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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

    [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004 or

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

For the transition period from ________ to ________

Commission file number: 0-27754

HUB GROUP, INC.
(Exact name of registrant as specified in its charter)

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

3050 Highland Parkway, Suite 100
Downers Grove, Illinois 60515
(Address, including zip code, of principal executive offices)
(630) 271-3600
(Registrant’s telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No    

         Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes    No X

        On October 22, 2004, the registrant had 9,364,337 outstanding shares of Class A common stock, par value $.01 per share, and 662,296 outstanding shares of Class B common stock, par value $.01 per share.

HUB GROUP, INC.

INDEX

Page                            

                            PART I. Financial Information:

Hub Group, Inc. - Registrant        

Unaudited Condensed Consolidated Balance Sheets - September 30, 2004 and		  
         December 31, 2003    3  

Unaudited Condensed Consolidated Statements of Income - Three Months and		  
         Nine Months Ended September 30, 2004 and 2003    4  

Unaudited Condensed Consolidated Statement of Stockholders' Equity - Nine		  
         Months Ended September 30, 2004    5  

Unaudited Condensed Consolidated Statements of Cash Flows - Nine		  
         Months Ended September 30, 2004 and 2003    6  

Notes to Unaudited Condensed Consolidated Financial Statements		    7  

Management's Discussion and Analysis of Financial Condition and		  
         Results of Operations    12  

Quantitative and Qualitative Disclosures related to Market Risk		    22  

Controls and Procedures		    22  

PART II. Other Information		    22  

HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

September 30,
2004
 December 31,
2003
ASSETS      
    CURRENT ASSETS: 
      Cash and cash equivalents  $          —   $          —  
      Accounts receivable 
         Trade, net  134,551   125,754  
         Other  5,948   9,472  
      Deferred taxes  4,676   4,676  
      Prepaid expenses and other current assets  4,359   4,578  
         TOTAL CURRENT ASSETS

  149,534

   144,480

  
    PROPERTY AND EQUIPMENT, net  21,544   27,855  
    GOODWILL, net  215,175   215,175  
    OTHER ASSETS  321   1,017  
         TOTAL ASSETS  $ 386,574   $ 388,527  
LIABILITIES AND STOCKHOLDERS' EQUITY 
    CURRENT LIABILITIES: 
      Accounts payable 
         Trade  $ 110,709   $ 117,790  
         Other  2,905   2,555  
      Accrued expenses 
         Payroll  16,305   14,157  
         Other  13,200   11,592  
      Current portion of long-term debt  —   8,017  
           TOTAL CURRENT LIABILITIES

  143,119

   154,111

  
    LONG-TERM DEBT, EXCLUDING CURRENT PORTION  —   67,017  
    DEFERRED TAXES  30,594   24,364  
    STOCKHOLDERS' EQUITY: 
      Preferred stock, $.01 par value, 2,000,000 shares authorized; no shares 
         issued or outstanding in 2004 and 2003  —   —  
      Common stock 
         Class A: $.01 par value; 12,337,700 shares authorized; 9,354,977 shares 
           issued and 9,337,687 outstanding in 2004; 7,410,700 issued and 
            7,390,500 outstanding in 2003  93   74  
         Class B: $.01 par value; 662,300 shares authorized; 662,296 shares 
           issued and outstanding in 2004 and 2003  7   7  
      Additional paid-in capital  174,449   115,820  
      Purchase price in excess of predecessor basis, net of tax benefit of $10,306  (15,458 ) (15,458 )
      Retained earnings  57,656   47,332  
      Unearned compensation  (3,475 ) (4,448 )
      Treasury stock, at cost (17,290 shares in 2004 and 20,200 shares in 2003)  (411 ) (292 )
         TOTAL STOCKHOLDERS' EQUITY  212,861   143,035  
           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 386,574   $ 388,527  

        See notes to unaudited condensed consolidated financial statements.

HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

Three Months
Ended September 30,
 Nine Months
Ended September 30,
2004
 2003
 2004
 2003
Revenue   $ 362,105   $ 339,484   $ 1,039,377   $ 1,000,418  
Transportation costs  314,077   296,023   905,881   871,447  
       Gross margin  48,028   43,461   133,496   128,971  
 
Costs and expenses: 
     Salaries and benefits  21,995   22,508   66,570   68,689  
     Selling, general and administrative  9,023   11,041   29,618   34,932  
     Depreciation and amortization of property and equipment  3,052   2,716   8,786   7,865  
       Total costs and expenses  34,070   36,265   104,974   111,486  
       Operating income  13,958   7,196   28,522   17,485  
 
Other income (expense): 
     Interest expense  (571 ) (1,885 ) (3,968 ) (5,981 )
     Interest income  56   43   165   118  
     Debt extinguishment expenses  (7,296 ) —   (7,296 ) —  
     Other, net  180   46   583   59  
       Total other expense  (7,631 ) (1,796 ) (10,516 ) (5,804 )
 
Income before provision for income taxes  6,327   5,400   18,006   11,681  
 
Provision for income taxes  2,775   2,514   7,682   5,889
Net income   $     3,552   $     2,886   $     10,324   $     5,792  
Basic earnings per common share  $       0.37   $       0.37   $         1.22   $       0.75  
Diluted earnings per common share  $       0.34   $       0.37   $         1.14   $       0.74  
Basic weighted average number of shares outstanding  9,707   7,709   8,435   7,709  
Diluted weighted average number of shares outstanding  10,324   7,897   9,029   7,814  

        See notes to unaudited condensed consolidated financial statements.

HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the nine months ended September 30, 2004
(in thousands, except shares)

September 30,
2004
Class A & B Common Stock Shares Outstanding        
  Beginning of year    8,052,796  
  Exercise of stock options    127,634  
  Issuance of restricted stock    16,643  
  Purchase of treasury shares    (96,500 )
  Stock offering    1,800,000  
  Treasury shares issued under restricted stock and stock option plan, net of forfeitures    99,410  
   Ending balance    9,999,983  
Class A & B Common Stock Amount  
  Beginning of year   $ 81  
  Issuance of restricted stock and exercise of stock options     1  
  Stock offering     18  
   Ending balance    100  
Additional Paid-in Capital  
  Beginning of year    115,820  
  Exercise of stock options    2,282  
  Issuance of restricted stock    494  
  Stock offering    55,853  
   Ending balance    174,449  
Purchase Price in Excess of Predecessor Basis, Net of Tax  
  Beginning of year    (15,458 )
   Ending balance    (15,458 )
Retained Earnings  
  Beginning of year    47,332  
  Net income    10,324  
   Ending balance    57,656  
Unearned Compensation  
  Beginning of year    (4,448 )
  Issuance of restricted stock, net of forfeitures    (620 )
  Compensation expense related to restricted stock    1,593  
   Ending balance    (3,475 )
Treasury Stock  
  Beginning of year    (292 )
  Purchase of treasury shares    (2,767 )
  Issuance of restricted stock and exercise of stock options, net of forfeitures    2,648  
   Ending balance    (411 )
   Total stockholder's equity   $ 212,861  

See notes to unaudited condensed consolidated financial statements.

HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Nine Months Ended
September 30,
2004
 2003
Cash flows from operating activities:      
    Net income   $   10,324   $   5,792  
    Adjustments to reconcile net income to net cash provided 
       by operating activities: 
         Depreciation and amortization of property and equipment  8,966   7,908  
         Deferred taxes  7,535   5,739  
         Compensation expense related to restricted stock  1,593   —  
         Gain on sale of assets  (248 ) (60 )
         Other assets  696   (110 )
         Changes in working capital: 
           Accounts receivable, net  (5,273 ) 553  
           Prepaid expenses and other current assets  219   (201 )
           Accounts payable  (6,731 ) (4,225 )
           Accrued expenses  3,756   7,799  
            Net cash provided by operating activities  20,837   23,195  
Cash flows from investing activities: 
    Purchases of property and equipment, net  (2,407 ) (3,173 )
            Net cash used in investing activities  (2,407 ) (3,173 )
Cash flows from financing activity: 
    Proceeds from stock offering, net  55,871   —  
    Proceeds from stock options exercised  3,500   22  
    Purchase of treasury stock  (2,767 ) —  
    Net payments on revolver  (6,000 ) (14,000 )
    Payments on long-term debt  (69,034 ) (6,044 )
            Net cash used in financing activities  (18,430 ) (20,022 )
Net increase (decrease) in cash and cash equivalents  —   —  
Cash and cash equivalents beginning of period  —   —  
Cash and cash equivalents end of period  $        —   $      —  
Supplemental disclosures of cash flow information 
    Cash paid for: 
       Interest  $   2,995   $ 4,951  
       Income Taxes  $      477   $      —  

See notes to unaudited condensed consolidated financial statements.

HUB GROUP, INC.

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Interim Financial Statements

        Our accompanying unaudited condensed consolidated financial statements of Hub Group, Inc. (“we,“us” or “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. However, we believe that the disclosures contained herein are adequate to make the information presented not misleading.

        The financial statements reflect, in our opinion, all material adjustments (which include only normal recurring adjustments) necessary to fairly present our financial position and results of operations for the three months and nine months ended September 30, 2004 and 2003.

        These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2003. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year due partially to seasonality.

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

NOTE 2. Restructuring Charges

        During the year ended December 31, 2003 we recorded a severance charge for 165 employees of $876,000. We recorded severance charges of $115,000 for 20 employees during the quarter ended March 31, 2004 and $191,000 for 20 employees during the quarter ended June 30, 2004. An additional severance charge of $184,000 for 35 employees was recorded during the quarter ended September 30, 2004. Total severance charges recorded during the nine months ended September 30, 2004 were $490,000 for 75 employees. All severance payments were made as of September 30, 2004.

        In the fourth quarter of 2002, we recorded a $458,000 liability for the remaining lease obligation related to a closed facility. During the quarter ended June 30, 2003 we recorded a liability of $180,000 for the estimated remaining lease obligation and closing costs related to a facility in Detroit. We closed two operating centers during the quarter ended September 30, 2004 and recorded a $118,000 liability for the estimated remaining lease obligations related to the closed facilities. Lease and closing cost payments made during 2004 were $182,000. Payments made in the quarters ended March 31, 2004, June 30, 2004 and September 30. 2004 were $72,000, $45,000 and $65,000, respectively. The liability related to consolidation of facilities at September 30, 2004 is $297,000.

