all factors that may cause actual
results to differ, the risks and uncertainties that may affect the Company's
business, performance and results of operations include the factors listed on
Exhibit 99.3 to this report, which is incorporated herein by reference.
Subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements in this paragraph and elsewhere in this
Form 10-K.

         All such forward-looking statements speak only as of the date of this
Form 10-K. 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 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 subsidiaries.

ITEM 1.      BUSINESS

         Incorporated in 1986, we are one of the largest truckload carriers in
North America, with dedicated operations in the United States, Mexico and
Canada. Our focus is to excel in service, safety and technology as we move
time-sensitive freight in and between the North American Free Trade Agreement
("NAFTA") countries. In fiscal year 2003, we transported approximately 100,000
trailers across the United States-Mexico border and approximately 40,000 across
the United States-Canada border. We believe the Company is a leader in our
industry in cross-border movements within the NAFTA countries. Our strategically
located terminals and experience with different languages, cultures and border
crossing requirements, we believe, provide us with a competitive advantage in
the international trucking marketplace. These cross-border shipments represented
over 50% of our trucking revenue in fiscal 2003 and the balance is domestic
throughout the United States with first class customers.

         In recent years, we have focused on returning to and sustaining
profitability. We have added several experienced managers, implemented cost
reductions, and integrated the acquisitions made in the late 1990's. A lower
cost base from corporate integration and restructuring, coupled with
improvements in service, safety and technology has allowed us to improve our
operating ratio for the last three years. Our strategy is to maintain a
leadership position in cross-border shipments, broaden our domestic position
through selective opportunistic acquisitions, and continue our emphasis on
service, safety and technology.

                                      - 3 -

<PAGE>

         In December 2001, the United States Congress enacted legislation
providing for the opening of the Mexican border consistent with NAFTA, which was
approved in December 1994. The opening of the border will for the first time
permit Mexican drivers to move loads without restrictions between Mexico and
points in the United States. On January 16, 2003, the Federal Appeals Court
ruled that the border opening would be delayed pending an environmental study.
We have extensive experience with the management of drivers in Mexico, through
our ownership of Jaguar, our Mexico City-based subsidiary. We expect to take
advantage of the border opening by utilizing lower cost drivers on shipments to
and from Mexico.

SERVICE

         With our focus on time-sensitive, van truckload operations in and
between the United States, Canada and Mexico, the NAFTA countries, we play an
integral role in our customers' supply chain management. We offer
point-to-point, on-time, just in time, team service to meet the expectations of
our service-oriented customers. With the addition of certain assets of
Burlington Motor Carriers in 2002 and Highway Express in 2003, we have
significantly improved our lane density, customer base and service offerings.

SAFETY

         In March 2003, we were awarded first place in fleet safety among all
truckload fleets that log more than 100 million miles per year at the Truckload
Carrier Conference, the trucking industry's most recognized trade group. We were
also recognized, in March 2002, as the third best large fleet in America at the
Truckload Carrier Conference. In August 2001, The Trucker magazine ranked us as
the public truckload carrier with the best Department of Transportation rating.
Hours-of-service issues, log violations, and reportable accidents and incidents
have all been significantly reduced. As a result of our improved safety record,
we were approved in July 2002 by the Department of Transportation for
self-insured status.

TECHNOLOGY

         We use state-of-the-art technology for customer service, dispatch,
equipment control, driver communications, electronic data interchange and
administrative purposes. All of our tractors are equipped with Qualcomm mobile
communication terminals, which allow information to be passed to and from the
driver via satellite instantaneously. Customer order information, load tracking,
and service performance are all monitored using the latest in mobile
communication technology. Our ability to capture data also allows customers to
track their own shipments utilizing CelaTrac, a proprietary Internet based
tracking system. We believe that these network optimization tools and our
ability to monitor engine performance, speed, and idle time on a real time basis
by satellite technology allow us to reduce operating expenses. We have
implemented document imaging throughout the Company. This includes the scanning
of shipping documents by the drivers at our terminals and truck stops within our
fuel network. All key documents are available so that customers can retrieve
information via the Internet, e-mail or facsimile 24 hours a day, 7 days a week.

TRUCKERSB2B

         TruckersB2B, Inc., is a "business-to-business" membership group that
allows the smaller carriers in the trucking industry to achieve cost savings on
various purchases. There are approximately 14,300 fleets, representing 405,000
tractors, participating as members as of June 2003. Fuel, tires, satellite
systems, financing and other items are vendor products that are offered. Over
$10.9 million in rebates have been paid out to members since inception. After
expensing a loss of $6.2 million, before taxes, to start the business,
TruckersB2B has been profitable since April of 2001.

                                      - 4 -

<PAGE>

INDUSTRY OVERVIEW AND COMPETITION

         The full truckload market is defined by the quantity of goods,
generally over 10,000 pounds, shipped by a single customer point-to-point and is
divided into several segments by the type of trailer used to transport the
goods. These segments include van, temperature-controlled, flatbed, and tank
carriers. We participate in the North American van truckload market. The markets
within the United States, Canada, and Mexico are fragmented, with thousands of
competitors, none of whom dominates the market. We believe that the current
economic pressures will continue to force many smaller and private fleets into
mergers or to exit the industry.

         Transportation of goods by truck between the United States, Canada, and
Mexico is subject to the provisions of NAFTA. United States and Canadian based
carriers may operate within both countries. United States and Canadian carriers
are not allowed to operate within Mexico, and Mexican carriers are not allowed
to operate within the United States and Canada, in each case except for a
26-kilometer, or approximately 16 miles, band along either side of the Mexican
border. Trailers may cross all borders.

         Transportation of goods between the United States or Canada and Mexico
consists of three components: (i) transport from the point of origin to the
Mexican border, (ii) drayage, which is transportation across the border, and
(iii) transportation from the border to the final destination. We are one of a
limited number of trucking companies that participates in all three segments of
this cross border market, providing true door-to-door carriage.

         While the truckload industry is highly competitive and fragmented, we
are one of a limited number of companies that is able to provide or arrange for
door-to-door transport service between points in the United States, Canada and
Mexico. Although both service and price drive competition in the premium long
haul, time sensitive portion of the market, we rely primarily on our high level
of service to attract customers. This strategy requires us to focus on market
segments that employ just-in-time inventory systems and other premium services.
Competitors include other long-haul truckload carriers and, to a lesser extent,
medium-haul truckload carriers and railroads.

         TruckersB2B is a business-to-business savings program, for small and
mid-sized fleets. Competitors include other large trucking companies and other
business-to-business buying programs.

OPERATIONS AND MARKETING

         We approach our trucking operations as an integrated effort of
marketing, customer service, and fleet management. Our customer service and
marketing personnel emphasize both new account development and expanded service
for current customers. Customer service representatives provide day-to-day
contact with customers, while the sales force targets freight that will increase
lane density.

         We provide and arrange for long-haul, point-to-point, time sensitive,
full truckload transport of goods between the United States, Canada and Mexico.
Most international shipments are carried on through-trailer service on U.S. or
Canadian trailers. Mexican carriers also use our trailers. As a result, we
maintain an above average trailer-to-tractor ratio. We utilized 2,491 tractors
(of which 417 were owner operators and 110 were lease-purchase owner operators)
and 7,142 trailers as of June 30, 2003.

         Our success is largely 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

                                      - 5 -

<PAGE>

of duties, taxes or government royalties by foreign governments, are present but
largely mitigated by the terms of NAFTA. Information regarding the Company's
revenue derived from foreign external customers and long-lived assets located in
foreign countries is set forth in Note 12 to the consolidated financial
statements filed as part of this report.

         We target large service-sensitive customers with time-definite delivery
requirements throughout the United States, Canada and Mexico. Our customers
frequently ship in the north-south lanes (i.e., to and from locations in Mexico
and locations in the United States and Eastern Canada). The sales and marketing
personnel in our offices work together to source northbound and southbound
transport, in addition to other transportation solutions. We currently service
in excess of 3,900 trucking customers. Our premium service to these customers is
enhanced by a high trailer-to-tractor ratio, state-of-the-art technology,
well-maintained tractors and trailers, and 24/7 dispatch and reporting services.
The principal types of freight transported include automotive parts, paper
products, manufacturing parts, semi-finished products, textiles, appliances,
retail and toys.

         Our largest customer is DaimlerChrysler, which accounted for
approximately 12%, 19% and 20% of our total revenue for fiscal 2003, 2002 and
2001, respectively. We transport DaimlerChrysler original equipment automotive
parts primarily between the United States and Mexico, and DaimlerChrysler
after-market replacement parts and accessories within the United States. We have
an agreement with DaimlerChrysler for international freight for the Chrysler
division, which expires in October 2006. No other customer accounted for more
than 10% of our total revenue during any of our three most recent fiscal years.

         Our TruckersB2B subsidiary provides discounted fuel, tires, and other
products and services to small and medium-sized trucking companies through its
website, www.truckersb2b.com. TruckersB2B provides small and medium-sized
trucking company members with the ability to cut costs, and thereby compete more
effectively and profitably with the larger fleets.

DRIVERS AND PERSONNEL

         At June 30, 2003, we employed 2,968 persons, of whom 2,054 were
drivers, 160 were truck maintenance personnel, 591 were administrative personnel
and 163 were dedicated services personnel and TruckersB2B personnel. None of our
U.S. or Canadian employees are represented by a union or a collective bargaining
unit.

         Driver recruitment, retention, and satisfaction are essential
components of our success. Competition to recruit and retain drivers is intense
in the trucking industry. There has been and continues to be a shortage of
qualified drivers in the industry. Drivers are selected in accordance with
specific guidelines, relating primarily to safety records, driving experience,
and personal evaluations, including a physical examination and mandatory drug
testing. Our drivers attend an orientation program and ongoing driver efficiency
and safety programs. An increase in driver turnover can have a negative impact
on the results of operations.

         Owner-operators are independent contractors who are utilized through a
contract with us to supply one or more tractors and drivers for our use.
Owner-operators must pay their own tractor expenses, fuel, maintenance and
driver costs and must meet our specified guidelines with respect to safety. The
lease-purchase program provides owner operators the opportunity to lease-to-own
a tractor from the Company. As of June 30, 2003, there were 417 owner-operator
tractors and 110 lease-purchase owner-operator tractors providing a combined 21%
of our tractor capacity.

                                      - 6 -

<PAGE>

REVENUE EQUIPMENT

         Our equipment strategy is to utilize premium late-model tractors,
maintain a high trailer-to-tractor ratio, actively manage equipment throughout
its life cycle and employ a comprehensive service and maintenance program.

         Our fleet is comprised of tractors manufactured by Freightliner, Volvo
and Peterbilt to our specifications, which we believe helps to attract and
retain drivers and to minimize maintenance and repair costs.

         As of June 30, 2003, the average age of our owned and leased tractors
and trailers was approximately 2.7 and 6.1 years, respectively. We utilize a
comprehensive maintenance program to minimize downtime and control maintenance
costs. Centralized purchasing of spare parts and tires, and centralized control
of over-the-road repairs are also used to control costs. We historically
replaced our tractors every five years. Beginning in fiscal 2004, we began
replacing tractors after four years of service. By reducing the average age of
the tractors, we believe this will decrease our maintenance costs and enhance
our ability to recruit additional drivers. We further reduce exposure to
declines in the resale value of our equipment by entering into agreements with
certain manufacturers providing for pre-established resale values upon trade-in
of existing equipment. In fiscal 2004, we intend to reduce the average age of
our trailer fleet by replacing our older model trailers with newer units that
require less maintenance.

         The following table shows our revenue equipment by type and model year
at June 30, 2003:

<TABLE>
<CAPTION>
MODEL YEAR             TRACTORS         TRAILERS
----------             --------         --------
<S>                    <C>              <C>
   2004                    73               ---
   2003                   293               ---
   2002                    72                16
   2001                   390               437
   2000                   716             1,242
   1999                   273             1,158
   1998                    67               685
   1997                    23               330
   1996                    24             1,800
   1995                     6               978
 Pre-1995                  27               496
                        -----             -----
   Total                1,964             7,142
                        =====             =====
</TABLE>

         We maintain a 2.9 to 1 trailer-to-tractor ratio (including owner
operator and lease-purchase owner operator equipment) in order to provide
availability in Mexico and to allow us to leave trailers with our high volume
shippers to load and unload at their convenience. As of June 30, 2003, we had
339 tractors on order for delivery in fiscal 2004. Additional growth in the
tractor and trailer fleet beyond our existing orders will require additional
sources of financing. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."

                                      - 7 -

<PAGE>

FUEL

         We purchase the majority of our fuel through a network of over 100 fuel
stops throughout the United States and Canada. We have negotiated discounted
pricing based on certain volume commitments with these fuel stops. We maintain
bulk fueling facilities in Indianapolis, Laredo, and Kitchener, Ontario to
further reduce fuel costs.

         Shortages of fuel, increases in prices or rationing of petroleum
products can have a materially adverse effect on our operations and
profitability. Fuel is subject to economic, political and market factors that
are outside of our control. We have historically been able to recover a portion
of high fuel prices from customers in the form of fuel surcharges. However, a
portion of the fuel expense increase is not recovered due to several factors:
the base fuel price levels which determine when surcharges are collected, truck
idling, empty miles between freight shipments, and out-of-route miles. We cannot
predict whether high fuel price levels will occur in the future or the extent to
which fuel surcharges will be collected to offset such increases.

         We from time-to-time will enter into derivative financial instruments
to reduce our exposure to fuel price fluctuations. In June 1998, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (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. In accordance with SFAS 133, we
adjust our derivative instruments to fair value through earnings on a monthly
basis. As of June 30, 2003, we had 14% of estimated fuel purchases hedged
through August 2003. We recognized approximately $98,000 of expense associated
with derivative contracts for the year ended June 30, 2003.

