CELADON GROUP INC - FORM 10-Q/A

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - CELADON GROUP INC	Financial_Report.xls
EX-32.2 - EXHIBIT 32.2 (906 CFO CERTIFICATION) - CELADON GROUP INC	exhibit322.htm
EX-31.1 - EXHIBIT 31.1 (302 CEO CERTIFICATION) - CELADON GROUP INC	exhibit311.htm
EX-32.1 - EXHIBIT 32.1 (906 CEO CERTIFICATION) - CELADON GROUP INC	exhibit321.htm
EX-31.2 - EXHIBIT 31.2 (302 CFO CERTIFICATION) - CELADON GROUP INC	exhibi312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 10-Q/A

Amendment No. 1

[ X ]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2011

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-34533

CELADON GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	13-3361050
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

9503 East 33rd Street
One Celadon Drive
Indianapolis, IN	46235-4207
(Address of principal executive offices)	(Zip Code)

(Registrant's telephone number, including area code): (317) 972-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]

Accelerated filer [X]

Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act).

Yes [ ] No [X]

As of January 31, 2012 (the latest practicable date), 22,776,889 shares of the registrant's common stock, par value $0.033 per share, were outstanding.

CELADON GROUP, INC.

Index to

December 31, 2011 Form 10-Q/A

Part I.	Financial Information

	Item 1.	Financial Statements

		Condensed Consolidated Statements of Income for the three and six months ended December 31, 2011 and 2010 (Unaudited)	4

		Condensed Consolidated Balance Sheets at December 31, 2011 (Unaudited) and June 30, 2011	5

		Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2011 and 2010 (Unaudited)	6

		Notes to Condensed Consolidated Financial Statements (Unaudited)	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26

	Item 4.	Controls and Procedures	27

Part II.	Other Information

	Item 1.	Legal Proceedings	29

	Item 1A.	Risk Factors	29

	Item 4	Mine Safety Disclosures	29

	Item 6.	Exhibits	30

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A (Amendment No. 1) amends the Quarterly Report on Form 10-Q of Celadon Group, Inc. (the Company) for the quarterly period ended December 31, 2011, as originally filed with the Securities and Exchange Commission (SEC) on February 6, 2012 (Original Filing). This Form 10-Q/A amends the Original Filing to change the classification of most of the Company’s revenue equipment leases from operating leases to capital leases. Further explanation regarding such change is set forth in Note 2 to the consolidated financial statements contained in this Amendment No. 1. This Amendment No. 1 amends and restates the Original Filing in its entirety. Revisions to the Original Filing have been made to the following sections:

·	Item 1 – Financial Statements
·	Item 1A – Risk Factors
·	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
·	Item 4 – Controls and Procedures

In addition, the Company’s principal executive officer and principal financial officer have provided certifications in connection with this Amendment No. 1 (Exhibits 31.1, 31.2, and 32.1 and 32.2).

Except as described above, no other amendments have been made to the Original Filing. This Amendment continues to speak as of the date of the Original Filing, and the Company has not updated the disclosure contained herein to reflect events that have occurred since the date of the Original Filing. Notwithstanding the foregoing, the modifications made herein resulted from the appropriate GAAP interpretation of the maximum amount the Company could be required to pay as described in ASC 840-10-25-14, in the event of a non-performance-related default under the Company’s r leases. Accordingly, this Amendment No. 1 should be read in conjunction with the Company’s other filings made with the SEC subsequent to the filing of the Original Filing, including any amendments to those filings.

Table of Contents

PART I. FINANCIAL INFORMATION

Item I. Financial Statements

CELADON GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars and shares in thousands except per share amounts)

(Unaudited)


	For the three months ended December 31,						For the six months ended December 31,
	2011			2010			2011			2010
	(Restated)			(Restated)			(Restated)			(Restated)
REVENUE:
Freight revenue	$	115,065		$	114,205		$	229,842		$	235,905
Fuel surcharge revenue		29,135			21,578			58,317			42,397
Total revenue		144,200			135,783			288,159			278,302

OPERATING EXPENSES:
Salaries, wages, and employee benefits		37,562			37,574			75,122			75,701
Fuel		37,063			30,931			75,530			63,202
Purchased transportation		27,302			25,426			54,435			51,300
Revenue equipment rentals		933			39			1,906			369
Operations and maintenance		10,177			10,050			19,979			20,143
Insurance and claims		3,676			3,468			6,719			7,593
Depreciation and amortization		12,413			13,976			23,944			29,203
Cost of products and services sold		-			1,350			-			2,748
Communications and utilities		998			1,062			1,903			2,169
Operating taxes and licenses		2,595			2,432			5,104			4,825
General and other operating		1,668			1,705			3,297			3,449
Total operating expenses		134,387			128,013			267,939			260,702

Operating income		9,813			7,770			20,220			17,600

Interest expense		1,524			2,266			2,906			4,524
Interest income		(44	)		(15	)		(52	)		(31	)
Other income		(211	)		(79	)		(498	)		(146	)
Income before income taxes		8,544			5,598			17,864			13,253
Income tax expense		3,089			2,472			6,951			5,735
Net income	$	5,455		$	3,126		$	10,913		$	7,518

Income per common share:
Diluted	$	0.24		$	0.14		$	0.48		$	0.33
Basic	$	0.25		$	0.14		$	0.49		$	0.34

Diluted weighted average shares outstanding		22,697			22,569			22,687			22,563
Basic weighted average shares outstanding		22,248			22,051			22,233			22,054

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

CELADON GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2011 and June 30, 2011

(Dollars and shares in thousands except par value)

	(unaudited)
	December 31,			June 30,
ASSETS	2011			2011
	(Restated)			(Restated)
Current assets:
Cash and cash equivalents	$	1,418		$	25,673
Trade receivables, net of allowance for doubtful accounts of $1,057 and $1,045 at December 31, 2011 and June 30, 2011, respectively		60,615			64,723
Prepaid expenses and other current assets		13,808			14,403
Tires in service		6,793			6,594
Assets held for sale		25,653			---
Income tax receivable		2,131			---
Deferred income taxes		3,868			3,940
Total current assets		114,286			115,333
Property and equipment		476,971			418,698
Less accumulated depreciation and amortization		130,505			141,584
Net property and equipment		346,466			277,114
Tires in service		3,182			2,914
Goodwill		16,702			16,702
Investment in unconsolidated companies		3,153			2,902
Other assets		6,582			1,701
Total assets	$	490,371		$	416,666

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	13,629		$	10,475
Accrued salaries and benefits		11,871			13,192
Accrued insurance and claims		10,853			13,360
Accrued fuel expense		9,468			11,113
Other accrued expenses		18,499			15,729
Current maturities of capital lease obligations		65,380			75,521
Income taxes payable		---			1,778
Total current liabilities		129,700			141,168
Long-term debt		34,531			---
Capital lease obligations, net of current maturities		112,307			72,182
Deferred income taxes		34,962			31,416
Stockholders' equity:
Common stock, $0.033 par value, authorized 40,000 shares; issued and outstanding 23,876 and 23,887 shares at December 31, 2011 and June 30, 2011, respectively		788			788
Treasury stock at cost; 1,258 and 1,364 shares at December 31, 2011 and June 30, 2011, respectively		(8,677	)		(9,408	)
Additional paid-in capital		100,250			99,906
Retained earnings		91,589			81,566
Accumulated other comprehensive loss		(5,079	)		(952	)
Total stockholders' equity		178,871			171,900
Total liabilities and stockholders' equity	$	490,371		$	416,666

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

CELADON GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Six months ended December 31,
	2011			2010
	(Restated)			(Restated)
Cash flows from operating activities:
Net income	$	10,913		$	7,518
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		26,526			30,318
Gain on sale of equipment		(2,380	)		(1,049	)
Stock based compensation		728			1,338
Deferred income taxes		3,640			14
Provision for doubtful accounts		10			128
Changes in assets and liabilities:
Trade receivables		3,855			6,754
Income taxes		(4,033	)		(1,662	)
Tires in service		(477	)		(1,282	)
Prepaid expenses and other current assets		(116	)		(1,629	)
Other assets		(630	)		(239	)
Accounts payable and accrued expenses		677			(2,207	)
Net cash provided by operating activities		38,713			38,002

Cash flows from investing activities:
Purchase of property and equipment		(64,141	)		(22,193	)
Proceeds on sale of property and equipment		44,012			21,022
Purchase of businesses, net of cash		(34,300	)		---
Purchase of available for sale securities		(4,661	)		---
Net cash used in investing activities		(59,090	)		(1,171	)

Cash flows from financing activities:
Borrowings (payments) on long-term debt		34,531			(204	)
Dividends paid		(445	)		---
Principal payments under capital lease obligations		(37,215	)		(43,761	)
Proceeds from issuance of stock		34			98
Net cash provided by/(used in) financing activities		(3,095	)		(43,867	)
Effect of exchange rates on cash and cash equivalents		(783	)		(666	)
Decrease in cash and cash equivalents		(24,255	)		(7,702	)
Cash and cash equivalents at beginning of period		25,673			18,844
Cash and cash equivalents at end of period	$	1,418		$	11,142
Supplemental disclosure of cash flow information:
Interest paid	$	2,864		$	4,579
Income taxes paid	$	7,193		$	1,917
Change in dividends payable	$	445			---
Lease obligation incurred in the purchase of equipment	$	67,200		$	5,060

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

1. Basis of Presentation

References in this Report on Form 10-Q/A to “we,” “us,” “our,” “Celadon,” or the “Company” or similar terms refer to Celadon Group, Inc. and its consolidated subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.

