UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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) July 21, 2011
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)
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
(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 July 21, 2011, Landstar System, Inc. (the “Company”) issued a press release announcing results
for the second quarter of fiscal 2011. 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 revenue for the
second fiscal quarter of 2011, as compared to second fiscal quarter of 2010, exclusive of
substitute line haul revenue.
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 July 21, 2011 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.
| LANDSTAR SYSTEM, INC. |
||||
| Date: July 21, 2011 | By: | /s/ James B. Gattoni | ||
| Name: | James B. Gattoni | |||
| Title: | Vice President and Chief Financial Officer | |||
Exhibit 99.1
| For Immediate Release | Contact: Jim Gattoni | |
| Landstar System, Inc. | ||
| www.landstar.com | ||
| July 21, 2011 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS 27 PERCENT INCREASE IN DILUTED EARNINGS
PER SHARE TO A SECOND QUARTER RECORD OF $0.62
PER SHARE TO A SECOND QUARTER RECORD OF $0.62
Jacksonville, FL — Landstar System, Inc. (NASDAQ: LSTR) reported 2011 record second quarter
diluted earnings per share of $0.62 per diluted share, from net income of $29.6 million, compared
to net income of $24.4 million, or $0.49 per diluted share, for the 2010 second quarter. Operating
margin was 43.6 percent in the 2011 second quarter compared to 38.2 percent in the 2010 second
quarter. Revenue for the 2011 second quarter was $675.6 million compared to $641.7 million in the
2010 second quarter.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck
brokerage carriers in the 2011 second quarter was $621.5 million, or 92 percent of revenue,
compared to $592.0 million, or 92 percent of revenue, in the 2010 second quarter. In the 2011 and
2010 second quarters, the Company invoiced customers $78.7 million and $53.1 million, respectively,
of fuel surcharges that were passed 100 percent to BCOs and excluded from revenue. Included in
revenue hauled by third-party truck capacity providers in the 2011 and 2010 second quarters were
$25.9 million and $23.1 million, respectively, of fuel surcharges invoiced to customers on revenue
hauled by third-party truck brokerage carriers. Also included in revenue hauled by third-party
truck capacity providers was revenue generated under the Company’s less-than-truckload substitute
line haul service offering of $18.8 million and $70.5 million in the 2011 and 2010 second quarters,
respectively. Revenue hauled by rail, air and ocean cargo carriers was $39.9 million, or 6 percent
of revenue, in the 2011 second quarter compared to $35.0 million, or 5 percent of revenue, in the
2010 second quarter. Transportation management fee revenue generated by the supply chain solutions
companies was $5.6 million and $4.9 million in the 2011 and 2010 second quarters, respectively.
LANDSTAR SYSTEM/2
Trailing twelve-month return on average shareholder’s equity was 35 percent and trailing
twelve-month return on invested capital, net income divided by the sum of average equity plus
average debt, was 25 percent. Landstar System, Inc. also announced that its Board of Directors has
declared a quarterly dividend of $0.055 per share. This represents a 10 percent increase in the
Company’s quarterly dividend. The dividend is payable on August 26, 2011 to stockholders of record
at the close of business on August 8, 2011. It is the intention of the Board of Directors to
continue to pay a quarterly dividend. During the 2011 second quarter, Landstar purchased 196,693
shares of its common stock at a total cost of $9.3 million. Under the Company’s authorized share
purchase program, the Company currently has a total of 526,000 shares of its common stock available
for purchase.
“I am extremely pleased with the Company’s 2011 second quarter operating performance,” said Henry
Gerkens, Landstar’s Chairman, President and CEO. “Despite the anticipated revenue decline in our
substitute line haul service offering, revenue increased five percent over the 2010 second quarter.
Excluding the substitute line haul revenue from both the 2011 and 2010 second quarters, revenue
increased 15 percent. I would characterize the overall second quarter freight environment as a
little choppy, but moving in an upward direction. Pricing continued to be strong. Consolidated
operating income increased 22 percent, while earnings per diluted share increased 27 percent to
$0.62 per diluted share, the best second quarter diluted earnings per share in Landstar history.”
