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, 2008


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 definitions of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.  (Check one):


Large Accelerated
FilerXAccelerated
FilerNon-Accelerated
FilerSmaller
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, 2008, based upon the last reported sale price on that date on the
NASDAQ Global Select Market of $34.13 per share, was
$1,196,507,390.





On
February 11, 2009, the Registrant had 37,161,597 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 6, 2009 (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 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 all years
presented 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, 2008, we also have exclusive access to approximately 1,450
rail-owned containers for our dedicated use on the Burlington Northern Santa Fe
(“BNSF”) and the Norfolk Southern (“NS”) rail networks and approximately 6,210
rail-owned containers for our dedicated use on the Union Pacific (“UP”) and the
NS rail networks.  In addition to these containers, since 2005 we
added a total of 8,400 new 53’ containers for use on the BNSF and
NS.  We financed these containers with operating
leases.  These arrangements are included in Note 8 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, 2008, QS and Comtrak owned 293 tractors, leased 21 tractors, leased
or owned 603 trailers, employed 321 drivers and contracted with 914
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.





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.








2


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





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.





In a
typical intermodal transaction, the customer contacts one of our intermodal
operating centers 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 operating center for the delivery market.





We
provide truck brokerage services to our customers in a similar manner. In a
typical truck brokerage transaction, the customer contacts one of our highway
operating centers to obtain a price quote for a particular freight movement. The
customer then provides appropriate shipping information to the operating center.
The 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 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, that operating center then may attempt to secure additional
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 one customer representing more than 5% of
our total revenue in 2008.  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.





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.











3


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., Express System
Intermodal Inc., Hanjin Shipping, Hyundai Merchant Marine, K-Line America,
Maersk Sea-Land, Mitsui O.S.K. Lines (America) Inc. and Pacer
International.





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.





We use our network to access
containers and trailers owned by leasing companies, railroads and steamship
lines.  As of December 31, 2008, we also have exclusive access to
approximately 1,450 rail-owned containers for our dedicated use on the BNSF and
the NS rail networks and approximately 6,210 rail-owned containers for our
dedicated use on the UP and the NS rail networks.  In addition to
these containers, since 2005 we added a total of 8,400 new 53’ containers for
use on the BNSF and NS.  We financed these containers with operating
leases.  These arrangements are included in Note 8 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.


4


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
$50.0 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.





General





Employees:As of
December 31, 2008, we had 1,420 employees or 1,099 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, 2008, 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.









5


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.




We
derived 71% of our revenue from our intermodal services in 2008 as compared to
73% in both 2007 and 2006. 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 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.




We
derived 20% of our revenue from our truck brokerage services in 2008 as compared
to 19% in both 2007 and 2006.  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 the independent contractor classification of a significant
number of independent contractors doing business with us.  The costs
associated with potential reclassifications could have a material adverse effect
on results of operations and our financial position.


6


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 summer of 2008, an owner-operator work
stoppage in Northern California caused us to incur an additional $1.0 million in
transportation costs.  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. Recently a new 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.




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 represented 87% of our consolidated revenue in 2008, and 86% in both 2007
and 2006. 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 possible that 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.








7


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.





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.




Our
largest 20 customers accounted for approximately 34%, 35% and 37% of our revenue
in 2008, 2007 and 2006, respectively.  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.





Our
growth could be adversely affected if we are not able to identify, successfully
acquire and integrate future acquisition prospects.





We believe that future acquisitions
and/or the failure to make such acquisitions 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.







8


The
recent economic downturn could materially adversely affect our
business.





Our
operations and performance depend significantly on economic conditions.
Uncertainty about current global economic conditions poses a risk as consumers
and businesses may postpone spending in response to tighter credit, negative
financial news and/or declines in income or asset values, which could have a
material negative effect on demand for transportation services. We are unable to
predict the likely duration and severity of the current disruptions in the
financial markets and the adverse global economic conditions, and if the current
uncertainty continues or economic conditions further deteriorate, our business
and results of operations could be materially and adversely
affected.  Other factors that could influence demand include
continuing fluctuations in fuel costs, labor costs, consumer confidence, and
other macroeconomic factors affecting consumer spending
behavior.  There could be a number of follow-on effects from the
credit crisis on our business, including the insolvency of key transportation
providers and the inability of our customers to obtain credit to finance
development and/or manufacture products resulting in a decreased demand for
transportation services.  Our revenues and gross margins are dependent
upon this demand, and if demand for transportation services declines, our
revenues and gross margins could be adversely affected.





Although
we believe we have adequate liquidity and capital resources to fund our
operations internally, in light of current market conditions, our inability to
access the capital markets on favorable terms, or at all, may adversely affect
our ability to engage in strategic transactions. The inability to obtain
adequate financing from debt or capital sources could force us to self-fund
strategic initiatives or even forgo certain opportunities, which in turn could
potentially harm our performance.





Uncertainty
about current global economic conditions could also continue to increase the
volatility of our stock price.





We
are exposed to credit risk and fluctuations in the market values of our
investment portfolio.





Although
we have not recognized any material losses on our cash and cash equivalents,
future declines in their market values could have a material adverse effect on
our financial condition and operating results.  The value or liquidity
of our cash and cash equivalents could decline and result in a material
impairment, which could have a material adverse effect on our financial
condition and operating results.








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 2008.





















9





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, 2009 with respect to each person who
is an executive officer of the Company.





Name
            Age
            PositionDavid
      P. Yeager
            55
            Chairman
      of the Board of Directors and Chief Executive OfficerMark
      A. Yeager
            44
            Vice
      Chairman of the Board of Directors, President and Chief Operating
      OfficerChristopher
      R. Kravas
            43
            Chief
      Intermodal OfficerDavid
      L. Marsh
            41
            Chief
      Marketing OfficerTerri
      A. Pizzuto
            50
            Executive
      Vice President, Chief Financial Officer and TreasurerJames
      B. Gaw
            58
            Executive
      Vice President-SalesDwight
      C. Nixon
            46
            Executive
      Vice President-HighwayDonald
      G. Maltby
            54
            Executive
      Vice President-LogisticsDennis
      R. Polsen
            55
            Executive
      Vice President-Information ServicesDavid
      C. Zeilstra
            39
            Vice
      President, Secretary and General
Counsel





David P.
Yeager has served as our Chairman of the Board since November 2008 and as Chief
Executive Officer since March 1995.  From March 1995 through November
2008, Mr. Yeager served as Vice Chairman of the Board.   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
brother of Mark A. Yeager.





Mark A.
Yeager has served as Vice Chairman of the Board since November
2008.  He 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 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 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, a less than truckload
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.





10


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.





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 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.




















































11








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 2008 and 2007.





2008
                  
                  
                  2007High
                  
                  
                  Low
                  
                  
                  High
                  
                  
                  LowFirst
      Quarter
                  
                  $
                  35.17
                  
                  
                  $
                  22.77
                  
                  
                  $
                  33.52
                  
                  
                  $
                  28.56Second
      Quarter
                  
                  $
                  36.32
                  
                  
                  $
                  30.90
                  
                  
                  $
                  37.83
                  
                  
                  $
                  28.98Third
      Quarter
                  
                  $
                  41.75
                  
                  
                  $
                  31.31
                  
                  
                  $
                  38.96
                  
                  
                  $
                  29.94Fourth
      Quarter
                  
                  $
                  36.50
                  
                  
                  $
                  21.82
                  
                  
                  $
                  33.39
                  
                  
                  $
                  23.69








On February 11, 2009, there were
approximately 295 stockholders of record of the Class A Common Stock and, in
addition, there were an estimated 4,738 beneficial owners of the Class A Common
Stock whose shares were held by brokers and other fiduciary
institutions.  On February 11, 2009, there were 13 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 13 of the Company’s Notes to
Consolidated Financial Statements is incorporated herein by
reference.



















12


Performance
Graph





The
following line graph compares the Company’s cumulative total stockholder return
on its Class A Common Stock since December 31, 2003 with the cumulative total
return of the Nasdaq Stock Market Index and the Nasdaq Trucking and
Transportation Index. These comparisons assume the investment of $100 on
December 31, 2003 in each index and in the Company’s Class A Common Stock and
the reinvestment of dividends.































