UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION


Washington,
      D.C. 20549


FORM
      10-K


(Mark
      One)


[X]
      Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of
      1934


For
      the
      fiscal year ended December 31, 2007


OR


[  ]
      Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act
      of 1934





Commission
      File No. 0-27754


__________________


HUB
      GROUP, INC.


(Exact
      name of registrant as specified in its charter)





Delaware
            36-4007085(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                of organization)
            Identification
                No.)





3050
      Highland Parkway, Suite 100


Downers
      Grove, Illinois 60515


(Address
      and zip code of principal executive offices)


(630)
      271-3600


(Registrant's
      telephone number, including area code)





Securities
      registered pursuant to Section 12(b) of the Act: None


Securities
      registered pursuant to Section 12(g) of the Act:


Class
      A Common Stock, $.01 par value


(Title
      of
      Class)





Indicate
      by check mark if the Registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.


Yes
X  No
      __





Indicate
      by check mark if Registrant is not required to file reports pursuant to Section
      13 or Section 15(d) of the Act.


Yes
  No
      X





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 if disclosure of
      delinquent filers pursuant to Item 405 of Regulation S-K is not contained
      herein, and will not be contained, to the best of Registrant's knowledge, in
      definitive proxy or information statements incorporated by reference in Part
      III
      of this Form 10-K or any amendment to this Form 10-K.X





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


Large
      Accelerated Filer  X     Accelerated
      Filer     Non-Accelerated
      Filer   Smaller Reporting
      Company




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
  No
      X





The
      aggregate market value of the Registrant’s voting stock held by non-affiliates
      on June 30, 2007, based upon the last reported sale price on that date on the
      NASDAQ Global Select Market of $35.16 per share, was
      $1,296,834,197.





On
      February 19, 2008, the Registrant had 36,972,648 outstanding shares of
      Class A Common Stock, par value $.01 per share, and 662,296 outstanding shares
      of Class B Common Stock, par value $.01 per share.


Documents
      Incorporated by Reference


The
      Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders
      to be held on May 14, 2008 (the “Proxy Statement”) is incorporated by reference
      in Part III of this Form 10-K to the extent stated herein. Except with respect
      to information specifically incorporated by reference in this Form 10-K, the
      Proxy Statement is not deemed to be filed as a part hereof.


PART
        I





Item
      1.                 
BUSINESS





General





Hub
      Group, Inc. (“Company”, “we”, “us” or “our”) is a Delaware corporation that was
      incorporated on March 8, 1995.  We are one of North America’s leading
      asset-light freight transportation management companies.  We offer
      comprehensive intermodal, truck brokerage and logistics
      services.  Since our founding in 1971, we have grown to become the
      largest intermodal marketing company (“IMC”) in the United States and one of the
      largest truck brokers.





We
      operate through a network of 21 operating centers throughout the United States
      and Canada.  Each operating center is strategically located in a
      market with a significant concentration of shipping customers and one or more
      railheads.  Through our network, we have the ability to move freight
      in and out of every major city in the United States, Canada and
      Mexico.  We service a large and diversified customer base in a broad
      range of industries, including consumer products, retail and durable
      goods.  We utilize an asset-light strategy in order to minimize our
      investment in equipment and facilities and reduce our capital
      requirements.  We arrange freight movement for our customers through
      transportation carriers and equipment providers.





We
      sold
      substantially all of the assets of Hub Group Distribution Services, LLC (“HGDS”
or “Hub Distribution”) to the President of the former subsidiary on May 1,
      2006.  Accordingly, the results of operations of HGDS for the years
      ended December 31, 2006 and 2005 have been reported as discontinued
      operations.





Services
      Provided





Our
      transportation services can be broadly placed into the following
      categories:





Intermodal.
      As an
      IMC, we arrange for the movement of our customers’ freight in containers and
      trailers, typically over long distances of 750 miles or more.  We
      contract with railroads to provide transportation for the long-haul portion
      of
      the shipment and with local trucking companies, known as “drayage companies,”
for pickup and delivery.  In certain markets, we supplement third
      party drayage services with Company-owned drayage operations.  As part
      of our intermodal services, we negotiate rail and drayage rates, electronically
      track shipments in transit, consolidate billing and handle claims for freight
      loss or damage on behalf of our customers.





We
      use our network to access
      containers and trailers owned by leasing companies, railroads and steamship
      lines.  We are able to track trailers and containers entering a
      service area and reuse that equipment to fulfill the customers’ outbound
      shipping requirements.  This effectively allows us to “capture”
containers and trailers and keep them within our network.  As of
      December 31, 2007, we also have exclusive access to approximately 2,935
      rail-owned containers for our dedicated use on the Burlington Northern Santa
      Fe
      (“BNSF”) and the Norfolk Southern (“NS”) rail networks and approximately 3,175
      rail-owned containers for our dedicated use on the Union Pacific (“UP”) and the
      NS rail networks.  In addition to these containers, during 2005, 2006
      and 2007, we added a total of 7,400 new 53’ containers for use on the BNSF and
      NS.  We financed these containers with operating
      leases.  These arrangements are included in Note 7 to the consolidated
      financial statements.





Through
      our subsidiary Comtrak Logistics, Inc. (“Comtrak”), we acquired substantially
      all the assets of Comtrak, Inc. at the close of business on February 28,
      2006.  Comtrak is a transportation company whose services include
      primarily rail and international drayage for the intermodal
      sector.  The results of Comtrak are included in our results of
      operations from March 1, 2006, its date of acquisition.





Our
      drayage services are provided by our subsidiaries, Comtrak and Quality Services,
      LLC (“QS”) who assist us in providing reliable, cost effective intermodal
      services to our customers.  Our subsidiaries have terminals in
      Atlanta, Birmingham, Charleston, Charlotte, Chattanooga, Chicago, Cleveland,
      Columbus, Dallas, Huntsville, Jacksonville, Kansas City, Los Angeles, Memphis,
      Nashville, Perry, Savannah, St. Louis, Stockton, and Tampa.  As of
      December 31, 2007, QS and Comtrak owned 329 tractors, leased 23 tractors, leased
      or owned 706 trailers and employed 331 drivers and contracted with 845
      owner-operators.





Truck
      Brokerage (Highway
      Services). We are one of the largest truck brokers in the United
      States, providing customers with another option for their transportation
      needs.  We match the customers’ needs with carriers’ capacity to
      provide the most effective service and price combinations.  We have
      contracts with a substantial base of carriers allowing us to meet the varied
      needs of our customers.  As part of the truck brokerage services, we
      negotiate rates, track shipments in transit and handle claims for freight loss
      and damage on behalf of our customers.


1


Our
      truck brokerage operation also
      provides customers with specialized programs.  Through the Dedicated
      Trucking Program, certain carriers have informally agreed to move freight for
      our customers on a continuous basis.  This arrangement allows us to
      effectively meet our customers’ needs without owning the equipment.





Logistics.  Our
      logistics business operates under the name of Unyson
      Logistics.  Unyson Logistics is comprised of a network of logistics
      professionals dedicated to developing, implementing and operating customized
      logistics solutions.  Unyson offers a wide range of transportation
      management services and technology solutions including shipment optimization,
      load consolidation, mode selection, carrier management, load planning and
      execution and web-based shipment visibility.  Our multi-modal
      transportation capabilities include small parcel, heavyweight, expedited,
      less-than-truckload, truckload, intermodal and railcar.  Unyson
      Logistics operates throughout North America with offices strategically located
      in key market areas.





Hub
      Network





Hub
      Group
      currently has operating centers in the following metropolitan
      areas:





Atlanta
            Indianapolis
            Minneapolis
            St.
                LouisBaltimore
            Kansas
                City
            New
                York City
            ToledoBoston
            Laredo
            Pittsburgh
            TorontoChicago
            Los
                Angeles
            Salt
                Lake CityCleveland
            Memphis
            San
                DiegoHouston
            Milwaukee
            San
                Francisco


Our entire network is interactively connected through our proprietary
      Network Management System. This enables us to move freight into and out of
      every
      major city in the United States, Canada and Mexico.





Each
      operating center manages the freight originating in its service area. In a
      typical intermodal transaction, the customer contacts the local operating center
      to place an order. The operating center consults with the centralized pricing
      group, obtains the necessary intermodal equipment, arranges for it to be
      delivered to the customer by a drayage company and, after the freight is loaded,
      arranges for the transportation of the container or trailer to the rail ramp.
      Relevant information is entered into our Network Management System by the
      assigned operating center. Our predictive track and trace technology then
      monitors the shipment to ensure that it arrives as scheduled and alerts the
      customer service personnel if there are service delays. The assigned operating
      center then arranges for and confirms delivery by a drayage company at
      destination. After unloading, the empty equipment is made available for
      reloading by the local operating center in the delivery market.





We
      provide truck brokerage services to our customers in a similar manner. In a
      typical truck brokerage transaction, the customer contacts the local operating
      center to obtain a price quote for a particular freight movement. The customer
      then provides appropriate shipping information to the local operating center.
      The local operating center makes the delivery appointment and arranges with
      the
      appropriate carrier to pick up the freight. Once it receives confirmation that
      the freight has been picked up, the local operating center monitors the movement
      of the freight until it reaches its destination and the delivery has been
      confirmed. If the carrier notifies us that after delivering the load it will
      need additional freight, we may notify the operating center located nearest
      the
      destination of the carrier’s availability.  Although under no
      obligation to do so, the local operating center then may attempt to secure
      freight for the carrier.





Marketing
      and Customers





We
      believe that fostering long-term
      customer relationships is critical to our success.  Through these
      long-term relationships, we are able to better understand our customers’ needs
      and tailor our transportation services to the specific customer, regardless
      of
      the customer’s size or volume.  We currently have full-time marketing
      representatives at various operating centers and sales offices with primary
      responsibility for servicing local, regional and national
      accounts.  These sales representatives directly or indirectly report
      to our Chief Marketing Officer.  This model allows us to provide our
      customers with both a local marketing contact and access to our competitive
      rates as a result of being a large, national transportation service
      provider.





Our
      marketing efforts have produced a
      large, diverse customer base, with no customer representing more than 5% of
      our
      total revenue in 2007.  We service customers in a wide variety of
      industries, including consumer products, retail and durable goods.





We
      maintain a joint marketing
      relationship with TMM Logistics, a wholly owned subsidiary of Grupo TMM, a
      Mexican logistics and transportation company.  TMM Logistics provides
      sales support and operating execution within Mexico, and we furnish the same
      capabilities in Canada and the United States for TMM Logistics.


2


Management
      Information
      Systems





A
      primary component of our business
      strategy is the continued improvement of our Network Management System and
      other
      technology to ensure that we remain a leader among transportation providers
      in
      information processing for transportation services.  Our Network
      Management System consists of proprietary software running on a combination
      of
      platforms which includes the IBM iSeries and Microsoft Windows Server
      environments located at a secure offsite data center.  All of our
      operating centers are linked together with the data center using an MPLS
      (“Multi-Protocol Label Switching”) network.  This configuration
      provides a real time environment for transmitting data among our operating
      centers and headquarters.  We also make extensive use of electronic
      commerce (“e-Commerce”), allowing each operating center to communicate
      electronically with each railroad, many drayage companies, certain trucking
      companies and those customers with e-Commerce capabilities.





Our
      Network Management System is the
      primary mechanism used in our operating centers to handle our intermodal and
      truck brokerage business.  The Network Management System processes
      customer transportation requests, tenders and tracks shipments, prepares
      customer billing, establishes account profiles and retains critical information
      for analysis. The Network Management System provides connectivity with each
      of
      the major rail carriers. This enables us to electronically tender and track
      shipments in a real time environment. In addition, the Network Management
      System’s e-Commerce features offer customers with e-Commerce capability a
      completely paperless process, including load tendering, shipment tracking,
      billing and remittance processing.  We aggressively pursue
      opportunities to establish e-Commerce interfaces with our customers, railroads,
      trucking companies and drayage companies.





To
      manage our logistics business, we use
      specialized software that includes planning and execution
      solutions.  This sophisticated transportation management software
      enables us to offer supply chain planning and logistics managing, modeling,
      optimizing and monitoring for our customers.  We use this software
      when offering logistics management services to customers that ship via multiple
      modes, including intermodal, truckload, and less-than-truckload, allowing us
      to
      optimize mode and carrier selection and routing for our
      customers.  This software is integrated with Hub Group’s Network
      Management System and our accounting system.





Our
      website,www.hubgroup.com,
      is designed to allow our customers and
      vendors to easily do business with us online.  Through Vendor
      Interface, we tender loads to our drayage partners using the Internet rather
      than phones or faxes.  Vendor Interface also captures event status
      information, allows vendors to view outstanding paperwork requirements and
      helps
      facilitate paperless invoicing. We currently tender substantially all of our
      drayage loads using Vendor Interface or e-Commerce.  Through Trucker
      Advantage, we exchange information on available Hub loads, available carrier
      capacity and updates to event status information with our truck brokerage
      partners.  Through Customer Advantage, customers receive immediate
      pricing, place orders, track shipments, and review historical shipping data
      through a variety of reports over the Internet.  All of our Internet
      applications are integrated with the Network Management
      System.





Relationship
      with Railroads





A
      key element of our business
      strategy is to strengthen our close working relationship with each of the major
      intermodal railroads in the United States. We view our relationship with the
      railroads as a partnership. Due to our size and relative importance, many
      railroads have dedicated support personnel to focus on our day-to-day service
      requirements. On a regular basis, our senior executives and each of the
      railroads meet to discuss major strategic issues concerning intermodal
      transportation. Several of our top executive officers are former railroad
      employees, which makes them well suited to understand the railroads’ service
      capabilities.





We
      have relationships with each of
      the following major railroads:





Burlington
                Northern Santa Fe
            Florida
                East CoastCanadian
                National
            Kansas
                City SouthernCanadian
                Pacific
            Norfolk
                SouthernCSX
            Union
                Pacific





We
      also have relationships with each
      of the following major service providers: CMA CGM (America)
      Inc., ExpressSystem Intermodal Inc.,Hanjin Shipping, HyundaiMerchant Marine, K-Line America,
      Maersk Sea-Land, Mitsui O.S.K. Lines (America) Inc. and Pacer
      International.





These
      relationships govern the
      transportation services and payment terms pursuant to which our intermodal
      shipments are handled by the railroads. Transportation rates are market driven
      and we typically negotiate with the railroads or other major service providers
      on a route or customer specific basis. Consistent with industry practice, many
      of the rates we negotiate are special commodity quotations (“SCQs”), which
      provide discounts from published price lists based on competitive market factors
      and are designed by the railroads or major service providers to attract new
      business or to retain existing business. SCQ rates are generally issued for
      the
      account of a single IMC.  SCQ rates apply to specific customers in
      specified shipping lanes for a specific period of time, usually up to 12
      months.


3


We
      use our network to access
      containers and trailers owned by leasing companies, railroads and steamship
      lines.  As of December 31, 2007, we also have exclusive access to
      approximately 2,935 rail-owned containers for our dedicated use on the BNSF
      and
      the NS rail networks and approximately 3,175 rail-owned containers for our
      dedicated use on the UP and the NS rail networks.  In addition to
      these containers, during 2005, 2006 and 2007, we added a total of 7,400 new
      53’
containers for use on the BNSF and NS.  We financed these containers
      with operating leases.  These arrangements are included in Note 7 to
      the consolidated financial statements.





Relationship
      with Drayage Companies





We
      have a “Quality Drayage Program,”
which consists of agreements and rules that govern the framework by which many
      drayage companies perform services for us.  Participants in the
      program commit to provide high quality service along with clean and safe
      equipment, maintain a defined on-time performance level and follow specified
      procedures designed to minimize freight loss and damage.  We negotiate
      drayage rates for transportation between specific origin and destination
      points.





We
      also supplement third-party
      drayage services with our own drayage operations, which we operate through
      our
      QS and Comtrak subsidiaries.  Our drayage operations employ their own
      drivers and also contract with owner-operators who supply their own
      trucks.





Relationship
      with Trucking Companies





Our
      truck brokerage operation has a
      large and growing number of active trucking companies that we use to transport
      freight.  The local operating centers deal daily with these carriers
      on an operational level.  Our corporate headquarters handles the
      administrative and regulatory aspects of the trucking company
      relationship.  Our relationships with these trucking companies are
      important since these relationships determine pricing, load coverage and overall
      service.




Risk
      Management and Insurance





We
      require all drayage companies
      participating in the Quality Drayage Program to carry at least $1.0 million
      in
      general liability insurance, $1.0 million in truckman’s auto liability insurance
      and a minimum of $100,000 in cargo insurance.  Railroads, which are
      self-insured, provide limited cargo protection, generally up to $250,000 per
      shipment.  To cover freight loss or damage when a carrier's liability
      cannot be established or a carrier's insurance is insufficient to cover the
      claim, we carry our own cargo insurance with a limit of $1.0 million per
      container or trailer and a limit of $20.0 million in the
      aggregate.  We also carry general liability insurance with limits of
      $1.0 million per occurrence and $2.0 million in the aggregate with a companion
      $25.0 million umbrella policy on this general liability insurance.





We
      maintain separate insurance
      policies to cover potential exposure from our company-owned drayage
      operations.  We have general liability insurance with limits of $1.0
      million per occurrence and $2.0 million in the aggregate, truckman’s auto
      liability with limits of $1.0 million and a companion $19.0 million umbrella
      liability policy.





Government
      Regulation





Hub
      Group, Inc. and various
      subsidiaries are licensed by the Department of Transportation as brokers in
      arranging for the transportation of general commodities by motor vehicle. To
      the
      extent that the operating centers perform truck brokerage services, they do
      so
      under these licenses. The Department of Transportation prescribes qualifications
      for acting in this capacity, including a $10,000 surety bond that we have
      posted.  To date, compliance with these regulations has not had a
      material adverse effect on our results of operations or financial condition.
      However, the transportation industry is subject to legislative or regulatory
      changes that can affect the economics of the industry by requiring changes
      in
      operating practices or influencing the demand for, and cost of providing,
      transportation services.





Competition





The
      transportation services industry
      is highly competitive. We compete against other IMCs, as well as logistics
      companies, third party brokers, trucking companies and railroads that market
      their own intermodal services. Several larger trucking companies have entered
      into agreements with railroads to market intermodal services nationwide.
      Competition is based primarily on freight rates, quality of service,
      reliability, transit time and scope of operations.  Several
      transportation service companies and trucking companies, and all of the major
      railroads, have substantially greater financial and other resources than we
      do.






4
 General
 
 Employees:As
        of
        December 31, 2007, we had 1,412 employees or 1,081 employees excluding drivers.
        We are not a party to any collective bargaining agreement and consider our
        relationship with our employees to be satisfactory.
 
 Other:No
        material
        portion of our operations is subject to renegotiation of profits or termination
        of contracts at the election of the federal government.  None of our
        trademarks are believed to be material to us.  Our business is
        seasonal to the extent that certain customer groups, such as retail, are
        seasonal.
 
 Periodic
        Reports
 
 Upon
        written request, our annual
        report to the Securities and Exchange Commission on Form 10-K for the fiscal
        year ended December 31, 2007, our quarterly reports on Form 10-Q and current
        reports on Form 8-K will be furnished to stockholders free of charge; write
        to:
        Public Relations Department, Hub Group, Inc., 3050 Highland Parkway, Suite
        100,
        Downers Grove, Illinois 60515.  Our filings are also accessible
        through our website at www.hubgroup.com
        as soon as reasonably practicable after we file or furnish such reports to
        the
        Securities and Exchange Commission.


Item
      1A.                 
RISK FACTORS





Since
      our business is concentrated on
      intermodal marketing, any decrease in demand for intermodal transportation
      services compared to other transportation services could have an adverse effect
      on our results of operations.




In
      2007, 2006 and 2005, wederived 73%of
      our revenue from our intermodal
      services. As a result, any decrease in demand for intermodal transportation
      services compared to other transportation services could have an adverse effect
      on our results of operations.




Because
      we depend on railroads for our
      operations, our operating results and financial condition are likely to be
      adversely affected by any reduction or deterioration in rail
      service.




We
      depend on the major railroads in the
      United States for virtually all of the intermodal services we provide. In many
      markets, rail service is limited to one or a few railroads. Consequently, a
      reduction in, or elimination of, rail service to a particular market is likely
      to adversely affect our ability to provide intermodal transportation services
      to
      some of our customers. In addition, the railroads are relatively free to adjust
      shipping rates up or down as market conditions permit. Rate increases would
      result in higher intermodal transportation costs, reducing the attractiveness
      of
      intermodal transportation compared to truck or other transportation modes,
      which
      could cause a decrease in demand for our services. Further, our ability to
      continue to expand our intermodal transportation business is dependent upon
      the
      railroads’ ability to increase capacity for intermodal freight and provide
      consistent service. Our business could also be adversely affected by a work
      stoppage at one or more railroads or by adverse weather conditions or other
      factors that hinder the railroads’ ability to provide reliable transportation
      services. In the past, there have been service issues when railroads have
      merged. As a result, we cannot predict what effect, if any, further
      consolidation among railroads may have on intermodal transportation services
      or
      our results of operations.




Because
      our relationships with the major
      railroads are critical to our ability to provide intermodal transportation
      services, our business may be adversely affected by any change to those
      relationships.




We
      have important relationships with
      each of the major U.S. railroads. To date, the railroads have chosen to rely
      on
      us, other IMCs and other intermodal competitors to market their intermodal
      services rather than fully developing their own marketing capabilities. If
      one
      or more of the major railroads were to decide to reduce their dependence on
      us,
      the volume of intermodal shipments we arrange would likely decline, which could
      adversely affect our results of operations and financial
      condition.




Because
      we rely on drayage companies in
      our intermodal operations, our ability to expand our business or maintain our
      profitability may be adversely affected by a shortage of drayage
      capacity.




In
      many of the markets we serve, we use
      third-party drayage companies for pickup and delivery of intermodal containers.
      Most drayage companies operate relatively small fleets and have limited access
      to capital for fleet expansion.  In some of our markets, there are a
      limited number of drayage companies that can meet ourquality
      standards. This could limit our ability to expand our intermodal business or
      require us to establish our own drayage operations in some markets, which could
      increase our operating costs and could adversely affect our profitability and
      financial condition. Also, the trucking industry chronically experiences a
      shortage of available drivers, which may limit the ability of third-party
      drayage companies to expand their fleets. This shortage also may require them
      to
      increase drivers’ compensation, thereby increasing our


5


cost
      of providing drayage services to
      our customers. Therefore, the driver shortage could also adversely affect our
      profitability and limit our ability to expand our intermodal
      business.




