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

Date of Report (Date of earliest event reported) October 15, 2008

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)

Delaware		021238		06-1313069
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer 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 October 15, 2008, Landstar System, Inc. (the “Company”) issued a press release announcing results for the third quarter of fiscal 2008. A copy of the press release is attached hereto as Exhibit 99.1.

In the press release attached hereto as Exhibit 99.1, the Company provided the following information that may be deemed a non-GAAP financial measure: percentage change in consolidated revenue for the fiscal quarter ended September 27, 2008, as compared to the fiscal quarter ended September 29, 2007, exclusive of revenue related to bus capacity provided in connection with evacuation assistance related to the storms that recently impacted the Gulf Coast.

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 the Company’s financial condition and results of operations; (2) this information will facilitate comparisons by investors of the Company’s results as compared to the results of peer companies; and (3) 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 October 15, 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
October 15, 2008		904-398-9400

LANDSTAR SYSTEM REPORTS A 15 PERCENT INCREASE IN
THIRD QUARTER REVENUE AND DILUTED EARNINGS PER SHARE

Jacksonville, FL — Landstar System, Inc. (NASDAQ: LSTR) reported record third quarter revenue of $733 million and record third quarter diluted earnings per share of $0.62 in the 2008 third quarter, compared to revenue of $635 million and diluted earnings per share of $0.54 in the 2007 third quarter. Net income was $32.8 million in the 2008 third quarter compared to net income of $29.3 million in the 2007 third quarter.

Revenue hauled by BCO Independent Contractors in the third quarter of 2008 was $371 million, or 51 percent of revenue, compared to $351 million, or 55 percent of revenue, in the 2007 third quarter. In the 2008 and 2007 third quarters, the Company invoiced customers $92 million and $45 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 $276 million, or 38 percent of revenue, in the 2008 third quarter compared to $225 million, or 35 percent of revenue, in the 2007 third quarter. Revenue hauled by rail, air, and ocean cargo carriers was $49 million, or 7 percent of revenue, in the 2008 third quarter compared to $46 million, or 7 percent of revenue, in the 2007 third quarter.

LANDSTAR SYSTEM/2

 

Revenue in the thirty-nine-week period ended September 27, 2008 increased approximately 11 percent to $2.039 billion compared to $1.844 billion in the 2007 thirty-nine-week period. Net income for the 2008 thirty-nine-week period was $86.3 million, or $1.62 per diluted share, compared to net income of $80.6 million, or $1.45 per diluted share, for the 2007 thirty-nine-week period.

Revenue hauled by BCO Independent Contractors in the 2008 thirty-nine-week period was $1.071 billion, or 53 percent of revenue, compared to $1.036 billion, or 56 percent of revenue, in the 2007 thirty-nine-week period. In the 2008 and 2007 thirty-nine-week periods, the Company invoiced customers $241 million and $125 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 $766 million, or 38 percent of revenue, in the 2008 thirty-nine-week period compared to $648 million, or 35 percent of revenue, in the 2007 thirty-nine-week period. Revenue hauled by rail, air, and ocean cargo carriers was $146 million, or 7 percent of revenue, in the 2008 thirty-nine-week period compared to $126 million, or 7 percent of revenue, in the 2007 thirty-nine-week period.

Revenue, net income, and diluted earnings per share in the 2008 thirteen and thirty-nine week periods included $27.6 million, $1.7 million, and $0.03 diluted earnings per share, respectively, for bus capacity provided in connection with evacuation assistance related to the storms that recently impacted the Gulf Coast.

Landstar System, Inc. announced that its Board of Directors has declared a quarterly dividend of $0.04 per share. The dividend is payable on November 28, 2008 to stockholders of record at the close of business on November 3, 2008. It is the intention of the Board of Directors to continue to pay a quarterly dividend. During the 2008 third quarter, Landstar purchased approximately 580,000 shares of its common stock at a total cost of $28.5 million. As of September 27, 2008, there were approximately 2,155,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase programs.

