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Expeditors International of WashingtonUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K(Mark One) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended December 31, 2009 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Commission File No. 0-27754__________________HUB GROUP, INC.(Exact name of registrant as specified in its charter)Delaware36-4007085(State or other jurisdiction of(I.R.S. Employer incorporation of organization)Identification No.) 3050 Highland Parkway, Suite 100Downers 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: NoneSecurities 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 X No __ 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 1934during 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 filingrequirements for the past 90 days. Yes X No __Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes __ 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 bestof 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 Form10-K. X Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Seedefinitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large Accelerated Filer X Accelerated Filer Non-Accelerated Filer Smaller Reporting Company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No XThe aggregate market value of the Registrant’s voting stock held by non-affiliates on June 30, 2009, based upon the last reported sale price on that date on theNASDAQ Global Select Market of $20.64 per share, was $740,375,975.On February 12, 2010, the Registrant had 37,405,371 outstanding shares of Class A Common Stock, par value $.01 per share, and 662,296 outstandingshares of Class B Common Stock, par value $.01 per share.Documents Incorporated by ReferenceThe Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to be held on May 6, 2010 (the “Proxy Statement”) is incorporated byreference 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 IItem 1. BUSINESSGeneralHub Group, Inc. (“Company”, “we”, “us” or “our”) is a Delaware corporation that was incorporated on March 8, 1995. We are one of NorthAmerica’s leading asset-light freight transportation management companies. We offer comprehensive intermodal, truck brokerage and logistics services. Sinceour founding in 1971, we have grown to become the largest intermodal marketing company (“IMC”) in the United States and one of the largest truck brokers.We operate through a network of operating centers throughout the United States, Canada and Mexico. Each operating center is strategically located in amarket with a significant concentration of shipping customers and one or more railheads. Through our network, we have the ability to move freight in and outof every major city in the United States, Canada and Mexico. We service a large and diversified customer base in a broad range of industries, includingconsumer products, retail and durable goods. We utilize an asset-light strategy in order to minimize our investment in equipment and facilities and reduce ourcapital requirements. We arrange freight movement for our customers through transportation carriers and equipment providers.Services ProvidedOur 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 ormore. We contract with railroads to provide transportation for the long-haul portion of the shipment and with local trucking companies, known as “drayagecompanies,” for pickup and delivery. In certain markets, we supplement third party drayage services with Company-owned drayage operations. As part ofour intermodal services, we negotiate rail and drayage rates, electronically track shipments in transit, consolidate billing and handle claims for freight loss ordamage 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 containersentering a service area and reuse that equipment to fulfill the customers’ outbound shipping requirements. This effectively allows us to “capture” containersand trailers and keep them within our network. As of December 31, 2009, we also have exclusive access to approximately 7,355 rail-owned containers for ourdedicated use on the Union Pacific (“UP”) and the Norfolk Southern (“NS”) rail networks and approximately 1,375 rail-owned containers for our dedicateduse on the Burlington Northern Santa Fe (“BNSF”) and the NS rail networks. In addition to these rail-owned containers, we currently have a total of 6,22553’ private containers for use on the UP and NS. We financed these containers with operating leases. These arrangements are included in Note 8 to theconsolidated financial statements.Our drayage services are provided by our subsidiary, Comtrak, which assists us in providing reliable, cost effective intermodal services to ourcustomers. Comtrak has terminals in Atlanta, Bensalem (Philadelphia), Birmingham, Charleston, Charlotte, Chattanooga, Chicago, Cleveland, Columbus,Dallas, Harrisburg, Huntsville, Jacksonville, Kansas City, Memphis, Nashville, Ontario (Los Angeles), Perry, Saint Louis, Savannah, Stockton, andTampa. As of December 31, 2009, Comtrak owned 283 tractors, leased 20 tractors, leased or owned 553 trailers, employed 301 drivers and contracted with1,007 owner-operators.Truck Brokerage (Highway Services). We are one of the largest truck brokers in the United States, providing customers with another option for theirtransportation needs. We match the customers’ needs with carriers’ capacity to provide the most effective service and price combinations. We have contractswith 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, trackshipments 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 haveinformally agreed to move freight for our customers on a continuous basis. This arrangement allows us to effectively meet our customers’ needs withoutowning the equipment. Logistics. Our logistics business operates under the name of Unyson Logistics. Unyson Logistics is comprised of a network of logistics professionalsdedicated to developing, implementing and operating customized logistics solutions. Unyson offers a wide range of transportation management services andtechnology solutions including shipment optimization, load consolidation, mode selection, carrier management, load planning and execution and web-basedshipment visibility. Our multi-modal transportation capabilities include small parcel, heavyweight, expedited, less-than-truckload, truckload, intermodal andrailcar. Unyson Logistics operates throughout North America, providing operations through its main operating location in St. Louis with additional supportlocations in Boston, Chicago, Cleveland and Minneapolis.2 Hub NetworkOur entire network is interactively connected through our proprietary Network Management System. This enables us to move freight into and out of everymajor city in the United States, Canada and Mexico. In a typical intermodal transaction, the customer contacts one of our intermodal operating centers to place an order. The operating center consults with thecentralized pricing group, obtains the necessary intermodal equipment, arranges for it to be delivered to the customer by a drayage company and, after thefreight is loaded, arranges for the transportation of the container or trailer to the rail ramp. Relevant information is entered into our Network ManagementSystem by the assigned operating center. Our predictive track and trace technology then monitors the shipment to ensure that it arrives as scheduled and alertsthe customer service personnel if there are service delays. The assigned operating center then arranges for and confirms delivery by a drayage company atdestination. After unloading, the empty equipment is made available for reloading by the operating center for the delivery market. We provide truck brokerage services to our customers in a similar manner. In a typical truck brokerage transaction, the customer contacts one of ourhighway operating centers to obtain a price quote for a particular freight movement. The customer then provides appropriate shipping information to theoperating center. The operating center makes the delivery appointment and arranges with the appropriate carrier to pick up the freight. Once it receivesconfirmation that the freight has been picked up, the operating center monitors the movement of the freight until it reaches its destination and the delivery hasbeen confirmed. If the carrier notifies us that after delivering the load it will need additional freight, we may notify the operating center located nearest thedestination of the carrier’s availability. Although under no obligation to do so, that operating center then may attempt to secure additional freight for the carrier. Marketing and CustomersWe believe that fostering long-term customer relationships is critical to our success. Through these long-term relationships, we are able to better understand ourcustomers’ needs and tailor our transportation services to the specific customer, regardless of the customer’s size or volume. We currently have full-timemarketing representatives at various operating centers and sales offices with primary responsibility for servicing local, regional and national accounts. Thesesales representatives directly or indirectly report to our Chief Marketing Officer. This model allows us to provide our customers with both a local marketingcontact and access to our competitive rates as a result of being a large, national transportation service provider.Our marketing efforts have produced a large, diverse customer base, with no one customer representing more than 5% of our total revenue in 2009. We servicecustomers in a wide variety of industries, including consumer products, retail and durable goods.Management Information SystemsA primary component of our business strategy is the continued improvement of our Network Management System and other technology to ensure that weremain a leader among transportation providers in information processing for transportation services. Our Network Management System consists ofproprietary software running on a combination of platforms which includes the IBM iSeries and Microsoft Windows Server environments located at a secureoffsite data center. All of our operating centers are linked together with the data center using an MPLS (“Multi-Protocol Label Switching”) network. Thisconfiguration provides a real time environment for transmitting data among our operating centers and headquarters. We also make extensive use of electroniccommerce (“e-Commerce”), allowing each operating center to communicate electronically with each railroad, many drayage companies, certain truckingcompanies 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. TheNetwork Management System processes customer transportation requests, tenders and tracks shipments, prepares customer billing, establishes accountprofiles and retains critical information for analysis. The Network Management System provides connectivity with each of the major rail carriers. Thisenables us to electronically tender and track shipments in a real time environment. In addition, the Network Management System’s e-Commerce features offercustomers with e-Commerce capability a completely paperless process, including load tendering, shipment tracking, billing and remittance processing. Weaggressively 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 managementsoftware enables us to offer supply chain planning and logistics managing, modeling, optimizing and monitoring for our customers. We use this softwarewhen offering logistics management services to customers that ship via multiple modes, including intermodal, truckload, and less-than-truckload, allowing usto optimize mode and carrier selection and routing for our customers. This software is integrated with Hub Group’s Network Management System and ouraccounting system.3 Our website, www.hubgroup.com, is designed to allow our customers and vendors to easily do business with us online. Through Vendor Interface, we tenderloads to our drayage partners using the Internet rather than phones or faxes. Vendor Interface also captures event status information, allows vendors to viewoutstanding paperwork requirements and helps facilitate paperless invoicing. We currently tender substantially all of our drayage loads using Vendor Interfaceor e-Commerce. Through Trucker Advantage, we exchange information on available Hub loads, available carrier capacity and updates to event statusinformation with our truck brokerage partners. Through Customer Advantage, customers receive immediate pricing, place orders, track shipments, andreview historical shipping data through a variety of reports over the Internet. All of our Internet applications are integrated with the Network ManagementSystem. Relationship with RailroadsA key element of our business strategy is to strengthen our close working relationship with the major intermodal railroads in the United States. We view ourrelationship 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 intermodaltransportation. We have relationships with each of the following major railroads:Burlington Northern Santa FeFlorida East CoastCanadian NationalKansas City SouthernCanadian PacificNorfolk SouthernCSXUnion PacificWe also have relationships with each of the following major service providers: CMA CGM (America) Inc., Express System Intermodal Inc., Hanjin Shipping,Hyundai Merchant Marine, K-Line America, Maersk Sea-Land, Mitsui O.S.K. Lines (America) Inc. and Pacer International.Transportation rates are market driven. We sometimes negotiate with the railroads or other major service providers on a route or customer specific basis.Consistent with industry practice, some of the rates we negotiate are special commodity quotations (“SCQs”), which provide discounts from published pricelists 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 oftime, usually up to 12 months.Relationship with Drayage CompaniesWe have a “Quality Drayage Program,” which consists of agreements and rules that govern the framework by which many drayage companies performservices for us. Participants in the program commit to provide high quality service along with clean and safe equipment, maintain a defined on-timeperformance level and follow specified procedures designed to minimize freight loss and damage. We negotiate drayage rates for transportation between specificorigin and destination points.We also supplement third-party drayage services with our own drayage operations, which we operate through our subsidiary Comtrak. Our drayageoperations employ their own drivers and also contract with owner-operators who supply their own trucks.Relationship with Trucking CompaniesOur truck brokerage operation has a large and growing number of active trucking companies that we use to transport freight. The local operating centers dealdaily with these carriers on an operational level. Our corporate headquarters handles the administrative and regulatory aspects of the trucking companyrelationship. 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 intruckman’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 insufficientto 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 alsocarry general liability insurance with limits of $1.0 million per occurrence and $2.0 million in the aggregate with a companion $50.0 million umbrella policyon this general liability insurance.4 We maintain separate insurance policies to cover potential exposure from our company-owned drayage operations. We carry commercial general liabilityinsurance with a limit of $1.0 million per occurrence, subject to a $2.0 million policy aggregate limit, and truckers automobile liability insurance with a limitof $1.0 million per occurrence. Additionally, we have an umbrella excess liability policy with a limit of $19.0 million. We also maintain motor truck cargoliability insurance with a limit of $1.0 million per occurrence.Government RegulationHub Group, Inc. and various subsidiaries are licensed by the Department of Transportation as brokers in arranging for the transportation of generalcommodities by motor vehicle. To the extent that the operating centers perform truck brokerage services, they do so under these licenses. The Department ofTransportation prescribes qualifications for acting in this capacity, including a $10,000 surety bond that we have posted. To date, compliance with theseregulations has not had a material adverse effect on our results of operations or financial condition. However, the transportation industry is subject tolegislative or regulatory changes that can affect the economics of the industry by requiring changes in operating practices or influencing the demand for, andcost of providing, transportation services.CompetitionThe transportation services industry is highly competitive. We compete against other IMCs, as well as logistics companies, third party brokers, truckingcompanies and railroads that market their own intermodal services. Several larger trucking companies have entered into agreements with railroads to marketintermodal services nationwide. Competition is based primarily on freight rates, quality of service, reliability, transit time and scope of operations. Severaltransportation service companies and trucking companies, and all of the major railroads, have substantially greater financial and other resources than we do.GeneralEmployees: As of December 31, 2009, we had 1,329 employees or 1,028 employees excluding drivers. We are not a party to any collective bargainingagreement 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 federalgovernment. 