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 24, 2011
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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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 24, 2011, Landstar System, Inc. (the “Company”) issued a press release announcing results for the third 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 third fiscal quarter of 2011, as compared to third 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 October 24, 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: October 24, 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 | ||
| October 24, 2011 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS 45 PERCENT INCREASE IN DILUTED EARNINGS
PER SHARE TO A THIRD QUARTER RECORD OF $0.64
Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported 2011 record third quarter diluted earnings per share of $0.64 per diluted share, from net income of $30.2 million, compared to net income of $21.8 million, or $0.44 per diluted share, for the 2010 third quarter. Operating margin was 44.7 percent in the 2011 third quarter compared to 35.6 percent in the 2010 third quarter. Revenue for the 2011 third quarter was $684.0 million compared to $622.8 million in the 2010 third quarter. Included in the 2010 third quarter was a one-time charge of $3.8 million, or $0.05 per diluted share, related to the buy-out by the Company of its remaining contingent payment obligation from an acquisition completed in 2009.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2011 third quarter was $625.8 million, or 91 percent of revenue, compared to $573.5 million, or 92 percent of revenue, in the 2010 third quarter. In the 2011 and 2010 third quarters, the Company invoiced customers $72.7 million and $48.5 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 third quarters were $25.9 million and $20.3 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 $17.1 million and $48.4 million in the 2011 and 2010 third quarters, respectively. Revenue hauled by rail, air and ocean cargo carriers was $44.5 million, or 7 percent of revenue, in the 2011 third
LANDSTAR SYSTEM/2
quarter compared to $36.2 million, or 6 percent of revenue, in the 2010 third quarter. Transportation management fee revenue generated by the supply chain solutions companies was $5.0 million and $4.3 million in the 2011 and 2010 third quarters, respectively.
Trailing twelve-month return on average shareholder’s equity was 39 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 27 percent. During the 2011 third quarter, the Company purchased 816,814 shares of its common stock under its authorized share purchase programs. In the thirty-nine week period ended September 24, 2011, the Company purchased a total of 1,013,507 shares of its common stock at a total cost of $41,966,000. Under the Company’s authorized share purchase program, the Company currently has a total of 709,000 shares of its common stock available for purchase. Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.055 per share. The dividend is payable on December 2, 2011 to stockholders of record at the close of business on November 8, 2011. It is the intention of the Board of Directors to continue to pay a quarterly dividend.
“I am extremely pleased with the Company’s 2011 third quarter operating performance,” said Henry Gerkens, Landstar’s Chairman, President and CEO. “Revenue increased ten percent over the 2010 third quarter, even after taking into account the anticipated revenue decline in our substitute line haul service offering. Excluding the substitute line haul revenue from both the 2011 and 2010 third quarters, revenue increased 16 percent. During the 2011 third quarter, the growth rate in the number of loads hauled increased each month compared to the corresponding prior year month as we moved through the quarter. Revenue per load continued to be strong. Consolidated operating income increased 38 percent, while earnings per diluted share increased 45 percent to $0.64 per diluted share, the best third quarter diluted earnings per share in Landstar history.”
Gerkens continued, “Although I am very confident as Landstar enters the 2011 fourth quarter, the Company’s fourth quarter revenue performance in recent years has been somewhat inconsistent, especially in the latter part of the quarter. However, recent trends in September, and thus far in October, indicate continued strength in revenue per
LANDSTAR SYSTEM/3
load and load volume. Assuming these trends continue throughout the 2011 fourth quarter, I would expect 2011 fourth quarter diluted earnings per share to be within a range of $0.62 to $0.67.”
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 Third Quarter 2011 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 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.
