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Landstar System Reports 31 Percent Increase in Revenue and a 40 Percent Increase in Diluted Earnings Per Share
07/14/10
04:02 PM EDT

JACKSONVILLE, Fla., July 14, 2010 /PRNewswire via COMTEX/ --

Landstar System, Inc. (Nasdaq: LSTR) reported a 31 percent increase in revenue to $641.7 million in the 2010 second quarter, up from $491.2 million in the 2009 second quarter. Net income for the 2010 second quarter was $24.4 million, or $0.49 per diluted share, compared to $17.9 million, or $0.35 per diluted share for the 2009 second quarter. Operating income increased 34 percent to $40.0 million in the 2010 second quarter compared to $29.8 million in the 2009 second quarter.

Truck transportation revenue hauled by business capacity owners and truck brokerage carriers in the 2010 second quarter was $592.0 million, or 92 percent of revenue, compared to $453.8 million, or 92 percent of revenue, in the 2009 second quarter. Included in revenue hauled by truck brokerage carriers in the 2010 and 2009 second quarters were $23.1 million and $9.2 million, respectively, of fuel surcharges invoiced to customers. In the 2010 and 2009 second quarters, the Company also invoiced customers $53.1 million and $27.3 million, respectively, of fuel surcharges that were passed 100 percent to business capacity owners and excluded from revenue. Revenue hauled by rail, air and ocean cargo carriers was $35.0 million, or 6 percent of revenue, in the 2010 second quarter compared to $28.2 million, or 6 percent of revenue, in the 2009 second quarter. Transportation management fee revenue generated by the supply chain solutions companies was $6.1 million, or 1 percent of revenue, in the 2010 second quarter.

Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.05 per share. This represents an 11 percent increase in the Company's quarterly dividend. The dividend is payable on August 27, 2010 to stockholders of record at the close of business on August 9, 2010. It is the intention of the Board of Directors to continue to pay a quarterly dividend. During the 2010 second quarter, Landstar purchased 510,062 shares of its common stock at a total cost of $20.6 million. Under the Company's authorized share purchase program, the Company currently has a total of 745,000 shares of its common stock available for purchase.

Commenting on Landstar's 2010 second quarter, Landstar's Chairman, President and CEO, Henry Gerkens said, "I am very pleased with the Company's performance in the 2010 second quarter. 2010 second quarter revenue, operating income and diluted earnings per share all increased sharply over the corresponding 2009 second quarter amounts. Revenue increased 31 percent due to stronger volumes and pricing, operating income increased 34 percent, despite higher purchased transportation costs and insurance and claims costs, and diluted earnings per share increased 40 percent. The total number of truck transportation loads hauled by business capacity owners and truck brokerage carriers in the 2010 second quarter was the highest reported number of truck transportation loads hauled by business capacity owners and truck brokerage carriers in any quarter of any year in Landstar's history. Additionally, from a pricing standpoint, revenue per load for truck transportation on freight hauled by business capacity owners and truck brokerage carriers continued to strengthen as we moved through the 2010 second quarter.

"The overall freight environment continues to be strong. Recent trends in June, and thus far in July, indicate that both the revenue per load and the number of loads hauled remain strong compared to the corresponding prior year periods. I expect these trends to continue throughout the 2010 third quarter. I would anticipate 2010 third quarter results to be similar to those experienced in the 2010 second quarter. As such, I expect 2010 third quarter revenue to increase in a range of 25 percent to 33 percent over 2009 third quarter revenue and diluted earnings per share to be in a range of $0.47 to $0.52."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 5 pm ET. To access the webcast, visit the Company's website at www.landstar.com; click on "Investor Relations" and "Webcasts," then click on "Landstar's Second Quarter 2010 Earnings Release Conference Call."

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this press release that are not based on historical facts are "forward-looking statements". This press release contains forward-looking statements, such as statements which relate to Landstar's business objectives, plans, strategies, expectations and intentions. Terms such as "anticipates," "believes," "estimates," "intention," "plans," "predicts," "may," "should," "will," the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: an increase in the frequency or severity of accidents or workers' compensation claims; unfavorable development of existing claims; dependence on independent sales agents; dependence on third-party capacity providers; disruptions or failures in our computer systems; a downturn in domestic or international economic growth or growth in the transportation sector; substantial industry competition; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2009 fiscal year, described in Item 1A Risk Factors, and other SEC filings from time-to-time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking statements, and Landstar undertakes no obligation to publicly update or revise any forward-looking statements.