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, areseasonal.Periodic ReportsUpon written request, our annual report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2009, our quarterlyreports on Form 10-Q and current reports on Form 8-K will be furnished to stockholders free of charge; write to: Public Relations Department, Hub Group,Inc., 3050 Highland Parkway, Suite 100, Downers Grove, Illinois 60515. Our filings are also accessible through our website at www.hubgroup.com as soonas reasonably practicable after we file or furnish such reports to the Securities and Exchange Commission.Item 1A. RISK FACTORSBecause our business is concentrated on intermodal marketing, any decrease in demand for intermodal transportation services compared to othertransportation services could have an adverse effect on our results of operations. We derived 70% of our revenue from our intermodal services in 2009 as compared to 71% in 2008 and 73% in 2007. As a result, any decrease in demandfor 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 anyreduction 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 toone 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 provideintermodal transportation services to some of our customers. In addition, the railroads are relatively free to adjust shipping rates up or down as marketconditions permit. Rate increases would result in higher intermodal transportation costs, reducing the attractiveness of intermodal transportation compared totruck or other transportation modes, which could cause a decrease in demand for our services. Further, our ability to continue to expand our intermodaltransportation business is dependent upon the railroads’ ability to increase capacity for intermodal freight and provide consistent service. Our business couldalso 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 toprovide reliable transportation services. In the past, there have been service issues when railroads have merged. As a result, we cannot predict what effect, ifany, further consolidation among railroads may have on intermodal transportation services or our results of operations.5 Because our relationships with the major railroads are critical to our ability to provide intermodal transportation services, our business may beadversely affected by any change to those relationships. We have important relationships with the major U.S. railroads. To date, the railroads have chosen to rely on us, other IMCs and other intermodalcompetitors to market their intermodal services rather than fully developing their own marketing capabilities. If one or more of the major railroads were todecide to reduce their dependence on us, the volume of intermodal shipments we arrange would likely decline, which could adversely affect our results ofoperations and financial condition. Because we rely on drayage companies in our intermodal operations, our ability to expand our business or maintain our profitability may beadversely 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 companiesoperate relatively small fleets and have limited access to capital for fleet expansion. In some of our markets, there are a limited number of drayage companiesthat can meet our quality standards. This could limit our ability to expand our intermodal business or require us to establish our own drayage operations insome markets, which could increase our operating costs and could adversely affect our profitability and financial condition. Also, the trucking industrychronically experiences a shortage of available drivers, which may limit the ability of third-party drayage companies to expand their fleets. This shortage alsomay require them to increase drivers’ compensation, thereby increasing our cost of providing drayage services to our customers. Therefore, the driver shortagecould also adversely affect our profitability and limit our ability to expand our intermodal business. Because we depend on trucking companies for our truck brokerage services, our ability to maintain or expand our truck brokerage businessmay be adversely affected by a shortage of trucking capacity. We derived 19% of our revenue from our truck brokerage services in 2009 as compared to 20% in 2008 and 19% in 2007. We depend upon various third-party trucking companies for the transportation of our customers’ loads. Particularly during periods of economic expansion, trucking companies may beunable to expand their fleets due to capital constraints or chronic driver shortages, and these trucking companies also may raise their rates. If we faceinsufficient capacity among our third-party trucking companies, we may be unable to maintain or expand our truck brokerage business. Also, we may beunable to pass rate increases on to our customers, which could adversely affect our profitability. Because we use a significant number of independent contractors in our businesses, proposals from legislative, judicial or regulatory authoritiesthat change the independent contractor classification could have a significant impact on our gross margin and operating income.We use a significant number of independent contractors in our businesses, consistent with long-standing industry practices. There can be no assurancethat legislative, judicial, or regulatory (including tax) authorities will not introduce proposals or assert interpretations of existing rules and regulations thatwould change the independent contractor classification of a significant number of independent contractors doing business with us. The costs associated withpotential reclassifications could have a material adverse effect on results of operations and our financial position. We depend on third parties for equipment essential to operate our business, and if we fail to secure sufficient equipment, we could lose customersand revenue. We depend on third parties for transportation equipment, such as containers and trailers, necessary for the operation of our business. Our industry hasexperienced equipment shortages in the past, particularly during the peak shipping season in the fall. A substantial amount of intermodal freight originates ator near the major West Coast ports, which have historically had the most severe equipment shortages. If we cannot secure sufficient transportation equipmentat a reasonable price from third parties to meet our customers’ needs, our customers may seek to have their transportation needs met by other providers. Thiscould have an adverse effect on our business, results of operations and financial position.Our business could be adversely affected by strikes or work stoppages by draymen, truckers, longshoremen and railroad workers. There has been labor unrest, including work stoppages, among draymen. We could lose business from any significant work stoppage or slowdown and,if labor unrest results in increased rates for draymen, we may not be able to pass these cost increases on to our customers. In the summer of 2008, an owner-operator work stoppage in Northern California caused us to incur an additional $1.0 million in transportation costs. In the fall of 2002, all of the West Coastports 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 courtorder under the Taft-Hartley Act. Our operations were adversely affected by the shutdown. A new contract was agreed to through 2014 by the InternationalLongshoremen 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 ourbusiness and results of operations. Any significant work stoppage, slowdown or other disruption involving ports, railroads, truckers or draymen couldadversely affect our business and results of operations.6 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 othergeneral economic factors affect the demand for transportation services and the operating costs of railroads, trucking companies and drayage companies. Wehave little or no control over any of these factors or their effects on the transportation industry. Increases in the operating costs of railroads, truckingcompanies or drayage companies can be expected to result in higher freight rates. Our operating margins could be adversely affected if we were unable to passthrough to our customers the full amount of higher freight rates. Economic recession or a downturn in customers’ business cycles also may have an adverseeffect on our results of operations and growth by reducing demand for our services. Therefore, our results of operations, like the entire freight transportationindustry, 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 effecton our gross margin and operating income. Transportation costs represented 88% of our consolidated revenue in 2009, 87% in 2008 and 86% in 2007. Because transportation costs represent such asignificant portion of our costs, even relatively small increases in these transportation costs, if we are unable to pass them through to our customers, are likelyto have a significant effect on our gross margin and operating income. Our business could be adversely affected by heightened security measures, actual or threatened terrorist attacks, efforts to combat terrorism,military action against a foreign state or other similar event. We cannot predict the effects on our business of heightened security measures, actual or threatened terrorist attacks, efforts to combat terrorism, militaryaction against a foreign state or other similar events. It is possible that one or more of these events could be directed at U.S. or foreign ports, borders, railroadsor 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 theeconomy 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 logisticsprovider. We expect our customers to continue to demand more sophisticated information technology applications from their suppliers. If we do not continueto enhance our Network Management System and the logistics software we use to meet the increasing demands of our customers, we may be placed at acompetitive 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 couldmaterially adversely affect our business. Our information technology systems are dependent upon global communications providers, web browsers, telephone systems and other aspects of theInternet 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 similardisruptions from unauthorized tampering with our computer systems. The occurrence of any of these events could disrupt or damage our informationtechnology systems and inhibit our internal operations, our ability to provide services to our customers and the ability of our customers and vendors to accessour 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 operatingresults or financial condition. Hub Group, Inc. and various subsidiaries are licensed by the Department of Transportation as motor carrier freight brokers. The Department ofTransportation prescribes qualifications for acting in this capacity, including surety bond requirements. Our Comtrak subsidiary is licensed by theDepartment of Transportation to act as a motor carrier. To date, compliance with these regulations has not had a material adverse effect on our results ofoperations or financial condition. However, the transportation industry is subject to legislative or regulatory changes, including potential limits on carbonemissions under climate change legislation, that can affect the economics of the industry by requiring changes in operating practices or influencing the demandfor, and cost of providing, transportation services. We may become subject to new or more restrictive regulations relating to fuel emissions or limits on vehicleweight and size. Future laws and regulations may be more stringent and require changes in operating practices, influence the demand for transportationservices or increase the cost of providing transportation services, any of which could adversely affect our business and results of operations.7 We are not able to accurately predict how new governmental laws and regulations, or changes to existing laws and regulations, will affect thetransportation industry generally, or us in particular. Although government regulation that affects us and our competitors may simply result in higher coststhat can be passed to customers, there can be no assurance that this will be the case. 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 variousenvironmental laws and regulations relating to the handling of hazardous materials. If we are involved in a spill or other accident involving hazardousmaterials, 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 criminalliability, 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 materialadverse effect on our revenue and business. Our largest 20 customers accounted for approximately 40%, 36% and 36% of our revenue in 2009, 2008 and 2007, respectively. A reduction in ortermination 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, ouroperating results could be adversely affected. We maintain insurance with licensed insurance companies. Insurance carriers have recently raisedpremiums. As a result, our insurance and claims expenses could increase when our current coverage expires. If these expenses increase, and we are unable tooffset 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 ofother qualified personnel to run our business. There is substantial competition for qualified personnel in the transportation services industry. As all keypersonnel 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. Wedo not have written employment agreements with any of our executive officers and do not maintain key man insurance on any of our executive officers.Our growth could be adversely affected if we are not able to identify, successfully acquire and integrate future acquisition prospects.We believe that future acquisitions and/or the failure to make such acquisitions could significantly impact financial results. Financial results most likely to beimpacted include, but are not limited to, revenue, gross margin, salaries and benefits, selling general and administrative expenses, depreciation andamortization, interest expense, net income and our debt level.An economic downturn could materially adversely affect our business.Our operations and performance depend significantly on economic conditions. Uncertainty about global economic conditions poses a risk as consumersand businesses may postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have amaterial negative effect on demand for transportation services. We are unable to predict the likely duration and severity of the current disruptions in thefinancial markets and the adverse global economic conditions, and if the current uncertainty continues or economic conditions further deteriorate, our businessand results of operations could be materially and adversely affected. Other factors that could influence demand include fluctuations in fuel costs, labor costs,consumer confidence, and other macroeconomic factors affecting consumer spending behavior. There could be a number of follow-on effects from a creditcrisis on our business, including the insolvency of key transportation providers and the inability of our customers to obtain credit to finance developmentand/or manufacture products resulting in a decreased demand for transportation services. Our revenues and gross margins are dependent upon this demand,and if demand for transportation services declines, our revenues and gross margins could be adversely affected.Although we believe we have adequate liquidity and capital resources to fund our operations internally our inability to access the capital markets onfavorable terms, or at all, may adversely affect our ability to engage in strategic transactions. The inability to obtain adequate financing from debt or capitalsources could force us to self-fund strategic initiatives or even forgo certain opportunities, which in turn could potentially harm our performance.Uncertainty about global economic conditions could also continue to increase the volatility of our stock price.8 We are exposed to credit risk and fluctuations in the market values of our investment portfolio.Although we have not recognized any material losses on our cash and cash equivalents, future declines in their market values could have a materialadverse effect on our financial condition and operating results. The value or liquidity of our cash and cash equivalents could decline which could have amaterial adverse effect on our financial condition and operating results.Item 1B. UNRESOLVED STAFF COMMENTSNone.Item 2. PROPERTIES We directly, or indirectly through our subsidiaries, operate 43 offices throughout the United States, Canada and Mexico, including our headquartersin Downers Grove, Illinois and our Company-owned drayage operations headquartered in Memphis, Tennessee. All of our office space is leased. Most officeleases 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 wewill have difficulty in renewing them or in finding alternative office space. We believe that our offices are adequate for the purposes for which they arecurrently used.Item 3. LEGAL PROCEEDINGSWe 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 insurancecarriers. 