About Landstar:
Landstar System, Inc. is a non-asset based provider of integrated supply chain solutions. Landstar delivers safe, specialized transportation 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
LANDSTAR SYSTEM/4
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)
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| September 24, 2011 |
September 25, 2010 |
September 24, 2011 |
September 25, 2010 |
|||||||||||||
| Revenue |
$ | 1,931,560 | $ | 1,812,635 | $ | 684,013 | $ | 622,826 | ||||||||
| Investment income |
1,294 | 1,069 | 373 | 495 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Purchased transportation |
1,459,660 | 1,381,955 | 518,300 | 474,665 | ||||||||||||
| Commissions to agents |
153,165 | 134,695 | 54,990 | 47,316 | ||||||||||||
| Other operating costs |
22,050 | 21,952 | 6,427 | 6,448 | ||||||||||||
| Insurance and claims |
34,096 | 37,609 | 9,381 | 11,480 | ||||||||||||
| Selling, general and administrative (1) |
112,252 | 114,886 | 39,206 | 41,070 | ||||||||||||
| Depreciation and amortization |
19,336 | 18,444 | 6,549 | 6,456 | ||||||||||||
|
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|
|
|||||||||
| Total costs and expenses (1) |
1,800,559 | 1,709,541 | 634,853 | 587,435 | ||||||||||||
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|
|||||||||
| Operating income (1) |
132,295 | 104,163 | 49,533 | 35,886 | ||||||||||||
| Interest and debt expense |
2,340 | 2,699 | 735 | 1,035 | ||||||||||||
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| Income before income taxes (1) |
129,955 | 101,464 | 48,798 | 34,851 | ||||||||||||
| Income taxes |
49,642 | 38,761 | 18,640 | 13,315 | ||||||||||||
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|
|||||||||
| Net income (1) |
80,313 | 62,703 | 30,158 | 21,536 | ||||||||||||
| Less: Net loss attributable to noncontrolling interest |
(62 | ) | (712 | ) | — | (266 | ) | |||||||||
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| Net income attributable to Landstar System, Inc. and subsidiary (1) |
$ | 80,375 | $ | 63,415 | $ | 30,158 | $ | 21,802 | ||||||||
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| Earnings per common share attributable to Landstar System, Inc. and subsidiary (1) |
$ | 1.69 | $ | 1.27 | $ | 0.64 | $ | 0.44 | ||||||||
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| Diluted earnings per share attributable to Landstar System, Inc. and subsidiary (1) |
$ | 1.68 | $ | 1.27 | $ | 0.64 | $ | 0.44 | ||||||||
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| Average number of shares outstanding: |
||||||||||||||||
| Earnings per common share |
47,670,000 | 49,921,000 | 47,358,000 | 49,434,000 | ||||||||||||
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| Diluted earnings per share |
47,735,000 | 49,990,000 | 47,387,000 | 49,447,000 | ||||||||||||
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| Dividends paid per common share |
$ | 0.155 | $ | 0.1400 | $ | 0.055 | $ | 0.0500 | ||||||||
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| (1) | The 2010 thirty-nine and thirteen-week periods include a $3,800 one-time charge for the buyout by the Company of its remaining contingent payment obligation from an acquisition completed in 2009. Net of related income tax benefits, these costs reduced net income for the thirty-nine and thirteen-week periods ended September 25, 2010 by $2,348, or $0.05 per common share ($0.05 per diluted share). |
LANDSTAR SYSTEM/6
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| Sept. 24, 2011 |
Dec. 25, 2010 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 69,409 | $ | 44,706 | ||||
| Short-term investments |
28,177 | 23,266 | ||||||
| Trade accounts receivable, less allowance of $4,652 and $5,324 |
388,235 | 307,350 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $5,018 and $5,511 |
53,515 | 23,943 | ||||||
| Deferred income taxes and other current assets |
19,073 | 21,652 | ||||||
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| Total current assets |
558,409 | 420,917 | ||||||
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| Operating property, less accumulated depreciation and amortization of $147,237 and $137,830 |
128,388 | 132,649 | ||||||
| Goodwill |
57,470 | 57,470 | ||||||
| Other assets |
59,090 | 72,846 | ||||||
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| Total assets |
$ | 803,357 | $ | 683,882 | ||||
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| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Cash overdraft |
