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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 March 31, 1997 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.)
377 East Butterfield Road, Suite 700
Lombard, Illinois 60148
(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 __
On May 12, 1997, the registrant had 5,262,750 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.
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HUB GROUP, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION:
HUB GROUP, INC. - REGISTRANT
Unaudited Condensed Consolidated Balance Sheets - December 31, 1996
and March 31, 1997 3
Unaudited Condensed Consolidated Statements of Operations - Three Months
Ended March 31, 1996 and 1997 4
Unaudited Condensed Consolidated Statement of Stockholders' Equity - Three
Months Ended March 31, 1997 5
Unaudited Condensed Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1996 and 1997 6
Notes to Unaudited Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
HUB PARTNERSHIPS - PREDECESSOR
Unaudited Condensed Combined Statement of Operations for the Period
January 1, 1996 through March 17, 1996 13
Unaudited Condensed Combined Statement of Stockholders' Equity for the
Period January 1, 1996 through March 17, 1996 14
Unaudited Condensed Combined Statement of Cash Flows for the Period
January 1, 1996 through March 17, 1996 15
Notes to Unaudited Condensed Combined Financial Statements 16
PART II. OTHER INFORMATION 17
2
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, March 31,
1996 1997
------------ ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,893 $ 25,766
Accounts receivable, net 114,125 110,151
Prepaid expenses and other current assets 3,532 3,808
-------- --------
TOTAL CURRENT ASSETS 131,550 139,725
PROPERTY AND EQUIPMENT, net 14,058 15,720
GOODWILL, net 42,255 43,509
DEFERRED TAXES 11,357 11,186
OTHER ASSETS 2,005 2,082
-------- --------
TOTAL ASSETS $201,225 $212,222
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Trade $ 94,884 $103,543
Other 8,144 6,877
Accrued expenses
Payroll 4,988 3,785
Other 3,186 3,362
Deferred taxes 1,307 1,441
Current portion of long-term debt 3,164 20,787
-------- --------
TOTAL CURRENT LIABILITIES 115,673 139,795
LONG-TERM DEBT, EXCLUDING CURRENT PORTION 28,714 13,651
CONTINGENCIES AND COMMITMENTS
MINORITY INTEREST 10,714 10,691
STOCKHOLDERS' EQUITY:
Preferred stock - -
Common stock 59 59
Additional paid-in capital 55,083 55,066
Purchase price in excess of predecessor basis (25,764) (25,764)
Tax benefit of purchase price in excess of predecessor basis 10,306 10,306
Retained earnings 6,440 8,418
-------- --------
TOTAL STOCKHOLDERS' EQUITY 46,124 48,085
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $201,225 $212,222
======== ========
See notes to unaudited condensed consolidated financial statements.
3
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months
Ended March 31,
-------------------
1996 1997
------- --------
REVENUE:
Trade $45,338 $251,120
Affiliates 3,459 -
------- --------
Total revenue 48,797 251,120
TRANSPORTATION COSTS 43,412 220,906
------- --------
Net revenue 5,385 30,214
COSTS AND EXPENSES:
Salaries and benefits 2,587 15,253
Selling, general and administrative 998 6,084
Depreciation and amortization 45 961
------- --------
Total costs and expenses 3,630 22,298
Operating income 1,755 7,916
------- --------
OTHER INCOME (EXPENSE):
Interest expense (37) (619)
Interest income 31 263
Other, net 8 30
------- --------
Total other income (expense) 2 (326)
INCOME BEFORE MINORITY INTEREST AND PROVISION
FOR INCOME TAXES 1,757 7,590
------- --------
MINORITY INTEREST 687 4,294
------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,070 3,296
PROVISION FOR INCOME TAXES 187 1,318
------- --------
NET INCOME $ 883 $ 1,978
======= ========
PRO FORMA PROVISION FOR ADDITIONAL INCOME TAXES 241 -
------- --------
PRO FORMA NET INCOME $ 642 $ 1,978
======= ========
PRO FORMA EARNINGS PER SHARE $ 0.29 $ 0.33
======= ========
PRO FORMA WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND SHARE EQUIVALENTS OUTSTANDING 2,233 6,028
======= ========
See notes to unaudited condensed consolidated financial statements.
