**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, 2006


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. Yes ___   No X





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


Large
      Accelerated Filer X   Accelerated
      Filer ___   Non-Accelerated Filer ___




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, 2006, based upon the last reported sale price on that date on the
      NASDAQ National Market of $24.53 per share, was $938,679,256.





On
      February 20, 2007, the Registrant had 39,172,178 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 7, 2007 (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 22 operating centers throughout the United States
      and Canada. Each operating center is strategically located in a market with
      a
      significant concentration of shipping customers and one or more railheads.
      Through our network, we have the ability to move freight in and out of every
      major city in the United States, Canada and Mexico. We service a large and
      diversified customer base in a broad range of industries, including consumer
      products, retail and durable goods. We utilize an asset-light strategy in order
      to minimize our investment in equipment and facilities and reduce our capital
      requirements. We arrange freight movement for our customers through
      transportation carriers and equipment providers.





We
      sold
      substantially all of the assets of Hub Group Distribution Services, LLC (“HGDS”
or “Hub Distribution”) to the President of the former subsidiary on May 1, 2006.
      Accordingly, the results of operations of HGDS for the current and prior periods
      have been reported as discontinued operations. In addition, HGDS’s assets and
      liabilities have been reclassified as discontinued operations in the
      consolidated balance sheet as of December 31, 2005.





**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,
      2006, we also have exclusive access to approximately 5,400 rail-owned containers
      for our dedicated use on the Burlington Northern Santa Fe (“BNSF”) and the
      Norfolk Southern (“NS”) rail networks and approximately 2,100 rail-owned
      containers for our dedicated use on the Union Pacific (“UP”) rail network. In
      addition to these containers, during 2005 and 2006, we added 5,400 new 53’
containers for use on the BNSF and NS. We financed these containers with
      operating leases. These arrangements are included in Note 7 to the consolidated
      financial statements.





Through
      our newly formed 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.











2


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, Houston, Huntsville, Jacksonville, Kansas City, Los Angeles, Memphis,
      Nashville, Perry, Savannah, St. Louis, Stockton, and Tampa. At
      December 31, 2006, QS and Comtrak owned 305 tractors, leased 69 tractors, leased
      or owned 625 trailers and employed 424 drivers and contracted with 865
      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 customer’s needs without owning the equipment.





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




**Hub
      Network**





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





Atlanta
            Indianapolis
            Minneapolis
            San
                FranciscoBaltimore
            Kansas
                City
            New
                York City
            SeattleBoston
            Laredo
            Ontario
            St.
                LouisChicago
            Los
                Angeles
            Pittsburgh
            ToledoCleveland
            Memphis
            Salt
                Lake CityHouston
            Milwaukee
            San
                Diego


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





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





We
      provide truck brokerage services to our customers in a similar manner. In a
      typical truck brokerage transaction, the customer contacts the local operating
      center to obtain a price quote for a particular freight movement. The customer
      then provides appropriate shipping information to the local operating center.
      The local operating center makes the delivery appointment and arranges with
      the
      appropriate carrier to pick up the freight. Once it receives confirmation that
      the freight has been picked up, the local operating center monitors the


3


movement
      of the freight until it reaches its destination and the delivery has been
      confirmed. If the carrier notifies us that after delivering the load it will
      need additional freight, we may notify the operating center located nearest
      the
      destination of the carrier’s availability. Although under no obligation to do
      so, the local operating center then may attempt to secure freight for the
      carrier.




**Marketing
      and Customers**





We
      believe that fostering long-term customer relationships is critical to our
      success. Through these long-term relationships, we are able to better understand
      our customers’ needs and tailor our transportation services to the specific
      customer, regardless of the customer’s size or volume. We currently have
      full-time marketing representatives at various operating centers and sales
      offices with primary responsibility for servicing local, regional and national
      accounts. These sales representatives directly or indirectly report to our
      Executive Vice President - Sales. 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 services provider.





Our
        marketing
        efforts have produced a large, diverse customer base, with no customer
        representing more than 5.0% of our total revenue in 2006. We service customers
        in a wide variety of industries, including consumer products, retail and
        durable
        goods.





We
      have 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 Hub Group’s
      operating centers are linked together with the data center using an MPLS
      (“Multi-Protocol Label Switching”) network. This configuration provides a real
      time environment for transmitting data among our operating centers and
      headquarters. We also make extensive use of electronic commerce (“e-Commerce”),
      allowing each operating center to communicate electronically with each railroad,
      many drayage companies, certain trucking companies and those customers with
      e-Commerce capabilities.





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





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





Our
      website, www.hubgroup.com, is designed to allow our customers and vendors to
      easily do business with us online. Through Vendor Interface, we tender loads
      to
      our drayage partners using the Internet rather than phones or faxes. Vendor
      Interface also captures event status information, allows vendors to view
      outstanding paperwork requirements and helps facilitate paperless invoicing.
      We
      currently tender substantially all of our drayage loads using Vendor Interface
      or e-Commerce. Through Trucker Advantage, we exchange


4


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.





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





Under
        agreements with the BNSF, NS and UP, we managed, as of December 31, 2006,
        approximately 7,500 rail-owned containers. These containers are for Hub Group’s
        dedicated use on the respective rail networks. BNSF and NS containers are
        generally interchangeable across both rail networks. In addition to these
        containers, during 2005 and 2006, we added 5,400 new 53’ containers to our
        fleet. We financed these containers with operating leases.





**Relationship
      with Drayage Companies**





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





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













5


**Relationship
      with Trucking Companies**





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





**Risk
      Management and Insurance**





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





We
      maintain separate insurance policies to cover potential exposure from our
      company-owned drayage operations. We have general liability insurance with
      limits of $1.0 million per occurrence and $1.0 million in the aggregate,
      truckman’s auto liability with limits of $1.0 million and a companion $20.0
      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, 2006, we had 1,513 employees or 1,089 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.









6


**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, 2006, and our quarterly reports
      on Form 10-Q 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 .





**Item
      1A.**  **RISK
      FACTORS**





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




In
      2006,
      2005 and 2004, we derived 73% of our revenue from our intermodal services.
      As a
      result, any decrease in demand for intermodal transportation services compared
      to other transportation services could have an adverse effect on our results
      of
      operations.




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




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




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




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




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




In
      many
      of the markets we serve, we use third-party drayage companies for pickup and
      delivery of intermodal containers. Most drayage companies operate relatively
      small fleets and have limited access to capital for fleet expansion. In some
      of
      our markets, there are a limited number of drayage companies that can meet
      our quality
      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.




7


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




In
      2006,
      2005 and 2004, we derived 19%, 18% and 16%, respectively, of our revenue from
      our truck brokerage services. We depend upon various third-party trucking
      companies for the transportation of our customers’ loads. Particularly during
      periods of economic expansion, trucking companies may be unable to expand their
      fleets due to capital constraints or chronic


driver
      shortages, and these trucking companies also may raise their rates. If we face
      insufficient capacity among our third-party trucking companies, we may be unable
      to maintain or expand our truck brokerage business. Also, we may be unable
      to
      pass rate increases on to our customers, which could adversely affect our
      profitability.


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




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




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




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




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




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




**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 86%, 88% and 88% of our consolidated revenue in 2006, 2005
      and
      2004, respectively. Because transportation costs represent such a significant
      portion of our costs, even relatively small increases in these transportation
      costs, if we are unable to pass them through to our customers, are likely to
      have a significant effect on our gross margin and operating income.




8


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




We
      cannot
      predict the effects on our business of heightened security measures, actual
      or
      threatened terrorist attacks, efforts to combat terrorism, military action
      against a foreign state or other similar events. It is possiblethat
      one
      or more of these events could be directed at U.S. or foreign ports, borders,
      railroads or highways. Heightened security measures or other


events
      are likely to slow the movement of freight through U.S. or foreign ports, across
      borders or on U.S. or foreign railroads or highways and could adversely affect
      our business and results of operations. Any of these events could also
      negatively affect the economy and consumer confidence, which could cause a
      downturn in the transportation industry.




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




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




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




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




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




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




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




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




**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.**






9


For
          2006,
          our largest 20 customers accounted for approximately 36.8% of our revenue.
          A
          reduction in or termination of our services by several of our largest customers
          could have a material adverse effect on our revenue and
          business.
  **Insurance
        and claims expenses could significantly reduce our
        earnings.**
  Our
        future insurance claims expenses might exceed historical levels, which could
        reduce our earnings. If the number or severity of claims increases, our
        operating results could be adversely affected. We maintain insurance with
        licensed insurance companies. Insurance carriers have recently raised premiums.
        As a result, our insurance and claims expenses could


increase
      when our current coverage expires. If these expenses increase, and we are unable
      to offset the increase with higher freight rates, our earnings could be
      materially and adversely affected.





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




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




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




**Item
      1B.**  **UNRESOLVED
      STAFF COMMENTS**





None.





**Item
      2.**  **PROPERTIES**





We
      directly, or indirectly through our subsidiaries, operate 46  offices
      throughout the United States and in Canada, including our headquarters in
      Downers Grove, Illinois and our Company-owned drayage operations. 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 2006.


10





**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, 2007 with respect to each person who
      is an
      executive officer of the Company.







**Name**
            **Age**
            **Position**Phillip
                C. Yeager
            79
            Chairman
                of the Board of DirectorsDavid
                P. Yeager
            53
            Vice
                Chairman of the Board of Directors and Chief Executive
                OfficerMark
                A. Yeager
            42
            President,
                Chief Operating Officer and DirectorThomas
                M. White
            49
            Senior
                Vice President, Chief Financial Officer and TreasurerStephen
                P. Cosgrove
            47
            Executive
                Vice President-Intermodal and AdministrationJames
                B. Gaw
            56
            Executive
                Vice President-SalesChristopher
                R. Kravas
            41
            Executive
                Vice President-Strategy and Yield ManagementDonald
                G. Maltby
            52
            Executive
                Vice President-LogisticsDavid
                L. Marsh
            39
            Executive
                Vice President-HighwayDennis
                R. Polsen
            53
            Executive
                Vice President of Information ServicesTerri
                A. Pizzuto
            48
            Vice
                President-FinanceDavid
                C. Zeilstra
            37
            Vice
                President, Secretary and General
                Counsel








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





11


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





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





Thomas
      M.
      White has been our Senior Vice President, Chief Financial Officer and Treasurer
      since June 2002. Prior to joining us, Mr. White was a partner at Arthur
      Andersen. Mr. White received a Masters of Science of Business Administration
      from Purdue University in 1985 and a Bachelor of Business Administration from
      Western Michigan University in 1979. Mr. White is a CPA and a member of the
      board of directors of FTD Group, Inc. and Landauer, Inc.





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





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





Christopher
      R. Kravas has been our Executive Vice President -Strategy and Yield Management
      since December 2003. 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.





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.







12


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





Dennis
      R.
      Polsen has been our Executive Vice President of 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.





Terri
      A.
      Pizzuto has been our Vice President of Finance since July 2002. 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.





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





**Directors
      of the Registrant**





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

































13


**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 National Market
      tier of the NASDAQ Stock Market under the symbol “HUBG.” Set forth below are the
      high and low closing prices for shares of the Class A Common Stock for each
      full
      quarterly period in 2006 and 2005.





**2006**
            
            **2005****High**
            
            **Low**
            
            **High**
            
            **Low**First
                Quarter
            
            $
            22.92
            
            $
            17.42
            
            $
            16.46
            
            $
            12.30Second
                Quarter
            
            $
            25.80
            
            $
            20.75
            
            $
            16.03
            
            $
            12.11Third
                Quarter
            
            $
            24.68
            
            $
            20.98
            
            $
            18.47
            
            $
            12.54Fourth
                Quarter
            
            $
            29.63
            
            $
            22.99
            
            $
            20.46
            
            $
            16.41






On
      February 20, 2007, there were approximately 238 stockholders of record of
      the Class A Common Stock and, in addition, there were an estimated 10,186
      beneficial owners of the Class A Common Stock whose shares were held by brokers
      and other fiduciary institutions. On February 20, 2007, there were 11 holders
      of
      record of our Class B Common Stock (the “Class B Common Stock” together with the
      Class A Common Stock, the “Common Stock”).





