JACKSONVILLE, Fla., Jan. 28 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported 2008 fourth quarter net income of $24.6 million, or $0.47 per diluted share, on revenue of $603.8 million compared to net income of $29.0 million, or $0.54 per diluted share, on revenue of $642.9 million in the 2007 fourth quarter.

Revenue hauled by BCO Independent Contractors in the fourth quarter of 2008 was $317 million, or 53 percent of revenue, compared to $341 million, or 53 percent of revenue, in the 2007 fourth quarter. In the 2008 and 2007 fourth quarters, the Company invoiced customers $55 million and $54 million, respectively, in fuel surcharges that were passed on 100 percent to BCO Independent Contractors and excluded from revenue. Revenue hauled by third- party truck brokerage carriers was $230 million, or 38 percent of revenue, in the 2008 fourth quarter compared to $236 million, or 37 percent of revenue, in the 2007 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $47 million, or 8 percent of revenue, in the 2008 fourth quarter compared to $54 million, or 8 percent of revenue, in the 2007 fourth quarter.

Revenue in the fiscal year ended December 27, 2008 was $2.643 billion compared to $2.487 billion in the 2007 fiscal year. Net income for the 2008 fiscal year was $110.9 million, or $2.10 per diluted share, compared to net income of $109.7 million, or $1.99 per diluted share, for fiscal year 2007.

Revenue hauled by BCO Independent Contractors in the 2008 fiscal year was $1.388 billion, or 53 percent of revenue, compared to $1.377 billion, or 55 percent of revenue, in 2007. In fiscal years 2008 and 2007, the Company invoiced customers $295 million and $179 million, respectively, in fuel surcharges that were passed on 100 percent to BCO Independent Contractors and excluded from revenue. Revenue hauled by third-party truck brokerage carriers was $996 million, or 38 percent of revenue, in fiscal year 2008 compared to $885 million, or 36 percent of revenue, in fiscal year 2007. Revenue hauled by rail, air and ocean cargo carriers was $193 million, or 7 percent of revenue, in fiscal year 2008 compared to $180 million, or 7 percent of revenue, in fiscal year 2007.

Landstar System, Inc. announced that its Board of Directors has declared a quarterly dividend of $0.04 per share. The dividend is payable on February 27, 2009 to stockholders of record at the close of business on February 6, 2009. It is the intention of the Board of Directors to continue to pay a quarterly dividend. In addition, Landstar System, Inc. announced that its Board of Directors authorized the purchase of an additional 1,569,000 shares of its common stock from time to time in the open market and in privately negotiated transactions. During the 2008 fourth quarter, Landstar purchased approximately 724,000 shares of its common stock at a total cost of $23.1 million bringing the total number of shares purchased during fiscal year 2008 to 1,304,000 at an aggregate cost of $51.6 million. Currently, there are approximately 3,000,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program.

"Landstar's 2008 fourth quarter revenue was significantly impacted by lower freight demand related to the severe downturn in the domestic and global economies," said Landstar President and Chief Executive Officer Henry Gerkens. "The number of loads hauled by BCO Independent Contractors, truck brokerage carriers and rail intermodal carriers were each below the number of loads hauled by each of these modes during the 2007 fourth quarter. Pricing, based on rate per load, also softened throughout the quarter as weak freight demand created additional excess capacity. However, rate per load in the 2008 fourth quarter continued to exceed prior year rates, and the current environment continues to present Landstar with great opportunities in adding new agents and capacity."

"Regardless of the current economic environment, Landstar's non-asset based variable cost business model continues to generate significant cash flow and outstanding returns. During the 2008 fourth quarter, cash from operations was $69 million, compared to $29 million in the 2007 fourth quarter. During the 2008 fourth quarter, the Company purchased $23 million of its common stock in the open market while, at the same time, it reduced borrowings on its senior credit facility by $21 million. At December 27, 2008, there was $127 million available for borrowings under the Company's senior credit facility, while the ratio of debt to capital was 35 percent. Since September 2008, cash and short term investments increased $19 million to $122 million at December 27, 2008. Return on average equity for fiscal year 2008 was 48 percent and return on invested capital, net income divided by the sum of average equity plus average debt was 29 percent. Landstar's balance sheet remains strong."