4
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the three months ended March 31, 1997
(in thousands, except shares)
Tax Benefit
Purchase of Purchase
Price in Price in
Common Stock Additional Excess of Excess of Total
------------------ Paid-in Predecessor Predecessor Retained Stockholders'
Shares Amount Capital Basis Basis Earnings Equity
--------- ------ ---------- ----------- ----------- -------- -------------
Balance at December 31, 1996 5,923,546 $ 59 $55,083 $(25,764) $10,306 $6,440 $ 46,124
Net income - - - - - 1,978 1,978
Sale of common stock in initial
public offering, net - - (45) - - - (45)
Exercise of non-qualified
stock options 1,500 - 28 - - - 28
--------- ---- ------- -------- ------- ------ --------
Balance at March 31, 1997 5,925,046 $ 59 $55,066 $(25,764) $10,306 $8,418 $ 48,085
========= ==== ======= ======== ======= ====== ========
See notes to unaudited condensed consolidated financial statements.
5
HUB GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31,
-------------------
1996 1997
-------- -------
Cash flows from operating activities:
Net income $ 883 $ 1,978
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 45 1,222
Deferred taxes 39 305
Minority interest 687 4,294
Loss on sale of assets - 8
Changes in working capital, net of effects of purchase transactions:
Accounts receivable, net 1,755 3,974
Prepaid expenses and other current assets 313 (276)
Accounts payable 71 7,392
Accrued expenses 74 (1,027)
Other assets (128) (77)
-------- -------
Net cash provided by operations 3,739 17,793
-------- -------
Cash flows from investing activities:
Cash used in acquisitions, net (35,544) -
Purchase of minority interest - (1,525)
Purchases of property and equipment, net (118) (2,621)
-------- -------
Net cash used in investing activities (35,662) (4,146)
-------- -------
Cash flows from financing activities:
Proceeds from sale of common stock in initial public offering, net 52,981 (45)
Proceeds from sale of common stock - 28
Distributions to stockholders (1,104) -
Distributions to minority interest - (4,317)
Payments on long-term debt - (798)
Proceeds from issuance of long-term debt - 3,358
-------- -------
Net cash provided by (used in) financing activities 51,877 (1,774)
-------- -------
Net increase in cash 19,954 11,873
Cash, beginning of period 2 13,893
-------- -------
Cash, end of period $ 19,956 $25,766
======== =======
Supplemental disclosures of cash flow information
Cash paid for:
Interest $ - $ 125
Income taxes 28 54
Non-cash investing and financing activities:
Notes payable issued as distributions to stockholders $ 663 $ -
See notes to unaudited condensed consolidated financial statements.
6
HUB GROUP, INC.
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
of Hub Group, Inc. (the "Company") 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, the
Company believes that the disclosures contained herein are adequate to make the
information presented not misleading.
The financial statements reflect, in the opinion of management, all
material adjustments (which include only normal recurring adjustments) necessary
to present fairly the Company's financial position and results of operations.
NOTE 2. BUSINESS COMBINATIONS
On March 18, 1996, the Company acquired a controlling interest in each
of 27 operating partnerships (collectively referred to as "Hub Partnerships")
for a total purchase price of approximately $43,309,000 in cash. The purchase
price of these acquisitions was allocated to the assets acquired and liabilities
assumed based on the fair value at the date of acquisition using the purchase
method of accounting.
The portion of the difference between fair value and historical cost
of individual assets acquired and liabilities assumed attributable to interests
acquired by the Company from non-control group stockholders was recorded at fair
market value. This resulted in goodwill of approximately $17,207,000. The
remaining portion of the difference between fair value and historical cost
attributable to interests acquired from control group stockholders,
approximately $25,764,000, has been charged to equity as purchase price in
excess of predecessor basis.
In connection with the purchase of the controlling interest in Hub
Partnerships, approximately $10,306,000 has been recorded as a deferred tax
benefit utilizing an assumed effective tax rate of 40% representing the tax
effect of the purchase price in excess of predecessor basis, with the
corresponding credit recorded as an increase to equity.
On May 2, 1996, the Company purchased the rights to service the
customers of American President Lines Domestic Distribution Services, a division
of APL Land Transport Services, Inc., for approximately $8,000,000. The
$8,000,000 was financed with $2,000,000 in cash and $6,000,000 in notes. The
notes bear interest at an annual rate of 6% with three equal annual principal
payments due beginning May 2, 1997. The acquisition was recorded using the
purchase method of accounting resulting in goodwill of approximately $8,090,000.
Results of operations from acquisitions recorded under the purchase
method of accounting are included in the Company's financial statements from
their respective dates of acquisition. The purchase price allocations presented
are preliminary.