        The following table displays the activity and balances of the restructuring reserves for the year ended December 31, 2003 and the nine months ended September 30, 2004 (in thousands):

Workforce Consolidation
Reduction of Facilities Total
                                                                
Balance at December 31, 2002   $ --   $ 458   $ 458  
  Additional Restructuring Expenses    876    180    1,056  
  Cash Payments    (801 )  (277 )  (1,078 )
Balance at December 31, 2003    75    361    436  
  Additional Restructuring Expenses    115    --    115  
  Cash Payments    (190 )  (72 )  (262 )
Balance at March 31, 2004    --    289    289  
  Additional Restructuring Expenses    191    --    191  
  Cash Payments    (191 )  (45 )  (236 )
Balance at June 30, 2004    --    244    244  
  Additional Restructuring Expenses    184    118    302  
  Cash Payments    (184 )  (65 )  (249 )
Balance at September 30. 2004   $ --   $ 297   $ 297  

NOTE 3. Stock Based Compensation

        Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. We have chosen to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, compensation expense for stock options is measured as the excess, if any, of the quoted market price of our stock at the date of the grant over the amount an employee must pay to acquire the stock. We grant options at fair market value and therefore recognize no compensation expense.

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

Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
     
Net income, as reported   $3,552   $2,886   $10,324   $5,792  
     
Add: Total stock-based compensation included in net income, 
   net of related tax effects  309   —   914   —  
Deduct: Total stock-based employee compensation expense   determined under fair value based method for all 
   awards, net of related tax effects  (447 ) (166 ) (1,371 ) (548 )
Net income, pro forma  $3,414   $2,720   $9,867   $5,244  
Earnings per share: 
     
Basic-- as reported  $0.37   $0.37   $1.22   $0.75  
Basic-- pro forma  $0.35   $0.35   $1.17   $0.68  
Diluted-- as reported  $0.34   $0.37   $1.14   $0.74  
Diluted-- pro forma  $0.33   $0.34   $1.09   $0.67  

        No options were granted in 2004. The above table is based upon the valuation of option grants using the Black-Scholes pricing model for traded options with an assumed risk-free interest rate of 3.7% in 2003, a stock price volatility factor of 40.0% in 2003, dividend yield of 0 in 2003 and an expected life of the options of six years. Using the foregoing assumptions, the calculated weighted-average fair value of the options granted during the three months ended September 30, 2003 was $4.69 and for the nine months ended September 30, 2003 was $2.60. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, in management’s opinion, the model does not necessarily provide a reliable single measure of the fair value of our employee stock options.

        The pro forma disclosure is not likely to be indicative of pro forma results which may be expected in future periods because of the fact that options vest over several years, pro forma compensation expense is recognized as the options vest and additional awards may also be granted.

NOTE 4. Earnings Per Share

        The following is a reconciliation of our earnings per share:

Three Months Ended
September 30, 2004
 Three Months Ended
September 30, 2003
(000's)
 (000's)
Income
 Shares
 Per Share
Amount
 Income
 Shares
 Per Share
Amount
Basic EPS              
      Net Income  $3,552   9,707   $0.37   $2,886   7,709   $0.37  
Effect of Dilutive Securities 
      Stock options and restricted stock  —   617   —   —   188   —  
Diluted EPS 
      Net Income  $3,552   10,324   $0.34   $2,886   7,897   $0.37  
   
   
Nine Months Ended
September 30, 2004
 Nine Months Ended
September 30, 2003
(000's)
 (000's)
Income
 Shares
 Per Share
Amount
 Income
 Shares
 Per Share
Amount
Basic EPS              
      Net Income  $10,324   8,435   $1.22   $5,792   7,709   $0.75  
Effect of Dilutive Securities 
      Stock options and restricted stock  —   594   —   —   105   —  
Diluted EPS 
      Net Income  $10,324   9,029   $1.14   $5,792   7,814   $0.74  

        Stock options not included in diluted weighted-average shares because they would have been anti-dilutive were 0 and 731,550 for the three months ending September 30, 2004 and 2003, respectively. Stock options not included in diluted weighted average shares because they would have been anti-dilutive were 7,667 and 881,217 for the nine months ended September 30, 2004 and 2003, respectively.

NOTE 5. Property and Equipment

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

September 30, December 31,
2004 2003
Building and improvements   $        46   $        57  
Leasehold improvements  567   608  
Computer equipment and software  50,151   51,927  
Furniture and equipment  5,607   6,085  
Transportation equipment and automobiles  290   1,221  
   56,661   59,898  
Less: Accumulated depreciation and amortization  (35,117 ) (32,043 )
    Property and Equipment, net  $ 21,544   $   27,855  

NOTE 6. Debt

        Our outstanding debt is as follows (in thousands):

September 30, December 31,
2004 2003
                          
Bank revolving line of credit   $—   $ 6,000  
Term notes with quarterly payments of $2,000,000 with a balloon payment  
  of $9,000,000 due June 24, 2005; interest is due quarterly at a floating  
  rate    —    19,000  
Notes due on June 25, 2009 with annual payments of $10,000,000  
  commencing on June 25, 2005; interest is paid quarterly at a fixed rate  
  of 9.14%    —    50,000  
Capital lease obligations collateralized by certain equipment    —    34  
Total debt    —    75,034  
Less current portion    —    (8,017 )
    $ —   $ 67,017  

        On July 6, 2004, we used the net proceeds from our completed public offering, fully described in Note 9, to prepay the $50,000,000 of 9.14% debt as well as the majority of the make-whole payment of $6,804,000. As a result of the pre-payment, we recorded debt extinguishment expenses $7,296,000 (after-tax of approximately $4,232,000) consisting of $6,804,000 in pre-payment penalties and $492,000 related to the write off of deferred financing costs.