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





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





Note
      13
      of the Company’s Notes to Consolidated Financial Statements is incorporated
      herein by reference.








14


**Performance
      Graph**





The
      following line graph compares the Company’s cumulative total stockholder return
      on its Class A Common Stock since December 31, 2001 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, 2001 in each index and in the Company’s Class A Common Stock and
      the reinvestment of dividends.












































15








**Item
      6. SELECTED FINANCIAL DATA**





**Selected
                Financial Data**(in
                thousands except per share data)**Years
                Ended December 31**,**2006
                (2)**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002****Statement
                of Income Data:**Revenue
            
            $
            1,609,529
            
            $
            1,481,878
            
            $
            1,380,722
            
            $
            1,305,817
            
            $
            1,254,744Gross
                margin
            
            
            218,418
            
            
            174,742
            
            
            167,062
            
            
            155,569
            
            
            143,759Operating
                income
            
            
            77,236
            
            
            47,904
            
            
            38,104
            
            
            20,611
            
            
            7,948Income
                (loss) from continuing operations before taxes
            
            
            79,508
            
            
            48,871
            
            
            27,551
            
            
            13,842
            
            
            (637
            )Income
                (loss) from continuing operations after taxes
            
            
            47,705
            
            
            29,176
            
            
            15,870
            
            
            6,906
            
            
            (376
            )Income
                from discontinued operations, net of tax (1)
            
            
            981
            
            
            3,770
            
            
            1,409
            
            
            1,524
            
            
            1,874Net
                income
            
            $
            48,686
            
            $
            32,946
            
            $
            17,279
            
            $
            8,430
            
            $
            1,498Basic
                earnings per common shareIncome (loss) from continuing operations
            
            $
            1.19
            
            $
            0.73
            
            $
            0.45
            
            $
            0.22
            
            $
            (0.01
            )Income from discontinued operations
            
            $
            0.03
            
            $
            0.10
            
            $
            0.04
            
            $
            0.05
            
            $
            0.06Diluted
                earnings per common shareIncome (loss) from continuing operations
            
            $
            1.17
            
            $
            0.71
            
            $
            0.42
            
            $
            0.22
            
            $
            (0.01
            )Income from discontinued operations
            
            $
            0.02
            
            $
            0.09
            
            $
            0.04
            
            $
            0.05
            
            $
            0.06**As
                of December 31,****2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003**
            
            
            **2002****Balance
                Sheet Data:**Total
                assets
            
            $
            484,548
            
            $
            444,418
            
            $
            410,845
            
            $
            388,527
            
            $
            399,262Long-term
                debt, excluding current portion
            
            
            -
            
            
            -
            
            
            -
            
            
            67,017
            
            
            94,027Stockholders'
                equity
            
            
            258,844
            
            
            242,075
            
            
            226,936
            
            
            143,035
            
            
            134,340




(1)
      HGDS
      disposed of May 1, 2006


(2)
      Comtrak was acquired February 28, 2006
































16


**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;


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


·
            general
                economic and business conditions;


·
            fuel
                shortages or fluctuations in fuel
                prices;


·
            increases
                in interest rates;


·
            changes
                in homeland security or terrorist
                activity;


·
            difficulties
                in maintaining or enhancing our information technology
                systems;


·
            changes
                to or new governmental regulation;


·
            loss
                of several of our largest customers;


·
            inability
                to recruit and retain key personnel;


·
            changes
                in insurance costs and claims expense;
                and


·
            inability
                to close and successfully integrate any future business
                combinations





**CAPITAL
      STRUCTURE**





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





**EXECUTIVE
      SUMMARY**





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












17


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 newly formed 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, Houston, Huntsville, Jacksonville, Kansas City, Los Angeles, Memphis,
      Nashville, Perry, Savannah, St. Louis, Stockton, and Tampa. At December 31,
      2006, QS and Comtrak owned 305 tractors, leased 69 tractors, leased or owned
      625
      trailers and employed 424 drivers and contracted with 865 owner-operators.





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





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





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





One
      of
      our primary goals is to grow our net income. We achieved this growth through
      an
      increase in revenue and margin from our existing transportation customers,
      winning new customers and the acquisition of Comtrak. Our yield management
      group
      works with sales and operations to enhance customer margins. Our top 50
      customers’ revenue represents approximately 52% of our revenue. During 2006 and
      2005, we severed relationships with certain customers, due to profitability
      issues and credit issues which impeded our intermodal revenue growth. We have
      mitigated our risks in the automotive sector by significantly reducing or
      eliminating our relationship with two automotive parts suppliers in 2006. While
      we continue to do some limited business for this sector, we are carefully
      managing our credit exposure.





We
      use
      various performance indicators to manage our business. We closely monitor margin
      and gains and losses for our top 50 customers and loads with negative margins.
      We also evaluate on-time performance, costs per load by location and daily
      sales
      outstanding by location. 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 the current and prior
      periods have been reported as discontinued operations. In addition, HGDS’s
      assets and liabilities have been reclassified as discontinued operations in
      the
      consolidated balance sheet as of December 31, 2005.















18


**RESULTS
      OF OPERATIONS**





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





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


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


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





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





19





**Revenue**





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





**Gross
      Margin**





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





**Salaries
      and Benefits**





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




**General
      and Administrative**




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





**Depreciation
      and Amortization**





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





**Other
      Income (Expense)**





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




**Provision
      for Income Taxes**





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





20


**Income
      from Continuing Operations**




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





**Income
      from Discontinued Operations**





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





**Earnings
      Per Common Share**





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





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





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





***Year
      Ended December 31, 2005, Compared to Year Ended December 31,
      2004***





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








Twelve
                Months EndedDecember
                31,%2005
            
            2004
            
            ChangeRevenueIntermodal
            
            $
            1,079,798
            
            $
            1,014,533
            
            
            6.4
            %Brokerage
            
            
            266,545
            
            
            225,466
            
            
            18.2
            %Logistics
            
            
            135,535
            
            
            140,723
            
            
            (3.7)
            %**Total
                revenue from continuing operations**
            
            $
            1,481,878
            
            $
            1,380,722
            
            
            7.3
            %


















21


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





**Twelve
                Months Ended****December
                31,****2005**
            
            **2004**Revenue
            
            
            100.0
                %
            
            
            100.0
                %Transportation
                costs
            
            
            88.2
            
            
            87.9Gross
                margin
            
            
            11.8
            
            
            12.1Costs
                and expenses:Salaries
                and benefits
            
            
            5.6
            
            
            6.1General
                and administration
            
            
            2.3
            
            
            2.5Depreciation
                and amortization
            
            
            0.7
            
            
            0.7Total
                costs and expenses
            
            
            8.6
            
            
            9.3Operating
                income
            
            
            3.2
            
            
            2.8Other
                income (expense):Interest
                expense
            
            
            -
            
            
            (0.3)Interest
                income
            
            
            0.1
            
            
            -Debt
                extinguishment expense
            
            
            -
            
            
            (0.5)Total
                other income (expense)
            
            
            0.1
            
            
            (0.8)Income
                from continuing operations before
              provision
                for income taxes
            
            
            3.3
            
            
            2.0Provision
                for income taxes
            
            
            1.3
            
            
            0.8Income
                from continuing operations
            
            
            2.0%
            
            
            1.2 %





**Revenue**





Revenue
      increased 7.3% to $1,481.9 million in 2005 from $1,380.7 million in 2004.
      Intermodal revenue increased 6.4% to $1,079.8 million from $1,014.5 million
      due
      primarily to price increases, mix and fuel surcharges, offset by a 5.1% decrease
      in volume. Truck brokerage revenue increased 18.2% to $266.5 million from $225.5
      million due primarily to price increases, mix and fuel surcharges and a 5.4%
      increase in volume. Logistics revenue decreased 3.7% to $135.5 million from
      $140.7 million due primarily to the loss of two customers in 2005. Hub
      Distribution’s revenue has been reclassified to discontinued operations due to
      the sale in May 2006.














22


**Gross
      Margin**





Gross
      margin increased 4.6% to $174.7 million in 2005 from $167.1 million in 2004.
      Gross margin percentage decreased from 12.1% in 2004 to 11.8% in 2005 due
      partially to additional costs for repositioning equipment in 2005, accessorial
      cost increases, ramp up costs for certain new customers and start up costs
      associated with our new containers. We made a decision to reposition equipment
      to certain cities to expand the number of rail-controlled containers within
      our
      network in order to meet customer demand during the 2005 peak season. In
      addition, in 2005 some of our rail carriers changed accessorial pricing and
      there is often a lag time before we can pass along the increase to our
      customers. Further, in 2005 we incurred initial ramp up costs for several large
      customers and we had extra drayage costs associated with moving our new
      containers from the pier.




**Salaries
      and Benefits**





Salaries
      and benefits decreased slightly to $83.4 million in 2005 from $83.8 million
      in
      2004. As a percentage of revenue, salaries and benefits decreased to 5.6% in
      2005 from 6.1% in 2004 due primarily to an increase in revenue. Headcount as
      of
      December 31, 2005 and 2004 was 944 and 951, respectively, which excludes
      drivers, as driver costs are included in transportation costs.




**General
      and Administrative**




General
      and administrative expenses decreased 1.3% to $34.5 million in 2005 from $35.0
      million in 2004. As a percentage of revenue, these expenses decreased to 2.3%
      in
      2005 from 2.5% in 2004. General and administrative expense decreased primarily
      due to reductions in outside services and equipment lease expense. Equipment
      lease expense decreased by approximately $1.3 million due primarily to equipment
      lease buy-outs. Outside services decreased by $0.6 million due primarily to
      lower professional service costs.




**Depreciation
      and Amortization**





Depreciation
      and amortization decreased 12.4% to $8.9 million from $10.2 million in 2004.
      This expense as a percentage of revenue remained consistent at 0.7%. The
      decrease in depreciation and amortization is due primarily to lower computer
      equipment and software depreciation.





**Other
      Income (Expense)**





Interest
      expense decreased 96.6% to $0.1 million from $3.6 million in 2004. The decrease
      in interest expense is due primarily to carrying a lower average debt balance
      this year as compared to the prior year and the extinguishment of the private
      placement debt during the third quarter of 2004. The debt extinguishment
      expenses of $7.3 million in 2004 includes a $6.8 million pre-payment penalty
      associated with paying off the $50 million of 9.14% debt and the $0.5 million
      write off of the related deferred financing costs.





**Provision
      for Income Taxes**





The
      provision for income taxes increased to $19.7 million in 2005 compared to $11.7
      million in 2004. We provided for income taxes using an effective rate of 40.3%
      in 2005 compared to 42.4% in 2004. The decrease in the effective rate in 2005
      resulted primarily from a lower increase in reserves for 2005 and a lower state
      tax rate due to business restructuring.





**Income
      from Continuing Operations**




Net
      income from continuing operations increased to $29.2 million in 2005 from $15.9
      million in 2004 due primarily to an increase in our gross margin, lower general
      and administrative expenses and lower interest expense.





23


**Income
      from Discontinued Operations**





Income
      from discontinued operations represents income from the operations of HGDS.
      This
      income was $3.8 million in 2005 and $1.4 million in 2004.





**Earnings
      Per Common Share**





Basic
      earnings per share from continuing operations were $0.73 in 2005 and $0.45
      in
      2004. Basic earnings per share from discontinued operations were $0.10 in 2005
      and $0.04 in 2004. Basic earnings per share were $0.83 in 2005 and $0.49 in
      2004.