REGULATION

         Our operations are regulated and licensed by various United States
federal and state, Canadian provincial and Mexican federal agencies. Interstate
motor carrier operations are subject to safety requirements prescribed by the
United States Department of Transportation (DOT). Such matters as weight and
equipment dimensions are also subject to United States federal and state
regulation and Canadian provincial regulations. We operate in the United States
throughout the 48 contiguous states pursuant to operating authority granted by
the Federal Highway Administration, in various Canadian provinces pursuant to
operation authority granted by the Ministries of Transportation and
Communications in such provinces, and within Mexico pursuant to operating
authority granted by Secretaria de Communiciones y Transportes. To the extent
that we conduct operations outside the United States, we are subject to the
Foreign Corrupt Practices Act, which generally prohibits United States companies
and their intermediaries from bribing foreign officials for the purpose of
obtaining or retaining favorable treatment.

         In January 2003, the DOT sent a final rule, related to amending the
hours-in-service requirements, which has not been published, to the Office of
Management and Budget. The DOT is also considering implementing stronger safety
requirements on trucks. These regulatory changes may have an impact on our
profitability in the future.

CARGO LIABILITY, INSURANCE, AND LEGAL PROCEEDINGS

         We are a party to routine litigation incidental to our business,
primarily involving claims for bodily injury or property damage incurred in the
transportation of freight. We are responsible for the safe

                                      - 8 -

<PAGE>

delivery of cargo. As of July 2003, we are self-insured on auto liability claims
in the United States and Canada, for the first one million dollars of an
accident claim. In addition, we are responsible for a $2.75 million aggregate
deductible for claims between $1.0 million and $2.5 million of auto liability
insurance claims. We are also responsible for administrative expenses, for each
occurrence involving personal injury or property damage. We are also
self-insured for our physical damage losses, and workers compensation losses and
responsible for the first $100,000 on cargo claims. We maintain separate
insurance in Mexico consisting of bodily injury and property damage coverage
with acceptable deductibles. Management believes our uninsured exposure is
reasonable for the transportation industry, based on previous history.
Consequently, we do not believe that the litigation and claims experienced will
have a material impact on our financial position or results of operations.

         There are various claims, lawsuits and pending actions against the
Company and its subsidiaries in the normal course of the operations of its
businesses. 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.

SEASONALITY

         To date, our revenues have not shown any significant seasonal pattern.
However, because our primary traffic lane is between the Midwest United States
and Mexico, winter generally may have an unfavorable impact upon our results of
operations. Also, many manufacturers close or curtail their operations during
holiday periods and observe vacation shutdowns, which may impact our operations
in any particular period.

NON-AUDIT SERVICES PERFORMED BY INDEPENDENT ACCOUNTANTS

         We are responsible for disclosing to investors the non-audit services
pursuant to Section 10A(i)(2) of the Securities Exchange Act of 1934, as added
by Section 202 of the Sarbanes-Oxley Act of 2002. Non-audit services are defined
as services other than those provided in connection with an audit or review of
our financial statements. Our current non-audit services consist of a tax
outsourcing agreement with Ernst & Young LLP, which was approved by our Audit
Committee prior to commencement. Future non-audit services will be processed in
the same manner.

ITEM 2.     PROPERTIES

         The Company operates an international network of fifteen terminal
locations, including facilities in Laredo and El Paso, Texas, which are the two
largest inland freight gateway cities between the United States and Mexico.
Operating terminals are currently located in the following cities:

<TABLE>
<CAPTION>
              UNITED STATES                               MEXICO                      CANADA
              -------------                               ------                      ------
<S>                                          <C>                                 <C>
Baltimore, MD (L)    Indianapolis, IN (L)    Guadalajara (L)    Queretaro (L)    Kitchener, ON (L)
Dallas, TX (O)       Laredo, TX (O)          Mexico City (L)    Tijuana (L)
Detroit, MI (L)      Louisville, KY (L)      Monterrey (L)
El Paso, TX (O)                              Nuevo Laredo (L)
                                             Puebla (L)
</TABLE>

Owned Property (O) Lease Property (L)

                                      - 9 -

<PAGE>

         The Indianapolis, Laredo, and Kitchener facilities include
administrative functions, lounge facilities for drivers, parking, fuel,
maintenance, and truck washing facilities. The Company's executive and
administrative offices occupy four buildings located on 30 acres of property in
Indianapolis, Indiana.

ITEM 3.     LEGAL PROCEEDINGS

         See discussion under "Cargo Liability, Insurance, and Legal
Proceedings" in Item 1, and Note 10 to the consolidated financial statements,
"Commitments and Contingencies."

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted for a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended June 30, 2003.

                                     - 10 -

<PAGE>

                                     PART II

ITEM 5.     MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         Since January 24, 1994, the date of the initial public offering of the
Company's Common Stock, the Common Stock has been quoted through the Nasdaq
National Market under the symbol "CLDN." The following table sets forth the
range of high and low reported sales price for the Common Stock as quoted
through the Nasdaq National Market for the periods indicated.

<TABLE>
<CAPTION>
                                          HIGH            LOW
                                          ----            ---
<S>                                      <C>            <C>
         FISCAL 2002

Quarter ended September 30, 2001         $  4.26        $ 2.98

Quarter ended December 31, 2001          $  6.05        $ 3.30

Quarter ended March 31, 2002             $  7.00        $ 4.62

Quarter ended June 30, 2002              $ 13.99        $ 5.85

         FISCAL 2003

Quarter ended September 30, 2002         $ 13.15        $ 7.12

Quarter ended December 31, 2002          $ 12.30        $ 7.85

Quarter ended March 31, 2003             $ 13.15        $ 7.45

Quarter ended June 30, 2003              $ 10.10        $ 7.11
</TABLE>

         On September 18, 2003, there were approximately 2,200 holders of the
Company's Common Stock based upon the number of record holders on that date, and
the closing price of the Company's Common Stock was $13.44.

         The following table summarizes the Company's equity compensation plans
as of June 30, 2003:

<TABLE>
<CAPTION>
                                                                                                           (c)Number of securities
                                                                                                             remaining available
                                                                                                             for future issuance
                                            (a)Number of securities           (b)Weighted-average               under equity
                                            issued upon exercise of            exercise price of             compensation plans
                                             outstanding options,             outstanding options,          (excluding securities
          Plan Category                       warrants and rights             warrants and rights         reflected in column (a))
          -------------                       -------------------             -------------------         ------------------------
<S>                                         <C>                               <C>                         <C>
Equity compensation plans
    approved by security holders                    985,458                        $     6.70                      163,713
Equity compensation plans not
    approved by security holders                Not applicable                   Not applicable                Not applicable
</TABLE>

                                     - 11 -

<PAGE>

DIVIDEND POLICY

         The Company has not paid cash dividends on its Common Stock as a public
company and has no present intention of paying cash dividends on its Common
Stock in the foreseeable future. Moreover, pursuant to its existing credit
agreements and subject to approval by its lending group, the Company and certain
of its subsidiaries may pay cash dividends only up to certain specified levels
and only if certain financial ratios and financial conditions are met.

ITEM 6.     SELECTED FINANCIAL DATA

         The statement of operations data and balance sheet data presented below
have been derived from the Company's consolidated financial statements and
related notes thereto. The information set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's consolidated financial statements
and related notes thereto.

<TABLE>
<CAPTION>
                                                                         FISCAL YEAR ENDED JUNE 30,
                                                          (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS AND RATIOS)
                                                   2003         2002        2001                 2000             1999
                                                   ----         ----        ----                 ----             ----
<S>                                              <C>          <C>         <C>                  <C>              <C>
Statement of Operations Data:
Operating revenue ......................         $367,105     $336,999    $351,818             $351,569         $281,829
Operating expense ......................          354,371      326,454     351,162              345,991          266,538
                                                 --------     --------    --------             --------         --------

Operating income  ......................           12,734       10,545         656 (2)            5,578 (3)       15,291
Interest expense net....................            6,201        7,487       9,280                9,238            7,385
Other expense (income)..................               (3)         134        (331)                 256               85
Minority interest in subsidiary.........              ---          ---        (331)                (547)             ---
                                                 --------     --------    --------             --------         --------
Income (loss) before income taxes.......            6,536        2,924      (7,962)              (3,369)           7,821
Provision for income taxes (benefit) ...            2,948        1,215      (2,626)              (1,328)           2,980
                                                 --------     --------    --------             --------         --------
Net income (loss) .....................          $  3,588     $  1,709    $ (5,336)            $ (2,041)        $  4,841
                                                 ========     ========    ========             ========         ========
Diluted earnings (loss) per share (1):
Net income (loss) ......................         $   0.45     $   0.22    $  (0.70)            $  (0.26)        $   0.62
                                                 ========     ========    ========             ========         ========
Average diluted shares outstanding......            8,035        7,753       7,649                7,777            7,784

Balance Sheet Data:
  Working capital ......................         $  8,343     $ 12,905    $ 13,352             $ 22,087         $ 20,115
  Total assets  ........................          162,073      190,031     194,916              215,322          188,759
  Long-term debt and lease obligations..           39,678       68,371      77,026               92,659           71,580
  Stockholders' equity..................           57,252       53,916      52,063               58,407           57,306

Other Financial Data:
  Operating Ratio (4)...................             96.5%        96.9%       99.8%                98.4%            94.6%
  Capital Expenditures, net.............           (3,238)      (5,277)     (9,699)              (2,434)          (3,129)
  Capital Expenditures, gross...........            7,053        6,374       6,047               11,971            7,643
  Cash provided by operating activities.           33,701       14,450      13,922               10,331           12,250
  Cash provided by (used in) investing
  activities                                        3,238        5,277       9,699              (22,487)           3,129
  Cash provided by (used in) financing
  activities                                      (36,150)     (20,222)    (23,187)              11,821          (17,221)
</TABLE>

----------------------

  (1)    Calculation of diluted net income (loss) per common share for the 2001
         and 2000 periods are anti-dilutive.

  (2)    Includes expenses of $800,000 related to write-off of deferred initial
         public offering costs for TruckersB2B.

  (3)    Includes operating loss of $4.7 million related to TruckersB2B.

  (4)    Operating ratio is defined as total operating expenses as a percentage
         of operating revenues.

                                     - 12 -

<PAGE>

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

OVERVIEW

         Celadon Group, Inc., through its operating subsidiaries, provides
truckload transportation services in and between the NAFTA countries of the
United States, Mexico and Canada. We deliver our services through a network of
owned and leased tractors and, to a lesser extent, independent owner-operators.
We excel in service, safety and technology as we move time-sensitive freight in
and between the United States, Canada and Mexico.

         Consistent with our focus on technology to improve our core businesses,
we also operate TruckersB2B, Inc., a profitable e-procurement business that
passes on volume purchasing power to more than 14,300 member fleets to provide
discounts on fuel, tire and other related services.

         We continually evaluate our acquisition opportunities in order to
expand our core business and improve the quality of our customer service. We
believe that current economic conditions will lead to additional consolidation
in the industry, and we feel that we are well positioned to take advantage of
that consolidation. Consistent with our strategy, we acquired certain assets of
Burlington Motor Carriers in 2002. We believe acquisitions, such as this,
improve our lane density, customer base, service offerings and operating
results.

RECENT ACQUISITIONS AND DIVESTITURES

         In August 2003, the Company purchased certain assets of Highway
Express, Inc. ("Highway"). The assets of Highway consisted of approximately 190
tractors, 500 trailers, trade receivables and other assets. The purchase price
of approximately $11.4 million consisted of $4.0 million cash and a $7.4 million
note payable over thirty-six months. The Company used borrowings under its
existing Credit Agreement to fund the cash portion of the acquisition. We expect
this acquisition to strengthen the Company's regional presence and lane density
in the southeast, enhance our consumer non-durable customer base, and should
increase our rate per mile. Highway's revenue for fiscal 2002 was approximately
$27 million.

         In March 2002, we purchased certain fixed assets of Burlington Motor
Carriers, consisting primarily of approximately 300 tractors and 900 trailers,
and we incurred $7.5 million in notes payable related to the transaction.

         In June 2001, we sold certain assets and the owner-operator and agent
contracts of Cheetah Transportation, Inc. to American Trans Freight. Cheetah, a
flatbed truckload carrier operating out of Mooresville, North Carolina, was
divested due to its lack of strategic fit with our focus on van truckload
operations. We recognized a $3.7 million loss on disposition, which included a
non-cash charge of $3.2 million, related to the net book value of goodwill and
other intangibles. Cheetah had approximately 300 owner-operators and revenues of
$27 million in fiscal 2001.

                                     - 13 -

<PAGE>

RESULTS OF OPERATIONS

         The following table sets forth the percentage relationship of revenue
and expense items to operating revenues for the periods indicated.

<TABLE>
<CAPTION>
                                                                             FISCAL YEAR ENDED JUNE 30,
                                                                             --------------------------
                                                                     2003                2002                 2001
                                                                     ----                ----                 ----
<S>                                                                 <C>                 <C>                  <C>
Operating Revenue......................................             100.0%              100.0%               100.0%
Operating expenses:
   Salaries, wages and employee benefits...............              30.4                29.8                 27.3
   Fuel ...............................................              13.0                10.7                 11.3
   Operating costs and supplies........................               8.6                 8.3                  7.6
   Insurance and claims................................               3.8                 3.6                  2.9
   Depreciation and amortization.......................               3.8                 4.1                  4.4
   Rent and purchased transportation...................              30.0                33.3                 38.1
   General, administrative, and selling expenses.......               1.9                 2.2                  2.7
   Cost of goods sold..................................               1.2                 1.2                  0.8
   Other operating expenses............................               3.8                 3.7                  3.7
   Loss on disposition of flatbed division.............               ---                 ---                  1.0
                                                                     ----                ----                 ----

      Total operating expenses.........................              96.5                96.9                 99.8
                                                                     ----                ----                 ----

Operating income.......................................               3.5                 3.1                  0.2
Other (income) expense:
   Interest expense, net...............................               1.7                 2.2                  2.6
   Other (income) expense, net.........................               ---                 ---                 (0.1)
   Minority Interest in subsidiary loss................               ---                 ---                 (0.1)
                                                                     ----                ----                 ----

Income (loss) before income taxes......................               1.8                 0.9                 (2.2)
Provision (benefit) for income taxes...................               0.8                 0.4                 (0.7)
                                                                     ----                ----                 ----

Net income (loss) .....................................               1.0%                0.5%                (1.5)%
                                                                     ====                ====                 ====
</TABLE>

FISCAL YEAR ENDED JUNE 30, 2003 COMPARED WITH FISCAL YEAR ENDED JUNE 30, 2002

         REVENUE. Consolidated revenue increased by $30.1 million, to $367.1
million for fiscal 2003 from $337.0 million for fiscal 2002. This increase is
related to a 4.4% increase in truckload volume and a 4.8% increase in rate per
mile. Dedicated operations for outsourced spotting services, which began in
March 2002, represented approximately $3.3 million of this increase. Revenue for
TruckersB2B was $7.2 million in fiscal 2003 compared to $6.7 million in fiscal
2002. The TruckersB2B revenue increase is primarily related to an increase in
member usage of various programs including the tire discount program.