7
The following summarizes the effects of businesses acquired and
accounted for as purchases in 1996 as if they had been acquired as of January 1,
1996:
THREE MONTHS
ENDED MARCH 31,
1996
---------------
(000's)
Revenue as reported $ 48,797
Revenue of purchased business for period prior to
acquisitions, net of eliminations 174,845
--------
Pro forma revenue $223,642
--------
Net income as reported $ 642
Net income of purchased businesses for period prior to
acquisitions 295
Adjustment for goodwill amortization (86)
--------
Pro forma net income $ 851
--------
Earnings per share as reported $ 0.29
Effect of purchased businesses prior to acquisitions (0.13)
--------
Pro forma earnings per share $ 0.16
--------
Business acquisitions which involved the use of cash were accounted for as
follows:
THREE MONTHS
ENDED MARCH 31,
1996
---------------
(000's)
Accounts receivable $ 75,576
Prepaid expenses and other current assets 1,585
Property and equipment 9,309
Goodwill 17,449
Deferred tax benefit, net 10,306
Other assets 704
Accounts payable (74,693)
Accrued expenses (5,100)
Long-term debt (14,921)
Minority interest (129)
Purchase price in excess of predecessor basis 25,764
Tax benefit of purchase in excess of predecessor basis (10,306)
--------
Cash used in acquisitions, net $ 35,544
--------
NOTE 3. PURCHASE OF MINORITY INTEREST
On March 1, 1997, the Company purchased an approximate 44% minority
interest in Hub Group Distribution Services for approximately $1,500,000 in
cash.
8
NOTE 4. Property And Equipment
Property and equipment consist of the following:
December 31, March 31,
1996 1997
------------- -------------
(000's)
Land $ 92 $ 92
Building and improvements 841 859
Leasehold improvements 629 844
Computer equipment and software 7,258 8,613
Furniture and equipment 3,419 3,575
Transportation equipment and
automobiles 4,541 5,347
------------- -------------
16,780 19,330
Less: Accumulated depreciation
and amortization (2,722) (3,610)
------------- -------------
PROPERTY AND EQUIPMENT, net $14,058 $15,720
============= =============
NOTE 5. Statement of Financial Accounting Standards (SFAS) No. 128
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128 - Earnings per Share. This statement's objective is to simplify the
computation of earnings per share (EPS) to make the U.S. standard for computing
EPS more compatible with the EPS standards of other countries and with that of
the International Accounting Standards Committee. This statement is effective
for financial statements issued for periods ending after December 15, 1997,
including interim periods; earlier application is not permitted.
The Company does not expect the future adoption of this standard to have a
material impact, if any, on its financial statements.
9
HUB GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997, Compared to
Three Months Ended March 31, 1996
REVENUE
Revenue totaled $251.1 million for the three months ended March 31,
1997, representing an increase of 414.6% over the comparable period in 1996.
Revenue increased 12.3% for the three months ended March 31, 1997, over pro
forma revenue for the comparable period in 1996. The 1996 pro forma revenue was
impacted significantly by the addition of the revenue reported by American
President Lines Domestic Distribution Services ("APLDDS"), a division of APL
Land Transport Services, Inc. The business acquired from APLDDS on May 2, 1996,
had been experiencing significant decline during 1995 and the first quarter of
1996. This decline had a negative influence on the pro forma revenue growth
rate. Despite the declining trend, management believes Hub Group, Inc. and its
subsidiaries (the "Company") has successfully transitioned and retained greater
than 90% of the APLDDS business that existed on May 2, 1996.
Excluding the revenue relating to APLDDS prior to the acquisition on
May 2, 1996, Hub City Terminals, Inc. ("Hub Chicago") and the Company's 27
operating partnerships (collectively referred to as "Hub Partnerships"), on a
combined basis assuming Hub Chicago had acquired Hub Partnerships on January 1,
1996, experienced a revenue increase of 33.8% in the three months ended March
31, 1997, over the comparable period in 1996. This percentage increase is the
result of strong growth in truckload brokerage, logistics and intermodal service
offerings.
NET REVENUE
Net revenue as a percentage of revenue increased to 12.0% for the
three months ended March 31, 1997, compared to 11.0% in the same period in 1996.
This increase is primarily a reflection of the higher net revenue as a
percentage of revenue that is experienced by Hub Partnerships as compared to Hub
Chicago due to Hub Chicago's larger proportion of high volume/low margin
accounts.