Diluted
      earnings per share from continuing operations increased to $0.71 in 2005 from
      $0.42 in 2004. Diluted earnings per share from discontinued operations were
      $0.09 in 2005 and $0.04 in 2004. Diluted earnings per share increased to $0.80
      in 2005 from $0.46 in 2004. The weighted average diluted shares outstanding
      increased 10.2% from 37,556,000 at December 31, 2004 to 41,392,000 at December
      31, 2005 due primarily to the 7,200,000 shares from our stock offering being
      outstanding the whole year in 2005 and the issuance of restricted stock.





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







**LIQUIDITY
      AND CAPITAL RESOURCES**





In
      2006,
      we have funded our operations, capital expenditures, acquisitions and stock
      buy
      backs through cash flows from operations **.**





Cash
      provided by operating activities for the year ended December 31, 2006 was
      approximately $76.6 million, which resulted primarily from net income from
      continuing operations of $47.7 million, non-cash charges of $12.1 million and
      an
      increase in the change in operating assets of $16.8 million.





Net
      cash
      used in investing activities for the year ended December 31, 2006 was $35.7
      million and related primarily to our acquisition of Comtrak for $39.9 million
      partially offset by the $12.2 million of proceeds from the disposition of our
      discontinued operations. We expect capital expenditures to be between $10.0
      and
      $11.0 million in 2007.




The
      net
      cash used in financing activities for the year ended December 31, 2006 was
      $35.3
      million. We generated $2.0 million of cash from stock options exercised and
      used
      $49.6 million of cash to purchase treasury stock. We also reported $12.3 million
      of excess tax benefits from share-based compensation as a financing cash
      in-flow. These tax benefits were previously reported as operating cash flows
      prior to the adoption of SFAS 123 (R).





Cash
      provided by discontinued operations was $1.8 million for the year ended December
      31, 2006.





We
      invest
      our cash overnight in commercial paper. These investments are included in cash
      and cash equivalents on our balance sheet due to their short term maturity
      and
      are carried at market value.





On
      March
      23, 2005 we entered into a revolving credit agreement that provides for
      unsecured borrowings of up to $40.0 million. The interest rate ranges from
      LIBOR
      plus 0.75% to 1.25% or Prime plus 0.5%. The revolving line of credit expires
      on
      March 23, 2010. The financial covenants require a minimum net worth of $175.0
      million and a cash flow leverage ratio of not more than 2.0 to 1.0. The
      commitment fees charged on the unused line of credit are between 0.15% and
      0.25%.  On
      February 21, 2006, we amended the revolving credit agreement to provide for
      unsecured borrowing up to $50.0 million. No other terms of the agreement were
      amended. Our unused and available borrowings under our bank revolving line
      of
      credit at December 31, 2006 and December 31, 2005 were $48.2 million and $39.0
      million, respectively. We were in compliance with our debt covenants at December
      31, 2006.




24


We
      have
      standby letters of credit that expire from 2007 to 2012. As of December 31,
      2006, our letters of credit were $1.8 million.





In
      2006,
      we added 2,000 new 53’ containers to our fleet. We financed these 2,000
      containers with operating leases. These and other leasing arrangements are
      included in Note 7 to the consolidated financial statements.





We
      have a
      related party payable of $5.0 million as of December 31, 2006 that will be
      paid
      during the first quarter of 2007. This amount relates to the 2006 earn out
      payment due to the former owner of Comtrak. A similar amount will be paid in
      2008 if the 2007 earn-out is achieved.




We
      have
      spent approximately $49.2 million on stock repurchases in 2006. We have
      authorization to spend an additional $75.0 million to purchase common stock
      through June of 2008.




**CONTRACTUAL
      OBLIGATIONS**





Our
      contractual cash obligations as of December 31, 2006 are minimum rental
      commitments and the earn out payment to the former owner of Comtrak. We have
      a
      ten year lease agreement for a building and property (Comtrak’s Memphis
      facility) with a related party, the President of Comtrak. Rent paid under this
      agreement totaled $0.6 million for the year ended December 31, 2006. The annual
      lease payments escalate by less than 1% per year. Minimum annual rental
      commitments, at December 31, 2006, under non-cancelable operating leases,
      principally for real estate, containers and equipment and the earn out relted
      to
      Comtrak are payable as follows (in thousands):





2007
            
            $
            28,0662008
            
            
            16,1732009
            
            
            12,7972010
            
            
            10,6992011
            
            
            10,0202012
                and thereafter
            
            
            12,728




**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):





2007
            
            $
            5712008
            
            
            2,1602009
            
            
            9552010
            
            
            1,3862011
            
            
            5192012
                and thereafter
            
            
            2,671


**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.





25


**Allowance
      for Uncollectible Trade Accounts Receivable**





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





**Revenue
      Recognition**





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





**Deferred
      Income Taxes**





Deferred
      income taxes are recognized for the future tax effects of temporary differences
      between financial and income tax reporting using tax rates in effect for the
      years in which the differences are expected to reverse. We believe that it
      is
      more likely than not that our deferred tax assets will be realized with the
      exception of $248,000 related to state tax net operating losses and other state
      credits for which valuation allowances have 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.
      We utilize a third-party independent valuation firm to assist in performing
      the
      necessary valuations to be used in the impairment testing. These valuations
      are
      based on market capitalization, discounted cash flow analysis or a combination
      of both methodologies. The assumptions used in the valuations include
      expectations regarding future operating performance, discount rates, control
      premiums and other factors which are subjective in nature. Actual cash flows
      from operations could differ from management’s estimates due to changes in
      business conditions, operating performance and economic conditions. Should
      estimates differ materially from actual results, we may be required to record
      impairment charges in the future.





**Equipment**





We
      operate tractors and utilize containers in connection with our business. This
      equipment may be purchased or acquired under capital or operating lease
      agreements. In addition, we rent equipment from third parties and various
      railroads under short term rental arrangements. Equipment which is purchased
      is
      depreciated on the straight line method over the estimated useful life. We
      had
      no equipment under capital lease arrangements at December 31, 2006. Our
      equipment leases have five to seven year terms and in some cases contain renewal
      options.


26


**Stock
      based Compensation**




Effective
      January 1, 2006 we adopted the fair value recognition provisions of FASB
      Statement No. 123 (R) “Share Based Payment” (SFAS No. 123 (R)), using the
      modified prospective transition method. Prior to January 1, 2006, we accounted
      for our share-based compensation plans under the recognition and measurement
      provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees,”
and related interpretations as permitted by Statement of Financial Accounting
      Standard (SFAS) No. 123 “Accounting for Stock Based


Compensation.”
      We have not granted any stock options since 2003. Instead, we have issued
      restricted stock that vests over three to five years. In addition, during 2006,
      the Board of Directors granted performance units which entitle the recipients
      to
      receive restricted stock contingent upon the achievement of an operating income
      earnings target. As of December 31, 2006, there was $4.9 million of unrecognized
      compensation cost related to non-vested shared based compensation that is
      expected be recognized over a weighted average period of 1.52 years. In
      addition, we have performance units that were issued in May of 2006. The
      unrecognized compensation cost mentioned above does not include any potential
      unrecognized compensation expense associated with the performance units.





**New
      Pronouncement**





In
      July
      2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. 48 (“FIN48”), 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. FIN 48 is effective for fiscal years beginning after December
      15,
      2006. We will implement this interpretation effective January 1, 2007. The
      Company has completed its initial evaluation of the impact of the January 1,
      2007 adoption of FIN 48 and determined that such adoption is not expected to
      have a material impact on the Company’s financial position.





**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 core
      transportation business mix, trailer and container capacity, vendor pricing,
      fuel costs, intermodal industry growth, intermodal industry service levels,
      accessorials, competition and accounting estimates.


27


**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
        and changes in railroad intermodal service levels which could result in a
        lower
        or higher cost of labor per move.




**General
      and Administrative**





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





**Depreciation
      and Amortization**





We
      estimate that depreciation and amortization of property and equipment will
      decrease slightly in 2007.





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





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





**Other
      Income (Expense)**





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





**Item
      7A.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**







We
      are
      exposed to market risk related to changes in interest rates on our bank line
      of
      credit which may adversely affect our results of operations and financial
      condition. We seek to minimize the risk from interest rate volatility through
      our regular operating and financing activities and when deemed appropriate,
      through the use of derivative financial instruments. No derivative financial
      instruments are outstanding at December 31, 2006. We do not use financial
      instruments for trading purposes.





At
      December 31, 2006, the Company had no outstanding obligations under its bank
      line of credit arrangement.











28








**Item
      8.**  **FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA**








**INDEX
      TO FINANCIAL STATEMENTS**


**AND
      FINANCIAL STATEMENT SCHEDULE**








Report
                of Independent Registered Public Accounting Firm
            30Consolidated
                Balance Sheets - December 31, 2006 and December 31, 2005
            31Consolidated
                Statements of Income - Years ended December 31, 2006, December 31,
                2005
                and December 31, 2004
            32Consolidated
                Statements of Stockholders’ Equity - Years ended December 31,
                2006,
              December
                31, 2005 and December 31, 2004
            33Consolidated
                Statements of Cash Flows - Years ended December 31, 2006,
              December
                31, 2005 and December 31, 2004
            34Notes
                to Consolidated Financial Statements
            35Schedule
                II - Valuation and Qualifying Accounts
            S-1









































29








**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, 2006 and 2005, and the related consolidated statements of income,
      stockholders' equity, and cash flows for each of the three years in the period
      ended December 31, 2006. Our audits also included the financial statement
      schedule listed in the index at Item 15(a) for the years ended December 31,
      2006, 2005 and 2004. 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, 2006 and 2005, and the consolidated results of their operations
      and
      their cash flows for each of the three years in the period ended December 31,
      2006 in conformity with U.S. generally accepted accounting principles. Also,
      in
      our opinion, the related financial statement schedule referred to above for
      the
      years ended December 31, 2006, 2005, and 2004 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 1 to the consolidated financial statements, effective January
      1, 2006, the Company changed the method of accounting for share-based payments
      to conform with FASB Statement No. 123 (R), *Share-Based
      Payment* .





We
      also
      have audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States), the effectiveness of the Company’s internal
      control over financial reporting as of December 31, 2006, based on criteria
      established in Internal Control - Integrated Framework issued by the Committee
      of Sponsoring Organizations of Treadway Commission and our report dated February
      22, 2007 expressed an unqualified opinion thereon.