         OPERATING INCOME. Consolidated operating income increased by $2.2
million, to $12.7 million in fiscal 2003, from $10.5 million in fiscal 2002. The
increase in operating income was primarily a result of increased revenue and
decreased rent and purchased transportation and general, administrative, and
selling expense. This was partially offset by increased salaries, wages and
employee benefits, fuel, and insurance expense. Truckload operating income
increased by $1.8 million, to $11.5 million in fiscal 2003, from $9.7 million in
fiscal 2002. Our operating ratio, which expresses operating expenses as a
percentage of operating revenue, improved from 96.9% in fiscal 2002 to 96.5% in
fiscal 2003.

                                     - 14 -

<PAGE>

         Salaries, wages and benefits were $111.6 million, or 30.4% of operating
revenues, for fiscal 2003 compared to 29.8% for the same period in 2002. This
increase is primarily related to a 4.4% increase in company miles, which in turn
increased driver paid miles. The non-driver payroll expense and employer-paid
health insurance remained consistent year over year despite an industry wide
rise in medical expenses.

         Fuel expenses increased to 13.0% of revenue for fiscal 2003 compared to
10.7% in fiscal 2002. Fuel prices have increased approximately $0.17 per gallon
for fiscal 2003 compared to fiscal 2002. Fuel prices continue to increase due to
low inventory and unrest in the Middle East. Increased fuel prices will increase
our operating expenses to whatever extent they are not offset by surcharges.

         Operating costs and supplies increased to 8.6% of revenue for fiscal
2003 compared to 8.3% in fiscal 2002. Operating costs and supplies consist of
maintenance, tire expense and other direct operating expenses. Maintenance
expenses increased in fiscal 2003, as the average age per tractor increased to
2.7 years from 2.3 years and trailers increased to 6.1 years from 4.9 years. As
the age of our equipment has increased the cost to maintain the fleet has
increased. We expect our maintenance costs to decrease in conjunction with the
reduction in the average age of the fleet in fiscal 2004.

         Insurance and claims expense was 3.8% in fiscal 2003 compared to 3.6%
for fiscal 2002. 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 the increased rates industry-wide and the risk retention we are willing
to assume. Specific large dollar claims occurring in a period can have a
significant negative impact on earnings.

         Rent and purchased transportation decreased $2.1 million to 30.0% of
revenue for fiscal 2003 from 33.3% for the same period in 2002. The decrease in
fiscal 2003 is primarily related to reduced owner-operator expense, as the
Company reduced the owner-operator fleet by 185 trucks for the year. In
addition, tractor costs have increased as new tractors financed by operating
leases on a four-year trade cycle were added. We expect our cost of tractor and
trailer ownership to increase in the future due to increased initial equipment
prices and lower resale values on used equipment.

         NET INTEREST EXPENSE. Net interest expense decreased by $1.3 million,
or 17.3%, to $6.2 million in fiscal 2003 from $7.5 million in fiscal 2002. The
decrease was the result of lower interest rates offset by a one-time non-cash
write-off of loan origination costs of approximately $900 thousand related to
the Company's previous credit facility. The decrease was also the result of a
0.9 percentage point decline in interest rates year-over-year and bank
borrowings decreasing from $38.9 million for fiscal 2002 to $23.1 million for
fiscal 2003.

         OTHER INCOME AND EXPENSES. Other income and expense includes
approximately $1.1 million of commission income related to a receivables
collection agreement between Foothill Capital and the Company. This agreement
related to the collection of receivables tied to the bankrupt Burlington Motor
Carriers' ("BMC") business. The Company has recognized approximately $1.0
million of other expense related to a write-down of revenue equipment acquired
from Foothill Capital for equipment, which has not been located.

                                     - 15 -

<PAGE>

         INCOME TAXES. Income taxes resulted in expense of $2.9 million in
fiscal 2003, with an effective tax rate of 45.1%, compared to expense of $1.2
million, with an effective tax rate of 41.6%, in fiscal 2002. The effective tax
rate increased by approximately 3.5 percentage points as a result of an increase
in non-deductible expenses related to a per diem pay structure change in fiscal
2003 compared to fiscal 2002. As per diem is a non-deductible expense our
effective tax rate will fluctuate as net income fluctuates in the future.

FISCAL YEAR ENDED JUNE 30, 2002 COMPARED WITH FISCAL YEAR ENDED JUNE 30, 2001

         REVENUE. Consolidated revenue decreased by $14.8 million, to $337.0
million for fiscal 2002 from $351.8 million for fiscal 2001. Revenue for fiscal
2001 included revenue from Cheetah, our flatbed carrier operation, and higher
pass-through revenues related to the Mexican portion of transportation. In April
of 2001, Daimler Chrysler began to coordinate and contract with Mexican
transportation companies for the Mexico portion of loads. This decreased our
pass-through revenues in fiscal 2002 by approximately $11 million. Adjusted for
these items, last year's consolidated revenue would have been $314.7 million. On
a comparable basis, excluding Cheetah and the pass-through revenues in the prior
year, revenue for fiscal 2002 represented an increase of $22.3 million, or
approximately 7%. We experienced an increase of approximately 11 million
dispatch miles for fiscal 2002 related to a strengthening economy and a focused
effort to add customers of bankrupt Burlington Motor Carriers. Revenue for
TruckersB2B was approximately $6.7 million in fiscal 2002 compared to $4.4
million in fiscal 2001. The TruckersB2B revenue increase is primarily related to
an increase in member usage of the tire discount program.

         OPERATING INCOME. Consolidated operating income increased by $6.2
million, to $10.5 million in fiscal 2002 from $4.3 million in fiscal 2001. The
increase in operating income was primarily a result of decreased fuel, rent and
purchased transportation and depreciation and amortization expense offset by
increased salaries, wages and employee benefits and insurance expense.
TruckersB2B operating income increased by $3.2 million, to $0.9 million in
fiscal 2002 from a loss of $2.3 million in fiscal 2001. Our operating ratio,
which expresses operating expenses as a percentage of operating revenue,
improved from 99.8% in fiscal 2001 to 96.9% in fiscal 2002. The decrease in
operating ratio for fiscal 2002 also adversely affects the operating expense
percentages of revenues discussed further below when compared to fiscal 2001.

         Salaries, wages and benefits were $100.4 million, or 29.8% of operating
revenues, for fiscal 2002 compared to 27.3% for the same period in 2001. This
increase is primarily related to driver pay for small, focused regional
operations which have accretive revenues.

         Fuel expenses decreased to 10.7% of revenue for fiscal 2002 compared to
11.3% in fiscal 2001. Fuel prices declined approximately $0.20 per gallon for
fiscal 2002 compared to fiscal 2001.

         Insurance and claims expense was 3.6% in fiscal 2002 compared to 2.9%
for fiscal 2001. 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. Liability
insurance premiums, which were renewed effective May 11, 2001, increased
significantly year-over-year due to continued difficulty in the insurance and
reinsurance markets.

         Rent and purchased transportation decreased $22 million to 33.3% of
revenue for fiscal 2002 from 38.1% for the same period in 2001. The decrease in
fiscal 2002 was primarily related to reduced owner-operator expense caused by
the sale of Cheetah, partially offset by increased usage of owner-operators in
other areas. Also, as pass-through revenue related to the Mexican portion of
loads decreased,

                                     - 16 -

<PAGE>

the pass-through purchased transportation expense has also decreased. To offset
these decreases, trailer costs rose as we continued to replace 48-foot trailers
with 53-foot trailers. In addition, tractor costs have increased as most new
tractors have operating leases on a four-year trade cycle.

         NET INTEREST EXPENSE. Net interest expense decreased by $1.8 million,
or 19.4%, to $7.5 million in fiscal 2002 from $9.3 million in fiscal 2001. The
decrease was the result primarily of lower interest rates as bank borrowings and
capital lease obligations were slightly higher at June 30, 2002, compared to
June 30, 2001. The bank line borrowings decreased $4.6 million to $38.9 million
on June 30, 2002.

         INCOME TAXES. Income taxes resulted in expense of $1.2 million in
fiscal 2002, with an effective tax rate of 41.6%, compared to a benefit of $2.6
million, with an effective benefit tax rate of 33.0%, in fiscal 2001. The
effective tax rate increased by approximately 6.0% for non-deductible expenses
as a result of the increased pre-tax income in fiscal 2002 compared to the
pre-tax loss in fiscal 2001.

LIQUIDITY AND CAPITAL RESOURCES

         We generated cash flow of $33.7 million and $14.5 million from
operating activities in fiscal 2003, and 2002, respectively. In fiscal 2003, the
increase in cash flow relative to fiscal 2002 was due to increased net income in
fiscal 2003, a significant decrease in trade receivables and accounts receivable
other partially offset by increases in prepaid expenses.

         Investing activities provided cash of $3.2 million and $5.3 million in
fiscal 2003 and 2002, respectively. This cash was provided by proceeds from the
sale of property and equipment offset in part by the purchase of new property
and equipment.

         We used $36.2 million and $20.2 million for financing activities in
fiscal 2003 and 2002, respectively. Long-term debt and capital lease obligations
were reduced to $60.8 million in fiscal 2003 from $97.0 million for fiscal 2002.
These uses were primarily for pay down of bank borrowings and capital lease
obligations.

         Our primary capital requirements over the last three years have been
funding the acquisition of equipment. Capital expenditures (including the value
of equipment procured under capital leases) totaled $7.1 million, $19.0 million,
and $23.3 million in fiscal 2003, 2002 and 2001, respectively. We purchased $4.0
million, $12.6 million, and $17.3 million of revenue equipment under capitalized
leases and other financing in fiscal 2003, 2002 and 2001, respectively. We have
historically and anticipate meeting our capital investment requirements with a
combination of internally generated funds, bank financing, equipment lease
financing (both capitalized and operating) and, to a lesser extent, the issuance
of common stock. This financing will depend on prevailing market conditions and
other factors over which we have limited control, as well as our financial
condition and results of operations.

         On September 26, 2002, we entered into a Loan and Security Agreement
("Credit Agreement") with Fleet Capital Corporation, Fleet Capital Canada
Corporation and several other lenders named in the Credit Agreement. The Credit
Agreement provides to us, our Canadian subsidiary and certain of our United
States subsidiaries a credit facility in the aggregate amount of $55 million.
The facility consists of two revolving loan facilities, two term loan
subfacilities and a commitment to issue and guaranty letters of credit. The term
loan subfacilities consist of a domestic term loan in the aggregate principal
amount of approximately $10 million and a Canadian term loan in the aggregate
principal amount of approximately $800 thousand. Repayment of the amounts
outstanding under the Credit Agreement is secured by a lien on our assets and
the assets of certain of our subsidiaries, including the stock or other equity
interests of various subsidiaries. In addition, certain of our subsidiaries that
are not party to the Credit Agreement have guaranteed the repayment of the
amount outstanding under the Credit Agreement, and have granted

                                     - 17 -

<PAGE>

a lien on their respective assets to secure such repayment. The Credit Agreement
replaced in full the credit facility the Company entered into with ING (U.S.)
Capital, LLC, in August 1999. The Credit Agreement, which is for a term of three
years, terminates on September 26, 2005.

         Amounts available under the Credit Agreement are determined based upon
the Company's borrowing base, as defined. In addition, there are certain
covenants, which restrict, among other things, the payment of cash dividends
annual capital expenditures, annual lease payments, and requires the Company to
maintain a minimum fixed charge coverage ratio along with certain financial
ratios and certain other financial conditions. Such borrowings are secured by a
significant portion of the Company's assets, primarily trade receivables.

         At June 30, 2003, $23.1 million of our credit facility was utilized as
outstanding borrowings and $5.5 million was utilized for standby letters of
credit. The average balance outstanding during fiscal 2003 was $30.4 million and
the highest balance outstanding was $40.3 million. At June 30, 2003, we also had
cash payments of $30.6 million for capital lease financing including interest
rates ranging from 6.7% to 8.6%, maturing at various dates through 2007. Of this
amount, $16.5 million of cash payments, including interest, is due prior to June
30, 2004.

         As of June 30, 2003, our bank loans, capitalized leases, operating
leases, other debts and future commitments have stated maturities or minimum
annual payments as follows:

<TABLE>
<CAPTION>
                                                                        ANNUAL CASH REQUIREMENTS
                                                                           AS OF JUNE 30, 2003
                                                                             (IN THOUSANDS)
                                                                          AMOUNTS DUE BY PERIOD

                                                                LESS THAN        ONE TO         THREE TO        OVER
                                                     TOTAL      ONE YEAR       THREE YEARS     FIVE YEARS    FIVE YEARS
                                                     -----      ---------      -----------     ----------    ----------
<S>                                               <C>           <C>            <C>             <C>           <C>
Operating Leases (1).........................     $ 119,777     $ 38,517        $  43,644       $ 21,731      $  15,885
Capital Leases Obligations(1)................        28,232       14,960           12,884            388            ---
Long-Term Debt...............................        32,562        6,156           23,323            360          2,723
                                                  ---------     --------        ---------       --------      ---------

Sub-Total....................................       180,571       59,633           79,851         22,479         18,608

Future Purchase of Revenue Equipment.........        30,332        3,792           15,166         11,374            ---
Employment and Consulting Agreements.........         2,175          800              800            575            ---
Standby Letters of Credit....................         5,466        5,466              ---            ---            ---
                                                  ---------     --------        ---------       --------      ---------

Total........................................     $ 218,544     $ 69,691        $  95,817       $ 34,428      $  18,608
                                                  =========     ========        =========       ========      =========
</TABLE>

 (1)      Included in these balances are residual guarantees of $51.1
          million in total and $20.9 million coming due in less than one
          year. We believe these balances will be satisfied by
          manufacturer commitments.