Because
      we depend on trucking companies
      for our truck brokerage services, our ability to maintain or expand our truck
      brokerage business may be adversely affected by a shortage of trucking
      capacity.




In
      2007, 2006 and 2005, wederived 19%, 19% and
      18%,
      respectively, of our
      revenue from our truck brokerage services. We depend upon various third-party
      trucking companies for the transportation of our customers’ loads. Particularly
      during periods of economic expansion, trucking companies may be unable to expand
      their fleets due to capital constraints or chronic driver shortages, and these
      trucking companies also may raise their rates. If we face insufficient capacity
      among our third-party trucking companies, we may be unable to maintain or expand
      our truck brokerage business. Also, we may be unable to pass rate increases
      on
      to our customers, which could adversely affect our
      profitability.




Because
      we use a
      significant number of independent contractors in our businesses, proposals
      from
      legislative, judicial or regulatory authorities
      that change
      theindependent
      contractor classification could have a significant impact on our gross margin
      and operating income.





We
      use a significant number of
      independent contractors in our businesses, consistent with long-standing
      industry practices.  There can be no assurance that legislative,
      judicial, or regulatory (including tax) authorities will not introduce proposals
      or assert interpretations of existing rules and regulations that would change theindependent
      contractor classification of
      a significant number of independentcontractors doing business
      with
      us.  Although management believes that there are no proposals
      currently pending that would change the classification of independent
      contractors that do business with us, the costs associated with potential
      reclassifications could have a material adverse effect on results of operations
      and our financial position.





We
      depend on third parties for equipment
      essential to operate our business, and if we fail to secure sufficient
      equipment, we could lose customers and revenue.




We
      depend on third parties for
      transportation equipment, such as containers and trailers, necessary for the
      operation of our business. Our industry has experienced equipment shortages
      in
      recent years, particularly during the peak-shipping season in the fall. A
      substantial amount of intermodal freight originates at or near the major West
      Coast ports, which have historically had the most severe equipment shortages.
      If
      we cannot secure sufficient transportation equipment at a reasonable price
      from
      third parties to meet our customers’ needs, our customers may seek to have their
      transportation needs met by other providers. This could have an adverse effect
      on our business, results of operations and financial
      position.





Our
      business could be adversely affected
      by strikes or work stoppages by draymen, truckers, longshoremen and railroad
      workers.




There
      has been labor unrest, including
      work stoppages, among draymen. We could lose business from any significant
      work
      stoppage or slowdown and, if labor unrest results in increased rates for
      draymen, we may not be able to pass these cost increases on to our customers.
      In
      the Fall of 2002, all of the West Coast ports were shut down as a result of
      a
      dispute with the longshoremen. The ports remained closed for nearly two weeks,
      until reopened as the result of a court order under the Taft-Hartley Act. Our
      operations were adversely affected by the shutdown. In January 2003, a new
      six-year contract was agreed to by the International Longshoremen and Warehouse
      Union and the Pacific Maritime Association. In the past several years, there
      have been strikes involving railroad workers. Future strikes by railroad workers
      in the United States, Canada or anywhere else that our customers’ freight
      travels by railroad could adversely affect our business and results of
      operations. Any significant work stoppage, slowdown or other disruption
      involving ports, railroads, truckers or draymen could adversely affect our
      business and results of operations.




Our
      results of operations are
      susceptible to changes in general economic conditions and cyclical
      fluctuations.




Economic
      recession, customers’ business
      cycles, changes in fuel prices and supply, interest rate fluctuations, increases
      in fuel or energy taxes and other general economic factors affect the demand
      for
      transportation services and the operating costs of railroads, trucking companies
      and drayage companies. We have little or no control over any of these factors
      or
      their effects on the transportation industry. Increases in the operating costs
      of railroads, trucking companies or drayage companies can be expected to result
      in higher freight rates. Our operating margins could be adversely affected
      if we
      were unable to pass through to our customers the full amount of higher freight
      rates. Economic recession or a downturn in customers’ business cycles also may
      have an adverse effect on our results of operations and growth by reducing
      demand for our services. Therefore, our results of operations, like the entire
      freight transportation industry, are cyclical and subject to significant
      period-to-period fluctuations.






6


Relatively
      small increases in our
      transportation costs that we are unable to pass through to our customers are
      likely to have a significant effect on our gross margin and operating
      income.




Transportation
      costs represented86%, 86%
      and 88% of our consolidated revenue in
      2007, 2006 and 2005, respectively. Because transportation costs represent such
      a
      significant portion of our costs, even relatively small increases in these
      transportation costs, if we are unable to pass them through to our customers,
      are likely to have a significant effect on our gross margin and operating
      income.




Our
      business could be adversely affected
      by heightened security measures, actual or threatened terrorist attacks, efforts
      to combat terrorism, military action against a foreign state or other similar
      event.




We
      cannot predict the effects on our
      business of heightened security measures, actual or threatened terrorist
      attacks, efforts to combat terrorism, military action against a foreign state
      or
      other similar events. It is possiblethat
      one or more of these events could
      be directed at U.S. or foreign ports, borders, railroads or highways. Heightened
      security measures or other events are likely to slow the movement of freight
      through U.S. or foreign ports, across borders or on U.S. or foreign railroads
      or
      highways and could adversely affect our business and results of operations.
      Any
      of these events could also negatively affect the economy and consumer
      confidence, which could cause a downturn in the transportation
      industry.




If
      we fail to maintain and enhance our
      information technology systems, we may be at a competitive disadvantage and
      lose
      customers.




Our
      information technology systems are
      critical to our operations and our ability to compete effectively as an IMC,
      truck broker and logistics provider. We expect our customers to continue to
      demand more sophisticated information technology applications from their
      suppliers. If we do not continue to enhance our Network Management System and
      the logistics software we use to meet the increasing demands of our customers,
      we may be placed at a competitive disadvantage and could lose
      customers.




Our
      information technology systems are
      subject to risks that we cannot control and the inability to use our information
      technology systems could materially adversely affect our
      business.




Our
      information technology systems are
      dependent upon global communications providers, web browsers, telephone systems
      and other aspects of the Internet infrastructure that have experienced
      significant system failures and electrical outages in the past. Our systems
      are
      susceptible to outages from fire, floods, power loss, telecommunications
      failures, break-ins and similar events. Our servers are vulnerable to computer
      viruses, break-ins and similar disruptions from unauthorized tampering with
      our
      computer systems. The occurrence of any of these events could disrupt or damage
      our information technology systems and inhibit our internal operations, our
      ability to provide services to our customers and the ability of our customers
      and vendors to access our information technology systems. This could result
      in a
      loss of customers or a reduction in demand for our services.




The
      transportation industry is subject
      to government regulation, and regulatory changes could have a material adverse
      effect on our operating results or financial condition.




Hub
      Group, Inc. and various subsidiaries
      are licensed by the Department of Transportation as motor carrier freight
      brokers. The Department of Transportation prescribes qualifications for acting
      in this capacity, including surety-bonding requirements. To date, compliance
      with these regulations has not had a material adverse effect on our results
      of
      operations or financial condition. However, the transportation industry is
      subject to legislative or regulatory changes that can affect the economics
      of
      the industry by requiring changes in operating practices or influencing the
      demand for, and cost of providing, transportation services.  Future
      laws and regulations may be more stringent and require changes in operating
      practices, influence the demand for transportation services or increase the
      cost
      of providing transportation services, any of which could adversely affect our
      business.




Our
      operations are subject to various
      environmental laws and regulations, the violation of which could result in
      substantial fines or penalties.




From
      time to time, we arrange for the
      movement of hazardous materials at the request of our customers. As a result,
      we
      are subject to various environmental laws and regulations relating to the
      handling of hazardous materials. If we are involved in a spill or other accident
      involving hazardous materials, or if we are found to be in violation of
      applicable laws or regulations, we could be subject to substantial fines or
      penalties and to civil and criminal liability, any of which could have an
      adverse effect on our business and results of
      operations.


7


We
      derive a significant portion of our
      revenue from our largest customers and the loss of several of these customers
      could have a material adverse effect on our revenue and
      business.




For
      2007, our largest 20 customers
      accounted for approximately 35% of our revenue. A reduction in or termination
      of
      our services by several of our largest customers could have a material adverse
      effect on our revenue and business.




Insurance
      and claims expenses could
      significantly reduce our earnings.




Our
      future insurance claims expenses
      might exceed historical levels, which could reduce our earnings.  If
      the number or severity of claims increases, our operating results could be
      adversely affected.  We maintain insurance with licensed insurance
      companies.  Insurance carriers have recently raised
      premiums.  As a result, our insurance and claims expenses could
      increase when our current coverage expires. If these expenses increase, and
      we
      are unable to offset the increase with higher freight rates, our earnings could
      be materially and adversely affected.





Our
      success depends upon our ability to
      recruit and retain key personnel.




Our
      success depends upon attracting and
      retaining the services of our management team as well as our ability to attract
      and retain a sufficient number of other qualified personnel to run our business.
      There is substantial competition for qualified personnel in the transportation
      services industry. As all key personnel devote their full time to our business,
      the loss of any member of our management team or other key person could have
      an
      adverse effect on us. We do not have written employment agreements with any
      of
      our executive officers and do not maintain key man insurance on any of our
      executive officers.





Ourgrowth
      could be adversely affected if we
      are not ableto identify,
      successfully acquire and integrate future acquisition
      prospects.





We
      believe that future acquisitions
      that we make could significantly impact financial results.  Financial
      results most likely to be impacted include, but are not limited to, revenue,
      gross margin, salaries and benefits, selling general and administrative
      expenses, depreciation and amortization, interest expense, net income and our
      debt level.








Item
      1B.                 
UNRESOLVED STAFF COMMENTS





None.








Item
      2.                 
PROPERTIES





We
      directly, or indirectly through our subsidiaries, operate 41offices
      throughout the United States and in Canada, including our headquarters in
      Downers Grove, Illinois and our Company-owned drayage operations headquartered
      in Memphis, Tennessee.  All of our office space is
      leased.  Most office leases have initial terms of more than one year,
      and many include options to renew.  While some of our leases expire in
      the near term, we do not believe that we will have difficulty in renewing them
      or in finding alternative office space. We believe that our offices are adequate
      for the purposes for which they are currently used.







Item
      3.                 
LEGAL PROCEEDINGS





We
      are a
      party to litigation incident to our business, including claims for personal
      injury and/or property damage, freight lost or damaged in transit, improperly
      shipped or improperly billed.  Some of the lawsuits to which we are
      party are covered by insurance and are being defended by our insurance
      carriers.  Some of the lawsuits are not covered by insurance and we
      defend those ourselves.  We do not believe that the outcome of this
      litigation will have a materially adverse effect on our financial position
      or
      results of operations.  See Item 1 Business - Risk Management and
      Insurance.








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





There
      were no matters submitted to a vote of our security holders during the fourth
      quarter of 2007.





8


Executive
      Officers of the Registrant





In
      reliance on General Instruction G to Form 10-K, information on executive
      officers of the Registrant is included in this Part I.  The table sets
      forth certain information as of February 1, 2008 with respect to each person
      who
      is an executive officer of the Company.




Name
            Age
            PositionPhillip
                C. Yeager
            80
            Chairman
                of the Board of DirectorsDavid
                P. Yeager
            54
            Vice
                Chairman of the Board of Directors and Chief Executive
                OfficerMark
                A. Yeager
            43
            President,
                Chief Operating Officer and DirectorChristopher
                R. Kravas
            42
            Chief
                Intermodal OfficerDavid
                L. Marsh
            40
            Chief
                Marketing OfficerTerri
                A. Pizzuto
            49
            Executive
                Vice President, Chief Financial Officer and TreasurerStephen
                P. Cosgrove
            48
            Executive
                Vice President-Customer ServiceJames
                B. Gaw
            57
            Executive
                Vice President-SalesDwight
                C. Nixon
            45
            Executive
                Vice President-HighwayDonald
                G. Maltby
            53
            Executive
                Vice President-LogisticsDennis
                R. Polsen
            54
            Executive
                Vice President-Information ServicesDavid
                C. Zeilstra
            38
            Vice
                President, Secretary and General Counsel


Phillip
      C. Yeager, our founder, has been Chairman of the Board since October 1985.
      From
      April 1971 to October 1985, Mr. Yeager served as President of Hub City
      Terminals, Inc. (“Hub Chicago”). Mr. Yeager became involved in intermodal
      transportation in 1959, five years after the introduction of intermodal
      transportation in the United States, as an employee of the Pennsylvania and
      Pennsylvania Central Railroads. He spent 19 years with the Pennsylvania and
      Pennsylvania Central Railroads, 12 of which involved intermodal transportation.
      In 1991, Mr. Yeager was named Man of the Year by the Intermodal Transportation
      Association. In 1995, he received the Salzburg Practitioners Award from Syracuse
      University in recognition of his lifetime achievements in the transportation
      industry. In October 1996, Mr. Yeager was inducted into the Chicago Area
      Entrepreneurship Hall of Fame sponsored by the University of Illinois at
      Chicago.  In March 1997, he received the Presidential Medal from
      Dowling College for his achievements in transportation
      services.   In September 1998, he received the Silver Kingpin
      award from the Intermodal Association of North America and in February 1999,
      he
      was named Transportation Person of the Year by the New York Traffic
      Club.  In June 2006, Mr. Yeager was awarded an honorary Doctor of
      Public Service degree from the University of Denver in recognition of his
      achievements in the intermodal transportation industry. In December 2006, the
      Containerization and Intermodal Institute presented Mr. Yeager with their 2006
      Connie Award in recognition of his contributions to their
      industry.  Mr. Yeager graduated from the University of Cincinnati in
      1951 with a Bachelor of Arts degree in Economics.  Mr. Yeager is the
      father of David P. Yeager and Mark A. Yeager.





David
      P.
      Yeager has served as our Vice Chairman of the Board since January 1992 and
      as
      Chief Executive Officer since March 1995. From October 1985 through December
      1991, Mr. Yeager was President of Hub Chicago. From 1983 to October 1985, he
      served as Vice President, Marketing of Hub Chicago. Mr. Yeager founded the
      St.
      Louis Hub in 1980 and served as its President from 1980 to 1983. Mr. Yeager
      founded the Pittsburgh Hub in 1975 and served as its President from 1975 to
      1977. Mr. Yeager received a Masters in Business Administration degree from
      the
      University of Chicago in 1987 and a Bachelor of Arts degree from the University
      of Dayton in 1975. Mr. Yeager is the son of Phillip C. Yeager and the brother
      of
      Mark A. Yeager.




Mark
      A.
      Yeager became the President of the Company in January 2005 and has been our
      Chief Operating Officer and a director since May 2004.  From July 1999
      to December 2004, Mr. Yeager was President-Field Operations.  From
      November 1997 through June 1999 Mr. Yeager was Division President, Secretary
      and
      General Counsel.  From March 1995 to November 1997, Mr. Yeager was
      Vice President, Secretary and General Counsel.  From May 1992 to March
      1995, Mr. Yeager served as our Vice President-Quality. Prior to joining us
      in
      1992, Mr. Yeager was an associate at the law firm of Grippo & Elden from
      January 1991 through May 1992 and an associate at the law firm of Sidley &
Austin from May 1989 through January 1991. Mr. Yeager received a Juris Doctor
      degree from Georgetown University in 1989 and a Bachelor of Arts degree from
      Indiana University in 1986. Mr. Yeager is the son of Phillip C. Yeager and
      the
      brother of David P. Yeager.





Christopher
      R. Kravas has been our Chief Intermodal Officer since October
      2007.  Prior to this promotion, Mr. Kravas was Executive Vice
      President-Strategy and Yield Management from December 2003 through September
      2007.  From February 2002 through November 2003, Mr. Kravas served as
      President of Hub Highway Services.  From February 2001 through
      December 2001, Mr. Kravas was Vice President-Enron Freight
      Markets.  Mr. Kravas joined Enron after it acquired Webmodal, an
      intermodal business he founded.  Mr. Kravas was Chief


9


Executive
      Officer of Webmodal from July 1999 through February 2001.  From 1989
      through June 1999 Mr. Kravas worked for the Burlington Northern Santa Fe Railway
      in various positions in the intermodal business unit and finance
      department.  Mr. Kravas received a Bachelor of Arts degree in 1987
      from Indiana University and a Masters in Business Administration in 1994 from
      the University of Chicago.


David
      L.
      Marsh has been our Chief Marketing Officer since October 2007.  Prior
      to this promotion, Mr. Marsh was Executive Vice President-Highway from February
      2004 through September 2007.  Mr. Marsh previously served as President
      of Hub Ohio from January 2000 through January 2004.  Mr. Marsh joined
      us in March 1991 and became General Manager with Hub Indianapolis in 1993,
      a
      position he held through December 1999.  Prior to joining Hub Group,
      Mr. Marsh worked for Carolina Freight Corporation, an LTL carrier, starting
      in
      January 1990.  Mr. Marsh received a Bachelor of Science degree in
      Marketing and Physical Distribution from Indiana University-Indianapolis in
      December 1989.  Mr. Marsh has been a member of the American Society of
      Transportation and Logistics, the Indianapolis Traffic Club, the Council for
      Logistics Management and served as an advisor to the Indiana
      University-Indianapolis internship program for transportation and
      logistics.  Mr. Marsh was honored as the Indiana Transportation Person
      of the Year in 1999.





Terri
      A.
      Pizzuto has been our Executive Vice President, Chief Financial Officer and
      Treasurer since March 2007.  Prior to this promotion, Ms. Pizzuto was
      Vice President of Finance from July 2002 through February 2007.  Prior
      to joining us, Ms. Pizzuto was a partner in the Assurance and Business Advisory
      Group at Arthur Andersen LLP.  Ms. Pizzuto worked for Arthur Andersen
      LLP for 22 years holding various positions and serving numerous transportation
      companies.  Ms. Pizzuto received a Bachelor of Science in Accounting
      from the University of Illinois in 1981.  Ms. Pizzuto is a CPA and a
      member of the American Institute of Certified Public Accountants.





Stephen
      P. Cosgrove has been our Executive Vice President-Customer Service since October
      2007.  Prior to this, Mr. Cosgrove served as Executive Vice
      President-Intermodal and Administration from January 2005 through September
      2007.  Prior to this, Mr. Cosgrove was Vice President-Intermodal and
      Administration for the Central Region from February 2004 through December
      2004.  Mr. Cosgrove served as Vice President of Hub Chicago from
      December 1996 through January 2004 and from September 1995 to November 1996
      was
      General Manager of sales and marketing for Hub Chicago.  Mr. Cosgrove
      worked for APL Stacktrain Services from 1986 through 1995 prior to coming to
      Hub
      Chicago.





James
      B.
      Gaw has been our Executive Vice President-Sales since February
      2004.  From December 1996 through January 2004, Mr. Gaw was President
      of Hub North Central, located in Milwaukee.  From 1990 through late
      1996, he was Vice President and General Manager of Hub Chicago.  Mr.
      Gaw joined Hub Chicago as Sales Manager in 1988.  Mr. Gaw’s entire
      career has been spent in the transportation industry, including 13 years of
      progressive leadership positions at Itofca, an intermodal marketing company,
      and
      Flex Trans.  Mr. Gaw received a Bachelor of Science degree from
      Elmhurst College in 1973.





Dwight
      C.
      Nixon has been our Executive Vice President-Highway since October
      2007.  Mr. Nixon previously served as Regional Vice President of
      Highway’s Western Region from April 2004 through September
      2007.  Prior to joining us, Mr. Nixon was a Senior Corporate Account
      Executive for Roadway Express, Inc. and spent 19 years in various operational,
      sales and sales management positions.  Mr. Nixon was also a California
      Gubernatorial appointee and member of the California Workforce Investment Board
      from November 2005 through December 2007.  Mr. Nixon received a
      Bachelor of Science degree in Finance from the University of Arizona in
      1984.





Donald
      G.
      Maltby has been our Executive Vice President-Logistics since February
      2004.  Mr. Maltby previously served as President of Hub Online, our
      e-commerce division, from February 2000 through January 2004.  Mr.
      Maltby also served as President of Hub Cleveland from July 1990 through January
      2000 and from April 2002 to January 2004.  Prior to joining Hub Group,
      Mr. Maltby served as President of Lyons Transportation, a wholly owned
      subsidiary of Sherwin Williams Company, from 1988 to 1990.  In his
      career at Sherwin Williams, which began in 1981 and continued until he joined
      us
      in 1990, Mr. Maltby held a variety of management positions including
      Vice-President of Marketing and Sales for their Transportation Division. Mr.
      Maltby has been in the transportation and logistics industry since 1976, holding
      various executive and management positions.  Mr. Maltby received a
      Masters in Business Administration from Baldwin Wallace College in 1982 and
      a
      Bachelor of Science degree from the State University of New York in
      1976.





Dennis
      R.
      Polsen has been our Executive Vice President-Information Services since February
      2004.  From September 2001 to January 2004, Mr. Polsen was Vice
      President-Chief Information Officer and from March 2000 through August 2001,
      Mr.
      Polsen was our Vice-President of Application Development.  Prior to
      joining us, Mr. Polsen was Director of Applications for Humana, Inc. from
      September 1997 through February 2000 and spent 14 years prior to that
      developing, implementing, and directing transportation logistics applications
      at
      Schneider National, Inc.  Mr. Polsen received a Masters in Business
      Administration in May of 1983 from the University of Wisconsin Graduate School
      of Business and a Bachelor of Business Administration in May of 1976 from the
      University of Wisconsin-Milwaukee.  Mr. Polsen is a past member of the
      American Trucking Association.







10


David
      C.
      Zeilstra has been our Vice President, Secretary and General Counsel since July
      1999.  From December 1996 through June 1999, Mr. Zeilstra was our
      Assistant General Counsel.  Prior to joining us, Mr. Zeilstra was an
      associate with the law firm of Mayer, Brown & Platt from September 1994
      through November 1996.  Mr. Zeilstra received a Juris Doctor degree
      from Duke University in 1994 and a Bachelor of Arts degree from Wheaton College
      in 1990.