LANDSTAR SYSTEM/3

 

“Landstar’s 2008 third quarter performance was remarkable,” said Landstar President and Chief Executive Officer Henry Gerkens. “Revenue and diluted earnings per share in the 2008 third quarter were the highest third quarter revenue and diluted earnings per share in the Company’s history. Landstar delivered a 15% increase in revenue over the 2007 third quarter and experienced strong revenue increases across multiple service offerings. Excluding the revenue from bus evacuation services, revenue increased 11% quarter over quarter. Landstar’s 2008 third quarter diluted earnings per share increased 15% over its 2007 third quarter diluted earnings per share.” Gerkens continued, “The 2008 third quarter included approximately $0.03 per diluted share of costs related to employee bonus accruals not included in the 2007 third quarter and approximately $0.03 per diluted share of income from bus evacuation services. As anticipated, operating margin was slightly impacted by a change in revenue mix, and was 7.5 percent in the 2008 third quarter, compared to 7.8 percent in the 2007 third quarter.”

“The resiliency of Landstar’s variable cost business model continues to generate outstanding returns and to provide the Company with a strong balance sheet. Trailing twelve month return on average shareholders’ equity remained high at 53 percent and trailing twelve month return on invested capital, net income divided by the sum of average equity plus average debt, was 31 percent. As of September 27, 2008, the Company had $103 million in cash and short-term investments and $87 million in outstanding borrowings under its senior credit facility, primarily resulting from borrowings to finance the purchase of its common stock under its authorized share purchase programs. As of September 27, 2008, there was $110 million available for borrowings under the Company’s senior credit facility.”

Gerkens continued, “Notwithstanding Landstar’s impressive third quarter results, the Company experienced reduced freight demand during the latter part of the 2008 third quarter. This trend has continued into early October and based upon the current uncertain economic outlook, I don’t foresee that trend reversing in the 2008 fourth quarter. I do anticipate increased revenue in the 2008 fourth quarter when compared to the 2007 fourth quarter. However, that rate of growth will not be at the level experienced in the first nine months of 2008 versus the first nine months of the prior year. I anticipate diluted earnings per share for the 2008 fourth quarter to be similar to that reported in the 2007 fourth quarter.”

LANDSTAR SYSTEM/4

 

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 Third 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.

LANDSTAR SYSTEM/5

 

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^® under the symbol LSTR.

(Tables follow)

LANDSTAR SYSTEM/6

 

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

		Thirty Nine Weeks Ended								Thirteen Weeks Ended
		Sept. 27,				Sept. 29,				Sept. 27,				Sept. 29,
		2008				2007				2008				2007
Revenue		$	2,039,232			$	1,844,412			$	732,753			$	634,811
Investment income			2,686				4,103				817				1,106
Costs and expenses:
Purchased transportation			1,573,209				1,394,781				569,864				481,946
Commissions to agents			153,857				148,574				54,267				51,170
Other operating costs			20,814				21,208				6,874				7,986
Insurance and claims			27,159				38,878				8,125				9,319
Selling, general and administrative			105,457				95,002				34,499				31,082
Depreciation and amortization			15,558				14,045				5,251				4,766
Total costs and expenses			1,896,054				1,712,488				678,880				586,269
Operating income			145,864				136,027				54,690				49,648
Interest and debt expense			5,635				4,464				1,757				1,764
Income before income taxes			140,229				131,563				52,933				47,884
Income taxes			53,904				50,941				20,116				18,536
Net income		$	86,325			$	80,622			$	32,817			$	29,348
Earnings per common share		$	1.64			$	1.46			$	0.62			$	0.54
Diluted earnings per share		$	1.62			$	1.45			$	0.62			$	0.54
Average number of shares outstanding:
Earnings per common share			52,680,000				55,221,000				52,586,000				54,189,000
Diluted earnings per share			53,142,000				55,740,000				53,028,000				54,608,000
Dividends paid per common share		$	0.1150			$	0.0975			$	0.0400			$	0.0375

LANDSTAR SYSTEM/7

 