        On March 25, 2004, at our request, the Credit Agreement was amended to reduce the interest rate, commitment fees and the aggregate Revolving Credit Commitment. The interest rate for both the Revolving Line of Credit and the Term Loan was reduced to LIBOR plus 1.625%. The commitment fees charged on the unused Line of Credit were reduced to .275%. The Revolving Credit Commitment was reduced from $50,000,000 to $35,000,000.

        We had $34,000,000 and $43,000,000 of unused and available borrowings under our bank revolving line of credit at September 30, 2004 and December 31, 2003, respectively. We were in compliance with our debt covenants at September 30, 2004.

        We have standby letters of credit that expire from 2004 to 2012. As of September 30, 2004, the letters of credit were $1,000,000.

 

NOTE 7. Contingencies

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

NOTE 8. Stock Buy Back Plan

        During the fourth quarter of 2003, the Board of Directors authorized the purchase of up to 500,000 shares of our Class A Common Stock from time to time. The timing of the program will be determined by financial and market conditions. Since the program was initiated, we purchased 116,700 shares for $3,059,000. A summary of purchases in 2004 follows:

ISSUER PURCHASES OF EQUITY SECURITIES

Total Number of Shares Maximum Number of
Total Number Purchased as Shares that May
of Shares Average Price Part of Publicly Yet be Purchased
Purchased Paid Per Share Announced Plan Under the Plan(1)
         
January 1 to January 31      -    -    -    479,800  
February 1 to February 29    27,800    $  27.61    27,800    452,000  
March 1 to March 31    68,700    29.04    68,700    383,300  
April 1 to April 30      -    -    -    383,300  
May 1 to May 31      -    -    -    383,300  
June 1 to June 30      -    -    -    383,300  
July 1 to July 31      -    -    -    383,300  
August 1 to August 31      -    -    -    383,300  
September 1 to September 30      -    -    -    383,300  
            Total    96,500    $  28.67    96,500  

    (1)        We announced on November 3, 2003 that the Board of Directors had authorized the purchase of up to 500,000 shares of our Class A Common Stock from time to time. There is no expiration date for the Plan.

NOTE 9. Public Equity Offering

        We completed a public offering of Class A common stock priced at $33.00 per share, before underwriting discounts and commissions, on July 2, 2004. We sold 1,800,000 shares and selling stockholders sold 385,000 shares. The net proceeds of $55,871,000 were used to prepay the $50,000,000 of 9.14% debt on July 6, 2004 as well as the majority of the make-whole payment of $6,804,000. As a result of the pre-payment, we recorded debt extinguishment expenses of $7,296,000 (after-tax of approximately $4,232,000) consisting of $6,804,000 in pre-payment penalties and $492,000 related to the write off of deferred financing costs during the third quarter of 2004.

HUB GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OUTLOOK, RISKS AND UNCERTAINTIES

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

        •  the degree and rate of market growth in the intermodal, truck brokerage and logistics markets served by us;
        •  deterioration in our relationships with existing railroads;
        •  changes in rail service conditions or adverse weather conditions;
        •  further consolidation of railroads;
        •  the impact of competitive pressures in the marketplace, including entry of new competitors, direct marketing efforts
           by the railroads or marketing efforts of asset-based carriers;
        •  changes in rail, drayage and trucking company capacity;
        •  equipment shortages;
        •  changes in the cost of services from rail, drayage, truck or other vendors;
        •  labor unrest in the rail, drayage or trucking company communities;
        •  general economic and business conditions;
        •  fuel shortages or prices;
        •  increases in interest rates;
        •  decrease in demand for our distribution services;
        •  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; and
        •  inability to recruit and retain key personnel.

EXECUTIVE SUMMARY

        Hub Group, Inc. (“we,” “us” or “our”) is the largest intermodal marketing company (“IMC”) in North America and a full service transportation provider offering intermodal, truck brokerage or highway services and comprehensive logistics services. These service offerings are referred to as the Core Transportation business. The Core Transportation business operates through a nationwide network of operating centers. We also operate Hub Group Distribution Services (“HGDS” or “Hub Distribution”). Hub Distribution performs certain specialized services, predominately installation of point of purchase displays, and is responsible for its own operations, customer service, marketing and management information systems support.

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

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

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

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

        One of our primary goals is to grow our gross margin. We have achieved growth through an increase in revenue from our existing Core Transportation customers as well as from winning new customers. Our top 50 customers’ revenue, which represents about 53% of our Core Transportation revenue, has increased by approximately 9.6% when comparing the nine months ended September 30, 2004 to September 30, 2003. During the year we severed relationships with certain low profitability customers impeding our intermodal revenue growth.

         Revenue growth resulted primarily from price increases and fuel surcharges during the third quarter of 2004 versus the third quarter of 2003. The price increase resulted from rate increases from our carriers.

        We use various performance indicators to manage our business. We closely monitor gains and losses for our Top 50 customers and evaluate on-time performance, costs per load by location and daily sales outstanding by location. Vendor cost changes and vendor service issues are also monitored closely.

        We closed two operating centers in the third quarter of 2004. This has caused us to incur severance charges related to the downsizing of staff and charges to terminate building as well as equipment leases.

        Intermodal capacity remains tight. There is a very limited supply of equipment in various key cities around the country.