The accompanying condensed consolidated unaudited financial statements of Celadon Group, Inc. and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America and Regulation S-X, instructions to Form 10-Q, and other relevant rules and regulations of the Securities and Exchange Commission (the “SEC”), as applicable to the preparation and presentation of interim financial information. Certain information and footnote disclosures have been omitted or condensed pursuant to such rules and regulations. We believe all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Results of operations in interim periods are not necessarily indicative of results for a full year. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K/A for the year ended June 30, 2011.

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

2. Restatement- Accounting for Leases

The Company has restated most of its revenue equipment operating leases as capital leases based upon certain provisions included in the lease agreements. Specifically, the leases have certain default clauses, including material adverse change, cross-default provisions, and other provisions which are not objectively determinable or do not represent pre-defined criteria at the inception of the lease. As a result, the maximum consideration the Company could be required to pay the lessor in the event of a default is included in the lease payments for lease classification purposes at the inception of the lease. For these leases, the maximum consideration usually approximates or exceeds the cost of the revenue equipment at the inception of the lease and, when included in minimum lease payments for purposes of applying ASC 840-10-25-1(d) (i.e., the 90% test), results in capital lease classification, in accordance with the guidance for default covenants related to non-performance as discussed in ASC 840-10-25-14.

As a result of the restatement, the Company has recorded additional capital lease assets and related capital lease obligations on the consolidated balance sheets. The Company also adjusted its deferred income tax liability to take into account the temporary differences created to reflect the capital lease obligations and assets for financial reporting purposes. Lease payments related to this revenue equipment are now recognized as principal reductions in the capital lease obligations and interest expense, rather than as revenue equipment rent expense. The consolidated statements of income also include depreciation on the capital lease assets over the terms of the respective leases.

In addition, the Company has reclassified the rental payments received for equipment rented to third parties from a reduction in the revenue equipment rental classification to freight revenue as part of the restatement. The reclassification of rents has no impact on net income.

The restatement also impacted opening stockholders equity and the classification of cash flows from operating, investing and financing activities; however, there was no impact on the net increase or decrease in cash and cash equivalents reported in the consolidated statements of cash flows.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

The adjustment to net income for the three and six months ended December 31, 2011 and 2010, is summarized below (amounts in thousands):

	For the three months ended December 31,						For the six months ended December 31,
	2011			2010			2011			2010
Net income as previously reported:	$	5,448		$	2,858		$	10,820		$	7,279
Freight revenue		2,686			2,652			5,166			4,882
Revenue equipment rentals		5,336			6,689			10,272			13,908
Depreciation and amortization		(6,647	)		(7,207	)		(12,584	)		(14,907	)
Interest expense		(1,364	)		(1,701	)		(2,703	)		(3,497	)
Tax effect on restatement adjustment		(4	)		(165	)		(58	)		(147	)
Net income, as restated	$	5,455		$	3,126		$	10,913		$	7,518

The impact of the restatement on the consolidated financial statements is summarized below (amounts in thousands except per share amounts):

	December 31, 2011				June 30, 2011
Consolidated Balance Sheets	As Previously Reported		As Restated		As Previously Reported		As Restated
Property and equipment	$	247,991	$	476,971	$	213,222	$	418,698
Less accumulated depreciation and amortization	76,319		130,505		80,592		141,584
Net property and equipment	171,672		346,466		132,630		277,114
Total assets	315,577		490,371		272,182		416,666

Current maturities of capital lease obligations	363		65,380		354		75,521
Total current liabilities	64,683		129,700		66,001		141,168
Capital lease obligations, net of current maturities	1,556		112,307		1,740		72,182
Deferred income taxes	35,229		34,962		31,740		31,416
Retained Earnings	92,297		91,589		82,367		81,566
Total stockholders' equity	179,578		178,871		172,701		171,900
Total liabilities and stockholders' equity		315,577		490,371		272,182		416,666

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

	Three months ended December 31,				Three months ended December 31,
	2011				2010
Consolidated Statements of Income	As Previously Reported		As Restated		As Previously Reported		As Restated

Freight revenue	$	112,379	$	115,065	$	111,553	$	114,205
Total revenue	141,514		144,200		133,131		135,783
Revenue equipment rentals	6,269		933		6,728		39
Depreciation and amortization	5,766		12,413		6,769		13,976
Total operating expenses	133,076		134,387		127,495		128,013
Operating income	8,438		9,813		5,636		7,770
Interest expense	160		1,524		565		2,266
Income before income taxes	8,533		8,544		5,165		5,598
Provision for income taxes	3,085		3,089		2,307		2,472
Net income	5,448		5,455		2,858		3,126
Diluted income per common share	$	0.24	$	0.24	$	0.13	$	0.14
Basic income per common share	$	0.24	$	0.25	$	0.13	$	0.14

	Six months ended December 31,				Six months ended December 31,
	2011				2010
Consolidated Statements of Income	As Previously Reported		As Restated		As Previously Reported		As Restated

Freight revenue	$	224,676	$	229,842	$	231,023	$	235,905
Total revenue	282,993		288,159		273,420		278,302
Revenue equipment rentals	12,178		1,906		14,277		369
Depreciation and amortization	11,360		23,944		14,296		29,203
Total operating expenses	265,627		267,939		259,703		260,702
Operating income	17,366		20,220		13,717		17,600
Interest expense	203		2,906		1,027		4,524
Income before income taxes	17,713		17,864		12,867		13,253
Provision for income taxes	6,893		6,951		5,588		5,735
Net income	10,820		10,913		7,279		7,518
Diluted income per common share	$	0.48	$	0.48	$	0.32	$	0.33
Basic income per common share	$	0.49	$	0.49	$	0.33	$	0.34

	Six months ended December 31,						Six months ended December 31,
	2011						2010
Consolidated Statements of Cash Flows	As Previously Reported			As Restated			As Previously Reported			As Restated
Net income	$	10,820		$	10,913		$	7,279		$	7,518
Depreciation and amortization expense		13,941			26,526			15,411			30,318
Deferred income taxes		3,583			3,640			(133	)		14
Net cash provided by operating activities		25,978			38,713			22,709			38,002
Purchase of property and equipment		(88,446	)		(64,141	)		(34,342	)		(22,193	)
Net cash used in investing activities		(83,395	)		(59,090	)		(13,320	)		(1,171	)
Principal payments under capital lease obligations		(175	)		(37,215	)		(16,319	)		(43,761	)
Net cash provided by (used in) financing activities		33,945			(3,095	)		(16,425	)		(43,867	)
Interest paid in cash during the period		160			2,864			1,078			4,579
Lease obligation incurred in the purchase of equipment		---			67,200			---			5,060

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

3. Earnings Per Share (in thousands, except per share data)

A reconciliation of the basic and diluted earnings per share is as follows:

	Three months ended		Six months ended
	December 31,		December 31,
	2011	2010	2011	2010
	(Restated)	(Restated)	(Restated)	(Restated)
Weighted average common shares outstanding – basic	22,248	22,051	22,233	22,054
Dilutive effect of stock options and unvested restricted stock units	449	518	454	509
Weighted average common shares outstanding – diluted	22,697	22,569	22,687	22,563

Net income	$5,455	$3,126	$10,913	$7,518
Earnings per common share
Diluted	$0.24	$0.14	$0.48	$0.33
Basic	$0.25	$0.14	$0.49	$0.34

Certain shares of common stock were excluded from the computation of diluted earnings per share because the options exercise prices were greater than the average market price of the common shares, and therefore, the effect would be anti-dilutive. A summary of those options follows:

	Three months ended				Six months ended
	December 31,				December 31,
	2011		2010		2011		2010

Number of anti-dilutive shares		811		5		813		125

4. Stock Based Compensation

The following table summarizes the components of our share based compensation program expense (in thousands):

	Three months ended				Six months ended
	December 31,				December 31,
	2011		2010		2011			2010

Stock compensation expense for options, net of forfeitures	$	107	$	212	$	336		$	427
Stock compensation for restricted stock, net of forfeitures		310		427		700			817
Stock compensation (income) expense for stock appreciation rights, net of forfeitures		420		141		(308	)		94
Total stock compensation expense	$	837	$	780	$	728		$	1,338

As of December 31, 2011, we have approximately $1.1 million of unrecognized compensation cost related to unvested options granted under the Company's 2006 Omnibus Incentive Plan, as amended (the "2006 Plan"). This cost is expected to be recognized over a weighted-average period of 1.3 years and a total period of 3.3 years.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model that uses the following assumptions:

Dividend yield – the dividend yield is based on our historical experience and future expectation of dividend payouts.