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 amaterially 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 HOLDERSThere were no matters submitted to a vote of our security holders during the fourth quarter of 2009.9 Executive Officers of the RegistrantIn 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 forthcertain information as of February 1, 2010 with respect to each person who is an executive officer of the Company. Name Age Position David P. Yeager 56 Chairman of the Board of Directors and Chief Executive Officer Mark A. Yeager45Vice Chairman of the Board of Directors, President and Chief Operating Officer Christopher R. Kravas44Chief Intermodal Officer David L. Marsh42Chief Marketing Officer Terri A. Pizzuto51Executive Vice President, Chief Financial Officer and Treasurer James B. Gaw59Executive Vice President-Sales Dwight C. Nixon47Executive Vice President-Highway Donald G. Maltby55Executive Vice President-Logistics Dennis R. Polsen56Executive Vice President-Information Services David C. Zeilstra40Vice President, Secretary and General CounselDavid P. Yeager has served as our Chairman of the Board since November 2008 and as Chief Executive Officer since March 1995. From March1995 through November 2008, Mr. Yeager served as Vice Chairman of the Board. From October 1985 through December 1991, Mr. Yeager was Presidentof 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 andserved 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. Yeagerreceived a Masters in Business Administration degree from the University of Chicago in 1987 and a Bachelor of Arts degree from the University of Dayton in1975. Mr. Yeager is the brother of Mark A. Yeager.Mark A. Yeager has served as Vice Chairman of the Board since November 2008. He became the President of the Company in January 2005 and hasbeen our Chief Operating Officer and a Director since May 2004. From July 1999 to December 2004, Mr. Yeager was President-Field Operations. FromNovember 1997 through June 1999, Mr. Yeager was Division President, Secretary and General Counsel. From March 1995 to November 1997, Mr. Yeagerwas Vice President, Secretary and General Counsel. From May 1992 to March 1995, Mr. Yeager served as our Vice President-Quality. Prior to joining us in1992, 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 degreefrom Indiana University in 1986. Mr. Yeager is the brother of David P. Yeager.Christopher R. Kravas has been our Chief Intermodal Officer since October 2007. Prior to this promotion, Mr. Kravas was Executive Vice President-Strategy and Yield Management from December 2003 through September 2007. From February 2002 through November 2003, Mr. Kravas served as Presidentof Hub Highway Services. From February 2001 through December 2001, Mr. Kravas was Vice President-Enron Freight Markets. Mr. Kravas joined Enronafter it acquired Webmodal, an intermodal business he founded. Mr. Kravas was Chief Executive Officer of Webmodal from July 1999 through February2001. From 1989 through June 1999 Mr. Kravas worked for the Burlington Northern Santa Fe Railway in various positions in the intermodal business unitand finance department. Mr. Kravas received a Bachelor of Arts degree in 1987 from Indiana University and a Masters in Business Administration in 1994from the University of Chicago. David L. Marsh has been our Chief Marketing Officer since October 2007. Prior to this promotion, Mr. Marsh was Executive Vice President-Highwayfrom February 2004 through September 2007. Mr. Marsh previously served as President of Hub Ohio from January 2000 through January 2004. Mr. Marshjoined us in March 1991 and became General Manager with Hub Indianapolis in 1993, a position he held through December 1999. Prior to joining HubGroup, Mr. Marsh worked for Carolina Freight Corporation, a less than truckload carrier, starting in January 1990. Mr. Marsh received a Bachelor ofScience degree in Marketing and Physical Distribution from Indiana University-Indianapolis in December 1989. Mr. Marsh has been a member of theAmerican Society of Transportation and Logistics, the Indianapolis Traffic Club, the Council for Logistics Management and served as an advisor to theIndiana University-Indianapolis internship program for transportation and logistics. Mr. Marsh was honored as the Indiana Transportation Person of the Yearin 1999.Terri A. Pizzuto has been our Executive Vice President, Chief Financial Officer and Treasurer since March 2007. Prior to this promotion, Ms. Pizzutowas Vice President of Finance from July 2002 through February 2007. Prior to joining us, Ms. Pizzuto was a partner in the Assurance and Business AdvisoryGroup at Arthur Andersen LLP. Ms. Pizzuto worked for Arthur Andersen LLP for 22 years holding various positions and serving numerous transportationcompanies. 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 theAmerican Institute of Certified Public Accountants.10 James B. Gaw has been our Executive Vice President-Sales since February 2004. From December 1996 through January 2004, Mr. Gaw was Presidentof Hub North Central, located in Milwaukee. From 1990 through late 1996, he was Vice President and General Manager of Hub Chicago. Mr. Gaw joinedHub Chicago as Sales Manager in 1988. Mr. Gaw’s entire career has been spent in the transportation industry, including 13 years of progressive leadershippositions at Itofca, an intermodal marketing company, and Flex Trans. Mr. Gaw received a Bachelor of Science degree from Elmhurst College in 1973.Dwight C. Nixon has been our Executive Vice President-Highway since October 2007. Mr. Nixon previously served as Regional Vice President ofHighway’s Western Region from April 2004 through September 2007. Prior to joining us, Mr. Nixon was a Senior Corporate Account Executive for RoadwayExpress, Inc. and spent 19 years in various operational, sales and sales management positions. Mr. Nixon was also a California Gubernatorial appointee andmember of the California Workforce Investment Board from November 2005 through December 2007. Mr. Nixon received a Bachelor of Science degree inFinance from the University of Arizona in 1984.Donald G. Maltby has been our Executive Vice President-Logistics since February 2004. Mr. Maltby previously served as President of Hub Online, oure-commerce division, from February 2000 through January 2004. Mr. Maltby also served as President of Hub Cleveland from July 1990 through January2000 and from April 2002 to January 2004. Prior to joining Hub Group, Mr. Maltby served as President of Lyons Transportation, a wholly owned subsidiaryof 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 thetransportation and logistics industry since 1976, holding various executive and management positions. Mr. Maltby received a Masters in BusinessAdministration from Baldwin Wallace College in 1982 and a Bachelor of Science degree from the State University of New York in 1976.Dennis R. Polsen has been our Executive Vice President-Information Services since February 2004. From September 2001 to January 2004, Mr. Polsenwas Vice President-Chief Information Officer and from March 2000 through August 2001, Mr. Polsen was our Vice-President of ApplicationDevelopment. Prior to joining us, Mr. Polsen was Director of Applications for Humana, Inc. from September 1997 through February 2000 and spent 14 yearsprior to that developing, implementing, and directing transportation logistics applications at Schneider National, Inc. Mr. Polsen received a Masters inBusiness Administration in May of 1983 from the University of Wisconsin Graduate School of Business and a Bachelor of Business Administration in Mayof 1976 from the University of Wisconsin-Milwaukee. Mr. Polsen is a past member of the American Trucking Association.David C. Zeilstra has been our Vice President, Secretary and General Counsel since July 1999. From December 1996 through June 1999, Mr.Zeilstra was our Assistant General Counsel. Prior to joining us, Mr. Zeilstra was an associate with the law firm of Mayer, Brown & Platt from September1994 through November 1996. Mr. Zeilstra received a Juris Doctor degree from Duke University in 1994 and a Bachelor of Arts degree from WheatonCollege in 1990.Directors of the RegistrantIn addition to David P. Yeager and Mark A. Yeager, the following three individuals are also on our Board of Directors: Gary D. Eppen – currently retired andformerly the Ralph and Dorothy Keller Distinguished Service Professor of Operations Management and Deputy Dean for part-time Masters in BusinessAdministration Programs at the Graduate School of Business at the University of Chicago; Charles R. Reaves – Chief Executive Officer of ReavesEnterprises, Inc., a real estate development company, and Martin P. Slark – Vice Chairman and Chief Executive Officer of Molex, Incorporated, amanufacturer of electronic, electrical and fiber optic interconnection products and systems. 11 PART IIItem 5.MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIESOur Class A Common Stock (“Class A Common Stock”) trades on the NASDAQ Global Select Market tier of the NASDAQ Stock Market under thesymbol “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 2009 and2008. 2009 2008 HighLow HighLow First Quarter $28.27 $15.83 $35.17 $22.77 Second Quarter $25.52 $17.42 $36.32 $30.90 Third Quarter $24.76 $18.34 $41.75 $31.31 Fourth Quarter $27.82 $22.48 $36.50 $21.82 On February 12, 2010, there were approximately 309 stockholders of record of the Class A Common Stock and, in addition, there were anestimated 9,482 beneficial owners of the Class A Common Stock whose shares were held by brokers and other fiduciary institutions. On February 12, 2010,there were 13 holders of record of our Class B Common Stock (the “Class B Common Stock” together with the Class A Common Stock, the “CommonStock”).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 andpayment 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 ofoperations, 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 ofincorporation requires that any cash dividends must be paid equally on each outstanding share of Class A Common Stock and Class B Common Stock. Ourcredit facility prohibits us from paying dividends on the Common Stock if there has been, or immediately following the payment of a dividend there wouldbe, a default or an event of default under the credit facility. We are currently in compliance with the covenants contained in the credit facility.On October 26, 2006, our Board of Directors authorized the purchase of up to $75.0 million of our Class A Common Stock. During the fourth quarterof 2007, we completed the authorized purchase of $75.0 million of our Class A Common Stock. On November 14, 2007, our Board of Directors authorizedthe purchase of up to $75.0 million of our Class A Common Stock. We purchased 38,800 shares at an average price of $36.12 during 2008. No additionalshares were purchased before the authorization expired June 30, 2009. 12 Performance Graph The following line graph compares the Company’s cumulative total stockholder return on its Class A Common Stock since December 31, 2004 with thecumulative 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, 2004 in each index and in the Company’s Class A Common Stock and the reinvestment of dividends.13 Item 6. SELECTED FINANCIAL DATASelected Financial Data(in thousands except per share data) Years Ended December 31, 2009 2008 2007 2006 (2) 2005 Statement of Income Data: Revenue $1,510,970 $1,860,608 $1,658,168 $1,609,529 $1,481,878 Gross margin 185,690 234,311 232,324 218,418 174,742 Operating income 55,531 95,462 90,740 77,236 47,904 Income from continuing operations before taxes 55,885 96,326 93,228 79,508 48,871 Income from continuing operations after taxes 34,265 59,245 59,799 47,705 29,176 Income from discontinued operations, net of tax (1) - - - 981 3,770 Net income $34,265 $59,245 $59,799 $48,686 $32,946 Basic earnings per common share Income from continuing operations $0.92 $1.59 $1.55 $1.19 $0.73 Income from discontinued operations $- $- $- $0.03 $0.10 Diluted earnings per common share Income from continuing operations $0.91 $1.58 $1.53 $1.17 $0.71 Income from discontinued operations $- $- $- $0.02 $0.09 As of December 31, 2009 2008 2007 2006 2005 Balance Sheet Data: Total assets $573,348 $528,231 $491,967 $484,548 $444,418 Long-term debt, excluding current portion - - - - - Stockholders' equity 353,841 315,184 250,899 258,844 242,075 (1) HGDS disposed of May 1, 2006(2) Comtrak was acquired February 28, 200614 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONSFORWARD LOOKING STATEMENTSThe information contained in this annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of1995. Words such as “expects,” “hopes,” “believes,” “intends,” “estimates,” “anticipates,” and variations of these words and similar expressions areintended to identify these forward-looking statements. Forward-looking statements are inherently uncertain and subject to risks. Such statements should beviewed with caution. Actual results or experience could differ materially from the forward-looking statements as a result of many factors. We assume noliability to update any such forward-looking statements contained in this annual report. Factors that could cause our actual results to differ materially, inaddition 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 marketingefforts of asset-based carriers;· changes in rail, drayage and trucking company capacity;· railroads moving away from ownership of intermodal assets;· equipment shortages or equipment surplus;· changes in the cost of services from rail, drayage, truck or other vendors;· increases in costs for independent contractors due to regulatory, judicial and legal changes;· labor unrest in the rail, drayage or trucking company communities;· general economic and business conditions;· significant deterioration in our customers’ financial condition, particularly in the retail and durable goods sectors;· fuel shortages or fluctuations in fuel prices;· increases in interest rates;· changes in homeland security or terrorist activity;· difficulties in maintaining or enhancing our information technology systems;· changes to or new governmental regulation;· loss of several of our largest customers;· inability to recruit and retain key personnel;· inability to recruit and maintain drivers and owner operators;· changes in insurance costs and claims expense;· changes to current laws which will aid union organizing efforts; and· inability to close and successfully integrate any future business combinations.CAPITAL STRUCTUREWe have authorized common stock comprised of Class A Common Stock and Class B Common Stock. The rights of holders of Class A CommonStock and Class B Common Stock are identical, except each share of Class B Common Stock entitles its holder to approximately 80 votes, while each shareof Class A Common Stock entitles its holder to one vote. We have authorized 2,000,000 shares of preferred stock.EXECUTIVE SUMMARYHub Group, Inc. (“we”, “us” or “our”) is the largest intermodal marketing company (“IMC”) in the United States and a full service transportationprovider offering intermodal, truck brokerage and logistics services. We operate through a nationwide network of operating centers.As an IMC, we arrange for the movement of our customers’ freight in containers and trailers over long distances. We contract with railroads to providetransportation for the long-haul portion of the shipment and with local trucking companies, known as “drayage companies,” for local pickup anddelivery. As part of the intermodal services, we negotiate rail and drayage rates, electronically track shipments in transit, consolidate billing and handle claimsfor freight loss or damage on behalf of our customers.15 Our drayage services are provided by our subsidiary, Comtrak, which assists us in providing reliable, cost effective intermodal services to ourcustomers. Comtrak has terminals in Atlanta, Bensalem (Philadelphia), Birmingham, Charleston, Charlotte, Chattanooga, Chicago, Cleveland, Columbus,Dallas, Harrisburg, Huntsville, Jacksonville, Kansas City, Memphis, Nashville, Ontario (Los Angeles), Perry, Saint Louis, Savannah, Stockton, andTampa. As of December 31, 2009, Comtrak owned 283 tractors, leased 20 tractors, leased or owned 553 trailers, employed 301 drivers and contracted with1,007 owner-operators. We also arrange for the transportation of freight by truck, providing customers with another option for their transportation needs. We match thecustomers’ needs with carriers’ capacity to provide the most effective service and price combinations. As part of our truck brokerage services, we negotiaterates, 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 carriermanagement. These service offerings are designed to take advantage of the increasing trend for shippers to outsource all or a greater portion of theirtransportation 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 transportationservices to them.Our yield management group works with pricing and operations to enhance customer margins. We are working