13





Item
6.                 SELECTED
FINANCIAL DATA





Selected
      Financial Data(in
      thousands except per share data)Years
      Ended December 31,2008
                                                                                              
                                                                                              
                                                                                              
                                                                                              2007
                                                                                              
                                                                                              
                                                                                              2006
      (2)
                                                                                              
                                                                                              
                                                                                              
                                                                                              2005
                                                                                              
                                                                                              
                                                                                              
                                                                                              2004Statement
      of Income Data:Revenue
                                                                                              
                                                                                              $
                                                                                              1,860,608
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1,658,168
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1,609,529
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1,481,878
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1,380,722Gross
      margin
                                                                                              
                                                                                              
                                                                                              234,311
                                                                                              
                                                                                              
                                                                                              
                                                                                              232,324
                                                                                              
                                                                                              
                                                                                              
                                                                                              218,418
                                                                                              
                                                                                              
                                                                                              
                                                                                              174,742
                                                                                              
                                                                                              
                                                                                              
                                                                                              167,062Operating
      income
                                                                                              
                                                                                              
                                                                                              95,462
                                                                                              
                                                                                              
                                                                                              
                                                                                              90,740
                                                                                              
                                                                                              
                                                                                              
                                                                                              77,236
                                                                                              
                                                                                              
                                                                                              
                                                                                              47,904
                                                                                              
                                                                                              
                                                                                              
                                                                                              38,104Income
      from continuing operations before taxes
                                                                                              
                                                                                              
                                                                                              96,326
                                                                                              
                                                                                              
                                                                                              
                                                                                              93,228
                                                                                              
                                                                                              
                                                                                              
                                                                                              79,508
                                                                                              
                                                                                              
                                                                                              
                                                                                              48,871
                                                                                              
                                                                                              
                                                                                              
                                                                                              27,551Income
      from continuing operations after taxes
                                                                                              
                                                                                              
                                                                                              59,245
                                                                                              
                                                                                              
                                                                                              
                                                                                              59,799
                                                                                              
                                                                                              
                                                                                              
                                                                                              47,705
                                                                                              
                                                                                              
                                                                                              
                                                                                              29,176
                                                                                              
                                                                                              
                                                                                              
                                                                                              15,870Income
      from discontinued operations, net of tax (1)
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              981
                                                                                              
                                                                                              
                                                                                              
                                                                                              3,770
                                                                                              
                                                                                              
                                                                                              
                                                                                              1,409Net
      income
                                                                                              
                                                                                              $
                                                                                              59,245
                                                                                              
                                                                                              
                                                                                              $
                                                                                              59,799
                                                                                              
                                                                                              
                                                                                              $
                                                                                              48,686
                                                                                              
                                                                                              
                                                                                              $
                                                                                              32,946
                                                                                              
                                                                                              
                                                                                              $
                                                                                              17,279Basic
      earnings per common shareIncome
      from continuing operations
                                                                                              
                                                                                              $
                                                                                              1.59
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1.55
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1.19
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.73
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.45Income
      from discontinued operations
                                                                                              
                                                                                              $
                                                                                              -
                                                                                              
                                                                                              
                                                                                              $
                                                                                              -
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.03
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.10
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.04Diluted
      earnings per common shareIncome
      from continuing operations
                                                                                              
                                                                                              $
                                                                                              1.58
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1.53
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1.17
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.71
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.42Income
      from discontinued operations
                                                                                              
                                                                                              $
                                                                                              -
                                                                                              
                                                                                              
                                                                                              $
                                                                                              -
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.02
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.09
                                                                                              
                                                                                              
                                                                                              $
                                                                                              0.04As
      of December 31,2008
                                                                                              
                                                                                              
                                                                                              
                                                                                              2007
                                                                                              
                                                                                              
                                                                                              2006
      (2)
                                                                                              
                                                                                              
                                                                                              
                                                                                              2005
                                                                                              
                                                                                              
                                                                                              
                                                                                              2004Balance
      Sheet Data:Total
      assets
                                                                                              
                                                                                              $
                                                                                              531,676
                                                                                              
                                                                                              
                                                                                              $
                                                                                              491,967
                                                                                              
                                                                                              
                                                                                              $
                                                                                              484,548
                                                                                              
                                                                                              
                                                                                              $
                                                                                              444,418
                                                                                              
                                                                                              
                                                                                              $
                                                                                              410,845Long-term
      debt, excluding current portion
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -Stockholders'
      equity
                                                                                              
                                                                                              
                                                                                              315,184
                                                                                              
                                                                                              
                                                                                              
                                                                                              250,899
                                                                                              
                                                                                              
                                                                                              
                                                                                              258,844
                                                                                              
                                                                                              
                                                                                              
                                                                                              242,075
                                                                                              
                                                                                              
                                                                                              
                                                                                              226,936





(1)
            HGDS
      disposed of May 1, 2006


(2)
            Comtrak
      was acquired February 28, 2006
















































































14





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;


·
            significant
      deterioration in our customers’ financial condition, particularly in the
      retail and durable goods sectors;


·
            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;


·
            changes
      to current laws which will aid union organizing efforts;
    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.





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.


15





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, 2008, QS and Comtrak owned 293 tractors, leased 21 tractors, leased
or owned 603 trailers, employed 321 drivers and contracted with 914
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 operating 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 49% of our revenue.





We use
various performance indicators to manage our business.  We closely
monitor margin and gains and losses for our top 50 customers and loads that are
not beneficial to our network.  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, 2008, Compared to Year Ended December 31, 2007





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





Twelve
      Months EndedDecember
      31,%2008
                  
                  
                  2007
                  
                  
                  ChangeRevenueIntermodal
                  
                  $
                  1,329,382
                  
                  
                  $
                  1,206,364
                  
                  
                  
                  10.2
                  %Brokerage
                  
                  
                  372,337
                  
                  
                  
                  322,465
                  
                  
                  
                  15.5
                  %Logistics
                  
                  
                  158,889
                  
                  
                  
                  129,339
                  
                  
                  
                  22.8
                  %Total
      revenue
                  
                  $
                  1,860,608
                  
                  
                  $
                  1,658,168
                  
                  
                  
                  12.2
                  %




























16





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





Twelve
      Months EndedDecember
      31,2008
                        
                        
                        2007Revenue
                        
                        
                        100.0
                        %
                        
                        
                        100.0
                        %Transportation
      costs
                        
                        
                        87.4
                        
                        
                        
                        86.0Gross
      margin
                        
                        
                        12.6
                        
                        
                        
                        14.0Costs
      and expenses:Salaries
      and benefits
                        
                        
                        5.0
                        
                        
                        
                        5.8General
      and administration
                        
                        
                        2.3
                        
                        
                        
                        2.5Depreciation
      and amortization
                        
                        
                        0.2
                        
                        
                        
                        0.2Total
      costs and expenses
                        
                        
                        7.5
                        
                        
                        
                        8.5Operating
      income
                        
                        
                        5.1
                        
                        
                        
                        5.5Other
      income (expense):Interest
      and dividend income
                        
                        
                        0.1
                        
                        
                        
                        0.1Total
      other income
                        
                        
                        0.1
                        
                        
                        
                        0.1Income
      before provision for income taxes
                        
                        
                        5.2
                        
                        
                        
                        5.6Provision
      for income taxes
                        
                        
                        2.0
                        
                        
                        
                        2.0Net
      income
                        
                        
                        3.2
                        %
                        
                        
                        3.6
                        %





Revenue





Revenue increased 12.2% to $1,860.6
million in 2008 from $1,658.2 million in 2007.  Intermodal revenue
increased 10.2% to $1,329.4 million from $1,206.4 million due primarily to a
2.1%  increase in volume and a combined increase related to pricing, mix
and fuel surcharges.  Truck brokerage revenue increased 15.5% to
$372.3 million from $322.5 million due to volume increases, changes in mix and
an increase in fuel surcharges.  Logistics revenue increased 22.8% to
$158.9 million from $129.3 million due to increases in business from both new
and existing customers in 2008.





Gross
Margin





Gross margin increased 0.9% to $234.3
million in 2008 from $232.3 million in 2007.  Gross margin as a
percentage of revenue decreased to 12.6% in 2008 from 14.0% in
2007.  The decrease in gross margin as a percentage of revenue is due
to a one time $2.0 million profitable vendor deal in 2007, the owner operator
work stoppage in northern California that cost us an extra $1.0 million in 2008
and competitive pricing.





Salaries
and Benefits





Salaries and benefits decreased to
$93.7 million in 2008 from $95.7 million in 2007.  The decrease in
2008 is due to a decrease in bonuses of $3.7 million due to not earning as much
EPS based bonus as we did in 2007, partially offset by an increase in salaries
of $1.4 million.  As a percentage of revenue, salaries and benefits
decreased to 5.0% in 2008 from 5.8% in 2007.  Headcount as of December
31, 2008 and 2007 was 1,099 and 1,081, respectively, which excludes drivers, as
driver costs are included in transportation costs.





General
and Administrative





General and administrative expenses
decreased to $41.2 million from $41.4 million in 2007.  The decrease
was primarily due to a $0.9 million reduction in general insurance expense
related to conversions in 2008 of QS locations to Comtrak and a $0.6 million
reduction in outside services related to reduced consultant
spending.  These were partially offset by a $0.6 million increase in
rent, an increase of $0.5 million related to bad debts due to bankruptcies, and
a $0.3 million increase in repairs and maintenance related to maintenance for
information technology hardware.  As a percentage of revenue, general
and administrative expenses decreased to 2.3% in 2008 from 2.5% in
2007.





17


Depreciation
and Amortization





Depreciation and amortization decreased
11.9% to $4.0 million in 2008 from $4.5 million in 2007.  This expense
as a percentage of revenue remained consistent at 0.2% of
revenue.  The decrease in depreciation and amortization is due to
lower software depreciation due to certain assets being fully
depreciated.





Other
Income (Expense)





Interest expense remained consistent at
$0.1 million in 2008 and 2007.  Interest and dividend income decreased
to $1.2 million in 2008 from $2.5 million in 2007.  The decrease in
interest and dividend income is the result of lower interest rates in 2008
partially due to investing our cash in money market funds comprised of U.S.
Treasury Securities and repurchase agreements for these securities rather than
commercial paper.





Provision
for Income Taxes





The
provision for income taxes increased to $37.1 million in 2008 compared to $33.4
million in 2007.  We provided for income taxes using an effective rate
of 38.5% in 2008 compared to 35.9% in 2007.  The 2007 effective rate
was lower primarily due to two events.  In the fourth quarter of 2007
we resolved a dispute with the IRS which reduced our 2007 income tax provision
by $1.3 million.  Also, tax legislation enacted by the State of
Illinois in the third quarter of 2007 created a benefit of approximately $1.2
million from the reduction of non-current deferred tax
liabilities.  The tax legislation modified how we apportion taxable
income to Illinois.





Net
Income





Net income decreased to $59.2 million
in 2008 from $59.8 million in 2007 due to higher income taxes and lower interest
and dividend income, only partially offset by higher gross margin, lower
salaries and benefits, lower depreciation and amortization expense and lower
general and administrative expense.