         As of June 30, 2003, we had 339 tractors on order for delivery in
fiscal 2004. A commitment for lease financing on these tractors has been
obtained. Management believes that there are presently adequate sources of
secured equipment financing together with our existing credit facilities and
cash flow from operations to provide sufficient funds to meet our anticipated
working capital requirements. Additional growth in the tractor and trailer fleet
beyond our existing orders will require additional sources of financing.

                                     - 18 -

<PAGE>

INFLATION

         Many of our operating expenses, including fuel costs and revenue
equipment, 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.

CRITICAL ACCOUNTING POLICIES

         The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
assumptions and estimates that can have a material impact on the reported
amounts of assets, liabilities, and results of operations. While management
applies its judgment based on assumptions believed to be reasonable under the
circumstances, actual results could vary from those assumptions, and it is
possible that materially different amounts would be reported using differing
assumptions.

         We recognize revenue, driver's wages, fuel, and other direct operating
expenses generally based on the date freight is delivered to the customer.

         We depreciate our property and equipment using the straight-line method
over the estimated life of the asset. We have historically depreciated tractors
and trailers over four to twelve years with various salvage values. Gains and
losses on disposal of revenue equipment are included in depreciation in the
statement of operations.

         Long-lived assets are depreciated over estimated useful lives based on
our historical experience and prevailing industry practice. Estimated useful
lives are periodically reviewed to ensure they remain appropriate. Long-lived
assets are tested for impairment whenever an event occurs that indicates an
impairment may exist. Future cash flows and operating performance are used for
analyzing impairment losses. If the sum of expected undiscounted cash flows is
less than the carrying value an impairment loss is recognized. The Company
measures the impairment loss by comparing the fair value of the asset to its
carrying value. Fair value is determined based on a discounted cash flow
analysis or appraised values as appropriate. Long-lived assets that are held for
sale are recorded at the lower of carrying value or the fair value less costs to
sell.

         Over the last two years the majority of our revenue equipment additions
have been financed via operating leases. These leases contain residual value
guarantees, which guarantee the lessor a negotiated amount at the end of the
lease. Operating lease debt is carried off the balance sheet in accordance with
SFAS 13 "Accounting for Leases."

         The Company is self-insured for most medical insurance claims, workers
compensation claims, and bodily injury and property damage liability losses.
Reported claims and related loss reserves are estimated by third party
administrators. Claims incurred but not reported are recorded based on
historical experience and industry trends, which are continually monitored, and
accruals are adjusted when warranted by changes in facts and circumstances.
Insurance and claims expense will vary from period to period based on the
severity and frequency of claims incurred in a given period.

         Deferred taxes are recognized for the future tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting, based on enacted tax laws and rates. Federal income
taxes are provided on the portion of the income of foreign subsidiaries that is
expected to be remitted to the United States.

                                     - 19 -

<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

         The Company has no off-balance sheet arrangements.

CODE OF ETHICS

         The Company has adopted a code of ethics applicable to its principal
executive officer, principal financial officer, principal accounting officer or
controller or person performing similar functions. The code is attached to this
report as Exhibit 10.20

ITEM 7A.    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.

         We are exposed to interest rate risk primarily from our Credit
Agreement as of June 30, 2003. The Credit Agreement carries a maximum variable
interest rate of the bank's base rate plus 3.0% or LIBOR plus 3.5%. At June 30,
2003, our variable interest rate averaged 4.5%. A hypothetical 10% movement in
this interest rate would have an impact on net income of approximately $117,000.
In the event of a change of such magnitude, management would likely consider
actions to further mitigate our exposure.

         Our foreign currency revenues are generally proportionate to our
foreign currency expenses, and we do not generally engage in currency hedging
transactions. For purposes of consolidation, however, the operating results
earned by our subsidiaries in foreign currencies are converted into United
States dollars. As a result, a decrease in the value of the Mexican peso or
Canadian dollar could adversely affect our consolidated results of operations
and equity.

         Shortages of fuel, increases in prices or rationing of petroleum
products can have a materially adverse effect on our operations and
profitability. Fuel is subject to economic, political and market factors that
are outside of our control. From time-to-time we will enter into derivative
financial instruments to reduce our exposure to fuel price 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. In accordance
with SFAS 133, we adjust our derivative instruments to fair value through
earnings on a monthly basis. As of June 30, 2003, we had 14% of estimated fuel
purchases hedged through August 2003. We have recognized approximately $98,000
and $100,000 of expense associated with derivative contracts for the years ended
June 30, 2003 and 2002, respectively. A hypothetical 10% movement in the price
of fuel future quantities would have an impact on net income of approximately
$68,000.

                                     - 20 -

<PAGE>

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following statements are filed with this report:

         Report of Independent Auditors;

         Consolidated Balance Sheets as of June 30, 2003 and 2002;

         Consolidated Statements of Operations for years ended June 30, 2003,
         2002, and 2001;

         Consolidated Statements of Cash Flows for years ended June 30, 2003,
         2002, and 2001;

         Consolidated Statements of Stockholders' Equity for years ended June
         30, 2003, 2002, and 2001; and Notes to Consolidated Financial
         Statements.

                                     - 21 -
<PAGE>

                               CELADON GROUP, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                      Three years ended June 30, 2003 with
                         Report of Independent Auditors

                                    Contents

<TABLE>
<S>                                                                                              <C>
Report of Independent Auditors................................................................   23

Audited Consolidated Financial Statements:

     Consolidated Balance Sheets as of June 30, 2003 and 2002.................................   24
     Consolidated Statements of Operations for years ended
          June 30, 2003, 2002, and 2001.......................................................   25
     Consolidated Statements of Cash Flows for years ended
          June 30, 2003, 2002, and 2001.......................................................   26
     Consolidated Statements of Stockholders' Equity for years ended
          June 30, 2003, 2002, and 2001.......................................................   27
     Notes to Consolidated Financial Statements...............................................   28
</TABLE>

                                     - 22 -
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders of Celadon Group, Inc.

         We have audited the accompanying consolidated balance sheets of Celadon
Group, Inc. as of June 30, 2003 and 2002, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended June 30, 2003. Our audits also included the
financial statement schedule listed in the Index at Item 15. These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Celadon Group, Inc. at June 30, 2003 and 2002, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended June 30, 2003, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statements
schedule, when considered in relation to the basic financial statement taken as
a whole, presents fairly in all material respects the information set forth
therein.

                                                     /s/ERNST & YOUNG LLP

Indianapolis, Indiana
August 8, 2003
except for Note 13, as to which that date is
August 21, 2003

                                     - 23 -
<PAGE>

                               CELADON GROUP, INC.
                           CONSOLIDATED BALANCE SHEETS
                             JUNE 30, 2003 AND 2002
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                         2003         2002
                                                                      ----------   ----------
<S>                                                                   <C>          <C>
A S S E T S

Current assets:
    Cash and cash equivalents .....................................   $    1,088   $      299
    Trade receivables, net of allowance for doubtful accounts of
        $1,065 and $940 in 2003 and 2002, respectively ............       44,182       54,796
    Accounts receivable -other ....................................        3,432        5,728
    Prepaid expenses and other current assets .....................        7,101        6,222
    Tires in service ..............................................        4,714        4,181
    Deferred income taxes .........................................        2,296        1,808
                                                                      ----------   ----------
        Total current assets ......................................       62,813       73,034
Property and equipment ............................................      129,319      140,142
    Less accumulated depreciation and amortization ................       52,352       45,164
                                                                      ----------   ----------
        Net property and equipment ................................       76,967       94,978
Tires in service ..................................................        2,207        1,982
Goodwill ..........................................................       16,702       16,702
Other assets ......................................................        3,384        3,335
                                                                      ----------   ----------
        Total assets ..............................................   $  162,073   $  190,031
                                                                      ==========   ==========

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 ..............................................   $    4,204   $    4,184
    Accrued salaries and benefits .................................        6,748        7,087
    Accrued insurance and claims ..................................        5,163        4,274
    Accrued owner-operator expense ................................        2,728        3,599
    Accrued fuel expense ..........................................        3,138        2,823
    Other accrued expenses ........................................       11,074        9,460
    Current maturities of long-term debt ..........................        6,156        7,531
    Current maturities of capital lease obligations ...............       14,960       21,120
    Income tax payable ............................................          299           51
                                                                      ----------   ----------
        Total current liabilities .................................       54,470       60,129
Long-term debt, net of current maturities .........................       26,406       44,178
Capital lease obligations, net of current maturities ..............       13,272       24,193
Deferred income taxes .............................................       10,648        7,590
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 12,000,000 shares
        issued 7,789,764 shares in 2003 and 2002 ..................          257          257
    Additional paid-in capital ....................................       60,092       60,044
    Retained deficit ..............................................         (761)      (4,349)
    Accumulated other comprehensive loss ..........................       (1,947)      (1,581)
    Treasury stock, at cost, 96,001 shares and 112,156 shares at
        June 30, 2003, and 2002, respectively .....................         (389)        (455)
                                                                      ----------   ----------
        Total stockholders' equity ................................       57,252       53,916
                                                                      ----------   ----------
        Total liabilities and stockholders' equity ................   $  162,073   $  190,031
                                                                      ==========   ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     - 24 -
<PAGE>

                               CELADON GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    YEARS ENDED JUNE 30, 2003, 2002 AND 2001
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                             2003         2002         2001
                                                          ----------   ----------   ----------
<S>                                                       <C>          <C>          <C>
Operating revenue .....................................   $  367,105   $  336,999   $  351,818

Operating expenses:
    Salaries, wages and employee benefits .............      111,588      100,373       95,956
    Fuel ..............................................       47,592       36,047       39,818
    Operating costs and supplies ......................       31,703       28,088       26,756
    Insurance and claims ..............................       14,100       12,032       10,104
    Depreciation and amortization .....................       13,818       13,690       15,409
    Rent and purchased transportation .................      110,061      112,144      134,094
    Cost of products and services sold ................        4,545        4,062        2,697
    Professional and consulting fees ..................        2,515        1,663        2,867
    Communications and utilities ......................        4,160        3,903        3,985
    Permits licenses and taxes ........................        7,484        6,821        6,034
    General, administrative, and selling ..............        6,805        7,631        9,408
    Non-cash member and vendor development costs ......          ---          ---          342
    Loss on disposition of flatbed division ...........          ---          ---        3,692
                                                          ----------   ----------   ----------
        Total operating expenses ......................      354,371      326,454      351,162

Operating income ......................................       12,734       10,545          656

Other (income) expense:
    Interest income ...................................          (85)        (114)        (148)
    Interest expense ..................................        6,286        7,601        9,428
    Other (income) expense, net .......................           (3)         134         (331)
    Minority interest in subsidiary loss ..............          ---          ---         (331)
                                                          ----------   ----------   ----------
Income (loss) before income taxes .....................        6,536        2,924       (7,962)
Provision (benefit) for income taxes ..................        2,948        1,215       (2,626)
                                                          ----------   ----------   ----------
        Net income (loss) .............................   $    3,588   $    1,709   $   (5,336)
                                                          ==========   ==========   ==========

Earnings (loss) per common share:
        Diluted earnings (loss) per share .............   $     0.45   $     0.22   $    (0.70)
        Basic earnings (loss) per share ...............   $     0.47   $     0.22   $    (0.70)
Average shares outstanding:
        Diluted .......................................        8,035        7,753        7,649
        Basic .........................................        7,688        7,611        7,649
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     - 25 -
<PAGE>

                               CELADON GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED JUNE 30, 2003, 2002 AND 2001
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          2003         2002         2001
                                                                       ----------   ----------   ----------
<S>                                                                    <C>          <C>          <C>
Cash flows from operating activities:
    Net income (loss) ..............................................   $    3,588   $    1,709   $   (5,336)
Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:
    Depreciation and amortization ..................................       13,818       13,690       15,409
    Write-off of loan origination cost .............................          914          ---          ---
    Write-off of revenue equipment .................................        1,023          ---          ---
    Loss on disposition of flatbed division ........................          ---          ---        3,692
    Minority interest ..............................................          ---          ---         (331)
    Non-cash member and vendor development costs ...................          ---          ---          342
    Provision (benefit) for deferred income taxes ..................        2,570          658       (2,870)
    Provision for doubtful accounts ................................          704          933          754
    Changes in assets and liabilities:
        Trade receivables ..........................................        9,910       (5,818)       1,870
        Accounts receivable - other ................................        2,296           (6)       2,588
        Income tax recoverable .....................................          ---          690          990
        Tires in service ...........................................         (758)         474          679
        Prepaid expenses and other current assets ..................       (1,793)       2,793         (757)
        Other assets ...............................................         (483)      (1,460)         263
        Accounts payable and accrued expenses ......................        1,628          736       (3,371)
        Income tax payable .........................................          284           51          ---
                                                                       ----------   ----------   ----------
        Net cash provided by operating activities ..................       33,701       14,450       13,922
Cash flows from investing activities:
    Purchase of property and equipment .............................       (7,053)      (6,374)      (6,047)
    Proceeds on sale of property and equipment .....................       10,291       11,651       15,746
                                                                       ----------   ----------   ----------
        Net cash provided by investing activities ..................        3,238        5,277        9,699
Cash flows from financing activities:
    Purchase of treasury stock .....................................          ---          (17)        (993)
    Sale of treasury stock .........................................           78          415          ---
    Proceeds from issuance of common stock .........................          ---          183           63
    Proceeds of long-term debt .....................................        4,147        3,795        7,666
    Payments on long-term debt .....................................      (23,294)     (10,211)     (10,093)
    Principal payments on capital lease obligations ................      (17,081)     (14,387)     (19,830)
                                                                       ----------   ----------   ----------
        Net cash used in financing activities ......................      (36,150)     (20,222)     (23,187)
                                                                       ----------   ----------   ----------
Increase (decrease) in cash and cash equivalents ...................          789         (495)         434
Cash and cash equivalents at beginning of year .....................          299          794          360
                                                                       ----------   ----------   ----------
Cash and cash equivalents at end of year ...........................   $    1,088   $      299   $      794
                                                                       ==========   ==========   ==========
Supplemental disclosure of cash flow information:
    Interest paid ..................................................   $    5,299   $    7,700   $    9,569
    Income taxes paid ..............................................   $      316   $      281   $      373
Supplemental disclosure of non-cash flow investing activities:
    Lease obligation incurred in the purchase of equipment .........   $      286   $   12,579   $   17,301
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     - 26 -
<PAGE>