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

		Thirty Nine Weeks Ended								Thirteen Weeks Ended
		Sept. 27,				Sept. 29,				Sept. 27,				Sept. 29,
		2008				2007				2008				2007
Revenue
Transportation logistics segment		$	2,011,766			$	1,816,751			$	723,535			$	625,581
Insurance segment			27,466				27,661				9,218				9,230
Revenue		$	2,039,232			$	1,844,412			$	732,753			$	634,811
Operating Income
Transportation logistics segment		$	118,171			$	110,441			$	44,611			$	38,071
Insurance segment			27,693				25,586				10,079				11,577
Operating income		$	145,864			$	136,027			$	54,690			$	49,648

LANDSTAR SYSTEM/8

 

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

		Sept. 27,				Dec 29,
		2008				2007
ASSETS
Current assets:
Cash and cash equivalents		$	77,604			$	60,750
Short-term investments			25,727				22,921
Trade accounts receivable, less allowance of $5,316 and $4,469			391,873				310,258
Other receivables, including advances to independent contractors, less allowance of $4,151 and $4,792			9,398				11,170
Deferred income taxes and other current assets			32,251				28,554
Total current assets			536,853				433,653
Operating property, less accumulated depreciation and amortization of $102,008 and $88,284			124,283				132,369
Goodwill			31,134				31,134
Other assets			37,310				31,845
Total assets		$	729,580			$	629,001
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Cash overdraft		$	32,906			$	25,769
Accounts payable			144,730				117,122
Current maturities of long-term debt			24,084				23,155
Insurance claims			25,086				28,163
Accrued income taxes			14,461				14,865
Other current liabilities			41,662				40,501
Total current liabilities			282,929				249,575
Long-term debt, excluding current maturities			132,997				141,598
Insurance claims			36,222				37,631
Deferred income taxes			25,339				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			152,845				132,788
Retained earnings			681,806				601,537
Cost of 13,700,931 and 13,121,109 shares of common stock in treasury			(582,771	)			(554,252	)
Accumulated other comprehensive income/(loss)			(448	)			57
Total shareholders’ equity			252,093				180,786
Total liabilities and shareholders’ equity		$	729,580			$	629,001

LANDSTAR SYSTEM/9

 

Landstar System, Inc.
Supplemental Information
(Unaudited)

		Thirty Nine Weeks Ended								Thirteen Weeks Ended
		Sept. 27,				Sept. 29,				Sept. 27,				Sept. 29,
		2008				2007				2008				2007
Revenue generated through (in thousands):
Business Capacity Owners (1)		$	1,070,982			$	1,036,155			$	370,787			$	351,451
Truck Brokerage Carriers			766,262				648,267				275,928				225,300
Rail intermodal			106,936				91,931				35,338				34,254
Ocean cargo carriers			29,329				18,691				11,109				7,152
Air cargo carriers			10,135				15,412				2,686				4,606
Other (2)			55,588				33,956				36,905				12,048
		$	2,039,232			$	1,844,412			$	732,753			$	634,811
Number of loads:
Business Capacity Owners (1)			638,330				646,720				209,250				213,350
Truck Brokerage Carriers			435,250				441,010				146,280				152,160
Rail intermodal			45,610				43,240				14,610				16,480
Ocean cargo carriers			3,990				3,330				1,400				1,230
Air cargo carriers			5,520				9,260				1,650				2,820
			1,128,700				1,143,560				373,190				386,040
Revenue per load:
Business Capacity Owners (1)		$	1,678			$	1,602			$	1,772			$	1,647
Truck Brokerage Carriers			1,761				1,470				1,886				1,481
Rail intermodal			2,345				2,126				2,419				2,079
Ocean cargo carriers			7,351				5,613				7,935				5,815
Air cargo carriers			1,836				1,664				1,628				1,633

		Sept. 27,				Sept. 29,
		2008				2007
Truck Capacity
Business Capacity Owners (1) (3)			8,363				8,452
Truck Brokerage Carriers:
Approved and active (4)			16,400				15,765
Approved			9,120				9,224
			25,520				24,989
Total available truck capacity providers			33,883				33,441
Agent Locations			1,403				1,414