ERNST
      & YOUNG LLP








Chicago,
      Illinois


February
      22, 2007



















30







**HUB
                GROUP, INC.**
            ******CONSOLIDATED
                BALANCE SHEETS**
            ******(in
                thousands, except share amounts)****December
                31,****2006**
            ****
            **2005**ASSETSCURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            43,491
            
            $
            36,133Accounts
                receivableTrade,
                net
            
            
            158,284
            
            
            147,004Other
            
            
            8,369
            
            
            10,603Prepaid
                taxes
            
            
            3,202
            
            
            6,040Deferred
                taxes
            
            
            3,433
            
            
            -Prepaid
                expenses and other current assets
            
            
            4,450
            
            
            3,860Assets
                of discontinued operations
            
            
            -
            
            
            17,855TOTAL
                CURRENT ASSETS
            
            
            221,229
            
            
            221,495Restricted
                investments
            
            
            3,017
            
            
            1,387Property
                and equipment, net
            
            
            26,974
            
            
            12,767Other
                intangibles, net
            
            
            7,502
            
            
            -Goodwill,
                net
            
            
            225,448
            
            
            208,150Other
                assets
            
            
            378
            
            
            619TOTAL
                ASSETS
            
            $
            484,548
            
            $
            444,418LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIES:Accounts
                payableTrade
            
            $
            117,676
            
            $
            114,094Other
            
            
            6,839
            
            
            3,668Accrued
                expensesPayroll
            
            
            15,901
            
            
            14,826Other
            
            
            29,010
            
            
            18,917Related
              party payable
            
            
            5,000
            
            
            -Deferred
                taxes
            
            
            -
            
            
            960Liabilities
                of discontinued operations
            
            
            -
            
            
            5,341TOTAL
                CURRENT LIABILITIES
            
            
            174,426
            
            
            157,806Deferred
                compensation
            
            
            7,691
            
            
            6,083Deferred
                taxes
            
            
            43,587
            
            
            38,454STOCKHOLDERS'
                EQUITY:Preferred
                stock, $.01 par value; 2,000,000 shares authorized; no shares issued
                or
                outstanding in 2006 and 2005
            
            
            -
            
            
            -Common
                stockClass
                A: $.01 par value; 47,337,700 shares authorized; 41,224,792 shares
                issued
                and 38,943,122 outstanding in 2006; 41,224,792 shares issued and
                39,962,484 outstanding in 2005
            
            
            412
            
            
            412Class
                B: $.01 par value; 662,300 shares authorized; 662,296 shares issued
                and
                outstanding in 2006 and 2005
            
            
            7
            
            
            7Additional
                paid-in capital
            
            
            179,203
            
            
            183,524Purchase
                price in excess of predecessor basis, net of tax benefit of
                $10,306
            
            
            (15,458
            )
            
            (15,458
            )Retained
                earnings
            
            
            146,243
            
            
            97,557Unearned
                compensation
            
            
            -
            
            
            (6,259
            )Treasury
                stock; at cost, 2,281,670 shares in 2006 and 1,262,308 shares in
                2005
            
            
            (51,563
            )
            
            (17,708
            )TOTAL
                STOCKHOLDERS' EQUITY
            
            
            258,844
            
            
            242,075TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            484,548
            
            $
            444,418


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


31





**HUB
                GROUP, INC.****CONSOLIDATED
                STATEMENTS OF INCOME****(in
                thousands, except per share amounts)****Years
                Ended****2006**
            
            **2005**
            
            **2004**Revenue
            
            $
            1,609,529
            
            $
            1,481,878
            
            $
            1,380,722Transportation
                costs
            
            
            1,391,111
            
            
            1,307,136
            
            
            1,213,660Gross
                margin
            
            
            218,418
            
            
            174,742
            
            
            167,062Costs
                and expenses:Salaries
                and benefits
            
            
            95,152
            
            
            83,392
            
            
            83,801General
                and administrative
            
            
            39,929
            
            
            34,541
            
            
            34,993Depreciation
                and amortization
            
            
            6,101
            
            
            8,905
            
            
            10,164Total
                costs and expenses
            
            
            141,182
            
            
            126,838
            
            
            128,958Operating
                income
            
            
            77,236
            
            
            47,904
            
            
            38,104Other
                income (expense):Interest
                expense
            
            
            (115
            )
            
            (124
            )
            
            (3,598
            )Interest
                income
            
            
            2,311
            
            
            971
            
            
            259Debt
                extinguishment expenses
            
            
            -
            
            
            -
            
            
            (7,296
            )Other,
                net
            
            
            76
            
            
            120
            
            
            82Total
                other income (expense)
            
            
            2,272
            
            
            967
            
            
            (10,553
            )Income
                from continuing operations before provision for income
                taxes
            
            
            79,508
            
            
            48,871
            
            
            27,551Provision
                for income taxes
            
            
            31,803
            
            
            19,695
            
            
            11,681Income
                from continuing operations
            
            
            47,705
            
            
            29,176
            
            
            15,870Discontinued
                operations:Income
                from discontinued operations of HGDS (including loss on disposal
                of $70 in
                2006)
            
            
            1,634
            
            
            6,315
            
            
            2,447Provision
                for income taxes
            
            
            653
            
            
            2,545
            
            
            1,038Income
                from discontinued operations
            
            
            981
            
            
            3,770
            
            
            1,409Net
                income
            
            $
            48,686
            
            $
            32,946
            
            $
            17,279Basic
                earnings per common shareIncome
                from continuing operations
            
            $
            1.19
            
            $
            0.73
            
            $
            0.45Income
                from discontinued operations
            
            $
            0.03
            
            $
            0.10
            
            $
            0.04Net
                income
            
            $
            1.22
            
            $
            0.83
            
            $
            0.49Diluted
                earnings per common shareIncome
                from continuing operations
            
            $
            1.17
            
            $
            0.71
            
            $
            0.42Income
                from discontinued operations
            
            $
            0.02
            
            $
            0.09
            
            $
            0.04Net
                income
            
            $
            1.19
            
            $
            0.80
            
            $
            0.46Basic
                weighted average number of shares outstanding
            
            
            39,958
            
            
            39,860
            
            
            35,200Diluted
                weighted average number of shares outstanding
            
            
            40,823
            
            
            41,392
            
            
            37,556


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




32




**HUB
                GROUP, INC**
            ******CONSOLIDATED
                STATEMENTS OF STOCKHOLDERS’ EQUITY**
            ******(in
                thousands, except shares)****Years
                ended December 31,****2006**
            ****
            **2005**
            ****
            **2004**Class
                A & B Common Stock Shares OutstandingBeginning
                of year
            
            
            40,624,780
            
            
            41,191,812
            
            
            32,211,184Exercise
                of non-qualified stock options
            
            
            -
            
            
            692,516
            
            
            1,491,532Issuance
                of restricted stock
            
            
            -
            
            
            2,760
            
            
            208,296Purchase
                of treasury shares
            
            
            (2,126,255
            )
            
            (2,378,712
            )
            
            (512,960
            )Stock
                offering
            
            
            -
            
            
            -
            
            
            7,200,000Treasury
                shares issued under restricted stock and stock options
                exercised
            
            
            1,106,893
            
            
            1,116,404
            
            
            593,760Ending
                balance
            
            
            39,605,418
            
            
            40,624,780
            
            
            41,191,812Class
                A & B Common Stock AmountBeginning
                of year
            
            $
            419
            
            $
            412
            
            $
            324Issuance
                of restricted stock and exercise of stock options
            
            
            -
            
            
            7
            
            
            16Stock
                offering
            
            
            -
            
            
            -
            
            
            72Ending
                balance
            
            
            419
            
            
            419
            
            
            412Additional
                Paid-in CapitalBeginning
                of year
            
            
            183,524
            
            
            182,056
            
            
            115,577Equity
                reclassification impact of adopting SFAS No. 123 (R)
            
            
            (6,259
            )
            
            -
            
            
            -Exercise
                of non-qualified stock options
            
            
            (12,516
            )
            
            (7,663
            )
            
            3,045Share-based
                compensation expense
            
            
            3,405
            
            
            -
            
            
            -Tax
                benefit of share-based compensation plans
            
            
            12,337
            
            
            8,523
            
            
            5,319Issuance
                of restricted stock awards, net of forfeitures
            
            
            (1,288
            )
            
            608
            
            
            2,316Stock
                offering
            
            
            -
            
            
            -
            
            
            55,799Ending
                balance
            
            
            179,203
            
            
            183,524
            
            
            182,056Purchase
                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
            
            
            97,557
            
            
            64,611
            
            
            47,332Net
                income
            
            
            48,686
            
            
            32,946
            
            
            17,279Ending
                balance
            
            
            146,243
            
            
            97,557
            
            
            64,611Unearned
                CompensationBeginning
                of year
            
            
            (6,259
            )
            
            (4,685
            )
            
            (4,448
            )Issuance
                of restricted stock awards, net of forfeitures
            
            
            -
            
            
            (3,751
            )
            
            (2,385
            )Compensation
                expense related to restricted stock awards
            
            
            -
            
            
            2,177
            
            
            2,148Equity
                reclassification impact of adopting SFAS No. 123 (R)
            
            
            6,259
            
            
            -
            
            
            -Ending
                balance
            
            
            -
            
            
            (6,259
            )
            
            (4,685
            )Treasury
                StockBeginning
                of year
            
            
            (17,708
            )
            
            -
            
            
            (292
            )Purchase
                of treasury shares
            
            
            (49,622
            )
            
            (33,245
            )
            
            (4,110
            )Issuance
                of restricted stock and exercise of stock options
            
            
            15,767
            
            
            15,537
            
            
            4,402Ending
                balance
            
            
            (51,563
            )
            
            (17,708
            )
            
            -Total
                stockholders’ equity
            
            $
            258,844
            
            $
            242,075
            
            $
            226,936


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


33


**HUB
                  GROUP, INC.****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS****(in
                  thousands)****Years
                  Ended December 31,****2006**
              
              **2005**
              
              **2004**Cash
                  flows from operating activities:Income from continuing operations
              
              $
              47,705
              
              $
              29,176
              
              $
              15,870Adjustments to reconcile income from continuing operations to net
                  cashprovided
                by operating activities:Depreciation and amortization
              
              
              8,170
              
              
              9,319
              
              
              10,454Deferred taxes
              
              
              690
              
              
              18,382
              
              
              11,714Compensation expense related to share-based compensation
                  plans
              
              
              3,405
              
              
              2,148
              
              
              2,113Gain on sale of assets
              
              
              (131
              )
              
              (271
              )
              
              (353
              )Changes in operating assets and liabilities excluding effects of
                  purchase
                  transaction:Restricted investments
              
              
              (1,630
              )
              
              (1,387
              )
              
              -Accounts receivable, net
              
              
              393
              
              
              (18,931
              )
              
              (9,797
              )Prepaid taxes
              
              
              2,234
              
              
              (6,151
              )
              
              -Prepaid expenses and other current assets
              
              
              (297
              )
              
              722
              
              
              (455
              )Other assets
              
              
              246
              
              
              200
              
              
              124Accounts payable
              
              
              4,754
              
              
              3,039
              
              
              (2,546
              )Accrued expenses
              
              
              9,440
              
              
              8,497
              
              
              8,048Deferred compensation
              
              
              1,608
              
              
              (1,534
              )
              
              1,381Net
                  cash provided by operating activities
              
              
              76,587
              
              
              43,209
              
              
              36,553Cash
                  flows from investing activities:Proceeds from sale of equipment
              
              
              394
              
              
              579
              
              
              294Purchases of property and equipment
              
              
              (8,372
              )
              
              (4,078
              )
              
              (3,377
              )Cash used in acquisition of Comtrak, Inc.
              
              
              (39,942
              )
              
              -
              
              
              -Proceeds from the disposal of discontinued operations
              
              
              12,203
              
              
              -
              
              
              -Net
                  cash used in investing activities
              
              
              (35,717
              )
              
              (3,499
              )
              
              (3,083
              )Cash
                  flows from financing activities:Proceeds from stock offering
              
              
              -
              
              
              -
              
              
              55,871Proceeds from stock options exercised
              
              
              1,963
              
              
              4,738
              
              
              7,394Purchase of treasury stock
              
              
              (49,622
              )
              
              (33,245
              )
              
              (4,110
              )Excess tax benefits from share-based compensation
              
              
              12,337
              
              
              -
              
              
              -Net payments on revolver
              
              
              -
              
              
              -
              
              
              (6,000
              )Payments on long-term debt
              
              
              -
              
              
              -
              
              
              (69,034
              )Net
                  cash used in financing activities
              
              
              (35,322
              )
              
              (28,507
              )
              
              (15,879
              )Cash
                  flows from operating activities of discontinued operations
              
              
              1,848
              
              
              8,416
              
              
              (702
              )Cash
                  flows used in investing activities of discontinued
                  operations
              
              
              (38
              )
              
              (292
              )
              
              (83
              )Net
                  cash provided by (used in) discontinued operations
              
              
              1,810
              
              
              8,124
              
              
              (785
              )Net
                  increase in cash and cash equivalents
              
              
              7,358
              
              
              19,327
              
              
              16,806Cash
                  and cash equivalents beginning of period
              
              
              36,133
              
              
              16,806
              
              
              -Cash
                  and cash equivalents end of period
              
              $
              43,491
              
              $
              36,133
              
              $
              16,806Supplemental
                  disclosures of cash paid for:Interest
              
              $
              114
              
              $
              124
              
              $
              2,995Income taxes
              
              $
              16,801
              
              $
              6,811
              
              $
              591The
                  accompanying notes to consolidated financial statements are an
                  integral
                  part of these statement.