$ | 23,061 | $ | 24,877 | ||||
| Accounts payable |
180,488 | 137,297 | ||||||
| Current maturities of long-term debt |
16,548 | 22,172 | ||||||
| Insurance claims |
75,511 | 40,215 | ||||||
| Other current liabilities |
68,268 | 53,785 | ||||||
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| Total current liabilities |
363,876 | 278,346 | ||||||
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| Long-term debt, excluding current maturities |
110,526 | 99,439 | ||||||
| Insurance claims |
30,336 | 31,468 | ||||||
| Deferred income taxes |
20,078 | 23,662 | ||||||
| Equity |
||||||||
| Landstar System, Inc. and subsidiary shareholders’ equity |
||||||||
| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,595,036 and 66,535,169 shares |
666 | 665 | ||||||
| Additional paid-in capital |
164,766 | 169,268 | ||||||
| Retained earnings |
917,100 | 844,132 | ||||||
| Cost of 19,689,466 and 18,674,902 shares of common stock in treasury |
(805,189 | ) | (763,182 | ) | ||||
| Accumulated other comprehensive income |
1,198 | 881 | ||||||
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|||||
| Total Landstar System, Inc. and subsidiary shareholders’ equity |
278,541 | 251,764 | ||||||
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| Noncontrolling interest |
— | (797 | ) | |||||
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| Total equity |
278,541 | 250,967 | ||||||
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| Total liabilities and equity |
$ | 803,357 | $ | 683,882 | ||||
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LANDSTAR SYSTEM/7
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| September 24, 2011 |
September 25, 2010 |
September 24, 2011 |
September 25, 2010 |
|||||||||||||
| Revenue generated through (in thousands): |
||||||||||||||||
| Business Capacity Owners (1) |
$ | 1,020,856 | $ | 966,221 | $ | 351,108 | $ | 334,485 | ||||||||
| Truck Brokerage Carriers |
747,122 | 705,189 | 274,731 | 239,026 | ||||||||||||
| Rail intermodal |
53,991 | 51,840 | 19,159 | 17,748 | ||||||||||||
| Ocean cargo carriers |
38,733 | 34,045 | 12,702 | 13,210 | ||||||||||||
| Air cargo carriers |
29,528 | 13,853 | 12,628 | 5,291 | ||||||||||||
| Other (2) |
41,330 | 41,487 | 13,685 | 13,066 | ||||||||||||
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| $ | 1,931,560 | $ | 1,812,635 | $ | 684,013 | $ | 622,826 | |||||||||
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| Number of loads: |
||||||||||||||||
| Business Capacity Owners (1) |
601,990 | 624,270 | 199,260 | 203,500 | ||||||||||||
| Truck Brokerage Carriers |
441,930 | 456,410 | 154,720 | 148,080 | ||||||||||||
| Rail intermodal |
22,750 | 23,120 | 7,920 | 7,630 | ||||||||||||
| Ocean cargo carriers |
6,040 | 4,930 | 2,090 | 1,820 | ||||||||||||
| Air cargo carriers |
6,110 | 4,870 | 2,110 | 1,740 | ||||||||||||
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| 1,078,820 | 1,113,600 | 366,100 | 362,770 | |||||||||||||
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| Revenue per load: |
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| Business Capacity Owners (1) |
$ | 1,696 | $ | 1,548 | $ | 1,762 | $ | 1,644 | ||||||||
| Truck Brokerage Carriers |
1,691 | 1,545 | 1,776 | 1,614 | ||||||||||||
| Rail intermodal |
2,373 | 2,242 | 2,419 | 2,326 | ||||||||||||
| Ocean cargo carriers |
6,413 | 6,906 | 6,078 | 7,258 | ||||||||||||
| Air cargo carriers |
4,833 | 2,845 | 5,985 | 3,041 | ||||||||||||
| September 24, 2011 |
September 25, 2010 |
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| Truck Capacity Providers |
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| Business Capacity Owners (1) (3) |
7,798 | 7,893 | ||||||||||||||
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| Truck Brokerage Carriers: |
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| Approved and active (4) |
18,402 | 17,393 | ||||||||||||||
| Approved |
9,088 | 9,490 | ||||||||||||||
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| 27,490 | 26,883 | |||||||||||||||
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| Total available truck capacity providers |
35,288 | 34,776 | ||||||||||||||
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| (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 8,314 and 8,481 at September 24, 2011 and September 25, 2010, respectively. |
| (4) | Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days. |