                               CELADON GROUP, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    YEARS ENDED JUNE 30, 2003, 2002 AND 2001
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                         COMMON                                         ACCUMULATED                TOTAL
                                          STOCK                ADDITIONAL   RETAINED       OTHER       TREASURY    STOCK-
                                      NO. OF SHARES             PAID-IN     EARNINGS   COMPREHENSIVE    STOCK-    HOLDERS'
                                       OUTSTANDING    AMOUNT    CAPITAL     (DEFICIT)  INCOME/(LOSS)    COMMON     EQUITY
                                      -------------   ------   ----------   --------   -------------   --------   --------
<S>                                   <C>             <C>      <C>          <C>        <C>             <C>        <C>
Balance at June 30, 2000                  7,782,907   $  257   $   60,113   $   (722)  $      (1,206)  $    (35)  $ 58,407

Net loss                                        ---      ---          ---     (5,336)            ---        ---     (5,336)
Equity adjustments for foreign
   currency translation                         ---      ---          ---        ---             155        ---        155
                                      -------------   ------   ----------   --------   -------------   --------   --------
Comprehensive income (loss)                     ---                           (5,336)            155        ---     (5,181)
Tax benefits from stock options                 ---      ---           14        ---             ---        ---         14
Additional paid-in capital arising
   from subsidiary capital
   transaction                                  ---      ---         (227)       ---             ---        ---       (227)
Treasury stock purchases                   (248,600)     ---          ---        ---             ---       (993)      (993)
Exercise of incentive stock options           5,335      ---           23        ---             ---         20         43
                                      -------------   ------   ----------   --------   -------------   --------   --------
Balance at June 30, 2001                  7,539,642   $  257   $   59,923   $ (6,058)  $      (1,051)  $ (1,008)  $ 52,063

Net income                                      ---      ---          ---      1,709             ---        ---      1,709
Equity adjustments for foreign
   currency translation                         ---      ---          ---        ---            (530)       ---       (530)
                                      -------------   ------   ----------   --------   -------------   --------   --------
Comprehensive income (loss)                     ---      ---          ---      1,709            (530)       ---      1,179
Tax benefits from stock options                 ---      ---           93        ---             ---        ---         93
Treasury stock purchases                     (4,250)     ---          ---        ---             ---        (17)       (17)
Treasury stock sales                        103,850      ---          ---        ---             ---        415        415
Exercise of incentive stock options          38,366      ---           28        ---             ---        155        183
                                      -------------   ------   ----------   --------   -------------   --------   --------
Balance at June 30, 2002                  7,677,608   $  257   $   60,044   $ (4,349)  $      (1,581)  $   (455)  $ 53,916

Net income                                      ---      ---          ---      3,588             ---        ---      3,588
Equity adjustments for foreign
   Currency translation                         ---      ---          ---        ---            (366)       ---       (366)
                                      -------------   ------   ----------   --------   -------------   --------   --------
Comprehensive income (loss)                     ---      ---          ---      3,588            (366)       ---      3,222
Tax benefits from stock options                 ---      ---           37        ---             ---        ---         37
Exercise of incentive stock options          16,155      ---           11        ---             ---         66         77
                                      -------------   ------   ----------   --------   -------------   --------   --------
Balance at June 30, 2003                  7,693,763   $  257   $   60,092   $   (761)  $      (1,947)  $   (389)  $ 57,252
                                      =============   ======   ==========   ========   =============   ========   ========
</TABLE>

                See accompanying notes to financial statements.

                                     - 27 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

(1)      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

         Celadon Group, Inc. (the "Company"), through its subsidiaries, provides
long haul, full truckload services between the United States, Canada and Mexico.
The Company's primary trucking subsidiaries are: Celadon Trucking Services, Inc.
("CTSI"), a U.S. based company; Servicio de Transportation Jaguar, S.A. de C.V.
("Jaguar"), a Mexican based company and Celadon Canada ("CelCan"), a Canadian
based company.

         TruckersB2B, Inc. ("TruckersB2B") is an interest based
"business-to-business" membership program, majority owned by Celadon E-Commerce,
Inc., a wholly owned subsidiary of Celadon Group, Inc.

SUMMARY OF SIGNIFICANT ACCOUNT POLICIES

Principles of Consolidation and Presentation

         The consolidated financial statements include the accounts of Celadon
Group, Inc. and its wholly and majority owned subsidiaries, all of which are
wholly owned except for Jaguar and TruckersB2B in which the Company has a 75%
and 81% interest, respectively. All significant intercompany accounts and
transactions have been eliminated in consolidation. Unless otherwise noted, all
references to annual periods refer to the respective fiscal years ended June 30.

Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses and related disclosures at the date of the
financial statements and during the reporting period. Such estimates include
provisions for liability claims and uncollectible accounts receivable. Actual
results could differ from those estimates.

Cash and Cash Equivalents

         The Company considers all highly liquid instruments with a maturity of
three months or less when purchased to be cash equivalents.

Concentration of Credit Risk

         Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of trade receivables.
Concentrations of credit risk with respect to trade receivables are generally
limited due to the Company's large number of customers and the diverse range of
industries, which they represent. Accounts receivable balances due from
DaimlerChrysler totaled $5.0 million, or 11%, of the gross trade receivables at
June 30, 2003. The Company had no other significant concentrations of credit
risk.

                                     - 28 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

Accounts Receivable Other

         The primary components of accounts receivable other are company driver
advances, owner operator advances, and equipment sales receivables. Company
driver and owner operator advances are collected on the next payroll and
settlement dates of sale.

Property and Equipment

         Property and equipment are stated at cost. Property and equipment under
capital leases are stated at fair value at the inception of the lease.

         Depreciation of property and equipment and amortization of assets under
capital leases is generally computed using the straight-line method and is based
on the estimated useful lives (net of salvage value) of the related assets as
follows:

<TABLE>
<S>                                                            <C>
Revenue and service equipment.........................         4-12 years
Furniture and office equipment........................         4-7 years
Buildings.............................................         20 years
Leasehold improvements................................         Lesser of life of lease or useful life of improvement
</TABLE>

         Initial delivery costs relating to placing tractors and trailers in
service, which are included in revenue and service equipment, are being
amortized on a straight-line basis over the lives of the assets or in the case
of leased equipment, over the respective lease term. The cost of maintenance and
repairs, including tractor overhauls, is charged to expense as incurred.

         Long-lived assets are depreciated over estimated useful lives based on
historical experience and prevailing industry practice. Estimated useful lives
are periodically reviewed to ensure they remain appropriate. Long-lived assets
are tested for impairment whenever an event occurs that indicates an impairment
may exist. Future cash flows and operating performance are used for analyzing
impairment losses. If the sum of expected undiscounted cash flows is less than
the carrying value an impairment loss is recognized. The Company measures the
impairment loss by comparing the fair value of the asset to its carrying value.
Fair value is determined based on a discounted cash flow analysis or appraised
values as appropriate. Long-lived assets that are held for sale are recorded at
the lower of carrying value or the fair value less costs to sell.

Tires in Service

         Original and replacement tires on tractors and trailers are included in
tires in service and are amortized over 18 to 36 months.

Goodwill

         Goodwill reflects the excess of cost over net assets of businesses
acquired. Goodwill is reviewed annually for impairment See Note 2 to the
Consolidated Financial Statements.

                                     - 29 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

Insurance Reserves

         Reserves for known claims and incurred but not reported claims up to
specific policy limits are accrued based upon information provided by third
party administrators. Such amounts are included in accrued insurance and claims.

Revenue Recognition

         Trucking revenue and related direct cost are recognized on the date
freight is delivered by the Company to the customer and collectibility is
reasonably assured. Prior to commencement of shipment, the Company will
negotiate an agreed upon price for services to be rendered.

         TruckersB2B revenue is recognized at different times depending on the
product or service purchased by the TruckersB2B member ("member"). Revenue for
fuel rebates is recognized in the month the fuel was purchased by a member. The
tire rebate revenue is recognized when proof-of-purchase documents are received
from members. In most other programs, TruckersB2B receives commissions,
royalties or transaction fees based upon percentages of member purchases.
TruckersB2B records revenue under these programs when earned and it receives the
necessary information to calculate the revenue.

Costs of Products and Services

         Cost of products and services represents the cost of the product or
service purchased or used by the TruckersB2B member. Cost of products and
services is recognized in the period that TruckersB2B recognizes revenue for the
respective product or service.

Advertising

         Advertising costs are expensed as incurred by the Company. Advertising
expenses for fiscal 2003, 2002, and 2001 were $1.0 million, $0.6 million, and
$1.6 million, respectively, and are included in salaries, wages and employee
benefits and general, administrative and selling expenses in the statement of
operations.

Non-Cash Member and Vendor Development Costs

         Non-cash member and vendor development costs represents the fair value,
at the measurement date, of TruckersB2B common stock issued to strategic
partners in connection with the development of its member base and product and
service offerings.

Income Taxes

         Deferred taxes are recognized for the future tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting, based on enacted tax laws and rates. Federal income
taxes are provided on the portion of the income of foreign subsidiaries that is
expected to be remitted to the United States.

                                     - 30 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

Accounting for Derivatives

         The Company from time-to-time will enter into derivative financial
instruments to reduce exposure to fuel price fluctuations. In June 1998, the
Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (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. In accordance
with SFAS 133, the Company adjusts our derivative instruments to fair value
through earnings on a monthly basis.

Earnings per Share ("EPS")

         The Company applies the provisions of the Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings per Share", which requires companies to present basic EPS and
diluted EPS. Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the Company. Dilutive common stock options are
included in the diluted EPS calculation using the treasury stock method. Common
stock options were not included in the diluted EPS computation for 2001 because
the options were anti-dilutive.

Stock-based Employee Compensation Plans

         The Company has elected to follow Accounting Principles Board Opinion
(APB) No. 25, "Accounting for Stock Issued to Employees," and related
interpretations in accounting for its stock options. Under APB 25, because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized for the Celadon options. See Note 7 to the Consolidated Financial
Statements - Stock Plans for further disclosure.

                                     - 31 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         SFAS 123, "Accounting for Stock-Based Compensation," and SFAS 148
"Accounting for Stock-Based Compensation - Transition and Disclosure" requires
presentation of pro forma net income and earnings per share if the Company had
accounted for its employee stock options granted subsequent to June 30, 1995
under the fair value method of that statement. For purposes of pro forma
disclosure, the estimated fair value of the options is amortized to expense over
the vesting period. Under the fair value method, the Company's net income (in
thousands) and earnings per share would have been:

<TABLE>
<CAPTION>
                                                                  2003            2002            2001
                                                               ----------      ----------      ----------
<S>                                                            <C>             <C>             <C>
Net incomes (loss) .........................................   $    3,588      $    1,709      $   (5,336)
Stock-based compensation expense (net of tax) ..............          773             910             972
                                                               ----------      ----------      ----------
Adjusted net income (loss) .................................   $    2,815      $      799      $   (6,308)
                                                               ==========      ==========      ==========

Basic and diluted income (loss) per share:
Diluted earnings (loss) per share ..........................   $     0.45      $     0.22      $    (.070)
Stock-based compensation expense (net of tax) per share ....   $     0.10      $     0.12      $     0.13
                                                               ----------      ----------      ----------
Adjusted diluted earnings (loss) per share .................   $     0.35 (1)  $     0.10 (1)  $    (0.83)
                                                               ==========      ==========      ==========
</TABLE>

(1) Adjusted basic earnings per share was $0.37 for fiscal 2003 and $0.11 in
fiscal 2002.

Foreign Currency Translation

         Foreign financial statements are translated into U.S. dollars in
accordance with SFAS 52, "Foreign Currency Translation." Assets and liabilities
of the Company's foreign operations are translated into U.S. dollars at year-end
exchange rates. Income statement accounts are translated at the average exchange
rate prevailing during the year. Resulting translation adjustments are included
in other comprehensive income.

Financial Instruments

         The fair value of the Company's financial instruments, including cash
and cash equivalents; accounts and notes receivable; accounts payable; and
accrued liabilities approximate their carrying value due to their short term
nature. The fair value of the Company's current and long-term bank borrowings
also approximate as their interest rates fluctuate based upon current market
conditions.

Reclassifications

         Certain reclassifications have been made to the 2002 and 2001 financial
statements in order to conform to the 2003 presentation.

                                     - 32 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

Recent Accounting Pronouncements

         In 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations." SFAS 143 requires companies to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred, which is adjusted to its present value each period. In addition,
companies must capitalize a corresponding amount by increasing the carrying
amount of the related long-lived asset, which is depreciated over the useful
life of the related asset. The Company adopted SFAS 143 on July 1, 2002, and
there was no impact on its consolidated financial position or results of
operations.

         In 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS 144 provides additional restrictive
criteria that would have to be met to classify an asset as held-for-sale. This
statement also requires expected future operating losses from discontinued
operations to be recorded in the period in which the losses are incurred (rather
than as of the date management commits to a formal plan to dispose of a segment,
as previously required). In addition, more dispositions will qualify for
discontinued operations treatment in the income statement. The Company adopted
SFAS 144 on July 1, 2002, and there was no impact on its consolidated financial
position or results of operations.

         In 2002, the FASB issued SFAS 145, Recession of SFAS 4, 44, and 64,
Amendment of SFAS 13 and Technical Corrections. This SFAS addresses the
recording of debt extinguishment costs as extraordinary items and accounting for
sale-lease back transactions. Effective July 1, 2002, the Company adopted the
provisions of SFAS 145 Under this new standard, $0.9 million in expenses
associated with the refinancing of the Company's Credit Agreement in September
2002, which under prior standards would have been recorded as an extraordinary
item, were recorded in interest expense in the Consolidated Statement of
Operations.