Earnings
Per Common Share





Basic earnings per share was $1.59 in
2008 and $1.55 in 2007.  Basic earnings per share increased primarily
due to the decrease in the basic weighted average number of shares outstanding
because of our purchase of treasury shares in 2007.





Diluted earnings per share increased to
$1.58 in 2008 from $1.53 in 2007.  Diluted earnings per share
increased primarily due to the decrease in the diluted weighted average number
of shares outstanding because of our purchase of treasury shares in
2007.








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
                    
                    
                    322,465
                    
                    
                    
                    306,332
                    
                    
                    
                    5.3
                    %Logistics
                    
                    
                    129,339
                    
                    
                    
                    130,631
                    
                    
                    
                    (1.0
                    %)Total
      revenue from continuing operations
                    
                    $
                    1,658,168
                    
                    
                    $
                    1,609,529
                    
                    
                    
                    3.0
                    %


















18








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
      and dividend income
                      
                      
                      0.1
                      
                      
                      
                      0.1Total
      other income
                      
                      
                      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 5.3% to $322.5 million from $306.3 million due primarily to price
increases, mix and fuel surcharges.  Logistics revenue decreased 1.0%
to $129.3 million from $130.6 million due to changes in business
mix.  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 as a
percentage of revenue 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 and a one time $2.0 million
profitable vendor deal in 2007.





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 bonuses.  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.









19


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 of $0.3 million in equipment lease expense, $0.2 million in
bad debt expense, $0.1 million in rental expense, and $0.1 million in telephone
expense.  Rental expense decreased because we relocated to less
expensive space and telephone expense decreased because we purchased a new phone
system resulting in lower costs.  Equipment lease expense decreased
because several leases expired.  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 2007 effective rate was lower
primarily due to two events.  In the fourth quarter of 2007 we
resolved a dispute with the IRS which reduced our 2007 income tax provision by
$1.3 million.  Also, tax legislation enacted by the State of Illinois
in the third quarter of 2007 created a benefit of approximately $1.2 million
from the reduction of non-current deferred tax liabilities.  The tax
legislation modified how we apportion taxable income to Illinois.





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.





LIQUIDITY
AND CAPITAL RESOURCES





In 2008, we funded our operations,
capital expenditures and stock buy backs through cash flows from operations.





Cash provided by operating activities
for the year ended December 31, 2008 was approximately $61.5 million, which
resulted primarily from income from continuing operations of $59.2 million,
adjusted for non-cash charges of $21.0 million, and a decrease in net operating
assets and liabilities of $18.7 million.





20


Net cash used in investing activities
for the year ended December 31, 2008 was $14.4 million and related primarily to
capital expenditures of $10.7 million and an earn-out payment relating to the
acquisition of Comtrak of $5.0 million partially offset by proceeds from the
sale of equipment of $1.3 million.  We expect capital expenditures to
be between $7.0 million and $8.0 million in 2009.





The net cash provided by financing
activities for the year ended December 31, 2008 was $0.7 million.  We
generated $0.4 million of cash from stock options exercised and used $2.6
million of cash to purchase treasury stock.  We also reported $2.9
million of excess tax benefits from share-based compensation as a financing cash
in-flow.





We invest our cash overnight in a
money market fund comprised of U.S. Treasury Securities and repurchase
agreements for these securities.  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.





Our revolving credit agreement
provides for unsecured borrowing up to $50.0 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%.  Our unused and
available borrowings under our bank revolving line of credit at December 31,
2008 and December 31, 2007 were $47.1 million and $47.2 million,
respectively.  We were in compliance with our debt covenants at
December 31, 2008.





We have standby letters of credit
that expire from 2009 to 2012.  As of December 31, 2008, our letters
of credit were $2.9 million.





We have authorization to spend $73.6
million to purchase common stock through June of 2009.





CONTRACTUAL
OBLIGATIONS





Our contractual cash obligations as
of December 31, 2008 are minimum rental commitments.  We have seven
years remaining on 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, 2008.  The annual lease payments escalate by
less than 1% per year.   Minimum annual rental commitments, at
December 31, 2008, under non-cancelable operating leases, principally for real
estate, containers and equipment are payable as follows (in
thousands):





2009
                  
                  $
                  21,0422010
                  
                  
                  18,3532011
                  
                  
                  16,6962012
                  
                  
                  13,9372013
                  
                  
                  5,1202014
      and thereafter
                  
                  
                  1,839$
                  76,987





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):





2009
                
                $
                7152010
                
                
                1,5942011
                
                
                4272012
                
                
                5652013
                
                
                4782014
      and thereafter
                
                
                5,039$
                8,818





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.





21


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 based on current economic conditions.  To be more specific,
we reserve a portion of every account balance that has aged over one year, a
portion of receivables for customers in bankruptcy and certain account balances
specifically identified as uncollectible.  On an annual basis, we
perform a hindsight analysis to determine our experience in collecting account
balances over one year old and account balances in
bankruptcy.   We then use this hindsight analysis to establish
our reserves for receivables over one year and in bankruptcy. In establishing a
reserve for certain account balances specifically identified as uncollectible,
we consider the aging of the customer receivables, the customer’s current and
projected financial results, the customer’s ability to meet and sustain their
financial commitments, the positive or negative effects of the current and
projected industry outlook and the general economic conditions.  The
Company’s level of reserves for its customer accounts receivable fluctuate
depending upon all the factors mentioned above.  However, we do not
expect the reserve for uncollectible accounts to change significantly relative
to our accounts receivable balance.  Historically, our reserve for
uncollectible accounts has approximated actual accounts written
off.   The allowance for uncollectible accounts is reported on
the balance sheet in net accounts receivable.  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.





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.  An indefinite lived intangible asset is impaired if its
fair value is less than its carrying value.  Goodwill impairment is
indicated if the fair value of the reporting unit is less that its carrying
value.  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 a market comparable approach,
a discounted cash flow approach or a combination of both
approaches.  The assumptions used in the valuations include
expectations regarding future operating performance (which are consistent with
our internal projections and operating plans), discount rates, control premiums
and other factors which are subjective in nature.  At December 31,
2008, reasonable variations in these assumptions do not have a significant
impact on the results of the goodwill impairment test.  Actual cash
flows from operations could differ from management’s estimates due to changes in
business conditions, operating performance and economic conditions.





Valuation
of Finite-Lived Intangibles and Fixed Assets





In
accordance with Statement of Financial Accounting Standards No. 144, “Accounting
for the Impairment or Disposal of Long-lived Assets” (SFAS No. 144), we evaluate
the potential impairment of finite-lived intangible assets and fixed assets when
impairment indicators exist.  If the carrying value is no longer
recoverable based upon the undiscounted future cash flows of the asset, the
amount of the impairment is the difference between the carrying amount and the
fair value of the asset.









22


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, 2008.  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.  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, 2008, there was $7.3 million of unrecognized compensation cost
related to non-vested share based compensation that is expected to be recognized
over a weighted average period of 1.41 years.  In addition, during
2006, the Board of Directors granted and issued performance units which entitled
the recipients to receive restricted stock contingent upon the achievement of an
operating income earnings target.  No restricted stock will be awarded
and therefore, no compensation expense associated with the performance units was
recognized.





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
Pronouncement




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 or significant impact on our financial statements for the year
ended December 31, 2008.  At December 31, 2008, cash and cash equivalents
and restricted investments include $84.0 million in a money market fund
comprised of U.S. treasury securities and repurchase agreements for these
securities and $6.1 million of mutual funds, respectively, which are reported at
fair value.  The fair value measurement of these securities is based
on quoted prices in active markets for identical assets which are defined as
“Level 1” of the fair value hierarchy based on the criteria in SFAS No.
157.





In February 2007, the FASB issued
SFAS No. 159, “Fair Value Option for Financial Assets and Financial Liabilities”
(SFAS No. 159).  SFAS No. 159 permits entities to voluntarily choose
to measure many financial instruments and certain other items at fair
value.  SFAS No. 159 was effective 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 acquistion date is on or after January 1, 2009.  We adopted
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
adopted SFAS No. 160 effective January 1, 2009 and do not currently expect the
impact on our financial statements to be significant.





23


In April
2008, the FASB issued FASB Staff Position (FSP) No. 142-3, “Determination of the
Useful Life of Intangible Assets.”  This FSP amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,
“Goodwill and Other Intangible Assets”.  This statement is effective
for financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years.  We adopted FSP
No. 142-3 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, competitive
pricing 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, how well we
perform against our EPS goals, 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 in 2009 will approximate
2008.





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, change in interest rates,
change in investments, funding working capital needs, funding capital
expenditures, funding an acquisition and buying back stock.


24


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.  We have no significant exposure to foreign
currency exchange rate changes.  No derivative financial instruments
are outstanding at December 31, 2008.  We do not use financial
instruments for trading purposes.





At December 31, 2008, the Company had
no outstanding obligations under its bank line of credit
arrangement.








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, 2008 and December 31, 2007
                
                
                27Consolidated
      Statements of Income – Years ended December 31, 2008, December 31, 2007
      and December 31, 2006
                
                
                28Consolidated
      Statements of Stockholders’ Equity – Years ended December 31,
      2008,
                  December
      31, 2007 and December 31, 2006
                
                
                29Consolidated
      Statements of Cash Flows – Years ended December 31, 2008,
                  December
      31, 2007 and December 31, 2006
                
                
                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, 2008 and 2007 and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2008.  Our audits also included the financial
statement schedule listed in the index at Item 15(b).  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, 2008 and 2007, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2008, 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 6 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.