Expected volatility – we analyzed the volatility of our stock using historical data for three or four years through the end of the most recent period to estimate the expected volatility, and the historical data used mirrors the vesting terms of the respective option.

Risk-free interest rate – the risk-free interest rate assumption is based on U.S. Treasury securities at a constant maturity with a maturity period that most closely resembles the expected term of the stock option award.

Expected terms – the expected terms of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and has been determined based on an analysis of historical exercise behavior from 1995 through the end of the most recent period.

No grants were issued in the six months ended December 31, 2011 or 2010.

A summary of the award activity of the Company’s stock option plans as of December 31, 2011, and changes during the period then ended is presented below:

Options	Option Totals			Weighted-Average Exercise Price per Share

Outstanding at July 1, 2011		1,432,083		$	10.60
Granted		---			---
Exercised		(11,250	)	$	3.00
Forfeited or expired		(11,060	)	$	11.54
Outstanding at December 31, 2011		1,409,773		$	10.58
Exercisable at December 31, 2011		1,151,315		$	11.67

We also have approximately $3.4 million of unrecognized compensation expense related to restricted stock awards, which is anticipated to be recognized over a weighted-average period of 3.0 years and a total period of 3.8 years. A summary of the restricted stock award activity under the 2006 Plan as of December 31, 2011, and changes during the six-month period is presented below:

	Number of Restricted Stock Awards			Weighted-Average Grant Date Fair Value

Unvested at July 1, 2011		355,630		$	12.27
Granted		84,593		$	10.93
Vested and Issued		(94,795	)	$	11.91
Forfeited		(566	)	$	11.89
Unvested at December 31, 2011		344,862		$	12.06

The fair value of each restricted stock award is based on the closing market price on the date of grant.

The company had 143,156 outstanding stock appreciation rights as of June 30, 2011 and December 31, 2011, respectively. These stock appreciation rights were granted at a fair value market price of $8.64 based on the closing market price on the date of the grant and are marked to market at the end of each quarter.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

5. Segment Information

We have two reportable segments comprised of an asset-based segment and an asset-light-based segment. Our asset-based segment includes our asset based dry van carrier and rail services, which are geographically diversified but have similar economic and other relevant characteristics, as they all provide truckload carrier services of general commodities to a similar class of customers. Our asset-light based segment consists of our warehousing, brokerage, and less-than-truckload ("LTL") operations, and Truckers B2B (through March 2011, when the majority interest was sold and de-consolidated), which we have determined qualifies as a reportable segment under ASC 280-10 Segment Reporting. Operating revenues and operating income by segment are presented below (in thousands):

	Operating Revenues
	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2011		2010		2011		2010
	(Restated)		(Restated)		(Restated)		(Restated)
Asset-based	$	133,900	$	125,145	$	267,858	$	256,836
Asset-light		10,300		10,638		20,301		21,466
Total	$	144,200	$	135,783	$	288,159	$	278,302

	Operating Income
	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2011		2010		2011		2010
	(Restated)		(Restated)		(Restated)		(Restated)
Asset-based	$	9,166	$	6,951	$	18,921	$	15,969
Asset-light		647		819		1,299		1,631
Total	$	9,813	$	7,770	$	20,220	$	17,600

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

	Operating Revenues
	Three Months Ended				Six Months Ended
	December 31, 2011				December 31, 2011
	2011		2010		2011		2010
	(Restated)		(Restated)		(Restated)		(Restated)
United States	$	124,214	$	118,230	$	248,750	$	243,558
Canada		11,674		10,090		22,908		20,251
Mexico		8,312		7,464		16,501		14,493
Consolidated	$	144,200	$	135,784	$	288,159	$	278,302

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

6. Comprehensive Income

Comprehensive income includes changes in fair value on foreign currency and fuel derivatives, which qualify for hedge accounting. A reconciliation of net income and comprehensive income follows (in thousands):

	Three months ended					Six months ended
	December 31,					December 31,
	2011			2010		2011			2010
	(Restated)			(Restated)		(Restated)			(Restated)
Net income	$	5,455		$	3,126	$	10,913		$	7,518
Unrealized gain (loss) on fuel derivative instruments		509			316		(140	)		1,176
Unrealized gain (loss) on currency derivative instruments		61			50		(376	)		356
Unrealized gain (loss) on available for sale securities		(15	)		---		265			---
Foreign currency translation adjustments		(286	)		524		(3,876	)		1,067

Comprehensive income	$	5,724		$	4,016	$	6,786		$	10,117

7. Income Taxes

During the three months ended December 31, 2011 and 2010, our effective tax rates were 36.2% and 44.2%, respectively. During the six months ended December 31, 2011 and 2010, our effective tax rates were 38.9% and 43.3%, respectively. Income tax expense varies from the amount computed by applying the statutory federal tax rate to income before income taxes primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences, the most significant of which is the effect of the per diem pay structure for drivers. Drivers may elect to receive non-taxable per diem pay in lieu of a portion of their taxable wages. This per diem program increases our drivers’ net pay per mile, after taxes, while decreasing gross pay, before taxes. As a result, salaries, wages and employee benefits are slightly lower, and our effective income tax rate is higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on our effective tax rate decreases because aggregate per diem pay becomes smaller in relation to pre-tax income. Due to the partially nondeductible effect of per diem pay, our tax rate will fluctuate in future periods based on fluctuations in earnings and in the number of drivers who elect to receive this pay structure.

We account for any uncertainty in income taxes by determining whether it is more likely than not that a tax position taken or expected to be taken in a tax return will be sustained upon examination by the appropriate taxing authority based on the technical merits of the position. In that regard, we have analyzed filing positions in our federal and applicable state tax returns as well as in all open tax years. The only periods subject to examination for our federal returns are the 2007 through 2010 tax years. We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our consolidated financial position, results of operations and cash flows. As of December 31, 2011, the Company recorded a $0.4 million liability for unrecognized tax benefits, a portion of which represents penalties and interest.

8. Lease Obligations and Long-Term Debt

The Company leases certain revenue and service equipment under long-term lease agreements, payable in monthly installments.

Equipment obtained under a capital lease is reflected on the Company's balance sheet as owned and the related leases mature at various dates through 2018.

Assets held under operating leases are not recorded on the Company's balance sheet. The Company leases revenue and service equipment under noncancellable operating leases expiring at various dates through December 2018.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

Future minimum lease payments relating to capital leases and to operating leases as of December 31, 2011 (in thousands):

	Capital Leases (Restated)		Operating Leases (Restated)
2012	$	69,166	$	6,197
2013		30,402		8,175
2014		38,984		7,316
2015		13,157		6,805
2016		6,402		2,232
Thereafter		29,853		12,787
Total minimum lease payments		187,964	$	43,512
Less amounts representing interest		10,277
Present value of minimum lease payments		177,687
Less current maturities		65,380
Non-current portion	$	112,307

Long-term debt consisted of our revolving credit facility:

	(in thousands)
	December 31,		June 30,
	2011		2011

Revolving credit facility	$	34,531	$	---

At December 31, 2011, we were authorized to borrow up to $100 million under this revolving credit facility, which expires August 29, 2016. The applicable interest rate under this agreement is based on either a base rate equal to Bank of America, N.A.'s prime rate or LIBOR plus an applicable margin between 0.75% and 1.125% that is adjusted quarterly based on the Company's lease adjusted total debt to EBITDAR ratio. Our average interest rate for the quarter ended December 31, 2011 was 1.0%. At December 31, 2011, we had $34.5 million in outstanding borrowings related to our credit facility and $0.4 million utilized for letters of credit. We are obligated to comply with certain financial covenants under our credit agreement and we were in compliance with these covenants at December 31, 2011.