Directors
      of the Registrant





In
      addition to Phillip C. Yeager,
      David P. Yeager and Mark A. Yeager, the following three individuals are also
      on
      our Board of Directors: Gary D. Eppen – currently retired and formerly the Ralph
      and Dorothy Keller Distinguished Service Professor of Operations Management
      and
      Deputy Dean for part-time Masters in Business Administration Programs at the
      Graduate School of Business at the University of Chicago; Charles R. Reaves
–
Chief Executive Officer of Reaves Enterprises, Inc., a real estate development
      company and Martin P. Slark – Vice Chairman and Chief Executive Officer of
      Molex, Incorporated, a manufacturer of electronic, electrical and fiber optic
      interconnection products and systems.










PART
      II





Item
                5.
            MARKET
                FOR REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND
                ISSUER
                PURCHASES OF EQUITY SECURITIES





Our
      Class A Common Stock (“Class A
      Common Stock”) trades on the NASDAQ Global Select Market tier of the NASDAQ
      Stock Market under the symbol “HUBG.”  Set forth below are the high
      and low closing prices for shares of the Class A Common Stock for each full
      quarterly period in 2006 and 2007.





2007
            
            
            2006High
            
            
            Low
            
            
            High
            
            
            LowFirst
                Quarter
            
            $
            33.52
            
            
            $
            28.56
            
            
            $
            22.92
            
            
            $
            17.42Second
                Quarter
            
            $
            37.83
            
            
            $
            28.98
            
            
            $
            25.80
            
            
            $
            20.75Third
                Quarter
            
            $
            38.96
            
            
            $
            29.94
            
            
            $
            24.68
            
            
            $
            20.98Fourth
                Quarter
            
            $
            33.39
            
            
            $
            23.69
            
            
            $
            29.63
            
            
            $
            22.99








On
      February 19, 2008, there were
      approximately 263 stockholders of record of the Class A Common Stock and,
      in addition, there were an estimated 12,517 beneficial owners of the Class
      A Common Stock whose shares were held by brokers and other fiduciary
      institutions.  On February 19, 2008, there were 11 holders of record
      of our Class B Common Stock (the “Class B Common Stock” together with the Class
      A Common Stock, the “Common Stock”).





We
      were incorporated in 1995 and have
      never paid cash dividends on either the Class A Common Stock or the Class B
      Common Stock.  The declaration and payment of dividends are subject to
      the discretion of the Board of Directors.  Any determination as to the
      payment of dividends will depend upon our results of operations, capital
      requirements and financial condition of the Company, and such other factors
      as
      the Board of Directors may deem relevant.  Accordingly, there can be
      no assurance that the Board of Directors will declare or pay cash dividends
      on
      the shares of Common Stock in the future.  Our certificate of
      incorporation requires that any cash dividends must be paid equally on each
      outstanding share of Class A Common Stock and Class B Common
      Stock.  Our credit facility prohibits us from paying dividends on the
      Common Stock if there has been, or immediately following the payment of a
      dividend there would be, a default or an event of default under the credit
      facility.  We are currently in compliance with the covenants contained
      in the credit facility.




The
      Board of Directors approved a
      two-for-one stock split in the form of a stock dividend which was paid on May
      6,
      2006.  All shares have been retroactively restated to give effect to
      the two-for-one stock split, which was affected in the form of a 100% stock
      dividend.  Each of our Class A stockholders and Class B stockholders
      received one Class A share on each share of Class A Common Stock and each share
      of Class B Common Stock held by them on the record date in connection with
      the
      stock split.  In accordance with the terms of our Certificate of
      Incorporation, the number of votes held by each share of Class B Common Stock
      was adjusted in connection with this stock dividend such that each share of
      Class B Common Stock now entitles its holder to approximately 80
      votes.  Each share of Class A Common Stock entitles its holder to one
      vote.





Note
      12
      of the Company’s Notes to Consolidated Financial Statements is incorporated
      herein by reference.


11








Performance
      Graph





The
      following line graph compares the Company’s cumulative total stockholder return
      on its Class A Common Stock sinceDecember 31, 2002with
      the cumulative total return of the
      Nasdaq Stock Market Index and the Nasdaq Trucking and Transportation Index.
      These comparisons assume the investment of $100 onDecember 31, 2002in
      each index and in the Company’s Class
      A Common Stock and the reinvestment of dividends.









12





Item
      6.                 
SELECTED FINANCIAL
      DATA










Selected Financial Data(in
              thousands except per share data)








Years
              Ended December 31,2007
            
            
            2006
              (2)
            
            
            2005
            
            
            2004
            
            
            2003Statement
                of
                Income Data:Revenue
            
            $
            1,658,168
            
            
            $
            1,609,529
            
            
            $
            1,481,878
            
            
            $
            1,380,722
            
            
            $
            1,305,817Gross
              margin
            
            
            232,324
            
            
            
            218,418
            
            
            
            174,742
            
            
            
            167,062
            
            
            
            155,569Operating
              income
            
            
            90,740
            
            
            
            77,236
            
            
            
            47,904
            
            
            
            38,104
            
            
            
            20,611Income
              from continuing operations
              before taxes
            
            
            93,228
            
            
            
            79,508
            
            
            
            48,871
            
            
            
            27,551
            
            
            
            13,842Income
              from continuing operations
              after taxes
            
            
            59,799
            
            
            
            47,705
            
            
            
            29,176
            
            
            
            15,870
            
            
            
            6,906Income
              from discontinued
              operations, net of tax (1)
            
            
            -
            
            
            
            981
            
            
            
            3,770
            
            
            
            1,409
            
            
            
            1,524Net
              income
            
            $
            59,799
            
            
            $
            48,686
            
            
            $
            32,946
            
            
            $
            17,279
            
            
            $
            8,430Basic
              earnings per common
              shareIncome
              from continuing operations
            
            $
            1.55
            
            
            $
            1.19
            
            
            $
            0.73
            
            
            $
            0.45
            
            
            $
            0.22Income
              from
              discontinued operations
            
            
            -
            
            
            $
            0.03
            
            
            $
            0.10
            
            
            $
            0.04
            
            
            $
            0.05Diluted
              earnings per common
              shareIncome
              from continuing operations
            
            $
            1.53
            
            
            $
            1.17
            
            
            $
            0.71
            
            
            $
            0.42
            
            
            $
            0.22Income
              from discontinued operations
            
            
            -
            
            
            $
            0.02
            
            
            $
            0.09
            
            
            $
            0.04
            
            
            $
            0.05






As
                  of December
                  31,2007
              
              
              2006
              
              
              2005
              
              
              2004
              
              
              2003Balance
                  Sheet
                  Data:Total
                  assets
              
              $
              491,967
              
              
              $
              484,548
              
              
              $
              444,418
              
              
              $
              410,845
              
              
              $
              388,527Long-term
                  debt, excluding current
                  portion
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              67,017Stockholders'
                  equity
              
              
              250,899
              
              
              
              258,844
              
              
              
              242,075
              
              
              
              226,936
              
              
              
              143,035





(1)
            HGDS
                disposed of May 1, 2006


(2)
            Comtrak
                was acquired February 28, 2006



























13


Item
      7.                 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL


CONDITION
      AND
      RESULTS OF OPERATIONS





FORWARD
      LOOKING STATEMENTS





The
      information contained in this annual report contains forward-looking statements
      within the meaning of the Private Securities Litigation Reform Act of
      1995.  Words such as “expects,” “hopes,” “believes,” “intends,”
“estimates,” “anticipates,” and variations of these words and similar
      expressions are intended to identify these forward-looking
      statements.  Forward-looking statements are inherently uncertain and
      subject to risks.  Such statements should be viewed with
      caution.  Actual results or experience could differ materially from
      the forward-looking statements as a result of many factors.  We assume
      no liability to update any such forward-looking statements contained in this
      annual report.  Factors that could cause our actual results to differ
      materially, in addition to those set forth under Items 1A “Risk Factors,”
include:





·
            the
                degree and rate of market growth in the domestic intermodal, truck
                brokerage and logistics markets served by
                us;


·
            deterioration
                in our relationships with existing railroads or adverse changes to
                the
                railroads’ operating rules;


·
            changes
                in rail service conditions or adverse weather
                conditions;


·
            further
                consolidation of railroads;


·
            the
                impact of competitive pressures in the marketplace, including entry
                of new
                competitors, direct marketing efforts by the railroads or marketing
                efforts of asset-based carriers;


·
            changes
                in rail, drayage and trucking company
                capacity;


·
            railroads
                moving away from ownership of intermodal
                assets;


·
            equipment
                shortages or equipment surplus;


·
            changes
                in the cost of services from rail, drayage, truck or other
                vendors;


·
            increases
                in costs for independent contractors due to regulatory, judicial
                and legal
                changes;


·
            labor
                unrest in the rail, drayage or trucking company
                communities;


·
            general
                economic and business conditions;


·
            fuel
                shortages or fluctuations in fuel
                prices;


·
            increases
                in interest rates;


·
            changes
                in homeland security or terrorist
                activity;


·
            difficulties
                in maintaining or enhancing our information technology
                systems;


·
            changes
                to or new governmental regulation;


·
            loss
                of several of our largest
                customers;


·
            inability
                to recruit and retain key
                personnel;


·
            inability
                to recruit and maintain drivers and owner
                operators;


·
            changes
                in insurance costs and claims expense;
                and


·
            inability
                to close and successfully integrate any future business
                combinations.





CAPITAL
      STRUCTURE





We
      have
      authorized common stock comprised of Class A Common Stock and Class B Common
      Stock.  The rights of holders of Class A Common Stock and Class B
      Common Stock are identical, except each share of Class B Common Stock entitles
      its holder to approximately 80 votes, while each share of Class A Common Stock
      entitles its holder to one vote.  We have authorized 2,000,000 shares
      of preferred stock.





EXECUTIVE
      SUMMARY





Hub
      Group, Inc.  (“we”, “us” or “our”) is the largest intermodal marketing
      company (“IMC”) in the United States and a full service transportation provider
      offering intermodal, truck brokerage and logistics services.  We
      operate through a nationwide network of operating centers.





As
      an
      IMC, we arrange for the movement of our customers’ freight in containers and
      trailers over long distances.  We contract with railroads to provide
      transportation for the long-haul portion of the shipment and with local trucking
      companies, known as “drayage companies,” for local pickup and
      delivery.  As part of the intermodal services, we negotiate rail and
      drayage rates, electronically track shipments in transit, consolidate billing
      and handle claims for freight loss or damage on behalf of our
      customers.





14


Through
      our subsidiary Comtrak Logistics, Inc. (“Comtrak”), we acquired substantially
      all the assets of Comtrak Inc. at the close of business on February 28,
      2006.  Comtrak is a transportation company whose services include
      primarily rail and international drayage for the intermodal
      sector.  The results of Comtrak are included in our results of
      operations from March 1, 2006, its date of acquisition.





Our
      drayage services are provided by our subsidiaries, Comtrak and Quality Services,
      LLC (“QS”) who assist us in providing reliable, cost effective intermodal
      services to our customers.  Our subsidiaries have terminals in
      Atlanta, Birmingham, Charleston, Charlotte, Chattanooga, Chicago, Cleveland,
      Columbus, Dallas, Huntsville, Jacksonville, Kansas City, Los Angeles,
      Memphis, Nashville, Perry, Savannah, St. Louis, Stockton, and
      Tampa.  At December 31, 2007, QS and Comtrak owned 329 tractors,
      leased 23 tractors, leased or owned 706 trailers and employed 331 drivers and
      contracted with 845 owner-operators.





We
      also
      arrange for the transportation of freight by truck, providing customers with
      another option for their transportation needs.   We match the
      customers’ needs with carriers’ capacity to provide the most effective service
      and price combinations.  As part of our truck brokerage services, we
      negotiate rates, track shipments in transit and handle claims for freight loss
      or damage on behalf of our customers.





Our
      logistics service consists of complex transportation management services,
      including load consolidation, mode optimization and carrier
      management.  These service offerings are designed to take advantage of
      the increasing trend for shippers to outsource all or a greater portion of
      their
      transportation needs.





We
      have
      full time marketing representatives throughout North America who service local,
      regional and national accounts.  We believe that fostering long-term
      customer relationships is critical to our success and allows us to better
      understand our customers’ needs and specifically tailor our transportation
      services to them.





One
      of
      our primary goals is to grow our net income.  We achieved this growth
      through an increase in revenue and margin from our existing transportation
      customers, winning new customers and the acquisition of Comtrak.  Our
      yield management group works with sales and operations to enhance customer
      margins.  Our top 50 customers’ revenue represents approximately 51%
      of our revenue.  During 2007, 2006 and 2005, we severed relationships
      with certain customers due to profitability issues and credit issues which
      impeded our intermodal revenue growth.  We have mitigated our risks in
      the automotive sector by significantly reducing or eliminating our relationship
      with two automotive parts suppliers in 2006.  While we continue to do
      some limited business for this sector, we are carefully managing our credit
      exposure.





We
      use
      various performance indicators to manage our business.  We closely
      monitor margin and gains and losses for our top 50 customers and loads with
      negative margins.  We also evaluate on-time performance, cost per load
      and daily sales outstanding by customer account.  Vendor cost changes
      and vendor service issues are also monitored closely.





Substantially
      all of the assets of Hub Group Distribution Services, LLC (“HGDS” or “Hub
      Distribution”) were sold to the President of the former subsidiary on May 1,
      2006.  Accordingly, the results of operations of HGDS for all years
      presented have been reported as discontinued operations.





RESULTS
      OF OPERATIONS





Year
      Ended December 31, 2007, Compared to Year Ended December 31, 2006





The
      following table summarizes our revenue by service line (in
      thousands):





Twelve
                Months EndedDecember
                31,%2007
            
            
            2006
            
            
            ChangeRevenueIntermodal
            
            $
            1,206,364
            
            
            $
            1,172,566
            
            
            
            2.9
            %Brokerage
            
            
            318,834
            
            
            
            306,332
            
            
            
            4.1
            %Logistics
            
            
            132,970
            
            
            
            130,631
            
            
            
            1.8
            %Total
                revenue from continuing operations
            
            $
            1,658,168
            
            
            $
            1,609,529
            
            
            
            3.0
            %








15





The
      following table includes certain items in the consolidated statements of income
      as a percentage of revenue:





Twelve
                Months EndedDecember
                31,2007
            
            
            2006Revenue
            
            
            100.0
            %
            
            
            100.0
            %Transportation
                costs
            
            
            86.0
            
            
            
            86.4Gross
                margin
            
            
            14.0
            
            
            
            13.6Costs
                and expenses:Salaries
                and benefits
            
            
            5.8
            
            
            
            5.9General
                and administration
            
            
            2.5
            
            
            
            2.5Depreciation
                and amortization
            
            
            0.2
            
            
            
            0.4Total
                costs and expenses
            
            
            8.5
            
            
            
            8.8Operating
                income
            
            
            5.5
            
            
            
            4.8Other
                income (expense):Interest
                income
            
            
            0.1
            
            
            
            0.1Total
                other income (expense)
            
            
            0.1
            
            
            
            0.1Income
                from continuing operations before
              provision
                for income taxes
            
            
            5.6
            
            
            
            4.9Provision
                for income taxes
            
            
            2.0
            
            
            
            1.9Income
                from continuing operations
            
            
            3.6
            %
            
            
            3.0
            %





Revenue





Revenue
      increased 3.0% to $1,658.2
      million in 2007 from $1,609.5 million in 2006.  Intermodal revenue
      increased 2.9% to $1,206.4 million from $1,172.6 million due primarily to a
      1.0%
      increase related to Comtrak (we owned Comtrak for 10 months in 2006 and for
      12 months in 2007) and a 2.5% increase in volume offset by a 0.6% combined
      decrease related to pricing, mix and fuel surcharges.  Truck brokerage
      revenue increased 4.1% to $318.8 million from $306.3 million due primarily
      to
      price increases, mix and fuel surcharges.  Logistics revenue increased
      1.8% to $133.0 million from $130.6 million due to increases in business from
      both new and existing customers in 2007.  Hub Distribution’s revenue
      has been reclassified to discontinued operations due to its sale.





Gross
      Margin





Gross
      margin increased 6.4% to $232.3
      million in 2007 from $218.4 million in 2006.  Gross margin percentage
      increased to 14.0% in 2007 from 13.6% in 2006 due to various margin enhancement
      efforts, growth in truck brokerage and our drayage operations, including the
      addition of Comtrak.





Salaries
      and Benefits





Salaries
      and benefits increased to
      $95.7 million in 2007 from $95.2 million in 2006.  The increase is
      related to Comtrak and an increase in salaries and employee benefits partially
      offset by a decrease in incentive compensation.  As a percentage of
      revenue, salaries and benefits decreased to 5.8% in 2007 from 5.9% in
      2006.  Headcount as of December 31, 2007 and 2006 was 1,081 and 1,089,
      respectively, which excludes drivers, as driver costs are included in
      transportation costs.







16


General
      and Administrative





General
      and administrative expenses
      increased to $41.4 million from $39.9 million in 2006 partially due to the
      acquisition of Comtrak.  The increase related to Comtrak was partially
      offset by a decrease in rental expense, telephone expense, bad debt expense
      and
      equipment lease expense.  As a percentage of revenue, general and
      administrative expenses remained consistent at 2.5% in 2007 and
      2006.





Depreciation
      and Amortization





Depreciation
      and amortization decreased
      26.4% to $4.5 million in 2007 from $6.1 million in 2006.  This expense
      as a percentage of revenue decreased to 0.2% from 0.4%.  The decrease
      in depreciation and amortization is due primarily to lower software depreciation
      due to certain assets being fully depreciated.





Other
      Income (Expense)





Interest
      expense remained consistent at
      $0.1 million in 2007 and 2006.  Interest income increased to $2.5
      million in 2007 from $2.3 million in 2006.  The increase in interest
      income is due to a higher average investment balance and a higher average
      interest rate in 2007.





Provision
      for Income Taxes





The
      provision for income taxes
      increased to $33.4 million in 2007 compared to $31.8 million in
      2006.  We provided for income taxes using an effective rate of 35.9%
      in 2007 compared to 40.0% in 2006.  The decrease in the effective rate
      in 2007 resulted primarily from the favorable impacts of the resolution of
      our
      dispute with the Internal Revenue Service and an Illinois law
      change.





Income
      from Continuing Operations





Income
      from continuing operations
      increased to $59.8 million in 2007 from $47.7 million in 2006 due primarily
      to
      higher gross margin, lower depreciation and amortization expense and higher
      interest income.





Income
      from Discontinued Operations





Income
      from discontinued operations of
      $1.0 million includes income from the operations of HGDS through May 1,
      2006.





Earnings
      Per Common Share





Basic
      earnings per share from
      continuing operations was $1.55 in 2007 and $1.19 in 2006.  Basic
      earnings per share from discontinued operations was $0.03 in
      2006.  Basic earnings per share increased to $1.55 in 2007 from $1.22
      in 2006.  Basic earnings per share increased due to the increase in
      income from continuing operations and the decrease in the basic weighted average
      number of shares outstanding because of our purchase of treasury
      shares.





Diluted
      earnings per share from
      continuing operations increased to $1.53 in 2007 from $1.17 in
      2006.  Diluted earnings per share from discontinued operations was
      $0.02 in 2006.   Diluted earnings per share increased to $1.53 in
      2007 from $1.19 in 2006.  Diluted earnings per share increased due to
      the increase in income from continuing operations and the decrease in the
      diluted weighted average number of shares outstanding because of our purchase
      of
      treasury shares.





All
      shares, per-share amounts and
      options have been retroactively restated to give effect to the two-for-one
      stock
      split in June of 2006.

















17


RESULTS
      OF OPERATIONS





Year
      Ended December 31, 2006, Compared to Year Ended December 31, 2005





The
      following table summarizes our revenue by service line (in
      thousands):





Twelve
                Months EndedDecember
                31,%2006
            
            
            2005
            
            
            ChangeRevenueIntermodal
            
            $
            1,172,566
            
            
            $
            1,079,798
            
            
            
            8.6
            %Brokerage
            
            
            306,332
            
            
            
            266,545
            
            
            
            14.9
            %Logistics
            
            
            130,631
            
            
            
            135,535
            
            
            
            (3.6)
            %Total
                revenue from continuing operations
            
            $
            1,609,529
            
            
            $
            1,481,878
            
            
            
            8.6
            %







The
      following table includes certain items in the consolidated statements of income
      as a percentage of revenue:





Twelve
                Months EndedDecember
                31,2006
            
            
            2005Revenue
            
            
            100.0
            %
            
            
            100.0
            %Transportation
                costs
            
            
            86.4
            
            
            
            88.2Gross
                margin
            
            
            13.6
            
            
            
            11.8Costs
                and expenses:Salaries
                and benefits
            
            
            5.9
            
            
            
            5.6General
                and administration
            
            
            2.5
            
            
            
            2.3Depreciation
                and amortization
            
            
            0.4
            
            
            
            0.7Total
                costs and expenses
            
            
            8.8
            
            
            
            8.6Operating
                income
            
            
            4.8
            
            
            
            3.2Other
                income (expense):Interest
                income
            
            
            0.1
            
            
            
            0.1Total
                other income (expense)
            
            
            0.1
            
            
            
            0.1Income
                from continuing operations before
              provision
                for income taxes
            
            
            4.9
            
            
            
            3.3Provision
                for income taxes
            
            
            1.9
            
            
            
            1.3Income
                from continuing operations
            
            
            3.0
            %
            
            
            2.0
            %





Revenue





Revenue
      increased 8.6% to $1,609.5
      million in 2006 from $1,481.9 million in 2005.  Intermodal revenue
      increased 8.6% to $1,172.6 million from $1,079.8 million due primarily to a
      6.2%
      increase related to Comtrak, a 5.2% combined increase related to pricing, mix
      and fuel surcharges, offset by a 2.8% decline in volume.  Truck
      brokerage revenue increased 14.9% to $306.3 million from $266.5 million due
      primarily to a 9.7% increase in volume in addition to price increases, mix
      and
      fuel surcharges.  Logistics revenue decreased 3.6% to $130.6 million
      from $135.5 million due primarily to lost customers offset by increases in
      business from both new and existing customers in 2006.  Hub
      Distribution’s revenue has been reclassified to discontinued operations due to
      its sale.