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, 2008, based on criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 16, 2009
expressed an unqualified opinion thereon.





ERNST
& YOUNG LLP








Chicago,
Illinois


February
16, 2009





























26





HUB
      GROUP, INC.CONSOLIDATED
      BALANCE SHEETS(in
      thousands, except share amounts)December
      31,2008
              
              
              2007ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
              
              $
              85,799
              
              
              $
              38,002Accounts
      receivableTrade,
      net
              
              
              145,362
              
              
              
              160,944Other
              
              
              10,318
              
              
              
              9,828Prepaid
      taxes
              
              
              123
              
              
              
              86Deferred
      taxes
              
              
              5,430
              
              
              
              5,044Prepaid
      expenses and other current assets
              
              
              4,346
              
              
              
              4,318TOTAL
      CURRENT ASSETS
              
              
              251,378
              
              
              
              218,222Restricted
      investments
              
              
              6,118
              
              
              
              5,206Property
      and equipment, net
              
              
              32,713
              
              
              
              29,662Other
      intangibles, net
              
              
              6,610
              
              
              
              7,056Goodwill,
      net
              
              
              233,110
              
              
              
              230,448Other
      assets
              
              
              1,747
              
              
              
              1,373TOTAL
      ASSETS
              
              $
              531,676
              
              
              $
              491,967LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payableTrade
              
              $
              105,064
              
              
              $
              123,020Other
              
              
              6,107
              
              
              
              6,683Accrued
      expensesPayroll
              
              
              9,988
              
              
              
              16,446Other
              
              
              26,388
              
              
              
              32,408Related
      party payable
              
              
              -
              
              
              
              5,000TOTAL
      CURRENT LIABILITIES
              
              
              147,547
              
              
              
              183,557Non-current
      liabilities
              
              
              9,535
              
              
              
              10,363Deferred
      taxes
              
              
              59,410
              
              
              
              47,148STOCKHOLDERS'
      EQUITY:Preferred
      stock, $.01 par value;  2,000,000 shares
      authorized;  no shares issued or outstanding in 2008 and
      2007
              
              
              -
              
              
              
              -Common
      stockClass
      A:  $.01 par value;  97,337,700 shares authorized and
      41,224,792 shares issued in 2008 and 2007; 36,970,347 outstanding in 2008
      and 36,666,731 shares outstanding in 2007
              
              
              412
              
              
              
              412Class
      B:  $.01 par value; 662,300 shares authorized; 662,296 shares
      issued and outstanding in 2008 and 2007
              
              
              7
              
              
              
              7Additional
      paid-in capital
              
              
              174,355
              
              
              
              176,657Purchase
      price in excess of predecessor basis, net of tax benefit of
      $10,306
              
              
              (15,458
              )
              
              
              (15,458
              )Retained
      earnings
              
              
              265,287
              
              
              
              206,042Treasury
      stock; at cost, 4,254,445 shares in 2008 and 4,558,061 shares in
      2007
              
              
              (109,419
              )
              
              
              (116,761
              )TOTAL
      STOCKHOLDERS' EQUITY
              
              
              315,184
              
              
              
              250,899TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              531,676
              
              
              $
              491,967





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
      Ended2008
                          
                          
                          2007
                          
                          
                          2006Revenue
                          
                          $
                          1,860,608
                          
                          
                          $
                          1,658,168
                          
                          
                          $
                          1,609,529Transportation
      costs
                          
                          
                          1,626,297
                          
                          
                          
                          1,425,844
                          
                          
                          
                          1,391,111Gross
      margin
                          
                          
                          234,311
                          
                          
                          
                          232,324
                          
                          
                          
                          218,418Costs
      and expenses:Salaries
      and benefits
                          
                          
                          93,658
                          
                          
                          
                          95,678
                          
                          
                          
                          95,152General
      and administrative
                          
                          
                          41,234
                          
                          
                          
                          41,416
                          
                          
                          
                          39,929Depreciation
      and amortization
                          
                          
                          3,957
                          
                          
                          
                          4,490
                          
                          
                          
                          6,101Total
      costs and expenses
                          
                          
                          138,849
                          
                          
                          
                          141,584
                          
                          
                          
                          141,182Operating
      income
                          
                          
                          95,462
                          
                          
                          
                          90,740
                          
                          
                          
                          77,236Other
      income (expense):Interest
      expense
                          
                          
                          (102
                          )
                          
                          
                          (108
                          )
                          
                          
                          (115
                          )Interest
      and dividend income
                          
                          
                          1,153
                          
                          
                          
                          2,480
                          
                          
                          
                          2,311Other,
      net
                          
                          
                          (187
                          )
                          
                          
                          116
                          
                          
                          
                          76Total
      other income
                          
                          
                          864
                          
                          
                          
                          2,488
                          
                          
                          
                          2,272Income
      from continuing operations before provision for income
    taxes
                          
                          
                          96,326
                          
                          
                          
                          93,228
                          
                          
                          
                          79,508Provision
      for income taxes
                          
                          
                          37,081
                          
                          
                          
                          33,429
                          
                          
                          
                          31,803Income
      from continuing operations
                          
                          
                          59,245
                          
                          
                          
                          59,799
                          
                          
                          
                          47,705Discontinued
      operations:Income
      from discontinued operations of HGDS (including loss on disposal of $70 in
      2006)
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,634Provision
      for income taxes
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          653Income
      from discontinued operations
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          981Net
      income
                          
                          $
                          59,245
                          
                          
                          $
                          59,799
                          
                          
                          $
                          48,686Basic
      earnings per common shareIncome
      from continuing operations
                          
                          $
                          1.59
                          
                          
                          $
                          1.55
                          
                          
                          $
                          1.19Income
      from discontinued operations
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          0.03Net
      income
                          
                          $
                          1.59
                          
                          
                          $
                          1.55
                          
                          
                          $
                          1.22Diluted
      earnings per common shareIncome
      from continuing operations
                          
                          $
                          1.58
                          
                          
                          $
                          1.53
                          
                          
                          $
                          1.17Income
      from discontinued operations
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          0.02Net
      income
                          
                          $
                          1.58
                          
                          
                          $
                          1.53
                          
                          
                          $
                          1.19Basic
      weighted average number of shares outstanding
                          
                          
                          37,174
                          
                          
                          
                          38,660
                          
                          
                          
                          39,958Diluted
      weighted average number of shares outstanding
                          
                          
                          37,484
                          
                          
                          
                          39,128
                          
                          
                          
                          40,823





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 31,2008
              
              
              2007
              
              
              2006Class
      A & B Common Stock Shares OutstandingBeginning
      of year
              
              
              37,329,027
              
              
              
              39,605,418
              
              
              
              40,624,780Purchase
      of treasury shares
              
              
              (85,361
              )
              
              
              (2,741,700
              )
              
              
              (2,126,255
              )Treasury
      shares issued for restricted stock and stock options
    exercised
              
              
              388,977
              
              
              
              465,309
              
              
              
              1,106,893Ending
      balance
              
              
              37,632,643
              
              
              
              37,329,027
              
              
              
              39,605,418Class
      A & B Common Stock AmountBeginning
      of year
              
              $
              419
              
              
              $
              419
              
              
              $
              419Ending
      balance
              
              
              419
              
              
              
              419
              
              
              
              419Additional
      Paid-in CapitalBeginning
      of year
              
              
              176,657
              
              
              
              179,203
              
              
              
              183,524Equity
      reclassification impact of adopting SFAS No. 123 (R)
              
              
              -
              
              
              
              -
              
              
              
              (6,259
              )Exercise
      of non-qualified stock options
              
              
              (4,085
              )
              
              
              (6,668
              )
              
              
              (12,516
              )Share-based
      compensation expense
              
              
              4,360
              
              
              
              3,853
              
              
              
              3,405Tax
      benefit of share-based compensation plans
              
              
              2,903
              
              
              
              3,952
              
              
              
              12,337Issuance
      of restricted stock awards, net of forfeitures
              
              
              (5,480
              )
              
              
              (3,683
              )
              
              
              (1,288
              )Ending
      balance
              
              
              174,355
              
              
              
              176,657
              
              
              
              179,203Purchase
      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
              
              
              206,042
              
              
              
              146,243
              
              
              
              97,557Net
      income
              
              
              59,245
              
              
              
              59,799
              
              
              
              48,686Ending
      balance
              
              
              265,287
              
              
              
              206,042
              
              
              
              146,243Unearned
      CompensationBeginning
      of year
              
              
              -
              
              
              
              -
              
              
              
              (6,259
              )Equity
      reclassification impact of adopting SFAS No. 123 (R)
              
              
              -
              
              
              
              -
              
              
              
              6,259Ending
      balance
              
              
              -
              
              
              
              -
              
              
              
              -Treasury
      StockBeginning
      of year
              
              
              (116,761
              )
              
              
              (51,563
              )
              
              
              (17,708
              )Purchase
      of treasury shares
              
              
              (2,630
              )
              
              
              (76,309
              )
              
              
              (49,622
              )Issuance
      of restricted stock and exercise of stock options
              
              
              9,972
              
              
              
              11,111
              
              
              
              15,767Ending
      balance
              
              
              (109,419
              )
              
              
              (116,761
              )
              
              
              (51,563
              )Total
      stockholders’ equity
              
              $
              315,184
              
              
              $
              250,899
              
              
              $
              258,844





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 31,2008
                              
                              
                              2007
                              
                              
                              2006Cash
      flows from operating activities:Income
      from continuing operations
                              
