File Pursuant to Rule 424(a)
Registration No. 333-33557
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
AUGUST 20, 1997
1,350,000 Shares
HUB GROUP, INC.
LOGO
Class A Common Stock
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All of the 1,350,000 shares of Class A Common Stock (the "Class A Common
Stock") offered hereby are being sold by Hub Group, Inc., a Delaware
corporation (the "Company" or "Hub Group"). The Company's authorized common
stock includes Class A Common Stock and Class B Common Stock (the "Class B
Common Stock" and, together with the Class A Common Stock, the "Common Stock").
The rights of holders of Class A Common Stock and Class B Common Stock are
identical, except each share of Class B Common Stock entitles its holder to 20
votes, while each share of Class A Common Stock entitles its holder to one
vote. Upon completion of the Offering, the holders of the Class B Common Stock
will control approximately 67% of the total voting power of the Company. See
"Prospectus Summary--The Offering."
The Class A Common Stock is traded on the Nasdaq National Market under the
symbol "HUBG." On August 20, 1997, the last reported sale price of the Class A
Common Stock on the Nasdaq National Market was $33.875 per share. See "Price
Range of Class A Common Stock."
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SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS COMPANY(1)
- -----------------------------------------------------------------------------
Per Share............ $ $ $
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Total(2)............. $ $ $
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(1) Before deducting estimated expenses of $300,000 payable by the Company.
(2) The Company has granted the Underwriters a 30-day option to purchase up to
202,500 additional shares of Class A Common Stock solely to cover over-
allotments, if any. To the extent that the option is exercised, the
Underwriters will offer the additional shares to the public at the Price to
Public shown above. If the option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to Company will
be $ , $ and $ , respectively. See
"Underwriting."
--------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as, and if delivered to and accepted by them,
subject to the right of the Underwriters to reject any order in whole or in
part. It is expected that delivery of the shares will be made at the offices of
Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about ,
1997.
Alex. Brown & Sons
INCORPORATED
Schroder & Co. Inc.
William Blair & Company
THE DATE OF THIS PROSPECTUS IS , 1997.
THE HUB NETWORK
LOGO
Hub Group operates through an extensive nationwide network of 34 offices or
"Hubs." Each Hub is strategically located in a market that has a significant
concentration of shipping customers and one or more railheads. The Company
uses this network to provide intermodal, truck brokerage and logistics
services to a broad range of customers throughout North America.
------------
IN CONNECTION WITH THIS OFFERING, CERTAIN PERSONS PARTICIPATING IN THIS
OFFERING MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS ON THE NASDAQ
NATIONAL MARKET IN THE CLASS A COMMON STOCK IN ACCORDANCE WITH RULE 103 UNDER
REGULATION M. SEE "UNDERWRITING."
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR
MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON STOCK OF THE COMPANY AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by more detailed
information appearing elsewhere or incorporated by reference in this
Prospectus. Unless otherwise indicated, all information contained in this
Prospectus assumes that the Underwriters' over-allotment option is not
exercised.
THE COMPANY
Since its founding as an intermodal marketing company ("IMC") in 1971, Hub
Group has grown to become the largest IMC in the United States and a full
service freight transportation provider, offering intermodal, truck brokerage
and comprehensive logistics services. Hub Group operates through an extensive
nationwide network of 34 offices or "Hubs." Each Hub is strategically located
in a market that has a significant concentration of shipping customers and one
or more railheads.
Intermodal. As an IMC, the Company arranges for the movement of its
customers' freight in containers and trailers over long distances. Hub Group
contracts with railroads to provide transportation over the long-haul portion
of the shipment and with local trucking companies, known as "drayage
companies," for pickup and delivery. In markets where adequate drayage service
is not available, the Company supplements third party drayage services with
Company-owned drayage operations. As part of its intermodal services, the
Company negotiates favorable rail and drayage rates, electronically tracks
shipments in transit, consolidates billing and handles claims for freight loss
or damage on behalf of its customers. The Company uses its Hub network,
connected through its proprietary advanced intermodal management ("AIM")
system, to access containers and trailers owned by leasing companies, railroads
and steamship lines. The Company estimates that on a typical day it controls
approximately 15,000 of the 159,000 intermodal containers and trailers in the
United States to which it has access. Hub Group, as the nation's largest IMC,
acts as a marketing agent on behalf of the railroads, thus allowing them to
limit the expenses of maintaining marketing organizations while gaining access
to Hub Group's substantial customer base. In addition, Hub Group's size places
it in a particularly strong position to assist railroads in balancing freight
volumes and repositioning intermodal equipment. Because of the large volume of
freight in its network, and Hub Group's role in assisting the railroads in
reducing their costs, the Company is able to provide highly competitive pricing
to its customers. The Hub network generated approximately $440 million in
railroad revenue in 1996.
Following deregulation of the railroad industry in the 1980s, improved rail
service and substantial advancements in equipment and technology have reduced
the cost and increased the reliability of intermodal transportation. At the
same time, driver shortages and higher operating costs in both the long-haul
for-hire and private trucking markets have made intermodal transportation more
competitive, particularly for shipments traveling long distances. The Company
estimates that the combined domestic (shipments both originating and
terminating within the United States) and U.S. international (shipments either
imported into or exported from the United States) intermodal transportation
industry generated approximately $8 billion in revenue in 1996. The intermodal
market has grown at a faster rate than the general economy and other segments
of the railroads' freight business over the last five years, taking market
share from boxcar traffic and from over-the-road truck transportation. Total
intermodal loadings (domestic and U.S. international) grew at an estimated
compound annual rate of 5.5% from 1991 through 1996. With its extensive Hub
network, strong and diverse customer base and partnerships with the railroads,
the Company has grown rapidly and is well-positioned to benefit from the
expected continued growth in this market.
Highway Services. Hub Group also arranges for the transportation of freight
by truck, which generated approximately $60.9 million in revenue in the first
six months of 1997, increasing from $39.9 million in the first six months of
1996. The Company has entered into contracts with approximately 3,000 motor
carriers. Using the equipment provided by these carriers, the Company matches
customers' needs
3
with carriers' capacity to provide the appropriate service and price
combination. As part of its highway services operations, the Company negotiates
rates, tracks shipments in transit, consolidates billing and handles claims for
freight loss and damage on behalf of its customers.
Logistics. The Company has expanded its logistics offerings as customers
increasingly outsource their transportation needs. The Company currently
arranges third party distribution and warehousing, as well as non-traditional
logistics services such as installation of point-of-sale merchandise displays.
