UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)

Delaware		021238		06-1313069
(State or other jurisdiction		(Commission		(I.R.S. Employer
of incorporation)		File Number)		Identification No.)
13410 Sutton Park Drive South, Jacksonville, Florida				32224
(Address of principal executive offices)				(Zip Code)

(904) 398-9400
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02 Results of Operations and Financial Condition

On January 31, 2008, Landstar System, Inc. (the “Company”) issued a press release announcing results for the fourth quarter of fiscal 2007. A copy of the press release is attached hereto as Exhibit 99.1.

In the press release attached hereto as Exhibit 99.1, Landstar provided the following information that may be deemed non-GAAP financial measures: (1) percentage change in consolidated revenue for the fiscal year and fiscal quarter ended December 29, 2007, as compared to the fiscal year and fiscal quarter ended December 30, 2006, exclusive of revenue related to transportation services provided primarily under the contract between Landstar Express America, Inc., and the United States Department of Transportation/Federal Aviation Administration (the “FAA Contract”); (2) percentage change in revenue at the global logistics segment for the fiscal quarter ended December 29, 2007, as compared to the fiscal quarter ended December 30, 2006, exclusive of revenue related to transportation services provided primarily under the FAA Contract; (3) percentage change in diluted earnings per share for the fiscal quarter ended December 29, 2007, as compared to fiscal quarter ended December 30, 2006, exclusive of net income related to transportation services provided primarily under the FAA Contract; and (4) with respect to the fiscal year and fiscal quarter ended December 29, 2007, as compared to the fiscal year and fiscal quarter ended December 30, 2006, revenue per load for the global logistics segment, excluding revenue and loads related to transportation services provided primarily under the FAA Contract.

Each of the foregoing financial measures should be considered in addition to, and not as a substitute for, the corresponding GAAP financial information also presented in the press release.

Management believes that it is appropriate to present this financial information for the following reasons: (1) disclosure of these matters will allow investors to better understand the underlying trends in Landstar’s financial condition and results of operations; (2) this information will facilitate comparisons by investors of Landstar’s results as compared to the results of peer companies; (3) a significant portion of the transportation services previously provided under the FAA Contract were provided on the basis of a daily rate for the use of transportation equipment in question, and therefore load and per load information is not necessarily available or appropriate for a significant portion of the related revenue; and (4) management considers this financial information in its decision making.

The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 9.01 Financial Statements and Exhibits

Exhibits

99.1

News Release dated January 31, 2008 of Landstar System, Inc.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT 99.1

For Immediate Release		Contact: Jim Gattoni
		Landstar System, Inc.
		www.landstar.com
January 31, 2008		904-398-9400

LANDSTAR SYSTEM REPORTS INCREASED FOURTH QUARTER REVENUE
AND EARNINGS PER DILUTED SHARE

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported consolidated revenue for the fourth quarter of 2007 of $643 million compared to $611 million for the 2006 fourth quarter. Net income for the thirteen-week period ended December 29, 2007 was $29.0 million, or $0.54 per diluted share, compared to net income of $28.7 million, or $0.50 per diluted share, for the thirteen-week period ended December 30, 2006. Net income included $317 thousand in the 2007 fourth quarter compared to $1.5 million, or $0.03 per diluted share, in the 2006 fourth quarter, from revenue of $2.3 million and $14.7 million in the 2007 and 2006 fourth quarters, respectively, for services provided under the contract between Landstar Express America, Inc. and the United States Department of Transportation/Federal Aviation Administration (the “FAA”). Operating income in the 2007 fourth quarter included $515 thousand of income related to revenue under the FAA contract compared to $2.4 million in the 2006 fourth quarter.

Landstar’s carrier group of companies generated $454 million and $440 million of revenue in the 2007 and 2006 thirteen-week periods, respectively. In the 2007 and 2006 thirteen-week periods, the carrier group invoiced customers $52.1 million and $38.4 million, respectively, in fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar’s global logistics group of companies generated $180 million of revenue in the 2007 thirteen-week period, which included $2.3 million related to transportation services provided under the FAA contract, compared with $162 million of revenue, which included $14.7 million related to

LANDSTAR SYSTEM/2

transportation services provided under the FAA contract, in the 2006 thirteen-week period.

Net income for the fiscal year ended December 29, 2007 was $109.7 million, or $1.99 per diluted share, compared to net income of $113.1 million, or $1.93 per diluted share, in the fiscal year ended 2006. Net income included $1.3 million, or $0.02 per diluted share, in the fiscal year ended 2007 compared to $8.9 million, or $0.15 per diluted share, in the fiscal year ended 2006, from revenue of $8.5 million and $100.7 million in the 2007 and 2006 fiscal years ended, respectively, for services provided under the FAA contract. Operating income in the fiscal year ended 2007 included $2.2 million of income related to revenue under the FAA contract compared to $14.6 million in the fiscal year ended 2006. Overall, consolidated revenue, including revenue under the FAA contract, for the fiscal year ended 2007 was $2.487 billion compared to $2.514 billion for the fiscal year ended 2006. Excluding revenue under the FAA contract from both periods, fiscal year 2007 revenue increased approximately 3 percent over revenue in the 2006 fiscal year.