        We opened up a drayage operation in Northern California during the third quarter of 2004 to supplement existing drayage capacity in that important market. We believe that our drayage operations, which are in Chicago, Kansas City, St. Louis, Atlanta and now Stockton, California, give us a competitive advantage as we seek to provide reliable, cost effective intermodal services to our customers.

RESULTS OF OPERATIONS

The following table summarizes our revenue by business line:

Three Months Ended Nine Months Ended
September 30, September 30
% %
2004 2003 Change 2004 2003 Change
Revenue (in thousands)                            
      Core Transporation  
          Intermodal   $ 254,385   $ 240,201    5 .9%   $ 727,245   $ 697,383    4 .3%
          Brokerage    56,124    53,684    4 .5  163,862    157,172    4 .3
          Logistics    39,601    37,555    5 .4  118,701    106,483    11 .5
      Total Core  
     350,110    331,440    5 .6  1,009,808    961,038    5 .1
      Hub Distribution    11,995    8,044    49 .1  29,569    39,380    (24 .9)
      Total Revenue  
    $362,105   $339,484    6 .7% 1,039,377   $1,000,418    3 .9%

The following table includes certain items in the consolidated statement of operations as a percentage of revenue:

Three Months
Ended September 30,
 Nine Months
Ended September 30,
2004
 2003
 2004
 2003
Revenue   100.0 % 100.0 % 100.0 % 100.0 %
Transportation Costs  86.7 % 87.2 % 87.2 % 87.1 %
       Gross Margin  13.3 % 12.8 % 12.8 % 12.9 %
 
Costs and Expenses: 
     Salaries and benefits  6.1   6.6   6.4   6.9  
     Selling, general and administrative  2.5   3.3   2.8   3.5  
     Depreciation and amortization   0.8   0.8   0.8   0.8  
Total Costs and Expenses  9.4   10.7   10.0   11.2  
 
Operating Income  3.9   2.1   2.8   1.7  
 
Other Expense 
     Debt extinguishment expenses  (2.0 ) —   (0.7 ) —  
     Other expense  (0.1 ) (0.5 ) (0.3 ) (0.6 )
Total Other Expense   (2.1 ) (0.5 ) (1.0 ) (0.6 )
 
Income before provision for income taxes  1.8   1.6   1.8   1.1  
 
Provision for income taxes  0.8   0.7   0.7   0.6
Net income   1.0 % 0.9 % 1.1 % 0.5 %


Three Months Ended September 30, 2004 Compared to the Three Months Ended September 30, 2003

Revenue

        Revenue generated by our Core Transportation business lines, intermodal, truckload brokerage and logistics increased 5.6%. Intermodal revenue increased 5.9% due primarily to price increases and fuel surcharges offset by a 2% decrease in volume. Truckload brokerage revenue increased 4.5% due primarily to an increase in revenue per load from fuel surcharges and price increases. Logistics revenue increased 5.4% due primarily to price increases. The increased logistics revenue is partially attributable to the transfer of the time sensitive delivery of pharmaceutical samples from Hub Distribution to this business line during the quarter. HGDS revenue increased 49.1% due primarily to an increase in the installation business. Our total revenue increased 6.7% to $362.1 million in 2004 from $339.5 million in 2003.

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

Gross Margin

        Gross margin increased 10.5% to $48.0 million in 2004 from $43.5 million in 2003. The majority of the increase relates to our Core Transportation business. As a percent of revenue, gross margin increased to 13.3% in 2004 from 12.8% in 2003 due primarily to more effective yield management. We proactively passed along rate increases to our customers for fuel and increased costs from our transportation suppliers. We also increased our margins by eliminating business where we do not receive adequate returns. This has caused a decline in intermodal volume.

Salaries and Benefits

        As a percentage of revenue, salaries and benefits decreased to 6.1% from 6.6% in 2003. Salaries and benefits decreased to $22.0 million in 2004 from $22.5 million in 2003. This was due primarily to a decrease in headcount. Headcount as of September 30, 2004 was 1,172 while headcount for September 30, 2003 was 1,250. In late 2003, we stopped issuing new stock options and began issuing restricted stock which vests over three years. As a result, salaries and benefits include a $0.5 million charge related to restricted stock in the three months ended September 30, 2004. Severance costs during the three months ended September 30, 2004 were $0.2 million compared with $0.5 million for the three months ended September 30, 2003.

Selling, General and Administrative

        Selling, general and administrative expenses decreased to $9.0 million in 2004 from $11.0 million in 2003. As a percentage of revenue, these expenses decreased to 2.5% in 2004 from 3.3% in 2003. The decrease in selling, general and administrative expenses is primarily attributed to a decrease in equipment leases, legal expenses, travel and entertainment expense and office supplies primarily due to cost savings initiatives. Equipment lease expense decreased due to lease buy-outs.

Depreciation and Amortization of Property and Equipment

        Depreciation and amortization increased to $3.1 million in 2004 from $2.7 million in 2003. This expense as a percentage of revenue remained constant at 0.8%. The increase in depreciation and amortization is due primarily to more computer equipment being depreciated in 2004 as a result of lease buy-outs.

Other Income (Expense)

        Interest expense decreased to $0.6 million in 2004 from $1.9 million in 2003. The decrease in interest expense is due primarily to carrying a lower average debt balance this year as compared to the prior year and the extinguishment of the private placement debt during the quarter. The debt extinguishment expenses of $7.3 million include a $6.8 million pre-payment penalty associated with paying off the $50 million of 9.14% debt and the $0.5 million write off of deferred financing costs.