18


Gross
      Margin





Gross
      margin increased 25.0% to $218.4
      million in 2006 from $174.7 million in 2005.  Gross margin percentage
      increased from 11.8% in 2005 to 13.6% in 2006 due to various margin enhancement
      efforts, growth in truck brokerage and our drayage operations, including the
      addition of Comtrak.





Salaries
      and Benefits





Salaries
      and benefits increased to
      $95.2 million in 2006 from $83.4 million in 2005.  The increase is
      related to Comtrak and an increase in salaries, employee benefits and incentive
      based compensation.  As a percentage of revenue, salaries and benefits
      increased to 5.9% in 2006 from 5.6% in 2005.  Headcount as of December
      31, 2006 and 2005 was 1,089 and 944, respectively, which excludes drivers,
      as
      driver costs are included in transportation costs. The increase in headcount
      can
      be attributed to the addition of the 167 employees resulting from the
      acquisition of Comtrak.





General
      and Administrative





General
      and administrative expenses
      increased to $39.9 million in 2006 from $34.5 million in 2005 partially due
      to
      the acquisition of Comtrak.  The increase related to Comtrak was
      partially offset by a decrease in telephone expense, bad debt expense, office
      expense and equipment lease expense.  As a percentage of revenue,
      general and administrative expenses increased to 2.5% in 2006 from 2.3% in
      2005.





Depreciation
      and Amortization





Depreciation
      and amortization decreased
      31.5% to $6.1 million from $8.9 million in 2005.  This expense as a
      percentage of revenue decreased to 0.4% from 0.7%.  The decrease in
      depreciation and amortization is due primarily to lower software depreciation
      due to certain assets being fully depreciated.





Other
      Income (Expense)





Interest
      expense remained consistent at
      approximately $0.1 million in 2006 and 2005.  Interest income
      increased to $2.3 million in 2006 from $1.0 million in 2005.  The
      increase in interest income is due to a higher average investment balance and
      a
      higher average interest rate in 2006.





Provision
      for Income Taxes





The
      provision for income taxes
      increased to $31.8 million in 2006 compared to $19.7 million in
      2005.  We provided for income taxes using an effective rate of 40.0%
      in 2006 compared to 40.3% in 2005.  The decrease in the effective rate
      in 2006 resulted primarily from adjustments to the valuation
      allowance.





Income
      from Continuing Operations





Income
      from continuing operations
      increased to $47.7 million in 2006 compared to $29.2 million in 2005 due
      primarily to higher gross margin, lower depreciation and amortization expense
      and higher interest income partially offset by an increase in salaries and
      general and administrative expenses.





Income
      from Discontinued Operations





Income
      from discontinued operations
      includes income from the operations of HGDS.  This income was $1.0
      million in 2006 and $3.8 million in 2005.  Certain assets of HGDS were
      disposed of on May 1, 2006 at a pre-tax loss of $0.1 million.





Earnings
      Per Common Share





Basic
      earnings per share from
      continuing operations was $1.19 in 2006 and $0.73 in 2005.  Basic
      earnings per share from discontinued operations was $0.03 in 2006 and $0.10
      in
      2005.  Basic earnings per share was $1.22 in 2006 and $0.83 in
      2005.





Diluted
      earnings per share from
      continuing operations increased to $1.17 in 2006 from $0.71 in
      2005.  Diluted earnings per share from discontinued operations was
      $0.02 in 2006 and $0.09 in 2005.   Diluted earnings per share
      increased to $1.19 in 2006 from $0.80 in 2005.


19


All
      shares, per-share amounts and
      options have been retroactively restated to give effect to the two-for-one
      stock
      split in June of 2006 and May of 2005.





LIQUIDITY
      AND CAPITAL RESOURCES





In
      2007, we have funded our
      operations, capital expenditures and stock buy backs through cash flows from
      operations and cash on hand.





Cash
      provided by operating activities
      for the year ended December 31, 2007 was approximately $80.6 million, which
      resulted primarily from net income from continuing operations of $59.8 million,
      non-cash charges of $14.4 million and an increase in the change in operating
      assets and liabilities of $6.4 million.





Net
      cash used in investing activities
      for the year ended December 31, 2007 was $14.5 million and related primarily
      to
      capital expenditures of $10.2 million and an earn-out payment relating to the
      acquisition of Comtrak of $5.0 million offset by proceeds from the sale of
      equipment of $0.7 million.  We expect capital expenditures to be
      between $10.0 million and $11.0 million in 2008.





The
      net cash used in financing
      activities for the year ended December 31, 2007 was $71.6 million.  We
      generated $0.8 million of cash from stock options exercised and used $76.3
      million of cash to purchase treasury stock.  We also reported $3.9
      million of excess tax benefits from share-based compensation as a financing
      cash
      in-flow.  These tax benefits were previously reported as operating
      cash flows prior to the adoption of SFAS 123(R) in 2006.





We
      invest our cash overnight in
      commercial paper.  These investments are included in cash and cash
      equivalents on our balance sheet due to their short term maturity and are
      reported at their carrying value which approximates fair value.





On
      March 23, 2005, we entered into a
      revolving credit agreement that provides for unsecured borrowings of up to
      $40.0
      million.  The interest rate ranges from LIBOR plus 0.75% to 1.25% or
      Prime plus 0.5%.  The revolving line of credit expires on March 23,
      2010.  The financial covenants require a minimum net worth of $175.0
      million and a cash flow leverage ratio of not more than 2.0 to
      1.0.  The commitment fees charged on the unused line of credit are
      between 0.15% and 0.25%.  On February 21, 2006, we amended the
      revolving credit agreement to provide for unsecured borrowing up to $50.0
      million.  No other terms of the agreement were amended.  Our
      unused and available borrowings under our bank revolving line of credit at
      December 31, 2007 and December 31, 2006 were $47.2 million and $48.2 million,
      respectively.  We were in compliance with our debt covenants at
      December 31, 2007.





We
      have standby letters of credit
      that expire from 2008 to 2012.  As of December 31, 2007, our letters
      of credit were $2.8 million.





In
      2007, we added 2,000 new 53’
containers to our fleet.  We financed these containers with operating
      leases.  These and other leasing arrangements are included in Note 7
      to the consolidated financial statements.





We
      have a related party payable of
      $5.0 million as of December 31, 2007 that will be paid during the first quarter
      of 2008.  This amount relates to the 2007 earn-out payment due to the
      former owner of Comtrak.





We
      have authorization to spend $75.0
      million to purchase common stock through June of 2009.





CONTRACTUAL
      OBLIGATIONS





Our
      contractual cash obligations as
      of December 31, 2007 are minimum rental commitments and the earn-out payment
      to
      the former owner of Comtrak.  We have a ten year lease agreement for a
      building and property (Comtrak’s Memphis facility) with a related party, the
      President of Comtrak.  Rent paid under this agreement totaled $0.7
      million for the year ended December 31, 2007.  The annual lease
      payments escalate by less than 1% per year.   Minimum annual
      rental commitments, at December 31, 2007, under non-cancelable operating leases,
      principally for real estate, containers and equipment and the earn-out related
      to Comtrak are payable as follows (in thousands):





2008
            
            $
            24,5142009
            
            
            17,8152010
            
            
            15,4612011
            
            
            13,9302012
            
            
            12,2972013
                and thereafter
            
            
            5,451




20




In
      February 2008, we
      entered into an equipment purchase contract with Singamas Management Services,
      Ltd. and Singamas North America, Inc.  We agreed to purchase 1,000
      fifty-three foot dry freight steel domestic containers for approximately $10.0
      million.  We expect delivery of the 1,000 units during the summer of
      2008.  We plan to finance these containers with operating
      leases.  These commitments are not included in the table above since
      the arrangements have not yet been finalized.


Deferred
      Compensation





Under
      our Nonqualified Deferred
      Compensation Plan (the “Plan”), participants can elect to defer certain
      compensation.  Payments under the Plan are due as follows (in
      thousands):





2008
            
            $
            9792009
            
            
            8682010
            
            
            1,6202011
            
            
            5762012
            
            
            5822013
                and thereafter
            
            
            5,806





CRITICAL
      ACCOUNTING POLICIES





The
      preparation of financial
      statements in conformity with U.S. generally accepted accounting principles
      requires management to make estimates and assumptions.  In certain
      circumstances, those estimates and assumptions can affect amounts reported
      in
      the accompanying consolidated financial statements.  We have made our
      best estimates and judgments of certain amounts included in the financial
      statements, giving due consideration to materiality.  We do not
      believe there is a great likelihood that materially different amounts would
      be
      reported related to the accounting policies described below.  However,
      application of these accounting policies involves the exercise of judgment
      and
      use of assumptions as to future uncertainties and, as a result, actual results
      could differ from these estimates.  The following is a brief
      discussion of the more significant accounting policies and
      estimates.


Allowance
      for Uncollectible Trade Accounts Receivable





In
      the normal course of business, we
      extend credit to customers after a review of each customer’s credit
      history.  An allowance for uncollectible trade accounts has been
      established through an analysis of the accounts receivable aging, an assessment
      of collectibility based on historical trends and an evaluation of the current
      economic conditions.  To be more specific, we reserve a portion of
      every account balance that has aged over one year, a portion of certain
      customers in bankruptcy and account balances specifically identified as
      uncollectible.  The allowance is reported on the balance sheet in net
      accounts receivable.  Actual collections of accounts receivable could
      differ from management’s estimates due to changes in future economic, industry
      or customer financial conditions.  Recoveries of receivables
      previously charged off are recorded when received.





Revenue
      Recognition





Revenue
      is recognized at the time 1)
      persuasive evidence of an arrangement exists, 2) services have been rendered,
      3)
      the sales price is fixed and determinable and 4) collectibility is reasonably
      assured.  In accordance with EITF 91-9, revenue and related
      transportation costs are recognized based on relative transit
      time.  Further, we report revenue on a gross basis in accordance with
      the criteria in EITF 99-19, “Reporting Revenue Gross as a Principal versus Net
      as an Agent.”  We are the primary obligor and are responsible for
      providing the service desired by the customer.  The customer views us
      as responsible for fulfillment including the acceptability of the
      service.  Service requirements may include, for example, on-time
      delivery, handling freight loss and damage claims, setting up appointments
      for
      pick up and delivery and tracing shipments in transit.  We have
      discretion in setting sales prices and as a result, our earnings
      vary.  In addition, we have the discretion to select our vendors from
      multiple suppliers for the services ordered by our
      customers.  Finally, we have credit risk for our
      receivables.  These three factors, discretion in setting prices,
      discretion in selecting vendors and credit risk, further support reporting
      revenue on the gross basis.





Deferred
      Income Taxes





Deferred
      income taxes are recognized
      for the future tax effects of temporary differences between financial and income
      tax reporting using tax rates in effect for the years in which the differences
      are expected to reverse.  We believe that it is more likely than not
      that our deferred tax assets will be realized with the exception of $0.2 million
      related to state tax net operating losses for which a valuation allowance has
      been established.  In the event the probability of realizing the
      remaining deferred tax assets do not meet the more likely than not threshold
      in
      the future, a valuation allowance would be established for the deferred tax
      assets deemed unrecoverable.


21


Valuation
      of Goodwill and Other Indefinite-Lived Intangibles





We
      review goodwill and other
      indefinite-lived intangibles for impairment on an annual basis or whenever
      events or changes in circumstances indicate the carrying amount of goodwill
      or
      other indefinite-lived intangibles may not be recoverable.  We utilize
      a third-party independent valuation firm to assist in performing the necessary
      valuations to be used in the impairment testing.  These valuations are
      based on market capitalization, discounted cash flow analysis or a combination
      of both methodologies.  The assumptions used in the valuations include
      expectations regarding future operating performance, discount rates, control
      premiums and other factors which are subjective in nature.  Actual
      cash flows from operations could differ from management’s estimates due to
      changes in business conditions, operating performance and economic
      conditions.  Should estimates differ materially from actual results,
      we may be required to record impairment charges in the future.





Equipment





We
      operate tractors and utilize
      containers in connection with our business.  This equipment may be
      purchased or acquired under capital or operating lease agreements.  In
      addition, we rent equipment from third parties and various railroads under
      short
      term rental arrangements.  Equipment which is purchased is depreciated
      on the straight line method over the estimated useful life.  We had no
      equipment under capital lease arrangements at December 31, 2007.  Our
      equipment leases have five to seven year terms and in some cases contain renewal
      options.





Stock
      Based Compensation





Effective
      January 1, 2006 we adopted
      the fair value recognition provisions of FASB Statement No. 123 (R) “Share Based
      Payment” (SFAS No. 123 (R)), using the modified prospective transition
      method.  Prior to January 1, 2006, we accounted for our share-based
      compensation plans under the recognition and measurement provisions of APB
      Opinion No. 25, “Accounting for Stock Issued to Employees,” and related
      interpretations as permitted by Statement of Financial Accounting Standard
      (SFAS) No. 123 “Accounting for Stock Based Compensation.”  We have not
      granted any stock options since 2003.  Instead, we have issued
      nonvested stock, commonly known as “restricted stock,” that vests over three to
      five years.  As of December 31, 2007, there was $6.0 million of
      unrecognized compensation cost related to non-vested share based compensation
      that is expected be recognized over a weighted average period of 1.37
      years.  In addition, during 2006, the Board of Directors granted and
      issued performance units which entitle the recipients to receive restricted
      stock contingent upon the achievement of an operating income earnings
      target.  The unrecognized compensation cost mentioned above does not
      include any potential unrecognized compensation expense associated with the
      performance units.





Accounting
      for Income Taxes





Effective
      January 1, 2007 we adopted
      the Financial Accounting Standards Board (FASB) Interpretation No. 48 (“FIN
      48”), “Accounting for Uncertainty in Income Taxes”, which is an interpretation
      of SFAS No. 109, Accounting for Income Taxes.  FIN 48 clarifies the
      accounting for income taxes by prescribing the minimum recognition threshold
      a
      tax position is required to meet before being recognized in the financial
      statements.  FIN 48 also provides guidance on derecognition,
      measurement, classification, interest and penalties, accounting in interim
      periods, disclosure and transition.  In addition, FIN 48 clearly
      scopes out income taxes from Financial Accounting Standards Board Statement
      No.
      5, “Accounting for Contingencies”.





New
      Pronouncements





In
      September 2006, the FASB issued
      Statement of Financial Accounting Standards No. 157, “Fair Value
      Measurements” (SFAS No. 157). SFAS No. 157 defines fair value, establishes
      a framework for measuring fair value in generally accepted accounting principles
      and expands disclosures about fair value measurements. In February 2008, the
      FASB deferred the effective date of SFAS No. 157 for one year for all
      nonfinancial assets and nonfinancial liabilities, except for those items that
      are recognized or disclosed at fair value in the financial statements on a
      recurring basis (at least annually).  In addition, certain leasing
      transactions accounted for under SFAS No. 13, “Accounting for Leases”, are now
      excluded from the scope of SFAS No. 157.  We adopted SFAS No. 157
      effective January 1, 2008.  There was no cumulative effect recorded
      upon adoption as of January 1, 2008 and we do not expect the impact on our
      financial statements in subsequent reporting periods to be
      significant.





In
      February 2007, the FASB issued
      SFAS No. No. 159, “Fair Value Option for Financial Assets and Financial
      Liabilities” (SFAS No. 159).  SFAS 159 permits entities to voluntarily
      choose to measure many financial instruments and certain other items at fair
      value.  SFAS No. 159 is effective beginning January 1, 2008,
      but we have decided not to adopt this optional standard at this
      time.





The
      FASB
      issued Statement of SFAS No. 141(R), “Business Combinations” (SFAS No. 141(R))
      in December 2007.  SFAS No. 141(R) requires the acquiring entity in a
      business combination to record all assets acquired and liabilities assumed
      at
      their respective acquisition-date fair values including contingent
      consideration.  In addition SFAS No. 141(R) changes the recognition of
      assets acquired and liabilities assumed


22
 arising
        from preacquisition contingencies and requires the expensing of
        acquisition-related costs as incurred.  SFAS No. 141(R) applies
        prospectively to business combinations for which the acquisition date is
        on or
        after January 1, 2009.  We plan to adopt SFAS No. 141(R) effective
        January 1, 2009 and do not currently expect the impact on our financial
        statements to be significant.





The
      FASB
      issued Statement of SFAS No. 160, “Noncontrolling Interest” (SFAS No. 160) in
      December 2007.  SFAS No. 160 clarifies the classification of
      noncontrolling interests in consolidated statements of financial position and
      the accounting for and reporting of transactions between the reporting entity
      and holders of such noncontrolling interests.  SFAS No. 160 is
      effective as of the beginning of an entity’s first fiscal year that begins on or
      after December 15, 2008 and is required to be adopted prospectively, except
      for
      the reclassification of noncontrolling interests to equity and the recasting
      of
      net income (loss) attributable to both the controlling and noncontrolling
      interests, which are required to be adopted retrospectively.  We plan
      to adopt SFAS No. 160 effective January 1, 2009 and do not currently expect
      the
      impact on our financial statements to be significant.








OUTLOOK,
      RISKS AND UNCERTAINTIES





Business
      Combinations/Divestitures





We
      believe that future acquisitions
      that we make could significantly impact financial results.  Financial
      results most likely to be impacted include, but are not limited to, revenue,
      gross margin, salaries and benefits, selling general and administrative
      expenses, depreciation and amortization, interest expense, net income and our
      debt level.





Revenue





We
      believe that the performance of
      the railroads and a severe or prolonged slow-down of the economy are the most
      significant factors that could negatively influence our revenue growth
      rate.  Should there be further consolidation in the rail industry
      causing a service disruption, we believe our intermodal business would likely
      be
      negatively impacted.  Should there be a significant service
      disruption, we expect that there may be some customers who would switch from
      using our intermodal service to other transportation services.  We
      expect that these customers may choose to continue to utilize other services
      even when intermodal service levels are restored.  Other factors that
      could negatively influence our growth rate include, but are not limited to,
      the
      elimination of fuel surcharges, the entry of new web-based competitors, customer
      retention, inadequate drayage service and inadequate equipment
      supply.





Gross
      Margin





We
      expect fluctuations in gross
      margin as a percentage of revenue from quarter-to-quarter caused by various
      factors including, but not limited to, changes in the transportation business
      mix, trailer and container capacity, vendor pricing, fuel costs, intermodal
      industry growth, intermodal industry service levels, accessorials, competition
      and accounting estimates.





Salaries
      and Benefits





We
      estimate that salaries and
      benefits as a percentage of revenue could fluctuate from quarter-to-quarter
      as
      there are timing differences between volume increases and changes in levels
      of
      staffing.  Factors that could affect the percentage from staying in
      the recent historical range include, but are not limited to, revenue growth
      rates significantly higher or lower than forecasted, a management decision
      to
      invest in additional personnel to stimulate new or existing businesses, changes
      in customer requirements, changes in our operating structure, achieving the
      targets for our performance units and changes in railroad intermodal service
      levels which could result in a lower or higher cost of labor per
      move.





General
      and Administrative





We
      believe there are several factors
      that could cause general and administrative expenses to fluctuate as a
      percentage of revenue.  As customer expectations and the competitive
      environment require the development of web-based business interfaces and the
      restructuring of our information systems and related platforms, we believe
      there
      could be significant expenses incurred, some of which would not be
      capitalized.  Other factors that could cause selling, general and
      administrative expense to fluctuate include, but are not limited to, changes
      in
      insurance premiums and outside services expense.





Depreciation
      and Amortization





We
      estimate that depreciation and
      amortization of property and equipment will decrease slightly in
      2008.


23


Impairment
      of Property and Equipment, Goodwill and Indefinite-Lived
      Intangibles





On
      an ongoing basis, we assess the
      realizability of our assets.  If, at any point during the year,
      management determines that an impairment exists, the carrying amount of the
      asset is reduced by the estimated impairment with a corresponding charge to
      earnings.  If it is determined that an impairment exists, management
      estimates that the write down of specific assets could have a material adverse
      impact on earnings.





Other
      Income (Expense)





Factors
      that could cause a change in
      interest income include, but are not limited to, funding working capital needs,
      funding capital expenditures, funding an acquisition and buying back
      stock.





Item
      7A.                 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





We
      are exposed to market risk related
      to changes in interest rates on our bank line of credit which may adversely
      affect our results of operations and financial condition.  We seek to
      minimize the risk from interest rate volatility through our regular operating
      and financing activities and when deemed appropriate, through the use of
      derivative financial instruments.  No derivative financial instruments
      are outstanding at December 31, 2007.  We do not use financial
      instruments for trading purposes.





At
      December 31, 2007, the Company had
      no outstanding obligations under its bank line of credit
      arrangement.





























































24


Item
      8.                            
FINANCIAL STATEMENTS
      AND
      SUPPLEMENTARY DATA








INDEX
      TO FINANCIAL STATEMENTS


AND
      FINANCIAL STATEMENT SCHEDULE








Report
                of Independent Registered Public Accounting Firm
            26Consolidated
                Balance Sheets – December 31, 2007 and December 31, 2006
            27Consolidated
                Statements of Income – Years ended December 31, 2007,
              December 31, 2006 and December 31, 2005
            28Consolidated
                Statements of Stockholders’ Equity – Years ended December 31,
                2007,
              December
                31, 2006 and December 31, 2005
            29Consolidated
                Statements of Cash Flows – Years ended December 31, 2007,
              December
                31, 2006 and December 31, 2005
            30Notes
                to Consolidated Financial Statements
            31Schedule
                II – Valuation and Qualifying Accounts
            S-1





















































25


REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The
      Board
      of Directors and Stockholders of Hub Group, Inc.:





We
      have audited the accompanying
      consolidated balance sheets of Hub Group, Inc. as of December 31, 2007 and
      2006,
      and the related consolidated statements of income, stockholders' equity, and
      cash flows for each of the three years in the period ended December 31,
      2007.  Our audits also included the financial statement schedule
      listed in the index at Item 15(a).  These financial statements and
      schedule are the responsibility of the Company's management.  Our
      responsibility is to express an opinion on these financial statements and
      schedule based on our audits.