34


**HUB
      GROUP, INC.**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





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





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





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





*Cash
      and Cash Equivalents* :
      We
      consider as cash equivalents all highly liquid instruments with an original
      maturity of three months or less. We invest our cash overnight in commercial
      paper of which $37.0 million and $36.0 million was outstanding at December
      31,
      2006 and 2005, respectively.





*Accounts
      Receivable and Allowance for Uncollectible Accounts* :
      In the
      normal course of business, we extend credit to customers after a review of
      each
      customer’s credit history. An allowance for uncollectible trade accounts has
      been established through an analysis of the accounts receivable aging, an
      assessment of collectibility based on historical trends and an evaluation of
      the
      current economic conditions. To be more specific, we reserve a portion of every
      account balance that has aged over one year, a portion of certain customers
      in
      bankruptcy and account balances specifically identified as uncollectible. The
      allowance is reported on the balance sheet in net accounts receivable. Actual
      collections of accounts receivable could differ from management’s estimates due
      to changes in future economic, industry or customer financial conditions. Our
      reserve for uncollectible accounts was approximately $6,299,000 and $6,815,000
      at December 31, 2006 and 2005, 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, 3 to 8 years. Direct costs related
      to
      internally developed software projects are capitalized and amortized over their
      expected useful life on a straight-line basis not to exceed five years. Interest
      is capitalized on qualifying assets under development for internal use.
      Maintenance and repairs are charged to operations as incurred and major
      improvements are capitalized. The cost of assets retired or otherwise disposed
      of and the accumulated depreciation thereon are removed from the accounts with
      any gain or loss realized upon sale or disposal charged or credited to
      operations. We review long-lived assets for impairment when events or changes
      in
      circumstances indicate the carrying amount of an asset may not be recoverable.
      In the event that the undiscounted future cash flows resulting from the use
      of
      the asset group is less than the carrying amount, an impairment loss equal
      to
      the excess of the assets carrying amount over its fair value is recorded.




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





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





35


*Fair
      Value of Financial Instruments:* The
      carrying value of cash and cash equivalents, accounts receivable and accounts
      payable approximates fair value at December 31, 2006 due to their short-term
      nature.




*Concentration
      of Credit Risk* :
      Our
      financial instruments that are exposed to concentrations of credit risk consist
      primarily of cash and cash equivalents and accounts receivable. We place our
      cash and temporary investments with high quality financial institutions. We
      primarily serve customers located throughout the United States with no
      significant concentration in any one region. No one customer accounted for
      more
      than 5% of revenue in 2006, 2005 or 2004. 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 $248,000 related to state tax net operating losses and other
      state credits 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.





*New
      Accounting Pronouncement:* In
      July
      2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. 48 (“FIN48”), 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. FIN 48 is effective for fiscal years beginning after December
      15,
      2006. We will implement this interpretation effective January 1, 2007. The
      Company has completed its initial evaluation of the impact of the January 1,
      2007 adoption of FIN 48 and determined that such adoption is not expected to
      have a material impact on the Company’s financial position.





*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* :
      Prior
      to January 1, 2006, we accounted for our share-based compensation plans under
      the recognition and measurement provisions of APB Opinion No. 25, “Accounting
      for Stock Issued to Employees,” and related interpretations, as permitted by
      Statement of Financial Accounting Standard (SFAS) No. 123 “Accounting for
      Stock-Based Compensation.” No stock-option based employee compensation cost was
      recognized in the income statement prior to 2006, as all stock options granted
      had an exercise price equal to the market value of the underlying common stock
      on the date of grant. Effective January 1, 2006, we adopted the fair value
      recognition provisions of FASB Statement No. 123 (R)


36


“Share-Based
      Payment” (SFAS No. 123 (R)), using the modified-prospective transition method.
      Under that transition method, compensation cost recognized in 2006 includes:
      (a)
      compensation costs for all share-based payments granted prior to, but not yet
      vested as of January 1, 2006, based on the grant date fair value estimated
      in
      accordance with the original provisions of SFAS No. 123 and (b) compensation
      cost for all share-based payments granted subsequent to January 1, 2006, based
      on the grant-date fair value estimated in accordance with the provisions of
      SFAS
      No. 123 (R). Results for prior periods have not been restated. We have not
      granted any stock options since 2003.


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




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


**Years
                Ended December 31,****2005**
            
            **2004**Income
                from continuing operations, as reported
            
            $
            29,176
            
            $
            15,870Income
                from discontinued operations, as reported
            
            
            3,770
            
            
            1,409Total
                net income, as reported
            
            $
            32,946
            
            $
            17,279Add:
                Total share-based compensation included in net income, net of related
                tax
                effects
            
            
            1,300
            
            
            1,237Deduct:
                Total share-based employee compensation expense determined under
                fair
                value based method for all awards, net of related tax
                effects
            
            
            (1,600
            )
            
            (1,820
            )Income
                from continuing operations, pro forma
            
            $
            28,876
            
            $
            15,287Income
                from discontinued operations, pro forma
            
            
            3,770
            
            
            1,409Total
                net income, pro forma
            
            $
            32,646
            
            $
            16,696Earnings
                per share:Basic
                from continuing operations, as reported
            
            $
            0.73
            
            $
            0.45Basic
                from discontinued operations, as reported
            
            $
            0.10
            
            $
            0.04Basic
                — pro forma from continuing operations
            
            $
            0.72
            
            $
            0.43Basic
                — pro forma from discontinued operations
            
            $
            0.10
            
            $
            0.04Diluted
                from continuing operations, as reported
            
            $
            0.71
            
            $
            0.42Diluted
                from discontinued operations, as reported
            
            $
            0.09
            
            $
            0.04Diluted
                — pro forma from continuing operations
            
            $
            0.70
            
            $
            0.41Diluted
                — pro forma from discontinued operations
            
            $
            0.09
            
            $
            0.04




37


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




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





**NOTE
      2.**  **Capital
      Structure**





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





**NOTE
      3.**  **Earnings
      Per Share**





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





**Year
                Ended**
            
            **Year
                Ended****December
                31, 2006**
            
            **December
                31, 2005**Income
            
            Shares
            
            Per
                Share Amount
            
            Income
            
            Shares
            
            Per
                Share Amount**Basic
                EPS**Income
                from continuing operations
            
            $
            47,705
            
            
            39,958
            
            $
            1.19
            
            $
            29,176
            
            
            39,860
            
            $
            0.73Income
                from discontinued operations
            
            
            981
            
            
            39,958
            
            
            0.03
            
            
            3,770
            
            
            39,860
            
            
            0.10Net
                Income
            
            $
            48,686
            
            
            39,958
            
            $
            1.22
            
            $
            32,946
            
            
            39,860
            
            $
            0.83**Effect
                of Dilutive Securities**Stock
                options and restricted stock
            
            
            
            
            
            865
            
            
            
            
            
            
            
            
            1,532**Diluted
                EPS**Income
                from continuing operations
            
            $
            47,705
            
            
            40,823
            
            $
            1.17
            
            $
            29,176
            
            
            41,392
            
            $
            0.71Income
                from discontinued operations
            
            
            981
            
            
            40,823
            
            
            0.02
            
            
            3,770
            
            
            41,392
            
            
            0.09Net
                Income
            
            $
            48,686
            
            
            40,823
            
            $
            1.19
            
            $
            32,946
            
            
            41,392
            
            $
            0.80




**Year
                Ended****December
                31, 2004**Income
            
            Shares
            
            Per
                Share Amount**Basic
                EPS**Income
                from continuing operations
            
            $
            15,870
            
            
            35,200
            
            $
            0.45Income
                from discontinued operations
            
            
            1,409
            
            
            35,200
            
            
            0.04Net
                Income
            
            $
            17,279
            
            
            35,200
            
            $
            0.49**Effect
                of Dilutive Securities**Stock
                options and restricted stock
            
            
            
            
            
            2,356**Diluted
                EPS**Income
                from continuing operations
            
            $
            15,870
            
            
            37,556
            
            $
            0.42Income
                from discontinued operations
            
            
            1,409
            
            
            37,556
            
            
            0.04Net
                Income
            
            $
            17,279
            
            
            37,556
            
            $
            0.46




38


**NOTE
      4.**  **Property
      and Equipment**





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


**Years
                Ended December 31,****2006**
            
            **2005**Building
                and improvements
            
            $
            54
            
            $
            -Leasehold
                improvements
            
            
            1,037
            
            
            824Computer
                equipment and software
            
            
            47,156
            
            
            46,160Furniture
                and equipment
            
            
            7,614
            
            
            6,593Transportation
                equipment
            
            
            20,512
            
            
            2,18176,373
            
            
            55,758Less:
                Accumulated depreciation and amortization
            
            
            (49,399
            )
            
            (42,991
            )Property
                and Equipment, net
            
            $
            26,974
            
            $
            12,767





Depreciation
      expense was $7,779,000, $9,320,000 and $10,454,000, for 2006, 2005 and 2004,
      respectively.





**NOTE
      5.**  **Income
      Taxes**





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





**Years
                Ended December 31,****2006**
            
            **2005**
            
            **2004**U.S.
                federal statutory rate
            35.0%
            
            35.0%
            
            35.0%State
                taxes, net of federal benefit
            3.5
            
            3.3
            
            4.1Nondeductible
                expenses
            1.5
            
            1.1
            
            1.2State
                tax impact of business restructuring
            -
            
            -
            
            (3.4)Provision
                for valuation allowance
            (0.3)
            
            0.4
            
            0.9Other
            0.3
            
            0.5
            
            4.6Net
                effective rate
            40.0%
            
            40.3%
            
            42.4%





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,****2006**
            
            **2005**
            
            **2004**CurrentFederal
            
            $
            27,986
            
            $
            6,419
            
            $
            3,692State and local
            
            
            3,078
            
            
            983
            
            
            56731,064
            
            
            7,402
            
            
            4,259DeferredFederal
            
            
            332
            
            
            11,301
            
            
            6,318State
                and local
            
            
            407
            
            
            992
            
            
            1,104739
            
            
            12,293
            
            
            7,422Total provision
            
            $
            31,803
            
            $
            19,695
            
            $
            11,681





39




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





**Years
                Ended December 31,****2006**
            
            **2005**Reserve
                for uncollectible accounts receivable
            
            $
            2,295
            
            $
            2,320Accrued
                compensation
            
            
            4,273
            
            
            2,883Other
                reserves
            
            
            1,611
            
            
            1,272Current deferred tax assets
            
            
            8,179
            
            
            6,475Operating
                loss carryforwards
            
            
            790
            
            
            1,376Other
            
            
            37
            
            
            37Income
                tax basis in excess of financial basis of goodwill
            
            
            4,923
            
            
            5,294Less valuation allowance
            
            
            (248
            )
            
            (489
            )Long-term deferred tax assets
            
            
            5,502
            
            
            6,218Total deferred tax assets
            
            $
            13,681
            
            $
            12,693Prepaids
            
            
            (1,258
            )
            $
            (958
            )Other
                Receivables
            
            
            (3,488
            )
            
            (6,477
            )Current deferred tax liabilities
            
            
            (4,746
            )
            
            (7,435
            )Property
                and equipment
            
            
            (2,940
            )
            
            (4,750
            )Goodwill
            
            
            (46,149
            )
            
            (39,922
            )Long-term deferred tax liabilities
            
            
            (49,089
            )
            
            (44,672
            )Total deferred tax liabilities
            
            $
            (53,835
            )
            $
            (52,107
            )





Our
      state
      net operating losses of $790,000 expire between December 31, 2007 and December
      31, 2023. Management believes it is more likely than not that the deferred
      tax
      assets will be realized with the exception of $248,000 related to state net
      operating losses and other state credits for which a valuation allowance has
      been established.