Provision for Income Taxes

        The provision for income taxes increased to $2.8 million in 2004 compared to $2.5 million in 2003. We provided for income taxes using an effective rate of 43.9% in 2004 and an effective rate of 46.6% in the third quarter of 2003. The decrease in the effective rate from 2003 to 2004 is related to the effect of 2003 tax law changes. Further, in 2004 we wrote off $0.1 million related to deferred tax assets that were no longer realizable due to the closing of two operating centers.

Net Income

        Net income increased to $3.6 million in 2004 from $2.9 million in 2003 due primarily to higher gross margin and lower selling, general and administrative expenses, partially offset by the one time debt extinguishment expenses of $7.3 million. Excluding the debt extinguishment expenses, adjusted net income for the 2004 quarter would have been $7.8 million. A tabular reconciliation of the differences between the adjusted financial results for the three months ended September 30, 2004 and our financial results determined in accordance with generally accepted accounting principles in the United States of America (“GAAP”) are contained in the table below.

Earnings Per Common Share

        Basic earnings per share remained constant at $0.37 in 2004 and 2003 and diluted earnings per share decreased to $0.34 in 2004 from $0.37 in 2003. The weighted average diluted shares outstanding increased 31% from 7,897,000 at September 30, 2003 to 10,324,000 at September 30, 2004 due primarily to our follow on offering. Excluding the debt extinguishment expenses, adjusted basic earnings per share would have been $0.80 and adjusted diluted earnings per share would have been $0.75.

RECONCILIATION OF AS REPORTED FINANCIAL RESULTS TO AS ADJUSTED FINANCIAL RESULTS
(in thousands, except per share amounts)

Three Months Ended September 30, 2004
As Reported
 Adjustments
 As Adjusted
Operating Income   $    13,958   $          —   $    13,958  
Interest expense  (571 ) —   (571 )    
Interest income  56   —   56      
Debt extinquishment expenses  (7,296 ) (7,296 )a —      
Other, net  180   —   180      
Income before provision for income taxes  6,327   (7,296 ) 13,623    
Provision for income taxes  2,775   (3,064 )b 5,839    
Net income   $     3,552   $  (4,232 ) $     7,784  
Basic earnings per common share  $       0.37   $    (0.43 ) $       0.80    
Diluted earnings per common share  $       0.34   $    (0.41 ) $       0.75    
Basic weighted average number of shares outstanding  9,707   9,707   9,707    
Diluted weighted average number of shares outstanding  10,324   10,324   10,324    

a) Fees and expenses related to our early extinquishment of 9.14% debt
   1) Pre-payment penalty of $6,804
   2) Write-off of related deferred financing costs of $492

b) Income taxes at 42.0%

         Note: The purpose of this statement is to reflect as adjusted earnings excluding the one time costs associated with prepaying our debt.

Nine Months Ended September 30, 2004 Compared to the Nine Months Ended September 30, 2003

Revenue

        Revenue generated by our Core Transportation business lines, intermodal, truckload brokerage and logistics increased 5.1% to $1.01 billion. Intermodal revenue increased 4.3% due primarily to a 1.3% increase in volume, price increases and fuel surcharge. Truckload brokerage revenue increased 4.3% due primarily to an increase in revenue per load related to price increases and fuel surcharge. Logistics revenue increased 11.5% due primarily to price increases and to increased volume. A portion of the volume increase resulted from the inclusion of the pharmaceutical delivery business previously handled by HGDS. HGDS revenue decreased 24.9% due primarily to a decrease in the installation business. Our total revenue increased 3.9% to $1.04 billion in 2004 from $1.0 billion in 2003.

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

Gross Margin

        Gross margin increased 3.5% to $133.5 million. We proactively passed along rate increases for fuel and increased costs from our transportation suppliers. We also increased our Core Transportation margins by eliminating business where we do not receive adequate returns. Core Transportation related gross margin dollar increases were partially offset by decreases in gross margin dollars at HGDS. As a percent of revenue, gross margin decreased slightly to 12.8% in 2004 from 12.9% in 2003 primarily as a result of fewer higher margin projects at HGDS.

Salaries and Benefits

        Salaries and benefits decreased to $66.6 million in 2004 from $68.7 million in 2003. As a percentage of revenue, salaries and benefits decreased to 6.4% from 6.9% in 2003. This was due primarily to a decrease in headcount. In late 2003, we stopped issuing new stock options and began issuing restricted stock which vests over three years. As a result, salaries and benefits include a $1.6 million charge related to restricted stock in the nine months ended September 30, 2004. Severance costs during the nine months ended September 30, 2004 were $0.5 million compared with $0.8 million for the nine months ended September 30, 2003.

Selling, General and Administrative

        Selling, general and administrative expenses decreased to $29.6 million in 2004 from $34.9 million in 2003. As a percentage of revenue, these expenses decreased to 2.8% in 2004 from 3.5% in 2003. Equipment lease expense decreased by $1.9 million due primarily to lease buy-outs. Telephone expense decreased by $0.6 million due primarily to a reduction in headcount. Outside services expense decreased by $1.0 million due primarily to lower legal fees incurred during 2004. Rent and office expense decreased by $0.5 million due primarily to a reduction in offices and cost savings initiatives. Outside sales commissions decreased by $0.4 million.