About Landstar:

Landstar System, Inc. is a non-asset based provider of integrated supply chain solutions. Landstar delivers safe, specialized transportation, warehousing and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees. All Landstar transportation companies are certified to ISO 9001:2008 quality management system standards. Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market(R) under the symbol LSTR.

                        Landstar System, Inc. and Subsidiary
                         Consolidated Statements of Income
                  (Dollars in thousands, except per share amounts)
                                    (Unaudited)

                        Twenty Six Weeks Ended Thirteen Weeks Ended
                        ---------------------- --------------------
                        June 26,        June 27,   June 26,     June 27,
                              2010            2009       2010         2009
                              ----            ----       ----         ----

    Revenue             $1,189,809        $960,411   $641,721     $491,164
    Investment income          574             675        289          250

    Costs and
     expenses:
      Purchased
       transportation      907,290         717,891    490,089      366,567
      Commissions to
       agents               87,379          78,251     46,971       39,927
      Other operating
       costs                15,504          14,838      7,968        7,388
      Insurance and
       claims               26,129          18,799     13,831        9,797
      Selling, general
       and
       administrative       73,816          66,612     36,973       32,243
      Depreciation and
       amortization         11,988          11,201      6,196        5,716
                            ------          ------      -----        -----

        Total costs and
         expenses        1,122,106         907,592    602,028      461,638
                         ---------         -------    -------      -------

    Operating income        68,277          53,494     39,982       29,776
    Interest and debt
     expense                 1,664           2,136        810          973
                             -----           -----        ---          ---

    Income before
     income taxes           66,613          51,358     39,172       28,803
    Income taxes            25,446          19,607     14,962       10,946


    Net income              41,167          31,751     24,210       17,857
    Less: Net loss
     attributable to
      noncontrolling
       interest               (446)              -       (227)           -
                              ----             ---       ----          ---
    Net income
     attributable to
     Landstar System,
      Inc. and
       subsidiary          $41,613         $31,751    $24,437      $17,857
                           =======         =======    =======      =======

    Earnings per
     common share
     attributable to
      Landstar System,
       Inc. and
       subsidiary            $0.83           $0.62      $0.49        $0.35
                             =====           =====      =====        =====

    Diluted earnings
     per share
     attributable to
      Landstar System,
       Inc. and
       subsidiary            $0.83           $0.61      $0.49        $0.35
                             =====           =====      =====        =====

    Average number of
     shares
     outstanding:
      Earnings per
       common share     50,165,000      51,453,000 50,123,000   51,330,000
                        ==========      ========== ==========   ==========
      Diluted earnings
       per share        50,259,000      51,636,000 50,215,000   51,487,000
                        ==========      ========== ==========   ==========

    Dividends paid per
     common share          $0.0900         $0.0800    $0.0450      $0.0400
                           =======         =======    =======      =======


                Landstar System, Inc. and Subsidiary
                     Consolidated Balance Sheets
          (Dollars in thousands, except per share amounts)
                             (Unaudited)

                                                   June 26,      Dec. 26,
                                                        2010          2009
                                                        ----          ----
    ASSETS
    Current assets:
      Cash and cash equivalents                      $45,081       $85,719
      Short-term investments                          33,156        24,325
      Trade accounts receivable, less allowance
        of $5,597 and $5,547                         338,877       278,854
      Other receivables, including advances to
       independent
        contractors, less allowance of $5,543 and
         $5,797                                     22,119        18,149
      Deferred income taxes and other current
       assets                                       22,232        19,565
                                                    ------        ------
        Total current assets                       461,465       426,612
                                                   -------       -------

    Operating property, less accumulated
     depreciation
          and amortization of $133,957 and $124,810     143,505       116,656
    Goodwill                                        57,470        57,470
    Other assets                                    66,662        48,054
    Total assets                                  $729,102      $648,792
                                                  ========      ========

    LIABILITIES AND EQUITY
    Current liabilities:
      Cash overdraft                               $30,293       $28,919
      Accounts payable                             159,548       121,030
      Current maturities of long-term debt          24,886        24,585
      Insurance claims                              34,902        41,627
      Other current liabilities                     47,180        42,474
                                                    ------        ------
        Total current liabilities                  296,809       258,635
                                                   -------       -------

    Long-term debt, excluding current
     maturities                                     93,956        68,313
    Insurance claims                                30,022        30,680
    Deferred income taxes                           23,368        23,013