Gerkens continued, “Recent trends in June, and thus far in July, indicate continued strength in
revenue per load with a relatively stable increase in the number of loads hauled month over prior
year month. I expect these trends to continue throughout the 2011 third quarter. In addition,
excluding disaster relief service revenue, revenue generated in the Company’s third quarter has
historically been very similar to revenue generated in the Company’s second quarter. As such, I
would expect revenue, gross profit, operating income and diluted earnings per share to be similar
to those experienced during the 2011 second quarter.”
Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at
2:00 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 2011 Earnings Release
Conference Call.”
LANDSTAR SYSTEM/3
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 2010 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/4
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 and RC14001:2008 environmental, health, safety and security management system standards. Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.
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 and RC14001:2008 environmental, health, safety and security 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/5
Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
| Twenty Six Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| June 25, | June 26, | June 25, | June 26, | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
$ | 1,247,547 | $ | 1,189,809 | $ | 675,561 | $ | 641,721 | ||||||||
Investment income |
921 | 574 | 393 | 289 | ||||||||||||
Costs and expenses: |
||||||||||||||||
Purchased transportation |
941,360 | 907,290 | 509,982 | 490,089 | ||||||||||||
Commissions to agents |
98,175 | 87,379 | 54,004 | 46,971 | ||||||||||||
Other operating costs |
15,623 | 15,504 | 7,679 | 7,968 | ||||||||||||
Insurance and claims |
24,715 | 26,129 | 13,449 | 13,831 | ||||||||||||
Selling, general and administrative |
73,046 | 73,816 | 35,782 | 36,973 | ||||||||||||
Depreciation and amortization |
12,787 | 11,988 | 6,388 | 6,196 | ||||||||||||
Total costs and expenses |
1,165,706 | 1,122,106 | 627,284 | 602,028 | ||||||||||||
Operating income |
82,762 | 68,277 | 48,670 | 39,982 | ||||||||||||
Interest and debt expense |
1,605 | 1,664 | 777 | 810 | ||||||||||||
Income before income taxes |
81,157 | 66,613 | 47,893 | 39,172 | ||||||||||||
Income taxes |
31,002 | 25,446 | 18,295 | 14,962 | ||||||||||||
Net income |
50,155 | 41,167 | 29,598 | 24,210 | ||||||||||||
Less: Net loss attributable to noncontrolling interest |
(62 | ) | (446 | ) | — | (227 | ) | |||||||||
Net income attributable to Landstar System,
Inc. and subsidiary |
$ | 50,217 | $ | 41,613 | $ | 29,598 | $ | 24,437 | ||||||||
Earnings per common share attributable to
Landstar System, Inc. and subsidiary |
$ | 1.05 | $ | 0.83 | $ | 0.62 | $ | 0.49 | ||||||||
Diluted earnings per share attributable to
Landstar System, Inc. and subsidiary |
$ | 1.05 | $ | 0.83 | $ | 0.62 | $ | 0.49 | ||||||||
Average number of shares outstanding: |
||||||||||||||||
Earnings per common share |
47,826,000 | 50,165,000 | 47,782,000 | 50,123,000 | ||||||||||||
Diluted earnings per share |
47,907,000 | 50,259,000 | 47,912,000 | 50,215,000 | ||||||||||||
Dividends paid per common share |
$ | 0.100 | $ | 0.090 | $ | 0.050 | $ | 0.045 | ||||||||
LANDSTAR SYSTEM/6
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| June 25, | Dec. 25, | |||||||
| 2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 39,544 | $ | 44,706 | ||||
Short-term investments |
30,489 | 23,266 | ||||||
Trade accounts receivable, less allowance
of $4,155 and $5,324 |
385,540 | 307,350 | ||||||
Other receivables, including advances to independent
contractors, less allowance of $4,987 and $5,511 |
25,493 | 23,943 | ||||||