The Company's Hub Logistics division provides complete transportation services,
supplementing or replacing the customer's transportation department as
necessary. These logistics operations have generated $41.9 million in revenue
in the first six months of 1997, up from $25.4 million in the first six months
of 1996.
International. The Company's joint venture with Norton Lilly International,
Inc., HLX, gives Hub Group access to the large and growing international
market. HLX manages every aspect of international steamship, air, rail and
truck transportation and provides full-service import and export shipping,
including one-call shipment tracking and tracing and complete logistics
services.
Management believes that the Company's principal competitive advantages are:
Unique Structure of Nationwide Hub Network. The Company's unique operating
structure enables it to combine the entrepreneurial responsiveness of a small
business with nationwide coverage and capabilities. Each Hub functions
essentially as a stand alone business managed locally by an executive with
significant transportation experience. These executives are highly incentivized
to achieve Company goals through bonus programs and, in cases where the
executive is also a minority owner, an equity ownership interest in the local
Hub. Local management is responsible for operations, customer service and
regional marketing, while corporate management is responsible for group
strategic planning and administration, financial services, relationships with
the railroads, management of the Company's logistics services business and
management information systems support. Hub Group also maintains a national
accounts sales force ("National Accounts") to provide centralized marketing of
the Company's services to large and geographically diverse shippers. The
Company believes that this mix of local accountability and strong central
management has been an integral part of the Company's success.
Strong and Diverse Customer Base. The Company believes that its customer base
is among the largest in the freight transportation industry. The Company
services customers in a wide variety of industries, including automotive,
chemicals, consumer products, electronics, paper, printing and retail. The
Company currently provides transportation services on a non-exclusive basis for
approximately 10,000 accounts throughout North America, including 141 accounts
served by the Company's National Accounts division. These 141 companies
accounted for approximately 28% of the Hub network's revenue in 1996. Hub
Group's extensive network has enabled it to provide reliable and cost-effective
services tailored to meet the individual needs of the companies comprising its
diverse customer base. This diverse customer base also benefits the Company by
reducing the impact of cyclical swings in particular geographic markets or
industries.
Strong Partnerships with Railroads. Hub Group has developed strong
relationships with the major U.S. railroads by providing them with significant
revenue, helping them maximize return on assets and reducing their costs. The
Company aggressively markets intermodal transportation services to shippers, in
many cases allowing the Company to handle freight that might otherwise have
been transported by conventional truck transportation. Through its marketing
efforts, Hub Group has become the top revenue-producing IMC for each of the six
largest U.S. railroads, generating approximately $440 million in railroad
revenue in 1996. The Hub network is able to help the railroads balance the flow
of inbound and outbound freight from specific geographic areas, thereby
enhancing the utilization of intermodal containers and trailers. By relying on
the Hub network and other IMCs to act as their marketing agents, railroads can
avoid
4
the substantial overhead cost associated with large sales and marketing staffs.
Management believes that as railroads continue to seek to cut costs and reduce
staff, these services will become increasingly important.
Non-Asset Based. As a non-asset based third party provider of intermodal,
highway and logistics services, the Company is able to select the
transportation mode and service which best meets each of its customers' needs.
By not being tied to owned equipment, Hub Group is able to offer a broad array
of options and more cost-effective services to its customers. The Company's
investment in information systems has allowed it to manage equipment in its
network without owning the assets. Through the AIM system, each Hub is able to
track trailers and containers entering its service area through the Hub network
and to redeploy that equipment to fulfill its customers' outbound shipping
requirements before the equipment is returned to the railroad. By accessing
this fleet of intermodal equipment, which consists of approximately 61,000
containers and 98,000 trailers, the Company is better able to offer each
customer the container or trailer that meets the customer's shipping
requirements.
Superior Access to Information. The Company has chosen to invest significant
resources in establishing and developing the Hub network, its information
systems and its staff. Through the Hub network and its AIM system, the
Company's intermodal operations have timely access to critical information
including the flow of freight into Hub service areas, rail and drayage rates,
rail schedules and equipment availability. With this information, the Company
is able to better meet its customers' transportation needs in a timely and
cost-effective manner and to provide the railroads with increased equipment
utilization and balanced freight flows. Using an advanced transportation
management system, Hub Logistics manages all aspects of its customers'
transportation needs. With this system, Hub Logistics consolidates orders into
full truckload shipments, chooses shipping routes, electronically tenders loads
to carriers and reports moves to its customers. Using Visual Movements
software, Hub's brokerage operations and drayage subsidiaries track the status
and availability of each piece of equipment, providing shipment visibility for
its customers and capacity management information for its vendors.
Technological improvements are currently focused on reducing customer service
response time, enhancing the customer profile database and expanding the number
of customers and service providers with which the Company shares data using
electronic data interchange ("EDI") applications.
GROWTH STRATEGY
The Company believes that its competitive advantages position it to
capitalize on the expected growth in the freight transportation market. The
Company intends to execute its business strategy by:
Increasing Business with Existing Customers. The Company has implemented
marketing programs focused on capturing additional freight volume from existing
customers. This process is customer specific, requiring Hub sales and marketing
representatives to identify potential opportunities, analyze the expectations
of the customer and match those expectations with the available services. Hub
Group will continue to aggressively solicit and encourage customers to
establish EDI interfaces to reduce paperwork and to automate billing and
payment processes. EDI relationships also allow the Company to respond quickly
to customer requests and to provide timely shipment data and other information
required by its customers.
Adding New Accounts. Hub Group intends to continue to add new accounts.
Management believes that much of its future growth will be generated by the
Company's large, well-trained sales force and sophisticated sales support
services. The Company intends to maintain its sales force and sales support
capabilities, utilizing the existing incentive-based compensation that
management believes is an important element in its sales success. The Company
will continue its policy of carefully selecting its sales force and thoroughly
training and constantly updating its sales representatives on logistics trends
and Hub Group service offerings. The Company believes that the expansion of its
logistics and brokerage operations will enable it to market its services to a
greater number of customers.
5
Pursuing Acquisitions. Since the Company's initial public offering in March
1996 it has acquired the minority interest in each of Hub Tennessee and Hub
North Central (which operates Hub Milwaukee and Hub Minneapolis) and currently
intends to acquire the minority interests in two additional Hubs (Hub Los
Angeles and Hub Golden Gate) with the net proceeds of the Offering and bank
borrowings. In addition, on May 2, 1996, the Company acquired the domestic
intermodal marketing business of American President Lines Domestic Distribution
Services ("APLDDS") from American President Companies, Ltd. As a result of the
APLDDS acquisition, the Company acquired the right to service APLDDS customers,
but did not assume any assets or liabilities associated with that business. The
Company believes that, as consolidation in the intermodal business continues,
additional acquisition opportunities will become available.