SALARIES AND BENEFITS
Salaries and benefits increased to $15.3 million in the three months
ended March 31, 1997, from $2.6 million in the same period in 1996. Salaries
and benefits as a percentage of revenue increased to 6.1% in the three months
ended March 31, 1997, from 5.3% in the same period in 1996. Some administrative
services for Hub Chicago were performed by Hub Partnerships for a fee. This fee
was reflected in selling, general and administrative expenses prior to March 18,
1996. After the acquisition of Hub Partnerships by Hub Chicago, this fee is
eliminated in consolidation and the costs of the aforementioned administrative
services are reported as salaries and benefits. This causes salaries and
benefits as a percentage of revenue to increase over the prior year.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased to $6.1 million
in the three months ended March 31, 1997, from $1.0 million in the same period
in 1996. Selling, general and administrative expenses as a percentage of
revenue increased to 2.4% in the three months ended March 31, 1997, from 2.0% in
the same period in 1996. Despite the elimination in consolidation of the fees
between Hub Chicago and Hub Partnerships in 1997, Hub Chicago provided greater
leverage on its selling, general and administrative expenses in the first three
months of 1996 than did the Company as a whole in the first three months of
1997.
10
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense was $1.0 million in the three
months ended March 31, 1997, and was negligible in the same period in 1996.
Depreciation and amortization as a percentage of revenue increased to 0.4% in
the three months ended March 31, 1997, from 0.1% in the same period in 1996.
The percentage increase is attributable to the amortization of goodwill that was
recorded in connection with the purchase of Hub Partnerships and APLDDS.
OTHER INCOME (EXPENSE)
Interest expense was $0.6 million in the three months ended March 31,
1997, and negligible in the same period in 1996. All of the interest expense in
1996 was incurred subsequent to March 17, 1996.
There are three primary components of interest expense. First, the
Company assumed or issued $13.2 million of five-year balloon notes in
conjunction with the acquisition of Hub Partnerships in March 1996. These notes
bear interest at an annual rate of 5.45%. Second, in conjunction with the
acquisition of APLDDS in May 1996, the Company issued notes for $6.0 million
bearing interest at an annual rate of 6%. Third, the Company has borrowed to
purchase tractors as it continues its strategy of starting small drayage
operations to service portions of its own business in those areas where enhanced
customer service is required. The annual rate of interest on these loans is
determined at the time each tractor is purchased at a rate equal to 3% over the
two-year Treasury note rate.
Interest income was $0.3 million in the three months ended March 31,
1997 and negligible during the same period in 1996.
MINORITY INTEREST
Minority interest was $4.3 million in the three months ended March 31,
1997 and $0.7 million in the same period in 1996. Minority interest as a
percentage of income before minority interest increased to 56.6% in the three
months ended March 31, 1997, from 39.1% in the same period in 1996. The lower
percentage in 1996 was the result of only having the revenue and expense of Hub
Chicago, which is wholly owned by Hub Group, Inc., in the period prior to March
18, 1996.
INCOME TAXES
Income taxes were $1.3 million in the three months ended March 31,
1997 and $0.2 million in the same period in 1996. Other than an insignificant
provision for Illinois replacement tax, the Company had no provision for income
taxes prior to March 18, 1996, as the Company was a federally non-taxable
subchapter S corporation. The Company is providing for income taxes at an
effective rate of 40% for all income subsequent to March 17, 1996.
PRO FORMA PROVISION FOR ADDITIONAL INCOME TAXES
Additional pro forma income taxes were zero in the three months ended
March 31, 1997, and $0.2 million in the same period in 1996. Additional pro
forma provision for income taxes are shown to provide an assumed effective
federal and state income tax rate of 40% of income before taxes for periods
prior to March 18, 1996.
PRO FORMA NET INCOME
Pro forma net income (pro forma only to provide for income taxes)
increased to $2.0 million in the three months ended March 31, 1997, from $0.6
million in the same period in 1996. Pro forma net income as a percentage of
revenue decreased to 0.8% in the three months ended March 31, 1997, from 1.3% in
the same period in 1996. The decrease is principally attributable to the
increase in minority interest in 1997. See "Minority Interest."
11
PRO FORMA EARNINGS PER SHARE
Pro forma earnings per share (pro forma only to provide for income
taxes) increased to $0.33 in the three months ended March 31, 1997, from $0.29
in the same period in 1996.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (SFAS) NO. 128
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128 - Earnings per Share. This statement's objective is to simplify the
computation of earnings per share (EPS) to make the U.S. standard for computing
EPS more compatible with the EPS standards of other countries and with that of
the International Accounting Standards Committee. This statement is effective
for financial statements issued for periods ending after December 15, 1997,
including interim periods; earlier application is not permitted.