**NOTE
      6.**  **Long-Term
      Debt and Financing Arrangements**





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





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





Our
      unused and available borrowings under our bank revolving line of credit at
      December 31, 2006 and December 31, 2005 were $48.2 million and $39.0 million,
      respectively. We were in compliance with our debt covenants at December 31,
      2006.





We
      have
      standby letters of credit that expire from 2007 to 2012. As of December 31,
      2006, our letters of credit were $1.8 million.





40


**NOTE
      7.**  **Rental
      Expense, User Charges and Lease Commitments**





Minimum
      annual rental commitments, at December 31, 2006, under non-cancelable operating
      leases, principally for real estate, containers and equipment are payable as
      follows (in thousands):




2007
            
            $
            23,0662008
            
            
            16,1732009
            
            
            12,7972010
            
            
            10,6992011
            
            
            10,0202012
                and thereafter
            
            
            12,728$
            85,483





Total
      rental expense included in general and administrative expense, which relates
      primarily to real estate, was approximately $8,149,000, $7,607,000, and
      $9,074,000 for 2006, 2005 and 2004, 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 $550,000 for the year ended December 31, 2006. 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 $8,057,000, $3,036,000 and $1,085,000 for
      2006,
      2005 and 2004, 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
      $42,759,000, $33,830,000 and $31,063,000 for the years ended December 31, 2006,
      2005 and 2004, respectively. At December 31, 2006, under these agreements,
      we
      have the ability to return the containers and pay for the chassis only when
      we
      are using them. As a result, no minimum commitment has been included in the
      table above.




**NOTE
      8.**  **Stock-Based
      Compensation Plans**





In
      1996,
      we adopted a Long-Term Incentive Plan (the “1996 Incentive Plan”). The number of
      shares of Class A Common Stock reserved for issuance under the 1996 Incentive
      Plan was 1,800,000. In 1997, we adopted a second Long-Term Incentive Plan (the
      “1997 Incentive Plan”). The number of shares of Class A Common Stock reserved
      for issuance under the 1997 Incentive Plan was 600,000. In 1999 we adopted
      a
      third Long-Term Incentive Plan (the “1999 Incentive Plan”). The number of shares
      of Class A Common Stock reserved for issuance under the 1999 Incentive Plan
      was
      2,400,000. In 2002, we adopted a fourth Long-Term Incentive Plan (the “2002
      Incentive Plan”). The number of shares of Class A Common Stock reserved for
      issuance under the 2002 Incentive Plan was 2,400,000. In 2003, we amended our
      2002 Incentive Plan to add an additional 2,000,000 shares of Class A Common
      Stock that are reserved for issuance. 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, 2006, 920,021
      shares are available for future grant. Generally, when stock options are
      exercised, either new shares are issued or shares are issued out of
      treasury.







41


We
      recognize the cost of all share-based awards on a straight-line basis over
      the
      vesting period of the award including an estimate of forfeitures. Share-based
      compensation expense for the years ended December 31, 2006, 2005 and 2004 was
      $3.4 million, $2.1 million and $2.1 million or $2.0 million, $1.3 million and
      $1.2 million, net of taxes, respectively. Share-based compensation is included
      in salaries and benefits in the accompanying statements of income.





Information
      regarding option plans for 2005 and 2004 is as follows:





**2005**
            
            **2004****Shares**
            
            **Weighted
                Avg Exercise Price**
            
            **Shares**
            
            **Weighted
                Avg Exercise Price**Options
                outstanding, beginning of year
            
            
            3,400,296
            
            $
            2.49
            
            
            5,709,736
            
            $
            2.87Options
                exercised
            
            
            (1,604,068
            )
            
            2.96
            
            
            (2,093,972
            )
            
            3.53Options
                granted
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                forfeited
            
            
            (13,000
            )
            
            3.52
            
            
            (215,468
            )
            
            2.43Options
                outstanding, end of year
            
            
            1,783,228
            
            $
            2.06
            
            
            3,400,296
            
            $
            2.49








The
      following table summarizes the stock option activity for the year ended December
      31, 2006:





**Stock
                Options**
            
            **Shares**
            
            **Weighted
                Average Exercise**
              **Price**
            
            **Weighted
                Average Remaining Contractual Life**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding
                January 1, 2006
            
            
            1,783,228
            
            $
            2.06Options
                exercised
            
            
            (1,023,032
            )
            $
            1.92Options
                forfeited
            
            
            (5,600
            )
            $
            3.70Outstanding
                at December 31, 2006
            
            
            754,596
            
            $
            2.24
            
            
            5.26
            
            $
            19,099,512Exercisable
                at December 31, 2006
            
            
            612,196
            
            $
            2.36
            
            
            5.05
            
            $
            15,421,594





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, 2006, 2005 and 2004 was $21.3 million, $18.5
      million and $11.5 million, respectively. Cash received from stock options
      exercised during the years ended December 31, 2006, 2005 and 2004 was $2.0
      million, $4.7 million and $7.4 million, respectively. The tax benefit realized
      for tax deductions from stock options exercised for the years ended December
      31,
      2006, 2005 and 2004 was $7.9 million, $6.8 million and $4.0 million,
      respectively.





















42


The
      following table summarizes information about options outstanding at December
      31,
      2006:


Options
                  Outstanding
              
              Options
                  ExercisableWeighted
                  Avg
              
              Weighted
                  Avg
              
              
              
              Weighted
                  AvgRange
                  of
              
              Number
              
              Remaining
              
              Exercise
              
              Number
              
              ExerciseExercise
                  Prices
              
              of
                  Shares
              
              Contractual
                  Life
              
              Price
              
              of
                  Shares
              
              Price$
                  1.22 to $ 1.22
              
              
              69,600
              
              
              6.13
              
              $
              1.22
              
              
              10,400
              
              $
              1.22$
                  1.22 to $ 1.30
              
              
              219,332
              
              
              5.96
              
              $
              1.30
              
              
              219,332
              
              $
              1.30$
                  1.30 to $ 1.66
              
              
              136,000
              
              
              6.00
              
              $
              1.46
              
              
              104,000
              
              $
              1.42$
                  1.66 to $ 2.43
              
              
              140,464
              
              
              5.32
              
              $
              1.97
              
              
              121,264
              
              $
              1.97$
                  2.43 to $ 7.04
              
              
              189,200
              
              
              3.54
              
              $
              4.47
              
              
              157,200
              
              $
              4.84$
                  1.22 to $ 7.04
              
              
              754,596
              
              
              5.26
              
              $
              2.24
              
              
              612,196
              
              $
              2.36


The
      following table summarizes the non-vested restricted stock activity for the
      year
      ended December 31, 2006:





**Non-vested
                restricted stock**
            
            **Shares**
            
            **Weighted
                Average Grant Date Fair Value**Non-vested
                January 1, 2006
            
            
            743,504
            
            $
            8.93Granted
            
            
            106,819
            
            $
            21.58Vested
            
            
            (513,399
            )
            $
            6.33Forfeited
            
            
            (22,958
            )
            $
            9.17Non-vested
                at December 31, 2006
            
            
            313,966
            
            $
            17.48








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





During
      2004, we granted 235,380 shares of restricted stock to certain employees and
      13,896 shares of restricted stock to outside directors with a weighted average
      grant date fair value of $10.40. 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,
      2006,
      2005 and 2004 was $13.3 million, $9.2 million and $4.2 million, respectively.





As
      of
      December 31, 2006, there was $4.9 million of unrecognized compensation cost
      related to non-vested share-based compensation that is expected to be recognized
      over a weighted average period of 1.52 years.









43


In
      May
      2006, the Board of Directors granted certain of our officers 593,542 performance
      units. The performance units entitle the recipients to receive restricted shares
      of our Class A Common Stock contingent upon the achievement of an operating
      income earnings target. The aggregate operating income for the three year period
      ending December 31, 2008 must meet a specified target amount in order for these
      performance units to be earned and converted to restricted stock. Should the
      employees earn restricted stock under this program, the restricted stock will
      be
      granted in early 2009 and then vests ratably as of the first business day of
      January in each of 2010, 2011 and 2012 provided the officer remains an employee
      on each of the vesting dates. The maximum amount that would be recorded as
      salary expense over this 68 month period assuming the targets are met is $13.8
      million, which is calculated based on the stock price on the date the
      performance units were granted which was $23.25. We did not record expense
      related to the performance units during 2006.





During
      January 2007, we granted 189,824 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 $27.55. The stock vests over a three year
      period.




**NOTE
      9.**  **Business
      Segment**





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





**Years
                Ended December 31,****2006**
            
            **2005**
            
            **2004****Transportation**Intermodal
            
            $
            1,172,566
            
            $
            1,079,798
            
            $
            1,014,533Brokerage
            
            
            306,332
            
            
            266,545
            
            
            225,466Logistics
            
            
            130,631
            
            
            135,535
            
            
            140,723**Total
                revenue from continuing operations**
            
            $
            1,609,529
            
            $
            1,481,878
            
            $
            1,380,722




**NOTE
      10.**  **Employee
      Benefit Plans**





We
      had
      two profit-sharing plans and trusts in 2006, and one in 2005 and 2004 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 $1,659,000, $1,078,000 and $1,054,000 related to these plans
      in
      2006, 2005 and 2004, respectively.





In
      January 2005, we established the Hub Group, Inc. Nonqualified Deferred
      Compensation Plan (the “Plan”) to provide added incentive for the retention of
      certain key employees. Under the Plan, participants can elect to defer certain
      compensation. Accounts will grow on a tax-deferred basis to the participant.
      Restricted investments included in the consolidated balance sheet represent
      the
      fair value of the mutual funds and other security investments related to the
      Plan at December 31, 2006 and December 31, 2005. Both realized and unrealized
      gains and losses, which have not been material, are included in income and
      expense and offset the change in the deferred compensation liability. We provide
      a 50% match on the first 6% of employee compensation deferred under the Plan,
      with a maximum match equivalent to 3% of base salary. In addition, we have
      a
      legacy deferred compensation plan. There are no new contributions being made
      into this legacy plan. We expensed $737,000, $647,000, and $876,000 related
      to
      these plans in 2006, 2005 and 2004, respectively.




**NOTE
      11.**  **Legal
      Matters**





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


44


**NOTE
      12.**  **Restructuring
      Charges**





During
      the year ended December 31, 2004, we recorded a severance charge for 99
      employees of $661,000. We also recorded a liability of $118,000 for the
      estimated remaining lease obligations and closing costs related to two
      facilities.





During
      the year ended December 31, 2005, we recorded a severance charge for 37
      employees of $249,000.





All
      severance charges are included in salaries and benefits in the statements of
      income and all lease obligation and closing costs are included in general and
      administrative in the statements of income.





The
      following table displays the activity and balances of the restructuring reserves
      in the consolidated balance sheets (in thousands):





**Headcount**
            
            **Consolidation****Reduction**
            
            **of
                Facilities**
            
            **Total****Balance
                at December 31, 2003**
            
            $
            **75**
            
            $
            **361**
            
            $
            **436**Additional
                restructuring expenses
            
            
            661
            
            
            118
            
            
            779Cash
                payments
            
            
            (736
            )
            
            (333
            )
            
            (1,069
            )**Balance
                at December 31, 2004**
            
            
            **-**
            
            
            **146**
            
            
            **146**Additional
                restructuring expenses
            
            
            249
            
            
            -
            
            
            249Cash
                payments
            
            
            (222
            )
            
            (186
            )
            
            (408
            )Adjustments
                for previous estimate
            
            
            -
            
            
            40
            
            
            40**Balance
                at December 31, 2005**
            
            
            **27**
            
            
            **-**
            
            
            **27**Cash
                payments
            
            
            (27
            )
            
            -
            
            
            (27
            )**Balance
                at December 31, 2006**
            
            **$**
            **-**
            ****
            **$**
            **-**
            ****
            **$**
            **-**





**NOTE
      13. Stock Buy Back Plans**





During
      the fourth quarter of 2003, the Board of Directors authorized the purchase
      of up
      to 1,000,000 shares of our Class A Common Stock from time to time. The timing
      of
      the program was determined by financial and market conditions. During the fourth
      of quarter of 2003, we purchased 80,800 shares for $292,000. We purchased an
      additional 386,000 shares for $2,763,000 in 2004. During the first quarter
      of
      2005, the Board of Directors terminated the prior buy back plan and authorized
      the purchase of up to $30.0 million worth of our Class A Common Stock. During
      the second quarter of 2005, we completed the authorized purchase of $30.0
      million worth of our Class A Common Stock. We intend to hold the repurchased
      shares in treasury for future use.