Developing Additional Transportation Solutions. Although the Company's
intermodal operations are the largest part of its business, the Company's
logistics operations have grown significantly in 1997, with logistics revenue
increasing 65.1% in the first six months of 1997 compared to the same period in
1996. Management believes that this growth is attributable to the Company's
strategic efforts to capitalize on the increasing willingness of shippers to
outsource their transportation logistics needs. The Company believes that
demand for logistics services will continue to grow as more companies downsize
and outsource many of these functions to third parties. In addition, the
Company has worked with each local Hub to develop a comprehensive highway
services operation. These brokerage operations provide Hub Group with an
additional option for meeting its customers' transportation needs. In the first
six months of 1997, highway services revenue increased 52.6% compared to the
same period in 1996. With its large carrier network and customized software
application, management believes that it is well positioned to further expand
this product offering.
Increasing International Presence. Management believes that the rail
intermodal portion of U.S. international freight represents approximately 40%
of the total U.S. rail intermodal market. The Company's joint venture, HLX,
targets the large international intermodal market by facilitating international
shipments of freight originating in or destined for North America, helping
steamship companies and beneficial owners reduce costs and improve
efficiencies. HLX arranges port-to-door and door-to-port transportation within
North America and also offers door-to-door international service. All North
American intermodal freight movement arranged by HLX is handled by the Hub
network. The passage of the North American Free Trade Agreement is also
expected to increase the volume of international intermodal freight available
to the Company.
COMPANY STRUCTURE
Hub Group's structure is designed to maintain the balance between local
entrepreneurship and strong centralized management. The Company owns Hub
Chicago, Hub North Central, Hub Tennessee, a 65% general partnership interest
in Hub Group Distribution Services and a 30% general partnership interest in
each of the limited partnerships (each a "Hub Partnership") that operate the
remaining 29 Hubs. Hub Chicago is the sole general partner of each Hub
Partnership, giving it control over the management of each of the Hub
Partnerships. In addition, the Company is responsible for group strategic
planning and administration, financial services, relationships with the
railroads, management of the Company's logistics services business, management
information systems support and National Accounts. Hub Group has the continuing
option, exercisable at any time after the local executive managing a Hub
Partnership ceases to be an employee, to acquire the remaining 70% interest in
that Hub Partnership. The price to be paid by the Company upon any exercise of
its call option is determined by a pre-defined formula which takes into account
the prior earnings of the Hub Partnership being acquired, the price of the
Class A Common Stock and discounted trailing and projected price-to-earnings
multiples of the Class A Common Stock. Because the Company's ability to
exercise its option to acquire existing Hubs is dependent upon a number of
factors beyond its control, the Company cannot determine how long it will take
to acquire 100% ownership of all existing Hubs, if at all. Any new Hubs
established will be wholly-owned by Hub Group.
6
The Company was incorporated in Delaware in 1995 to become the successor to a
business founded by Phillip C. Yeager and his wife, Joyce E. Yeager, in 1971.
The Company's corporate office is located at 377 East Butterfield Road, Suite
700, Lombard, Illinois 60148; and its telephone number is (630) 271-3600.
Unless the context indicates or requires otherwise, references in this
Prospectus to the "Company" or to "Hub Group" are to Hub Group, Inc., its
wholly-owned subsidiaries (Hub Chicago, Hub North Central and Hub Tennessee),
each of the Hub Partnerships and Hub Group Distribution Services and their
respective predecessors.
RECENT DEVELOPMENTS
On July 28, 1997, the managing executives of Hub Los Angeles and Hub Golden
Gate retired, giving Hub Group the right to exercise its call option to
purchase the limited partnership interests in the Hub Partnerships that operate
those Hubs. The call option price for each of the Hub Los Angeles and Hub
Golden Gate limited partnership interests is approximately $30 million. The
Company intends to use the net proceeds from the Offering and bank borrowings
to purchase these limited partnership interests. See "Use of Proceeds."
Hub Los Angeles, headquartered in Brea, California, includes operations in
Los Angeles and sales offices in San Diego and Phoenix. Hub Golden Gate,
headquartered in Walnut Creek, California, includes operations in San Francisco
and Salt Lake City. The location and size of these Hubs are key components in
the execution of the Company's equipment control strategy. The large ports
serviced by these Hubs handle the major portion of international freight
entering or exiting the west coast of the United States, which presents a
significant opportunity for growth. Collectively, revenue for the year ended
December 31, 1996 increased by 38.4% compared to the same period in 1995, and
revenue for the six months ended June 30, 1997 increased by 52.7% compared to
the same period in 1996.
REVENUE (IN MILLIONS)(1)(2)
YEARS ENDED SIX MONTHS
DECEMBER ENDED
31, JUNE 30,
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1995 1996 1996 1997
----- ----- ----- -----
Hub Los Angeles......................................... $38.1 $53.8 $19.5 $33.3
Hub Golden Gate......................................... $33.2 $44.9 $19.2 $25.8
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(1) Excludes intercompany revenue.
(2) On May 2, 1996, the Company acquired the rights to service the customers of
APLDDS. Pursuant to this acquisition, Hub Los Angeles and Hub Golden Gate,
together with other Hubs, began moving freight for APLDDS customers located
in their respective territories.
7
THE OFFERING
Class A Common Stock offered
hereby 1,350,000 shares
Common Stock to be outstanding
after the Offering:
Class A Common Stock.......... 6,614,250 shares(1)
Class B Common Stock ......... 662,296 shares
----------------
Total....................... 7,276,546 shares(1)
Voting rights; conversion....... Generally, the holders of the Class A Common
Stock and the Class B Common Stock vote
together as a single class on all matters
submitted to a vote of stockholders, with
each share of Class A Common Stock entitled
to one vote and each share of Class B Common
Stock entitled to 20 votes. Each share of
Class B Common Stock converts into one share
of Class A Common Stock (i) at any time at
the option of the holder and (ii)
automatically upon its sale or other transfer
to anyone other than Phillip C. Yeager or a
member of his immediate family. Each class of
Common Stock otherwise has identical rights.
Use of proceeds................. To fund a significant portion of the purchase
price of the limited partnership interests of
the Hub Partnerships that operate Hub Los
Angeles and Hub Golden Gate. See "Use of
Proceeds."