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





In
      our opinion, the financial statements
      referred to above present fairly, in all material respects, the consolidated
      financial position of Hub Group, Inc. at December 31, 2007 and 2006, and the
      consolidated results of their operations and their cash flows for each of the
      three years in the period ended December 31, 2007 in conformity with U.S.
      generally accepted accounting principles.  Also, in our opinion, the
      related financial statement schedule when considered in relation to the basic
      consolidated financial statements taken as a whole, presents fairly in all
      material respects the information set forth therein.





As
      described in Note 5 to the
      consolidated financial statements, effective January 1, 2007, the Company
      changed its method of accounting for uncertain tax positions to conform with
      FIN
      48,Accounting
      for
      Uncertainty in Income Taxes.  As described in Note
      1 to
      the consolidated financial statements, effective January 1, 2006, the Company
      changed its method of accounting for share-based payments to conform with FASB
      Statement No. 123 (R),Share-Based
      Payment.





We
      also have audited, in accordance with
      the standards of the Public Company Accounting Oversight Board (United States),
      Hub Group, Inc.’s internal control over financial reporting as of December 31,
      2007, based on criteria established in Internal Control – Integrated Framework
      issued by the Committee of Sponsoring Organizations of Treadway Commission
      and
      our report dated February19,
      2008 expressed an unqualified opinion
      thereon.





ERNST
&
YOUNG
      LLP








Chicago,
      Illinois


February19,
      2008































26





HUB
                GROUP, INC.CONSOLIDATED
                BALANCE SHEETS(in
                thousands, except share amounts)December
                  31,2007
            
            
            2006ASSETSCURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            38,002
            
            
            $
            43,491Accounts
                receivableTrade,
                net
            
            
            160,944
            
            
            
            158,284Other
            
            
            9,828
            
            
            
            8,369Prepaid
                taxes
            
            
            86
            
            
            
            2,119Deferred
                taxes
            
            
            5,044
            
            
            
            3,433Prepaid
                expenses and other current assets
            
            
            4,318
            
            
            
            4,450TOTAL
                CURRENT ASSETS
            
            
            218,222
            
            
            
            220,146Restricted
                investments
            
            
            5,206
            
            
            
            3,017Property
                and equipment, net
            
            
            29,662
            
            
            
            26,974Other
                intangibles, net
            
            
            7,056
            
            
            
            7,502Goodwill,
                net
            
            
            230,448
            
            
            
            225,448Other
                assets
            
            
            1,373
            
            
            
            1,461TOTAL
                ASSETS
            
            $
            491,967
            
            
            $
            484,548LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIES:Accounts
                payableTrade
            
            $
            123,020
            
            
            $
            117,676Other
            
            
            6,683
            
            
            
            7,783Accrued
                expensesPayroll
            
            
            16,446
            
            
            
            18,294Other
            
            
            33,063
            
            
            
            25,673Related
                party payable
            
            
            5,000
            
            
            
            5,000TOTAL
                CURRENT LIABILITIES
            
            
            184,212
            
            
            
            174,426Non-current
                liabilities
            
            
            9,708
            
            
            
            7,691Deferred
                taxes
            
            
            47,148
            
            
            
            43,587STOCKHOLDERS'
                EQUITY:Preferred
                stock, $.01 par value;  2,000,000 shares
                authorized;  no shares issued or outstanding in 2007 and
                2006
            
            
            -
            
            
            
            -Common
                stockClass
                A:  $.01 par value;  97,337,700 shares authorized in
                2007; 41,224,792 shares issued and 36,666,731 outstanding in 2007;
                47,337,700 shares authorized in 2006; 41,224,792 shares issued and
                38,943,122 outstanding in 2006
            
            
            412
            
            
            
            412Class
                B:  $.01 par value; 662,300 shares authorized; 662,296 shares
                issued and outstanding in 2007 and 2006
            
            
            7
            
            
            
            7Additional
                paid-in capital
            
            
            176,657
            
            
            
            179,203Purchase
                price in excess of predecessor basis, net of tax benefit of
                $10,306
            
            
            (15,458
            )
            
            
            (15,458
            )Retained
                earnings
            
            
            206,042
            
            
            
            146,243Treasury
                stock; at cost, 4,558,061 shares in 2007 and 2,281,670 shares in
                2006
            
            
            (116,761
            )
            
            
            (51,563
            )TOTAL
                STOCKHOLDERS' EQUITY
            
            
            250,899
            
            
            
            258,844TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            491,967
            
            
            $
            484,548


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









27




HUB
                GROUP, INC.CONSOLIDATED
                STATEMENTS OF INCOME(in
                thousands, except per share amounts)Years
                  Ended2007
            
            
            2006
            
            
            2005Revenue
            
            $
            1,658,168
            
            
            $
            1,609,529
            
            
            $
            1,481,878Transportation
                costs
            
            
            1,425,844
            
            
            
            1,391,111
            
            
            
            1,307,136Gross
                margin
            
            
            232,324
            
            
            
            218,418
            
            
            
            174,742Costs
                and expenses:Salaries
                and benefits
            
            
            95,678
            
            
            
            95,152
            
            
            
            83,392General
                and administrative
            
            
            41,416
            
            
            
            39,929
            
            
            
            34,541Depreciation
                and amortization
            
            
            4,490
            
            
            
            6,101
            
            
            
            8,905Total
                costs and expenses
            
            
            141,584
            
            
            
            141,182
            
            
            
            126,838Operating
                income
            
            
            90,740
            
            
            
            77,236
            
            
            
            47,904Other
                income (expense):Interest
                expense
            
            
            (108
            )
            
            
            (115
            )
            
            
            (124
            )Interest
                income
            
            
            2,480
            
            
            
            2,311
            
            
            
            971Other,
                net
            
            
            116
            
            
            
            76
            
            
            
            120Total
                other income (expense)
            
            
            2,488
            
            
            
            2,272
            
            
            
            967Income
                from continuing operations before provision for income
                taxes
            
            
            93,228
            
            
            
            79,508
            
            
            
            48,871Provision
                for income taxes
            
            
            33,429
            
            
            
            31,803
            
            
            
            19,695Income
                from continuing operations
            
            
            59,799
            
            
            
            47,705
            
            
            
            29,176Discontinued
                operations:Income
                from discontinued operations of HGDS (including loss on disposal
                of $70 in
                2006)
            
            
            -
            
            
            
            1,634
            
            
            
            6,315Provision
                for income taxes
            
            
            -
            
            
            
            653
            
            
            
            2,545Income
                from discontinued operations
            
            
            -
            
            
            
            981
            
            
            
            3,770Net
                income
            
            $
            59,799
            
            
            $
            48,686
            
            
            $
            32,946Basic
                earnings per common shareIncome
                from continuing operations
            
            $
            1.55
            
            
            $
            1.19
            
            
            $
            0.73Income
                from discontinued operations
            
            $
            -
            
            
            $
            0.03
            
            
            $
            0.10Net
                income
            
            $
            1.55
            
            
            $
            1.22
            
            
            $
            0.83Diluted
                earnings per common shareIncome
                from continuing operations
            
            $
            1.53
            
            
            $
            1.17
            
            
            $
            0.71Income
                from discontinued operations
            
            $
            -
            
            
            $
            0.02
            
            
            $
            0.09Net
                income
            
            $
            1.53
            
            
            $
            1.19
            
            
            $
            0.80Basic
                weighted average number of shares outstanding
            
            
            38,660
            
            
            
            39,958
            
            
            
            39,860Diluted
                weighted average number of shares outstanding
            
            
            39,128
            
            
            
            40,823
            
            
            
            41,392





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







28





HUB
                GROUP, INCCONSOLIDATED
                STATEMENTS OF STOCKHOLDERS’ EQUITY(in
                thousands, except shares)Years
                  ended December 31,2007
            
            
            2006
            
            
            2005Class
                A & B Common Stock Shares OutstandingBeginning
                of year
            
            
            39,605,418
            
            
            
            40,624,780
            
            
            
            41,191,812Exercise
                of non-qualified stock options
            
            
            -
            
            
            
            -
            
            
            
            692,516Issuance
                of restricted stock
            
            
            -
            
            
            
            -
            
            
            
            2,760Purchase
                of treasury shares
            
            
            (2,741,700
            )
            
            
            (2,126,255
            )
            
            
            (2,378,712
            )Treasury
                shares issued under restricted stock and stock options
                exercised
            
            
            465,309
            
            
            
            1,106,893
            
            
            
            1,116,404Ending
                balance
            
            
            37,329,027
            
            
            
            39,605,418
            
            
            
            40,624,780Class
                A & B Common Stock AmountBeginning
                of year
            
            $
            419
            
            
            $
            419
            
            
            $
            412Issuance
                of restricted stock and exercise of stock options
            
            
            -
            
            
            
            -
            
            
            
            7Ending
                balance
            
            
            419
            
            
            
            419
            
            
            
            419Additional
                Paid-in CapitalBeginning
                of year
            
            
            179,203
            
            
            
            183,524
            
            
            
            182,056Equity
                reclassification impact of adopting SFAS No. 123 (R)
            
            
            -
            
            
            
            (6,259
            )
            
            
            -Exercise
                of non-qualified stock options
            
            
            (6,668
            )
            
            
            (12,516
            )
            
            
            (7,663
            )Share-based
                compensation expense
            
            
            3,853
            
            
            
            3,405
            
            
            
            -Tax
                benefit of share-based compensation plans
            
            
            3,952
            
            
            
            12,337
            
            
            
            8,523Issuance
                of restricted stock awards, net of forfeitures
            
            
            (3,683
            )
            
            
            (1,288
            )
            
            
            608Ending
                balance
            
            
            176,657
            
            
            
            179,203
            
            
            
            183,524Purchase
                Price in Excess of Predecessor Basis, Net of TaxBeginning
                of year
            
            
            (15,458
            )
            
            
            (15,458
            )
            
            
            (15,458
            )Ending
                balance
            
            
            (15,458
            )
            
            
            (15,458
            )
            
            
            (15,458
            )Retained
                EarningsBeginning
                of year
            
            
            146,243
            
            
            
            97,557
            
            
            
            64,611Net
                income
            
            
            59,799
            
            
            
            48,686
            
            
            
            32,946Ending
                balance
            
            
            206,042
            
            
            
            146,243
            
            
            
            97,557Unearned
                CompensationBeginning
                of year
            
            
            -
            
            
            
            (6,259
            )
            
            
            (4,685
            )Issuance
                of restricted stock awards, net of forfeitures
            
            
            -
            
            
            
            -
            
            
            
            (3,751
            )Compensation
                expense related to restricted stock awards
            
            
            -
            
            
            
            -
            
            
            
            2,177Equity
                reclassification impact of adopting SFAS No. 123 (R)
            
            
            -
            
            
            
            6,259
            
            
            
            -Ending
                balance
            
            
            -
            
            
            
            -
            
            
            
            (6,259
            )Treasury
                StockBeginning
                of year
            
            
            (51,563
            )
            
            
            (17,708
            )
            
            
            -Purchase
                of treasury shares
            
            
            (76,309
            )
            
            
            (49,622
            )
            
            
            (33,245
            )Issuance
                of restricted stock and exercise of stock options
            
            
            11,111
            
            
            
            15,767
            
            
            
            15,537Ending
                balance
            
            
            (116,761
            )
            
            
            (51,563
            )
            
            
            (17,708
            )Total
                stockholders’ equity
            
            $
            250,899
            
            
            $
            258,844
            
            
            $
            242,075





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





29


HUB
                GROUP, INC.CONSOLIDATED
                STATEMENTS OF CASH FLOWS(in
                thousands)Years
                Ended December 31,2007
            
            
            2006
            
            
            2005Cash
                flows from operating activities:Income
                from continuing operations
            
            $
            59,799
            
            
            $
            47,705
            
            
            $
            29,176Adjustments
                to reconcile income from continuing operations to net cashprovided
                by operating activities:Depreciation
                and amortization
            
            
            7,195
            
            
            
            8,170
            
            
            
            9,319Deferred
                taxes
            
            
            3,523
            
            
            
            690
            
            
            
            18,382Compensation
                expense related to share-based compensation plans
            
            
            3,853
            
            
            
            3,405
            
            
            
            2,148Gain
                on sale of assets
            
            
            (160
            )
            
            
            (131
            )
            
            
            (271
            )Changes
                in operating assets and liabilities excluding effects of
                purchase
              transaction:Restricted
                investments
            
            
            (2,189
            )
            
            
            (1,630
            )
            
            
            (1,387
            )Accounts
                receivable, net
            
            
            (4,119
            )
            
            
            393
            
            
            
            (18,931
            )Prepaid
                taxes
            
            
            2,033
            
            
            
            3,317
            
            
            
            (6,151
            )Prepaid
                expenses and other current assets
            
            
            132
            
            
            
            (297
            )
            
            
            722Other
                assets
            
            
            88
            
            
            
            (837
            )
            
            
            200Accounts
                payable
            
            
            4,223
            
            
            
            5,698
            
            
            
            3,039Accrued
                expenses
            
            
            4,441
            
            
            
            8,496
            
            
            
            8,497Deferred
                compensation
            
            
            1,761
            
            
            
            1,608
            
            
            
            (1,534
            )Net
                cash provided by operating activities
            
            
            80,580
            
            
            
            76,587
            
            
            
            43,209Cash
                flows from investing activities:Proceeds
                from sale of equipment
            
            
            725
            
            
            
            394
            
            
            
            579Purchases
                of property and equipment
            
            
            (10,197
            )
            
            
            (8,372
            )
            
            
            (4,078
            )Cash used in acquisition of Comtrak, Inc.
            
            
            (5,000
            )
            
            
            (39,942
            )
            
            
            -Proceeds
                from the disposal of discontinued operations
            
            
            -
            
            
            
            12,203
            
            
            
            -Net
                cash used in investing activities
            
            
            (14,472
            )
            
            
            (35,717
            )
            
            
            (3,499
            )Cash
                flows from financing activities:Proceeds
                from stock options exercised
            
            
            760
            
            
            
            1,963
            
            
            
            4,738Purchase
                of treasury stock
            
            
            (76,309
            )
            
            
            (49,622
            )
            
            
            (33,245
            )Excess
                tax benefits from share-based compensation
            
            
            3,952
            
            
            
            12,337
            
            
            
            -Net
                cash used in financing activities
            
            
            (71,597
            )
            
            
            (35,322
            )
            
            
            (28,507
            )Cash
                flows provided by operating activities of discontinued
                operations
            
            
            -
            
            
            
            1,848
            
            
            
            8,416Cash
                flows used in investing activities of discontinued
                operations
            
            
            -
            
            
            
            (38
            )
            
            
            (292
            )Net
                cash provided by discontinued operations
            
            
            -
            
            
            
            1,810
            
            
            
            8,124Net
                (decrease) increase in cash and cash equivalents
            
            
            (5,489
            )
            
            
            7,358
            
            
            
            19,327Cash
                and cash equivalents beginning of year
            
            
            43,491
            
            
            
            36,133
            
            
            
            16,806Cash
                and cash equivalents end of year
            
            $
            38,002
            
            
            $
            43,491
            
            
            $
            36,133Supplemental
                disclosures of cash paid for:Interest
            
            $
            106
            
            
            $
            114
            
            
            $
            124Income
                taxes
            
            $
            22,192
            
            
            $
            16,801
            
            
            $
            6,811The
                accompanying notes to consolidated financial statements are an integral
                part of these statements.











30


HUB
      GROUP, INC.





NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
      1.                      
Description of Business and Summary of Significant Accounting
      Policies





Business:  Hub
      Group, Inc. (“we”, “us” or “our”) provides intermodal transportation services
      utilizing primarily third party arrangements with railroads and drayage
      companies.  We also arrange for transportation of freight by truck and
      perform logistics and drayage services.





Principles
      of
      Consolidation:  The consolidated financial statements include
      our accounts and all entities in which we have more than a 50% equity ownership
      or otherwise exercise unilateral control.  All significant
      intercompany balances and transactions have been eliminated.





Cash
      and Cash
      Equivalents:  We consider as cash equivalents all highly liquid
      instruments with an original maturity of three months or less.  We
      invest our cash overnight in commercial paper of which $33.0 million and $37.0
      million was outstanding at December 31, 2007 and 2006,
      respectively.





Accounts
      Receivable and Allowance
      for Uncollectible Accounts:  In the normal course of business,
      we extend credit to customers after a review of each customer’s credit
      history.  An allowance for uncollectible trade accounts has been
      established through an analysis of the accounts receivable aging, an assessment
      of collectibility based on historical trends and an evaluation of the current
      economic conditions.  To be more specific, we reserve a portion of
      every account balance that has aged over one year, a portion of certain
      customers in bankruptcy and account balances specifically identified as
      uncollectible.  The allowance is reported on the balance sheet in net
      accounts receivable.  Actual collections of accounts receivable could
      differ from management’s estimates due to changes in future economic, industry
      or customer financial conditions.  Our reserve for uncollectible
      accounts was approximately $5.5 million and $6.3 million at December 31, 2007
      and 2006, respectively.  Recoveries of receivables previously charged
      off are recorded when received.





Property
      and
      Equipment:  Property and equipment are stated at
      cost.  Depreciation of property and equipment is computed using the
      straight-line and various accelerated methods at rates adequate to depreciate
      the cost of the applicable assets over their expected useful
      lives:  building and improvements, 1 to 8 years; leasehold
      improvements, the shorter of useful life or lease term; computer equipment
      and
      software, 3 to 5 years; furniture and equipment, 3 to 11 years; and
      transportation equipment and automobiles, 5 to 10
      years.  Direct costs related to internally developed software projects
      are capitalized and amortized over their expected useful life on a straight-line
      basis not to exceed five years.  Interest is capitalized on qualifying
      assets under development for internal use.  Maintenance and repairs
      are charged to operations as incurred and major improvements are
      capitalized.  The cost of assets retired or otherwise disposed of and
      the accumulated depreciation thereon are removed from the accounts with any
      gain
      or loss realized upon sale or disposal charged or credited to
      operations.  We review long-lived assets for impairment when events or
      changes in circumstances indicate the carrying amount of an asset may not be
      recoverable.  In the event that the undiscounted future cash flows
      resulting from the use of the asset group is less than the carrying amount,
      an
      impairment loss equal to the excess of the assets carrying amount over its
      fair
      value is recorded.





Goodwill:  Goodwill
      represents the excess of purchase price over the fair market value of net assets
      acquired in connection with our business combinations.  Under
      Statement of Financial Accounting Standards No. 142, “Goodwill and Other
      Intangible Assets” (“Statement 142”), goodwill and intangible assets that have
      indefinite useful lives are not amortized but are subject to annual impairment
      tests.





We
      review
      goodwill and other indefinite-lived intangibles for impairment on an annual
      basis as of November 1, or whenever events or changes in circumstances indicate
      the carrying amount of goodwill or other intangibles may not be
      recoverable.  We utilize a third-party independent valuation firm to
      assist in performing the necessary valuations to be used in the impairment
      testing.  These valuations are based on market capitalization,
      discounted cash flow analysis or a combination of both
      methodologies.  The assumptions used in the valuations include
      expectations regarding future operating performance, discount rates, control
      premiums and other factors which are subjective in nature.  Actual
      cash flows from operations could differ from management’s estimates due to
      changes in business conditions, operating performance and economic
      conditions.  Should estimates differ materially from actual results,
      we may be required to record impairment charges in the future.





Fair
      Value of Financial
      Instruments:The carrying value of cash and cash equivalents,
      accounts receivable and accounts payable approximates fair value at December
      31,
      2007 due to their short-term nature.




Concentration
      of Credit
      Risk:  Our financial instruments that are exposed to
      concentrations of credit risk consist primarily of cash and cash equivalents
      and
      accounts receivable.  We place our cash and temporary investments with
      high quality financial institutions.  We primarily serve customers
      located throughout the United States with no significant concentration in any
      one region.  No one customer accounted for more than 5% of revenue in
      2007, 2006 or 2005.  We review a customer’s credit history before
      extending credit.  In addition, we routinely assess the financial
      strength of our customers and, as a consequence, believe that our trade accounts
      receivable risk is limited.


31


Revenue
      Recognition:  Revenue is recognized at the time 1) persuasive
      evidence of an arrangement exists, 2) services have been rendered, 3) the sales
      price is fixed and determinable and 4) collectibility is reasonably
      assured.  In accordance with EITF 91-9, revenue and related
      transportation costs are recognized based on relative transit
      time.  Further, we report our revenue on a gross basis in accordance
      with the criteria in EITF 99-19, “Reporting Revenue Gross as a Principal versus
      Net as an Agent.”  We are the primary obligor as we are responsible
      for providing the service desired by the customer.  Our customers view
      us as responsible for fulfillment including the acceptability of the
      service.  Services requirements may include, for example, on-time
      delivery, handling freight loss and damage claims, setting up appointments
      for
      pick up and delivery and tracing shipments in transit.  We have
      discretion in setting sales prices and as a result, the amount we earn
      varies.  In addition, we have the discretion to select our vendors
      from multiple suppliers for the services ordered by our
      customers.  Finally, we have credit risk for our
      receivables.  These three factors, discretion in setting prices,
      discretion in selecting vendors and credit risk, further support reporting
      revenue on a gross basis.





Deferred
      Income
      Taxes:  Deferred income taxes are recognized for the future tax
      effects of temporary differences between financial and income tax reporting
      using tax rates in effect for the years in which the differences are expected
      to
      reverse.  We believe that it is more likely than not that our deferred
      tax assets will be realized with the exception of $0.2 million related to state
      tax net operating losses for which a valuation allowance has been
      established.  In the event the probability of realizing the deferred
      tax assets do not meet the more likely than not threshold in the future, a
      valuation allowance would be established for the deferred tax assets deemed
      unrecoverable.