         In 2002, the FASB issued SFAS 146, "Accounting for Costs Associated
with Exit or Disposal Activities", which addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring)." SFAS 146 requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred.
SFAS 146 also establishes that fair value is the objective for initial
measurement of the liability. The provisions of this Statement are required to
be applied starting with exit or disposal activities that are initiated after
December 31, 2002. Effective December 31, 2002, the Company adopted the
provisions of SFAS 146, and there was no impact on its consolidated financial
position or results of operations.

         In 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." The statement amends SFAS 123,
"Accounting for Stock-Based Compensation," to provide alternative methods of
transition to SFAS 123's fair value method of accounting for stock-based
employee compensation. In addition, SFAS 148 requires disclosure in the Summary
of Significant Accounting Policies of the effects of the Company's accounting
policy with respect to stock-based compensation on net income and earnings per
share in annual and interim financial statements accounted for using the
intrinsic value method prescribed by APB 25, "Accounting for Stock Issued to
Employees." The Company adopted the disclosure provisions of the statement
effective March 31, 2003.

                                     - 33 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         In 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." The interpretation expands on the disclosure
requirements to be made in interim and annual financial statements. The
interpretation also requires that a liability measure at fair value be
recognized for guarantees even if the probability of payment on the guarantee is
remote. The recognition provisions apply on a prospective basis for guarantees
issued or modified after December 31, 2002. The adoption of the interpretation
did not have a material effect on the Company's accounting or reporting of its
guarantees.

         On April 30, 2003, the FASB issued SFAS 149 "Amendment of Statement 133
on Derivative Instruments and Hedging Activities." SFAS 149 amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities under Statement 133 and
is to be applied prospectively to contracts entered into or modified after June
30, 2003. The Company will adopt SFAS 149 on July 1, 2003, and does not
anticipate any impact on the results of operations and financial position.

         In May 2003, the FASB issued SFAS 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
150 established standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify certain financial instruments as a liability
(or as an asset in some circumstances). SFAS 150 is effective for the Company at
the beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS 150 will not have an impact on the Company's financial
statements.

(2)      GOODWILL

         As of July 1, 2001, we adopted SFAS 142, "Goodwill and Other Intangible
Assets," which addressees the financial accounting and reporting standards for
the acquisition of intangible assets outside of a business combination and for
goodwill and other intangible assets subsequent to their acquisition. This
accounting standard requires that goodwill be separately disclosed from other
intangible assets in the statement of financial position, and no longer be
amortized but tested for impairment on a periodic basis. The provisions of this
accounting standard also require the completion of a transitional impairment
test within six months of adoption. The transitional impairment test was
completed and there was no impairment as of July 1, 2001, the date the Company
adopted the provisions of this statement. At April 1, 2003, the Company has
reviewed the impairment test principles applied previously and concluded that
there is no impairment.

                                     - 34 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         In accordance with SFAS 142, we discontinued the amortization of
goodwill effective July 1, 2001. A reconciliation of previously reported net
income, loss and earnings (loss) per share to the amounts adjusted for the
exclusion of goodwill amortization net of the related income tax effect follows:

<TABLE>
<CAPTION>
                                                                FISCAL YEAR ENDED
                                                                      JUNE 30,
                                                        2003            2002         2001
                                                     ----------      ----------   ----------
<S>                                                  <C>             <C>          <C>
Reported net income (loss) .......................   $    3,588      $    1,709   $   (5,336)
Add: Goodwill amortization, net of tax ...........          ---             ---          951
                                                     ----------      ----------   ----------
Adjusted net income (loss) .......................   $    3,588      $    1,709   $   (4,385)
                                                     ==========      ==========   ==========

Diluted and basic earnings (loss) per share:
Reported net income (loss) .......................   $     0.45(1)   $     0.22   $    (0.70)
                                                     ----------      ----------   ----------
Add: Goodwill amortization, net of tax ...........          ---             ---         0.13
                                                     ----------      ----------   ----------
Adjusted net income (loss) .......................   $     0.45      $     0.22   $    (0.57)
                                                     ==========      ==========   ==========
</TABLE>

         (1) Basic earnings per share was $0.47 for fiscal 2003.

(3)      ACQUISITIONS AND DIVESTITURES

         We purchased, in March 2002, certain fixed assets of Burlington Motor
Carriers, consisting primarily of approximately 300 tractors and 900 trailers,
and we incurred $7.5 million in notes payable related to the transaction.

         In June 2001, the Company sold certain assets and the owner operator
and agent contracts of Cheetah Transportation, Inc. ("Cheetah"), a wholly owned
subsidiary of the Company. Cheetah was a flatbed truckload carrier operating out
of Mooresville, North Carolina. The Company incurred a $3.7 million loss on the
disposition of Cheetah, which included a non-cash charge of $3.2 million related
to the net book value of goodwill and other intangible assets.

(4)      PROPERTY, EQUIPMENT AND LEASES

Property, Equipment and Revenue Equipment Under Capital Leases

         Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                        2003         2002
                                                     ----------   ----------
<S>                                                  <C>          <C>
Revenue equipment owned ..........................   $   58,805   $   41,749
Revenue equipment under capital leases ...........       53,263       82,223
Furniture and office equipment ...................        4,352        4,498
Land and buildings ...............................       10,484       10,185
Service equipment ................................          730          832
Leasehold improvements ...........................        1,685          655
                                                     ----------   ----------
                                                     $  129,319   $  140,142
                                                     ==========   ==========
</TABLE>

                                     - 35 -
<PAGE>

                              CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         Included in accumulated depreciation was $25.6 million and $23.1
million in 2003 and 2002, respectively, related to revenue equipment under
capital leases.

         Depreciation and amortization expense relating to property and
equipment owned and revenue equipment under capital leases was $13.5 in 2003,
$13.6 million in 2002 and $13.5 million in 2001.

Lease Obligations

         The Company leases certain revenue and service equipment under
long-term lease agreements, payable in monthly installments with interest at
rates ranging from 6.7% to 8.6% per annum, maturing at various dates through
2007.

         The Company leases warehouse and office space under noncancellable
operating leases expiring at various dates through September 2021. Certain
leases contain renewal options.

         Future minimum lease payments relating to capital leases and to
operating leases with initial or remaining terms in excess of one year are as
follows (in thousands):

<TABLE>
<CAPTION>
                         YEAR ENDED JUNE 30                             CAPITAL LEASES   OPERATING LEASES
                         ------------------                             --------------   ----------------
<S>                                                                     <C>              <C>
2004  ..............................................................    $       16,482   $         38,517
2005  ..............................................................             7,868             25,648
2006  ..............................................................             5,801             17,996
2007  ..............................................................               407             18,334
2008  ..............................................................               ---              3,397
Thereafter..........................................................               ---             15,885
                                                                        --------------   ----------------
    Total minimum lease payments....................................    $       30,558   $        119,777
                                                                                         ================
Less amounts representing interest..................................             2,326
                                                                        --------------
Present value of net minimum lease payments.........................    $       28,232
Less Current maturities.............................................            14,960
                                                                        --------------
    Non-current portion.............................................    $       13,272
                                                                        ==============
</TABLE>

Total rental expense for operating leases is as follows (in thousands):

<TABLE>
<CAPTION>
                                             2003      2002      2001
                                           --------  --------  --------
<S>                                        <C>       <C>       <C>
Revenue and service equipment ..........   $ 25,817  $ 22,079  $ 19,107
Office facilities and terminals ........      2,149     2,285     2,329
                                           --------  --------  --------
                                           $ 27,966  $ 24,364  $ 21,436
                                           ========  ========  ========
</TABLE>

                                     - 36 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

(5)      LONG-TERM DEBT

         The Company's outstanding borrowings consist of the following at June
30 (in thousands):

<TABLE>
<CAPTION>
                                                                 2003       2002
                                                               --------   --------
<S>                                                            <C>        <C>
Outstanding amounts under Credit Agreement (collateralized
     by certain trade receivables and revenue equipment)       $ 23,144   $ 38,910
Other borrowings ...........................................      9,418     12,799
                                                               --------   --------
                                                                 32,562     51,709
Less current maturities ....................................      6,156      7,531
                                                               --------   --------
     Non-current portion ...................................   $ 26,406   $ 44,178
                                                               ========   ========
</TABLE>

Lines of Credit

         The Company has a $55 million banking facility ("Credit Agreement")
with Fleet Capital Corporation, Fleet Capital Canada Corporation and several
other lenders named in the Loan Agreement. The arrangement includes $44.2
million revolving loan and a $10.8 million term loan. The Company's Credit
Agreement expires in September 2005 (fiscal 2006). Interest is based, at the
Company's option, upon either the bank's base rate as defined in the Credit
Agreement plus a margin ranging from 0.0% to 3.0% or the London Interbank
Offered Rate plus a margin ranging from 1.5% to 3.5% depending upon performance
by the Company. At June 30, 2003, the interest rate charged on outstanding
borrowings was 4.5%. In addition, the Company pays a commitment fee of .25% on
the unused portion of the Credit Agreement.

         Amounts available under the Credit Agreement are determined based upon
the Company's borrowing base, as defined. In addition, there are certain
covenants, which restrict, among other things, the payment of cash dividends
annual capital expenditures, annual lease payments, and requires the Company to
maintain a minimum fixed charge coverage ratio along with certain financial
ratios and certain other financial conditions. Such borrowings are secured by a
significant portion of the Company's assets, primarily trade receivables.

Other Borrowings

         Other borrowings consist primarily of mortgage debt financing and notes
payable for equipment purchase, which are collateralized by the equipment. At
June 30, 2003, the interest rate charged on outstanding borrowings ranged from
5.0% to 8.0%.

         Maturities of long-term debt for the years ending June 30 are as
follows (in thousands):

<TABLE>
<S>                               <C>
2004............................  $ 6,156
2005............................    2,625
2006............................   20,697
2007............................      174
2008............................      187
Thereafter......................    2,723
                                  -------
                                  $32,562
                                  =======
</TABLE>

                                     - 37 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

(6)      EMPLOYEE BENEFIT PLANS

401(k) Profit Sharing Plan

         The Company has a 401(k) profit sharing plan which permits U.S.
employees of the Company to contribute up to 15% of their annual compensation,
up to certain Internal Revenue Service limits, on a pre-tax basis. The
contributions made by each employee are fully vested immediately and are not
subject to forfeiture. The Company makes a matching contribution of 25% of the
employee's contribution up to 5% of their annual compensation and may make
additional discretionary contributions. The aggregate Company contribution may
not exceed 5% of the employee's compensation. Employees vest in the Company's
contribution to the plan at the rate of 20% per year from the date of
contribution. Contributions made by the Company during 2003, 2002 and 2001
amounted to $281 thousand, $232 thousand, and $220 thousand, respectively.

(7)      STOCK PLANS

Stock Options - Celadon Group, Inc.

         The Company has a Stock Option Plan ("Plan") which provides for the
granting of stock options, stock appreciation rights and restricted stock awards
to purchase not more than 1,200,000 shares of Common Stock, subject to
adjustment under certain circumstances, to select management and key employees
of the Company and its subsidiaries. The options have a three-year vesting
period.

         The weighted-average per share fair value of the individual options
granted during fiscal year 2002 and 2001 for Celadon is estimated as $4.32 and
$3.35, respectively, on the date of grant. There were no options granted in
fiscal 2003.

         The fair values of Celadon option grants for 2002 and 2001 were
determined using a Black-Scholes option-pricing model with the following
weighted average assumptions:

<TABLE>
<CAPTION>
                                               2002           2001
                                              ------         -------
<S>                                          <C>             <C>
Dividend yield.............................        0               0
Volatility.................................     85.7%          111.2%
Risk-free interest rate....................      3.9%            4.7%
Forfeiture rate............................      0.4%           14.0%
Expected life..............................  7 years         7 years
</TABLE>

                                     - 38 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         Stock option activity for Celadon is summarized below:

<TABLE>
<CAPTION>
                                       SHARES OF         WEIGHTED
                                     COMMON STOCK        AVERAGE
                                     ATTRIBUTABLE        EXERCISE
                                      TO OPTIONS      PRICE OF OPTIONS
                                     ------------     ----------------
<S>                                  <C>              <C>
Unexercised at June 30, 2000...        538,900        $          10.26
Granted .......................        366,333        $           3.80
Exercised .....................         (5,335)       $           8.00
Forfeited .....................        (87,549)       $          10.21
                                       -------        ----------------

Unexercised at June 30, 2001...        812,349        $           7.37
Granted .......................        282,664        $           5.57
Exercised .....................        (33,366)       $           4.49
Forfeited .....................       (211,296)       $           9.03
                                       -------        ----------------

Unexercised at June 30, 2002...        850,351        $           6.47
Granted .......................            ---                     ---
Exercised .....................        (16,155)       $           4.77
Forfeited .....................        (13,276)       $           8.21
                                       -------        ----------------

Unexercised at June 30, 2003...        820,920        $           6.70
                                       =======
</TABLE>

         The following table summarizes information concerning outstanding and
exercisable Celadon options at June 30, 2003:

<TABLE>
<CAPTION>
                                  Options Outstanding                    Options Exercisable
                                       Weighted-
                                        Average            Weighted                               Weighted
Range of                               Remaining            Average                                Average
Exercise              Number          Contractual          Exercise           Number              Exercise
 Prices            Outstanding           Life               Price           Exercisable            Price
 ------            -----------           ----               -----           -----------            -----
<S>                <C>            <C>                      <C>           <C>                      <C>
$ 0-$ 5              299,920              7.50              $ 3.56             214,033             $ 3.43
$ 5-$10              394,500              7.19              $ 6.76             252,835             $ 7.04
$10-$15              126,000              3.42              $12.48             126,000             $12.69
$15-$20                  500              6.92              $16.38                 500             $16.38
</TABLE>

         Celadon stock options exercisable at June 30, 2003, 2002 and 2001 were
593,368 and 442,137 and 279,386, respectively.