Nasdaq Stock Market (National
Market) symbol................. "HUBG"
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(1) Excludes 445,300 shares of Class A Common Stock reserved for issuance upon
exercise of options under the Company's Long-Term Incentive Plan (the
"Incentive Plan"), of which options to purchase 352,800 shares are
currently outstanding. Also excludes 150,000 shares of Class A Common Stock
reserved for issuance upon exercise of options under the Company's 1997
Long-Term Incentive Plan.
8
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------------- ------------------
1992 1993 1994 1995 1996(1) 1996(1) 1997
------- ------- ------- ------- -------- -------- --------
STATEMENT OF OPERATIONS
DATA:
Revenue................. $64,446 $73,123 $86,876 $81,408 $754,243 $258,033 $519,320
Transportation costs.... 59,360 67,985 80,588 75,142 662,679 227,524 456,646
------- ------- ------- ------- -------- -------- --------
Net revenue............. 5,086 5,138 6,288 6,266 91,564 30,509 62,674
Costs and expenses...... 3,007 3,295 3,940 3,699 63,639 21,911 46,366
------- ------- ------- ------- -------- -------- --------
Operating income........ 2,079 1,843 2,348 2,567 27,925 8,598 16,308
Other income (expense).. 96 96 58 71 (221) (72) (525)
------- ------- ------- ------- -------- -------- --------
Income before minority
interest and taxes..... 2,175 1,939 2,406 2,638 27,704 8,526 15,783
Minority interest....... -- -- -- -- 16,366 4,686 8,792
------- ------- ------- ------- -------- -------- --------
Income before taxes..... 2,175 1,939 2,406 2,638 11,338 3,840 6,991
Income taxes............ 29 32 37 39 4,294 1,295 2,796
------- ------- ------- ------- -------- -------- --------
Net income (as
reported).............. 2,146 1,907 2,369 2,599 7,044 2,545 4,195
Pro forma provision for
additional income
taxes(2)............... 841 744 925 1,016 241 241 --
------- ------- ------- ------- -------- -------- --------
Pro forma net income.... $ 1,305 $ 1,163 $ 1,444 $ 1,583 $ 6,803 $ 2,304 $ 4,195
======= ======= ======= ======= ======== ======== ========
Pro forma earnings per
share.................. $ 0.79 $ 0.70 $ 0.87 $ 0.95 $ 1.35 $ 0.56 $ 0.70
Pro forma weighted
average
shares outstanding..... 1,662 1,662 1,662 1,662 5,058 4,115 6,030
JUNE 30, 1997
--------------------
AS
ACTUAL ADJUSTED(3)
------- -----------
BALANCE SHEET DATA:
Working capital............................................ $ (980) $ (980)
Total assets............................................... 218,273 277,652
Long-term debt, excluding current portion.................. 10,947 27,181
Stockholders' equity....................................... 50,332 93,477
- --------
(1) On March 18, 1996, the Company purchased Hub Chicago in a stock-for-stock
acquisition through the issuance of 1,000,000 shares of Class A Common
Stock and 662,296 shares of Class B Common Stock. The acquisition of Hub
Chicago has been accounted for using a method similar to the pooling of
interests method of accounting and has been included in all periods
presented on a historical cost basis. Concurrent with the acquisition of
Hub Chicago, the Company completed the initial public offering of 4,261,250
shares of Class A Common Stock, with net proceeds to the Company of
approximately $52,945,000. Concurrent with the initial public offering, the
Company acquired with cash a controlling interest in each of the 27 Hub
Partnerships. On May 2, 1996, the Company acquired the rights to service
the customers of APLDDS.
(2) Prior to March 18, 1996, the Company was an S corporation and was not
subject to federal corporate income taxes. On March 18, 1996, the Company
changed its status from an S corporation to a C corporation. The statement
of operations data reflects a pro forma provision for income taxes as if
the Company were subject to federal and state corporate income taxes for
all periods presented. The pro forma provision reflects a combined federal
and state tax rate of 40%.
(3) Approximately $43,145,000, the net proceeds from the Offering, at an
assumed offering price of $33.875 per share, together with approximately
$16,234,000 in bank borrowings, will be used by the Company to purchase the
limited partnership interests in Hub Los Angeles and Hub Golden Gate. The
purchase of the minority interests would have resulted in goodwill of
approximately $59,379,000.
9
RISK FACTORS
Prospective purchasers should carefully consider the following factors,
together with other information in this Prospectus, in evaluating an
investment in the shares of Class A Common Stock. This Prospectus contains
certain forward-looking statements, including statements containing the words
"believes," "anticipates," "expects" and words of similar import. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
adverse changes in national or local economic conditions, increased
competition, changes in availability, cost and terms of financing, changes in
operating expenses and other factors referenced in this Prospectus. Given
these uncertainties, prospective investors are cautioned not to place undue
reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to publicly announce the results of
any revisions to any of the forward-looking statements contained in this
Prospectus to reflect future events or developments.
CONCENTRATION OF BUSINESS ON INTERMODAL MARKETING
In 1995 and 1996 and the six months ended June 30, 1997, 90.7%, 83.4% and
80.2%, respectively, of the Company's revenue was derived from intermodal
marketing. As a result, a decrease in demand for intermodal transportation
services relative to other transportation services would create a more
pronounced adverse effect on the Company's results of operations than if a
larger portion of the Company's revenue were derived from a broader range of
services.
DEPENDENCE ON RAILROADS
The Company is dependent upon the major intermodal railroads in the United
States for virtually all of the intermodal services provided by the Company.
In many markets, rail service is limited to a few railroads or even a single
railroad. Consequently, a reduction in, or elimination of, rail service to a
particular market is likely to adversely affect the Company's ability to
provide intermodal transportation services to some of the Company's customers.
In addition, the railroads are relatively free to adjust shipping rates up or
down as market conditions permit. Rate increases would result in higher
intermodal transportation costs, reducing the attractiveness of intermodal
transportation as an alternative to truck or other modes of transportation and
could cause a decrease in demand for the Company's services. Further, the
Company's ability to continue to expand its intermodal transportation business
is dependent upon the railroads' ability to increase capacity for intermodal
freight. The Company's business would also be adversely affected by a work
stoppage at one or more railroads or by adverse weather conditions that hinder
the railroads' ability to provide transportation services. The Company cannot
predict what effect, if any, the recent trend toward consolidation among
railroads may have on intermodal transportation services or the Company's
results of operations.
DEPENDENCE ON EQUIPMENT AVAILABILITY
The intermodal transportation industry has periodically experienced
shortages of containers and trailers, particularly in strong economies. The
Company anticipates that in a strong economy, demand for trailers and
containers could exceed supply, especially during the end of the third quarter
and the beginning of the fourth quarter of each year. If the Company were not
able to secure sufficient containers and trailers to meet its customers'
needs, its results of operations could be adversely affected.