on margin enhancement projectsincluding matching up inbound and outbound loads, reducing our drayage costs and improving our recovery of accessorial costs. Our top 50 customers’revenue represents approximately 59% of our revenue.We use various performance indicators to manage our business. We closely monitor margin and gains and losses for our top 50 customers and loads thatare not beneficial to our network. We also evaluate on-time performance, cost per load and daily sales outstanding by customer account. Vendor cost changesand vendor service issues are also monitored closely.RESULTS OF OPERATIONSYear Ended December 31, 2009 Compared to Year Ended December 31, 2008The following table summarizes our revenue by service line (in thousands): Twelve Months Ended December 31, % 2009 2008 Change Revenue Intermodal $1,054,862 $1,329,382 (20.7%)Brokerage 292,639 372,051 (21.3%)Logistics 163,469 159,175 2.7%Total revenue $1,510,970 $1,860,608 (18.8%) 16 The following table includes certain items in the consolidated statements of income as a percentage of revenue: Twelve Months Ended December 31, 2009 2008 Revenue 100.0 % 100.0 %Transportation costs87.7 87.4Gross margin12.3 12.6 Costs and expenses: Salaries and benefits5.9 5.0 General and administration2.4 2.3 Depreciation and amortization0.3 0.2Total costs and expenses8.6 7.5 Operating income3.7 5.1 Other income (expense): Interest and dividend income0.0 0.1 Total other income0.0 0.1 Income before provision for income taxes3.7 5.2 Provision for income taxes1.4 2.0 Net income 2.3% 3.2% RevenueRevenue decreased 18.8% to $1,511.0 million in 2009 from $1,860.6 million in 2008. Intermodal revenue decreased 20.7% to $1,054.9 million from$1,329.4 million due to an 11% decline for fuel, a 5% decrease in volume, a 3% price decrease and a 2% decrease for mix. Truck brokerage revenuedecreased 21.3% to $292.6 million from $372.1 million due to a 2% decrease in volume, an 11% decline for fuel and an 8% decline due to price andmix. Logistics revenue increased 2.7% to $163.5 million from $159.2 million due to increases in business from both new and existing customers in 2009.Gross MarginGross margin decreased 20.8% to $185.7 million in 2009 from $234.3 million in 2008. Gross margin as a percentage of revenue decreased to 12.3% in 2009from 12.6% in 2008. This decline was primarily due to decreases in intermodal gross margin, related to lower price and mix. These decreases were partiallyoffset by cost reductions from better management of our drayage operations and other margin initiatives.Salaries and BenefitsSalaries and benefits decreased to $88.5 million in 2009 from $93.7 million in 2008 partially due to a decrease in bonus expense of $2.2 million, salaries andbenefits of $2.1 million and commissions of $0.8 million. The decrease in bonus expense was the result of not earning any EPS based bonus in 2009. As apercentage of revenue, salaries and benefits increased to 5.9% in 2009 from 5.0% in 2008. Headcount as of December 31, 2009 and 2008 was 1,028 and1,099, respectively, which excludes drivers, as driver costs are included in transportation costs.General and AdministrativeGeneral and administrative expenses decreased to $37.5 million from $41.2 million in 2008. Total expenses decreased due to reductions in outside services of$1.4 million, travel and entertainment expenses of $1.2 million, office expense of $0.6 million and outside sales commissions of $0.4 million. Thesereductions were partially offset by a $0.7 million increase in bad debts due to bankruptcies of certain customers. The reduction in travel and entertainmentexpenses resulted primarily from an increased focus on controlling costs. As a percentage of revenue, general and administrative expenses increased to 2.4% in2009 from 2.3% in 2008. 17 Depreciation and AmortizationDepreciation and amortization increased 5.5% to $4.2 million in 2009 from $4.0 million in 2008. This expense as a percentage of revenue increased to 0.3% in2009 from 0.2% in 2008. The increase in depreciation and amortization was due primarily to a decrease in the salvage value of certain assets.Other Income (Expense)Interest expense remained consistent at $0.1 million in 2009 and 2008. Interest and dividend income decreased to $0.1 million in 2009 from $1.2 million in2008. The decrease in interest and dividend income was the result of lower interest rates in 2009 primarily due to investing our cash in money market fundscomprised of U.S. Treasury Securities and repurchase agreements for these securities rather than commercial paper.Provision for Income TaxesThe provision for income taxes decreased to $21.6 million in 2009 from $37.1 million in 2008. We provided for income taxes using an effective rate of38.7% in 2009 compared to 38.5% in 2008. The 2009 effective rate was higher due to income tax law changes enacted in February, 2009 by Wisconsin andCalifornia, which resulted in an increase of income tax expense of approximately $0.4 million.Net IncomeNet income decreased to $34.3 million in 2009 from $59.2 million in 2008 due primarily to lower gross margin.Earnings Per Common ShareBasic earnings per share was $0.92 in 2009 and $1.59 in 2008. Basic earnings per share decreased due to the decrease in net income.Diluted earnings per share decreased to $0.91 in 2009 from $1.58 in 2008. Diluted earnings per share decreased due to the decrease in net income.Year Ended December 31, 2008, Compared to Year Ended December 31, 2007The following table summarizes our revenue by service line (in thousands): Twelve Months Ended December 31, % 2008 2007 Change Revenue Intermodal $1,329,382 $1,206,364 10.2%Brokerage 372,051 322,465 15.4%Logistics 159,175 129,339 23.1%Total revenue $1,860,608 $1,658,168 12.2% 18 The following table includes certain items in the consolidated statements of income as a percentage of revenue: Twelve Months Ended December 31, 2008 2007 Revenue 100.0 % 100.0 %Transportation costs87.4 86.0Gross margin12.6 14.0 Costs and expenses: Salaries and benefits5.0 5.8 General and administration2.3 2.5 Depreciation and amortization0.2 0.2Total costs and expenses7.5 8.5 Operating income5.1 5.5 Other income (expense): Interest and dividend income0.1 0.1 Total other income0.1 0.1 Income before provision for income taxes5.2 5.6 Provision for income taxes2.0 2.0 Net income 3.2% 3.6% RevenueRevenue increased 12.2% to $1,860.6 million in 2008 from $1,658.2 million in 2007. Intermodal revenue increased 10.2% to $1,329.4 million from$1,206.4 million due to a 9% increase in fuel, a 2% increase in volume and a 1% decrease related to price/mix. Truck brokerage revenue increased 15.4% to$372.1 million from $322.5 million due to volume increases, changes in mix and an increase in fuel surcharges. Logistics revenue increased 23.1% to$159.2 million from $129.3 million due to increases in business from both new and existing customers in 2008.Gross MarginGross margin increased 0.9% to $234.3 million in 2008 from $232.3 million in 2007. Gross margin as a percentage of revenue decreased to 12.6% in 2008from 14.0% in 2007. The decrease in gross margin as a percentage of revenue was due to a one time $2.0 million profitable vendor deal in 2007, the owneroperator work stoppage in northern California that cost us an extra $1.0 million in 2008 and competitive pricing.Salaries and BenefitsSalaries and benefits decreased to $93.7 million in 2008 from $95.7 million in 2007. The decrease in 2008 was due to a decrease in bonuses of $3.7 milliondue to not earning as much EPS based bonus as we did in 2007, partially offset by an increase in salaries of $1.4 million. As a percentage of revenue, salariesand benefits decreased to 5.0% in 2008 from 5.8% in 2007. Headcount as of December 31, 2008 and 2007 was 1,099 and 1,081, respectively, whichexcludes drivers, as driver costs are included in transportation costs.General and AdministrativeGeneral and administrative expenses decreased to $41.2 million from $41.4 million in 2007. The decrease was primarily due to a $0.9 million reduction ingeneral insurance expense related to conversions in 2008 of QS locations to Comtrak and a $0.6 million reduction in outside services related to reducedconsultant spending. These reductions were partially offset by a $0.6 million increase in rent, an increase of $0.5 million related to bad debts due tobankruptcies, and a $0.3 million increase in repairs and maintenance related to maintenance for information technology hardware. As a percentage of revenue,general and administrative expenses decreased to 2.3% in 2008 from 2.5% in 2007.19 Depreciation and AmortizationDepreciation and amortization decreased 11.9% to $4.0 million in 2008 from $4.5 million in 2007. This expense as a percentage of revenue remainedconsistent at 0.2% of revenue. The decrease in depreciation and amortization was due to lower software depreciation due to certain assets being fullydepreciated.Other Income (Expense)Interest expense remained consistent at $0.1 million in 2008 and 2007. Interest and dividend income decreased to $1.2 million in 2008 from $2.5 million in2007. The decrease in interest and dividend income was the result of lower interest rates in 2008 partially due to investing our cash in money market fundscomprised of U.S. Treasury Securities and repurchase agreements for these securities rather than commercial paper.Provision for Income TaxesThe provision for income taxes increased to $37.1 million in 2008 from to $33.4 million in 2007. We provided for income taxes using an effective rate of38.5% in 2008 compared to 35.9% in 2007. The 2007 effective rate was lower primarily due to two events. In the fourth quarter of 2007, we resolved adispute with the IRS which reduced our 2007 income tax provision by $1.3 million. Also, tax legislation enacted by the State of Illinois in the third quarter of2007 created a benefit of approximately $1.2 million from the reduction of non-current deferred tax liabilities. The tax legislation modified how we apportiontaxable income to Illinois.Net IncomeNet income decreased to $59.2 million in 2008 from $59.8 million in 2007 due to higher income taxes and lower interest and dividend income, only partiallyoffset by higher gross margin, lower salaries and benefits, lower depreciation and amortization expense and lower general and administrative expense.Earnings Per Common ShareBasic earnings per share was $1.59 in 2008 and $1.55 in 2007. Basic earnings per share increased primarily due to the decrease in the basic weightedaverage number of shares outstanding because of our purchase of treasury shares in 2007.Diluted earnings per share increased to $1.58 in 2008 from $1.53 in 2007. Diluted earnings per share increased primarily due to the decrease in the dilutedweighted average number of shares outstanding because of our purchase of treasury shares in 2007.LIQUIDITY AND CAPITAL RESOURCESIn 2009, we funded our operations, capital expenditures and purchase of treasury stock through cash flows from operations.Cash provided by operating activities for the year ended December 31, 2009 was approximately $45.2 million, which resulted from net income of $34.3million, adjustments for non cash items of $18.1 million offset by an increase in net operating assets and liabilities of $7.2 million.Net cash used in investing activities for the year ended December 31, 2009 was $4.2 million and related primarily to capital expenditures. We expect capitalexpenditures to be between $9.0 million and $11.0 million in 2010.The net cash provided by financing activities for the year ended December 31, 2009 included $1.1 million of cash used to purchase treasury stock offset by$0.3 million of proceeds from stock options exercised and $0.8 million of reported excess tax benefits from share-based compensation as a financing cash in-flow.We invest our cash overnight in a money market fund comprised of U.S. Treasury Securities and repurchase agreements for these securities. Theseinvestments are included in cash and cash equivalents on our balance sheet due to their short term maturity and are reported at their carrying value whichapproximates fair value.Our revolving credit agreement provides for unsecured borrowing up to $50.0 million. The interest rate ranges from LIBOR plus 0.75% to 1.25% or Primeplus 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 flowleverage ratio of not more than 2.0 to 1.0. The commitment fees charged on the unused line of credit were between 0.15% and 0.25%. Our unused andavailable borrowings under our bank revolving line of credit were $47.1 million as of December 31, 2009 and December 31, 2008. We were in compliancewith our debt covenants as of December 31, 2009.We have standby letters of credit that expire from 2010 to 2012. As of December 31, 2009, our letters of credit were $2.9 million. 20 CONTRACTUAL OBLIGATIONSOur contractual cash obligations as of December 31, 2009 were minimum rental commitments. We have six years remaining on a ten year lease agreement fora building and property (Comtrak’s Memphis facility) with a related party, the President of Comtrak. Rent paid under this agreement totaled $0.7 million forthe year ended December 31, 2009. The annual lease payments escalate by less than 1% per year. Minimum annual rental commitments, as of December 31,2009, under non-cancelable operating leases, principally for real estate, containers and equipment are payable as follows (in thousands):2010 $16,919 2011 15,096 2012 11,599 2013 4,344 2014 1,166 2015 and thereafter 718 $49,842 Deferred CompensationUnder our Nonqualified Deferred Compensation Plan (the “Plan”), participants can elect to defer certain compensation. Payments under the Plan are due asfollows (in thousands):2010 $1,841 2011 729 2012 805 2013 761 2014 1,945 2015 and thereafter 5,738 $11,819 CRITICAL ACCOUNTING POLICIESThe preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates andassumptions. In certain circumstances, those estimates and assumptions can affect amounts reported in the accompanying consolidated financialstatements. We have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration tomateriality. We do not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies describedbelow. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result,actual results could differ from these estimates. The following is a brief discussion of the more significant accounting policies and estimates. Allowance for Uncollectible Trade Accounts ReceivableIn the normal course of business, we extend credit to customers after a review of each customer’s credit history. An allowance for uncollectible tradeaccounts has been established through an analysis of the accounts receivable aging, an assessment of collectibility based on historical trends and an evaluationbased on current economic conditions. To be more specific, we reserve a portion of every account balance that has aged over one year, a portion of receivablesfor customers in bankruptcy and certain account balances specifically identified as uncollectible. On an annual basis, we perform a hindsight analysis todetermine our experience in collecting account balances over one year old and account balances in bankruptcy. We then use this hindsight analysis toestablish our reserves for receivables over one year and in bankruptcy. In establishing a reserve for certain account balances specifically identified asuncollectible, we consider the aging of the customer receivables, the customer’s current and projected financial results, the customer’s ability to meet andsustain their financial commitments, the positive or negative effects of the current and projected industry outlook and the general economic conditions. TheCompany’s level of reserves for its customer accounts receivable fluctuate depending upon all the factors mentioned above. However, we do not expect thereserve for uncollectible accounts to change significantly relative to our accounts receivable balance. Historically, our reserve for uncollectible accounts hasapproximated actual accounts written off. The allowance for uncollectible accounts is reported on the balance sheet in net accounts receivable. Recoveries ofreceivables previously charged off are recorded when received. 