                              $
                              59,245
                              
                              
                              $
                              59,799
                              
                              
                              $
                              47,705Adjustments
      to reconcile income from continuing operations to net cashprovided
      by operating activities:Depreciation
      and amortization
                              
                              
                              7,369
                              
                              
                              
                              7,195
                              
                              
                              
                              8,170Deferred
      taxes
                              
                              
                              9,294
                              
                              
                              
                              3,523
                              
                              
                              
                              690Compensation
      expense related to share-based compensation plans
                              
                              
                              4,360
                              
                              
                              
                              3,853
                              
                              
                              
                              3,405Gain
      on sale of assets
                              
                              
                              (22
                              )
                              
                              
                              (160
                              )
                              
                              
                              (131
                              )Changes
      in operating assets and liabilities excluding effects of
      purchase
                                transaction:Restricted
      investments
                              
                              
                              (912
                              )
                              
                              
                              (2,189
                              )
                              
                              
                              (1,630
                              )Accounts
      receivable, net
                              
                              
                              15,092
                              
                              
                              
                              (4,119
                              )
                              
                              
                              393Prepaid
      taxes
                              
                              
                              (37
                              )
                              
                              
                              2,033
                              
                              
                              
                              3,317Prepaid
      expenses and other current assets
                              
                              
                              (28
                              )
                              
                              
                              132
                              
                              
                              
                              (297
                              )Other
      assets
                              
                              
                              (374
                              )
                              
                              
                              88
                              
                              
                              
                              (837
                              )Accounts
      payable
                              
                              
                              (18,532
                              )
                              
                              
                              4,223
                              
                              
                              
                              5,698Accrued
      expenses
                              
                              
                              (13,040
                              )
                              
                              
                              4,094
                              
                              
                              
                              8,496Non-current
      liabilities
                              
                              
                              (908
                              )
                              
                              
                              2,108
                              
                              
                              
                              1,608Net
      cash provided by operating activities
                              
                              
                              61,507
                              
                              
                              
                              80,580
                              
                              
                              
                              76,587Cash
      flows from investing activities:Proceeds
      from sale of equipment
                              
                              
                              1,342
                              
                              
                              
                              725
                              
                              
                              
                              394Purchases
      of property and equipment
                              
                              
                              (10,732
                              )
                              
                              
                              (10,197
                              )
                              
                              
                              (8,372
                              )Cash used in acquisition of Comtrak, Inc.
                              
                              
                              (5,000
                              )
                              
                              
                              (5,000
                              )
                              
                              
                              (39,942
                              )Proceeds
      from the disposal of discontinued operations
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              12,203Net
      cash used in investing activities
                              
                              
                              (14,390
                              )
                              
                              
                              (14,472
                              )
                              
                              
                              (35,717
                              )Cash
      flows from financing activities:Proceeds
      from stock options exercised
                              
                              
                              407
                              
                              
                              
                              760
                              
                              
                              
                              1,963Purchase
      of treasury stock
                              
                              
                              (2,630
                              )
                              
                              
                              (76,309
                              )
                              
                              
                              (49,622
                              )Excess
      tax benefits from share-based compensation
                              
                              
                              2,903
                              
                              
                              
                              3,952
                              
                              
                              
                              12,337Net
      cash provided by (used in) financing activities
                              
                              
                              680
                              
                              
                              
                              (71,597
                              )
                              
                              
                              (35,322
                              )Cash
      flows provided by operating activities of discontinued
      operations
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,848Cash
      flows used in investing activities of discontinued
    operations
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (38
                              )Net
      cash provided by discontinued operations
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,810Net
      increase (decrease) in cash and cash equivalents
                              
                              
                              47,797
                              
                              
                              
                              (5,489
                              )
                              
                              
                              7,358Cash
      and cash equivalents beginning of year
                              
                              
                              38,002
                              
                              
                              
                              43,491
                              
                              
                              
                              36,133Cash
      and cash equivalents end of year
                              
                              $
                              85,799
                              
                              
                              $
                              38,002
                              
                              
                              $
                              43,491Supplemental
      disclosures of cash paid for:Interest
                              
                              $
                              102
                              
                              
                              $
                              106
                              
                              
                              $
                              114Income
      taxes
                              
                              $
                              27,199
                              
                              
                              $
                              22,192
                              
                              
                              $
                              16,801The
      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.  In
2008, we invested our cash overnight in a money market fund comprised of U.S.
Treasury Securities and repurchase agreements for these securities, of which
$84.0 million was outstanding at December 31, 2008.  In 2007, we
invested our cash overnight in commercial paper, of which $33.0 million was
outstanding at December 31, 2007.





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 based on current
economic conditions.  To be more specific, we reserve a portion of
every account balance that has aged over one year, a portion of receivables for
customers in bankruptcy and certain account balances specifically identified as
uncollectible.  On an annual basis we perform a hindsight analysis to
determine our experience in collecting account balances over one year old and
account balances in bankruptcy.   We then use this hindsight
analysis to establish our reserves for receivables over one year and in
bankruptcy. In establishing a reserve for certain account balances specifically
identified as uncollectible, we consider the aging of the customer receivables,
the customer’s current and projected financial results, the customer’s ability
to meet and sustain their financial commitments, the positive or negative
effects of the current and projected industry outlook and the general economic
conditions.  The allowance for uncollectible accounts is reported on
the balance sheet in net accounts receivable.  Our reserve for
uncollectible accounts was approximately $5.1 million and $5.5 million at
December 31, 2008 and 2007, 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 and Other
Intangibles:  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 as of November 1
or whenever events or changes in circumstances indicate the carrying amount of
goodwill or other indefinite-lived intangibles may not be
recoverable.  An indefinite lived intangible asset is impaired if its
fair value is less than its carrying value.  Goodwill impairment is
indicated if the fair value of the reporting unit is less than its carrying
value.  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 a market comparable approach,
a discounted cash flow approach or a combination of both
approaches.  The assumptions used in the valuations include
expectations regarding future operating performance (which are consistent with
out internal projections and operating plans), discount rates, control premiums
and other factors which are subjective in nature.  As of December 31,
2008, reasonable variations in these assumptions do not have a significant
impact on the results of the goodwill impairment test.  Actual cash
flows from operations could differ from management’s estimates due to changes in
business conditions, operating performance and economic conditions.





31


In
accordance with Statement of Financial Accounting Standards No. 144, “Accounting
for the Impairment or Disposal of Long-lived Assets” (SFAS No. 144), we evaluate
the potential impairment of finite-lived acquired intangible assets when
impairment indicators exist.  If the carrying value is no longer
recoverable based upon the undiscounted future cash flows of the asset, the
amount of the impairment is the difference between the carrying amount and the
fair value of the asset.





Fair Value of Financial
Instruments:The carrying value of cash and cash equivalents,
accounts receivable and accounts payable approximates fair value as of December
31, 2008 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 and invest our cash overnight in a money
market fund comprised of U.S. Treasury Securities and repurchase agreements for
these securities.  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 2008, 2007 or
2006.  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.





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 or significant impact on our financial statements for the year
ended December 31, 2008. See Note 4 for additional information.





In
February 2007, the FASB issued SFAS No. 159, “Fair Value Option for Financial
Assets and Financial Liabilities” (SFAS No. 159).  SFAS No. 159
permits entities to voluntarily choose to measure many financial instruments and
certain other items at fair value.  SFAS No. 159 was
effective 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 adopted SFAS No. 141(R) effective January 1, 2009 and do not
currently expect the impact on our financial statements to be
significant.





32


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
adopted SFAS No. 160 effective January 1, 2009 and do not currently expect the
impact on our financial statements to be significant.





In April
2008, the FASB issued FASB Staff Position (FSP) No. 142-3, “Determination of the
Useful Life of Intangible Assets.”  This FSP amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,
“Goodwill and Other Intangible Assets”.  This statement is effective
for financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. We adopted FSP No.
142-3 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.





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.  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). 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 years ended December 31, 2008, 2007 and
2006 include $2.9 million, $4.0 million and $12.3 million of excess tax
benefits, respectively, as a financing cash in-flow and an operating cash
out-flow.





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 the 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.





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.





















33


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, 2008
                          
                          
                          December
      31, 2007Income
                          
                          
                          Shares
                          
                          
                          Per
      Share Amount
                          
                          
                          Income
                          
                          
                          Shares
                          
                          
                          Per
      Share AmountBasic
      EPSNet
      Income
                          
                          $
                          59,245
                          
                          
                          
                          37,174
                          
                          
                          $
                          1.59
                          
                          
                          $
                          59,799
                          
                          
                          
                          38,660
                          
                          
                          $
                          1.55Effect
      of Dilutive SecuritiesStock
      options and restricted  stock
                          
                          
                          
                          
                          
                          
                          310
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          468Diluted
      EPSNet
      Income
                          
                          $
                          59,245
                          
                          
                          
                          37,484
                          
                          
                          $
                          1.58
                          
                          
                          $
                          59,799
                          
                          
                          
                          39,128
                          
                          
                          $
                          1.53








Year
      EndedDecember
      31, 2006Income
                                                  
                                                  
                                                  Shares
                                                  
                                                  
                                                  Per
      Share AmountBasic
      EPSIncome
      from continuing operations
                                                  
                                                  $
                                                  47,705
                                                  
                                                  
                                                  
                                                  39,958
                                                  
                                                  
                                                  $
                                                  1.19Income
      from discontinued operations
                                                  
                                                  
                                                  981
                                                  
                                                  
                                                  
                                                  39,958
                                                  
                                                  
                                                  
                                                  0.03Net
      Income
                                                  
                                                  $
                                                  48,686
                                                  
                                                  
                                                  
                                                  39,958
                                                  
                                                  
                                                  $
                                                  1.22Effect
      of Dilutive SecuritiesStock
      options and restricted  stock
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  865Diluted
      EPSIncome
      from continuing operations
                                                  
                                                  $
                                                  47,705
                                                  
                                                  
                                                  
                                                  40,823
                                                  
                                                  
                                                  $
                                                  1.17Income
      from discontinued operations
                                                  
                                                  
                                                  981
                                                  
                                                  
                                                  
                                                  40,823
                                                  
                                                  
                                                  
                                                  0.02Net
      Income
                                                  
                                                  $
                                                  48,686
                                                  
                                                  
                                                  
                                                  40,823
                                                  
                                                  
                                                  $
                                                  1.19





NOTE
4.                      Fair
Value Measurement





At
December 31, 2008, cash and cash equivalents and restricted investments include
$84.0 million in a money market fund comprised of U.S. treasury securities and
repurchase agreements for these securities and $6.1 million of mutual funds,
respectively, which are reported at fair value.  The fair value
measurement of these securities is based on quoted prices in active markets for
identical assets which are defined as “Level 1” of the fair value hierarchy
based on the criteria in SFAS No. 157.





