Accounting
      for Income Taxes:In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
      Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes”,
      which is an interpretation of SFAS No. 109, Accounting for Income
      Taxes.  We adopted FIN 48 effective January 1, 2007.  FIN 48
      clarifies the accounting for income taxes by prescribing the minimum recognition
      threshold a tax position is required to meet before being recognized in the
      financial statements.  FIN 48 also provides guidance on derecognition,
      measurement, classification, interest and penalties, accounting in interim
      periods, disclosure and transition.  In addition, FIN 48 clearly
      scopes out income taxes from Financial Accounting Standards Board Statement
      No.
      5, “Accounting for Contingencies”.





New
      Pronouncements:  In September 2006, the FASB issued Statement
      of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS
      No. 157). SFAS No. 157 defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles and expands
      disclosures about fair value measurements. In February 2008, the FASB deferred
      the effective date of SFAS No. 157 for one year for all nonfinancial assets
      and
      nonfinancial liabilities, except for those items that are recognized or
      disclosed at fair value in the financial statements on a recurring basis (at
      least annually).  In addition, certain leasing transactions accounted
      for under SFAS No. 13, “Accounting for Leases”, are now excluded from the scope
      of SFAS No. 157.  We adopted SFAS No. 157 effective January 1,
      2008.  There was no cumulative effect recorded upon adoption as of
      January 1, 2008 and we do not expect the impact on our financial statements
      in
      subsequent reporting periods to be significant.





In
      February 2007, the FASB issued SFAS No. No. 159, “Fair Value Option for
      Financial Assets and Financial Liabilities” (SFAS No. 159).  SFAS 159
      permits entities to voluntarily choose to measure many financial instruments
      and
      certain other items at fair value.  SFAS No. 159 is effective
      beginning January 1, 2008, but we have decided not to adopt this optional
      standard at this time.





The
      FASB
      issued Statement of SFAS No. 141(R), “Business Combinations” (SFAS No. 141(R))
      in December 2007.  SFAS No. 141(R) requires the acquiring entity in a
      business combination to record all assets acquired and liabilities assumed
      at
      their respective acquisition-date fair values including contingent
      consideration.  In addition SFAS No. 141(R) changes the recognition of
      assets acquired and liabilities assumed arising from preacquisition
      contingencies and requires the expensing of acquisition-related costs as
      incurred.  SFAS No. 141(R) applies prospectively to business
      combinations for which the acquisition date is on or after January 1,
      2009.  We plan to adopt SFAS No. 141(R) effective January 1, 2009 and
      do not currently expect the impact on our financial statements to be
      significant.





The
      FASB
      issued Statement of SFAS No. 160, “Noncontrolling Interest” (SFAS No. 160) in
      December 2007.  SFAS No. 160 clarifies the classification of
      noncontrolling interests in consolidated statements of financial position and
      the accounting for and reporting of transactions between the reporting entity
      and holders of such noncontrolling interests.  SFAS No. 160 is
      effective as of the beginning of an entity’s first fiscal year that begins on or
      after December 15, 2008 and is required to be adopted prospectively, except
      for
      the reclassification of noncontrolling interests to equity and the recasting
      of
      net income (loss) attributable to both the controlling and noncontrolling
      interests, which are required to be adopted retrospectively.  We plan
      to adopt SFAS No. 160 effective January 1, 2009 and do not currently expect
      the
      impact on our financial statements to be significant.





Earnings
      Per Common
      Share:  Basic earnings per common share are based on the
      average quarterly weighted average number of Class A and Class B shares of
      common stock outstanding.  Diluted earnings per common share are
      adjusted for the assumed exercise of dilutive stock options and for restricted
      stock.  In computing the per share effect of  the assumed
      exercise of stock options, funds which would have been received from the
      exercise of options, including tax benefits assumed to be realized, are
      considered to have been used to purchase shares at current market prices, and
      the resulting net additional shares are included in the calculation of weighted
      average shares outstanding.  The dilutive effect of restricted stock
      and stock options is computed using the treasury method.


32


Stock
      based
      Compensation:  Prior to January 1, 2006, we accounted for our
      share-based compensation plans under the recognition and measurement provisions
      of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related
      interpretations, as permitted by Statement of Financial Accounting Standard
      (SFAS) No. 123 “Accounting for Stock-Based Compensation.”  No
      stock-option based employee compensation cost was recognized in the income
      statement prior to 2006, as all stock options granted had an exercise price
      equal to the market value of the underlying common stock on the date of
      grant.  Effective January 1, 2006, we adopted the fair value
      recognition provisions of FASB Statement No. 123 (R) “Share-Based Payment” (SFAS
      No. 123 (R)), using the modified-prospective transition method.  Under
      that transition method, compensation cost recognized in 2006 includes: (a)
      compensation costs for all share-based payments granted prior to, but not yet
      vested as of January 1, 2006, based on the grant date fair value estimated
      in
      accordance with the original provisions of SFAS No. 123 and (b) compensation
      cost for all share-based payments granted subsequent to January 1, 2006, based
      on the grant-date fair value estimated in accordance with the provisions of
      SFAS
      No. 123 (R).  Results for prior periods have not been
      restated.  We have not granted any stock options since
      2003.





We
      have
      elected to calculate our initial pool of excess benefits under FASB Staff
      Position 123 (R)-3 (“FSP”). Prior to the adoption of SFAS No. 123 (R), we
      presented all benefits of tax deductions resulting from the exercise of
      share-based compensation as operating cash flows in the Statement of Cash
      Flows.  Beginning on January 1, 2006, we changed our cash flow
      presentation in accordance with the FSP which requires benefits of tax
      deductions in excess of the compensation cost recognized (excess tax benefits)
      to be classified as a financing cash in-flow and an operating cash
      out-flow.  The results for the year ended December 31, 2007 and 2006
      include $4.0 million and $12.3 million of excess tax benefits, respectively,
      as
      a financing cash in-flow and an operating cash out-flow.







The
      following table illustrates the effect on the net income and net income per
      share if we had applied the fair value recognition provisions of SFAS No. 123,
      to share-based employee compensation during the year ended December 31, 2005
      (in
      thousands, except per share data):





Year EndedDecember
                31,2005Income
                from continuing operations, as reported
            
            $
            29,176Income
                from discontinued operations, as reported
            
            
            3,770Total
                net income, as reported
            
            $
            32,946Add:  Total
                share–based compensation included in net income, net of related tax
                effects
            
            
            1,300Deduct:  Total
                share-based employee compensation expense determined under fair value
                based method for all awards, net of related tax effects
            
            
            (1,600
            )Income
                from continuing operations, pro forma
            
            $
            28,876Income
                from discontinued operations, pro forma
            
            
            3,770Total
                net income, pro forma
            
            $
            32,646Earnings
                per share:Basic
                from continuing operations, as reported
            
            $
            0.73Basic
                from discontinued operations, as reported
            
            $
            0.10Basic
                — pro forma from continuing operations
            
            $
            0.72Basic
                — pro forma from discontinued operations
            
            $
            0.10Diluted
                from continuing operations, as reported
            
            $
            0.71Diluted
                from discontinued operations, as reported
            
            $
            0.09Diluted
                — pro forma from continuing operations
            
            $
            0.70Diluted
                — pro forma from discontinued operations
            
            $
            0.09





Use
      of
      Estimates:  The preparation of financial statements in
      conformity with U.S. generally accepted accounting principles requires us to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenue and expense during
      the reporting period.  Significant estimates include the allowance for
      doubtful accounts and cost of purchased transportation.  Actual
      results could differ from those estimates.





Reclassifications:Certain
      prior year amounts have been reclassified to conform to the current year
      presentation.









33


NOTE
      2.                      
Capital
      Structure





We
      have
      authorized common stock comprised of Class A Common Stock and Class B Common
      Stock.  The rights of holders of Class A Common Stock and Class B
      Common Stock are identical, except each share of Class B Common Stock entitles
      its holder to approximately 80 votes, while each share of Class A Common Stock
      entitles its holder to one vote.  We have authorized 2,000,000 shares
      of preferred stock.








NOTE
      3.                      
Earnings Per Share





The
      following is a reconciliation of our earnings per share (in thousands, except
      for per share data):





Year
                Ended
            
            
            Year
                EndedDecember
                31, 2007
            
            
            December
                31, 2006Income
            
            
            Shares
            
            
            Per
                Share Amount
            
            
            Income
            
            
            Shares
            
            
            Per
                Share AmountBasic
                EPSIncome
                from continuing operations
            
            $
            59,799
            
            
            
            38,660
            
            
            $
            1.55
            
            
            $
            47,705
            
            
            
            39,958
            
            
            $
            1.19Income
                from discontinued operations
            
            
            -
            
            
            
            38,660
            
            
            
            -
            
            
            
            981
            
            
            
            39,958
            
            
            
            0.03Net
                Income
            
            $
            59,799
            
            
            
            38,660
            
            
            $
            1.55
            
            
            $
            48,686
            
            
            
            39,958
            
            
            $
            1.22Effect
                of Dilutive SecuritiesStock
                options and restricted stock
            
            
            
            
            
            
            468
            
            
            
            
            
            
            
            
            
            
            
            865Diluted
                EPSIncome
                from continuing operations
            
            $
            59,799
            
            
            
            39,128
            
            
            $
            1.53
            
            
            $
            47,705
            
            
            
            40,823
            
            
            $
            1.17Income
                from discontinued operations
            
            
            -
            
            
            
            39,128
            
            
            
            -
            
            
            
            981
            
            
            
            40,823
            
            
            
            0.02Net
                Income
            
            $
            59,799
            
            
            
            39,128
            
            
            $
            1.53
            
            
            $
            48,686
            
            
            
            40,823
            
            
            $
            1.19














Year
                EndedDecember
                31, 2005Income
            
            
            Shares
            
            
            Per
                Share AmountBasic
                EPSIncome
                from continuing operations
            
            $
            29,176
            
            
            
            39,860
            
            
            $
            0.73Income
                from discontinued operations
            
            
            3,770
            
            
            
            39,860
            
            
            
            0.10Net
                Income
            
            $
            32,946
            
            
            
            39,860
            
            
            $
            0.83Effect
                of Dilutive SecuritiesStock
                options and restricted  stock
            
            
            
            
            
            
            1,532Diluted
                EPSIncome
                from continuing operations
            
            $
            29,176
            
            
            
            41,392
            
            
            $
            0.71Income
                from discontinued operations
            
            
            3,770
            
            
            
            41,392
            
            
            
            0.09Net
                Income
            
            $
            32,946
            
            
            
            41,392
            
            
            $
            0.80












34





NOTE
      4.                      
Property and Equipment





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




Years
                Ended December 31,2007
            
            
            2006Building
                and
                improvements
            
            $
            54
            
            
            $
            54Leasehold
                improvements
            
            
            1,372
            
            
            
            1,037Computer
                equipment and
                software
            
            
            49,304
            
            
            
            47,156Furniture
                and
                equipment
            
            
            7,894
            
            
            
            7,614Transportation
                equipment
            
            
            25,204
            
            
            
            20,51283,828
            
            
            
            76,373Less:  Accumulated
                depreciation and amortization
            
            
            (54,166
            )
            
            
            (49,399
            )Property
                and Equipment,
                net
            
            $
            29,662
            
            
            $
            26,974





Depreciation
      expense was $6.8 million, $7.8 million and $9.3 million for 2007, 2006 and
      2005,
      respectively.





NOTE
      5.                      
Income Taxes





The
      following is a reconciliation of our effective tax rate to the federal statutory
      tax rate:








Years
              Ended December 31,2007
            
            2006
            
            2005U.S.
                federal statutory
                rate
            35.0%
            
            35.0%
            
            35.0%State
                taxes, net of federal
                benefit
            3.4
            
            3.5
            
            3.3Nondeductible
                expenses
            0.5
            
            1.5
            
            1.1Provision
                for (reversal of)
                valuation allowance
            0.1
            
            (0.3)
            
            0.4IRS
                settlement
            (1.4)
            
            -
            
            -Illinois
                law
                change
            (1.3)
            
            -
            
            -Other
            (0.4)
            
            0.3
            
            0.5Net
                effective
                rate
            35.9%
            
            40.0%
            
            40.3%





We
      and
      our subsidiaries file both unitary and separate company state income tax
      returns.





The
      following is a summary of our provision for income taxes (in
      thousands):





Years
              Ended December 31,Current
            
            2007
            
            
            2006
            
            
            2005Federal
            
            $
            26,234
            
            
            $
            27,986
            
            
            $
            6,419State
                and
                local
            
            
            3,672
            
            
            
            3,078
            
            
            
            98329,906
            
            
            
            31,064
            
            
            
            7,402DeferredFederal
            
            
            4,000
            
            
            
            332
            
            
            
            11,301State
                and
                local
            
            
            (477
            )
            
            
            407
            
            
            
            9923,523
            
            
            
            739
            
            
            
            12,293Total
                provision
            
            $
            33,429
            
            
            $
            31,803
            
            
            $
            19,695












35





The
      following
      is a summary of our deferred tax assets and liabilities (in
      thousands):





Years
                Ended December 31,2007
            
            
            
            2006Reserve
                for uncollectible accounts
                receivable
            
            $
            1,939
            
            
            $
            2,295Accrued
                compensation
            
            
            5,394
            
            
            
            4,273Other
                reserves
            
            
            2,480
            
            
            
            1,611Current
                deferred tax assets
            
            
            9,813
            
            
            
            8,179Operating
                loss
                carryforwards
            
            
            430
            
            
            
            790Other
            
            
            216
            
            
            
            37Income
                tax basis in excess of
                financial basis of goodwill
            
            
            2,383
            
            
            
            3,123Less
                valuation allowance
            
            
            (163
            )
            
            
            (248
            )Long-term
                deferred tax assets
            
            
            2,866
            
            
            
            3,702Total
                deferred tax assets
            
            $
            12,679
            
            
            $
            11,881Prepaids
            
            $
            (1,245
            )
            
            $
            (1,258
            )Other
                receivables
            
            
            (3,524
            )
            
            
            (3,488
            )Current
                deferred tax liabilities
            
            
            (4,769
            )
            
            
            (4,746
            )Property
                and
                equipment
            
            
            (1,006
            )
            
            
            (2,940
            )Goodwill
            
            
            (49,008
            )
            
            
            (44,349
            )Long-term
                deferred tax liabilities
            
            
            (50,014
            )
            
            
            (47,289
            )Total
                deferred tax liabilities
            
            $
            (54,783
            )
            
            $
            (52,035
            )





Our
      state
      net operating losses of $0.4 million expire between December 31, 2012 and
      December 31, 2023.  Management believes it is more likely than not
      that the deferred tax assets will be realized with the exception of $0.2 million
      related to state net operating losses for which a valuation allowance has been
      established.





Effective
      January 1, 2007, we adopted
      Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”),
“Accounting for Uncertainty in Income Taxes”.  Although the
      implementation of FIN 48 did not impact the amount of our liability for
      unrecognized tax benefits, we reclassified our liability for unrecognized
      tax benefits from deferred tax liabilities to non-current liabilities to conform
      with the balance sheet presentation requirements of FIN 48.  As of
      January 1, 2007, the amount of unrecognized tax benefits, including $2.1 million
      ($1.3 million net of income tax)of
      accrued interest expense related to
      unrecognized tax benefits, was $5.3 million.





During
      its examination of our 1997
      federal income tax return, the Internal Revenue Service (“IRS”) proposed to
      reclassify our allocation of a significant amount of tax basis in fixed assets
      to non-amortizable intangibles. The dispute was ultimately resolved in the
      fourth quarter of 2007 after the IRS Office of Appeals reviewed the dispute
      and
      permitted the statute of limitations to lapse.





The
      settlement reduced our 2007 income
      tax provision by $1.3 million and resulted in areclassification
      ofourliability
      for unrecognized tax benefits
      to deferred tax liability.  As of December 31, 2007, the amount of
      unrecognized tax benefits was $0.3
      million, of which $0.2
      million would decrease our income tax
      provision, if recognized.  A reconciliation of the beginning and
      ending amount of unrecognized tax benefits (excluding accrued interest expense)
      is as follows:





(in
                millions)Balance
                at January 1,
                2007
            
            $
            3.2Reductions
                as a result of a lapse
                of the applicable statue of limitations
            
            
            (2.9
            )Balance
                at December 31,
                2007
            
            $
            0.3





We
        recognize interest expense and
        penalties related to unrecognized tax benefits in our provision for income
        taxes.  At January 1, 2007, accrued interest was $2.1 million ($1.3
        million net of income tax).  During the nine months ended September
        30, 2007, an additional $0.2 million of interest expense, net of tax, was
        recognized in our provision for income taxes.  During the fourth
        quarter of 2007, $1.5 million of accrued interest, net of income tax, was
        reversed as a consequence of the settlement of our dispute with the
        IRS.  This resulted in a reduction to our effective tax rate of 1.4%
        for the twelve months ended December 31, 2007.


36
 During
        the third
        quarter of 2007, the State of Illinois enacted tax legislation which impacts
        us
        by modifying how we apportion taxable income to Illinois.  The new
        legislation resulted in a reduction of our net deferred liabilities and a
        credit
        to our provision for state income taxes of approximately $1.2 million in
        the
        third quarter.  This resulted in a reduction to our effective tax rate
        of 1.3% for the twelve months ended December 31, 2007.  We also
        estimate that this change will saveapproximately$1.2
        million in state income taxes we
        would otherwise have to pay for the year ending December 31,
        2008.





Hub
      Group, Inc. and its subsidiaries are
      subject to income tax in the U.S. federal jurisdiction and numerous state
      jurisdictions.  The IRS has completed examinations of our federal
      income tax returns through 2004.  Although no examinations are in
      effect currently, tax years 2004 through 2006 generally remain open to
      examination by the major tax jurisdictions to which we are
      subject.





NOTE
      6.                      
Long-Term Debt and Financing Arrangements





On
      March
      23, 2005, we entered into a revolving credit agreement that provides for
      unsecured borrowings of up to $40.0 million.  The interest rate ranges
      from LIBOR plus 0.75% to 1.25% or Prime plus 0.5%.  The revolving line
      of credit expires on March 23, 2010.  The financial covenants require
      a minimum net worth of $175.0 million and a cash flow leverage ratio of not
      more
      than 2.0 to 1.0.  The commitment fees charged on the unused line of
      credit are between 0.15% and 0.25%.





On
      February 21, 2006, we amended the revolving credit agreement to provide for
      unsecured borrowing up to $50.0 million.  No other terms of the
      agreement were amended.





Our
      unused and available borrowings under our bank revolving line of credit at
      December 31, 2007 and December 31, 2006 were $47.2 million and $48.2 million,
      respectively.  We were in compliance with our debt covenants at
      December 31, 2007.





We
      have
      standby letters of credit that expire from 2008 to 2012.  As of
      December 31, 2007, our letters of credit were $2.8 million.





NOTE
      7.                      
Rental Expense, User Charges and Commitments





Minimum
      annual rental commitments, at December 31, 2007, under non-cancelable operating
      leases, principally for real estate, containers and equipment, are payable
      as
      follows (in thousands):





2008
            
            $
            19,5142009
            
            
            17,8152010
            
            
            15,4612011
            
            
            13,9302012
            
            
            12,2972013
                and thereafter
            
            
            5,451$
            84,468


Total
      rental
      expense included in general and administrative expense, which relates primarily
      to real estate, was approximately $7.7 million, $8.1 million and $7.6 million
      for 2007, 2006 and 2005, respectively.  Many of the real estate leases
      contain renewal options and escalation clauses which require payments of
      additional rent to the extent of increases in the related operating
      costs.  We straight-line rental expense in accordance with Statement
      of Financial Accounting Standards No. 13, paragraph 15 and Financial Accounting
      Standards Board Technical Bulletin 85-3.





In
      March
      2006, we entered into a ten year lease agreement for a building and property
      (Comtrak’s Memphis facility) with a related party, the President of
      Comtrak.  Rent paid under this lease agreement included in general and
      administrative expense totaled $0.7 million and $0.6 million for the years
      ended
      December 31, 2007 and 2006, respectively.  The annual lease payments
      escalate by less than 1% per year.





We
      incur rental
      expense for our leased containers and tractors that are included in
      transportation costs and totaled $9.9 million, $8.1 million, and $3.0 million
      for 2007, 2006 and 2005, respectively.





We
      incur
      charges for use of a fleet of rail owned chassis and dedicated rail owned
      containers on the Burlington Northern Santa Fe, Norfolk Southern and Union
      Pacific which are included in transportation costs.  Such charges were
      $45.5 million, $42.8 million and $33.8 million for the years ended December
      31,
      2007, 2006 and 2005, respectively.  At December 31, 2007, we have the
      ability to return the majority of the containers and pay for the chassis only
      when we are using them under these agreements.  As a result, no
      minimum commitments related to these chassis and containers have been included
      in the table above. At December 31, 2007, Accrued Expenses Other includes $11.4
      million related to chassis charges.


37


In
      February 2008, we entered into an equipment purchase contract with Singamas
      Management Services, Ltd. and Singamas North America, Inc.  We agreed
      to purchase 1,000 fifty-three foot dry freight steel domestic containers for
      approximately $10.0 million.  We expect delivery of the 1,000 units
      during the summer of 2008.  We plan to finance these containers with
      operating leases.  These commitments are not included in the table
      above since the arrangements have not yet been finalized.





NOTE
      8.                      
Stock-Based Compensation Plans





In
      1996, we adopted a
      Long-Term Incentive Plan (the “1996 Incentive Plan”).  The number of
      shares of Class A Common Stock reserved for issuance under the 1996 Incentive
      Plan was 1,800,000.  In 1997, we adopted a second Long-Term Incentive
      Plan (the “1997 Incentive Plan”).  The number of shares of Class A
      Common Stock reserved for issuance under the 1997 Incentive Plan was
      600,000.  In 1999 we adopted a third Long-Term Incentive Plan (the
“1999 Incentive Plan”).  The number of shares of Class A Common Stock
      reserved for issuance under the 1999 Incentive Plan was 2,400,000.  In
      2002, we adopted a fourth Long-Term Incentive Plan (the “2002 Incentive
      Plan”).  The number of shares of Class A Common Stock reserved for
      issuance under the 2002 Incentive Plan was 2,400,000.  In 2003, we
      amended our 2002 Incentive Plan to add an additional 2,000,000 shares of Class
      A
      Common Stock that are reserved for issuance.  In 2007, we amended our
      2002 Incentive Plan to add an additional 1,000,000 shares of Class A common
      Stock that are reserved for issuance.  Under the 1996, 1997, 1999 and
      2002 Incentive Plans, stock options, stock appreciation rights, restricted
      stock
      and performance units may be granted for the purpose of attracting and
      motivating our key employees and non-employee directors.  The options
      granted to non-employee directors vest ratably over a three-year period and
      expire 10 years after the date of grant.  The options granted to
      employees vest over a range of three to five years and expire 10 years after
      the
      date of grant.  Restricted stock vests over a three to five year
      period.  At December 31, 2007, 1,806,474 shares are available for
      future grant.  Generally, when stock options are exercised, either new
      shares are issued or shares are issued out of treasury.