Landstar’s carrier group of companies generated $1.808 billion of revenue in the fiscal year ended December 29, 2007, compared with $1.797 billion in the fiscal year ended December 30, 2006. In the fiscal years ended 2007 and 2006, the carrier group invoiced customers $173.6 million and $167.8 million, respectively, in fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar’s global logistics group of companies generated $642 million of revenue, which included $8.5 million related to transportation services under the FAA contract, in the fiscal year ended 2007 compared with $683 million of revenue, which included $100.7 million related to the transportation services provided under the FAA contract, in the fiscal year ended 2006.

Landstar System, Inc. announced that its Board of Directors has declared a quarterly dividend of $0.0375 per share. The dividend is payable on February 29, 2008 to stockholders of record at the close of business on February 8, 2008. It is the intention of the Board of Directors to continue to pay a quarterly dividend.

LANDSTAR SYSTEM/3

Commenting on Landstar’s 2007 fourth quarter performance, Landstar’s President and CEO Henry Gerkens said, “Excluding the revenue for services provided under the FAA contract, Landstar’s revenue increased 7.4 percent quarter over quarter. Revenue at the carrier group increased 3 percent, while revenue at Landstar’s global logistics group, excluding FAA revenue from both the 2007 and 2006 fourth quarters, increased an outstanding 20 percent. Additionally, excluding the net income effect of revenue generated under the FAA contract from each of the 2007 and 2006 fourth quarters, Landstar’s diluted earnings per share increased over 12 percent quarter over quarter. Overall, although van pricing remained challenging, market share gains resulted in stronger volumes across both of the company’s operating segments. In short, Landstar had a very good quarter in a difficult freight market.”

“Landstar continues to generate outstanding returns. Trailing twelve month return on average shareholders’ equity remained high at 51 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 33 percent. During the 2007 fourth quarter, Landstar purchased 1,266,000 shares of its common stock at a total cost of $50,441,000 bringing the total number of common shares purchased during the fiscal year ended December 29, 2007 to 4,093,000 at a total cost of $176,590,000. The Company may purchase an additional 734,400 shares of its common stock under its authorized share purchase program.”

Gerkens continued, “January of any given year is typically the slowest month of the year. Nevertheless, through the first part of January 2008, we continued to see volume growth in our core business at a rate consistent with the quarter-over-quarter growth rate experienced in the 2007 fourth quarter. There continues to be pressure on van pricing, however, it appears to be stabilizing. I also anticipate volumes to continue to strengthen.”

“Assuming pricing indeed has stabilized and volumes continue to strengthen, I anticipate revenue for the first quarter of 2008 as compared to the first quarter of 2007 to grow in the mid-to-high single digits, while revenue growth for the full 2008 fiscal year compared to the full fiscal year 2007 to grow in the high single to low double digits. I anticipate Landstar’s earnings for the 2008 first quarter to be within a range of $0.41 to

LANDSTAR SYSTEM/4

$0.46 per diluted share and I anticipate diluted earnings per share for the 2008 full fiscal year to be within a range of $2.00 to $2.25 per share.”

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2 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 2007 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 2006 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 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 capacity providers. Landstar’s carrier group

LANDSTAR SYSTEM/5

delivers excellence in complete over-the-road transportation services. Landstar’s global logistics group provides third party logistics services, including international and domestic multimodal (over-the-road, air, ocean and rail) transportation, contract logistics and warehousing services. Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market^® under the symbol LSTR.

(Tables follow)

LANDSTAR SYSTEM/6

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

		Fiscal Year Ended								Thirteen Weeks Ended
		Dec 29,				Dec 30,				Dec 29,				Dec 30,
		2007				2006				2007				2006
Revenue		$	2,487,277			$	2,513,756			$	642,865			$	611,279
Investment income			5,347				4,250				1,244				1,661
Costs and expenses:
Purchased transportation			1,884,207				1,890,755				489,426				460,344
Commissions to agents			200,630				199,775				52,056				50,081
Other operating costs			28,997				45,700				7,789				8,575
Insurance and claims			49,832				39,522				10,954				9,292
Selling, general and administrative			125,177				134,239				30,175				31,430
Depreciation and amortization			19,088				16,796				5,043				4,566
Total costs and expenses			2,307,931				2,326,787				595,443				564,288
Operating income			184,693				191,219				48,666				48,652
Interest and debt expense			6,685				6,821				2,221				1,871
Income before income taxes			178,008				184,398				46,445				46,781
Income taxes			68,355				71,313				17,414				18,091
Net income		$	109,653			$	113,085			$	29,031			$	28,690
Earnings per common share		$	2.01			$	1.95			$	0.55			$	0.51
Diluted earnings per share		$	1.99			$	1.93			$	0.54			$	0.50
Average number of shares outstanding:
Earnings per common share			54,681,000				57,854,000				53,062,000				56,728,000
Diluted earnings per share			55,156,000				58,654,000				53,422,000				57,328,000
Dividends paid per common share		$	0.1350			$	0.1100			$	0.0375			$	0.0300