RELATIONSHIP WITH DRAYAGE COMPANIES
Most drayage companies operate relatively small fleets and have limited
access to additional capital for expansion. Thus, as the Company expands, it
will likely require the services of additional drayage
10
companies. At some Hub locations, only a few drayage companies meet the
Company's quality standards. In addition, the trucking industry has experienced
severe shortages of available drivers in recent years, which may curtail the
ability of the drayage companies to expand the size of their fleets. This
shortage may also require drayage companies to increase drivers' compensation,
thereby increasing drayage costs to the Company. If the Company were unable to
secure additional local drayage capacity to handle the drayage needs of its
customers or had to increase the amount paid for drayage services, the
Company's results of operations could be adversely affected and the Company
could experience difficulty increasing its business volume.
COMPETITION
The transportation services industry is highly competitive. The Company
competes against other IMCs, as well as logistics companies, third party
brokers and railroads that market their own intermodal services. In addition,
there is an emerging trend for larger truckload carriers to enter into
agreements with railroads to market intermodal services nationwide. Competition
is based primarily on freight rates, quality of service, reliability, transit
time and scope of operations. Several transportation service companies and
truckload carriers, and all of the major railroads, have substantially greater
financial and other resources than the Company.
POSSIBLE EFFECT OF ECONOMIC DEVELOPMENTS
Interest rate fluctuations, economic recession, customers' business cycles,
changes in fuel prices and supply, increases in fuel or energy taxes and the
transportation costs of railroads, trucking companies and drayage companies are
economic factors over which the Company has little or no control. Increased
operating expenses incurred by railroads, trucking companies or drayage
companies can be expected to result in higher transportation costs. The
Company's operating margins would be adversely affected if it were unable to
pass through to its customers the full amount of increased transportation
costs. Moreover, increases in the cost of intermodal transportation could
reduce the attractiveness of intermodal transportation as an alternative to
truck or other modes of transportation and cause a decrease in the demand for
the Company's services. Economic recession or a downturn in customers' business
cycles also could have an adverse effect on the Company's results of operations
and growth by reducing demand for the Company's services.
POSSIBLE DECISION NOT TO PURCHASE HUBS
The Company has the option, exercisable at any time following the retirement,
disability, death or other termination of employment of each current managing
local executive, to purchase the limited partnership interest in the Hub
Partnership managed by that executive. The decision as to whether to exercise
this option will be made on behalf of the Company by a majority of the
independent members of the Company's Board of Directors in their sole
discretion. Their decision will be subject to whatever considerations they deem
relevant, such as the financial position of the Company, the market value of
the Class A Common Stock and prevailing economic conditions. As a result, the
Company may defer the exercise of its option to acquire the limited partnership
interests in one or more Hub Partnerships, potentially for an indefinite period
of time, in which event the Company will continue to own 30% of that Hub
Partnership.
POSSIBLE EFFECTS OF OPERATING LEVERAGE
Transportation costs represented 87.7%, 87.8% and 87.9% of the Company's
consolidated revenue in 1995 and 1996 and the six months ended June 30, 1997,
respectively. Because transportation costs represent a significant portion of
the Company's overall cost structure, minor fluctuations in the Company's
transportation costs as a percentage of revenue can have a material effect on
the Company's earnings.
11
BENEFITS OF OFFERING TO EXISTING STOCKHOLDERS
Approximately $59.4 million, obtained from the net proceeds of the Offering
and bank borrowings, will be used to purchase limited partnership interests in
the Hub Partnerships that operate Hub Los Angeles and Hub Golden Gate. In
connection with such purchase, Phillip C. Yeager will receive approximately
$5.1 million, David P. Yeager (including members of his immediate family) will
receive approximately $3.7 million, Mark A. Yeager (including members of his
immediate family will receive approximately $3.7 million, Robert J. Jensen
(including members of his immediate family) will receive approximately $3.7
million, and Thomas L. Hardin will receive approximately $1.5 million.
GOVERNMENT REGULATION
Hub Highway Services, a partnership owned by the Company, is licensed by the
Department of Transportation (the "DOT") as a broker in arranging for the
transportation of general commodities by motor vehicle. The DOT prescribes
qualifications for acting in this capacity, including certain surety bonding
requirements. To date, compliance with these regulations has not had a
material adverse effect on the Company's results of operations or financial
condition. However, the transportation industry is subject to legislative or
regulatory changes that can affect the economics of the industry by requiring
changes in operating practices or influencing the demand for, and cost of
providing, transportation services. For example, a number of western states
currently permit the use of longer combination vehicles ("LCVs"), two 48-foot
or three 27-foot trailers pulled by a single tractor. Although previous
legislation has failed, proponents of LCVs continue to lobby Congress to enact
legislation that would allow the use of LCVs in more states. Nationwide use of
LCVs could have an adverse effect on the Company's business.
CONFLICTS OF INTEREST
Members of the Yeager family are directors and/or officers of the Company
and also have significant indirect interests in the Hub Partnerships.
Accordingly, they may have conflicts of interest relating to the allocation of
business opportunities between the Company and one or more of the Hub
Partnerships. Because the Company is entitled to a distribution of 30% of the
available net cash flow from each Hub Partnership and the Hub S Corporation is
entitled to the remaining 70% of available net cash flow, these directors
and/or officers may have a financial incentive to direct business
opportunities to the Hub Partnerships rather than the Company. The
relationship between the Hub Partnerships and Hub Group is governed by a
management agreement between each of the Hub Partnerships and the Company. The
management agreement delineates certain fundamental business practices which
govern the relationship between each Hub and the Company and provides that
these practices may not be changed without the approval of the independent
members of the Company's Board of Directors.
CONTROL BY PRINCIPAL STOCKHOLDERS
On all matters with respect to which the Company's stockholders have a right
to vote, including the election of directors, each share of Class A Common
Stock is entitled to one vote, while each share of Class B Common Stock is
entitled to 20 votes. Except as otherwise required by law or expressly
provided in the Company's Certificate of Incorporation (the "Certificate of
Incorporation"), the Class A Common Stock and Class B Common Stock vote
together as a single class. Each share of Class B Common Stock converts into
one share of Class A Common Stock (i) at any time at the option of the holder
and (ii) automatically upon its sale or other transfer to anyone other than to
Phillip C. Yeager or a member of his immediate family.