We
      generally recognize the cost of share-based awards on a straight-line basis
      over
      the vesting period of the award including an estimate of
      forfeitures.  Share-based compensation expense for the years ended
      December 31, 2007, 2006 and 2005 was $3.9 million, $3.4 million and $2.1 million
      or $2.5 million, $2.0 million and $1.3 million, net of taxes,
      respectively.  Share-based compensation is included in salaries and
      benefits in the accompanying statements of income.





The
      following table summarizes the stock option activity for the year ended December
      31, 2007:





Stock
                Options
            
            Shares
            
            
            Weighted
                Average Exercise
              Price
            
            
            Weighted
                Average Remaining Contractual Life
            
            
            Aggregate
              Intrinsic
              ValueOutstanding
                at January 1, 2007
            
            
            754,596
            
            
            $
            2.24Options
                exercised
            
            
            (307,264
            )
            
            $
            2.45Options
                forfeited
            
            
            (6,000
            )
            
            $
            4.69Outstanding
                at December 31, 2007
            
            
            441,332
            
            
            $
            2.06
            
            
            
            4.42
            
            
            $
            10,820,636Exercisable
                at December 31, 2007
            
            
            387,732
            
            
            $
            2.11
            
            
            
            4.30
            
            
            $
            9,488,994





Intrinsic
      value for stock options is defined as the difference between the current market
      value and the grant price.  The total intrinsic value of options
      exercised during the years ended December 31, 2007, 2006 and 2005 was $8.3
      million, $21.3 million and $18.5 million, respectively.  Cash received
      from stock options exercised during the years ended December 31, 2007, 2006
      and
      2005 was $0.8 million, $2.0 million and $4.7 million,
      respectively.  The tax benefit realized for tax deductions from stock
      options exercised for the years ended December 31, 2007, 2006 and 2005 was
      $3.2
      million, $7.9 million and $6.8 million, respectively.




















38





The
      following table summarizes information about options outstanding at December
      31,
      2007:


Options
                  Outstanding
              
              
              Options
                  ExercisableRange
                  of Exercise Prices
              
              
              Number
                  of Shares
              
              
              Weighted
                  Avg. Remaining Contractual Life
              
              
              Weighted
                  Avg. Exercise Price
              
              
              Number
                  of Shares
              
              
              Weighted
                  Avg. Exercise Price$
              1.22
                to $1.22
              
              
              
              47,200
              
              
              
              5.10
              
              
              $
              1.22
              
              
              
              21,600
              
              
              $
              1.22$
              1.22
                to $1.30
              
              
              
              204,332
              
              
              
              4.96
              
              
              $
              1.30
              
              
              
              204,332
              
              
              $
              1.30$
              1.30
                to $1.82
              
              
              
              56,000
              
              
              
              5.04
              
              
              $
              1.53
              
              
              
              44,000
              
              
              $
              1.51$
              1.82
                to $2.70
              
              
              
              73,600
              
              
              
              4.54
              
              
              $
              2.33
              
              
              
              57,600
              
              
              $
              2.25$
              2.70
                to $7.04
              
              
              
              60,200
              
              
              
              1.35
              
              
              $
              5.47
              
              
              
              60,200
              
              
              $
              5.47$
              1.22
                to $7.04
              
              
              
              441,332
              
              
              
              4.42
              
              
              $
              2.06
              
              
              
              387,732
              
              
              $
              2.11
  The
      following
      table summarizes the non-vested restricted stock activity for the year ended
      December 31, 2007:





Non-vested
                restricted stock
            
            Shares
            
            
            Weighted
                Average Grant Date Fair ValueNon-vested
                January 1, 2007
            
            
            313,966
            
            
            $
            17.48Granted
            
            
            210,807
            
            
            $
            27.77Vested
            
            
            (135,321
            )
            
            $
            15.80Forfeited
            
            
            (53,662
            )
            
            $
            20.84Non-vested
                at December 31, 2007
            
            
            335,790
            
            
            $
            24.08





During
      2007, we granted 200,163 shares of restricted stock to certain employees and
      10,644 shares of restricted stock to outside directors with a weighted average
      grant date fair value of $27.77.  The stock vests over a three year
      period.





During
      2006, we granted 106,819 shares of restricted stock to certain employees with
      a
      weighted average grant date fair value of $21.58.  The stock vests
      over a three year period.





During
      2005, we granted 223,460 shares of restricted stock to certain employees and
      10,644 shares of restricted stock to outside directors with a weighted average
      grant date fair value of $16.68. The stock vests over a three to five year
      period.





The
      fair
      value of non-vested restricted stock is equal to the market price of our stock
      at the date of grant.





The
      total
      fair value of restricted shares vested during the years ended December 31,
      2007,
      2006 and 2005 was $3.9 million, $13.3 million and $9.2 million,
      respectively.





As
      of
      December 31, 2007, there was $6.0 million of unrecognized compensation cost
      related to non-vested share-based compensation that is expected to be recognized
      over a weighted average period of 1.37 years.





In
      May
      2006, the Board of Directors granted certain of our officers 593,542 performance
      units.  Due to attrition, there are currently 529,026 performance
      units outstanding.  The performance units entitle the recipients to
      receive restricted shares of our Class A Common Stock contingent upon the
      achievement of an operating income earnings target.  The aggregate
      operating income for the three year period ending December 31, 2008 must meet
      a
      specified target amount in order for these performance units to be earned and
      converted to restricted stock.  Should the employees earn restricted
      stock under this program, the restricted stock will be granted in early 2009
      and
      then vests in equal installments as of the first business day of January in
      each
      of 2010, 2011 and 2012 provided the officer remains an employee on each of
      the
      vesting dates.  The maximum amount that would be recorded as salary
      expense assuming the target is met is $12.3 million, which is calculated based
      on the stock price on the date the performance units were granted which was
      $23.25.  We did not record expense related to the performance units
      during 2007.


39


During
      January 2008, we granted 204,374 shares of restricted stock to certain employees
      and 10,644 shares of restricted stock to outside directors with a weighted
      average grant date fair value of $25.77. The stock vests in equal installments
      over a five year period beginning a year from the grant date except for the
      stock for the outside Board of Directors, which will vest over a three year
      period.







NOTE
      9.                      
Business Segment





We
      have
      no separately reportable segments.  Under the enterprise wide
      disclosure requirements, we report revenue (in thousands), for Intermodal,
      Brokerage and Logistics Services as follows:





Years
                Ended December 31,2007
            
            
            2006
            
            
            2005RevenueIntermodal
            
            $
            1,206,364
            
            
            $
            1,172,566
            
            
            $
            1,079,798Brokerage
            
            
            318,834
            
            
            
            306,332
            
            
            
            266,545Logistics
            
            
            132,970
            
            
            
            130,631
            
            
            
            135,535Total
                revenue from continuing operations
            
            $
            1,658,168
            
            
            $
            1,609,529
            
            
            $
            1,481,878





NOTE
      10.                      
Employee Benefit Plans





We
      had
      two profit-sharing plans and trusts in 2007 and 2006, and one in 2005 under
      section 401(k) of the Internal Revenue Code.  At our discretion, we
      partially match qualified contributions made by employees to the
      plan.  We expensed approximately $1.9 million, $1.7 million and $1.1
      million related to these plans in 2007, 2006 and 2005,
      respectively.





In
      January 2005, we established the Hub Group, Inc. Nonqualified Deferred
      Compensation Plan (the “Plan”) to provide added incentive for the retention of
      certain key employees.  Under the Plan, participants can elect to
      defer certain compensation.  Accounts will grow on a tax-deferred
      basis to the participant.  Restricted investments included in the
      consolidated balance sheet represent the fair value of the mutual funds and
      other security investments related to the Plan at December 31, 2007 and December
      31, 2006.  Both realized and unrealized gains and losses, which have
      not been material, are included in income and expense and offset the change
      in
      the deferred compensation liability.  We provide a 50% match on the
      first 6% of employee compensation deferred under the Plan, with a maximum match
      equivalent to 3% of base salary.  In addition, we have a legacy
      deferred compensation plan.  There are no new contributions being made
      into this legacy plan.  We expensed $1.3 million, $1.1 million and
      $0.6 million related to these plans in 2007, 2006 and 2005,
      respectively.   The liabilities related to these plans at
      December 31, 2007 and 2006 were $10.4 million and $8.3 million,
      respectively.





NOTE
      11.                      
Legal Matters





We
      are a
      party to litigation incident to our business, including claims for personal
      injury and/or property damage, freight lost or damaged in transit, improperly
      shipped or improperly billed.  Some of the lawsuits to which we are
      party to are covered by insurance and are being defended by our insurance
      carriers.  Some of the lawsuits are not covered by insurance and we
      are defending them ourselves.  Management does not believe that the
      outcome of this litigation will have a materially adverse effect on our
      financial position or results of operations.





NOTE
      12.                  
   Stock Buy Back Plans





During
      the fourth quarter of 2003, the Board of Directors authorized the purchase
      of up
      to 1,000,000 shares of our Class A Common Stock from time to
      time.  The timing of the program was determined by financial and
      market conditions.  During the fourth of quarter of 2003, we purchased
      80,800 shares for $0.3 million.  We purchased an additional 386,000
      shares for $2.8 million in 2004.   During the first quarter of
      2005, the Board of Directors terminated the prior buy back plan and authorized
      the purchase of up to $30.0 million worth of our Class A Common
      Stock.  During the second quarter of 2005, we completed the authorized
      purchase of $30.0 million worth of our Class A Common Stock.





On
      August
      22, 2005, our Board of Directors authorized the purchase of up to $45.0 million
      of our Class A Common Stock.  During the third quarter of 2006, we
      completed the authorized purchase of $45.0 million of Class A Common
      Stock.









40


On
      October 26, 2006, our Board of Directors authorized the purchase of up to $75.0
      million of our Class A Common Stock.  During the fourth quarter of
      2007, we completed the authorized purchase of $75.0 million of Class A Common
      Stock.  We intend to hold the repurchased shares in treasury for
      future use.





On
      November 14, 2007, our Board of Directors authorized the purchase of up to
      $75.0
      million of our Class A Common Stock.  The authorization expires June
      30, 2009 and we have not yet purchased any shares pursuant to this
      plan.  We may make purchases from time to time as market conditions
      warrant and any repurchased shares are expected to be held in treasury for
      future use.





The
      following table displays the number of shares purchased and available under
      the
      plans in 2007:





Total
                Number of Shares Purchased
            
            
            Average
                Price Paid Per Share
            
            
            Total
                Number of Shares Purchased as Part of Publicly Announced
                Plans
            
            
            Maximum
                Value of Shares that May Yet Be Purchased Under the Plans (in
                000’s)January
                1 to
              March
                31
            
            
            408,205
            
            
            $
            30.62
            
            
            
            408,205
            
            
            $
            62,500April
                1 to
              June
                30
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            62,500July
                1 to
              September
                30
            
            
            740,015
            
            
            $
            32.72
            
            
            
            740,015
            
            
            $
            38,285October
                1 to
              December
                31
            
            
            1,547,818
            
            
            $
            24.73
            
            
            
            1,547,818
            
            
            $
            75,000Total
            
            
            2,696,038
            
            
            $
            27.82
            
            
            
            2,696,038
            
            
            $
            75,000





This
      table excludes 45,662 shares ($1.3 million) purchased during the year by the
      Company related to employee withholding upon vesting of restricted
      stock.





NOTE
      13.                            
Stock Splits





The
      Board
      of Directors approved a two-for-one stock split which was paid on May 11,
      2005.  All shares and per-share amounts have been retroactively
      restated to give effect to the two-for-one stock split which was affected in
      the
      form of a 100% stock dividend.  In addition, all options have been
      retroactively restated for the stock split in accordance with the terms of
      the
      incentive plans.  Each of our Class A stockholders and Class B
      stockholders received one Class A share on each share of Class A Common Stock
      and each share of Class B Common Stock held by them on the record date in
      connection with the stock split.  In accordance with the terms of our
      Certificate of Incorporation, the number of votes held by each stockholder
      of
      Class B Common Stock was proportionately adjusted in connection with this stock
      dividend.





The
      Board
      of Directors approved a two-for-one stock split which was paid on June 6,
      2006.  All shares and per-share amounts have been retroactively
      restated to give effect to the two-for-one stock split which was affected in
      the
      form of a 100% stock dividend.  In addition, all options and
      performance units have been retroactively restated for the stock split in
      accordance with the terms of the incentive plans.  Each of our Class A
      stockholders and Class B stockholders received one Class A share on each share
      of Class A Common Stock and each share of Class B Common Stock held by them
      on
      the record date in connection with the stock split.  In accordance
      with the terms of our Certificate of Incorporation, the number of votes held
      by
      each stockholder of Class B Common Stock was adjusted in connection with this
      stock dividend such that each share of Class B Common Stock now entitles its
      holder to approximately 80 votes.  Each share of Class A Common Stock
      entitles its holder to one vote.





NOTE
      14.                            
Acquisition





At
      the
      close of business on February 28, 2006, we acquired certain assets of Comtrak,
      Inc. (“Comtrak”), a transportation company whose services include primarily rail
      and international drayage for the intermodal sector.  Comtrak was
      established in 1983 and is headquartered in Memphis,
      Tennessee.  Comtrak utilizes company drivers and third-party owner
      operators to serve its customers.  Comtrak had net sales of $87.1
      million, including sales to Hub of $8.6 million, for the year ended December
      31,
      2005.   The acquisition is consistent with our strategic plan to
      increase the amount of local trucking (or drayage) we
      perform.  Comtrak performs drayage for the international intermodal
      market and this transaction provided us with an immediate entry into this
      growing market.





41


We
      paid
      the $38.0 million purchase price plus a working capital adjustment of $1.2
      million, which was finalized during 2006, in accordance with the terms of the
      Asset Purchase Agreement, from available cash.  There is an earn-out
      mechanism for 2006 and 2007, which has been achieved for $10.0 million in total
      and is based on Comtrak’s 2006 and 2007 EBITDA as defined in the Asset Purchase
      Agreement.  The additional contingent consideration of $5.0 million
      for both 2006 and 2007 has been added to the purchase price and has been applied
      to goodwill.  The $5.0 million for 2006 has been paid.  The
      $5.0 million for 2007 is due to the seller, the current President of Comtrak,
      and is included in the related party payable in the accompanying consolidated
      balance sheet.  The results of operations of Comtrak are included in
      our consolidated statements of income for the period March 1, 2006 to December
      31, 2006 and the year ended December 31, 2007.





The
      Comtrak acquisition was accounted for as a purchase business combination in
      accordance with Statement of Financial Accounting Standards No. 141 “Business
      Combinations.”  Assets acquired and liabilities assumed were recorded
      in the accompanying consolidated balance sheet at their fair values as of March
      1, 2006.





Pro
      forma
      results including the acquisition at the beginning of the periods presented
      are
      not materially different than actual results.





The
      following table summarizes the allocation of the total purchase price to the
      assets acquired and liabilities assumed as of the date of the acquisition (in
      thousands):


March
                1, 2006Accounts
                receivableTrade,
                net
            
            $
            9,012Other
            
            
            428Prepaid
                expenses and other current assets
            
            
            294Property
                and equipment
            
            
            13,507Goodwill
            
            
            12,298Other
                intangible assets
            
            
            7,894Total
                assets acquired
            
            $
            43,433Accounts
                payableTrade
            
            $
            832Other
            
            
            1,166Accrued
                expensesPayroll
            
            
            944Other
            
            
            549Total
                liabilities assumed
            
            $
            3,491Net
                assets acquired
            
            $
            39,942Direct
                acquisition costs
            
            
            766Purchase
                price
            
            $
            39,176


The
      property
      and equipment’s useful lives range from 6 months to 11 years.  The
      above allocation is based on a valuation using management’s estimates and
      assumptions and the use of an independent appraisal.  We expect the
      amortization of all goodwill for tax purposes to be deductible over 15 years
      and
      for book purposes it has an indefinite life.





The
      components of the “Other intangible assets” listed in the above table as of the
      acquisition date are as follows (in thousands):


Amount
            
            
            Accumulated
              Amortization
            
            
            Balance
                at
              December
                31, 2007
            
            LifeRelationships
                with owner operators
            
            $
            647
            
            
            $
            (198
            )
            
            $
            449
            
            6
                yearsBacklog/open
                orders
            
            
            20
            
            
            
            (20
            )
            
            
            -
            
            1
                monthTrade
                name
            
            
            2,904
            
            
            
            -
            
            
            
            2,904
            
            IndefiniteCustomer
                relationships
            
            
            3,823
            
            
            
            (467
            )
            
            
            3,356
            
            15  yearsInformation
                technology
            
            
            500
            
            
            
            (153
            )
            
            
            347
            
            6
                yearsTotal
            
            $
            7,894
            
            
            $
            (838
            )
            
            $
            7,056




The
      above
      intangible assets will be amortized using the straight-line
      method.  Amortization expense for the year ended December 31, 2007 was
      $0.4 million.


42




Amortization
      expense for the next five years is as follows (in
      thousands):


2008
            
            $
            4452009
            
            
            4452010
            
            
            4452011
            
            
            4452012
            
            
            286








NOTE
      15.                            
Discontinued Operations





On
      May 1,
      2006, we entered into a definitive agreement to sell certain assets of HGDS
      to a
      third party.  As specified in the Asset Purchase Agreement, the buyer
      assumed $4.5 million of liabilities and we received a cash payment of $12.2
      million.  The current and comparative period results of HGDS have been
      reported as “discontinued operations” in our Consolidated Financial Statements.
      These discontinued operations generated diluted earnings per share of $0.02
      and
      $0.09 for the years ended December 31, 2006 and 2005, respectively.





The
      financial results of HGDS included in discontinued operations are as follows
      (in
      thousands):





2006
            
            
            2005Revenue
            
            $
            19,194
            
            
            $
            49,621Income
                from discontinued operationsbefore
                income taxes
            
            
            1,634
            
            
            
            6,315Income
                tax provision
            
            
            653
            
            
            
            2,545Income
                from discontinued operations
            
            $
            981
            
            
            $
            3,770








The
      total
      assets sold to and liabilities assumed by the purchaser of HGDS on May 1,
      2006:







May
              1, 2006AssetsAccounts
              receivable-trade, net
            
            $
            8,845Prepaid
              expenses and other current assets
            
            
            149Property
              and equipment, net
            
            
            670Goodwill,
              net
            
            
            7,026Other
              assets
            
            
            44Total
              assets of discontinued operations
            
            $
            16,734LiabilitiesAccounts
                payable-trade
            
            $
            3,619Accounts
                payable-other
            
            
            64Accrued
                expenses-payroll
            
            
            449Accrued
                expenses-other
            
            
            330Total liabilities
              of discontinued operations
            
            $
            4,462










43





NOTE
      16.                      
Selected Quarterly Financial Data (Unaudited)





The
      following table sets forth selected quarterly financial data for each of the
      quarters in 2007 and 2006 (in thousands, except per share amounts):





QuartersFirst
            
            
            Second
            
            
            Third
            
            
            FourthYear
                Ended
                December 31, 2007:Revenue
            
            $
            393,297
            
            
            $
            401,565
            
            
            $
            417,842
            
            
            $
            445,464Gross
                margin
            
            
            56,661
            
            
            
            57,763
            
            
            
            57,510
            
            
            
            60,390Income
                from continuing
                operations
            
            
            11,419
            
            
            
            13,775
            
            
            
            16,608
            
            
            
            17,997Net
                income
            
            $
            11,419
            
            
            $
            13,775
            
            
            $
            16,608
            
            
            $
            17,997Basic
                earnings per
                shareIncome
                from continuing operations
            
            $
            0.29
            
            
            $
            0.35
            
            
            $
            0.43
            
            
            $
            0.48Net
                Income
            
            $
            0.29
            
            
            $
            0.35
            
            
            $
            0.43
            
            
            $
            0.48Diluted
                earnings per
                shareIncome
                from continuing operations
            
            $
            0.29
            
            
            $
            0.35
            
            
            $
            0.42
            
            
            $
            0.47Net
                Income
            
            $
            0.29
            
            
            $
            0.35
            
            
            $
            0.42
            
            
            $
            0.47QuartersFirst
                (2)
            
            
            Second
            
            
            Third
            
            
            FourthYear
                Ended
                December 31, 2006:Revenue
            
            $
            356,764
            
            
            $
            395,296
            
            
            $
            432,009
            
            
            $
            425,460Gross
                margin
            
            
            47,373
            
            
            
            55,491
            
            
            
            57,336
            
            
            
            58,218Income
                from continuing
                operations
            
            
            8,473
            
            
            
            12,219
            
            
            
            13,494
            
            
            
            13,519Income
                from discontinued
                operations (1)
            
            
            657
            
            
            
            324
            
            
            
            -
            
            
            
            -Net
                income
            
            $
            9,130
            
            
            $
            12,543
            
            
            $
            13,494
            
            
            $
            13,519Basic
                earnings per
                shareIncome
                from continuing operations
            
            $
            0.21
            
            
            $
            0.30
            
            
            $
            0.34
            
            
            $
            0.35Income
                from discontinued operations
            
            
            0.02
            
            
            
            0.01
            
            
            
            -
            
            
            
            -Net
                Income
            
            $
            0.23
            
            
            $
            0.31
            
            
            $
            0.34
            
            
            $
            0.35Diluted
                earnings per
                shareIncome
                from continuing operations
            
            $
            0.21
            
            
            $
            0.29
            
            
            $
            0.33
            
            
            $
            0.34Income
                from discontinued operations
            
            
            0.01
            
            
            
            0.01
            
            
            
            -
            
            
            
            -Net
                Income
            
            $
            0.22
            
            
            $
            0.30
            
            
            $
            0.33
            
            
            $
            0.34(1)HGDS
                disposed of May 1, 2006
              (2)Comtrak
                was acquired February 28, 2006




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





None.