Gerkens continued, "In the last four weeks of 2008, consolidated load volume was 15 percent below the load volumes reported in the corresponding period of 2007. This downward revenue trend has continued into the first few weeks of January but is not necessarily an accurate indicator of the revenue that might be expected for the entire fiscal year. At this time, due to the uncertainty of the current economic environment and related weak freight demand, and the difficulty in forecasting when there may be a pickup in overall economic activity, Landstar will not be providing 2009 revenue and earnings guidance. However, as an example of how Landstar's variable cost business model would react under certain negative assumptions, it is worth noting that if one were to assume fiscal year 2009 Company revenue performance of a twenty percent decline to flat compared to fiscal year 2008, and taking into account certain cost reduction actions taken by the Company, Landstar should generate diluted earnings per share in a range of $1.65 to $2.12. This in no way should be interpreted as any sort of guidance, but rather a demonstration of the resiliency of our model and that Landstar's ability to generate earnings is somewhat insulated from possible effects of a prolonged recession."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 4:15 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 Fourth Quarter 2008 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 2007 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. delivers safe, specialized transportation and logistics services to a broad range of customers worldwide. The Company identifies and fulfills shippers' needs through the coordination of individual businesses comprised of independent sales agents and third-party transportation and logistics capacity providers. Through its operating subsidiaries, Landstar delivers excellence in complete transportation logistics services and solutions. All Landstar operating companies are certified to ISO 9001:2000 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.

                               (Tables follow)



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

                                 Fiscal Year Ended      Thirteen Weeks Ended
                                Dec. 27,    Dec. 29,    Dec. 27,    Dec. 29,
                                  2008        2007        2008        2007

    Revenue                    $2,643,069  $2,487,277    $603,837    $642,865
    Investment income               3,339       5,347         653       1,244

    Costs and expenses:
      Purchased transportation  2,033,384   1,884,207     460,175     489,426
      Commissions to agents       203,058     200,630      49,201      52,056
      Other operating costs        28,033      28,997       7,219       7,789
      Insurance and claims         36,374      49,832       9,215      10,954
      Selling, general and
       administrative             137,758     125,177      32,301      30,175
      Depreciation and
       amortization                20,960      19,088       5,402       5,043

         Total costs and
          expenses              2,459,567   2,307,931     563,513     595,443

    Operating income              186,841     184,693      40,977      48,666
    Interest and debt expense       7,351       6,685       1,716       2,221

    Income before income taxes    179,490     178,008      39,261      46,445
    Income taxes                   68,560      68,355      14,656      17,414

    Net income                   $110,930    $109,653     $24,605     $29,031


    Earnings per common share       $2.11       $2.01       $0.47       $0.55

    Diluted earnings per share      $2.10       $1.99       $0.47       $0.54

    Average number of shares
     outstanding:
      Earnings per common
       share                   52,503,000  54,681,000  51,973,000  53,062,000
      Diluted earnings per
       share                   52,854,000  55,156,000  52,197,000  53,422,000

    Dividends paid per common
     share                        $0.1550     $0.1350     $0.0400     $0.0375



                            Landstar System, Inc.
                         Selected Segment Information
                            (Dollars in thousands)
                                 (Unaudited)

                                     Fiscal Year Ended    Thirteen Weeks Ended
                                    Dec. 27,    Dec. 29,   Dec. 27,  Dec. 29,
                                      2008        2007       2008      2007

     Revenue

     Transportation logistics
      segment                      $2,606,216  $2,450,411  $594,450  $633,660
     Insurance segment                 36,853      36,866     9,387     9,205

        Revenue                    $2,643,069  $2,487,277  $603,837  $642,865


     Operating Income

     Transportation logistics
      segment                        $148,385    $150,638   $30,214   $40,197
     Insurance segment                 38,456      34,055    10,763     8,469

        Operating income             $186,841    $184,693   $40,977   $48,666



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

                                                 Dec. 27,           Dec. 29,
                                                   2008               2007
    ASSETS
    Current assets:
      Cash and cash equivalents                    $98,904            $60,750
      Short-term investments                        23,479             22,921
      Trade accounts receivable, less
       allowance of $6,230 and $4,469              315,065            310,258
      Other receivables, including
       advances to independent
        contractors, less allowance of
         $4,298 and $4,792                          10,083             11,170
      Deferred income taxes and other
       current assets                               27,871             28,554
        Total current assets                       475,402            433,653

    Operating property, less accumulated
     depreciation and amortization of
     $106,635 and $88,284                          124,178            132,369
    Goodwill                                        31,134             31,134
    Other assets                                    32,816             31,845
    Total assets                                  $663,530           $629,001

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Cash overdraft                               $32,065            $25,769
      Accounts payable                             105,882            117,122
      Current maturities of long-term debt          24,693             23,155
      Insurance claims                              23,545             28,163
      Accrued income taxes                          12,239             14,865
      Other current liabilities                     38,161             40,501
        Total current liabilities                  236,585            249,575

    Long-term debt, excluding current
     maturities                                    111,752            141,598
    Insurance claims                                38,278             37,631
    Deferred income taxes                           23,779             19,411

    Shareholders' equity:
      Common stock, $0.01 par value,
       authorized 160,000,000 shares,
       issued 66,109,547 and 65,630,383
       shares                                          661                656
      Additional paid-in capital                   154,533            132,788
      Retained earnings                            704,331            601,537
      Cost of 14,424,887 and 13,121,109
       shares of common stock in treasury         (605,828)          (554,252)
      Accumulated other comprehensive
       income/(loss)                                  (561)                57
        Total shareholders' equity                 253,136            180,786
    Total liabilities and shareholders'
     equity                                       $663,530           $629,001



                            Landstar System, Inc.
                           Supplemental Information
                                 (Unaudited)

                                     Fiscal Year Ended    Thirteen Weeks Ended
                                    Dec. 27,    Dec. 29,   Dec. 27,  Dec. 29,
                                      2008        2007       2008      2007
    Revenue generated through
     (in thousands):

       Business Capacity Owners
        (1)                        $1,388,353  $1,377,083  $317,371  $340,928
       Truck Brokerage Carriers       996,269     884,577   230,007   236,310
       Rail intermodal                136,367     133,878    29,431    41,947
       Ocean cargo carriers            42,153      26,498    12,824     7,807
       Air cargo carriers              14,891      19,692     4,756     4,280
       Other (2)                       65,036      45,549     9,448    11,593
                                   $2,643,069  $2,487,277  $603,837  $642,865


    Number of loads:

       Business Capacity Owners
        (1)                           820,680     857,200   182,350   210,480
       Truck Brokerage Carriers       571,600     588,660   136,350   147,650
       Rail intermodal                 58,510      62,720    12,900    19,480
       Ocean cargo carriers             5,380       4,620     1,390     1,290
       Air cargo carriers               8,260      11,600     2,740     2,340
                                    1,464,430   1,524,800   335,730   381,240


    Revenue per load:

       Business Capacity Owners
        (1)                            $1,692      $1,606    $1,740    $1,620
       Truck Brokerage Carriers         1,743       1,503     1,687     1,600
       Rail intermodal                  2,331       2,135     2,281     2,153
       Ocean cargo carriers             7,835       5,735     9,226     6,052
       Air cargo carriers               1,803       1,698     1,736     1,829


                                                           Dec. 27,  Dec. 29,
                                                             2008      2007
    Truck Capacity

       Business Capacity Owners (1) (3)                       8,455     8,403
       Truck Brokerage Carriers:
            Approved and active (4)                          16,135    16,053
            Approved                                         10,036     9,362
                                                             26,171    25,415
       Total available truck capacity providers              34,626    33,818

    Agent Locations                                           1,428     1,397


    (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 revenue generated by the transportation logistics segment.
        Also, included in the 2008 fiscal year was $27,638 of revenue for bus
        capacity provided for evacuation assistance related to the storms that
        impacted the Gulf Coast in September 2008. Included in the 2007 fiscal
        year and thirteen-week periods was $8,511 and $2,302, respectively, of
        revenue derived from transportation services provided in support of
        disaster relief efforts provided under a contract between Landstar
        Express America, Inc. and the United States Department of
        Transportation/Federal Aviation Administration.

    (3) Trucks provided by Business Capacity Owners were 9,039 and 8,993 at
        December 27, 2008 and December 29, 2007, respectively.

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

SOURCE Landstar System, Inc.
CONTACT: Jim Gattoni of Landstar System, Inc., +1-904-398-9400
Web site: http://www.landstar.com
(LSTR)