                                     - 39 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

Stock Options- TruckersB2B, Inc.

         On March 15, 2000, TruckersB2B, Celadon - E-Commerce's majority owned
subsidiary, adopted the 2000 Stock Option Plan ("2000 Plan"). Under the 2000
Plan, TruckersB2B is authorized to grant options for up to 1,000,000 shares of
common stock to employees of TruckersB2B, Celadon, directors of TruckersB2B, and
vendors. Options granted under the 2000 Plan are for periods not to exceed ten
years and must be issued at prices not less than 100% of the fair market value
of the stock on the date of grant. Incentive stock options granted to
stockholders with greater than 10% ownership of the outstanding stock are for
periods not to exceed five years. Options generally vest at a rate of 2% to 5%
per month. In certain cases, a portion of the options vests immediately on the
date of grant.

         TruckersB2B has elected to follow APB 25, "Accounting for Stock Issued
to Employees," and related interpretations in accounting for its stock options.
Under APB 25, because the exercise price of TruckersB2B employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized for the options.

         The weighted-average per share fair value of the individual options
granted is estimated as $0.09, on the date of the grant, during fiscal year
2001. No options were granted during fiscal year 2002 and 2003.

         The fair value of TruckersB2B option grants for 2001 was determined
using a Black-Scholes option-pricing model with the following weighted average
assumptions;

<TABLE>
<CAPTION>
                                                2001
                                               -------
<S>                                            <C>
Dividend yield...............................        0
Volatility...................................       .1%
Risk-free interest rate......................      5.8%
Forfeiture rate..............................       17%
Expected life................................  3 years
</TABLE>

                                     - 40 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         Stock option activity for TruckersB2B is summarized below:

<TABLE>
<CAPTION>
                                     SHARES OF           WEIGHTED
                                    COMMON STOCK         AVERAGE
                                    ATTRIBUTABLE         EXERCISE
                                     TO OPTIONS      PRICE OF OPTIONS
                                    ------------     ----------------
<S>                                 <C>              <C>
Unexercised at July 1, 2000 ...       693,250        $           1.57
Granted .......................       152,000        $           0.57
Forfeited .....................       (96,500)       $           1.01
                                      -------        ----------------

Unexercised at July 1, 2001 ...       748,750        $           1.44
Forfeited .....................      (336,000)       $           1.19
                                      -------        ----------------

Unexercised at June 30, 2002 ..       412,750        $           1.64
Forfeited .....................       (10,500)       $           0.62
                                      -------        ----------------
Unexercised at June 30, 2003 ..       402,250        $           1.67
                                      -------

         The following table summarizes information concerning outstanding and
exercisable TruckersB2B options at June 30, 2003:
</TABLE>

<TABLE>
<CAPTION>
                                             Options Outstanding                 Options Exercisable
                                       Weighted-
                                        Average            Weighted                               Weighted
Range of                               Remaining            Average                                Average
Exercise             Number           Contractual          Exercise           Number              Exercise
 Prices            Outstanding           Life               Price           Exercisable            Price
 ------            -----------           ----               -----           -----------            -----
<S>                <C>                <C>                  <C>              <C>                   <C>
$0-$ 1               377,000              6.9               $ 0.89            329,000              $ 0.94
$1-$15                25,250              6.9               $13.28             25,250              $13.28
</TABLE>

Stockholder Rights Plan

         On June 28, 2000, the Company's Board of Directors approved a
Stockholder Rights Plan whereby, on July 31, 2000, common stock purchase rights
("Rights") were distributed as a dividend at the rate of one Right for each
share of the Company's common stock held as of the close of business on July 20,
2000. The Rights will expire on July 18, 2010. Under the plan, the Rights will
be exercisable only if triggered by a person or group's acquisition of 15% or
more of the Company's common stock. Each right, other than Rights held by the
acquiring person or group, would entitle its holder to purchase a specified
number of the Company's common shares for 50% of their market value at that
time.

         Following the acquisition of 15% or more of the Company's common stock
by a person or group, the Board of Directors may authorize the exchange of the
Rights, in whole or in part, for shares of the Company's common stock at an
exchange ratio of one share for each Right, provided that at the time of such
proposed exchange no person or group is then the beneficial owner of 50% or more
of the Company's common stock.

         Unless a 15% acquisition has occurred, the Rights may be redeemed by
the Company at any time prior to the termination date of the plan.

                                     - 41 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

(8)      EARNINGS PER SHARE

         The following is a reconciliation of the numerators and denominators
used in computing earnings per share (in thousands):

<TABLE>
<CAPTION>
                                                                 2003       2002       2001
                                                               --------   --------   --------
<S>                                                            <C>        <C>        <C>
Income (loss) available to common shareholders .............   $  3,588   $  1,709   $ (5,336)
                                                               ========   ========   ========

Basic earnings (loss) per share:
     Weighted - average number of common
         shares outstanding ................................      7,688      7,611      7,649
                                                               ========   ========   ========

         Basic earnings (loss) per share ...................   $   0.47   $   0.22   $  (0.70)
                                                               ========   ========   ========

Diluted earnings (loss) per share:
     Weighted - average number of common
         shares outstanding ................................      7,688      7,611      7,649
     Effect of stock options and other incremental shares ..        347        142        ---
                                                               --------   --------   --------

     Weighted-average number of common shares
         outstanding - diluted .............................      8,035      7,753      7,649
                                                               ========   ========   ========

     Dilute earnings (loss) per share ......................   $   0.45   $   0.22   $  (0.70)
                                                               ========   ========   ========
</TABLE>

         Diluted loss per share for fiscal year 2001 does not include the
anti-dilutive effect of 50 thousand stock options and other incremental shares,
respectively.

(9)      RELATED PARTY TRANSACTIONS

         In October 2001, the Company sold 103,850 shares of treasury stock to
non-executive members of management. The Company granted loans totaling $449,000
to the non-executive management with a 5-year term. As of June 30, 2003,
approximately $268,000 of the aforementioned loans remained outstanding.

                                     - 42 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         In fiscal 2002, Millennium Contractor's, LLC, a company which is
majority owned by Jerry Closser, Officer and Executive Vice President of Celadon
Group, Inc., sub-contracted from MacDougall Pierce to perform various services
for Celadon Trucking Services, Inc. The sub-contract was awarded by MacDougall
Pierce based on competitive bidding. These services included but were not
limited to excavation, utility installation, and ground preparation for parking
and building additions constructed in fiscal 2002. Millennium Contractor's LLC
was paid by MacDougall Pierce approximately $177,000 for these services.

(10)     COMMITMENTS AND CONTINGENCIES

         The Company has outstanding commitments to purchase approximately $30.3
million of revenue equipment at June 30, 2003, which will be financed utilizing
long-term lease agreements.

         Standby letters of credit, not reflected in the accompanying
consolidated financial statements, aggregated approximately $5.5 million at June
30, 2003.

         The Company has employment and consulting agreements with various key
employees providing for minimum combined annual compensation over the next three
fiscal years of $800 thousand in fiscal 2004 and 2005 and $575 thousand in
fiscal 2006.

         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.

         We are a party to routine litigation incidental to its business,
primarily involving claims for bodily injury or property damage incurred in the
transportation of freight. We are responsible for the safe delivery of cargo. As
of July 2003, we are self-insured on auto liability claims, in the United States
and Canada, for the first one million dollars of an accident claim. In addition,
Celadon is responsible for a $2.75 million aggregate deductible for claims
between $1.0 million and $2.5 million of auto liability insurance claims. We are
also responsible for administrative expenses, for each occurrence involving
personal injury or property damage. We are also self-insured for its physical
damage losses, and workers compensation losses and responsible for the first
$100,000 on cargo claims. We maintain separate insurance in Mexico consisting of
bodily injury and property damage coverage with acceptable deductibles.
Management believes its uninsured exposure is reasonable for the transportation
industry, based on previous history. Consequently, we do not believe that the
litigation and claims experienced will have a material impact on our financial
position or results of operations.

                                     - 43 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         Shortages of fuel, increases in fuel prices or rationing of petroleum
products can have a materially adverse effect on the operations and
profitability of the Company. The Company cannot predict whether high fuel price
levels will continue in the future or the extent to which fuel surcharges will
be collected to offset such increases. During the years ended June 30, 2003 and
2002, the Company recognized approximately $98 and $100 thousand of expense,
respectively on futures contracts and commodity collar transactions which is
included in fuel expense.

(11)     INCOME TAXES

         The income tax provision (benefit) for operations in 2003, 2002 and
2001 consisted of the following (in thousands):

<TABLE>
<CAPTION>
                               2003       2002       2001
                             --------   --------   --------
<S>                          <C>        <C>        <C>
Current:
     Federal .............   $    ---   $    ---   $    ---
     State and local .....         74         97        244
     Foreign .............       (302)        90        ---
                             --------   --------   --------
         Total Current ...       (228)       187        244
                             --------   --------   --------
Deferred:
     Federal .............      2,226        740     (2,638)
     State and local .....        409         39       (232)
     Foreign .............        541        249        ---
                             --------   --------   --------
         Total Deferred ..      3,175      1,028     (2,870)
                             --------   --------   --------
         Total ...........   $  2,948   $  1,215   $ (2,626)
                             ========   ========   ========
</TABLE>

         No provision is made for U.S. federal income taxes on undistributed
earnings of foreign subsidiaries of approximately $7.0 million at June 30, 2003,
as management intends to permanently reinvest such earnings in the Company's
operations in the respective foreign countries where earned. Included in the
consolidated income before income taxes is income of approximately $0.5 million
generated from foreign operations in fiscal 2003.

                                     - 44 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

         The Company's effective rate differs from the statutory federal tax
rate as follows:

<TABLE>
<CAPTION>
                                           2003     2002     2001
                                           -----    -----    -----
<S>                                        <C>      <C>      <C>
Statutory federal tax rate .............   35.00%   35.00%   35.00%
State taxes, net of federal benefit ....    5.98     3.04    (0.10)
Non-deductible expenses ................    4.80     2.33    (3.84)
Other, net .............................   (0.67)    1.23     1.92
                                           -----    -----    -----
         Effective tax rate ............   45.11%   41.60%   32.98%
                                           =====    =====    =====
</TABLE>

         The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at June 30, 2003 and 2002
consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                             2003         2002
                                                          ----------   ----------
<S>                                                       <C>          <C>
Deferred tax assets:
     Allowance for doubtful accounts ..................   $      290   $      280
     Insurance reserves ...............................        1,211        1,276
     Net operating loss carryforwards .................        3,255        3,931
     Alternative minimum tax credit carryforward ......          628          628
     Other ............................................          878          142
                                                          ----------   ----------
           Total deferred tax assets ..................   $    6,262   $    6,257
                                                          ==========   ==========

Deferred tax liabilities:
     Property and equipment ...........................   $   (5,427)  $   (4,301)
     Capital leases ...................................       (4,542)      (4,665)
     Other ............................................       (4,645)      (3,073)
                                                          ----------   ----------
           Total deferred tax liabilities .............   $  (14,614)  $  (12,039)
                                                          ==========   ==========

Net current deferred tax assets .......................   $    2,296   $    1,808
Net non-current deferred tax liabilities ..............      (10,648)      (7,590)
                                                          ----------   ----------
           Total net deferred tax liabilities .........   $   (8,352)  $   (5,782)
                                                          ==========   ==========
</TABLE>

         As of June 30, 2003, the Company had approximately $8.4 million of net
operating loss carryforwards with expiration dates beginning in 2015.

                                     - 45 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

(12)     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, CTSI, Jaguar,
CelCan, and formerly Cheetah. The Company began providing certain services over
the Internet through its e-commerce subsidiary, TruckersB2B, in the last half of
fiscal year 2000. 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 (loss).

                                     - 46 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

<TABLE>
<CAPTION>
                                                              FISCAL YEAR ENDED
                                                                   JUNE 30,
                                                            (DOLLARS IN THOUSANDS)
                                                        2003         2002         2001
                                                     ----------   ----------   ----------
<S>                                                  <C>          <C>          <C>
Operating revenues
    Transportation ...............................   $  359,883   $  330,321   $  347,390
    E-Commerce ...................................        7,222        6,678        4,428
                                                     ----------   ----------   ----------
                                                        367,105      336,999      351,818

Operating income (loss)
    Transportation ...............................       11,522        9,659        2,952
    E-Commerce ...................................        1,212          886       (2,296)
                                                     ----------   ----------   ----------
                                                         12,734       10,545          656

Depreciation and amortization
    Transportation ...............................       13,750       13,616       15,352
    E-Commerce ...................................           68           74           57
                                                     ----------   ----------   ----------
                                                         13,818       13,690       15,409

Interest income
    Transportation ...............................           85          114          148

Interest expense
    Transportation ...............................        6,127        7,489        9,311
    E-Commerce ...................................          159          112          117
                                                     ----------   ----------   ----------
                                                          6,286        7,601        9,428

Income (loss) before taxes
    Transportation ...............................        5,484        2,150       (5,894)
    E-Commerce ...................................        1,052          774       (2,068)
                                                     ----------   ----------   ----------
                                                          6,536        2,924       (7,962)

Total assets
    Transportation ...............................      160,970      188,508      193,574
    E-Commerce ...................................        1,103        1,523        1,342
                                                     ----------   ----------   ----------
                                                        162,073      190,031      194,916

Special charges included in segment profit loss
    Loss on flatbed division (Transportation) ....          ---          ---       (3,692)
    Non-cash member costs (E-commerce) ...........          ---          ---         (342)
    Write-off IPO costs (E-commerce) .............          ---          ---         (800)
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     - 47 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

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

<TABLE>
<CAPTION>
                                  2003         2002         2001
                               ----------   ----------   ----------
<S>                            <C>          <C>          <C>
Operating revenue:
         United States .....   $  301,492   $  268,902   $  281,032
         Canada ............       47,524       47,900       51,296
         Mexico ............       18,089       20,197       19,490
                               ----------   ----------   ----------
                  Total ....   $  367,105   $  336,999   $  351,818
                               ==========   ==========   ==========

Long lived assets:
         United States .....   $   65,860   $   81,940   $   85,997
         Canada ............        9,337       10,684       12,770
         Mexico ............        1,770        2,354        3,135
                               ----------   ----------   ----------
                  Total ....   $   76,967   $   94,978   $  101,902
                               ==========   ==========   ==========
</TABLE>

         The Company's largest customer is DaimlerChrysler, which accounted for
approximately 12%, 19%, and 20% of the Company's total revenue for fiscal 2003,
2002 and 2001, respectively. The Company transports DaimlerChrysler original
equipment automotive parts primarily between the United States and Mexico and
Daimler Chrysler after-market replacement parts and accessories within the
United States. The Company's agreement with DaimlerChrysler is an agreement for
international freight with the Chrysler division, which expires in October 2006.
No other customer accounted for more than 10% of the Company's total revenue
during any of its three most recent fiscal years.