Deferred income taxes and other current assets |
21,008 | 21,652 | ||||||
Total current assets |
502,074 | 420,917 | ||||||
Operating property, less accumulated depreciation
and amortization of $146,476 and $137,830 |
123,895 | 132,649 | ||||||
Goodwill |
57,470 | 57,470 | ||||||
Other assets |
60,873 | 72,846 | ||||||
Total assets |
$ | 744,312 | $ | 683,882 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Cash overdraft |
$ | 26,347 | $ | 24,877 | ||||
Accounts payable |
175,325 | 137,297 | ||||||
Current maturities of long-term debt |
17,260 | 22,172 | ||||||
Insurance claims |
44,442 | 40,215 | ||||||
Other current liabilities |
53,077 | 53,785 | ||||||
Total current liabilities |
316,451 | 278,346 | ||||||
Long-term debt, excluding current maturities |
93,894 | 99,439 | ||||||
Insurance claims |
31,273 | 31,468 | ||||||
Deferred income taxes |
20,214 | 23,662 | ||||||
Equity |
||||||||
Landstar System, Inc. and subsidiary shareholders’ equity
Common stock, $0.01 par value, authorized 160,000,000
shares, issued 66,589,780 and 66,535,169 shares |
666 | 665 | ||||||
Additional paid-in capital |
163,355 | 169,268 | ||||||
Retained earnings |
889,561 | 844,132 | ||||||
Cost of 18,872,652 and 18,674,902 shares of common
stock in treasury |
(772,489 | ) | (763,182 | ) | ||||
Accumulated other comprehensive income |
1,387 | 881 | ||||||
Total Landstar System, Inc. and subsidiary shareholders’
equity |
282,480 | 251,764 | ||||||
Noncontrolling interest |
— | (797 | ) | |||||
Total equity |
282,480 | 250,967 | ||||||
Total liabilities and equity |
$ | 744,312 | $ | 683,882 | ||||
LANDSTAR SYSTEM/7
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
Supplemental Information
(Unaudited)
| Twenty Six Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| June 25, | June 26, | June 25, | June 26, | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue generated through (in thousands): |
||||||||||||||||
Business Capacity Owners (1) |
$ | 669,748 | $ | 631,736 | $ | 362,854 | $ | 345,595 | ||||||||
Truck Brokerage Carriers |
472,391 | 466,163 | 258,668 | 246,408 | ||||||||||||
Rail intermodal |
34,832 | 34,092 | 18,367 | 19,316 | ||||||||||||
Ocean cargo carriers |
26,031 | 20,835 | 12,198 | 11,700 | ||||||||||||
Air cargo carriers |
16,900 | 8,562 | 9,340 | 3,959 | ||||||||||||
Other (2) |
27,645 | 28,421 | 14,134 | 14,743 | ||||||||||||
| $ | 1,247,547 | $ | 1,189,809 | $ | 675,561 | $ | 641,721 | |||||||||
Number of loads: |
||||||||||||||||
Business Capacity Owners (1) |
402,730 | 420,770 | 210,690 | 223,020 | ||||||||||||
Truck Brokerage Carriers |
287,210 | 308,330 | 151,470 | 158,980 | ||||||||||||
Rail intermodal |
14,830 | 15,490 | 7,570 | 8,620 | ||||||||||||
Ocean cargo carriers |
3,950 | 3,110 | 2,120 | 1,650 | ||||||||||||
Air cargo carriers |
4,000 | 3,130 | 2,050 | 1,630 | ||||||||||||
| 712,720 | 750,830 | 373,900 | 393,900 | |||||||||||||
Revenue per load: |
||||||||||||||||
Business Capacity Owners (1) |
$ | 1,663 | $ | 1,501 | $ | 1,722 | $ | 1,550 | ||||||||
Truck Brokerage Carriers |
1,645 | 1,512 | 1,708 | 1,550 | ||||||||||||
Rail intermodal |
2,349 | 2,201 | 2,426 | 2,241 | ||||||||||||
Ocean cargo carriers |
6,590 | 6,699 | 5,754 | 7,091 | ||||||||||||
Air cargo carriers |
4,225 | 2,735 | 4,556 | 2,429 | ||||||||||||
| June 25, | June 26, | |||||||
| 2011 | 2010 | |||||||
Truck Capacity |
||||||||
Business Capacity Owners (1) (3) |
7,711 | 7,818 | ||||||
Truck Brokerage Carriers: |
||||||||
Approved and active (4) |
17,696 | 16,670 | ||||||
Approved |
8,984 | 9,047 | ||||||
| 26,680 | 25,717 | |||||||
Total available truck capacity providers |
34,391 | 33,535 | ||||||
| (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 8,231 and 8,399 at June 25, 2011 and June 26, 2010, respectively. | |
| (4) | Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days. |