Item
                9A.
            CONTROLS
                AND PROCEDURES





MANAGEMENT’S
      REPORT ON DISCLOSURE CONTROLS AND PROCEDURES





As
      of
      December 31, 2007, an evaluation was carried out under the supervision and
      with
      the participation of our management, including our Chief Executive Officer
      and
      Chief Financial Officer, of the effectiveness of our disclosure controls and
      procedures as defined in Rule 13a-15(e) and Rule 15d-15(f) under the Securities
      Exchange Act of 1934.  Based upon this evaluation, the Chief Executive
      Officer and Chief Financial Officer concluded that these disclosure controls
      and
      procedures were effective.


44


No
      significant changes were made in our internal control over financial reporting
      during the fourth quarter of 2007 that has materially affected, or is reasonably
      likely to materially affect, our internal control over financial
      reporting.





Because
      of its inherent limitations, internal controls over financial reporting may
      not
      prevent or detect misstatements.  Also, projections of any evaluation
      of effectiveness to future periods are subject to the risk that controls may
      become inadequate because of changes in conditions, or that the degree of
      compliance with the policies or procedures may deteriorate.





MANAGEMENT’S
      ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Our
      management is responsible for establishing and maintaining adequate controls
      over financial reporting as defined in Rule 13a-15(f) of the Exchange
      Act.  Under the supervision and with the participation of our
      management, including our Chief Executive Officer and our Chief Financial
      Officer, we conducted an evaluation of the effectiveness of our internal control
      over financial reporting as of December 31, 2007.  Based on criteria
      established in Internal Control-Integrated Framework issued by the Committee
      of
      Sponsoring Orgnizations of the Treadway Commission (the COSO criteria),
      management believes our internal control over financial reporting was effective
      as of December 31, 2007.





Management
      believes, however, that a control system, no matter how well designed and
      operated, cannot provide absolute assurance that the objectives of the control
      system are met, and no evaluation controls can provide absolute assurance that
      all control issues and instances of fraud, if any, within the Company have
      been
      detected.





Ernst
      & Young LLP, an independent registered public accounting firm, who audited
      and reported on the consolidated financial statements, included in this report,
      has issued an attestation report on the Company’s internal control over
      financial reporting.























































45


REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL
      OVER


FINANCIAL
      REPORTING





The
      Board
      of Directors and Stockholders of Hub Group, Inc.:


We
      have
      audited Hub Group, Inc.’s internal control over financial reporting as of
      December 31, 2007, based on criteria established in Internal Control—Integrated
      Framework issued by the Committee of Sponsoring Organizations of the Treadway
      Commission (the COSO criteria). Hub Group Inc.’s management is responsible for
      maintaining effective internal control over financial reporting, and for its
      assessment of the effectiveness of internal control over financial reporting
      included in the accompanying Management’s Annual Report on Internal Control Over
      Financial Reporting.  Our responsibility is to express an opinion on
      the company’s internal control over financial reporting based on our
      audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether effective
      internal control over financial reporting was maintained in all material
      respects. Our audit included obtaining an understanding of internal control
      over
      financial reporting, assessing the risk that a material weakness exists, testing
      and evaluating the design and operating effectiveness of internal control based
      on the assessed risk, and performing such other procedures as we considered
      necessary in the circumstances. We believe that our audit provides a reasonable
      basis for our opinion.





A
      company’s internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. A company’s internal control over
      financial reporting includes those policies and procedures that (1) pertain
      to
      the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company; (2)
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the company are
      being made only in accordance with authorizations of management and directors
      of
      the company; and (3) provide reasonable assurance regarding prevention or timely
      detection of unauthorized acquisition, use, or disposition of the company’s
      assets that could have a material effect on the financial
      statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements.  Also, projections of any evaluation
      of effectiveness to future periods are subject to the risk that controls may
      become inadequate because of changes in conditions, or that the degree of
      compliance with the policies or procedures may deteriorate.





In
      our
      opinion, Hub Group, Inc. maintained, in all material respects, effective
      internal control over financial reporting as of December 31, 2007, based onthe COSO criteria.





We
      also
      have audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States), the consolidated balance sheets of Hub Group,
      Inc. as of December 31, 2007 and 2006, and the related consolidated statements
      of income, stockholders’ equity, and cash flows for each of the three years in
      the period ended December 31, 2007 of Hub Group, Inc., and our report dated
      February 19, 2008 expressed an unqualified opinion thereon.











Ernst
      & Young LLP








Chicago,
      Illinois


February
      19, 2008






















46


Item
        9B.                 
OTHER
        INFORMATION
 None.


PART
      III





Item
      10.                 
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE





The
      sections entitled “Election of Directors” and “Ownership of the Capital Stock of
      the Company” appearing in our proxy statement for our annual meeting of
      stockholders to be held on May 14, 2008, sets forth certain information with
      respect to our directors and Section 16 compliance and is incorporated herein
      by
      reference.  Certain information with respect to persons who are or may
      be deemed to be our executive officers is set forth under the caption “Executive
      Officers of the Registrant” in Part I of this report.





Our
      code
      of ethics can be found on our website at www.hubgroup.com.








Item
      11.                 
EXECUTIVE COMPENSATION





The
      section entitled “Compensation of Directors and Executive Officers” appearing in
      our proxy statement for our annual meeting of stockholders to be held on May
      14,
      2008, sets forth certain information with respect to the compensation of our
      management and is incorporated herein by reference.








Item
      12.                 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED


STOCKHOLDER
      MATTERS





The
      sections entitled “Ownership of the Capital Stock of the Company” appearing in
      our proxy statement for our annual meeting of stockholders to be held on May
      14,
      2008, sets forth certain information with respect to the ownership of our Common
      Stock and is incorporated herein by reference.





Equity
      Compensation Plan
      Information-





The
      following chart contains certain
      information regarding the Company’s Long-Term Incentive
      Plans:


Plan
                Category
            Number
                of securities
              to
                be issued
              upon
                exercise of
              outstanding
                options,
              warrants
                and rights
              (a)
                1
            Weighted-average
              exercise
                price of
              outstanding
                options,
              warrants
                and rights
            Number
                of securities
              remaining
                available for
              future
                issuance under
              equity
                compensation
              plans
                (excluding
              securities
                reflected in column (a)) 2Equity
                compensation
              plans
                approved by
              security
                holders
            441,332
            $2.06
            1,806,474Equity
                compensation
              plans
                not approved
              by
                security holders
            --
            --
            --Total
            441,332
            $2.06
            1,806,474





1
      This
      represents securities to be issued upon exercise of stock options.  We
      have no outstanding warrants or stock appreciation rights.  This does
      not include any securities to be issued if the 529,026 performance units granted
      in 2006 are earned.


2
      The
      number of securities reserved for future issuance under equity compensation
      plans has been reduced by 529,026 shares of restricted stock in connection
      with
      the performance units granted in 2006 that will be delivered upon successful
      achievement of certain performance goals.  To the extent that those
      shares of restricted stock are not delivered because the award is forfeited
      or
      cancelled, such shares shall not be deemed to have been delivered for purposes
      of determining the securities remaining available for future issuance and shall
      be available for future grant.


47







Item
      13.                 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE





The
      sections entitled “Certain Transactions” and “Meetings and Committees of the
      Board” appearing in our proxy statement for the annual meeting of our
      stockholders to be held on May 14, 2008, set forth certain information with
      respect to certain business relationships and transactions between us and our
      directors and officers and the independence of our directors and is incorporated
      herein by reference.





Item
      14.                 
PRINCIPAL ACCOUNTANT FEES AND SERVICES





The
      section entitled “Principal
      Accountant Fees and Services” appearing in our proxy statement for our annual
      meeting of stockholders to be held on May 14, 2008, sets forth certain
      information with respect to certain fees we have paid to our principal
      accountant for services and is incorporated herein by
      reference.





Item
      15.                 
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





(a)
      Financial Statements





The
      following consolidated financial statements of the Registrant are included
      under
      Item 8 of this Form 10-K:





Report
      of
      Independent Registered Public Accounting Firm





Consolidated
      Balance Sheets - December 31, 2007 and December 31, 2006





Consolidated
      Statements of Income - Years ended December 31, 2007, December 31, 2006 and
      December 31, 2005





Consolidated
      Statements of Stockholders’ Equity - Years ended December 31, 2007, December 31,
      2006 and December 31, 2005





Consolidated
      Statements of Cash Flows - Years ended December 31, 2007, December 31, 2006
      and
      December 31, 2005





Notes
      to
      Consolidated Financial Statements





(b)
      Financial Statement Schedules





The
      following financial statement schedules of Hub Group, Inc. are filed as part
      of
      this report and should be read in conjunction with the consolidated financial
      statements of Hub Group, Inc.:





Page


II.  Valuation
      and qualifying accounts and reserves
..........................................................................  S-1





All
      other
      schedules are omitted because they are not required, are not applicable, or
      the
      required information is shown in the consolidated financial statements or notes
      thereto.





(c)
      Exhibits





The
      exhibits included as part of this Form 10-K are set forth in the Exhibit Index
      immediately preceding such Exhibits and are incorporated herein by
      reference.













48


SIGNATURES





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.


HUB
                GROUP,
                INC.Date: 
                  February 21, 2008
              By:
              /s/ 
                David P. YeagerName:
                David P. YeagerTitle:  
                  Chief Executive Officer and
                Vice Chairman





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








Title
            Date/s/Phillip
                C.
                Yeager
              Phillip
                C. Yeager
            Chairman
                and Director
            February
                21, 2008/s/
                David P.
                Yeager
              David
                P. Yeager
            Vice
                Chairman, Chief Executive Officer and Director
            February
                21, 2008/s/
                Mark A. Yeager
              Mark
                A. Yeager
            President,
                Chief Operating Officer and Director
            February
                21, 2008/s/
                Terri A. Pizzuto
              Terri
                A. Pizzuto
            Executive
                Vice President, Chief Financial Officer and Treasurer (Principal
                Financial
                and Accounting Officer)
            February
                21, 2008/s/
                Charles R. Reaves
              Charles
                R. Reaves
            Director
            February
                21, 2008/s/
                Martin P. Slark
              Martin
                P. Slark
            Director
            February
                21, 2008/s/
                Gary D. Eppen
              Gary
                D. Eppen
            Director
            February
                21, 2008



























SCHEDULE
                IIHUB
                GROUP, INC.VALUATION
                AND QUALIFYING ACCOUNTSBalance
                at
            Charged
                to
            Charged
            
            Balance
                atBeginning
            Costs
                &
            To
                Other
            
            Endof
                Year
            Expenses
            Accounts
                (1)
            Deductions
                (2)
            of
                YearYear
                Ended December 31:Allowance
                for uncollectible trade accounts2007
            $    6,299,000
            $     (63,000)
            $       (780,000)
            $              
                    -
            $          5,456,0002006
            $    6,815,000
            $     138,000
            $         644,000
            $       (1,298,000)
            $          6,299,0002005
            $    6,869,000
            $     476,000
            $      1,135,000
            $       (1,665,000)
            $          6,815,000Deferred
                tax valuation allowanceBalance
                at
            Charged
                to
            Charged
            Transferred
                to
            Balance
                atBeginning
            Costs
                &
            To
                Other
            Other
            Endof
                Year
            Expenses
            Accounts
            Accounts
                (3)
            of
                Year2007
            $       248,000
            $     81,000
            $                   -
            $            (166,000)
            $           163,0002006
            $       489,000
            $  (241,000)
            $                   -
            $                       -
            $           248,0002005
            $       271,000
            $   218,000
            $                   -
            $                       -
            $           489,000





(1)
            Expected
                customer account adjustments charged to revenue and write-offs, net
                of
                recoveries


(2)
            Reserve
                adjustment(3)
            Establish
              FIN 48 liability
















































S-1


INDEX
      TO EXHIBITS





Number                                                               
      Exhibit





3.1
            Amended
                Certificate of Incorporation of the Registrant (incorporated by reference
                to Exhibit 3.1 to the Registrant’s quarterly report on Form 10-Q filed
                July 23, 2007, File No. 000-27754)





3.2
            By-Laws
                of the Registrant (incorporated by reference to Exhibit 3.2 to the
                Registrant’s registration statement on Form S-1, File No. 33-90210)





10.1
            Amended
                and Restated Limited Partnership Agreement of Hub City Canada, L.P.
                (incorporated by reference to Exhibit 10.2 to the Registrants report
                on
                Form 10-K dated March 26, 1997 and filed March 27, 1997, File No
                000-27754)





10.2
            Stockholders'
                Agreement (incorporated by reference to Exhibit 10.7 to the Registrant’s
                report on Form 10-K dated March 26, 1997 and filed March 27, 1997,
                File
                No. 000-27754)





10.3
            Letter
                from the Registrant to Thomas M. White dated June 4, 2002 (incorporated
                by
                reference to Exhibit 10.28 to the Registrant’s report on Form 10-K dated
                March 12, 2003 and filed on March 13, 2003, File No. 000-27754)





10.4
            Hub
                Group’s Nonqualified Deferred Compensation Plan Basic Plan Document as
                amended and restated as of January 1, 2008.





10.5
            Hub
                Group’s Nonqualified Deferred Compensation Plan Adoption Agreement as
                amended and restated as of January 1, 2008.





10.6
            Description
                of Executive Officer cash compensation for 2008





10.7
            Director
                compensation for 2008





10.8
            Hub
                Group’s 2002 Long Term Incentive Plan (as amended and restated effective
                May 7, 2007) (incorporated by reference from Appendix B to the
                Registrant’s definitive proxy statement on Schedule 14A dated and filed
                March 26, 2007)





10.9
            $40
                million Credit Agreement dated
                as of March 23, 2005 among the Registrant, Hub City Terminals, Inc.
                and
                Harris Trust and Savings Bank  (incorporated by reference to
                Exhibit 10.1 to the Registrant’s report on Form 8-K dated March 23, 2005
                and filed March 25, 2005, File No.
                000-27754)





10.10
            Lease
                Agreement dated as of May
                10, 2005, between Banc of America Leasing & Capital, LLC and Hub City
                Terminals, Inc., with form of Schedule thereto (incorporated by reference
                to Exhibit 10.1 to the Registrant’s report on Form 8-K dated May 10, 2005
                and filed May 16, 2005, File No.
                000-27754)





10.11
            Guaranty
                of Corporation, dated as
                of May 10, 2005, made by Registrant to, and for the benefit of, Banc
                of
                America Leasing & Capital, LLC (incorporated by reference to Exhibit
                10.2 to the Registrant’s report on Form 8-K dated May 10, 2005 and filed
                May 16, 2005, File No.
                000-27754)





10.12
            Asset
                Purchase Agreement, dated
                January 19, 2006, by and among Hub Group, Inc., Comtrak, Inc. and
                Michael
                J. Bruns (incorporated by reference to Exhibit 10.1 to the Registrant’s
                report on Form 8-K dated January 19, 2006 and filed January 25, 2006,
                File
                No. 000-27754)





10.13
            Amendment
                to the $40 million
                Credit Agreement among the Registrant, Hub City Terminals, Inc. and
                Harris
                Trust and Savings Bank dated February 21, 2006.  (incorporated
                by reference to Exhibit 10.16 to the Registrant’s report on Form 10-K for
                the year ended December 31, 2005 and filed February 27, 2006, File
                No.
                000-27754)





10.14
            Form
                of Hub Group, Inc. 2006
                Performance Unit Award Statement (incorporated by reference to Exhibit
                10.1 to the Registrant’s report on Form 8-K dated May 22, 2006 and filed
                May 26, 2006, File No.
                000-27754)





10.15
            Form
                of Terms of Restricted Stock
                Award under Hub Group, Inc. 2002 Long-Term Incentive Plan (incorporated
                by
                reference to Exhibit 10.2 to the Registrant’s report on Form 8-K dated May
                22, 2006 and filed May 26, 2006, File No.
                000-27754)





10.16
            Equipment
                Purchase Contract, dated as of March 8, 2007, by and between Hub
                City
                Terminals, Inc., Singamas
                Management Services, Ltd. and Singamas North America, Inc.
                (incorporated by reference to Exhibit 10.1 to the Registrant’s report on
                Form 8-K filed March 12, 2007, File No. 000-27754)





10.17
            Asset
                Purchase Agreement, dated
                June 6, 2007, by and among Hub Group, Inc., Comtrak Logistics, Inc.,
                Hub
                City Terminals, Inc.,  Interdom Partners, Commercial Cartage, Inc.,
                Pride Logistics, L.L.C. and the other parties signatory thereto
                (incorporated by reference to Exhibit 10.1 to the Registrant’s report on
                Form 8-K filed June 8, 2007, File No. 000-27754)





10.18
            Termination
                letter, dated July 9,
                2007, by and among Comtrak Logistics, Inc., Hub City Terminals, Inc.,
                Interdom Partners, Commercial Cartage, Inc. and Pride Logistics,
                L.L.C.
                (incorporated by
                reference to Exhibit 10.1to the Registrant’s report on
                Form
                8-K filed July 10, 2007, File No.
                000-27754)





14
            Hub
                Group’s Code of Business Conduct and Ethics (incorporated by reference
                from Exhibit 99.2 to the Registrant’s report on Form 10-K dated March 12,
                2003 and filed on March 13, 2003, File No. 000-27754)





21
            Subsidiaries
                of the Registrant




23.1
              Consent
                  of Ernst & Young LLP
  31.1
                Certification
                    of David P. Yeager, Vice Chairman and Chief Executive Officer,
                    Pursuant to
                    Rule 13a-14(a) promulgated under the Securities Exchange Act
                    of 19
  31.2
                Certification
                        of Terri A. Pizzuto, Executive Vice President, Chief Financial
                        Officer and
                        Treasurer, Pursuant to Rule 13a-14(a) promulgated under the
                        Securities
                        Exchange Act of 1934


32.1
            Certification
                  of David P. Yeager and Terri A. Pizzuto, Chief Executive Officer
                  and Chief
                  Financial Officer respectively, Pursuant to 18 U.S.C. Section
                  1350









































EXHIBIT
      10.6








Hub
      Group, Inc.


Description
      of Executive Officer Cash Compensation


For
      2008





Annual
      Cash
      Compensation





Base
      Salary


Set
      forth
      below are the base salaries of the Chief Executive Officer and each of the
      four
      most highly compensated executive officers in 2007 effective January 1,
      2008.  The Company considers various factors in assigning executive
      officers to specific salary ranges, including job content, level of
      responsibility, accountability, and the competitive compensation
      market.  On an annual basis, all executive officers’ salaries are
      reviewed and adjusted to reflect individual performance and position within
      their respective ranges.





Bonus
      Plan


Executive
      officers are eligible for annual performance-based awards under the Company’s
      bonus plan, as are all salaried employees.  For 2007, goals were
      weighted upon achievement of targeted levels of earnings per share and, for
      some
      executives, upon achievement of personal goals.  The goals for 2008
      will also be weighted.





Restricted
      Stock


The
      Company makes periodic grants of restricted stock to executive
      officers.  The grants of restricted stock made in early 2008 vest in
      equal installments over a five year period from the grant
      date.








David
      P. Yeager


Vice
      Chairman and Chief Executive Officer





Base


2008                      
      $574,867





Mark
      A. Yeager


President
      and Chief Operating Officer





Base


2008
            $399,489





Terri
      A. Pizzuto


Executive
      Vice President, Chief Financial Officer and Treasurer




Base


2008                      
      $300,000





David
      Marsh


Chief
      Marketing Officer





Base


2008            
      $300,000





Donald
      G. Maltby


Executive
      Vice President-Logistics





Base


2008                      
      $273,182


EXHIBIT
      10.7





Hub
      Group, Inc.


Directors’
      Compensation For 2008








Directors’
      Compensation





Each
      non-employee director receives an annual retainer fee of $60,000 in 2008, paid
      in quarterly installments.  In addition, expenses are paid for
      attendance at each Committee meeting. Directors who are also officers or
      employees of the Company receive no compensation for duties performed as a
      director.





Stock
      Plan





The
      Company
      makes periodic grants of restricted stock to the directors.  In
      connection with their 2008 compensation package, each independent director
      received 3,548 shares of restricted stock in January 2008.  These
      shares vest over three years.














EXHIBIT
      21








Subsidiaries
      of Hub Group, Inc.





SUBSIDIARIES
            JURISDICTION
                OF INCORPORATION/ORGANIZATIONHub
                City Terminals, Inc.
            DelawareHub
                Group Atlanta, LLC
            DelawareHub
                Group Canada, L.P.
            DelawareHub
                City Texas, L.P.
            DelawareHub
                Group Associates, Inc.
            IllinoisHub
                Group Distribution Services, LLC
            IllinoisQuality
                Services L.L.C.
            MissouriHub
                Chicago Holdings, Inc.
            DelawareHub
                Group Transport, LLC
            DelawareHub
                Freight Services, Inc.
            DelawareComtrak
                Logistics, Inc.
            Delaware














EXHIBIT
      23.1





Consent
      of Independent Registered Public Accounting Firm





We
      consent to the incorporation by reference in the Registration Statements (Forms
      S-8 Nos. 333-146951, 333-115576 and 333-103845) pertaining to the Hub Group,
      Inc. 2002 Long Term Incentive Plan, Form S-8 No. 333-107745 pertaining to the
      Hub Group Employee Profit Sharing Plan and Trust, Form S-8 No. 333-33006
      pertaining to the Hub Group, Inc. 1999 Long-Term Incentive Plan and Form S-8
      No.
      333-06327 pertaining to the Hub Group, Inc. 1996 Long-Term Incentive Plan of
      our
      reports dated February 19, 2008, with respect to the consolidated financial
      statements and schedule of Hub Group, Inc., and the effectiveness of internal
      control over financial reporting of Hub Group, Inc., included in this Annual
      Report (Form 10-K) for the year ended December 31, 2007.





/s/
      Ernst & Young
      LLP





Chicago,
      Illinois


February
      19, 2008