LANDSTAR SYSTEM/7

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

		Fiscal Year Ended								Thirteen Weeks Ended
		Dec 29,				Dec 30,				Dec 29,				Dec 30,
		2007				2006				2007				2006
External Revenue
Carrier segment		$	1,808,391			$	1,796,616			$	453,536			$	439,836
Global Logistics segment			642,020				682,542				180,124				162,462
Insurance segment			36,866				34,598				9,205				8,981
External revenue		$	2,487,277			$	2,513,756			$	642,865			$	611,279
Operating Income
Carrier segment		$	180,247			$	181,550			$	44,705			$	44,152
Global Logistics segment			21,397				31,433				8,523				6,080
Insurance segment			34,055				35,673				8,469				11,617
Other			(51,006	)			(57,437	)			(13,031	)			(13,197	)
Operating income		$	184,693			$	191,219			$	48,666			$	48,652

LANDSTAR SYSTEM/8

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

		Dec 29,				Dec 30,
		2007				2006
ASSETS
Current assets:
Cash and cash equivalents		$	60,750			$	91,491
Short-term investments			22,921				21,548
Trade accounts receivable, less allowance of $4,469 and $4,834			310,258				318,983
Other receivables, including advances to independent contractors, less allowance of $4,792 and $4,512			11,170				14,198
Deferred income taxes and other current assets			28,554				25,142
Total current assets			433,653				471,362
Operating property, less accumulated depreciation and amortization of $88,284 and $77,938			132,369				110,957
Goodwill			31,134				31,134
Other assets			31,845				33,198
Total assets		$	629,001			$	646,651
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Cash overdraft		$	25,769			$	25,435
Accounts payable			117,122				122,313
Current maturities of long-term debt			23,155				18,730
Insurance claims			28,163				25,238
Other current liabilities			55,366				58,478
Total current liabilities			249,575				250,194
Long-term debt, excluding current maturities			141,598				110,591
Insurance claims			37,631				36,232
Deferred income taxes			19,411				19,360
Shareholders’ equity:
Common stock, $.01 par value, authorized 160,000,000 shares, issued 65,630,383 and 64,993,143 shares			656				650
Additional paid-in capital			132,788				108,020
Retained earnings			601,537				499,273
Cost of 13,121,109 and 9,028,009 shares of common stock in treasury			(554,252	)			(377,662	)
Accumulated other comprehensive gain/(loss)			57				(7	)
Total shareholders’ equity			180,786				230,274
Total liabilities and shareholders’ equity		$	629,001			$	646,651

LANDSTAR SYSTEM/9

Landstar System, Inc.
Supplemental Information
(Unaudited)

		Fiscal Year Ended								Thirteen Weeks Ended
		Dec 29,				Dec 30,				Dec 29,				Dec 30,
		2007				2006				2007				2006
Carrier Segment
External revenue generated through (in thousands):
Business Capacity Owners (1)		$	1,288,070			$	1,270,649			$	317,638			$	306,389
Other third party truck capacity providers			520,321				525,967				135,898				133,447
		$	1,808,391			$	1,796,616			$	453,536			$	439,836
Revenue per revenue mile		$	2.04			$	2.02			$	2.08			$	2.02
Revenue per load		$	1,612			$	1,621			$	1,623			$	1,647
Average length of haul (miles)			791				803				780				814
Number of loads			1,121,900				1,108,300				279,400				267,100
Global Logistics Segment
External revenue generated through (in thousands):
Business Capacity Owners (1) (2)		$	103,155			$	103,588			$	26,980			$	25,280
Other third party truck capacity providers			361,257				396,141				99,913				93,395
Rail, Air, Ocean and Bus Carriers (3)			177,608				182,813				53,231				43,787
		$	642,020			$	682,542			$	180,124			$	162,462
Revenue per load (4) (5)		$	1,572			$	1,528			$	1,744			$	1,584
Number of loads (4) (5)			402,900				380,700				101,900				93,300

		As of				As of
		Dec 29,				Dec 30,
		2007				2006
Capacity
Business Capacity Owners (1) (6)			8,403				8,516
Other third party truck capacity providers:
Approved and active (7)			16,053				15,247
Approved			9,362				8,574
			25,415				23,821
Total available truck capacity providers			33,818				32,337
Agent Locations			1,397				1,345