34


NOTE
5.                      Property
and Equipment





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




Years
      Ended December 31,2008
                                
                                
                                2007Building
      and improvements
                                
                                $
                                54
                                
                                
                                $
                                54Leasehold
      improvements
                                
                                
                                1,700
                                
                                
                                
                                1,372Computer
      equipment and software
                                
                                
                                50,366
                                
                                
                                
                                49,304Furniture
      and equipment
                                
                                
                                7,995
                                
                                
                                
                                7,894Transportation
      equipment
                                
                                
                                30,231
                                
                                
                                
                                25,20490,346
                                
                                
                                
                                83,828Less:  Accumulated
      depreciation and amortization
                                
                                
                                (57,633
                                )
                                
                                
                                (54,166
                                )Property
      and Equipment, net
                                
                                $
                                32,713
                                
                                
                                $
                                29,662





Depreciation
expense was $6.9 million, $6.8 million and $7.8 million for 2008, 2007 and 2006,
respectively.






NOTE
6.                      Income
Taxes





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








Years
      Ended December 31,2008
                                                                              
                                                                              
                                                                              
                                                                              2007
                                                                              
                                                                              
                                                                              
                                                                              2006U.S.
      federal statutory rate
                                                                              
                                                                              
                                                                              35.0
                                                                              %
                                                                              
                                                                              
                                                                              35.0
                                                                              %
                                                                              
                                                                              
                                                                              35.0
                                                                              %State
      taxes, net of federal benefit
                                                                              
                                                                              
                                                                              2.7
                                                                              
                                                                              
                                                                              
                                                                              3.4
                                                                              
                                                                              
                                                                              
                                                                              3.5Nondeductible
      expenses
                                                                              
                                                                              
                                                                              0.6
                                                                              
                                                                              
                                                                              
                                                                              0.5
                                                                              
                                                                              
                                                                              
                                                                              1.5Provision
      for (reversal of) valuation allowance
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              0.1
                                                                              
                                                                              
                                                                              
                                                                              (0.3
                                                                              )IRS
      settlement
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              (1.4
                                                                              )
                                                                              
                                                                              
                                                                              -Illinois
      law change
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              (1.3
                                                                              )
                                                                              
                                                                              
                                                                              -Other
                                                                              
                                                                              
                                                                              0.2
                                                                              
                                                                              
                                                                              
                                                                              (0.4
                                                                              )
                                                                              
                                                                              
                                                                              0.3Net
      effective rate
                                                                              
                                                                              
                                                                              38.5
                                                                              %
                                                                              
                                                                              
                                                                              35.9
                                                                              %
                                                                              
                                                                              
                                                                              40.0
                                                                              %





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
                                                                                  
                                                                                  2008
                                                                                  
                                                                                  
                                                                                  2007
                                                                                  
                                                                                  
                                                                                  2006Federal
                                                                                  
                                                                                  $
                                                                                  25,197
                                                                                  
                                                                                  
                                                                                  $
                                                                                  26,234
                                                                                  
                                                                                  
                                                                                  $
                                                                                  27,986State
      and local
                                                                                  
                                                                                  
                                                                                  2,590
                                                                                  
                                                                                  
                                                                                  
                                                                                  3,672
                                                                                  
                                                                                  
                                                                                  
                                                                                  3,07827,787
                                                                                  
                                                                                  
                                                                                  
                                                                                  29,906
                                                                                  
                                                                                  
                                                                                  
                                                                                  31,064DeferredFederal
                                                                                  
                                                                                  
                                                                                  8,651
                                                                                  
                                                                                  
                                                                                  
                                                                                  4,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  332State
      and local
                                                                                  
                                                                                  
                                                                                  643
                                                                                  
                                                                                  
                                                                                  
                                                                                  (477
                                                                                  )
                                                                                  
                                                                                  
                                                                                  4079,294
                                                                                  
                                                                                  
                                                                                  
                                                                                  3,523
                                                                                  
                                                                                  
                                                                                  
                                                                                  739Total
      provision
                                                                                  
                                                                                  $
                                                                                  37,081
                                                                                  
                                                                                  
                                                                                  $
                                                                                  33,429
                                                                                  
                                                                                  
                                                                                  $
                                                                                  31,803












35


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








Years
      Ended December 31,2008
                                                                  
                                                                  
                                                                  2007Reserve
      for uncollectible accounts receivable
                                                                  
                                                                  $
                                                                  1,813
                                                                  
                                                                  
                                                                  $
                                                                  1,939Accrued
      compensation
                                                                  
                                                                  
                                                                  5,612
                                                                  
                                                                  
                                                                  
                                                                  5,394Other
      reserves
                                                                  
                                                                  
                                                                  2,158
                                                                  
                                                                  
                                                                  
                                                                  2,480Current
      deferred tax assets
                                                                  
                                                                  
                                                                  9,583
                                                                  
                                                                  
                                                                  
                                                                  9,813Operating
      loss carryforwards
                                                                  
                                                                  
                                                                  386
                                                                  
                                                                  
                                                                  
                                                                  430Other
                                                                  
                                                                  
                                                                  282
                                                                  
                                                                  
                                                                  
                                                                  216Income
      tax basis in excess of financial basis of goodwill
                                                                  
                                                                  
                                                                  1,588
                                                                  
                                                                  
                                                                  
                                                                  2,383Less
      valuation allowance
                                                                  
                                                                  
                                                                  (163
                                                                  )
                                                                  
                                                                  
                                                                  (163
                                                                  )Long-term
      deferred tax assets
                                                                  
                                                                  
                                                                  2,093
                                                                  
                                                                  
                                                                  
                                                                  2,866Total
      deferred tax assets
                                                                  
                                                                  $
                                                                  11,676
                                                                  
                                                                  
                                                                  $
                                                                  12,679Prepaids
                                                                  
                                                                  $
                                                                  (1,200
                                                                  )
                                                                  
                                                                  $
                                                                  (1,245
                                                                  )Other
      receivables
                                                                  
                                                                  
                                                                  (2,953
                                                                  )
                                                                  
                                                                  
                                                                  (3,524
                                                                  )Current
      deferred tax liabilities
                                                                  
                                                                  
                                                                  (4,153
                                                                  )
                                                                  
                                                                  
                                                                  (4,769
                                                                  )Property
      and equipment
                                                                  
                                                                  
                                                                  (7,393
                                                                  )
                                                                  
                                                                  
                                                                  (1,006
                                                                  )Goodwill
                                                                  
                                                                  
                                                                  (54,110
                                                                  )
                                                                  
                                                                  
                                                                  (49,008
                                                                  )Long-term
      deferred tax liabilities
                                                                  
                                                                  
                                                                  (61,503
                                                                  )
                                                                  
                                                                  
                                                                  (50,014
                                                                  )Total
      deferred tax liabilities
                                                                  
                                                                  $
                                                                  (65,656
                                                                  )
                                                                  
                                                                  $
                                                                  (54,783
                                                                  )




During
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 in our effective tax rate
of 1.3% for the year ended December 31, 2007.


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 a reclassification of our liability for unrecognized tax
benefits to a deferred tax liability.




As of
December 31, 2008, the amount of unrecognized tax benefits was $0.4 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 statute of
      limitations
                
                
                (2.9
                )Balance
      at December 31, 2007
                
                $
                .3Additions
      for tax positions of prior years
                
                
                .1Balance
      at December 31, 2008
                
                $
                .4





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 in our effective tax rate of 1.4%
for the year ended December 31, 2007.





36





We 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.  The IRS commenced an examination of
our 2006 tax year in October 2008.  Illinois is currently examining
our 2005 and 2006 tax years.  Although no other examinations are in
effect currently, tax years 2005 through 2007 generally remain open to
examination by the major tax jurisdictions to which we are subject.





We
recognize interest expense and penalties related to unrecognized tax benefits in
our provision for income taxes.  During 2008 we paid penalties of
approximately two thousand dollars and received interest related to income tax
refunds of approximately eighteen thousand dollars.








NOTE
7.                      Long-Term
Debt and Financing Arrangements





We have a
revolving credit agreement that provides for unsecured borrowings of up to $50.0
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%.





Our
unused and available borrowings under our bank revolving line of credit at
December 31, 2008 and December 31, 2007 were $47.1 million and $47.2 million,
respectively.  We were in compliance with our debt covenants at
December 31, 2008.





We have
standby letters of credit that expire from 2009 to 2012.  As of
December 31, 2008, our letters of credit were $2.9 million.