9. Commitments and Contingencies

We are involved in certain claims and pending litigation arising from the normal conduct of business. Based on our present knowledge of the facts and, in certain cases, opinions of outside counsel, we believe the resolution of these claims and pending litigation will not have a material adverse effect on our financial condition, results of operations or our liquidity.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

10. Fair Value Measurements

Effective January 1, 2009, we adopted ASC 820-10 Fair Value Measurements and Disclosure for non-recurring fair value measurements of non-financial assets and liabilities. This standard defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This standard establishes a three-level hierarchy for fair value measurements based upon the significant inputs used to determine fair value. Observable inputs are those which are obtained from market participants external to the Company while unobservable inputs are generally developed internally, utilizing management’s estimates assumptions, and specific knowledge of the nature of the assets or liabilities and related markets. The three levels are defined as follows:

Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market is defined as a market in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active (markets with few transactions), inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc), and inputs that are derived principally from or corroborated by observable market data correlation or other means (market corroborated inputs).

Level 3 – Unobservable inputs, only used to the extent that observable inputs are not available, reflect the Company’s assumptions about the pricing of an asset or liability.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value as of December 31, 2011 and June 30, 2011.

						Level 1				Level 2					Level 3
	Balance at December 31, 2011			Balance at June 30, 2011		Balance at December 31, 2011		Balance at June 30, 2011		Balance at December 31, 2011			Balance at June 30, 2011		Balance at December 31, 2011		Balance at June 30, 2011




Foreign currency derivatives	$	(271	)	$	105	$	---	$	---	$	(271	)	$	105	$	---	$	---

Fuel derivatives		246			387		---		---		246			387		---		---

Available for sale securities		5,086			---		5,086		---		---			---		---		---

11. Dividend

On October 25, 2011, the Company declared a cash dividend of $0.02 per share of common stock. The dividend was payable to shareholders of record on January 4, 2012 and was paid on January 13, 2012. Future payment of cash dividends, and the amount of any such dividends, will depend on our financial condition, results of operations, cash requirements, tax treatment, and certain corporate law requirements, as well as other factors deemed relevant by our Board of Directors.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

12. Fuel Derivatives

In the Company’s day to day business activities we are exposed to certain market risks, including the effects of changes in fuel prices. The company continually reviews new ways to reduce the potentially adverse effects that the volatility of fuel markets may have on operating results. In an effort to reduce the variability of the ultimate cash flows associated with fluctuations in diesel fuel prices, the company has begun to enter into futures contracts. These instruments will be heating oil futures contracts as the related index, New York Mercantile Exchange ("NYMEX"), generally exhibits high correlation with the changes in the dollars of the forecasted purchase of diesel fuel. The Company does not engage in speculative transactions, nor does it hold or issue financial instruments for trading purposes.

In fiscal 2012, we entered into futures contracts, which pertain to 5.0 million gallons (up to 378,000 gallons per month) or approximately 11% of our monthly projected fuel requirements through August 2012 and 7% of our monthly projected fuel requirements through December 2012. Under these contracts, we pay a fixed rate per gallon of heating oil and receive the monthly average price of New York heating oil per the NYMEX. The Company has done retrospective and prospective regression analyses that showed the changes in the prices of diesel fuel and heating oil were deemed to be highly effective based on the relevant authoritative guidance. Accordingly, we have designated the respective hedges as cash flow hedges.

We perform both a prospective and retrospective assessment of the effectiveness of our hedge contracts at inception and quarterly. If our analysis shows that the derivatives are not highly effective as hedges, we will discontinue hedge accounting for the period and prospectively recognize changes in the fair value of the derivative being recognized through earnings. As a result of our effectiveness assessment at inception and at December 31, 2011, we believe our hedge contracts have been and will continue to be highly effective in offsetting changes in cash flows attributable to the hedged risk.

We recognize all derivative instruments at fair value on our consolidated condensed balance sheets in other assets or other accrued expenses. The Company's derivative instruments are designated as cash flow hedges, thus the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income and will be reclassified into earnings in the same period during which the hedged transactions affect earnings. The effective portion of the derivative represents the change in fair value of the hedge that offsets the change in fair value of the hedged item. To the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item, the ineffective portion of the hedge is immediately recognized in other income or expense on our consolidated condensed statements of operations. The ineffective portion of the hedge for the quarter was immaterial and therefore not recognized through earnings.

Based on the amounts in accumulated other comprehensive income as of December 31, 2011 and the expected timing of the purchases of the diesel hedged, we expect to reclassify $0.2 million of income on derivative instruments from accumulated other comprehensive income to the statement of income, as an offset to fuel expense, during the next twelve months due to the actual diesel fuel purchases. The amounts actually realized will be dependent on the fair values as of the date of settlement.

Outstanding financial derivative instruments expose us to credit loss in the event of nonperformance by the companies with which we have these agreements. Our credit exposure related to these financial instruments is represented by the fair value of contracts reported as assets. To evaluate credit risk, we review each counterparty's audited financial statements and credit ratings and obtain references. Any credit valuation adjustments deemed necessary would be reflected in the fair value of the instrument. As of December 31, 2011, there have not been any adjustments made.

13. Disposition of Majority Interest in Subsidiary

In February 2011, the Company entered into a joint venture, whereby the Company sold a 65% majority interest, in its TruckersB2B subsidiary to an unrelated third party. TruckersB2B will continue normal daily operations with an expanding sales and marketing team to develop growth. TruckersB2B is controlled by a five person executive committee, of which the Company has two committee seats. In conjunction with the transaction, the Company recognized a pre-tax gain of $4.1 million and de-consolidated the subsidiary, including $2.4 million of goodwill. Approximately $2.6 million of the gain related to the fair market valuation of the Company's continuing 35% ownership.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

14. Marketable Equity Securities

In fiscal year 2012, the Company invested $4.7 million in marketable equity securities that are classified as available-for-sale securities. These securities are carried at fair value on our balance sheet in the Other Assets category, with unrealized gains and losses recorded through accumulated other comprehensive income. Any future realized gains and losses will be included in net income. As of December 31, 2011, the value of available-for-sale securities included in Other Assets was $5.1 million, which included unrealized gains of $0.4 million.

15. Acquisitions and Assets Held for Sale

On October 19, 2011, the Company acquired certain assets of American Eagle, the non-refrigerated division of Frozen Food Express Industries, Inc. “FFE”. We acquired 229 tractors and 435 trailers which were recorded at their estimated fair value, of $14.0 million, of which $9.5 million remains in assets held for sale. The purposes for the acquisition are to acquire equipment to dispose of for our Quality Leasing and Sales division, to offer employment opportunities to former FFE drivers, and to evaluate freight transportation opportunities from FFE customers.

On December 15, 2011, the Company acquired certain assets of USF Glen Moore, Inc. “Glen Moore”. We acquired Glen Moore’s truckload business assets and their terminal in Carlisle, PA. The terminal was recorded at its estimated fair value of approximately $2.4 million, which included administrative offices and a maintenance shop. Acquired revenue equipment of 557 tractors and 1,151 trailers was recorded at its estimated fair value, of $16.2 million which remains in assets held for sale. The purposes for the acquisition are to acquire equipment to dispose of for our Quality Leasing and Sales division, secure a terminal facility to operate from in the northeastern United States, to offer employment opportunities to former Glen Moore drivers, and to evaluate freight transportation opportunities from Glen Moore customers.

The recorded amounts of assets acquired in the above transactions are subject to change upon the finalization of our determination of acquisition date fair values. Assets held for sale are not being depreciated.

16. Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2011-05, "Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income" ("ASU 2011-05"), which amends current comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. Instead the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 will be effective during interim and annual periods beginning after December 15, 2011. In December 2011, the FASB issued ASU No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05" ("ASU 2011-12"). ASU 2011-12 defers the requirement in ASU 2011-05 to present reclassification adjustments for each component of accumulated other comprehensive income ("AOCI") in both other comprehensive income and net income on the face of the financial statements and the presentation of reclassification adjustments is not required in interim periods. We expect to continue to present amounts reclassified out of AOCI on the face of the financial statements or disclose those amounts in the notes to the financial statements. The effective dates of ASU 2011-12 are consistent with the effective dates of ASU 2011-05, which is effective for fiscal years and interim periods beginning after December 15, 2011. Adoption of these standards is not expected to have a material impact on the Company’s consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08, Goodwill and Other (Topic 350) – Testing Goodwill for Impairment. The new guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that a reporting unit's fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. The new guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We do not expect the adoption of ASU 2011-08 will have a material impact on the consolidated financial statements.

Table of Contents

CELADON GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

(Unaudited)

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (ASC Topic820): Amendments to Archive Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04”), which clarifies existing fair value measurement and disclosure requirements, amends certain fair value measurement principles, and requires additional disclosures about fair value measurements. ASU 2011-04 will be effective during the interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. Adoption of ASU 2011-04 is not expected to have a material impact on the Company’s consolidated financial statements.