On
      August
      22, 2005, our Board of Directors authorized the purchase of up to $45.0 million
      of our Class A Common Stock. During the third quarter of 2006, we completed
      the
      authorized purchase of $45.0 million of Class A common stock. We intend to
      hold
      the repurchased shares in treasury for future use.





On
      October 26, 2006, our Board of Directors authorized the purchase of up to $75.0
      million of our Class A Common Stock. This authorization expires June 30, 2008
      and we have not yet purchased any shares pursuant to this plan. We may make
      purchases from time to time as market conditions warrant and any repurchased
      shares are expected to be held in treasury for future use.










45


The
      following table displays the number of shares purchased and available under
      the
      plans in 2006:




**Total
                Number of Shares Purchased**
            
            **Average
                Price Paid Per Share**
            
            **Total
                Number of Shares Purchased as Part of Publicly Announced
                Plan**
            
            **Maximum
                Value of Shares that May Yet Be Purchased Under the Plan (in
                000’s)**January
                1 to
              March
                31
            
            
            -
            
            $
            -
            
            
            -
            
            $
            45,000April
                1 to
              June
                30
            
            
            -
            
            $
            -
            
            
            -
            
            $
            45,000July
                1 to
              July
                31
            
            
            393,300
            
            $
            22.23
            
            
            393,300
            
            $
            36,258August
                1 to
              August
                31
            
            
            1,563,845
            
            $
            23.19
            
            
            1,563,845
            
            $
            -September
                1 to
              September
                30
            
            
            -
            
            $
            -
            
            
            -
            
            $
            -October
                1 to
              December
                31
            
            
            -
            
            $
            -
            
            
            -
            
            $
            75,000Total
            
            
            1,957,145
            
            $
            22.99
            
            
            1,957,145
            
            $
            75,000





**NOTE
      14.**  **Stock
      Split**





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





The
      Board
      of Directors approved a two-for-one stock split which was paid on June 6, 2006.
      All shares and per-share amounts have been retroactively restated to give effect
      to the two-for-one stock split which was effected 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 shareholder 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
      15.**  **Public
      Equity Offering**





We
      completed a public offering of Class A Common Stock priced at $8.25 per share,
      before underwriting discounts and commissions, on July 2, 2004. We sold
      7,200,000 shares and selling stockholders sold 1,540,000 shares. The Company’s
      net proceeds of $55,871,000 were used to prepay the $50,000,000 of 9.14% debt
      on
      July 6, 2004 as well as the majority of the make-whole payment of
      $6,804,000.









46


**NOTE
      16.**  **Acquisition**





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





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 will not exceed $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 million for 2006 has been added to
      the
      purchase price and has been applied to goodwill since it will be paid. The
      amount due the seller, and current President of Comtrak, is included in the
      related party payable in the accompanying consolidated balance sheet. The
      additional contingent consideration related to 2007 EBITDA will be added to
      the
      purchase price and will be applied to goodwill when the contingency is resolved.
      The results of operations of Comtrak are included in our consolidated statements
      of income for the period March 1, 2006 to December 31, 2006.





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





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




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





**March
                1, 2006**Accounts
                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


47


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





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


**Amount**
            
            **Accumulated**
              **Amortization**
            
            **Balance
                at December 31, 2006**
            
            **Life**Relationships
                with owner operators
            
            $
            647
            
            $
            (90
            )
            $
            557
            
            
            6
                yearsBacklog/open
                orders
            
            
            20
            
            
            (20
            )
            
            -
            
            
            1
                monthTrade
                name
            
            
            2,904
            
            
            -
            
            
            2,904
            
            
            IndefiniteCustomer
                relationships
            
            
            3,823
            
            
            (212
            )
            
            3,611
            
            
            15
                yearsInformation
                technology
            
            
            500
            
            
            (70
            )
            
            430
            
            
            6
                yearsTotal
            
            $
            7,894
            
            $
            (392
            )
            $
            7,502





The
      above
      intangible assets will be amortized using the straight-line method. Amortization
      expense for the year ended December 31, 2006 was $0.4 million. Amortization
      expense for the next five years is as follows (in thousands):





2007
            
            $
            4452008
            
            
            4452009
            
            
            4452010
            
            
            4452011
            
            
            445





**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, $0.09
      and
      $0.04 for the years ended December 31, 2006, 2005 and 2004, respectively.





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





**Years
                Ended December 31,****2006**
            
            **2005**
            
            **2004**Revenue
            
            $
            19,194
            
            $
            49,621
            
            $
            46,084Income
                from discontinued operationsbefore
                income taxes
            
            
            1,634
            
            
            6,315
            
            
            2,447Income
                tax provision
            
            
            653
            
            
            2,545
            
            
            1,038Income
                from discontinued operations
            
            $
            981
            
            $
            3,770
            
            $
            1,409




48


The
      total
      assets sold to and liabilities assumed by the purchaser of HGDS on May 1, 2006
      as well as total assets and liabilities of HGDS included in the captions “Assets
      of discontinued operations” and “Liabilities of discontinued operations” at
      December 31, 2005 are as follows (in thousands):





**May
                1, 2006**
            
            **Dec.
                31, 2005****Assets**Accounts
                receivable-trade, net
            
            $
            8,845
            
            $
            9,861Prepaid
                expenses and other current assets
            
            
            149
            
            
            146Property
                and equipment, net
            
            
            670
            
            
            758Goodwill,
                net
            
            
            7,026
            
            
            7,026Other
                assets
            
            
            44
            
            
            64**Total
                assets of discontinued operations**
            
            $
            16,734
            
            $
            17,855**Liabilities**Accounts
                payable-trade
            
            $
            3,619
            
            $
            3,618Accounts
                payable-other
            
            
            64
            
            
            67Accrued
                expenses-payroll
            
            
            449
            
            
            1,183Accrued
                expenses-other
            
            
            330
            
            
            473**Total
                liabilities of discontinued operations**
            
            $
            4,462
            
            $
            5,341





**NOTE
      18.**  **Selected
      Quarterly Financial Data (Unaudited)**




The
      following table sets forth selected quarterly financial data for each of the
      quarters in 2006 and 2005 (in thousands, except per share amounts):





**Quarters****First
                (2)**
            
            **Second**
            
            **Third**
            
            **Fourth**Year
                Ended December 31, 2006:Revenue
            
            $
            356,764
            
            $
            395,296
            
            $
            432,009
            
            $
            425,460Gross
                margin
            
            
            47,373
            
            
            55,491
            
            
            57,336
            
            
            58,218Income
                from continuing operations
            
            
            8,473
            
            
            12,219
            
            
            13,494
            
            
            13,519Income
                from discontinued operations (1)
            
            
            657
            
            
            324
            
            
            -
            
            
            -Net
                income
            
            $
            9,130
            
            $
            12,543
            
            $
            13,494
            
            $
            13,519Basic
                earnings per shareIncome from continuing operations
            
            $
            0.21
            
            $
            0.30
            
            $
            0.34
            
            $
            0.35Income from discontinued operations
            
            
            0.02
            
            
            0.01
            
            
            -
            
            
            -Net Income
            
            $
            0.23
            
            $
            0.31
            
            $
            0.34
            
            $
            0.35Diluted
                earnings per shareIncome from continuing operations
            
            $
            0.21
            
            $
            0.29
            
            $
            0.33
            
            $
            0.34Income from discontinued operations
            
            
            0.01
            
            
            0.01
            
            
            -
            
            
            -Net Income
            
            $
            0.22
            
            $
            0.30
            
            $
            0.33
            
            $
            0.34(1)
              HGDS disposed of May 1, 2006(2)
              Comtrak was acquired February 28, 2006




49


**Quarters****First**
            
            
            **Second**
            
            
            **Third**
            
            
            **Fourth**Year
                Ended December 31, 2005:Revenue
            
            $
            329,405
            
            $
            361,822
            
            $
            387,434
            
            $
            403,217Gross
                margin
            
            
            40,108
            
            
            43,820
            
            
            45,261
            
            
            45,553Income
                from continuing operations
            
            
            4,713
            
            
            7,229
            
            
            8,426
            
            
            8,808Income
                from discontinued operations
            
            
            635
            
            
            696
            
            
            1,184
            
            
            1,255Net
                Income
            
            $
            5,348
            
            $
            7,925
            
            $
            9,610
            
            $
            10,063Basic
                earnings per shareIncome from continuing operations
            
            $
            0.12
            
            $
            0.18
            
            $
            0.21
            
            $
            0.22Income from discontinued operations
            
            
            0.02
            
            
            0.02
            
            
            0.03
            
            
            0.03Net Income
            
            $
            0.14
            
            $
            0.20
            
            $
            0.24
            
            $
            0.25Diluted
                earnings per shareIncome from continuing operations
            
            $
            0.11
            
            $
            0.17
            
            $
            0.21
            
            $
            0.22Income from discontinued operations
            
            
            0.01
            
            
            0.02
            
            
            0.03
            
            
            0.03Net
                Income
            
            $
            0.12
            
            $
            0.19
            
            $
            0.24
            
            $
            0.25





**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, 2006, 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 2006 that has materially affected, or is reasonably
      likely to materially affect, our internal control over financial
      reporting.





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





**MANAGEMENT’S
      ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**





Our
      management is responsible for establishing and maintaining adequate controls
      over financial reporting as defined in Rule 13a-15(f) of the Exchange Act.
      Under
      the supervision and with the participation of our management, including our
      Chief Executive Officer and our Chief Financial Officer, we conducted an
      evaluation of the effectiveness of our internal control over financial reporting
      as of December 31, 2006. On
      February 28, 2006, we acquired Comtrak Logistics, Inc. Consistent with published
      guidance of the Securities and Exchange Commission, management excluded from
      its
      assessment of the effectiveness of our internal control over financial reporting
      as of December 31, 2006, Comtrak’s internal control over financial reporting.
      Total assets and total revenues from the Comtrak acquisition represent $52.7
      million and $67.1 million, respectively of the related consolidated financial
      statement amounts of Hub Group, Inc. as of year ended December 31,
      2006.


50
 Based
        upon this evaluation, management believes our internal control over financial
        reporting was effective as of December 31, 2006.




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, including in this report,
      has issued an attestation report on management’s assessment of internal control
      over financial reporting.





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER
      FINANCIAL REPORTING**





The
      Board
      of Directors and Shareholders


Hub
      Group, Inc.





We
      have
      audited management’s assessment, included in the accompanying Management’s
      Annual Report on Internal Control Over Financial Reporting, that Hub Group,
      Inc.
      (the "Company") maintained effective internal control over financial reporting
      as of December 31, 2006, based on criteria established in Internal
      Control—Integrated Framework issued by the Committee of Sponsoring Organizations
      of the Treadway Commission (the COSO criteria) **.** The
      Company’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. Our responsibility is to express an opinion
      on
      management’s assessment and an opinion on the effectiveness of 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, evaluating management’s assessment, testing and evaluating
      the design and operating effectiveness of internal control, 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.