NOTE
8.                      Rental
Expense, User Charges and Commitments





Minimum
annual rental commitments, at December 31, 2008, under non-cancelable operating
leases, principally for real estate, containers and equipment, are payable as
follows (in thousands):





2009
                
                $
                21,0422010
                
                
                18,3532011
                
                
                16,6962012
                
                
                13,9372013
                
                
                5,1202014
      and thereafter
                
                
                1,839$
                76,987





Total
rental expense included in general and administrative expense, which relates
primarily to real estate, was approximately $8.3 million, $7.7 million and $8.1
million for 2008, 2007 and 2006, 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, $0.7 million and $0.6 million for
2008, 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 $12.1 million, $9.9 million, and $8.1 million
for 2008, 2007 and 2006, 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
$45.4 million, $45.5 million and $42.8 million for 2008, 2007 and 2006,
respectively.  As of December 31, 2008, 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.
Chassis charges included in accrued expenses-other as of December 31, 2008 and
2007 were $9.8 million and $11.4 million, respectively.





37


NOTE
9.                      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, 2008, 2,120,955 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 2008, 2007 and 2006
was $4.4 million, $3.9 million and $3.4 million or $2.7 million, $2.5 million
and $2.0 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, 2008:





Stock
      Options
                
                Shares
                
                
                Weighted
      Average Exercise
                  Price
                
                
                Weighted
      Average Remaining Contractual Life
                
                
                Aggregate
                  Intrinsic
                  ValueOutstanding
      at January 1, 2008
                
                
                441,332
                
                
                $
                2.06Options
      exercised
                
                
                (175,332
                )
                
                $
                2.32Options
      forfeited
                
                
                -
                
                
                $
                -Outstanding
      at December 31, 2008
                
                
                266,000
                
                
                $
                1.89
                
                
                
                3.69
                
                
                $
                6,554,227Exercisable
      at December 31, 2008
                
                
                266,000
                
                
                $
                1.89
                
                
                
                3.69
                
                
                $
                6,554,227





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, 2008, 2007 and 2006 was $5.4
million, $8.3 million and $21.3 million, respectively.  Cash received
from stock options exercised during the years ended December 31, 2008, 2007 and
2006 was $0.4 million, $0.8 million and $2.0 million,
respectively.  The tax benefit realized for tax deductions from stock
options exercised for the years ended December 31, 2008, 2007 and 2006 was $2.3
million, $3.2 million and $7.9 million, respectively.





The
following table summarizes information about options outstanding at December 31,
2008:




Options
      Outstanding and ExercisableRange
      of Exercise Prices
                                                    
                                                    
                                                    Number
      of Shares
                                                    
                                                    
                                                    Weighted
      Avg. Remaining Contractual Life
                                                    
                                                    
                                                    Weighted
      Avg. Exercise Price$
                                                    1.22
      to $1.22
                                                    
                                                    
                                                    
                                                    20,100
                                                    
                                                    
                                                    
                                                    4.01
                                                    
                                                    
                                                    $
                                                    1.22$
                                                    1.22
      to $1.30
                                                    
                                                    
                                                    
                                                    123,000
                                                    
                                                    
                                                    
                                                    3.96
                                                    
                                                    
                                                    $
                                                    1.30$
                                                    1.30
      to $2.00
                                                    
                                                    
                                                    
                                                    56,000
                                                    
                                                    
                                                    
                                                    3.80
                                                    
                                                    
                                                    $
                                                    1.65$
                                                    2.00 to
      $2.64
                                                    
                                                    
                                                    
                                                    40,800
                                                    
                                                    
                                                    
                                                    4.29
                                                    
                                                    
                                                    $
                                                    2.57$
                                                    2.64
      to $4.69
                                                    
                                                    
                                                    
                                                    26,100
                                                    
                                                    
                                                    
                                                    0.98
                                                    
                                                    
                                                    $
                                                    4.63$
                                                    1.22
      to $4.69
                                                    
                                                    
                                                    
                                                    266,000
                                                    
                                                    
                                                    
                                                    3.69
                                                    
                                                    
                                                    $
                                                    1.89


38




The
following table summarizes the non-vested restricted stock activity for the year
ended December 31, 2008:





Non-vested
      restricted stock
                  
                  Shares
                  
                  
                  Weighted
      Average Grant Date Fair ValueNon-vested
      January 1, 2008
                  
                  
                  336,690
                  
                  
                  $
                  24.10Granted
                  
                  
                  226,152
                  
                  
                  $
                  26.16Vested
                  
                  
                  (147,967
                  )
                  
                  $
                  22.11Forfeited
                  
                  
                  (12,507
                  )
                  
                  $
                  24.93Non-vested
      at December 31, 2008
                  
                  
                  402,368
                  
                  
                  $
                  25.96





During
2008, we granted 215,508 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 $26.16.  The stock vests over a three to five
year period.





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.





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, 2008,
2007 and 2006 was $3.9 million, $3.9 million and $13.3 million,
respectively.





As of
December 31, 2008, there was $7.3 million of unrecognized compensation cost
related to non-vested share-based compensation that is expected to be recognized
over a weighted average period of 1.41 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.  No restricted stock will be awarded
and therefore no compensation expense associated with the performance units was
recognized.





During
January 2009, we granted 184,849 shares of restricted stock to certain employees
and 12,000 shares of restricted stock to outside directors with a weighted
average grant date fair value of $27.01. The stock vests over a three to five
year period.





NOTE
10.                      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 31,2008
                        
                        
                        2007
                        
                        
                        2006RevenueIntermodal
                        
                        $
                        1,329,382
                        
                        
                        $
                        1,206,364
                        
                        
                        $
                        1,172,566Brokerage
                        
                        
                        372,337
                        
                        
                        
                        322,465
                        
                        
                        
                        306,332Logistics
                        
                        
                        158,889
                        
                        
                        
                        129,339
                        
                        
                        
                        130,631Total
      revenue from continuing operations
                        
                        $
                        1,860,608
                        
                        
                        $
                        1,658,168
                        
                        
                        $
                        1,609,529





NOTE
11.                      Employee
Benefit Plans





We had
two profit-sharing plans and trusts in 2008, 2007 and 2006 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 $1.8 million, $1.9 million and $1.7 million related to these plans
in 2008, 2007, and 2006, respectively.





39


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, 2008 and
2007.  Both realized and unrealized gains and losses 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 $0.3 million, $1.0 million and $0.8 million related
to the employer match for these plans in 2008, 2007 and 2006,
respectively.   The liabilities related to these plans at
December 31, 2008 and 2007 were $8.8 million and $10.4 million,
respectively.





NOTE
12.                      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
13.       
  Stock Buy Back Plans





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.





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.  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
plan in 2008:





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
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          -
                          
                          
                          $
                          75,000April
      1 to
                            June
      30
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          -
                          
                          
                          $
                          75,000July
      1 to
                            September
      30
                          
                          
                          38,800
                          
                          
                          $
                          36.12
                          
                          
                          
                          38,800
                          
                          
                          $
                          73,598October
      1 to
                            December
      31
                          
                          
                          -
                          
                          
                          $
                          -
                          
                          
                          
                          -
                          
                          
                          $
                          73,598Total
                          
                          
                          38,800
                          
                          
                          $
                          36.12
                          
                          
                          
                          38,800
                          
                          
                          $
                          73,598





This
table excludes 46,561 shares ($1.2 million) purchased during the year by the
Company related to employee withholding upon vesting of restricted
stock.





NOTE
14.                            Stock
Splits





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.











40


NOTE
15.                            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 was consistent with our strategic plan to
increase the amount of local trucking (or drayage) we perform.  We
have benefited from Comtrak’s diverse service offerings.  In addition,
we have been able to perform more of our own drayage which our customers
value.  We are also less vulnerable to the capacity volatility in the
marketplace.  Due to these factors and the fact Comtrak had best in
class operations that we have implemented at our existing drayage operations, we
paid a premium (or goodwill) when we acquired Comtrak.





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 earn-out payments were considered additional
goodwill because 1) the payments are not affected if the former owner of Comtrak
is not employed at Hub, 2) the President of Comtrak received a compensation
package comparable to other key employees and 3) at the time of acquisition, the
contingent earn-out was determined based on our valuation of
Comtrak.  The $5.0 million for both 2006 and 2007 have been
paid.  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 years ended December 31, 2007 and December 31, 2008.





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.





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.




41





NOTE
16.                            Goodwill
and Other Intangible Assets





In
accordance with SFAS 142, we completed the required annual impairment
test.  No impairment charge was recognized based on the results of the
annual goodwill impairment test.  The following table presents the
carrying amount of goodwill (in thousands):





Balance
      at January 1, 2007
                
                $
                225,448Contingent
      earn-out payment
                
                
                5,000Balance
      at December 31, 2007
                
                
                230,448Other
                
                
                2,662Balance
      at December 31, 2008
                
                $
                233,110





The
changes in the carrying amount for goodwill since December 31, 2007 are due
primarily to purchase accounting adjustments related to the acquisition of
Comtrak.





The
components of the “Other intangible assets” are as follows (in
thousands):


Gross
      Amount
                
                
                Accumulated
                  Amortization
                
                
                Net
      Carrying Value
                
                LifeAs
      of December 31, 2008:Relationships
      with owner operators
                
                $
                647
                
                
                $
                (306
                )
                
                $
                341
                
                6
      yearsBacklog/open
      orders
                
                
                20
                
                
                
                (20
                )
                
                
                -
                
                1
      monthTrade
      name
                
                
                2,904
                
                
                
                -
                
                
                
                2,904
                
                IndefiniteCustomer
      relationships
                
                
                3,823
                
                
                
                (722
                )
                
                
                3,101
                
                15  yearsInformation
      technology
                
                
                500
                
                
                
                (236
                )
                
                
                264
                
                6
      yearsTotal
                
                $
                7,894
                
                
                $
                (1,284
                )
                
                $
                6,610As
      of December 31, 2007:Relationships
      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, 2008 was
$0.4 million.  Amortization expense for the next five years is as
follows (in thousands):





2009
                
                $
                4442010
                
                
                4442011
                
                
                4442012
                
                
                2852013
                
                
                253
















42





NOTE
17.                            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 for
the year ended December 31, 2006.