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations presented below reflects certain restatements to our previously reported results of operations for these periods. See Note 2 to the consolidated financial statements for a discussion of this matter.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, events, performance, or achievements of the Company to be materially different from any future results, events, performance, or achievements expressed in or implied by such forward-looking statements. Such statements may be identified by the fact that they do not relate strictly to historical or current facts. These statements generally use words such as "believe," "expect," "anticipate," "project," "forecast," "should," "estimate," "plan," "intend," "outlook," "goal," "will," "may," and similar expressions. While it is impossible to identify all factors that may cause actual results to differ from those expressed in or implied by forward-looking statements, the risks and uncertainties that may affect the Company's business, include, but are not limited to, those discussed in the section entitled Item 1A. Risk Factors set forth below.

All such forward-looking statements speak only as of the date of this Form 10-Q/A. You are cautioned not to place undue reliance on such forward-looking statements. 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 the 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 consolidated subsidiaries.

Business Overview

We are one of North America's twenty largest truckload carriers as measured by revenue. We generated $568.2 million in operating revenue during our fiscal year ended June 30, 2011. We provide asset-based dry van truckload carrier and rail services and asset-light services including brokerage services, LTL, and warehousing services. Through our asset and asset-light services, we are able to transport or arrange for transportation throughout the United States, Canada, and Mexico.

We generated approximately 44% of our revenue in fiscal 2011 from international movements, and we believe our annual border crossings make us the largest provider of international truckload movements in North America. We believe that our strategically located terminals and experience with the language, culture, and border crossing requirements of each North American country provide a competitive advantage in the international trucking marketplace.

We believe our international operations, particularly those involving Mexico, offer an attractive business niche. The additional complexity of and need to establish cross-border business partners and to develop strong organization and adequate infrastructure in Mexico affords some barriers to competition that are not present in traditional U.S. truckload services.

Recent Results of Operations

Our results of operations for the quarter ended December 31, 2011, compared to the same period in 2010 are:

·	Freight revenue increased to $115.1 million from $114.2 million;
·	Net income increased to $5.5 million from $3.1 million; and
·	Net income per diluted share increased to $0.24 from $0.14.

In the December 2011 quarter, average revenue per seated tractor per week increased 1.0% and average miles per seated tractor declined 2.1% from the December 2010 quarter. Average revenue per total mile increased 3.3% and average revenue per loaded mile increased 3.5% from the December 2010 quarter. We believe that we are making progress improving our freight mix and contract pricing.

Table of Contents

Our average seated line haul tractors decreased to 2,633 tractors in the quarter ended December 31, 2011, compared to 2,687 tractors for the same period a year ago. The net change of 54 units is comprised of a 40-unit decrease in independent contractor tractors, and a 14-unit decrease in company tractors. The decrease in company tractors was primarily driven by difficulty recruiting drivers because of the tight driver market. We anticipate this number to increase in the third quarter of fiscal 2012 for drivers hired through our asset acquisition of certain assets of FFE and Glen Moore completed in December 2011. The number of tractors operated by independent contractors decreased 9.2% from a year ago.

Revenue and Expenses

We primarily generate revenue by transporting freight for our customers. Generally, we are paid a predetermined rate per mile or per load for our services. We enhance our revenue by charging for tractor and trailer detention, loading and unloading activities, brokerage operations, and other specialized services, as well as through the collection of fuel surcharges to mitigate the impact of the cost of fuel. The main factors that affect our revenue are the revenue per mile we receive from our customers, the percentage of miles for which we are compensated, and the number of miles we generate with our equipment. These factors relate to, among other things, the general level of economic activity in the United States, inventory levels, specific customer demand, the level of capacity in the trucking industry, and driver availability.

The main factors that impact our profitability in terms of expenses are the variable costs of transporting freight for our customers. These costs include fuel expense, driver-related expenses, such as wages, benefits, training and recruitment, and independent contractor and third party carrier costs, which are recorded on the ’Purchased Transportation’ line of our consolidated statements of income. Expenses that have both fixed and variable components include maintenance, insurance, and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency, and other factors. Our main fixed costs are the acquisition and depreciation of long-term assets, such as revenue equipment and the compensation of non-driver personnel. Effectively controlling our expenses and managing our net cost of revenue equipment acquisitions and dispositions, including any related gains or losses, are important elements of assuring our profitability. We evaluate our profitability using operating ratio, excluding the impact of fuel surcharge revenue (operating expenses, net of fuel surcharge, expressed as a percentage of revenue, before fuel surcharge), and income before income taxes, which eliminates shifting operating lease expenses "above the line" from interest expense on owned or capital leased equipment.

Restatement

In April 2012, we determined that substantially all of our operating leases should be recorded as capitalized leases. This determination resulted from a recent accounting interpretation concerning customary lease provisions where the default terms are not objectively quantifiable and the remedies could result in the operating lease criteria not being satisfied. The result of this accounting change on our balance sheet at March 31, 2012, was to record approximately $191.4 million in net property and equipment as assets, and approximately $192.5 million in capitalized lease obligations as liabilities, with an immaterial effect on total stockholders' equity. This accounting change did not result in a material change to our historical or expected pre-tax earnings. However, it did result in a significant increase in EBITDA as lease expense is reclassified into depreciation and interest. All current and historical information in this Form 10-Q/A has been restated. See Note 2 to our Condensed Consolidated Financial Statements for additional information.

Table of Contents

Results of Operations

The following table sets forth the percentage relationship of expense items to freight revenue for the periods indicated:

	Three months ended						Six months ended
	December 31,						December 31,
	2011			2010			2011			2010
	(Restated)			(Restated)			(Restated)			(Restated)
Freight revenue(1)		100.0	%		100.0	%		100.0	%		100.0	%

Operating expenses:
Salaries, wages, and employee benefits		32.6	%		32.9	%		32.7	%		32.1	%
Fuel(1)		6.9	%		8.2	%		7.5	%		8.8	%
Purchased transportation		23.7	%		22.3	%		23.7	%		21.7	%
Revenue equipment rentals		0.8	%		0.0	%		0.8	%		0.2	%
Operations and maintenance		8.8	%		8.8	%		8.7	%		8.5	%
Insurance and claims		3.2	%		3.0	%		2.9	%		3.2	%
Depreciation and amortization		10.8	%		12.2	%		10.4	%		12.4	%
Cost of products and services sold		---			1.2	%		---			1.2	%
Communications and utilities		0.9	%		0.9	%		0.8	%		0.9	%
Operating taxes and licenses		2.3	%		2.2	%		2.2	%		2.0	%
General and other operating		1.5	%		1.5	%		1.5	%		1.5	%
Total operating expenses		91.5	%		93.2	%		91.2	%		92.5	%

Operating income		8.5	%		6.8	%		8.8	%		7.5	%

Other expense (incomes)		1.1	%		1.9	%		1.0	%		1.9	%

Income before income taxes		7.4	%		4.9	%		7.8	%		5.6	%
Provision for income taxes		2.7	%		2.2	%		3.0	%		2.4	%

Net income		4.7	%		2.7	%		4.8	%		3.2	%

(1)

Freight revenue is total revenue less fuel surcharges. In this table, fuel surcharges are eliminated from revenue and subtracted from fuel expense. Fuel surcharges were $29.1 million and $21.6 million for the second quarter of fiscal 2012 and 2011, respectively, and $58.3 million and $42.4 million for the six months ended December 31, 2011 and 2010, respectively.

Comparison of Three Months Ended December 31, 2011 to Three Months Ended December 31, 2010

In discussing our results of operations, we use freight revenue ("revenue") and fuel, net of fuel surcharge, because we believe that eliminating the impact of the sometimes volatile source of revenue affords more consistent basis for comparing our results of operations from period to period.

Total revenue increased by $8.4 million, or 6.2%, to $144.2 million for the second quarter of fiscal 2012, from $135.8 million for the second quarter of fiscal 2011. Freight revenue increased by $0.9 million to $115.1 million for the second quarter of fiscal 2012, from $114.2 million for the second quarter of fiscal 2011. This increase was attributable to revenue per loaded mile increasing to $1.528 for the second quarter of fiscal 2012 from $1.477 for the second quarter of fiscal 2011 offset by a decrease in loaded miles to 58.4 million for the second quarter of fiscal 2012 from 61.2 million in the second quarter of fiscal 2011, due to a slight decrease in seated line-haul tractors. This combination of factors resulted in an increase in average revenue per tractor per week, which is our primary measure of asset productivity, to $2,823 in the second quarter of fiscal 2012, from $2,794 for the second quarter of fiscal 2011. The decrease in company tractors was primarily driven by difficulty recruiting drivers because of the tight driver market. We anticipate revenue to increase in the near term due to an anticipated increase in our seated line-haul tractors through the hiring of certain drivers from the acquisitions of FFE and Glen Moore.