21 Revenue RecognitionRevenue is recognized at the time 1) persuasive evidence of an arrangement exists, 2) services have been rendered, 3) the sales price is fixed and determinableand 4) collectibility is reasonably assured. Revenue and related transportation costs are recognized based on relative transit time. Further, we report revenue ona gross basis because we are the primary obligor and are responsible for providing the service desired by the customer. The customer views us as responsiblefor fulfillment including the acceptability of the service. Service requirements may include, for example, on-time delivery, handling freight loss and damageclaims, setting up appointments for pick up and delivery and tracing shipments in transit. We have discretion in setting sales prices and as a result, ourearnings vary. In addition, we have the discretion to select our vendors from multiple suppliers for the services ordered by our customers. Finally, we havecredit risk for our receivables. These three factors, discretion in setting prices, discretion in selecting vendors and credit risk, further support reportingrevenue on the gross basis.Provision for Income TaxesDeferred income taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting using tax rates in effect forthe 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 based on futuretaxable income projections with the exception of $0.4 million related to state tax net operating losses for which a valuation allowance has been established. Inthe 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 wouldbe established for the deferred tax assets deemed unrecoverable. Tax liabilities are recorded when, in management’s judgment, a tax position does not meet the more likely than not threshold for recognition as prescribedby the guidance. For tax positions that meet the more likely than not threshold, a tax liability may be recorded depending on management’s assessment of howthe tax position will ultimately be settled.Valuation of Goodwill and Other Indefinite-Lived IntangiblesWe review goodwill and other indefinite-lived intangibles for impairment on an annual basis or whenever events or changes in circumstances indicate thecarrying amount of goodwill or other indefinite-lived intangibles may not be recoverable. An indefinite lived intangible asset is impaired if its fair value is lessthan its carrying value. Goodwill impairment is indicated if the fair value of the reporting unit is less that its carrying value. An impairment loss is measuredas the difference between the implied fair value of the reporting unit's goodwill and the carrying amount of goodwill. We utilize a third party independentvaluation firm to assist in performing the necessary valuations to be used in the impairment testing. These valuations are based on a market comparableapproach, a discounted cash flow approach or a combination of both approaches. The fair value measurement is determined based on assumptions that amarket participant would use including expectations regarding future operating performance (which are consistent with our internal projections and operatingplans), discount rates, control premiums and other factors which are subjective in nature. As of December 31, 2009, reasonable variations in theseassumptions do not have a significant impact on the results of the goodwill impairment test. Actual cash flows from operations could differ frommanagement’s estimates due to changes in business conditions, operating performance and economic conditions.Valuation of Finite-Lived Intangibles and Fixed AssetsWe evaluate the potential impairment of finite-lived intangible assets and fixed assets when impairment indicators exist. If the carrying value is no longerrecoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and thefair value of the asset. EquipmentWe operate tractors and utilize containers in connection with our business. This equipment may be purchased or acquired under capital or operating leaseagreements. In addition, we rent equipment from third parties and various railroads under short term rental arrangements. Equipment which is purchased isdepreciated on the straight line method over the estimated useful life. We had no equipment under capital lease arrangements as of December 31, 2009 or2008. Our equipment leases have five to seven year terms and in some cases contain renewal options.Stock Based CompensationShare-based compensation includes the restricted stock awards expected to vest based on the grant date fair value. Compensation expense is amortizedstraight-line over the vesting period and is included in salaries and benefits.22 Fair Value MeasurementIn September 2006, the FASB issued guidance in the Fair Value Measurements and Disclosures Topic of the Codification. This guidance defines fairvalue, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.In February 2008, the FASB deferred the effective date of this guidance for one year for nonfinancial assets and nonfinancial liabilities, except for those itemsthat are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We adopted the guidance effective January 1,2008 for all financial assets and liabilities. As of January 1, 2009, we adopted the guidance for all nonfinancial assets and nonfinancial liabilities. There isno impact on our financial statements as of December 31, 2009.New PronouncementsIn December 2007, the FASB issued guidance in the Business Combinations Topic of the Codification. This guidance requires the acquiring entity in abusiness combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values including contingent consideration. Inaddition, this guidance changes the recognition of assets acquired and liabilities assumed arising from preacquisition contingencies and requires the expensingof acquisition-related costs as incurred. The guidance applies prospectively to business combinations for which the acquisition date is on or after January 1,2009. We adopted this guidance effective January 1, 2009. Any impact would be on future acquisitions.In April 2008, the FASB issued guidance in the Intangibles-Goodwill and Other Topic of the Codification on the determination of the useful life of anintangible asset. This guidance amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful lifeof a recognized intangible asset. This statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interimperiods within those fiscal years. We adopted this guidance effective January 1, 2009 and it had no impact on our financial statements.The FASB issued guidance in the Subsequent Events Topic of the Codification in May 2009. The guidance is intended to establish general standards ofaccounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued. It requires the disclosure of the datethrough which an entity has evaluated subsequent events and the basis for that date. We adopted this guidance effective for the quarter ending June 30,2009. The adoption of this guidance had no impact on our financial statements as of December 31, 2009, other than the additional disclosure. In June 2009, the FASB issued amendments to the guidance on variable interest entities and consolidation, codified primarily in the Consolidation Topicof the FASB ASC. This guidance modifies the method for determining whether an entity is a variable interest entity as well as the methods permitted fordetermining the primary beneficiary of a variable interest entity. In addition, this guidance requires ongoing reassessments of whether a company is theprimary beneficiary of a variable interest entity and enhanced disclosures related to a company’s involvement with a variable interest entity. The Companyadopted this guidance effective January 1, 2010, as required. The effect of adopting this standard was not significant.OUTLOOK, RISKS AND UNCERTAINTIESBusiness Combinations/DivestituresWe believe that any future acquisitions that we may 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, interestexpense, net income and our debt level.RevenueWe believe that the performance of the railroads and a severe or prolonged slow-down of the economy are the most significant factors that could negativelyinfluence our revenue growth rate. Should there be further consolidation in the rail industry causing a service disruption, we believe our intermodal businesswould likely be negatively impacted. Should there be a significant service disruption, we expect that there may be some customers who would switch fromusing our intermodal service to other transportation services. We expect that these customers may choose to continue to utilize other services even whenintermodal service levels are restored. Other factors that could negatively influence our growth rate include, but are not limited to, the elimination of fuelsurcharges, the entry of new competitors, customer retention, inadequate drayage service and inadequate equipment supply.Gross MarginWe expect fluctuations in gross margin as a percentage of revenue from quarter-to-quarter caused by various factors including, but not limited to, changes inthe transportation business mix, insurance costs, trailer and container capacity, vendor pricing, fuel costs, intermodal industry growth, intermodal industryservice levels, accessorials, competitive pricing and accounting estimates.23 Salaries and BenefitsWe estimate that salaries and benefits as a percentage of revenue could fluctuate from quarter-to-quarter as there are timing differences between volumeincreases 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 existingbusinesses, changes in customer requirements, changes in our operating structure, how well we perform against our EPS goals, and changes in railroadintermodal service levels which could result in a lower or higher cost of labor per move. General and AdministrativeWe believe there are several factors that could cause general and administrative expenses to fluctuate as a percentage of revenue. As customer expectations andthe 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 andadministrative expense to fluctuate include, but are not limited to, changes in insurance premiums, bad debt expenses and outside services expense.Depreciation and AmortizationWe estimate that depreciation and amortization of property and equipment in 2010 will approximate 2009.Impairment of Property and Equipment, Goodwill and Indefinite-Lived IntangiblesOn an ongoing basis, we assess the realizability of our assets. If, at any point during the year, management determines that an impairment exists, the carryingamount of the asset is reduced by the estimated impairment with a corresponding charge to earnings which management estimates could have a materialadverse impact on earnings.Other Income (Expense)Factors that could cause a change in interest income include, but are not limited to, change in interest rates, change in investments, funding working capitalneeds, funding capital expenditures, funding an acquisition and buying back stock.Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe 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 financialcondition. We have no significant exposure to foreign currency exchange rate changes. No derivative financial instruments were outstanding as of December31, 2009 and 2008. We do not use financial instruments for trading purposes.As of December 31, 2009 and 2008, the Company had no outstanding obligations under its bank line of credit arrangement. 24 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTSAND FINANCIAL STATEMENT SCHEDULEReport of Independent Registered Public Accounting Firm26 Consolidated Balance Sheets – December 31, 2009 and December 31, 200827 Consolidated Statements of Income – Years ended December 31, 2009, December 31, 2008 and December 31,2007 28 Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2009, December 31, 2008 and December 31, 200729 Consolidated Statements of Cash Flows – Years ended December 31, 2009, December 31, 2008 and December 31, 200730 Notes to Consolidated Financial Statements31 Schedule II – Valuation and Qualifying AccountsS-1 25 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe 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, 2009 and 2008 and the related consolidatedstatements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included thefinancial statement schedule listed in the index at Item 15(b). These financial statements and schedule are the responsibility of the Company'smanagement. 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 standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. Webelieve 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, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December31, 2009 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule when considered inrelation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Hub Group, Inc.’sinternal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control – Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2010 expressed an unqualified opinion thereon.ERNST & YOUNG LLPChicago, IllinoisFebruary 18, 2010 26 HUB GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) December 31, 2009 2008 ASSETS CURRENT ASSETS: Cash and cash equivalents $126,863 $85,799 Accounts receivable Trade, net 145,317 145,362 Other 11,932 10,318 Prepaid taxes 593 123 Deferred taxes 2,874 1,985 Prepaid expenses and other current assets 6,801 4,346 TOTAL CURRENT ASSETS 294,380 247,933 Restricted investments 9,583 6,118 Property and equipment, net 28,510 32,713 Other intangibles, net 6,164 6,610 Goodwill, net 232,892 233,110 Other assets 1,819 1,747 TOTAL ASSETS $573,348 $528,231 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable Trade $110,626 $105,064 Other 7,695 6,107 Accrued expenses Payroll 8,253 9,988 Other 18,958 26,388 TOTAL CURRENT LIABILITIES 145,532 147,547 Non-current liabilities 12,002 9,535 Deferred taxes 61,973 55,965 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued or outstanding in 2009 and 2008 - - Common stock Class A: $.01 par value; 97,337,700 shares authorized and 41,224,792 shares issued in 2009 and 2008;37,253,330 outstanding in 2009 and 36,970,347 shares outstanding in 2008 412 412 Class B: $.01 par value; 662,300 shares authorized; 662,296 shares issued and outstanding in 2009 and 2008 7 7 Additional paid-in capital 171,470 174,355 Purchase price in excess of predecessor basis, net of tax benefit of $10,306 (15,458) (15,458)Retained earnings 299,552 265,287 Other comprehensive income (9) - Treasury stock; at cost, 3,971,462 shares in 2009 and 4,254,445 shares in 2008 (102,133) (109,419)TOTAL STOCKHOLDERS' EQUITY 353,841 315,184 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $573,348 $528,231 The accompanying notes to consolidated financial statements are an integral part of these statements. 27 HUB GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) Years Ended 2009 2008 2007 Revenue $1,510,970 $1,860,608 $1,658,168 Transportation costs 1,325,280 1,626,297 1,425,844 Gross margin 185,690 234,311 232,324 Costs and expenses: Salaries and benefits 88,518 93,658 95,678 General and administrative 37,467 41,234 41,416 Depreciation and amortization 4,174 3,957 4,490 Total costs and expenses 130,159 138,849 141,584 Operating income 55,531 95,462 90,740 Other income (expense): Interest expense (91) (102) (108)Interest and dividend income 146 1,153 2,480 Other, net 299 (187) 116 Total other income 354 864 2,488 Income before provision for income taxes 55,885 96,326 93,228 Provision for income taxes 21,620 37,081 33,429 Net income $34,265 $59,245 $59,799 Basic earnings per common share $0.92 $1.59 $1.55 Diluted earnings per common share $0.91 $1.58 $1.53 Basic weighted average number of shares outstanding 37,367 37,174 38,660 Diluted weighted average number of shares outstanding 37,525 37,484 39,128 The accompanying notes to consolidated financial statements are an integral part of these statements. 28 HUB GROUP, INC CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except shares) Years ended December 31, 2009 2008 2007 Class A & B Common Stock Shares Outstanding Beginning of year 37,632,643 37,329,027 39,605,418 Purchase of treasury shares (43,408) (85,361) (2,741,700)Treasury shares issued for restricted stock and stock options exercised 326,391 388,977 465,309 Ending balance 37,915,626 37,632,643 37,329,027 Class A & B Common Stock Amount Beginning of year $419 $419 $419 Ending balance 419 419 419 Additional Paid-in Capital Beginning of year 174,355 176,657 179,203 Exercise of non-qualified stock options (2,965) (4,085) (6,668)Share-based compensation expense 4,394 4,360 3,853 Tax benefit of share-based compensation plans 852 2,903 3,952 Issuance of restricted stock awards, net of forfeitures (5,166) (5,480) (3,683)Ending balance 171,470 174,355 176,657 Purchase Price in Excess of Predecessor Basis, Net of Tax Beginning of year (15,458) (15,458) (15,458)Ending balance (15,458) (15,458) (15,458) Retained Earnings Beginning of year 265,287 206,042 146,243 Net income 34,265 59,245 59,799 Ending balance 299,552 265,287 206,042 Accumulated Other Comprehensive Income Beginning of year - - - Foreign currency translation adjustments (9) - - Ending balance (9) - - Treasury Stock Beginning of year (109,419) (116,761) (51,563)Purchase of treasury shares (1,101) (2,630) (76,309)Issuance of restricted stock and exercise of stock options 8,387 9,972 11,111 Ending balance (102,133) (109,419) (116,761) Total stockholders’ equity $353,841 $315,184 $250,899 The accompanying notes to consolidated financial statements are an integral part of these statements. 