    Equity
    Landstar System, Inc. and subsidiary
     shareholders' equity
      Common stock, $0.01 par value, authorized
       160,000,000
        shares, issued 66,487,151 and 66,255,358
         shares                                        665           663
      Additional paid-in capital                   166,292       161,261
      Retained earnings                            803,126       766,040
      Cost of 16,652,344 and 16,022,111 shares
       of common
        stock in treasury                         (685,506)     (660,446)
      Accumulated other comprehensive income           681           498
                                                       ---           ---
        Total Landstar System, Inc. and
         subsidiary shareholders'
        equity                                     285,258       268,016
                                                   -------       -------
    Noncontrolling interest                           (311)          135
                                                      ----           ---
        Total equity                               284,947       268,151
                                                   -------       -------
    Total liabilities and equity                  $729,102      $648,792
                                                  ========      ========


                             Landstar System, Inc. and Subsidiary
                                   Supplemental Information
                                          (Unaudited)

                                               Twenty Six Weeks
                                                    Ended
                                                 ----------------
                                          June 26,         June 27,
                                                2010           2009
                                                ----           ----
    Revenue generated through
     (in thousands):
    -------------------------

      Business Capacity Owners (1)          $631,736       $550,665
      Truck Brokerage Carriers               466,163        329,479
      Rail intermodal                         34,092         36,728
      Ocean cargo carriers                    20,835         17,518
      Air cargo carriers                       8,562          7,508
      Other (2)                               28,421         18,513
                                          $1,189,809       $960,411
                                          ==========       ========


    Number of loads:
    ----------------

      Business Capacity Owners (1)           420,770        365,000
      Truck Brokerage Carriers               308,330        240,020
      Rail intermodal                         15,490         18,290
      Ocean cargo carriers                     3,110          2,590
      Air cargo carriers                       3,130          5,100
                                             750,830        631,000
                                             =======        =======


    Revenue per load:
    -----------------

      Business Capacity Owners (1)            $1,501         $1,509
      Truck Brokerage Carriers                 1,512          1,373
      Rail intermodal                          2,201          2,008
      Ocean cargo carriers                     6,699          6,764
      Air cargo carriers                       2,735          1,472




    Truck Capacity
    --------------

      Business Capacity Owners (1)
       (3)
      Truck Brokerage Carriers:
           Approved and active (4)
           Approved

      Total available truck
       capacity providers

    Agent Locations
    ---------------





                                                    Thirteen Weeks Ended
                                                    --------------------
                                                  June 26,          June 27,
                                                         2010           2009
                                                         ----           ----
    Revenue generated through
     (in thousands):
    -------------------------

      Business Capacity Owners (1)                   $345,595       $288,600
      Truck Brokerage Carriers                        246,408        165,236
      Rail intermodal                                  19,316         17,410
      Ocean cargo carriers                             11,700          8,667
      Air cargo carriers                                3,959          2,121
      Other (2)                                        14,743          9,130
                                                     $641,721       $491,164
                                                     ========       ========


    Number of loads:
    ----------------

      Business Capacity Owners (1)                    223,020        194,350
      Truck Brokerage Carriers                        158,980        122,370
      Rail intermodal                                   8,620          8,710
      Ocean cargo carriers                              1,650          1,350
      Air cargo carriers                                1,630          1,840
                                                      393,900        328,620
                                                      =======        =======


    Revenue per load:
    -----------------

      Business Capacity Owners (1)                     $1,550         $1,485
      Truck Brokerage Carriers                          1,550          1,350
      Rail intermodal                                   2,241          1,999
      Ocean cargo carriers                              7,091          6,420
      Air cargo carriers                                2,429          1,153


                                                  June 26,          June 27,
                                                         2010           2009
                                                         ----           ----
    Truck Capacity
    --------------

      Business Capacity Owners (1)
       (3)                                              7,818          8,286
                                                        -----          -----
      Truck Brokerage Carriers:
           Approved and active (4)                     16,670         14,827
           Approved                                     9,047         11,082
                                                        -----         ------
                                                       25,717         25,909
                                                       ------         ------
      Total available truck
       capacity providers                              33,535         34,195
                                                       ======         ======

    Agent Locations                                     1,343          1,436
    ---------------                                     =====          =====




    (1) Business Capacity Owners are independent contractors who provide
    truck capacity to the Company under exclusive
    lease arrangements.

    (2) Includes premium revenue generated by the insurance segment and
    warehousing and transportation management fee revenue
    generated by the transportation logistics segment.

    (3) Trucks provided by Business Capacity Owners were 8,399 and 8,875
    at June 26, 2010 and June 27, 2009, respectively.

    (4) Active refers to Truck Brokerage Carriers who have moved at least
    one load in the past 180 days.

SOURCE Landstar System, Inc.