Revenue for our asset-light segment decreased to $10.3 million in the second quarter of fiscal 2012 from $10.6 million in the second quarter of fiscal 2012. Excluding TruckersB2B, asset-light revenue increased on a comparative basis by $1.6 million to $10.3 million in the second quarter of fiscal 2012 from $8.7 million in the second quarter of fiscal 2011.

Table of Contents

Fuel surcharge revenue increased to $29.1 million in the second quarter of fiscal 2012 from $21.6 million for the second quarter of fiscal 2011.

Salaries, wages, and employee benefits were $37.6 million, or 32.7% of revenue, for the second quarter of fiscal 2012, compared to $37.6 million, or 32.1% of revenue, for the second quarter of fiscal 2011. These expenses were flat due to decreases in driver payroll related to fewer company miles and a decrease in medical claims expense offset by increases in non-driver salaries and wages and recruiting expenses. We expect that our hiring of drivers in the current quarter as a result of our acquisition of certain assets of Glen Moore, Inc. will increase these expenses in the near term.

Fuel expenses, net of fuel surcharge revenue, decreased to $7.9 million, or 6.9% of revenue, for the second quarter of fiscal 2012, compared to $9.4 million, or 8.2% of revenue, for the second quarter of fiscal 2011. This decrease was primarily attributable to a decrease in gallons purchased due to lower total company miles offset by the average fuel price increasing to $3.48 per gallon in the second quarter of fiscal 2012, compared to $2.82 per gallon in the second quarter of fiscal 2011. We expect that our continued efforts to reduce idling, operate more fuel-efficient tractors, and aerodynamic trailer skirts will continue to have a positive impact on our miles per gallon. However, we expect this positive impact to be partially offset by lower fuel economy on EPA-mandated new engines and use of more costly ultra-low sulfur diesel fuel.

Purchased transportation increased to $27.3 million, or 23.7% of revenue, for the second quarter of fiscal 2012, from $25.4 million, or 22.3% of revenue, for the second quarter of fiscal 2011. These increases are primarily related to increases in intermodal rail expense and third party broker transportation offset by a decrease in our independent contractors due to a decrease in miles to 11.2 million in the second quarter of fiscal 2012 compared to 12.9 million miles in the second quarter of fiscal 2011. Independent contractors are drivers who cover all their operating expenses (fuel, driver salaries, maintenance, and equipment costs) for a fixed payment per mile. We expect purchased transportation to increase as we increase the number of independent contractors in our fleet and continue to increase our purchased transportation for brokerage and intermodal transportation.

Operations and maintenance increased to $10.2 million, or 8.8% of revenue, for the second quarter of fiscal 2012, from $10.1 million, or 8.8% of revenue, for the second quarter of fiscal 2011. Operations and maintenance consist of direct operating expense, maintenance, and tire expense. These slight increases in the second quarter of fiscal 2012 are primarily related to increases in costs associated with tire expense. We expect our operations and maintenance expense to be similar to the current level going forward, subject to winter weather conditions and implementation of CSA 2010 that may impact these expenses.

Insurance and claims expense increased to $3.7 million, or 3.2% of revenue, for the second quarter of fiscal 2012, from $3.5 million, or 3.0% of revenue, for the second quarter of fiscal 2011. Insurance consists of premiums for liability, physical damage, cargo damage, and workers' compensation insurance, in addition to claims expense. Insurance expense was affected by a slight increase in workers' compensation costs and liability claims expense, which was offset by a decrease in cargo claims expenses. 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 premium expense and the risk retention we are willing to assume. Insurance and claims expense will vary based primarily on the frequency and severity of claims, the level of self-retention, and the premium expense.

Depreciation and amortization, consisting primarily of depreciation of revenue equipment, increased to $12.4 million, or 10.8% of revenue, for the second quarter of fiscal 2012, compared to $14.0 million, or 12.2% of revenue, for the second quarter of fiscal 2011. These decreases were due to a reduction in trailer depreciation and offset by a gain on sale of equipment, which includes expenses to prepare the equipment for sale. These factors were partially offset by an increase in tractor depreciation. Revenue equipment held under operating leases is not reflected on our balance sheet and the expenses related to such equipment are reflected on our statements of income in revenue equipment rentals, rather than in depreciation and amortization and interest expense, as is the case for revenue equipment that is financed with borrowings or capital leases.

All of our other operating expenses are relatively minor in amount, and there were no significant changes in such expenses. Accordingly, we have not provided a detailed discussion of such expenses.

Income taxes increased to $3.1 million, with an effective tax rate of 36.2%, for the second quarter of fiscal 2012, from $2.5 million, with an effective tax rate of 44.2%, for the second quarter of fiscal 2011. As pre-tax net income increases, our non-deductible expenses, such as per diem expense, have a lesser impact on our effective rate.

Table of Contents

Comparison of Six Months Ended December 31, 2011 to Six Months Ended December 31, 2010

Total revenue increased by $9.9 million, or 3.6%, to $288.2 million for the six months ended December 31, 2011, (“the fiscal 2012 period”), from $278.3 million for the six months ended December 31, 2010, (“the fiscal 2011 period”). Freight revenue decreased by $6.1 million to $229.8 million for the fiscal 2012 period, from $235.9 million for the fiscal 2011 period. The decrease was attributable to a decrease in loaded miles to 117.4 million for the fiscal 2012 period from 126.5 million in the fiscal 2011 period, due to a decrease in seated tractors, partially offset by revenue per loaded mile increasing to $1.527 for the fiscal 2012 period from $1.474 for the fiscal 2011 period. The decrease in company tractors was primarily driven by difficulty recruiting drivers because of the tight driver market. This combination of factors resulted in an increase in average revenue per tractor per week, which is our primary measure of asset productivity, to $2,901 in the fiscal 2012 period, from $2,880 for the fiscal 2011 period. We anticipate revenue to increase in the near term due to an anticipated increase in our seated line-haul tractors through the hiring of certain drivers from the acquisitions of FFE and Glen Moore.

Revenue for our asset-light segment decreased to $20.3 million in the fiscal 2012 period from $21.5 million in the fiscal 2011 period. Excluding TruckersB2B that we disposed of in March 2011, asset-light revenue increased on a comparative basis $2.7 million to $20.3 million in the second quarter of the fiscal 2012 period from $17.6 million in the second quarter of the fiscal 2011 period.

Fuel surcharge revenue increased to $58.3 million in the fiscal 2012 period from $42.4 million for the fiscal 2011 period.

Salaries, wages, and employee benefits were $75.1 million, or 32.7% of revenue, for the fiscal 2012 period, compared to $75.7 million, or 32.1% of revenue, for the fiscal 2011 period. Expenses decreased due to decreases in driver payroll related to fewer company miles, partially offset by increases in medical claims expense, non-driver salaries and wages and recruiting expenses. We expect that our hiring of drivers as a result of the acquisition of certain assets of FFE and Glen Moore will increase these expenses in the near term.

Fuel expenses, net of fuel surcharge revenue, decreased to $17.2 million, or 7.5% of revenue, for the fiscal 2012 period, compared to $20.8 million, or 8.8% of revenue, for the fiscal 2011 period. This decrease was primarily attributable to a decrease in gallons purchased due to lower total company miles offset by the average fuel price increasing to $3.47 per gallon in the fiscal 2012 period, compared to $2.72 per gallon in the fiscal 2011 period. We expect that our continued efforts to reduce idling, operate more fuel-efficient tractors, and aerodynamic trailer skirts will continue to have a positive impact on our miles per gallon; however, we expect this positive impact to be partially offset by lower fuel economy on EPA-mandated new engines and use of more costly ultra-low sulfur diesel fuel.

Purchased transportation increased to $54.4 million, or 23.7% of revenue, for the fiscal 2012 period, from $51.3 million, or 21.7% of revenue, for the fiscal 2011 period. These increases were primarily related to increases in intermodal rail expense and third party broker transportation offset by decreases in our independent contractors due to a decrease in miles to 22.7 million in the fiscal 2012 period compared to 25.9 million miles in the fiscal 2011 period. Independent contractors are drivers who cover all their operating expenses (fuel, driver salaries, maintenance, and equipment costs) for a fixed payment per mile. We expect purchased transportation to increase as we increase the number of independent contractors in our fleet and continue to increase our purchased transportation for brokerage and intermodal transportation.

Revenue equipment rentals increased to $1.9 million, or 0.8% of revenue, for the fiscal 2012 period, compared to $0.3 million, or 0.21% of revenue, for the fiscal 2011 period. These decreases were attributable to a decrease in the number of tractors financed under operating leases.