29 HUB GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2009 2008 2007 Cash flows from operating activities: Net Income $34,265 $59,245 $59,799 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,199 7,369 7,195 Deferred taxes 5,519 9,294 3,523 Compensation expense related to share-based compensation plans 4,394 4,360 3,853 Loss (gain) on sale of assets 50 (22) (160) Changes in operating assets and liabilities: Restricted investments (3,465) (912) (2,189) Accounts receivable, net (1,569) 15,092 (4,119) Prepaid taxes (470) (37) 2,033 Prepaid expenses and other current assets (2,455) (28) 132 Other assets (72) (374) 88 Accounts payable 7,150 (18,532) 4,223 Accrued expenses (8,603) (13,040) 4,094 Non-current liabilities 2,285 (908) 2,108 Net cash provided by operating activities 45,228 61,507 80,580 Cash flows from investing activities: Proceeds from sale of equipment 84 1,342 725 Purchases of property and equipment (4,246) (10,732) (10,197) Cash used in acquisition of Comtrak, Inc. - (5,000) (5,000) Net cash used in investing activities (4,162) (14,390) (14,472) Cash flows from financing activities: Proceeds from stock options exercised 256 407 760 Purchase of treasury stock (1,101) (2,630) (76,309) Excess tax benefits from share-based compensation 852 2,903 3,952 Net cash provided by (used in) financing activities 7 680 (71,597) Effect of exchange rate changes on cash and cash equivalents (9) - - Net increase (decrease) in cash and cash equivalents 41,064 47,797 (5,489)Cash and cash equivalents beginning of year 85,799 38,002 43,491 Cash and cash equivalents end of year $126,863 $85,799 $38,002 Supplemental disclosures of cash paid for: Interest $91 $102 $106 Income taxes $17,263 $27,199 $22,192 The accompanying notes to consolidated financial statements are an integral part of these statements. 30 HUB GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 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 anddrayage 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 ownershipor 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 investedour cash overnight in a money market fund comprised of U.S. Treasury Securities and repurchase agreements for these securities. The outstanding balanceswere $123.0 million and $80.9 million as of December 31, 2009 and 2008, respectively.Accounts Receivable and Allowance for Uncollectible Accounts: In the normal course of business, we extend credit to customers after a review of eachcustomer’s credit history. An allowance for uncollectible trade accounts has been established through an analysis of the accounts receivable aging, anassessment of collectibility based on historical trends and an evaluation based on current economic conditions. To be more specific, we reserve a portion ofevery account balance that has aged over one year, a portion of receivables for customers in bankruptcy and certain account balances specifically identified asuncollectible. On an annual basis we perform a hindsight analysis to determine our experience in collecting account balances over one year old and accountbalances in bankruptcy. We then use this hindsight analysis to establish our reserves for receivables over one year and in bankruptcy. In establishing areserve for certain account balances specifically identified as uncollectible, we consider the aging of the customer receivables, the customer’s current andprojected financial results, the customer’s ability to meet and sustain their financial commitments, the positive or negative effects of the current and projectedindustry outlook and the general economic conditions. The allowance for uncollectible accounts is reported on the balance sheet in net accountsreceivable. Our reserve for uncollectible accounts was approximately $4.6 million and $5.1 million as of December 31, 2009 and 2008,respectively. Receivables are written off once collection efforts have been exhausted. Recoveries of receivables previously charged off are recorded whenreceived.Property and Equipment: Property and equipment are stated at cost. Depreciation of property and equipment is computed using the straight-line and variousaccelerated 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; andtransportation equipment and automobiles, 5 to 10 years. Direct costs related to internally developed software projects are capitalized and amortized over theirexpected useful life on a straight-line basis not to exceed five years. Interest is capitalized on qualifying assets under development for internaluse. Maintenance and repairs are charged to operations as incurred and major improvements are capitalized. The cost of assets retired or otherwise disposedof and the accumulated depreciation thereon are removed from the accounts with any gain or loss realized upon sale or disposal charged or credited tooperations. We review long-lived assets for impairment when events or changes in circumstances indicate the carrying amount of an asset may not berecoverable. 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 lossequal to the excess of the assets carrying amount over its fair value is recorded.Goodwill and Other Intangibles: Goodwill represents the excess of purchase price over the fair market value of net assets acquired in connection with ourbusiness combinations. Goodwill and intangible assets that have indefinite useful lives are not amortized but are subject to annual impairment tests.We review goodwill and other indefinite-lived intangibles for impairment as of November 1 or whenever events or changes in circumstances indicate thecarrying amount of goodwill or other indefinite-lived intangibles may not be recoverable. An indefinite lived intangible asset is impaired if its fair value is lessthan its carrying value. Goodwill impairment is indicated if the fair value of the reporting unit is less than its carrying value. An impairment loss is measuredas the difference between the implied fair value of the reporting unit's goodwill and the carrying amount of goodwill. We utilize a third party independentvaluation firm to assist in performing the necessary valuations to be used in the impairment testing. These valuations are based on a market comparableapproach, a discounted cash flow approach or a combination of both approaches. The fair value measurement is determined based on assumptions that amarket participant would use including expectations regarding future operating performance (which are consistent with our internal projections and operatingplans), discount rates, control premiums and other factors which are subjective in nature. As of December 31, 2009, reasonable variations in theseassumptions do not have a significant impact on the results of the goodwill impairment test. Actual cash flows from operations could differ frommanagement’s estimates due to changes in business conditions, operating performance and economic conditions.31 We evaluate the potential impairment of finite-lived acquired intangible assets when impairment indicators exist. If the carrying value is no longer recoverablebased upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value ofthe asset.Concentration of Credit Risk: Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents andaccounts receivable. We place our cash and temporary investments with high quality financial institutions and invest our cash overnight in a money marketfund comprised of U.S. Treasury Securities and repurchase agreements for these securities. We primarily serve customers located throughout the UnitedStates with no significant concentration in any one region. No one customer accounted for more than 5% of revenue in 2009, 2008 or 2007. We review acustomer’s credit history before extending credit. In addition, we routinely assess the financial strength of our customers and, as a consequence, believe thatour 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 isfixed and determinable and 4) collectibility is reasonably assured. Revenue and related transportation costs are recognized based on relative transittime. Further, we report our revenue on a gross basis because we are the primary obligor as we are responsible for providing the service desired by thecustomer. 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 havediscretion 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 suppliersfor the services ordered by our customers. Finally, we have credit risk for our receivables. These three factors, discretion in setting prices, discretion inselecting vendors and credit risk, further support reporting revenue on a gross basis.Provision for Income Taxes: Deferred income taxes are recognized for the future tax effects of temporary differences between financial and income taxreporting 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 taxassets will be realized based on future taxable income projections with the exception of $0.4 million related to state tax net operating losses for which a valuationallowance has been established. In the event the probability of realizing the remaining deferred tax assets do not meet the more likely than not threshold in thefuture, a valuation allowance would be established for the deferred tax assets deemed unrecoverable. Tax liabilities are recorded when, in management’s judgment, a tax position does not meet the more likely than not threshold for recognition as prescribed bythe guidance. For tax positions that meet the more likely than not threshold, a tax liability may be recorded depending on management’s assessment of how thetax position will ultimately be settled. We recognize interest expense and penalities related to income tax liabilities in our provision for income taxes.Earnings Per Common Share: Basic earnings per common share are based on the average quarterly weighted average number of Class A and Class Bshares of common stock outstanding. Diluted earnings per common share are adjusted for the assumed exercise of dilutive stock options and for restrictedstock which are both computed using the treasury stock method.Stock Based Compensation: Share-based compensation includes the restricted stock awards expected to vest based on the grant date fairvalue. Compensation expense is amortized straight-line over the vesting period and is included in salaries and benefits. We present excess tax deductionsresulting from the exercise of share-based compensation as financing cash in-flows and as operating cash out-flows in the Statement of Cash Flows. New Pronouncements: In September 2006, the FASB issued new guidance in the Fair Value Measurements and Disclosures Topic of the Codification. Thisguidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fairvalue measurements. In February 2008, the FASB deferred the effective date of this guidance for one year for nonfinancial assets and nonfinancial liabilities,except for those items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We adopted the guidanceeffective January 1, 2008 for all financial assets and liabilities. As of January 1, 2009, we adopted the guidance for all nonfinancial assets and allnonfinancial liabilities. There is no impact on our financial statements as of December 31, 2009.In December 2007, the FASB issued guidance in the Business Combinations Topic of the Codification. This guidance requires the acquiring entity in abusiness combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values including contingent consideration. Inaddition, this guidance changes the recognition of assets acquired and liabilities assumed arising from preacquisition contingencies and requires the expensingof acquisition-related costs as incurred. The guidance applies prospectively to business combinations for which the acquisition date is on or after January 1,2009. We adopted this guidance effective January 1, 2009. Any impact would be on future acquisitions.In April 2008, the FASB issued guidance in the Intangibles-Goodwill and Other Topic of the Codification on the determination of the useful life of an intangibleasset. This guidance amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of arecognized intangible asset. This statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periodswithin those fiscal years. We adopted this guidance effective January 1, 2009 and it had no impact on our financial statements.32 The FASB issued guidance in the Subsequent Events Topic of the Codification in May 2009. This guidance sets forth the period after the balance sheet dateduring which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financialstatements. The guidance also indicates the circumstances under which an entity should recognize events or transactions occurring after the balance sheet datein its financial statements, as well as the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. Weadopted this guidance effective for the quarter ending June 30, 2009. The adoption of this guidance had no impact on our financial statements as of December31, 2009, other than the additional disclosure.The Company evaluated subsequent events through February 18, 2010, the date the financial statements were issued and filed with the Securities andExchange Commission. There were no subsequent events that required recognition or disclosure except for the issuance of restricted stock as described in Note9. In June 2009, the FASB issued amendments to the guidance on variable interest entities and consolidation, codified primarily in the Consolidation Topic of theFASB ASC. This guidance modifies the method for determining whether an entity is a variable interest entity as well as the methods permitted for determiningthe primary beneficiary of a variable interest entity. In addition, this guidance requires ongoing reassessments of whether a company is the primary beneficiaryof a variable interest entity and enhanced disclosures related to a company’s involvement with a variable interest entity. The Company adopted this guidanceeffective January 1, 2010, as required. We do not expect the adoption of this guidance to have an impact on our financial statements. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenue and expense during the reporting period. Significant estimates include the allowance for doubtful accounts andthe 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 StructureWe have authorized common stock comprised of Class A Common Stock and Class B Common Stock. The rights of holders of Class A CommonStock and Class B Common Stock are identical, except each share of Class B Common Stock entitles its holder to approximately 80 votes, while each shareof 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): Years Ended, December 31, 2009 2008 2007 Net income for basic and diluted earnings per share $34,265 $59,245 $59,799 Weighted average shares outstanding - basic 37,367 37,174 38,660 Dilutive effect of stock options and restricted stock 158 310 468 Weighted average shares outstanding - diluted 37,525 37,484 39,128 Earnings per share - basic $0.92 $1.59 $1.55 Earnings per share - diluted $0.91 $1.58 $1.53 NOTE 4. Fair Value MeasurementThe carrying value of cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of December 31, 2009 and 2008due to their short-term nature. Cash and cash equivalents included $123.0 million and $80.9 million as of December 31, 2009 and 2008, respectively,invested in a money market fund comprised of U.S. treasury securities and repurchase agreements for these securities. Restricted investments included $9.6million and $6.1 million as of December 31, 2009 and 2008, respectively, of mutual funds which are reported at fair value. The fair value measurement ofthese securities is based on quoted prices in active markets for identical assets which are defined as “Level 1” of the fair value hierarchy in the Fair ValueMeasurements and Disclosures Topic of the Codification. 