The Company does not expect the future adoption of this standard to
have a material impact, if any, on its financial statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains a bank line of credit for $5.0 million. The
interest rate is set at the bank's discretion at a rate less than or equal to
the bank's prime rate. At March 31, 1997, the rate was 7.75%. As of March 31,
1997, the unused and available portion of this credit line was $2.3 million.
Although there are no assurances, management believes it can obtain an
additional line of credit, if necessary.
12
HUB PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands)
January 1,
through
March 17, 1996
--------------
REVENUE:
Trade $142,413
Affiliate 3,992
--------
Total revenue 146,405
PURCHASED TRANSPORTATION 128,405
--------
Net revenue 18,000
COSTS AND EXPENSES:
Salaries and benefits 9,807
Selling, general and administrative 3,393
Depreciation and amortization 553
--------
Total costs and expenses 13,753
Operating income 4,247
--------
OTHER INCOME (EXPENSE):
Interest expense (56)
Interest income 120
Other, net 95
--------
Total other income 159
INCOME BEFORE INCOME TAXES 4,406
INCOME TAXES 126
--------
NET INCOME $ 4,280
========
See notes to unaudited condensed combined financial statements.
13
HUB PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
For the period January 1, 1996 through March 17, 1996
(in thousands, except shares)
Common Stock Additional Total
----------------- Paid-in Treasury Retained Stockholders'
Shares Amount Capital Stock Earnings Equity
------- ------- ---------- -------- -------- -------------
Balance at December 31, 1995 105,800 $ 1,943 $ 629 $ (32) $ 9,197 $11,737
Net income - - - - 4,280 4,280
Distributions to
stockholders - (1,730) (629) 32 (13,477) (15,804)
------- ------- ----- ----- -------- -------
Balance at March 17, 1996 105,800 $ 213 $ - $ - $ - $ 213
======= ======= ===== ===== ======== =======
See notes to unaudited condensed combined financial statements.
14
HUB PARTNERSHIPS
UNAUDITED CONDENSED COMBINED STATEMENT OF CASH FLOWS
(in thousands)
January 1,
through
March 17, 1996
--------------
Cash flows from operating activities:
Net income $ 4,280
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 553
Loss (gain) on sale of assets 3
Changes in working capital:
Accounts receivable, net 604
Prepaid expenses and other current assets 889
Accounts payable 4,783
Accrued expenses (140)
Other assets (407)
--------
Net cash provided by operations 10,565
--------
Cash flows from investing activities:
Purchases of property and equipment, net (775)
--------
Cash flows from financing activities:
Distributions to stockholders (13,014)
Payments on long-term debt (361)
Proceeds from issuance of long-term debt 418
--------
Net cash used in financing activities (12,957)
--------
Net decrease in cash (3,167)
Cash, beginning of period 10,949
--------
Cash, end of period $ 7,782
========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest 56
Income taxes 130
Non-cash financing activity:
Notes payable issued as distributions to stockholders $ 13,176
See notes to unaudited condensed combined financial statements.
15
HUB PARTNERSHIPS
NOTES TO UNAUDITED CONDENSED COMBINED
FINANCIAL STATEMENTS
NOTE 1. Interim Financial Statements
The accompanying unaudited condensed combined financial statements of
26 Subchapter S corporations and the Hub Group Distribution Services partnership
(collectively referred to as "Hub Partnerships" or the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to those rules and regulations. However, the Company believes that the
disclosures contained herein are adequate to make the information presented not
misleading.
The financial statements reflect, in the opinion of management, all
material adjustments (which include only normal recurring adjustments) necessary
to present fairly the Company's financial position and results of operations.
NOTE 2. Basis of Financial Statement Presentation
The unaudited condensed combined financial statements of Hub
Partnerships are presented herein to reflect the financial condition and results
of operations of the Hub Partnerships for the period in which Hub Partnerships
was the predecessor to the business acquired by Hub Group, Inc. on March 18,
1996, as necessary to disclose the financial statements of the business acquired
by Hub Group, Inc. pursuant to the rules and regulations of the Securities and
Exchange Commission.
NOTE 3. Special Distribution
Immediately prior to March 18, 1996, the Company distributed
substantially all of its equity, including retained earnings through March 17,
1996, to its shareholders in the form of cash and notes. The notes are five-year
balloon notes bearing interest at an annual rate of 5.45%. Interest is
compounded annually with all principal and interest due in March of 2001.
16
PART II. Other Information
None.
17
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: May 12, 1997 /s/ William L. Crowder
----------------------
William L. Crowder
Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer)