Form 10-Q
false2019Q3000085381612-28LANDSTAR SYSTEM INC 0000853816 2018-12-30 2019-09-28 0000853816 2019-09-28 0000853816 2018-12-29 0000853816 2017-12-31 2018-09-29 0000853816 2019-06-30 2019-09-28 0000853816 2018-07-01 2018-09-29 0000853816 2018-12-30 2019-03-30 0000853816 2019-03-31 2019-06-29 0000853816 2017-12-31 2018-03-31 0000853816 2018-04-01 2018-06-30 0000853816 2018-09-29 0000853816 2019-10-21 0000853816 2017-12-30 0000853816 2018-03-31 0000853816 2019-03-30 0000853816 2019-06-29 0000853816 2018-06-30 0000853816 us-gaap:MoneyMarketFundsMember 2019-09-28 0000853816 us-gaap:AssetBackedSecuritiesMember 2019-09-28 0000853816 lstr:CorporateBondsAndDirectObligationsOfGovernmentAgenciesMember 2019-09-28 0000853816 us-gaap:USTreasurySecuritiesMember 2019-09-28 0000853816 lstr:TwoThousandElevenEquityIncentivePlanMember 2019-09-28 0000853816 lstr:TwoThousandAndThirteenDirectorsStockCompensationPlanMember 2019-09-28 0000853816 us-gaap:RevolvingCreditFacilityMember 2019-09-28 0000853816 lstr:GuaranteePaymentOfInsuranceClaimsMember 2019-09-28 0000853816 lstr:OtherStockCompensationPlanMember 2019-09-28 0000853816 lstr:TransportationLogisticsMember 2019-09-28 0000853816 us-gaap:RestrictedStockUnitsRSUMember 2019-09-28 0000853816 lstr:NonVestedRestrictedStockAndDeferredStockUnitsMember 2019-09-28 0000853816 us-gaap:AccountingStandardsUpdate201602Member 2019-09-28 0000853816 us-gaap:CollateralPledgedMember lstr:CurrentInvestmentsMember 2019-09-28 0000853816 us-gaap:CollateralPledgedMember lstr:NonCurrentInvestmentsMember 2019-09-28 0000853816 lstr:NonCurrentInvestmentsMember 2019-09-28 0000853816 us-gaap:OtherAssetsMember 2019-09-28 0000853816 lstr:PropertyPlantAndEquipmentNetMember 2019-09-28 0000853816 us-gaap:OtherCurrentLiabilitiesMember 2019-09-28 0000853816 lstr:DeferredIncomeTaxesAndOtherNoncurrentLiabilitiesMember 2019-09-28 0000853816 srt:MinimumMember 2019-09-28 0000853816 srt:MaximumMember 2019-09-28 0000853816 us-gaap:MoneyMarketFundsMember 2018-12-29 0000853816 us-gaap:AssetBackedSecuritiesMember 2018-12-29 0000853816 lstr:CorporateBondsAndDirectObligationsOfGovernmentAgenciesMember 2018-12-29 0000853816 lstr:TransportationLogisticsMember 2019-06-30 2019-09-28 0000853816 lstr:InsuranceMember 2019-06-30 2019-09-28 0000853816 lstr:DevelopmentOfPriorYearSelfInsuredClaimsEstimatesMember 2019-06-30 2019-09-28 0000853816 us-gaap:RetainedEarningsMember 2019-06-30 2019-09-28 0000853816 us-gaap:TreasuryStockMember 2019-06-30 2019-09-28 0000853816 us-gaap:CommonStockMember 2019-06-30 2019-09-28 0000853816 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 2019-09-28 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 2019-09-28 0000853816 lstr:BcoIndependentContractorMember 2019-06-30 2019-09-28 0000853816 lstr:TruckBrokerageCarriersMember 2019-06-30 2019-09-28 0000853816 lstr:RailroadsMember 2019-06-30 2019-09-28 0000853816 lstr:AirAndOceanCargoCarriersMember 2019-06-30 2019-09-28 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:VanEquipmentMember 2019-06-30 2019-09-28 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:UnsidedPlatformEquipmentMember 2019-06-30 2019-09-28 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:LessThanTruckloadMember 2019-06-30 2019-09-28 0000853816 lstr:TransportationLogisticsMember 2018-07-01 2018-09-29 0000853816 lstr:InsuranceMember 2018-07-01 2018-09-29 0000853816 lstr:DevelopmentOfPriorYearSelfInsuredClaimsEstimatesMember 2018-07-01 2018-09-29 0000853816 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-29 0000853816 us-gaap:NoncontrollingInterestMember 2018-07-01 2018-09-29 0000853816 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-29 0000853816 us-gaap:CommonStockMember 2018-07-01 2018-09-29 0000853816 us-gaap:TreasuryStockMember 2018-07-01 2018-09-29 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-29 0000853816 lstr:AirAndOceanCargoCarriersMember 2018-07-01 2018-09-29 0000853816 lstr:BcoIndependentContractorMember 2018-07-01 2018-09-29 0000853816 lstr:TruckBrokerageCarriersMember 2018-07-01 2018-09-29 0000853816 lstr:RailroadsMember 2018-07-01 2018-09-29 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:VanEquipmentMember 2018-07-01 2018-09-29 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:UnsidedPlatformEquipmentMember 2018-07-01 2018-09-29 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:LessThanTruckloadMember 2018-07-01 2018-09-29 0000853816 lstr:TransportationLogisticsMember 2018-12-30 2019-09-28 0000853816 lstr:InsuranceMember 2018-12-30 2019-09-28 0000853816 lstr:DevelopmentOfPriorYearSelfInsuredClaimsEstimatesMember 2018-12-30 2019-09-28 0000853816 us-gaap:RestrictedStockUnitsRSUMember 2018-12-30 2019-09-28 0000853816 lstr:NonVestedRestrictedStockAndDeferredStockUnitsMember 2018-12-30 2019-09-28 0000853816 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-30 2019-09-28 0000853816 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-30 2019-09-28 0000853816 us-gaap:RestrictedStockUnitsRSUMember lstr:MarketConditionMember 2018-12-30 2019-09-28 0000853816 us-gaap:EmployeeStockOptionMember 2018-12-30 2019-09-28 0000853816 lstr:TwoThousandAndThirteenDirectorsStockCompensationPlanMember lstr:DeferredStockUnitMember 2018-12-30 2019-09-28 0000853816 lstr:BcoIndependentContractorMember 2018-12-30 2019-09-28 0000853816 lstr:TruckBrokerageCarriersMember 2018-12-30 2019-09-28 0000853816 lstr:RailroadsMember 2018-12-30 2019-09-28 0000853816 lstr:AirAndOceanCargoCarriersMember 2018-12-30 2019-09-28 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:VanEquipmentMember 2018-12-30 2019-09-28 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:UnsidedPlatformEquipmentMember 2018-12-30 2019-09-28 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:LessThanTruckloadMember 2018-12-30 2019-09-28 0000853816 lstr:TransportationLogisticsMember 2017-12-31 2018-09-29 0000853816 lstr:InsuranceMember 2017-12-31 2018-09-29 0000853816 lstr:DevelopmentOfPriorYearSelfInsuredClaimsEstimatesMember 2017-12-31 2018-09-29 0000853816 us-gaap:RestrictedStockUnitsRSUMember 2017-12-31 2018-09-29 0000853816 us-gaap:EmployeeStockOptionMember 2017-12-31 2018-09-29 0000853816 lstr:BcoIndependentContractorMember 2017-12-31 2018-09-29 0000853816 lstr:TruckBrokerageCarriersMember 2017-12-31 2018-09-29 0000853816 lstr:RailroadsMember 2017-12-31 2018-09-29 0000853816 lstr:AirAndOceanCargoCarriersMember 2017-12-31 2018-09-29 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:VanEquipmentMember 2017-12-31 2018-09-29 0000853816 lstr:UnsidedPlatformEquipmentMember lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember 2017-12-31 2018-09-29 0000853816 lstr:BcoIndependentContractorAndTruckBrokerageCarriersMember lstr:LessThanTruckloadMember 2017-12-31 2018-09-29 0000853816 us-gaap:RetainedEarningsMember 2018-12-30 2019-03-30 0000853816 us-gaap:NoncontrollingInterestMember 2018-12-30 2019-03-30 0000853816 us-gaap:TreasuryStockMember 2018-12-30 2019-03-30 0000853816 us-gaap:AdditionalPaidInCapitalMember 2018-12-30 2019-03-30 0000853816 us-gaap:CommonStockMember 2018-12-30 2019-03-30 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-30 2019-03-30 0000853816 us-gaap:RetainedEarningsMember 2019-03-31 2019-06-29 0000853816 us-gaap:TreasuryStockMember 2019-03-31 2019-06-29 0000853816 us-gaap:CommonStockMember 2019-03-31 2019-06-29 0000853816 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 2019-06-29 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 2019-06-29 0000853816 us-gaap:RetainedEarningsMember 2017-12-31 2018-03-31 0000853816 us-gaap:NoncontrollingInterestMember 2017-12-31 2018-03-31 0000853816 us-gaap:TreasuryStockMember 2017-12-31 2018-03-31 0000853816 us-gaap:CommonStockMember 2017-12-31 2018-03-31 0000853816 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 2018-03-31 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 2018-03-31 0000853816 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0000853816 us-gaap:NoncontrollingInterestMember 2018-04-01 2018-06-30 0000853816 us-gaap:TreasuryStockMember 2018-04-01 2018-06-30 0000853816 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0000853816 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0000853816 lstr:TransportationLogisticsMember 2018-09-29 0000853816 us-gaap:CommonStockMember 2019-09-28 0000853816 us-gaap:TreasuryStockMember 2019-09-28 0000853816 us-gaap:AdditionalPaidInCapitalMember 2019-09-28 0000853816 us-gaap:RetainedEarningsMember 2019-09-28 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-28 0000853816 us-gaap:CommonStockMember 2018-09-29 0000853816 us-gaap:TreasuryStockMember 2018-09-29 0000853816 us-gaap:AdditionalPaidInCapitalMember 2018-09-29 0000853816 us-gaap:RetainedEarningsMember 2018-09-29 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-29 0000853816 us-gaap:NoncontrollingInterestMember 2018-09-29 0000853816 us-gaap:RestrictedStockUnitsRSUMember 2018-12-29 0000853816 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-29 0000853816 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-29 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-29 0000853816 lstr:NonVestedRestrictedStockAndDeferredStockUnitsMember 2018-12-29 0000853816 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-09-28 0000853816 us-gaap:AccumulatedTranslationAdjustmentMember 2019-09-28 0000853816 us-gaap:CommonStockMember 2018-12-29 0000853816 us-gaap:TreasuryStockMember 2018-12-29 0000853816 us-gaap:AdditionalPaidInCapitalMember 2018-12-29 0000853816 us-gaap:RetainedEarningsMember 2018-12-29 0000853816 us-gaap:NoncontrollingInterestMember 2018-12-29 0000853816 us-gaap:CommonStockMember 2019-03-30 0000853816 us-gaap:TreasuryStockMember 2019-03-30 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-30 0000853816 us-gaap:AdditionalPaidInCapitalMember 2019-03-30 0000853816 us-gaap:RetainedEarningsMember 2019-03-30 0000853816 us-gaap:TreasuryStockMember 2019-06-29 0000853816 us-gaap:CommonStockMember 2019-06-29 0000853816 us-gaap:AdditionalPaidInCapitalMember 2019-06-29 0000853816 us-gaap:RetainedEarningsMember 2019-06-29 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-29 0000853816 us-gaap:CommonStockMember 2017-12-30 0000853816 us-gaap:TreasuryStockMember 2017-12-30 0000853816 us-gaap:AdditionalPaidInCapitalMember 2017-12-30 0000853816 us-gaap:RetainedEarningsMember 2017-12-30 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-30 0000853816 us-gaap:NoncontrollingInterestMember 2017-12-30 0000853816 us-gaap:RetainedEarningsMember 2018-03-31 0000853816 us-gaap:CommonStockMember 2018-03-31 0000853816 us-gaap:TreasuryStockMember 2018-03-31 0000853816 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0000853816 us-gaap:NoncontrollingInterestMember 2018-03-31 0000853816 us-gaap:CommonStockMember 2018-06-30 0000853816 us-gaap:TreasuryStockMember 2018-06-30 0000853816 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0000853816 us-gaap:RetainedEarningsMember 2018-06-30 0000853816 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000853816 us-gaap:NoncontrollingInterestMember 2018-06-30 iso4217:USD xbrli:shares xbrli:pure iso4217:USD xbrli:shares lstr:EquityPlan lstr:Customer
Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM
10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the quarterly period ended September 28, 2019
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:
0-21238
 
 
 
 
LANDSTAR SYSTEM, INC.
(Exact name of registrant as specified in its charter)
 
     
Delaware
 
06-1313069
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13410 Sutton Park Drive South, Jacksonville, Florida
(Address of principal executive offices)
32224
(Zip Code)
(904)
398-9400
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
         
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common Stock
 
LSTR
 
NASDAQ
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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  
    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files):    Yes  
    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule
12b-2
of the Exchange Act. (Check one):
             
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated filer
 
 
Smaller reporting company
 
             
 
 
Emerging growth company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  
    No  
The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of the close of business on October 21, 2019 was 39,462,908.
 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Table of Contents
Index
         
 
 
 
 
 
 
 
 
Page 3
 
 
 
 
 
 
 
 
Page 4
 
 
 
 
 
 
 
 
Page 5
 
 
 
 
 
 
 
 
Page 6
 
 
 
 
 
 
 
 
Page 7
 
 
 
 
 
 
 
 
Page 8
 
 
 
 
 
 
 
 
Page 10
 
 
 
 
 
 
 
 
Page 19
 
 
 
 
 
 
 
 
Page 30
 
 
 
 
 
 
 
 
Page 31
 
 
 
 
 
 
         
 
 
 
 
 
 
 
Page 31
 
 
 
 
 
 
 
 
Page 32
 
 
 
 
 
 
 
 
Page 33
 
 
 
 
 
 
 
 
Page 34
 
 
 
 
 
 
 
 
Page 36
 
 
 
 
 
 
EX – 31.1 Section 302 CEO Certification
 
 
 
 
 
 
 
 
EX – 31.2 Section 302 CFO Certification
 
 
 
 
 
 
 
 
EX – 32.1 Section 906 CEO Certification
 
 
 
 
 
 
 
 
EX – 32.2 Section 906 CFO Certification
 
 
 
 
 
 
 
 
 
 

Table of Contents
PART I -
FINANCIAL INFORMATION
Item 1. Financial Statements
The interim consolidated financial statements contained herein reflect all adjustments (all of a normal, recurring nature) which, in the opinion of management, are necessary for a fair statement of the financial condition, results of operations, cash flows and changes in equity for the periods presented. They have been prepared in accordance with Rule
10-01
of Regulation
S-X
and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the thirty nine weeks ended September 28, 2019 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 28, 2019.
These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2018 Annual Report on Form
10-K.
 
3
 

 
Table of Contents
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
 
September 28,
2019
 
 
December 29,
2018
 
ASSETS
   
     
 
Current Assets
   
     
 
Cash and cash equivalents
  $
284,434
    $
199,736
 
Short-term investments
   
31,596
     
40,058
 
Trade accounts receivable, less allowance of $7,296 and $6,413
   
598,415
     
691,604
 
Other receivables, including advances to independent contractors, less allowance of $8,593 and $6,216
   
25,384
     
23,744
 
Other current assets
   
30,921
     
16,287
 
                 
Total current assets
   
970,750
     
971,429
 
                 
Operating property, less accumulated depreciation and amortization of $274,000 and $250,153
   
270,430
     
284,032
 
Goodwill
   
38,232
     
38,232
 
Other assets
   
106,319
     
86,871
 
                 
Total assets
  $
1,385,731
    $
1,380,564
 
                 
LIABILITIES AND EQUITY
   
     
 
Current Liabilities
   
     
 
Cash overdraft
  $
44,625
    $
55,339
 
Accounts payable
   
285,442
     
314,134
 
Current maturities of long-term debt
   
39,375
     
43,561
 
Insurance claims
   
51,320
     
40,176
 
Accrued compensation
   
10,477
     
29,489
 
Contractor escrow
   
25,521
     
25,202
 
Other current liabilities
   
26,996
     
27,917
 
                 
Total current liabilities
   
483,756
     
535,818
 
                 
Long-term debt, excluding current maturities
   
61,390
     
84,864
 
Insurance claims
   
33,024
     
30,429
 
Deferred income taxes and other noncurrent liabilities
   
51,586
     
40,320
 
Equity
   
     
 
Landstar System, Inc. and subsidiary shareholders’ equity
   
     
 
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,072,834 and 67,870,926 shares
   
681
     
679
 
Additional
paid-in
capital
   
225,937
     
226,852
 
Retained earnings
   
1,998,362
     
1,841,279
 
Cost of 28,609,926 and 27,755,001 shares of common stock in treasury
   
(1,465,284
)    
(1,376,111
)
Accumulated other comprehensive loss
   
(3,721
)    
(5,875
)
                 
Total Landstar System, Inc. and subsidiary shareholders’ equity
   
755,975
     
686,824
 
Noncontrolling interest
   
     
2,309
 
                 
Total equity
   
755,975
     
689,133
 
                 
Total liabilities and equity
  $
1,385,731
    $
1,380,564
 
                 
See accompanying notes to consolidated financial statements.
 
4
 

 
Table of Contents
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
                                 
 
Thirty Nine Weeks Ended
   
Thirteen Weeks Ended
 
 
September 28,
2019
 
 
September 29,
2018
 
 
September 28,
2019
 
 
September 29,
2018
 
Revenue
  $
3,089,698
    $
3,432,793
    $
1,011,658
    $
1,202,081
 
Investment income
   
3,736
     
2,754
     
1,315
     
1,002
 
Costs and expenses:
   
     
     
     
 
Purchased transportation
   
2,365,646
     
2,658,710
     
774,520
     
931,473
 
Commissions to agents
   
257,862
     
275,828
     
84,568
     
99,304
 
Other operating costs, net of gains/losses on asset sales/dispositions
   
28,531
     
24,176
     
10,431
     
8,966
 
Insurance and claims
   
55,248
     
57,718
     
23,969
     
18,819
 
Selling, general and administrative
   
120,717
     
140,948
     
38,152
     
46,699
 
Depreciation and amortization
   
33,045
     
32,520
     
10,695
     
10,754
 
                                 
Total costs and expenses
   
2,861,049
     
3,189,900
     
942,335
     
1,116,015
 
                                 
Operating income
   
232,385
     
245,647
     
70,638
     
87,068
 
Interest and debt expense
   
2,278
     
2,455
     
764
     
816
 
                                 
Income before income taxes
   
230,107
     
243,192
     
69,874
     
86,252
 
Income taxes
   
52,452
     
56,279
     
16,619
     
19,304
 
                                 
Net income
   
177,655
     
186,913
     
53,255
     
66,948
 
Less: Net loss attributable to noncontrolling interest
   
(17
)    
(112
)    
     
(37
)
                                 
Net income attributable to Landstar System, Inc. and subsidiary
  $
177,672
    $
187,025
    $
53,255
    $
66,985
 
                                 
Earnings per common share attributable to Landstar System, Inc. and subsidiary
  $
4.45
    $
4.50
    $
1.35
    $
1.63
 
                                 
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary
  $
4.45
    $
4.50
    $
1.35
    $
1.63
 
                                 
Average number of shares outstanding:
   
     
     
     
 
Earnings per common share
   
39,891,000
     
41,530,000
     
39,566,000
     
41,101,000
 
                                 
Diluted earnings per share
   
39,891,000
     
41,576,000
     
39,566,000
     
41,137,000
 
                                 
Dividends per common share
  $
0.515
    $
0.465
    $
0.185
    $
0.165
 
                                 
 
 
 
 
 
 
See accompanying notes to consolidated financial statements.
 
5
 

 
Table of Contents
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
                                 
 
Thirty Nine Weeks Ended
   
Thirteen Weeks Ended
 
 
September 28,
2019
 
 
September 29,
2018
 
 
September 28,
2019
 
 
September 29,
2018
 
Net income attributable to Landstar System, Inc. and subsidiary
  $
177,672
    $
187,025
    $
53,255
    $
66,985
 
Other comprehensive income (loss):
   
     
     
     
 
Unrealized holding gains (losses) on
available-for-sale
investments, net of tax expense (benefit) of $577, ($231), $83 and $2
   
2,112
     
(876
)    
307
     
7
 
Foreign currency translation gains (losses)
   
42
     
(531
)    
(1,083
)    
708
 
                                 
Other comprehensive income (loss)
   
2,154
     
(1,407
)    
(776
)    
715
 
                                 
Comprehensive income attributable to Landstar System, Inc. and subsidiary
  $
179,826
    $
185,618
    $
52,479
    $
67,700
 
                                 
 
 
 
 
See accompanying notes to consolidated financial statements.
 
6
 

 
Table of Contents
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
                 
 
Thirty Nine Weeks Ended
 
 
September 28,
2019
 
 
September 29,
2018
 
OPERATING ACTIVITIES
   
     
 
Net income
  $
177,655
    $
186,913
 
Adjustments to reconcile net income to net cash provided by operating activities:
   
     
 
Depreciation and amortization of operating property and intangible assets
   
33,045
     
32,520
 
Non-cash
interest charges
   
190
     
190
 
Provisions for losses on trade and other accounts receivable
   
6,942
     
5,360
 
Gains on sales/disposals of operating property
   
(1,188
)    
(1,025
)
Deferred income taxes, net
   
7,151
     
7,459
 
Stock-based compensation
   
4,470
     
13,003
 
Changes in operating assets and liabilities:
   
     
 
Decrease (increase) in trade and other accounts receivable
   
84,607
     
(60,785
)
Increase in other assets
   
(21,129
)    
(9,779
)
(Decrease) increase in accounts payable
   
(28,692
)    
22,121
 
(Decrease) increase in other liabilities
   
(16,076
)    
3,245
 
Increase in insurance claims
   
13,739
     
4,983
 
                 
NET CASH PROVIDED BY OPERATING ACTIVITIES
   
260,714
     
204,205
 
                 
INVESTING ACTIVITIES
   
     
 
Sales and maturities of investments
   
56,467
     
34,259
 
Purchases of investments
   
(58,829
)    
(36,296
)
Purchases of operating property
   
(15,199
)    
(7,325
)
Proceeds from sales of operating property
   
3,621
     
3,542
 
                 
NET CASH USED BY INVESTING ACTIVITIES
   
(13,940
)    
(5,820
)
                 
FINANCING ACTIVITIES
   
     
 
Decrease in cash overdraft
   
(10,714
)    
(2,483
)
Dividends paid
   
(20,589
)    
(82,261
)
Proceeds from exercises of stock options
   
629
     
1,397
 
Taxes paid in lieu of shares issued related to stock-based compensation plans
   
(8,449
)    
(3,936
)
Purchases of common stock
   
(88,578
)    
(105,488
)
Principal payments on finance lease obligations
   
(34,141
)    
(32,663
)
Purchase of noncontrolling interest
   
(600
)    
—  
 
Payment of contingent consideration
   
     
(985
)
                 
NET CASH USED BY FINANCING ACTIVITIES
   
(162,442
)    
(226,419
)
                 
Effect of exchange rate changes on cash and cash equivalents
   
366
     
(408
)
                 
Increase (decrease) in cash and cash equivalents
   
84,698
     
(28,442
)
Cash and cash equivalents at beginning of period
   
199,736
     
242,416
 
                 
Cash and cash equivalents at end of period
  $
284,434
    $
213,974
 
                 
 
 
 
 
 
 
See accompanying notes to consolidated financial statements.
 
7
 

 
Table of Contents
 
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Thirty Nine and Thirteen Weeks Ended September 28, 2019 and September 29, 2018
(Dollars in thousands)
(Unaudited)
                                                                         
 
Landstar System, Inc. and Subsidiary Shareholders
 
 
 
 
 
 
 
 
 
Additional
Paid-In
Capital
 
 
Retained
Earnings
 
 
 
 
 
Accumulated
Other
Comprehensive
(Loss) Income
 
 
Non-controlling
Interests
 
 
 
 
Common Stock
 
Treasury Stock at Cost
 
 
 
Shares
 
 
Amount
 
Shares
 
 
Amount
 
Total
 
Balance December 29, 2018
 
 
67,870,962
 
 
$
679
 
 
$
226,852
 
 
$
1,841,279
 
 
 
27,755,001
 
 
$
(1,376,111
)
 
$
(5,875
)
 
$
2,309
 
 
$
689,133
 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
63,317
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(17
)
 
 
63,300
 
Dividends ($0.165 per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6,629
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6,629
)
Purchases of common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
124,481
 
 
 
(12,977
)
 
 
 
 
 
 
 
 
 
 
(12,977
)
Purchase of noncontrolling interests
 
 
 
 
 
 
 
 
 
 
1,842
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2,442
)
 
 
(600
)
Issuance of stock related to stock-based compensation plans
 
 
176,079
 
 
 
1
 
 
 
(7,081
)
 
 
 
 
 
 
5,199
 
 
 
(524
)
 
 
 
 
 
 
 
 
 
 
(7,604
)
Stock-based compensation
 
 
 
 
 
 
 
 
 
 
1,938
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,938
 
Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,549
 
 
 
150
 
 
 
1,699
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance March 30, 2019
 
 
68,047,041
 
 
$
680
 
 
$
223,551
 
 
$
1,897,967
 
 
 
27,884,681
 
 
$
(1,389,612
)
 
$
(4,326
)
 
$
 
 
$
728,260
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
61,100
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
61,100
 
Dividends ($0.165 per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6,628
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6,628
)
Purchases of common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
549,929
 
 
 
(56,752
)
 
 
 
 
 
 
 
 
 
 
(56,752
)
Issuance of stock related to stock-based compensation plans
 
 
17,836
 
 
 
1
 
 
 
(431
)
 
 
 
 
 
 
572
 
 
 
(61
)
 
 
 
 
 
 
 
 
 
 
(491
)
Stock-based compensation
 
 
 
 
 
 
 
 
 
 
1,430
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,430
 
Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,381
 
 
 
 
 
 
 
1,381
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance June 29, 2019
 
 
68,064,877
 
 
$
681
 
 
$
224,550
 
 
$
1,952,439
 
 
 
28,435,182
 
 
$
(1,446,425
)
 
$
(2,945
)
 
$
 
 
$
728,300
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53,255
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53,255
 
Dividends ($0.185 per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,332
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,332
)
Purchases of common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
174,658
 
 
 
(18,849
)
 
 
 
 
 
 
 
 
 
 
(18,849
)
Issuance of stock related to stock-based compensation plans
 
 
7,957