Operations and maintenance decreased to $20.0 million, or 8.7% of revenue, for the fiscal 2012 period, from $20.1 million, or 8.5% of revenue, for the fiscal 2011 period. Operations and maintenance consist of direct operating expense, maintenance, and tire expense. The slight dollar decrease in the fiscal 2012 period is primarily related to decreases in maintenance costs. We expect our operations and maintenance expense to be similar to the current level going forward, subject to winter weather conditions and implementation of CSA 2010 that may impact these expenses.

Table of Contents

Insurance and claims expense decreased to $6.7 million, or 2.9% of revenue, for the fiscal 2012 period, from $7.6 million, or 3.2% of revenue, for the fiscal 2011 period. Insurance consists of premiums for liability, physical damage, cargo damage, and workers' compensation insurance, in addition to claims expense. Insurance expense was affected by a decrease in workers' compensation costs and cargo claims expense, which was offset by a slight increase in liability claims expense. 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 premium expense and the risk retention we are willing to assume. Insurance and claims expense will vary based primarily on the frequency and severity of claims, the level of self-retention, and the premium expense.

Depreciation and amortization, consisting primarily of depreciation of revenue equipment, decreased to $23.9 million, or 10.4% of revenue, for the fiscal 2012 period, compared to $29.2 million, or 12.4% of revenue, for the fiscal 2011 period. These decreases were due to a reduction in trailer depreciation and offset by a gain on sale of equipment, which includes expenses to prepare the equipment for sale. These factors were partially offset by an increase in tractor depreciation. Revenue equipment held under operating leases is not reflected on our balance sheet and the expenses related to such equipment are reflected on our statements of income in revenue equipment rentals, rather than in depreciation and amortization and interest expense, as is the case for revenue equipment that is financed with borrowings or capital leases.

All of our other operating expenses are relatively minor in amount, and there were no significant changes in such expenses. Accordingly, we have not provided a detailed discussion of such expenses.

Income taxes increased to $7.0 million, with an effective tax rate of 38.9%, for the fiscal 2012 period, from $5.7 million, with an effective tax rate of 43.3%, for the fiscal 2011 period. As pre-tax net income increases, our non-deductible expenses, such as per diem expense, have a lesser impact on our effective rate.

Liquidity, Capital Resources and Debt

Trucking is a capital-intensive business. We require cash to fund our operating expenses (other than depreciation and amortization), to make capital expenditures and acquisitions, and to repay debt, including principal and interest payments. Other than ordinary operating expenses, we anticipate that capital expenditures for the acquisition of revenue equipment will constitute our primary cash requirement over the next twelve months. We frequently consider potential acquisitions, and if we were to consummate an acquisition, our cash requirements would increase and we may have to modify our expected financing sources for the purchase of tractors. Subject to any required lender approval, we may make acquisitions in the future. Our principal sources of liquidity are cash generated from operations, bank borrowings, capital and operating lease financing of revenue equipment, and proceeds from the sale of used revenue equipment. At December 31, 2011, our total balance sheet debt, including capital lease obligations and long term debt, was $212.2 million, compared to $147.7 million at June 30, 2011.

As of December 31, 2011, we had a capital commitment for revenue equipment of $54.8 million for delivery through fiscal 2012. These capital commitments are amounts before considering the proceeds of equipment dispositions. In fiscal 2012, we expect to purchase our new tractors and trailers with cash, capital leases and off-balance sheet operating leases.

On August 29, 2011, we increased our credit facility to $100 million and reset the term on our five-year revolving credit facility agented by Bank of America, N.A. The facility refinanced the Company's existing credit facility and provides for ongoing working capital needs and general corporate purposes. Bank of America, N.A. continues to serve as the lead arranger in the facility and Wells Fargo Bank, N.A. continues to participate in the new facility. At December 31, 2011, we were authorized to borrow up to $100 million under this revolving line of credit, which expires August 29, 2016. The applicable interest rate under this agreement is based on either a base rate equal to Bank of America, N.A.'s prime rate or LIBOR plus an applicable margin between 0.75% and 1.125% that is adjusted quarterly based on the Company's lease adjusted total debt to EBITDAR ratio. At December 31, 2011, we had $34.5 million in outstanding borrowings related to our credit facility and $0.4 million utilized for letters of credit. The agreement is collateralized by the assets of all the U.S. subsidiaries of the Company. We are obligated to comply with certain financial covenants under our credit agreement and we were in compliance with these covenants at December 31, 2011.

Table of Contents

We believe we will be able to fund our operating expenses, as well as our current commitments for the acquisition of revenue equipment over the next twelve months, with a combination of cash generated from operations, borrowings available under our primary credit facility, and lease financing arrangements. We will continue to have significant capital requirements over the long term, and the availability of the needed capital will depend upon our financial condition and operating results and numerous other factors over which we have limited or no control, including prevailing market conditions and the market price of our common stock. However, based on our operating results, anticipated future cash flows, current availability under our credit facility, and sources of equipment lease financing that we expect will be available to us, we do not expect to experience significant liquidity constraints in the foreseeable future.

Cash Flows

Net cash provided by operations for the six months ended December 31, 2011 was $38.7 million, compared to cash provided by operations of $38.0 million for the six months ended December 31, 2010. Cash provided by operations increased primarily due to the increase in net income.

Net cash used in investing activities was $59.1 million for the six months ended December 31, 2011, compared to net cash used in investing activities of $1.2 million for the six months ended December 31, 2010. Cash used in investing activities includes the net cash effect of acquisitions and dispositions of revenue equipment during each period. Capital expenditures for equipment totaled $64.1 million for the six months ended December 31, 2011, and $22.2 million for the six months ended December 31, 2010. We generated proceeds from the sale of property and equipment of $44.0 million and $21.0 million for the six months ended December 31, 2011, and December 31, 2010, respectively. We made three acquisitions in the six months ended December 31, 2011, which used cash of $34.3 million.

Net cash used in financing activities was $3.1 million for the six months ended December 31, 2011, compared to $43.9 million for the six months ended December 31, 2010. The decrease in cash used by financing activities was primarily due to an increase in bank borrowings and a reduction in the payments of the principal component of capital lease obligations.

Contractual Obligations

As of December 31, 2011, our operating leases, capitalized leases, other debts, and future commitments have stated maturities or minimum annual payments as follows:

	Annual Cash Requirements
	As of December 31, 2011
	(in thousands)
	Payments Due by Period
			Less						More
			than			1-3		3-5	than
	Total		1 year		years		Years		5 years
	(Restated)		(Restated)		(Restated)		(Restated)		(Restated)
Operating leases	$	23,874	$	6,060	$	9,370	$	4,464	$	3,980
Lease residual value guarantees		19,638		137		6,121		4,573		8,807
Capital leases(1)		187,964		69,166		69,386		19,560		29,852
Long-term debt(1)		34,892		---		34,892		---		---
Sub total	$	266,368	$	75,363	$	119,769	$	28,597	$	42,639

Future purchase of revenue equipment	$	54,760	$	5,472	$	14,591	$	26,392	$	8,305
Employment and consulting agreements(2)		700		700		---		---		---
Standby letters of credit		438		438		---		---		---

Total	$	322,266	$	81,973	$	134,360	$	54,989	$	50,944

(1)	Includes interest
(2)	The amounts reflected in the table do not include amounts that could become payable to our Chief Executive Officer and Chief Operating Officer under certain circumstances if their employment by the Company is terminated.

Table of Contents

Off-Balance Sheet Arrangements

Operating leases have been an important source of financing for our revenue equipment. Our operating leases include some under which we do not guarantee the value of the asset at the end of the lease term ("walk-away leases") and some under which we do guarantee the value of the asset at the end of the lease term ("residual value"). Therefore, we are subject to the risk that equipment values may decline, in which case we would suffer a loss upon disposition and be required to make cash payments because of the residual value guarantees. We were obligated for residual value guarantees related to operating leases of $19.6 million at December 31, 2011, compared to $7.2 million at December 31, 2010. We believe that any residual payment obligations will be satisfied by the value of the related equipment at the end of the lease. To the extent the expected value at the lease termination date is lower than the residual value guarantee we would accrue for the difference over the remaining lease term. We anticipate that going forward, we will use a combination of cash generated from operations and operating leases to finance tractor purchases and operating leases to finance trailer purchases.

Critical Accounting Policies

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America require that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, revenue, and expenses in our consolidated financial statements and accompanying notes. Management bases it estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that affect, or could affect our financial statements materially and involve a significant level of judgment by management. The accounting policies we deem most critical to use include revenue recognition, allowance for doubtful accounts, depreciation, claims accrual, and accounting for income taxes. There have been no significant changes to our critical accounting policies and estimates during the three months ended December 31, 2011, compared to those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” included in our 2011 Annual Report on Form 10-K/A.