As
      indicated in the accompanying Management’s Annual Report on Internal Control
      Over Financial Reporting, management’s assessment of and conclusion on the
      effectiveness of internal control over financial reporting did not include
      the
      internal controls of Comtrak Logistics, Inc. (Comtrak), which is included in
      the
      2006 consolidated financial statements of the Company and constituted $52.7
      million of total assets as of December 31, 2006 and $67.1 million of revenue
      for
      the ten months then ended. Our audit of internal control over financial
      reporting of the Company also did not include an evaluation of the internal
      control over financial reporting of Comtrak.







51


In
      our
      opinion, management’s assessment that the Company maintained effective internal
      control over financial reporting as of December 31, 2006, is fairly stated,
      in
      all material respects, based on the COSO criteria. Also, in our opinion, the
      Company maintained, in all material respects, effective internal control over
      financial reporting as of December 31, 2006, based on **** the
      COSO
      criteria **.**





We
        have
        also 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, 2006 and 2005, and the related consolidated statements
        of income, shareholders’ equity, and cash flows for each of the three years in
        the period ended December 31, 2006 of Hub Group, Inc. and our report dated
        February 22 ,
        2007
        expressed an unqualified opinion thereon.







Ernst
      & Young LLP





Chicago,
      Illinois


February
      22, 2007








**Item
      9B.**  **OTHER INFORMATION**


None.



















































52


**PART
      III**





**Item
      10.**  **DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE**





The
      sections entitled “Election of Directors” and “Ownership of the Capital Stock of
      the Company” appearing in our proxy statement for our annual meeting of
      stockholders to be held on May 7, 2007, 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
      7,
      2007, 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
      MANAGEMENT**  **AND
      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
      7,
      2007, 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
              754,596
              $2.24
              920,021Equity
                  compensation
                plans
                  not approved
                by
                  security holders
              --
              --
              --Total
              754,596
              $2.24
              920,021


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




The
      section entitled “Certain Transactions” appearing in our proxy statement for the
      annual meeting of our stockholders to be held on May 7, 2007, sets forth certain
      information with respect to certain business relationships and transactions
      between us and our directors and officers and it is incorporated herein by
      reference.


53


**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 7, 2007,
      sets
      forth certain information with respect to certain fees we have paid to our
      principal accountant for services and it is incorporated herein by
      reference .





**Item
      15.**  **EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES**





**(a)
      Financial Statements**





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





Report
      of
      Independent Registered Public Accounting Firm





Consolidated
      Balance Sheets - December 31, 2006 and December 31, 2005





Consolidated
      Statements of Income - Years ended December 31, 2006, December 31, 2005 and
      December 31, 2004





Consolidated
      Statements of Stockholders’ Equity - Years ended December 31, 2006, December 31,
      2005 and December 31, 2004





Consolidated
      Statements of Cash Flows - Years ended December 31, 2006, December 31, 2005
      and
      December 31, 2004





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.












54








**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.




Date:
      February 23, 2007      HUB
      GROUP, INC.





By/s/David
                P. YeagerDavid
                P. YeagerChief
                Executive Officer and Vice Chairman





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





Title
            Date/s/Phillip
                C. Yeager
              Phillip C. Yeager
            Chairman
                and Director
            February
                23, 2007/s/
                David P. Yeager
              David P. Yeager
            Vice
                Chairman, Chief Executive Officer and Director
            February
                23, 2007/s/
                Mark A. Yeager
              Mark A. Yeager
            President,
                Chief Operating Officer and Director
            February
                23, 2007/s/
                Thomas M. White
              Thomas M. White
            Senior
                Vice President-Chief Financial Officer and Treasurer (Principal Financial
                and Accounting Officer)
            February
                23, 2007/s/
                Charles R. Reaves
              Charles R. Reaves
            Director
            February
                23, 2007/s/
                Martin P. Slark
              Martin P. Slark
            Director
            February
                23, 2007/s/
                Gary D. Eppen
              Gary D. Eppen
            Director
            February
                23, 2007






















55





**SCHEDULE
                  II****HUB
                  GROUP, INC.****VALUATION
                  AND QUALIFYING ACCOUNTS**Balance
                  at
              
              Charged
                  to
              
              Charged
                  to
              
              
              
              Balance
                  atBeginning
              
              Costs
                  &
              
              Other
              
              
              
              Endof
                  Year
              
              Expenses
              
              Accounts
                  (1)
              
              Deductions
                  (2)
              
              of
                  YearYear
                  Ended December 31:Allowance
                  for uncollectible trade accounts2006
              
              
              
              
              $
              6,815,000
              
              $
              138,000
              
              $
              644,000
              
              $
              (1,298,000
              )
              $
              6,299,0002005
              
              
              
              
              $
              6,869,000
              
              $
              476,000
              
              $
              1,135,000
              
              $
              (1,665,000
              )
              $
              6,815,0002004
              
              
              
              
              $
              5,835,000
              
              $
              148,000
              
              $
              886,000
              
              $
              -
              
              $
              6,869,000Deferred
                  tax valuation allowance2006
              
              
              
              
              $
              489,000
              
              $
              (241,000
              )
              $
              -
              
              $
              -
              
              $
              248,0002005
              
              
              
              
              $
              271,000
              
              $
              218,000
              
              $
              -
              
              $
              -
              
              $
              489,0002004
              
              
              
              
              $
              -
              
              $
              271,000
              
              $
              -
              
              $
              -
              
              $
              271,000(1) Expected customer account adjustments charged to revenueand
                write-offs, net of recoveries(2) Reserve adjustments




































S-1





**INDEX
      TO EXHIBITS**




**Number**  **Exhibit**   ****




3.1
              Amended Certificate of Incorporation of the Registrant
                (incorporated by reference to Exhibit 3.1 and 3.3 to the Registrant’s
                registration statement on Form S-1, File No. 33-90210)
 
 3.2
              By-Laws of the Registrant (incorporated by reference
                to
                Exhibit 3.2 to the Registrant’s registration statement on Form S-1, File
                No. 33-90210)
 
 10.1
              Amended and Restated Limited Partnership Agreement
                of Hub
                City Canada, L.P. (incorporated by reference to Exhibit 10.2 to the
                Registrants report on Form 10-K dated March 26, 1997 and filed March
                27,
                1997, File No 000-27754)
 
 10.2
              Stockholders' Agreement (incorporated by reference
                to
                Exhibit 10.7 to the Registrant’s report on Form 10-K dated March 26, 1997
                and filed March 27, 1997, File No. 000-27754)




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





10.4
            
            Hub
                Group’s Nonqualified Deferred Compensation Plan Basic Plan Document
                (incorporated by reference to Exhibit 10.15 to the Registrant’s report on
                Form 10-K dated February 25, 2005 and filed on February 28, 2005,
                File No.
                000-27754)





10.5
            Hub
                Group’s Nonqualified Deferred Compensation Plan Adoption Agreement
                (incorporated by reference to Exhibit 10.16 to the Registrant’s report on
                Form 10-K dated February 25, 2005 and filed on February 28, 2005,
                File No.
                000-27754)





10.6
            
            Hub
                Group’s Nonqualified Deferred Compensation Plan, Amendment 1 (incorporated
                by reference to Exhibit 10.17 to the Registrant’s report on Form 10-K
                dated February 25, 2005 and filed on February 28, 2005, File No.
                000-27754)





10.7
            Description
                of Executive Officer cash compensation for
                2007





10.8
            Director
                compensation for 2007





10.9
            Hub
                Group’s 2002 Long Term Incentive Plan (as amended and restated effective
                December 3, 2003) (incorporated by reference from Exhibit 4.1 from
                the
                Registrant’s report on Form S-8 dated and filed May 17,
                2004)





10.10
            Purchase
                Option and Right of Refusal Agreement dated November 11, 2004
                (incorporated by reference from Exhibit 10.1 to the Registrant’s Report on
                Form 8-K dated and filed November 16,
                2004)





10.11
            Equipment
                Purchase Contract dated as of March 7, 2005 between Hub City Terminals,
                Inc., and Shanghai Jindo Container Co., Ltd. (incorporated by reference
                to
                Exhibit 10.1 to the Registrant’s report on Form 8-K dated March 7, 2005
                and filed March 8, 2005, File No.
                000-27754)





10.12
            $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)





10.13
            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)





10.14
            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)





10.15
            Asset
                Purchase Agreement, dated January 19, 2006, by and among Hub Group,
                Inc.,
                Comtrak, Inc. and Michael J. Bruns (incorporated by reference to
                Exhibit
                10.1 to the Registrant’s report on Form 8-K dated January 19, 2006 and
                filed January 25, 2006, File No.
                000-27754)





10.16
            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)





10.17
            Equipment
                Purchase Contract dated as of March 21, 2006 between Hub City Terminals,
                Inc. and Singamas North America, Inc. (incorporated by reference
                to
                Exhibit 10.1 to the Registrant’s report on Form 8-K dated March 21, 2006
                and filed March 24, 2006, File No.
                000-27754)





10.18
            Asset
                Purchase Agreement, dated May 1, 2006, by and among Hub Group, Inc.,
                Hub
                Group Distribution Services, LLC and HGDS Acquisition, LLC (incorporated
                by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K dated
                May 1, 2006 and filed May 2, 2006, File No.
                000-27754)





10.19
            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)





10.20
            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)





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





21
            Subsidiaries
                of the Registrant





23.1
            Consent
                  of Ernst & Young LLP  31.1
              Certification
                  of David P. Yeager, Vice Chairman and Chief Executive Officer,
                  Pursuant to
                  Rule 13a-14(a) promulgated under the Securities Exchange Act of
                  1934  31.2
              Certification
                    of Thomas M. White, Senior 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 Thomas M. White, Chief Executive Officer
                      and Chief
                      Financial Officer respectively, Pursuant to 18 U.S.C. Section
                      1350


EXHIBIT
      10.7


**Hub
      Group, Inc.**


**Description
      of Executive Officer Cash Compensation**


**For
      2007**


**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 2006 effective January 1, 2007.
      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 2006, goals were weighted upon
      achievement of targeted levels of earnings per share and, for some executives,
      upon achievement of personal goals. The goals for 2007 will also be
      weighted.





**Restricted
      Stock**


The
      Company makes periodic grants of restricted stock to executive officers. Grants
      of restricted stock have historically provided for vesting in three years after
      grant.




**David
      P. Yeager**


**Vice
      Chairman and Chief Executive Officer**





Base


2007   $574,867





**Mark
      A. Yeager**


**President
      and Chief Operating Officer**




Base
 2007   $399,489





**Thomas
      M. White**


**Sr.
      Vice President, Treasurer and Chief Financial Officer**





Base


2007   $366,672





**David
      Marsh**


**Executive
      Vice President-Highway**




Base
 2007   $283,894


**Donald
      G. Maltby**


**Executive
      Vice President-Logistics**





Base


2007   $273,182





EXHIBIT
      10.8





**Hub
      Group, Inc.**


**Directors’
      Compensation For 2007**








**Directors’
      Compensation**





Each
      non-employee director receives an annual retainer fee of $60,000 in 2007, 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 2007 compensation package, each independent director
      received 3,548 shares of restricted stock in January 2007.























EXHIBIT
      21








Subsidiaries
      of Hub Group, Inc.





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

















EXHIBIT
      23.1





Consent
      of Independent Registered Public Accounting Firm





We
      consent to the incorporation by reference in the Registration Statements (Forms
      S-8, Nos. 333-115576, 333-33006, 333-06327, 333-107745, 333-103845 and
      333-48185) of Hub Group, Inc. and the related Prospectuses of our reports dated
      February 22, 2007, with respect to the consolidated financial statements and
      schedule of Hub Group, Inc., Hub Group, Inc. management’s assessment of the
      effectiveness of internal control over financial reporting, and the
      effectiveness of internal control over financial reporting of Hub Group, Inc.,
      included in this Annual Report on Form 10-K for the year ended December 31,
      2006.





/s/
      Ernst
& Young LLP





Chicago,
      Illinois


February
      22, 2007