                                     - 48 -
<PAGE>

                               CELADON GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2003

(13)     SUBSEQUENT EVENT

         In August 2003, the Company purchased certain assets of Highway
Express, Inc. ("Highway"). The assets of Highway consisted of approximately 190
tractors, 500 trailers, trade receivables and other assets. The purchase price
of approximately $11.4 million consisted of $4.0 million of cash and a $7.4
million thirty-six month note payable. The Company used borrowings under its
existing Credit Agreement to fund the cash portion of the acquisition. This
acquisition will strengthen the Company's regional presence and lane density in
the southeast, enhance our consumer non-durable customer base, and should
increase our rate per mile. Highway's revenue for calendar 2002 was
approximately $27 million.

(14)     SELECTED QUARTERLY DATA (UNAUDITED)

         Summarized quarterly data for fiscal 2003 and 2002 follows (in
thousands except per share amounts):

<TABLE>
<CAPTION>
                                                 FISCAL YEAR 2003
                                   1ST QTR.    2ND QTR.     3RD QTR.     4TH QTR.
                                 ----------   ----------   ----------   ----------
<S>                              <C>          <C>          <C>          <C>
Operating revenues ...........   $   93,560   $   90,827   $   90,686   $   92,032
Operating expenses ...........       89,624       87,675       88,670       88,402
                                 ----------   ----------   ----------   ----------

Operating income .............        3,936        3,152        2,016        3,630
Other expense, net ...........        2,416        1,417        1,222        1,143
                                 ----------   ----------   ----------   ----------

Income before taxes ..........        1,520        1,735          794        2,487
Income tax expense ...........          629          707          340        1,272
                                 ----------   ----------   ----------   ----------

Net income ...................   $      891   $    1,028   $      454   $    1,215
                                 ==========   ==========   ==========   ==========

Basic income per share .......   $     0.12   $     0.13   $     0.06   $     0.16
                                 ==========   ==========   ==========   ==========
Diluted income per share .....   $     0.11   $     0.13   $     0.06   $     0.15
                                 ==========   ==========   ==========   ==========
</TABLE>

<TABLE>
<CAPTION>
                                                 FISCAL YEAR 2003
                                   1ST QTR.    2ND QTR.     3RD QTR.     4TH QTR.
                                 ----------   ----------   ----------   ----------
<S>                              <C>          <C>          <C>          <C>
Operating revenues ...........   $   82,870   $   79,349   $   78,737   $   96,043
Operating expenses ...........       80,383       77,125       76,550       92,396
                                 ----------   ----------   ----------   ----------

Operating income .............        2,487        2,224        2,187        3,647
Other expense, net ...........        2,086        1,896        1,714        1,925
                                 ----------   ----------   ----------   ----------

Income before taxes ..........          401          328          473        1,722
Income tax expense ...........          260          129          195          631
                                 ----------   ----------   ----------   ----------

Net income ...................   $      141   $      199   $      278   $    1,091
                                 ==========   ==========   ==========   ==========

Basic income per share .......   $     0.02   $     0.03   $     0.04   $     0.14
                                 ==========   ==========   ==========   ==========
Diluted income per share .....   $     0.02   $     0.03   $     0.04   $     0.14
                                 ==========   ==========   ==========   ==========
</TABLE>

                                     - 49 -
<PAGE>

ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

There were no changes in or disagreements with accountants on accounting or
financial disclosure within the last three fiscal years.

ITEM 9A.          CONTROLS AND PROCEDURES

An evaluation was performed with the participation of our management, including
our Chief Executive Officer and our Chief Financial Officer, concerning the
effectiveness of the design and operation of our disclosure controls and
procedures as of June 30, 2003. Based on that evaluation, our management,
including our Chief Executive Officer and Chief Financial Officer, concluded
that our disclosure controls and procedures were effective as of June 30, 2003.

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated herein by reference to the Company's definitive Proxy Statement to
be filed in connection with the 2003 Annual Meeting of Stockholders.

ITEM 11.          EXECUTIVE COMPENSATION

Incorporated herein by reference to the Company's definitive Proxy Statement to
be filed in connection with the 2003 Annual Meeting of Stockholders.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                  AND RELATED STOCKHOLDER MATTERS

Incorporated herein by reference to the Company's definitive Proxy Statement to
be filed in connection with the 2003 Annual Meeting of Stockholders.

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated herein by reference to the Company's definitive Proxy Statement to
be filed in connection with the 2003 Annual Meeting of Stockholders.

ITEM 14.          PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated herein by reference to the Company's definitive Proxy Statement to
be filed in connection with the 2003 Annual Meeting of Stockholders.

                                     - 50 -
<PAGE>

                                     PART IV

ITEM 15.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

<TABLE>
<CAPTION>
                                                                                             Page Number of
                                                                                             Annual Report
                                                                                              on Form 10-K
<S>                                                                                          <C>
(a)  List of Documents filed as part of this Report

        (1)   FINANCIAL STATEMENTS

Report of Independent Auditors                                                                     23

Consolidated Balance Sheets as of June 30, 2003 and 2002                                           24

Consolidated Statements of Operations
        Years ended June 30, 2003, 2002 and 2001                                                   25

Consolidated Statements of Cash Flows
        Years ended June 30, 2003, 2002 and 2001                                                   26

Consolidated Statements of Stockholders' Equity
        Years ended June 30, 2003, 2002 and 2001                                                   27

Notes to Consolidated Financial Statements                                                         28

        (2)   FINANCIAL STATEMENT SCHEDULES

Consolidated Financial Statements Schedules as of and for
        Years ended June 30, 2003, 2002 and 2001

        Schedule II        Valuation and Qualifying Accounts                                       55
</TABLE>

  All other Financial Statements Schedules have been omitted because they are
                       not required or are not applicable.

                                     - 51 -
<PAGE>

(3)      EXHIBITS (NUMBERED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K).

3.1--    Certificate of Incorporation of the Company. Incorporated by reference
         to Exhibit 3.1 of Form S-1 filed January 20, 1994 (No. 33-72128).

3.2--    Certificate of Amendment of Certificate of Incorporation dated February
         2, 1995 decreasing aggregate number of authorized shares to 12,179,985.
         Incorporated by reference to Exhibit 3.2 of Form 10-K filed November
         30, 1995.

3.3--    Certificate of Designation. Incorporated by reference to Exhibit 3.3 of
         form 10-K filed September 28, 2000.

3.4--    By-laws of the Company. Incorporated by reference to Exhibit 3.2 of
         Form S-1 filed January 20, 1994 (No. 33-72128).

10.1--   Celadon Group, Inc. 1994 Stock Option Plan. Incorporated by reference
         to Exhibit B to the Company's Proxy Statement filed October 17, 1997.

10.2--   401(k) Profit Sharing Plan of the Company. Incorporated by reference to
         Exhibit 10.4 of Form S-1 filed January 20, 1994 (No. 33-72128).

10.3--   401(K) Profit Sharing Plan and Adoption Agreement of the Company.
         Incorporated by reference to Exhibit 10.45 of Form 10-Q filed February
         12, 1997.

10.4--   Employment Agreement between the Company and Stephen Russell.
         Incorporated by reference to Exhibit 10.43 of Form S-1 Filed January
         20, 1994 (No. 33-72128).10.7

10.5--   Amendment dated February 12, 1997 to Employment Agreement dated January
         21, 1994 between the Company and Stephen Russell. Incorporated by
         reference to Exhibit 10.50 of Form 10-K filed September 12, 1997.

10.6--   Celadon Group, Inc. Non-Employee Director Stock Option Plan.
         Incorporated by reference to Exhibit A to the Company's Proxy Statement
         filed October 17, 1997.

10.7--   Amendment No. 2 dated August 1, 1997 to Employment Agreement dated
         January 21, 1994 between the Company and Stephen Russell. Incorporated
         by reference to Exhibit 10.55 of Form 10-Q filed February 11, 1998.

10.8--   Stockholder Rights Plan for the Company Incorporated by reference to
         Exhibit 4.1 of Form 8-A filed July 20, 2000.

10.9--   Amendment No. 3 dated July 26, 2000 to Employment Agreement dated
         January 21, 1994 between the Company and Stephen Russell. Incorporated
         by reference to Exhibit 10.19 of Form 10-K filed September 30, 2002.

10.10--  Amendment No. 4 dated April 4, 2002 to Employment Agreement dated
         January 21, 1994 between the Company and Stephen Russell. Incorporated
         by reference to Exhibit 10.10 of Form 10-K filed September 30, 2002.

10.11--  Separation Agreement dated March 3, 2000 between the Company and Paul
         A. Will. Incorporated by reference to Exhibit 10.21 of Form 10-K filed
         September 30, 2002.

10.12--  Amendment to Separation Agreement between the Company and Paul A. Will
         dated March 3, 2000. Incorporated by reference to Exhibit 10.22 of Form
         10-K filed September 30, 2002.

10.13--  Separation Agreement dated March 2, 2000 between the Company and David
         Shatto. Incorporated by reference to Exhibit 10.23 of Form 10-K filed
         September 30, 2002.

10.14--  Amendment to Separation Agreement between the Company and David Shatto
         dated March 2, 2000. Incorporated by reference to Exhibit 10.24 of Form
         10-K filed September 30, 2002.

10.15--  Loan and Security Agreement dated September 26, 2002, among the
         Company, certain of its subsidiaries, Fleet Capital Corporation, Fleet
         Capital Canada Corporation and certain other lenders. Incorporated by
         reference to Exhibit 10.25 of Form 10-K filed September 30, 2002.

10.16--  First Amendment Credit Agreement dated January 31, 2003 among the
         Company, certain of its subsidiaries, Fleet Capital Corporation, Fleet
         Capital Canada Corporation and certain other lenders.

10.17--  Second Amendment to Credit Agreement dated April 24, 2003 among the
         Company, certain of its subsidiaries, Fleet Capital Corporation, Fleet
         Capital Canada Corporation and certain other lenders.

10.18--  Third Amendment to Credit Agreement dated August 21, 2003 among the
         Company, certain of its subsidiaries, Fleet Capital Corporation, Fleet
         Capital Canada Corporation and certain other lenders.

10.19--  Amendment No. 5 dated November 20, 2002 to Employment Agreement dated
         January 21, 1994 between the Company and Stephen Russell.

10.20--  Code of Ethics adopted by the Company on April 30, 2003.

                                     - 52 -
<PAGE>

21--     Subsidiaries.

23--     Consent of Independent Auditors.

31.1--   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
         2002.

31.2--   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
         2002.

32.1--   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2--   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1--   Risk Factors.

(b)      REPORTS ON FORM 8-K.

Report on Form 8-K dated April 30, 2003, filed pursuant to Items 7 and 9.

                                     - 53 -
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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 this September 19,
2003.

                                        Celadon Group, Inc.

                                        By: /s/ Stephen Russell
                                            -------------------
                                            Stephen Russell
                             Chairman of the Board and Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

      Signature                      Title                        Date

                         Chairman of the Board and         September 19, 2003
/s/ Stephen Russell      Chief Executive Officer
-------------------      (Principal Executive Officer)
(Stephen Russell)

                         Chief Financial Officer,          September 19, 2003
/s/ Paul A. Will         Secretary, and Asst. Treasurer
----------------         (Principal Financial and
(Paul A. Will)           Accounting Officer)

                                                           September 19, 2003
/s/ Michael Dunlap       Asst. Secretary and Treasurer
------------------
(Michael Dunlap)

                                                           September 19, 2003
/s/ Paul A. Biddelman    Director
---------------------
(Paul A. Biddelman)

                                                           September 19, 2003
/s/ Michael Miller       Director
------------------
(Michael Miller)

                                                           September 19, 2003
/s/ Anthony Heyworth     Director
--------------------
(Anthony Heyworth)

                                                           September 19, 2003
/s/ John Kines           Director
--------------
(John Kines)

                                     - 54 -
<PAGE>

SCHEDULE II

                               CELADON GROUP, INC.
                        VALUATION AND QUALIFYING ACCOUNTS

                    YEARS ENDED JUNE 30, 2003, 2001 AND 2000

<TABLE>
<CAPTION>
                                      BALANCE AT   CHARGED TO                   BALANCE AT
                                      BEGINNING    COSTS AND                      END OF
DESCRIPTION                           OF PERIOD     EXPENSES    DEDUCTIONS        PERIOD
-----------                           ----------   ----------   ----------      ----------
<S>                                   <C>          <C>          <C>             <C>

YEAR ENDED JUNE 30, 2001:

Allowance for doubtful accounts       $  786,420   $  753,860   $  530,249(a)   $1,010,031

Reserves for claims payable
     as self insurer                  $2,191,215   $5,260,129   $4,239,005(b)   $3,212,339

YEAR ENDED JUNE 30, 2002:

Allowance for doubtful accounts       $1,010,031   $  932,657   $1,002,566(a)   $  940,122

Reserves for claims payable
     as self insurer                  $3,212,339   $6,203,768   $5,024,203(b)   $4,391,904

YEAR ENDED JUNE 30, 2003:

Allowance for doubtful accounts       $  940,122   $  704,155   $  579,519(a)   $1,064,758

Reserves for claims payable
     as self insurer                  $4,391,904   $6,905,684   $6,125,336(b)   $5,172,252
</TABLE>

-------------------------

(a)      Represents accounts receivable write-offs.

(b)      Represents claims paid.

                                     - 55 -