Following the Offering, the Yeager family members will continue to own in
the aggregate 662,296 shares of Class B Common Stock, representing all of the
outstanding shares of Class B Common Stock. Consequently, the Yeager family
will control approximately 67% of the voting power of the Company on all
matters presented for stockholder action. The Yeager family members are
parties to a stockholders'
12
agreement, pursuant to which they have agreed to vote all of their shares of
Class B Common Stock in accordance with the vote of the holders of a majority
of such shares. As a result, the Yeager family members will be able to elect
the entire Board of Directors, thereby controlling the management policy and
conduct of the business of the Company, as well as all matters submitted to a
vote of the Company's stockholders.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends upon attracting and retaining the services of
its executive officers, primarily Phillip C. Yeager, Chairman of the Board,
David P. Yeager, Vice Chairman of the Board and Chief Executive Officer, and
Thomas L. Hardin, President and Chief Operating Officer, and the executives of
the Hubs, as well as its ability to attract and retain other qualified
personnel. There is substantial competition for qualified personnel in the
transportation services industry. The loss of key personnel could have an
adverse effect on the Company. The Company does not have written employment
agreements with any of its executive officers and does not maintain life
insurance on the life of any of its executive officers. All key personnel
devote their full time to the Company's business. See "Management."
13
USE OF PROCEEDS
The net proceeds from the sale of the shares of Class A Common offered hereby
are expected to be approximately $43.1 million ($49.7 million if the
Underwriters' over-allotment option is exercised in full), at an assumed
offering price of $33.875 per share of Class A Common Stock and after deducting
estimated underwriting discounts and commissions and Offering expenses payable
by the Company. The Company intends to use all of the net proceeds together
with borrowings under a new credit facility (the "New Credit Facility"), to
purchase the limited partnership interests in the partnerships that operate Hub
Los Angeles and Hub Golden Gate. The purchase price of each of the Hub Los
Angeles and Hub Golden Gate limited partnership interests is approximately $30
million. The Company is currently negotiating an unsecured five-year $36
million revolving line of credit. The amount available under the line is
expected to decrease by $5.4 million at the beginning of year three and by $7.2
million at the beginning of each of years four and five. The interest rate is
expected to be LIBOR (London Interbank Offered Rate) plus 0.75% to 1.25% based
on the Company's funded debt to EBITDA (earnings before interest expense,
income taxes, depreciation and amortization) ratio. The credit facility is
expected to contain covenants customary for credit facilities of similar size
and type.
PRICE RANGE OF CLASS A COMMON STOCK
The Class A Common Stock has been traded on the Nasdaq National Market under
the symbol "HUBG" since March 13, 1996, the date of the Company's initial
public offering. The following table sets forth, for the periods indicated, the
high and low sale prices for the Class A Common Stock, as reported by Nasdaq:
HIGH LOW
------- -------
1996
First Quarter (from March 13, 1996).................... $19.000 $14.000
Second Quarter......................................... 24.250 17.625
Third Quarter.......................................... 22.625 16.000
Fourth Quarter......................................... 27.500 21.250
1997
First Quarter.......................................... $30.125 $24.500
Second Quarter......................................... 31.000 24.250
Third Quarter (through August 20, 1997)................ 36.000 30.125
DIVIDEND POLICY
The Company has never paid cash dividends on either the Class A Common Stock
or Class B Common Stock. The declaration and payment of dividends by the
Company are subject to the discretion of the Board of Directors. Any
determination as to the payment of dividends will depend upon the results of
operations, capital requirements and financial condition of the Company, and
such other factors as the Board of Directors may deem relevant. Accordingly,
there can be no assurance that the Board of Directors will declare or pay
dividends on the shares of Common Stock in the future. The Certificate of
Incorporation requires that any cash dividends must be paid equally on each
outstanding share of Class A Common Stock and Class B Common Stock.
14
CAPITALIZATION
The following table sets forth the short-term debt and capitalization as of
June 30, 1997 and as adjusted to give effect to the sale of the shares of Class
A Common Stock offered hereby at an assumed offering price of $33.875 per share
and the application of the net proceeds therefrom as set forth under "Use of
Proceeds."
JUNE 30, 1997
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
Total short-term debt....... $18,391 $ 18,391
======= ========
Total long-term debt........ $10,947 $ 27,181
Stockholders' equity:
Class A Common Stock, $.01
par value,
12,337,700 shares
authorized, 5,262,550
shares issued and
outstanding, actual;
6,612,550 shares issued
and outstanding,
as adjusted.............. 52 66
Class B Common Stock, $.01
par value, 662,300
shares authorized,
662,296 shares issued and
outstanding, actual and
as adjusted.............. 7 7
Additional paid-in
capital.................. 55,096 98,227
Purchase price in excess
of predecessor basis..... (25,764) (25,764)
Tax benefit resulting from
acquisition of general
partnership interest from
controlling
stockholders............. 10,306 10,306
Retained earnings......... 10,635 10,635
------- --------
Total stockholders'
equity................. 50,332 93,477
------- --------
Total capitalization.... $61,279 $120,658
======= ========
15
MANAGEMENT
The following are the Company's directors and executive officers:
NAME AGE POSITION
---- --- --------
Phillip C. Yeager....... 69 Chairman of the Board of Directors
David P. Yeager......... 44 Vice Chairman of the Board of Directors and Chief Executive Officer
Thomas L. Hardin........ 51 President, Chief Operating Officer and Director
William L. Crowder...... 55 Vice President--Finance, Chief Financial Officer and Treasurer
Daniel F. Hardman....... 48 President--Chicago Region
Mark A. Yeager.......... 33 Vice President, Secretary and General Counsel
John T. Donnell......... 57 Executive Vice President--Marketing
Robert L. Maro.......... 44 Vice President--Information Services
Robert J. Jensen........ 42 President--Hub Group Operations Management
Richard M. Rogan........ 57 President--Hub Highway Services
Gary D. Eppen........... 61 Director
Charles R. Reaves....... 59 Director
Martin P. Slark......... 42 Director
Phillip C. Yeager, the Company's founder, has been Chairman of the Board of
Directors since October 1985. From April 1971 to October 1985, Mr. Yeager
served as President of Hub Chicago. Mr. Yeager became involved in intermodal
transportation in 1959, five years after the introduction of intermodal
transportation in the United States, as an employee of the Pennsylvania and
Pennsylvania Central Railroads. He spent 19 years with the Pennsylvania and
Pennsylvania Central Railroads, 12 of which involved intermodal transportation.