Depreciation and Amortization of Property and Equipment

        Depreciation and amortization increased to $8.8 million in 2004 from $7.9 million in 2003. This expense as a percentage of revenue remained constant at 0.8%. The increase in depreciation and amortization is due primarily to more computer equipment being depreciated in 2004 as a result of lease buy-outs.

Other Income (Expense)

        Interest expense decreased to $4.0 million in 2004 from $6.0 million in 2003. The decrease in interest expense is due primarily to carrying a lower average debt balance this year as compared to the prior year and the extinguishment of the private placement debt during July of 2004. The debt extinguishment expenses include the $6.8 million pre-payment penalty associated with paying off the $50 million of 9.14% debt and the $0.5 million write off of deferred financing costs.

Provision for Income Taxes

        The provision for income taxes increased to $7.7 million in 2004 compared to $5.9 million in 2003. We provided for income taxes using an effective rate of 42.7% for the nine months ended September 30, 2004 and an effective rate of 50.4% for the nine months ended September 30, 2003. The effective rate in 2003 included a write off of $0.8 million of deferred tax assets related to the Illinois Research and Development credit. During 2004, we wrote off of $0.1 million of deferred tax assets that were no longer realizable due to the closing of two operating centers.

Net Income

        Net income increased to $10.3 million in 2004 from $5.8 million in 2003 due primarily to higher gross margin and lower selling, general and administrative expenses, partially offset by debt extinguishment expenses. Excluding the debt extinguishment expenses, adjusted net income for the nine months ended September 30, 2004 would have been $14.6 million. A tabular reconciliation of the differences between the adjusted financial results for the nine months ended September 30, 2004 and our financial results determined in accordance with generally accepted accounting principles in the United States of America (“GAAP”) are contained in the table below.

Earnings Per Common Share

        Basic earnings per share increased to $1.22 in 2004 from $0.75 in 2003 and diluted earnings per share increased to $1.14 in 2004 from $0.74 in 2003. The weighted average diluted shares outstanding increased 15.5% from 7,814,000 at September 30, 2003 to 9,029,000 at September 30, 2004. Excluding the debt extinguishment expenses adjusted basic earnings per share would have been $1.72 and adjusted diluted earnings per share would have been $1.61.

RECONCILIATION OF AS REPORTED FINANCIAL RESULTS TO AS ADJUSTED FINANCIAL RESULTS
(in thousands, except per share amounts)

Nine Months Ended September 30, 2004
As Reported
 Adjustments
 As Adjusted
Operating Income   $    28,522   $          —   $    28,522  
Interest expense  (3,968 ) —   (3,968 )    
Interest income  165   —   165      
Debt extinquishment expenses  (7,296 ) (7,296 )a —      
Other, net  583   —   583      
Income before provision for income taxes  18,006   (7,296 ) 25,302    
Provision for income taxes  7,682   (3,064 )b 10,746    
Net income   $     10,324   $    (4,232 ) $     14,556  
Basic earnings per common share  $         1.22   $      (0.50 ) $         1.72    
Diluted earnings per common share  $         1.14   $      (0.47 ) $         1.61    
Basic weighted average number of shares outstanding  8,435   8,435   8,435    
Diluted weighted average number of shares outstanding  9,029   9,029   9,029    

a) Fees and expenses related to our early extinquishment of 9.14% debt
   1) Pre-payment penalty of $6,804
   2) Write-off of related deferred financing costs of $492

b) Income taxes at 42.0%

         Note: The purpose of this statement is to reflect as adjusted earnings excluding the one time costs associated with prepaying our debt.

CRITICAL ACCOUNTING POLICIES

        The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions. In certain circumstances, those estimates and assumptions can affect amounts reported in the accompanying consolidated financial statements. We have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. We do not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Note 1 of the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2003, includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. The following is a brief discussion of the more significant accounting policies and estimates.

Allowance for Uncollectible Trade Accounts Receivable

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

Revenue Recognition

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

Deferred Income Taxes

        Deferred income taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse. We have not recorded a valuation reserve on the recorded amount of net deferred tax assets as we believe that future earnings will more likely than not be sufficient to fully utilize the assets. In the event the probability of realizing the deferred tax assets does not meet the more likely than not threshold in the future, a valuation allowance would be established for the deferred tax assets deemed unrecoverable.

Valuation of Goodwill

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

LIQUIDITY AND CAPITAL RESOURCES

        We have funded operations and capital expenditures through cash flows from operations and bank borrowings.

        Cash provided by operating activities for the nine months ended September 30, 2004, was approximately $20.8 million, which resulted primarily from net income from operations of $10.3 million, non-cash charges of $18.5 million offset by decreases in working capital of $8.0 million. The decrease in working capital relates partially to paying vendors more quickly.

        Net cash used in investing activities for the nine months ended September 30, 2004, was $2.4 million and related to expenditures made to enhance our information system capabilities, purchase of tractors used in our Quality Services operations and purchase of office equipment. We expect capital expenditures to be in the range of $4 million to $5 million for the year ended December 31, 2004.

        The net cash used in financing activities for the nine months ended September 30, 2004, was $18.4 million. Our sale of 1,800,000 shares at a price of $33.00, after underwriting discounts and commissions, generated $55.9 million. Uses of cash related primarily to payments on our debt and the purchase of treasury stock. We generated cash from stock options being exercised.