33 NOTE 5. Property and EquipmentProperty and equipment consist of the following (in thousands): December 31, 2009 2008 Building and improvements $72 $54 Leasehold improvements 2,174 1,700 Computer equipment and software 52,302 50,366 Furniture and equipment 8,077 7,995 Transportation equipment 30,551 30,231 93,176 90,346 Less: Accumulated depreciation and amortization (64,666) (57,633)Property and Equipment, net $28,510 $32,713 Depreciation expense was $7.8 million, $6.9 million and $6.8 million for 2009, 2008 and 2007, respectively. NOTE 6. Income TaxesThe following is a reconciliation of our effective tax rate to the federal statutory tax rate: Years Ended December 31, 2009 2008 2007 U.S. federal statutory rate 35.0% 35.0% 35.0%State taxes, net of federal benefit 2.6 2.7 3.4 Nondeductible expenses 0.5 0.6 0.5 Provision for valuation allowance 0.4 - 0.1 IRS settlement - - (1.4)Illinois law change - - (1.3)Other 0.2 0.2 (0.4)Net effective rate 38.7% 38.5% 35.9%We and our subsidiaries file both unitary and separate company state income tax returns.The following is a summary of our provision for income taxes (in thousands): Years Ended December 31, Current 2009 2008 2007 Federal $14,700 $25,197 $26,234 State and local 1,619 2,590 3,672 16,319 27,787 29,906 Deferred Federal 4,560 8,651 4,000 State and local 741 643 (477) 5,301 9,294 3,523 Total provision $21,620 $37,081 $33,429 34 The following is a summary of our deferred tax assets and liabilities (in thousands): December 31, 2009 2008 Reserve for uncollectible accounts receivable $1,721 $1,813 Accrued compensation 2,792 2,577 Other reserves 2,393 1,748 Current deferred tax assets 6,906 6,138 Accrued compensation 3,739 3,035 Operating loss carryforwards 390 386 Other reserves 842 692 Income tax basis in excess of financial basis of goodwill 870 1,588 Less valuation allowance (379) (163) Long-term deferred tax assets 5,462 5,538 Total deferred tax assets $12,368 $11,676 Prepaids $(1,374) $(1,200)Other receivables (2,658) (2,953) Current deferred tax liabilities (4,032) (4,153) Property and equipment (7,322) (7,393)Goodwill (60,113) (54,110) Long-term deferred tax liabilities (67,435) (61,503) Total deferred tax liabilities $(71,467) $(65,656) Our state tax net operating losses of $390,000 expire between December 31, 2012 and December 31, 2023. Management believes it is more likely than notthat the deferred tax assets will be realized with the exception of $379,000 related to state tax net operating losses for which a valuation allowance has beenestablished.During its examination of our 1997 federal income tax return, the Internal Revenue Service (“IRS”) proposed to reclassify our allocation of a significantamount of tax basis in fixed assets to non-amortizable intangibles. The dispute was ultimately resolved in the fourth quarter of 2007 after the IRS Office ofAppeals reviewed the dispute and permitted the statute of limitations to lapse. The settlement reduced our 2007 income tax provision by $1.3 million andresulted in a reclassification of our liability for unrecognized tax benefits to a deferred tax liability.As of December 31, 2009 and 2008, the amount of unrecognized tax benefits was $0.5 million and $0.3 million, of which $0.3 million and $0.2 millionwould decrease our income tax provision, respectively, if recognized. A reconciliation of the beginning and ending amount of unrecognized tax benefits(excluding accrued interest expense) is as follows (in thousands):Balance at January 1, 2007 $3,152 Reductions as a result of a lapse of the applicable statute of limitations (2,896)Balance at December 31, 2007 $256 Additions for tax positions taken in prior years 80 Balance at December 31, 2008 $336 Additions based on tax positions related to the current year 118 Additions for tax positions taken in prior years 199 Reductions for tax positions taken in prior years (80)Reductions as a result of a lapse of the applicable statute of limitations (55)Balance at December 31, 2009 $518 35 We are subject to income tax in the U.S. federal jurisdiction and numerous state jurisdictions. Our 2006 tax year was the subject of our most recent IRSexamination. The examination was concluded in 2009 and resulted in the issuance of a no-change letter. The examination by Illinois of our 2005 and 2006 taxyears concluded in 2009 and resulted in our payment of approximately $17,000 to Illinois of combined income tax, penalty and interest. Marylandcommenced an examination of our 2006 through 2008 tax years in December 2009. Although no other significant examinations are currently in effect, taxyears 2006 through 2008 generally remain open to examination (with the exceptions noted above for the federal and Illinois jurisdictions) by the major taxjurisdictions to which we are subject. During the next twelve months, it is reasonably possible we will both reduce unrecognized tax benefits by approximately$0.1 million as a result of expiration of state statutes of limitations and increase unrecognized tax benefits by approximately $0.1 million as a result of stateincome tax apportionment uncertainty.NOTE 7. Long-Term Debt and Financing ArrangementsWe have a revolving credit agreement that provides for unsecured borrowings of up to $50.0 million. The interest rate ranges from LIBOR plus 0.75% to1.25% 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 millionand a cash flow leverage ratio of not more than 2.0 to 1.0. The commitment fees charged on the unused line of credit are between 0.15% and 0.25%.Our unused and available borrowings under our bank revolving line of credit were $47.1 million as of December 31, 2009 and December 31, 2008. We werein compliance with our debt covenants as of December 31, 2009.We have standby letters of credit that expire from 2010 to 2012. As of December 31, 2009, our letters of credit were $2.9 million.NOTE 8. Rental Expense, User Charges and CommitmentsMinimum annual rental commitments, as of December 31, 2009, under non-cancelable operating leases, principally for real estate, containers andequipment, are payable as follows (in thousands):2010 $16,919 2011 15,096 2012 11,599 2013 4,344 2014 1,166 2015 and thereafter 718 $49,842 Total rental expense included in general and administrative expense, which relates primarily to real estate, was approximately $8.0 million, $8.3 millionand $7.7 million for 2009, 2008 and 2007, respectively. Many of the real estate leases contain renewal options and escalation clauses which require paymentsof additional rent to the extent of increases in the related operating costs. We straight-line rental expense in accordance with the FASB guidance in the LeasesTopic of the Codification.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 ofComtrak. Rent paid under this lease agreement included in general and administrative expense totaled $0.7 million for each of the years ended 2009, 2008 and2007. 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 $11.5 million, $12.1 million, and$9.9 million for 2009, 2008 and 2007, respectively.We incur charges for use of a fleet of rail owned chassis and dedicated rail owned containers on the Union Pacific, Norfolk Southern and BurlingtonNorthern Santa Fe which are included in transportation costs. Such charges were $50.1 million, $45.4 million and $45.5 million for 2009, 2008 and 2007,respectively. As of December 31, 2009, we have the ability to return the majority of the containers and pay for the chassis only when we are using them underthese agreements. As a result, no minimum commitments related to these chassis and containers have been included in the table above. Chassis chargesincluded in accrued expenses-other as of December 31, 2009 and 2008 were $3.1 million and $9.8 million, respectively.36 NOTE 9. Stock-Based Compensation Plans In 1996, we adopted a Long-Term Incentive Plan (the “1996 Incentive Plan”). The number of shares of Class A Common Stock reserved for issuanceunder 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 sharesof 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, weadopted a fourth Long-Term Incentive Plan (the “2002 Incentive Plan”). The number of shares of Class A Common Stock reserved for issuance under the2002 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 arereserved for issuance. In 2007, we amended our 2002 Incentive Plan to add an additional 1,000,000 shares of Class A common Stock that are reserved forissuance. Under the 1996, 1997, 1999 and 2002 Incentive Plans, stock options, stock appreciation rights, restricted stock and performance units may begranted for the purpose of attracting and motivating our key employees and non-employee directors. We have not granted any stock options since2003. Restricted stock vests over a three to five year period. As of December 31, 2009, 1,915,433 shares were available for future grant. Generally, whenstock options are exercised, either new shares are issued or shares are issued out of treasury.We generally recognize the cost of share-based awards on a straight-line basis over the vesting period of the award including an estimate offorfeitures. Share-based compensation expense for 2009, 2008 and 2007 was $4.4 million, $4.4 million and $3.9 million or $2.7 million, $2.7 million and$2.5 million, net of taxes, respectively. Share-based compensation is included in Salaries and benefits in the accompanying Statements of Income. The following table summarizes the stock option activity for the year ended December 31, 2009:Stock Options Shares WeightedAverageExercisePrice WeightedAverageRemainingContractualLife AggregateIntrinsicValue Outstanding at January 1, 2009 266,000 $1.89 Options exercised (125,300) $2.05 Options forfeited - $- Outstanding at December 31, 2009 140,700 $1.75 3.06 $3,523,594 Exercisable at December 31, 2009 140,700 $1.75 3.06 $3,523,594 Intrinsic value for stock options is defined as the difference between the current market value and the grant price. The total intrinsic value of optionsexercised during the years ended December 31, 2009, 2008 and 2007 was $2.6 million, $5.4 million and $8.3 million, respectively. Cash received fromstock options exercised during the years ended December 31, 2009, 2008 and 2007 was $0.3 million, $0.4 million and $0.8 million, respectively. The taxbenefit realized for tax deductions from stock options exercised for the years ended December 31, 2009, 2008 and 2007 was $1.0 million, $2.3 million and$3.2 million, respectively.The following table summarizes information about options outstanding as of December 31, 2009: Options Outstanding and Exercisable Weighted Avg. Weighted Avg.Range of Number Remaining Exercise Exercise Prices of Shares Contractual Life Price$1.22 to $1.22 20,100 3.01 $1.22$1.22 to $1.22 35,000 2.96 $1.30$1.30 to $1.66 40,000 3.06 $1.51 $1.66 to $2.43 12,800 2.12 $2.24 $2.43 to $2.70 32,800 3.55 $2.64 $1.22 to $2.70 140,700 3.06 $1.75 37 The following table summarizes the non-vested restricted stock activity for the year ended December 31, 2009:Non-vested restricted stock Shares WeightedAverage GrantDate FairValue Non-vested January 1, 2009 402,368 $25.96 Granted 208,101 $26.56 Vested (129,426) $26.13 Forfeited (7,010) $26.74 Non-vested at December 31, 2009 474,033 $26.16 The following table summarizes the restricted stock granted during the respective years:Restricted stock grants 2009 2008 2007 Employees 196,101 215,508 200,163 Outside directors 12,000 10,644 10,644 Total 208,101 226,152 210,807 Weighted average grant date fair value $26.56 $26.16 $27.77 Vesting period 3-5 years 3-5 years 3 years 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, 2009, 2008 and 2007 was $3.3 million, $3.9 million and $3.9million, respectively.As of December 31, 2009, there was $8.2 million of unrecognized compensation cost related to non-vested share-based compensation that is expected to berecognized over a weighted average period of 1.44 years.During January 2010, we granted 187,416 shares of restricted stock to certain employees and 12,000 shares of restricted stock to outside directors with aweighted average grant date fair value of $26.79. The stock vests over a three to five year period.NOTE 10. Business SegmentWe 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, 2009 2008 2007 Intermodal $1,054,862 $1,329,382 $1,206,364 Brokerage 292,639 372,051 322,465 Logistics 163,469 159,175 129,339 Total revenue $1,510,970 $1,860,608 $1,658,168 38 NOTE 11. Employee Benefit PlansWe had one profit-sharing plan and trust as of December 31, 2009 and two profit-sharing plans and trusts in 2008 and 2007, all respectively undersection 401(k) of the Internal Revenue Code. At our discretion, we partially match qualified contributions made by employees to the plan. We expensedapproximately $1.3 million, $1.8 million and $1.9 million related to these plans in 2009, 2008, and 2007, respectively. In January 2005, we established the Hub Group, Inc. Nonqualified Deferred Compensation Plan (the “Plan”) to provide added incentive for the retentionof certain key employees. Under the Plan, participants can elect to defer certain compensation. Accounts will grow on a tax-deferred basis to theparticipant. Restricted investments included in the consolidated balance sheets represent the fair value of the mutual funds and other security investmentsrelated to the Plan as of December 31, 2009 and 2008. Both realized and unrealized gains and losses are included in income and expense and offset the changein the deferred compensation liability. We provide a 50% match on the first 6% of employee compensation deferred under the Plan, with a maximum matchequivalent to 3% of base salary. In addition, we have a legacy deferred compensation plan. There are no new contributions being made into this legacyplan. We expensed $0.4 million, $0.3 million and $1.0 million related to the employer match for these plans in 2009, 2008 and 2007, respectively. Theliabilities related to these plans as of December 31, 2009 and 2008 were $11.8 million and $8.8 million, respectively.NOTE 12. Legal MattersWe 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 insurancecarriers. Some of the lawsuits are not covered by insurance and we are defending them ourselves. Management does not believe that the outcome of thislitigation will have a materially adverse effect on our financial position or results of operations.NOTE 13. Stock Buy Back PlansOn October 26, 2006, our Board of Directors authorized the purchase of up to $75.0 million of our Class A Common Stock. During the fourth quarterof 2007, we completed the authorized purchase of $75.0 million of our Class A Common Stock.On November 14, 2007, our Board of Directors authorized the purchase of up to $75.0 million of our Class A Common Stock. We purchased 38,800shares at an average price of $36.12 during 2008. No additional shares were purchased before the authorization expired June 30, 2009.NOTE 14. Goodwill and Other Intangible AssetsIn accordance with the FASB issued guidance in the Intangibles-Goodwill and Other Topic of the Codification, we completed the required annualimpairment test. No impairment charge was recognized based on the results of the annual goodwill impairment test and there were no accumulated impairmentlosses at the beginning of the period.The following table presents the carrying amount of goodwill (in thousands):Balance at January 1, 2008 $230,448 Other 2,662 Balance at December 31, 2008 $233,110 Other (218)Balance at December 31, 2009 $232,892 The changes in the carrying amount of goodwill for 2008 are due primarily to purchase accounting adjustments related to the acquisition ofComtrak. The changes in the carrying amount of goodwill for 2009 relate to the amortization of the income tax benefit of tax goodwill in excess of financialstatement goodwill. 39 The components of the “Other intangible assets” are as follows (in thousands): GrossAmount AccumulatedAmortization Net CarryingValue LifeAs of December 31, 2009: Relationships with owner operators $647 $(413) $234 6 yearsBacklog/open orders 20 (20) - 1 monthTrade name 2,904 - 2,904 IndefiniteCustomer relationships 3,823 (977) 2,846 15 yearsInformation technology 500 (320) 180 6 yearsTotal $7,894 $(1,730) $6,164 As of December 31, 2008: Relationships with owner operators $647 $(306) $341 6 yearsBacklog/open orders 20 (20) - 1 monthTrade name 2,904 - 2,904 IndefiniteCustomer relationships 3,823 (722) 3,101 15 yearsInformation technology 500 (236) 264 6 yearsTotal $7,894 $(1,284) $6,610 The above intangible assets will be amortized using the straight-line method. Amortization expense for each of the years ended December 31, 2009, 2008and 2007 was $0.4 million. Amortization expense for the next five years is as follows (in thousands): 2010 $444 2011 444 2012 285 2013 253 2014 253 NOTE 15. Restructuring ChargesIn 2009, we recorded restructuring charges of approximately $1.0 million. This consisted of a severance charges for 115 employees in the first quarter, 7employees in the second quarter, 4 employees in the third quarter and 6 employees in the fourth quarter of 2009. Approximately $13,000 of severancepayments remained to be paid as of December 31, 2009.All severance charges are included in salaries and benefits in the Statements of Income.The following table displays the activity and balances of the restructuring reserves in the Consolidated Balance Sheets (in thousands):Balance at January 1, 2009 $- Restructuring expenses-severance 993 Cash payments made (879) Change in estimate (101)Balance at December 31, 2009 $13 40 NOTE 16. GuaranteesThe California Air Resource Board (CARB) has approved new regulations that require significantly reduced emissions from existing on-road dieselvehicles operating in California. The regulations require older model tractors to be modified to comply with the new regulations. In response to the costsassociated with complying with these new emission laws, we developed a guaranty program with a leasing company in 2009. As part of this program, we areguaranteeing the owner operators’ lease payments for these tractors. The term of the guarantee is through 2012.At December 31, 2009, the potential maximum exposure under these lease guarantees was approximately $3.8 million. The potential maximum exposurerepresents the payment of the remaining lease payments on all outstanding guaranteed leases at December 31, 2009. However, upon default, we have theoption to purchase the tractors. We could then sell the tractors and use the proceeds to recover all or a portion of the amounts paid under theguarantees. Alternatively, we can contract with another owner operator who would assume the lease. At December 31, 2009, there were no potential defaults.We recorded a $0.1 million liability at December 31, 2009 for the guarantees representing the fair value of the guarantees based on a discounted cash-flowanalysis. We are amortizing the amounts over the remaining lives of the respective guarantees. NOTE 17. Comprehensive IncomeForeign subsidiaries’ assets and liabilities are translated to United States dollars at the end of period exchange rates. Revenues and expenses are translatedat average rates for the period. Translation adjustments are reported as a separate component of stockholders’ equity. Total comprehensive income was $34.3million, $59.2 million and $59.8 million for the years ended December 31, 2009, 2008 and 2007 respectively.NOTE 18. Selected Quarterly Financial Data (Unaudited)The following table sets forth selected quarterly financial data for each of the quarters in 2009 and 2008 (in thousands, except per share amounts): Quarters First Second Third Fourth Year Ended December 31, 2009: Revenue $351,695 $362,613 $388,781 $407,881 Gross margin 45,169 45,763 48,200 46,558 Operating income 10,676 13,446 15,892 15,517 Net income 6,178 8,305 9,831 9,951 Basic earnings per share $0.17 $0.22 $0.26 $0.27 Diluted earnings per share $0.17 $0.22 $0.26 $0.26 Quarters First Second Third Fourth Year Ended December 31, 2008: Revenue $424,995 $490,929 $514,212 $430,472 Gross margin 57,502 59,839 63,160 53,810 Operating income 20,988 24,070 27,283 23,121 Net income 13,135 14,970 16,930 14,210 Basic earnings per share $0.35 $0.40 $0.45 $0.38 Diluted earnings per share $0.35 $0.40 $0.45 $0.38 41 Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone. Item 9A.CONTROLS AND PROCEDURESMANAGEMENT’S REPORT ON DISCLOSURE CONTROLS AND PROCEDURESAs of December 31, 2009, an evaluation was carried out under the supervision and with the participation of our management, including our ChiefExecutive 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 thesedisclosure controls and procedures were effective.No significant changes were made in our internal control over financial reporting during the fourth quarter of 2009 that has materially affected, or isreasonably 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 evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGOur management is responsible for establishing and maintaining adequate controls over financial reporting as defined in Rule 13a-15(f) of the ExchangeAct. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, weconducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2009. Based on criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria), managementbelieves our internal control over financial reporting was effective as of December 31, 2009.Management believes, however, that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives ofthe control system are met, and no evaluation controls can provide absolute assurance that all control issues and instances of fraud, if any, within theCompany have been detected.Ernst & Young LLP, an independent registered public accounting firm, who audited and reported on the consolidated financial statements, included inthis report, has issued an attestation report on the Company’s internal control over financial reporting. 42 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVERFINANCIAL REPORTINGThe Board of Directors and Stockholders of Hub Group, Inc.:We have audited Hub Group, Inc.’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Hub Group Inc.’smanagement is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control overfinancial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to expressan opinion on the company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary 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 andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely 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 ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, Hub Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on theCOSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof Hub Group, Inc. as of December 31, 2009 and 2008 and the related consolidated statements of income, stockholders’ equity, and cash flows for each of thethree years in the period ended December 31, 2009 of Hub Group, Inc., and our report dated February 18, 2010 expressed an unqualified opinion thereon.Ernst & Young LLPChicago, IllinoisFebruary 18, 2010 Item 9B. OTHER INFORMATIONNone. 43 PART IIIItem 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe sections entitled “Election of Directors” and “Ownership of the Capital Stock of the Company” appearing in our proxy statement for our annualmeeting of stockholders to be held on May 6, 2010, sets forth certain information with respect to our directors and Section 16 compliance and is incorporatedherein 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 “ExecutiveOfficers 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 COMPENSATIONThe section entitled “Compensation of Directors and Executive Officers” appearing in our proxy statement for our annual meeting of stockholders to beheld on May 6, 2010, 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 MATTERSThe section entitled “Ownership of the Capital Stock of the Company” appearing in our proxy statement for our annual meeting of stockholders to beheld on May 6, 2010, sets forth certain information with respect to the ownership of our Common Stock and is incorporated herein by reference.Equity Compensation Plan InformationThe following chart contains certain information regarding the Company’s Long-Term Incentive Plans:Plan Category Number of securitiesto be issuedupon exercise ofoutstanding options,warrants and rights(a) Weighted-averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected in column(a)) Equity compensationplans approved bysecurity holders 140,700 $1.75 1,915,433 Equity compensationplans not approvedby security holders -- -- -- Total 140,700 $1.75 1,915,433 Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe sections entitled “Certain Transactions” and “Meetings and Committees of the Board” appearing in our proxy statement for the annual meeting of ourstockholders to be held on May 6, 2010, set forth certain information with respect to certain business relationships and transactions between us and ourdirectors and officers and the independence of our directors and is incorporated herein by reference.Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESThe section entitled “Principal Accountant Fees and Services” appearing in our proxy statement for our annual meeting of stockholders to be held on May6, 2010, sets forth certain information with respect to certain fees we have paid to our principal accountant for services and is incorporated herein by reference.44 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 FirmConsolidated Balance Sheets - December 31, 2009 and December 31, 2008Consolidated Statements of Income - Years ended December 31, 2009, December 31, 2008 and December 31, 2007Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2009, December 31, 2008 and December 31, 2007Consolidated Statements of Cash Flows - Years ended December 31, 2009, December 31, 2008 and December 31, 2007Notes 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 consolidatedfinancial statements of Hub Group, Inc.: PageI. 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 financialstatements 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 byreference. 45 SIGNATURESPursuant 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 itsbehalf by the undersigned, thereunto duly authorized.Date: February 18, 2010 HUB GROUP, INC.By /s/ David P. Yeager David P. Yeager Chairman and Chief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and onthe dates indicated: TitleDate /s/ David P. Yeager David P. Yeager Chairman and Chief Executive OfficerFebruary 18, 2010 /s/ Mark A. Yeager Mark A. Yeager Vice Chairman, President and Chief Operating OfficerFebruary 18, 2010 /s/ Terri A. Pizzuto Terri A. Pizzuto Executive Vice President, Chief Financial Officer and Treasurer (Principal Financialand Accounting Officer)February 18, 2010 /s/ Charles R. Reaves Charles R. Reaves DirectorFebruary 18, 2010 /s/ Martin P. Slark Martin P. Slark DirectorFebruary 18, 2010 /s/ Gary D. Eppen Gary D. EppenDirectorFebruary 18, 2010 46 SCHEDULE II HUB GROUP, INC.VALUATION AND QUALIFYING ACCOUNTS Allowance for uncollectible trade accounts Balance at Charged to Charged to Balance at Beginning Costs & Other End Year EndedDecember 31: of Year Expenses Accounts(1) of Year 2009 $5,102,000 $1,157,000 $(1,652,000) $4,607,000 2008 $5,456,000 $448,000 $(802,000) $5,102,000 2007 $6,299,000 $(63,000) $(780,000) $5,456,000 Deferred tax valuation allowance Balance at Charged to Transferred to Balance at Beginning Costs & Other End Year ended December 31: of Year Expenses Accounts (2) of Year 2009 $163,000 $216,000 $- $379,000 2008 $163,000 $- $- $163,000 2007 $248,000 $81,000 $(166,000) $163,000 (1) Expected customer account adjustments charged to revenue and write-offs, net of recoveries(2) Establish liability for uncertain tax positions S-1 INDEX TO EXHIBITS Number Exhibit 3.1Amended Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s quarterly report on Form 10-Q filed July 23, 2007, File No. 000-27754) 3.2By-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) 10.1Amended and Restated Limited Partnership Agreement of Hub City Canada, L.P. (incorporated by reference to Exhibit 10.2 to the Registrantsreport on Form 10-K dated March 26, 1997 and filed March 27, 1997, File No 000-27754) 10.2Stockholders' Agreement (incorporated by reference to Exhibit 10.7 to the Registrant’s report on Form 10-K dated March 26, 1997 and filedMarch 27, 1997, File No. 000-27754) 10.3Hub Group’s Nonqualified Deferred Compensation Plan Basic Plan Document as amended and restated as of January 1, 2008 (incorporatedby reference to Exhibit 10.4 to the Registrant’s report on Form 10-K dated February 21, 2008 and filed February 22, 2008, File No. 000-27754) 10.4Hub Group’s Nonqualified Deferred Compensation Plan Adoption Agreement as amended and restated as of January 1, 2008 (incorporated byreference to Exhibit 10.5 to the Registrant’s report on Form 10-K dated February 21, 2008 and filed February 22, 2008, File No. 000-27754) 10.5Description of Executive Officer cash compensation for 2010 10.6Director compensation for 2010 10.7Hub Group’s 2002 Long Term Incentive Plan (as amended and restated effective May 7, 2007) (incorporated by reference from Appendix B tothe Registrant’s definitive proxy statement on Schedule 14A dated and filed March 26, 2007) 10.8$40 million Credit Agreement dated as of March 23, 2005 among the Registrant, Hub City Terminals, Inc. and Harris Trust and SavingsBank (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, FileNo. 000-27754) 10.9Lease Agreement dated as of May 10, 2005, between Banc of America Leasing & Capital, LLC and Hub City Terminals, Inc., with form ofSchedule 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) 10.10Guaranty 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) 10.11Amendment to the $40 million Credit Agreement among the Registrant, Hub City Terminals, Inc. and Harris Trust and Savings Bank datedFebruary 21, 2006 (incorporated by reference to Exhibit 10.16 to the Registrant’s report on Form 10-K for the year ended December 31, 2005and filed February 27, 2006, File No. 000-27754) 10.12Form of Terms of Restricted Stock Award under Hub Group, Inc. 2002 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 tothe Registrant’s report on Form 8-K dated May 22, 2006 and filed May 26, 2006, File No. 000-27754) 10.13Equipment Purchase Contract, dated as of March 8, 2007, by and between Hub City Terminals, Inc., Singamas Management Services, Ltd.and Singamas North America, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s report on Form 8-K filed March 12, 2007,File No. 000-27754) 14Hub Group’s Code of Business Conduct and Ethics (incorporated by reference from Exhibit 99.2 to the Registrant’s report on Form 10-Kdated March 12, 2003 and filed on March 13, 2003, File No. 000-27754) 21Subsidiaries of the Registrant 23.1 Consent of Ernst & Young LLP 31.1 Certification of David P. Yeager, Chairman and Chief Executive Officer, Pursuant to Rule 13a-4(a) promulgated under the Securities Exchange Act of 1934 31.2 Certification of Terri A. Pizzuto, Executive Vice President, Chief Financial Officer and Treasurer, Pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934 32.1 Certification of David P. Yeager and Terri A. Pizzuto, Chief Executive Officer and Chief Financial Officer respectively, Pursuant to 18 U.S.C. Section 1350 EXHIBIT 10.5Hub Group, Inc.Description of Executive Officer Cash CompensationFor 2010Annual Cash CompensationBase SalarySet forth below are the base salaries of the Chief Executive Officer and each of the four most highly compensated executive officers in 2009 effectiveJanuary 1, 2010. The Company considers various factors in assigning executive officers to specific salary ranges, including job content, level ofresponsibility, accountability, and the competitive compensation market. On an annual basis, all executive officers’ salaries are reviewed and adjusted toreflect individual performance and position within their respective ranges.Bonus PlanExecutive officers are eligible for annual performance-based awards under the Company’s bonus plan, as are all salaried employees. For 2009, goals wereweighted upon achievement of targeted levels of earnings per share and, for some executives, upon achievement of personal goals. The goals for 2010 will alsobe weighted.Restricted StockThe Company makes periodic grants of restricted stock to executive officers. The grants of restricted stock made in early 2010 vest in equal installmentsover a five year period beginning a year from the grant date.David P. YeagerChairman and Chief Executive OfficerBase2010 $574,867Mark A. YeagerVice Chairman, President and Chief Operating OfficerBase2010 $460,000Terri A. PizzutoExecutive Vice President, Chief Financial Officer and TreasurerBase2010 $300,000Christopher R. KravasChief Intermodal OfficerBase2010 $300,000David L. MarshChief Marketing OfficerBase2010 $300,000 EXHIBIT 10.6Hub Group, Inc.Directors’ Compensation For 2010Directors’ CompensationEach non-employee director receives an annual retainer fee of $60,000 in 2010, paid in quarterly installments. In addition, expenses are paid forattendance at each Committee meeting. Directors who are also officers or employees of the Company receive no compensation for duties performed as a director.Stock PlanThe Company makes periodic grants of restricted stock to the directors. In connection with their 2010 compensation package, each independent directorreceived 4,000 shares of restricted stock in January 2010. These shares vest over three years. EXHIBIT 21Subsidiaries of Hub Group, Inc.SUBSIDIARIESJURISDICTION OF INCORPORATION/ORGANIZATION Hub City Terminals, Inc. DelawareHub Group Atlanta, LLCDelawareHub Group Canada, L.P.DelawareHub Group Associates, Inc.IllinoisHub Group Distribution Services, LLCIllinoisQuality Services L.L.C.MissouriHub Chicago Holdings, Inc.DelawareHub Group Transport, LLCDelawareHub Freight Services, Inc.DelawareComtrak Logistics, Inc.DelawareHGNA Group de Mexico, S. de RL de C.V.Mexico EXHIBIT 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the Registration Statements (Forms S-8 Nos. 333-146951, 333-115576 and 333-103845) pertaining to the HubGroup, Inc. 2002 Long Term Incentive Plan, Form S-8 No. 333-107745 pertaining to the Hub Group Employee Profit Sharing Plan and Trust, Form S-8 No.333-33006 pertaining to the Hub Group, Inc. 1999 Long-Term Incentive Plan and Form S-8 No. 333-48185 pertaining to the Hub Group, Inc. 1997 Long-Term Incentive Plan, of our reports dated February 18, 2010, with respect to the consolidated financial statements and schedule of Hub Group, Inc., and theeffectiveness of internal control over financial reporting of Hub Group, Inc., included in this Annual Report (Form 10-K) for the year ended December 31,2009./s/ Ernst & Young LLPChicago, IllinoisFebruary 18, 2010 EXHIBIT 31.1CERTIFICATIONI, David P. Yeager, certify that:1) I have reviewed this report on Form 10-K of Hub Group, Inc.;2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reportingand;5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Date: February 18, 2010 By:/s/ David P. Yeager Name: David P. Yeager Title: Chairman and Chief Executive Officer EXHIBIT 31.2CERTIFICATIONI, Terri A. Pizzuto, certify that:1) I have reviewed this report on Form 10-K of Hub Group, Inc.;2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reportingand;5)The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Date: February 18, 2010 By:/s/ Terri A. Pizzuto Name: Terri A. Pizzuto Title: Executive Vice President, Chief Financial Officer and Treasurer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The following statement is provided by the undersigned to accompany the Annual Report on Form 10-K for the year ended December 31, 2009 ofHub Group, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and shall not be deemed filed pursuant to any provision of theExchange Act of 1934 or any other securities law. Each of the undersigned certifies that the foregoing Report on Form 10-K fully complies with the requirements of Section 13(a) of the SecuritiesExchange Act of 1934 (15 U.S.C. 78m) and that the information contained in the Form 10-K fairly presents, in all material respects, the financial conditionand results of operations of Hub Group, Inc. /s/ David P. Yeager /s/ Terri A. Pizzuto David P. Yeager Terri A. Pizzuto Chairman and Chief Executive Officer Executive Vice President, Chief Financial Officer andTreasurer
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