In 1991, Mr. Yeager was named the Man of the Year by the Intermodal
Transportation Association. In 1995, he received the Salzburg Practitioners
Award from Syracuse University in recognition of his lifetime achievements in
the transportation industry. In October 1996, Mr. Yeager was inducted into the
Chicago Area Entrepreneurship Hall of Fame sponsored by the University of
Illinois at Chicago. In March 1997, he received the Presidential Medal from
Dowling College for his achievements in transportation services. Mr. Yeager
graduated from the University of Cincinnati in 1951 with a Bachelor of Arts
degree in Economics. Mr. Yeager is the father of David P. Yeager and Mark A.
Yeager and the father-in-law of Robert J. Jensen.
David P. Yeager has served as the Company's Vice Chairman of the Board since
January 1992 and as Chief Executive Officer of the Company since March 1995.
From October 1985 through December 1991, Mr. Yeager was President of Hub
Chicago. From 1983 to October 1985, he served as Vice President, Marketing of
Hub Chicago. Mr. Yeager founded the St. Louis Hub in 1980 and served as its
President from 1980 to 1983. Mr. Yeager founded the Pittsburgh Hub in 1975 and
served as its President from 1975 to 1977. Mr. Yeager received a Masters in
Business Administration degree from the University of Chicago in 1987 and a
Bachelor of Arts degree from the University of Dayton in 1975. Mr. Yeager is
the son of Phillip C. Yeager, the brother of Mark A. Yeager and the brother-in-
law of Robert J. Jensen.
Thomas L. Hardin has served as the Company's President since October 1985 and
has served as Chief Operating Officer and a director of the Company since March
1995. From January 1980 to September 1985, Mr. Hardin was Vice President--
Operations and from June 1972 to December 1979, he was General Manager of the
Company. Prior to joining the Company, Mr. Hardin worked for the Missouri
Pacific Railroad where he held various marketing and pricing positions. During
1996, Mr. Hardin was Chairman of the Intermodal Association of North America.
16
William L. Crowder has been the Company's Vice President of Finance and Chief
Financial Officer since April 1994 and Treasurer since July 1996. From January
1990 through December 1993, Mr. Crowder was Vice President of Finance and
Treasurer of Sears Logistics Services, Inc., a transportation, distribution and
home delivery subsidiary of Sears Roebuck & Company. Mr. Crowder worked at
Sears Roebuck & Company from 1966 through 1989 in various senior financial
management positions. Mr. Crowder received a Bachelors of Business
Administration degree from Georgia State University in 1966.
Daniel F. Hardman has been the President--Chicago Region since February 1996.
Mr. Hardman has been employed by the Hub Group since 1982, serving as President
of Hub Chicago from December 1992 to February 1996, Vice President of Hub
Chicago from January 1987 to December 1992, General Manager of Sales of Hub
Chicago from August 1985 to January 1987, President of Hub Charlotte from June
1984 to August 1985 and Regional Sales Manager of Hub Chicago from December
1982 to June 1984. Mr. Hardman is a former Director of the Intermodal
Transportation Association and is presently a member of the Chicago Traffic
Club and the Chicago Intermodal Transportation Association. Mr. Hardman is a
1991 graduate of the Certificate Program in Business Administration from the
University of Illinois.
Mark A. Yeager has been the Company's Vice President, Secretary and General
Counsel since March 1995. From May 1992 to March 1995, Mr. Yeager served as the
Company's Vice President--Quality. Prior to joining the Company in 1992, Mr.
Yeager was an associate at the law firm of Grippo & Elden from January 1991
though May 1992 and an associate at the law firm of Sidley & Austin from May
1989 through January 1991. Mr. Yeager received a Juris Doctor degree from
Georgetown University in 1989 and a Bachelor of Arts degree from Indiana
University in 1986. Mr. Yeager is the son of Phillip C. Yeager, the brother of
David P. Yeager and the brother-in-law of Robert J. Jensen.
John T. Donnell has been Executive Vice President of Marketing since October
1993. From October 1985 through October 1993, Mr. Donnell served as Vice
President of National Accounts. Prior to joining in the Company in 1985, Mr.
Donnell worked for Transamerica Leasing as Vice President of Marketing where he
was responsible for marketing 40,000 intermodal trailers to the railroads and
the intermodal marketing industry. Mr. Donnell received a Master of Business
Administration degree from Northwestern University in 1981 and a Bachelor of
Science degree in Marketing from Northeast Louisiana University in 1961.
Robert L. Maro has been Vice President of Information Services since November
1991. From January 1978 through November 1991, Mr. Maro worked as Director of
Operations of Zink & Katich, an information technology consulting firm that
provided consulting services to the Company. Mr. Maro received a Bachelor of
Science degree in Mathematics from Chicago State University in 1974.
Robert J. Jensen has been President of Hub Group Operations Management since
July 1991. He served as President of Hub St. Louis from July 1985 through July
1991 and as General Manager of Hub St. Louis from October 1980 through July
1985. Mr. Jensen received a Bachelor of Science degree in Finance from the
University of Illinois in 1977. Mr. Jensen is the son-in-law of Phillip C.
Yeager and the brother-in-law of both David P. Yeager and Mark A. Yeager.
Richard M. Rogan has served as President of Hub Highway Services since May
1995. Prior to joining the Company, Mr. Rogan was Executive Vice President of
National Freight, Inc. from May 1993 to April 1995. Prior to that, Mr. Rogan
was with Burlington Motor Carriers, Inc., where he served as President and
Chief Executive Officer from March 1988 to April 1993 and as an Executive Vice
President from July 1985 to February 1988. Mr. Rogan's transportation career
spans 25 years and includes earlier assignments with the Illinois Central
Railroad, North American Van Lines and Schneider National. He received a
Bachelor of Business Administration degree from Loyola University of Chicago in
1962 and a Master of Business Administration from the Wharton School of the
University of Pennsylvania in 1963. He has served on the Board of Directors of
the ATA Foundation as well as the Interstate Truckload Carrier Conference
("ITCC"). He is a past Chairman of the ITCC Highway Policy Committee and has
also served on the Advisory Board of the Trucking Profitability Strategies
Conference at the University of Georgia.
17
Gary D. Eppen has served as a director of the Company since February 1996.
Having served as a Professor in the Graduate School of Business at The
University of Chicago since 1964, Mr. Eppen is currently the Ralph and Dorothy
Keller Distinguished Service Professor of Operations Management. He received a
Ph.D. in Operations Research from Cornell University in 1964, a Master of
Science in Industrial Engineering from the University of Minnesota in 1960, a
Bachelor of Science from the University of Minnesota in 1959 and an Associate
in Arts degree in Pre-Engineering from Austin Junior College in 1956. Mr. Eppen
also serves as a director of Landauer, Inc.