Seasonality

In the trucking industry, revenue generally decreases as customers reduce shipments during the winter holiday season and as inclement weather impedes operations. At the same time, operating expenses generally increase, with fuel efficiency declining because of engine idling and inclement weather. We have substantial operations in the Midwestern and Eastern United States and Canada. For the reasons stated, in those geographic regions in particular, third quarter net income historically has been lower than net income in each of the other three quarters of the year excluding charges. Our equipment utilization typically improves substantially between May and October of each year because of seasonal increased shipping and better weather. Also, during September and October, business generally increases as a result of increased retail merchandise shipped in anticipation of the holidays.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We experience various market risks, including fluctuations in interest rates, variability in currency exchange rates, and fuel prices. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.

Interest Rate Risk. We are exposed to interest rate risk principally from our primary credit facility. At December 31, 2011, we have $34.5 million in debt outstanding related to our credit facility and the market risk related to debt is immaterial.

Currency Exchange Rate Risk. We are subject to variability in foreign currency exchange rates in our international operations. Exposure to this variability is periodically managed primarily through the use of natural hedges, whereby funding obligations and assets are both managed in the local currency. We, from time-to-time, enter into currency exchange agreements to manage our exposure arising from fluctuating exchange rates related to specific and forecasted transactions. We operate this program pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes.

Our currency risk consists primarily of foreign currency denominated firm commitments and forecasted foreign currency denominated intercompany and third party transactions. At December 31, 2011, we had outstanding foreign exchange derivative contracts in notional amounts of $3.2 million with a fair value of these contracts approximately $0.4 million less than the original contract value. Derivative gains/(losses), initially reported as a component of other comprehensive income, are reclassified to earnings in the period when the forecasted transaction affects earnings.

Table of Contents

Assuming revenue and expenses for our Canadian operations are identical to that in the second quarter of fiscal 2012 (both in terms of amount and currency mix), we estimate that a $0.01 decrease in the Canadian dollar exchange rate would reduce our annual net income by approximately $127,000. Also, we estimate that a $0.01 decrease in the Mexican peso exchange rate would reduce our annual net income by approximately $183,000.

Commodity Price Risk. 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 believe fuel surcharges are effective at mitigating most, but not all, of the risk of high fuel price because we do not recover the full amount of fuel price increases. In fiscal 2012, we entered into contracts to hedge up to 0.4 million gallons per month for up to one year. At December 31, 2011, we had outstanding contracts in place for a notional amount of $13.3 million with a fair value of these contracts approximately $0.9 million more than the original contract value. Derivative gains/(losses), initially reported as a component of other comprehensive income, are reclassified to earnings in the period when the forecasted transaction affects earnings.

Item 4. Controls and Procedures

Restatement of Previously Issued Financial Statements

During the third quarter of fiscal 2012, the Company discovered that under ASC 840-10-25-14, some leases would need to be classified as capital leases, because of certain non-performance-related default provisions. Management initiated a review of the Company’s equipment lease accounting and determined that its previous method of accounting for certain equipment leases as operating leases was not in accordance with U.S. generally accepted accounting principles (GAAP). As a result, the Company has restated its consolidated balance sheets as of June 30, 2011 and 2010, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2011 and the consolidated interim financial statements included for the quarterly periods ended December 31, 2011 and 2010.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officers (referred to in this report as the Certifying Officers), as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(b) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply judgment in evaluating our controls and procedures.

Prior to the filing of our Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2012, our management, under the supervision and with the participation of our Certifying Officers, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (the Evaluation) as of the last day of the period covered by our Filing.

Based upon that Evaluation, our Certifying Officers concluded that our previously established equipment lease accounting practices were not in accordance with GAAP. Correspondingly, as described above, management has restated its consolidated balance sheets as of June 30, 2011 and 2010, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2011 included in the Company’s June 30, 2011 Annual Report on Form 10-K and the consolidated interim financial statements included in the Company’s Form 10-Q as of and for the quarter ended December 31, 2011, and related comparative prior quarter included in that Form 10-Q. The restatement is the result of the material weakness related to the Company’s control to evaluate leases for capital lease or operating lease classification which was not designed to consider all of the relevant lease accounting literature applicable to lease classification, including nonperformance related default provisions as described in ASC 840-10-25-14. As a result of the material weakness, our Certifying Officers have now concluded that our disclosure controls and procedures were not effective as of December 31, 2011.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

Remediation of the Material Weakness

To remediate the material weakness in the Company’s internal control over financial reporting, subsequent to the reporting period, the Company implemented additional review procedures over the lease default provisions affecting equipment lease accounting practices.

The Company’s remediation plan has been implemented; however, the above material weakness will not be considered remediated until the additional review procedures over lease default provisions have been operating effectively for an adequate time. Management will consider the status of this remedial effort when assessing the effectiveness of the Company’s internal control over financial reporting and other disclosure controls and procedures in future reporting periods. While management believes that the remedial efforts will resolve the identified material weakness, there is no assurance that management’s remedial efforts conducted to date will be sufficient or that additional remedial actions will not be necessary.

Table of Contents

Part II. Other Information

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. Our Annual Report on Form 10-K/A for the year ended June 30, 2011, in the section entitled Item 1A. Risk Factors, describes some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects. In addition to the risk factors set forth in our Form 10-K/A, we believe that the following additional risk should be considered in evaluating our business and growth outlook:

We are required to maintain disclosure controls and procedures. As of December 31, 2011, our disclosure controls and procedures were not effective due to a material weakness.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, concluded that, as of December 31, 2011, our disclosure controls and procedures were ineffective due to a material weakness in our internal control over financial reporting. The material weakness arose because our previously established equipment lease accounting practices were not in accordance with GAAP. As a result, we are required to restate certain of our financial statements. Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. We cannot assure you that the measures we will take to remediate the material weakness will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the further restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price of our common stock.

Item 4. Mine Safety Disclosures – Not applicable

Table of Contents

Item 6. Exhibits

3.1	Amended and Restated Certificate of Incorporation of the Company, effective January 12, 2006. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ending December 31, 2005, filed with the SEC on January 30, 2006.)
3.2	Certificate of Designation for Series A Junior Participating Preferred Stock. (Incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2000, filed with the SEC on September 28, 2000.)
3.3	Amended and Restated By-laws of the Company. (Incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K filed with the SEC on July 3, 2006.)
4.1	Amended and Restated Certificate of Incorporation of the Company, effective January 12, 2006. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ending December 31, 2005, filed with the SEC on January 30, 2006.)
4.2	Amended and Restated By-laws of the Company. (Incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K filed with the SEC on July 3, 2006.)
31.1	Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Stephen Russell, the Company's Chief Executive Officer.*
31.2	Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by William Meek, the Company's Chief Financial Officer.*
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002, by Stephen Russell, the Company's Chief Executive Officer.*
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by William Meek, the Company's Chief Financial Officer.*
101.INS**	XBRL Instance Document.*
101.SCH**	XBRL Taxonomy Extension Schema Document.*
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.*

*	Filed herewith
**	In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed to be "furnished" and not "filed."

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Celadon Group, Inc. (Registrant)


	/s/Stephen Russell
	Stephen Russell
	Chief Executive Officer


	/s/William E. Meek
	William E. Meek
	Executive Vice President, Chief Financial Officer and Treasurer


Date: May 24, 2012

Table of Contents

EXHIBIT INDEX
Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company, effective January 12, 2006. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ending December 31, 2005, filed with the SEC on January 30, 2006.)
3.2	Certificate of Designation for Series A Junior Participating Preferred Stock. (Incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2000, filed with the SEC on September 28, 2000.)
3.3	Amended and Restated By-laws of the Company. (Incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K filed with the SEC on July 3, 2006.)
4.1	Amended and Restated Certificate of Incorporation of the Company, effective January 12, 2006. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ending December 31, 2005, filed with the SEC on January 30, 2006.)
4.2	Amended and Restated By-laws of the Company. (Incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K filed with the SEC on July 3, 2006.)
31.1	Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Stephen Russell, the Company's Chief Executive Officer.*
31.2	Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by William Meek, the Company's Chief Financial Officer.*
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes–Oxley Act of 2002, by Stephen Russell, the Company's Chief Executive Officer.*
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by William Meek, the Company's Chief Financial Officer.*
101.INS**	XBRL Instance Document.*
101.SCH**	XBRL Taxonomy Extension Schema Document.*
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.*

*	Filed herewith
**	In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed to be "furnished" and not "filed."

Attached files

Stock widget

Investing forum

CELADON GROUP INC Reports

Also read