        On March 25, 2004, at our request, our Credit Agreement was amended to reduce the interest rate, commitment fees and the aggregate Revolving Credit Commitment. The interest rate for both the Revolving Line of Credit and the Term Loan was reduced to LIBOR plus 1.625%. The commitment fees charged on the unused Line of Credit were reduced to .275%. The Revolving Credit Commitment was reduced from $50 million to $35 million.

        Our unused and available borrowings under our bank revolving line of credit at September 30, 2004 and December 31, 2003 are $34 million and $43 million, respectively. We were in compliance with our debt covenants at September 30, 2004.

        We have standby letters of credit that expire from 2004 to 2012. As of September 30, 2004 our letters of credit were $1 million.

Contractual Obligations

        Our contractual cash obligations as of September 30, 2004 are minimum rental commitments. Minimum annual rental commitments, at September 30, 2004, under noncancellable operating leases, principally for real estate and equipment, are payable as follows (in thousands):

Remainder 2004     $ 2,372  
2005    7,704  
2006    6,052  
2007    5,192  
2008    4,335  
2009 and thereafter    6,456  
    $ 32,111  

Revenue

        During 2004, in connection with the realignment, we revised our revenue classifications by transportation mode. Accordingly, the 2003 and 2002 revenue amounts have been reclassified to conform to the current year presentation (in millions):

2003 Intermodal Brokerage Logistics HGDS Total
           
Quarter Ended March 31     $ 228.0   $ 50.6   $ 35.2   $  15.5   $ 329.3  
Quarter Ended June 30    229.2    52.9    33.7    15.9    331.7  
Quarter Ended September 30    240.2    53.7    37.6    8.0    339.5  
Quarter Ended December 31    254.0    53.3    37.4    14.4    359.1  
             Total   $ 951.4   $ 210.5   $ 143.9   $  53.8   $ 1,359.6  
   
2002 Intermodal Brokerage Logistics HGDS Total
           
Quarter Ended March 31     $ 211.2   $ 54.5   $ 20.3   $  19.3   $ 305.3  
Quarter Ended June 30    238.2    53.5    16.9    19.0    327.6  
Quarter Ended September 30    260.4    55.2    20.4    20.7    356.7  
Quarter Ended December 31    248.5    53.3    22.3    22.0    346.1  
             Total   $ 958.3   $ 216.5   $ 79.9   $  81.0   $ 1,335.7  

Interest Expense

        As a result of eliminating the $50 million of private placement debt, we will no longer be required to pay the related interest which historically has been approximately $1.2 million per quarter. We will continue to have interest expense related to our deferred compensation plan.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We are exposed to market risk related to changes in interest rates on our bank line of credit which may adversely affect our results of operations and financial condition.

CONTROLS AND PROCEDURES

        As of September 30, 2004, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of September 30, 2004. No significant changes were made in our internal controls or in other factors that could significantly affect these controls subsequent to the date of this evaluation.



PART II. Other Information

Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds

               (c)          Note 8 of the Company’s Notes to Unaudited Condensed Consolidated Financial Statements is incorporated herein by
                              reference.

Item 6.           Exhibits and Reports on Form 8-K

               (a)          A list of exhibits included as part of this report is set forth in the Exhibit Index incorporated herein by reference.

               (b)          Reports on Form 8-K

  The Company furnished a Report on July 22, 2004 reporting in Item 9 that it was attaching as an exhibit as press release containing operating results for the second quarter of 2004.


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

                                   HUB GROUP, INC.

DATE: October 26, 2004 /s/ Thomas M. White
Thomas M. White
Senior Vice President-Chief Financial
Officer and Treasurer
(Principal Financial Officer)

EXHIBIT INDEX

Exhibit No.           Description

31.1   Certification of David P. Yeager, Vice Chairman and Chief Executive Officer, Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2   Certification of Thomas M. White, Senior Vice President-Chief Financial Officer and Treasurer, Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1   Certification of David P. Yeager and Thomas M. White, Chief Executive Officer and Chief Financial Officer, respectively, Pursuant to 18 U.S.C. Section 1350.

Exhibit 31.1

CERTIFICATION

I, David P. Yeager, certify that:

1)  

I have reviewed this report on Form 10-Q 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 the statements 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 the financial 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 Exchange Act Rules 13a-15e and 15d-15e for the registrant and we have:


a)  

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)  

(paragraph omitted pursuant to SEC release Nos. 33-8238 and 34-47986);


c)  

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)  

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;


5)  

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’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 are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)  

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 26, 2004
/s/ David P.Yeager
Name: David P. Yeager
Title: Vice Chairman and
          Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Thomas M. White, certify that:

1)  

I have reviewed this report on Form 10-Q 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 the statements 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 the financial 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 Exchange Act Rules 13a-15e and 15d-15e for the registrant and we have:


a)  

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)  

(paragraph omitted pursuant to SEC release Nos. 33-8238 and 34-47986);


c)  

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)  

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;


5)  

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’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 are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)  

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 26, 2004
/s/ Thomas M. White
Name: Thomas M. White
Title: Senior Vice President-
          Chief Financial Officer and Treasurer

Exhibit 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

        The following statement is provided by the undersigned to accompany the Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 of Hub 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 the Exchange Act of 1934 or any other securities law.

        Each of the undersigned certifies that the foregoing Report on Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m) and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Hub Group, Inc.

/s/David P. Yeager /s/Thomas M. White
David P. Yeager Thomas M. White
Vice Chairman and Chief Executive Officer Senior Vice President- Chief Financial Officer
Hub Group, Inc. and Treasurer
Hub Group, Inc.