Charles R. Reaves has served as a director of the Company since February
1996. Since 1994, Mr. Reaves has been President and Chief Executive Officer of
Reaves Enterprises, Inc., a real estate development company. From April 1962
until November 1994, Mr. Reaves worked for Sears Roebuck & Company in various
positions, most recently as President and Chief Executive Officer of Sears
Logistics Services, Inc., a transportation, distribution and home delivery
subsidiary of Sears Roebuck & Company. Mr. Reaves received a Bachelor of
Science degree in Business Administration from Arkansas Sate University in
1961.
Martin P. Slark has served as a director of the Company since February 1996.
Since 1976, Mr. Slark has been employed by Molex Incorporated ("Molex"), a
manufacturer of electronic, electrical and fiber optic interconnection products
and systems. Having worked for Molex in Europe, the United States and Asia, Mr.
Slark is presently a Corporate Vice President and President of the U.S. region.
Mr. Slark received a Master of Business Administration degree from the London
Business School in 1993, a Post-Graduate Diploma in Management Studies from the
London School of Economics in 1981 and a Bachelor of Science degree in
Engineering from Reading University in 1977.
18
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Underwriters named below (the "Underwriters"), through their
representatives, Alex. Brown & Sons Incorporated, Schroder & Co. Inc. and
William Blair & Company, L.L.C. (the "Representatives"), have severally agreed
to purchase from the Company the following respective numbers of shares of
Class A Common Stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:
NUMBER OF
UNDERWRITER SHARES
----------- ---------
Alex. Brown & Sons Incorporated................................
Schroder & Co. Inc.............................................
William Blair & Company, L.L.C.................................
---------
Total...................................................... 1,350,000
=========
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase the total number of shares of Class A Common Stock offered hereby if
any of such shares are purchased.
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Class A Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per share to certain other dealers. After commencement of the
Offering, the offering price and other selling terms may be changed by the
Representatives.
The Company has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 202,500
additional shares of Class A Common Stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Class A Common Stock to be
purchased by it shown in the above table bears to 1,350,000 and the Company
will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover over-
allotments made in connection with the sale of Class A Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on the
same terms as those on which the 1,350,000 shares are being offered.
In connection with this Offering, certain Underwriters may engage in passive
market making transactions in the Class A Common Stock on The Nasdaq National
Market immediately prior to the commencement of sales in this Offering in
accordance with Rule 103 of Regulation M. Passive market making consists of
displaying bids on The Nasdaq National Market limited by the bid prices of
independent market makers and making purchases limited by such prices and
effected in response to order flow. Net purchases by a passive market maker on
each day are limited to a specified percentage of the passive market maker's
average daily trading volume in the Class A Common Stock during a specified
period and must be discontinued when such limit is reached. Passive market
making may stabilize the market price of the Class A Common Stock at a level
above that which might otherwise prevail and, if commenced, may be discontinued
at any time.
Subject to applicable limitations, the Underwriters, in connection with this
Offering, may place bids for or make purchases of the Class A Common Stock in
the open market or otherwise, for long or short account, or cover short
positions incurred, to stabilize, maintain or otherwise affect the price of the
Class A Common Stock, which may be higher than the price that might otherwise
prevail in the open market. There can be no assurance that the price of the
Class A Common Stock will be stabilized, or that
19
stabilizing, if commenced, will not be discontinued at any time. Subject to
applicable limitations, the Underwriters may also place bids or make purchases
on behalf of the underwriting syndicate to reduce a short position created in
connection with this Offering. The Underwriters are not required to engage in
these activities and may end these activities at any time. The
Representatives, on behalf of the Underwriters, also may reclaim selling
concessions allowed to an Underwriter or dealer, if the syndicate repurchases
shares distributed by that Underwriter or dealer.
The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters and the Company with respect to certain civil
liabilities, including liabilities under the Securities Act of 1933 (the
"Securities Act").
Certain of the Company's stockholders, who beneficially own all of the
shares of Class B Common Stock, the Company's directors and officers and the
Company, have agreed not to offer, sell or otherwise dispose of any shares of
Class A Common Stock or Class B Common Stock or shares issuable upon exercise
of any options, except for certain transfers of Common Stock among Yeager
family members for a period of 90 days after the date of this Prospectus
without the prior written consent of Alex. Brown & Sons Incorporated.
LEGAL MATTERS
The validity of the shares of Class A Common Stock being offered hereby and
certain other legal matters will be passed upon for the Company by Mayer,
Brown & Platt, Chicago, Illinois. Certain legal matters will be passed upon
for the Underwriters by Piper & Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The consolidated financial statements and schedules of Hub Group, Inc. as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 and the combined financial statements of Hub Partnerships as
of December 31, 1995 and for each of the two years in the period ended
December 31, 1995 and the period January 1, 1996 through March 17, 1996
incorporated by reference in this Prospectus and elsewhere in the registration
statement on Form S-3 filed by the Company have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated by reference herein in reliance
upon the authority of said firm as experts in accounting and auditing in
giving said reports.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company may be inspected and
copied at the public reference facilities maintained by the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven
World Trade Center, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained upon written request addressed to the Commission, Public Reference
Section, Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, at prescribed rates, or from the Commission's worldwide web site at
http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act, with respect to the shares
of Common Stock offered hereby. This Prospectus, which constitutes part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement,
20
certain items of which are contained in exhibits to the Registration Statement
as permitted by the rules and regulations of the Commission. Statements made in
this Prospectus as to the content of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the Registration Statement, which may be inspected and
copied in the manner and at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act, are incorporated herein by reference (File No. 0-27754):
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1996 and amended by Amendment No. 1 on Form 10-K/A;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997; and
(3) The description of the Company's Class A Common Stock contained in
the Company's registration statement on Form 8-A.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in any
subsequently filed document which is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
telephone requests for such copies should be directed to the Company's
principal office: Hub Group, Inc., 377 East Butterfield Road, Suite 700,
Lombard, Illinois 60148, Attention: Corporate Secretary (telephone: (630) 271-
3600).
21
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
PAGE
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Prospectus Summary......................................................... 3
Risk Factors............................................................... 10
Use of Proceeds............................................................ 14
Price Range of Class A Common Stock........................................ 14
Dividend Policy............................................................ 14
Capitalization............................................................. 15
Management................................................................. 16
Underwriting............................................................... 19
Legal Matters.............................................................. 20
Experts.................................................................... 20
Available Information...................................................... 20
Incorporation of Certain Documents by Reference............................ 21
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1,350,000 Shares
LOGO
Class A Common Stock
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PROSPECTUS
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Alex. Brown & Sons
INCORPORATED
Schroder & Co. Inc.
William Blair & Company
, 1997
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