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




Four months ended May 1,
    2006Revenue
                
                $
                19,194Income
      from discontinued operationsbefore
      income taxes
                
                
                1,634Income
      tax provision
                
                
                653Income
      from discontinued operations
                
                $
                981





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
18.                      Selected
Quarterly Financial Data (Unaudited)





The
following table sets forth selected quarterly financial data for each of the
quarters in 2008 and 2007 (in thousands, except per share amounts):





QuartersFirst
                
                
                Second
                
                
                Third
                
                
                FourthYear
      Ended December 31, 2008:Revenue
                
                $
                424,995
                
                
                $
                490,929
                
                
                $
                514,212
                
                
                $
                430,472Gross
      margin
                
                
                57,502
                
                
                
                59,839
                
                
                
                63,160
                
                
                
                53,810Operating
      income
                
                
                20,988
                
                
                
                24,070
                
                
                
                27,283
                
                
                
                23,121Net
      income
                
                
                13,135
                
                
                
                14,970
                
                
                
                16,930
                
                
                
                14,210Basic
      earnings per share
                
                $
                0.35
                
                
                $
                0.40
                
                
                $
                0.45
                
                
                $
                0.38Diluted
      earnings per share
                
                $
                0.35
                
                
                $
                0.40
                
                
                $
                0.45
                
                
                $
                0.38QuartersFirst
                
                
                Second
                
                
                Third
                
                
                FourthYear
      Ended December 31, 2007:Revenue
                
                $
                393,297
                
                
                $
                401,565
                
                
                $
                417,842
                
                
                $
                445,464Gross
      margin
                
                
                56,661
                
                
                
                57,763
                
                
                
                57,510
                
                
                
                60,390Operating
      income
                
                
                18,278
                
                
                
                22,165
                
                
                
                24,734
                
                
                
                25,563Net
      income
                
                
                11,419
                
                
                
                13,775
                
                
                
                16,608
                
                
                
                17,997Basic
      earnings per share
                
                $
                0.29
                
                
                $
                0.35
                
                
                $
                0.43
                
                
                $
                0.48Diluted
      earnings per share
                
                $
                0.29
                
                
                $
                0.35
                
                
                $
                0.42
                
                
                $
                0.47








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, 2008, 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.





No
significant changes were made in our internal control over financial reporting
during the fourth quarter of 2008 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.














44


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, 2008.  Based on criteria
established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria),
management believes our internal control over financial reporting was effective
as of December 31, 2008.





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.





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, 2008, 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, 2008, 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, 2008 and 2007, and the related consolidated statements
of income, stockholders’ equity, and cash flows for each of the three years in
the period ended December 31, 2008 of Hub Group, Inc., and our report dated
February 16, 2009 expressed an unqualified opinion thereon.





Ernst
& Young LLP


Chicago,
Illinois


February
16, 2009







Item
9B.                 
OTHER INFORMATION


None.


45


PART
III





Item
10.                 
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





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 6, 2009, 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 6,
2009, 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 6,
2009, 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)
                                                          
                                                          
                                                          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))Equity
      compensation
                                                            plans
      approved by
                                                            security
      holders
                                                          
                                                          
                                                          266,000
                                                          
                                                          
                                                          $
                                                          1.89
                                                          
                                                          
                                                          
                                                          2,120,955Equity
      compensation
                                                            plans
      not approved
                                                            by
      security holders
                                                          
                                                          
                                                          --
                                                          
                                                          
                                                          
                                                          --
                                                          
                                                          
                                                          
                                                          --Total
                                                          
                                                          
                                                          266,000
                                                          
                                                          
                                                          $
                                                          1.89
                                                          
                                                          
                                                          
                                                          2,120,955





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 6, 2009, 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 6, 2009, sets forth certain
information with respect to certain fees we have paid to our principal
accountant for services and is incorporated herein by
reference.










46





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, 2008 and December 31, 2007





Consolidated
Statements of Income - Years ended December 31, 2008, December 31, 2007 and
December 31, 2006





Consolidated
Statements of Stockholders’ Equity - Years ended December 31, 2008, December 31,
2007 and December 31, 2006





Consolidated
Statements of Cash Flows - Years ended December 31, 2008, December 31, 2007 and
December 31, 2006





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.













































47


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 17, 2009
                By:
                /s/ David P.
YeagerName:
      David P. YeagerTitle:
      Chairman and Chief Executive Officer





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


Title
                            Date/s/ David P.
      Yeager
                              David
      P. Yeager
                            Chairman
      and Chief Executive Officer
                            February
      17, 2009/s/
      Mark A. Yeager
                              Mark
      A. Yeager
                            Vice
      Chairman, President and Chief Operating Officer
                            February
      17, 2009/s/
      Terri A. Pizzuto
                              Terri
      A. Pizzuto
                            Executive
      Vice President, Chief Financial Officer and Treasurer (Principal Financial
      and Accounting Officer)
                            February
      17, 2009/s/
      Charles R. Reaves
                              Charles
      R. Reaves
                            Director
                            February
      17, 2009/s/
      Martin P. Slark
                              Martin
      P. Slark
                            Director
                            February
      17, 2009/s/
      Gary D. Eppen
                              Gary
      D. Eppen
                            Director
                            February
      17,
2009










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 accounts2008
                      
                      $
                      5,456,000
                      
                      
                      $
                      448,000
                      
                      
                      $
                      (802,000
                      )
                      
                      $
                      -
                      
                      
                      $
                      5,102,0002007
                      
                      $
                      6,299,000
                      
                      
                      $
                      (63,000
                      )
                      
                      $
                      (780,000
                      )
                      
                      $
                      -
                      
                      
                      $
                      5,456,0002006
                      
                      $
                      6,815,000
                      
                      
                      $
                      138,000
                      
                      
                      $
                      644,000
                      
                      
                      $
                      (1,298,000
                      )
                      
                      $
                      6,299,000Deferred
      tax valuation allowanceBalance
      at
                      
                      
                      Charged
      to
                      
                      
                      Charged
                      
                      
                      Transferred
      to
                      
                      
                      Balance
      atBeginning
                      
                      
                      Costs
      &
                      
                      
                      To
      Other
                      
                      
                      Other
                      
                      
                      Endof
      Year
                      
                      
                      Expenses
                      
                      
                      Accounts
                      
                      
                      Accounts
      (3)
                      
                      
                      of
      Year2008
                      
                      $
                      163,000
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      163,0002007
                      
                      $
                      248,000
                      
                      
                      $
                      81,000
                      
                      
                      $
                      -
                      
                      
                      $
                      (166,000
                      )
                      
                      $
                      163,0002006
                      
                      $
                      489,000
                      
                      
                      $
                      (241,000
                      )
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      248,000





(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
            Hub
      Group’s Nonqualified Deferred Compensation Plan Basic Plan Document as
      amended and restated as of January 1, 2008 (incorporated by reference to
      Exhibit 10.4 to the Registrant’s report on Form 10-K dated February 21,
      2008 and filed February 22, 2008, File No.
  000-27754)





10.4
            Hub
      Group’s Nonqualified Deferred Compensation Plan Adoption Agreement as
      amended and restated as of January 1, 2008 (incorporated by reference to
      Exhibit 10.5 to the Registrant’s report on Form 10-K dated February 21,
      2008 and filed February 22, 2008, File No.
  000-27754)





10.5
            Description
      of Executive Officer cash compensation for
2009





10.6
            Director
      compensation for 2009





10.7
            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)





10.8
            $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)





10.9
            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)





10.10
            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)





10.11
            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)





10.12
            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)





10.13
            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)





10.14
            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)







10.15
            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)




10.16
            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 10.1 to 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, Chairman and Chief Executive Officer, Pursuant to Rule
      13a-14(a) promulgated under the Securities Exchange Act of
      1934




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
10.5





Hub
Group, Inc.


Description
of Executive Officer Cash Compensation


For
2009





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 2008 effective January 1,
2009.  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 2008, goals were
weighted upon achievement of targeted levels of earnings per share and, for some
executives, upon achievement of personal goals.  The goals for 2009
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 2009 vest in
equal installments over a five year period beginning a year from the grant
date.








David
P. Yeager


Chairman
and Chief Executive Officer





Base


2009                      $574,867





Mark
A. Yeager


Vice
Chairman, President and Chief Operating Officer





Base


2009                      $399,489





Terri
A. Pizzuto


Executive
Vice President, Chief Financial Officer and Treasurer


Base


2009                      $300,000





Christopher
R. Kravas


Chief
Intermodal Officer





Base


2009                      $300,000





David
L. Marsh


Chief
Marketing Officer





Base


2009                      $300,000





EXHIBIT
10.6





Hub
Group, Inc.


Directors’
Compensation For 2009








Directors’
Compensation





Each
non-employee director receives an annual retainer fee of $60,000 in 2009, 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 2009 compensation package, each
independent director received 4,000 shares of restricted stock in January
2009.  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
      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, 2009, 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, 2008.





/s/ Ernst & Young
LLP





Chicago,
Illinois


February
16, 2009