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) February 2, 2012
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 February 2, 2012, Landstar System, Inc. issued a press release announcing results for the fourth quarter of fiscal 2011. A copy of the press release is attached hereto as Exhibit 99.1.
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 February 2, 2012 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: February 2, 2012 | 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 | ||||
| February 2, 2012 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS 22 PERCENT INCREASE IN
FOURTH QUARTER REVENUE AND 40 PERCENT INCREASE IN DILUTED
EARNINGS PER SHARE TO $0.70
Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported revenue of $717.5 million in the fourteen-week 2011 fourth quarter compared to $587.5 million in the 2010 thirteen-week fourth quarter. The Company also reported earnings of $0.70 per diluted share, from net income of $32.6 million, compared to net income of $24.1 million, or $0.50 per diluted share, for the 2010 fourth quarter. Diluted earnings per share in the 2011 fourth quarter equals the highest quarterly diluted earnings per share in Landstar history. Further, operating margin, representing operating income divided by gross profit (gross profit defined as revenue less the cost of purchased transportation and commissions to agents) was 45.0 percent in the 2011 fourth quarter compared to 36.4 percent in the 2010 fourth quarter.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2011 fourth quarter was $659.3 million, or 92 percent of revenue, compared to $537.6 million, or 91 percent of revenue, in the 2010 fourth quarter. In the 2011 and 2010 fourth quarters, the Company invoiced customers $76.1 million and $51.1 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 fourth quarters were $30.0 million and $17.6 million, respectively, of fuel surcharges invoiced to customers on revenue hauled by third-party truck brokerage carriers. Revenue hauled by rail, air and ocean cargo carriers was $44.2 million, or 6 percent of revenue, in the 2011 fourth
LANDSTAR SYSTEM/2
quarter compared to $36.7 million, or 6 percent of revenue, in the 2010 fourth quarter. Transportation management fee revenue generated by the supply chain solutions companies was $5.1 million and $4.4 million in the 2011 and 2010 fourth quarters, respectively.
Return on average shareholder’s equity was 41 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 29 percent for fiscal year 2011. During 2011, the Company purchased 1,206,000 shares of its common stock under its authorized share purchase programs at a total cost of $50,450,000. Under the Company’s authorized share purchase program, the Company currently has a total of 517,000 shares of its common stock available for purchase. Landstar also announced that its Board of Directors has declared a quarterly dividend of $0.055 per share. The dividend is payable on March 16, 2012 to stockholders of record at the close of business on February 20, 2012. It is the intention of the Board of Directors to continue to pay a quarterly dividend.
“I am extremely pleased with Landstar’s 2011 fourth quarter and full year performance,” said Landstar’s Chairman, President and CEO, Henry Gerkens. “Revenue in the 2011 fourth quarter increased 22 percent over the 2010 fourth quarter. I estimate that the extra week in the 2011 fourth quarter contributed approximately $25 to $30 million in additional revenue. Revenue growth was driven by continued strength in revenue per load and a significant increase in volumes over the prior year fourth quarter. Gross profit and operating income in the 2011 fourth quarter increased 15 percent and 42 percent, respectively, over the 2010 fourth quarter, resulting in operating margin expansion from 36.4 percent in the 2010 fourth quarter to 45.0 percent in the 2011 fourth quarter. Diluted earnings per share increased 40 percent over the 2010 fourth quarter to $0.70.”
Gerkens continued, “2011 was a very strong year. Landstar completed fiscal year 2011 with record annual revenue of $2,649.1 million compared to $2,400.2 million for the 2010 fiscal year and record annual diluted earnings per share of $2.38 compared to $1.77 for the 2010 fiscal year. On a full year basis, operating margin was 42.4 percent for the 2011 fiscal year compared to 35.5 percent for the 2010 fiscal year. I expect that strength to continue into 2012. As to the 2012 first quarter, revenue in the first quarter of the year has historically been seasonally lower than any other quarter of the year
LANDSTAR SYSTEM/3
and, as a result, operating margin in the first quarter of the year is also generally lower than any other quarter of the year. We expect we will experience that seasonal impact in the 2012 first quarter, as well. Revenue per load continues to remain strong into the first several weeks of January and volume remains strong compared to the first several weeks of January 2011. Based on current trends and assuming those trends continue throughout 2012, I anticipate diluted earnings per share to be within a range of $0.51 to $0.56 for the 2012 first quarter and within a range of $2.62 to $2.82 for fiscal year 2012.”
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 Fourth 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.
LANDSTAR SYSTEM/4
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 services 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)
| Fiscal Year Ended | Fiscal Quarter Ended | |||||||||||||||
| December 31, 2011 |
December 25, 2010 |
December 31, 2011 |
December 25, 2010 |
|||||||||||||
| Revenue |
$ | 2,649,082 | $ | 2,400,170 | $ | 717,522 | $ | 587,535 | ||||||||
| Investment income |
1,705 | 1,558 | 411 | 489 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Purchased transportation |
2,007,102 | 1,824,308 | 547,442 | 442,353 | ||||||||||||
| Commissions to agents |
210,088 | 181,405 | 56,923 | 46,710 | ||||||||||||
| Other operating costs |
28,865 | 28,826 | 6,815 | 6,874 | ||||||||||||
| Insurance and claims |
42,766 | 49,334 | 8,670 | 11,725 | ||||||||||||
| Selling, general and administrative |
152,907 | 153,080 | 40,655 | 38,194 | ||||||||||||
| Depreciation and amortization |
25,814 | 24,804 | 6,478 | 6,360 | ||||||||||||
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|
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| Total costs and expenses |
2,467,542 | 2,261,757 | 666,983 | 552,216 | ||||||||||||
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| Operating income |
183,245 | 139,971 | 50,950 | 35,808 | ||||||||||||
| Interest and debt expense |
3,112 | 3,623 | 772 | 924 | ||||||||||||
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| Income before income taxes |
180,133 | 136,348 | 50,178 | 34,884 | ||||||||||||
| Income taxes |
67,188 | 49,766 | 17,546 | 11,005 | ||||||||||||
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| Net income |
112,945 | 86,582 | 32,632 | 23,879 | ||||||||||||
| Less: Net loss attributable to noncontrolling interest |
(62 | ) | (932 | ) | — | (220 | ) | |||||||||
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| Net income attributable to Landstar System, Inc. and subsidiary |
$ | 113,007 | $ | 87,514 | $ | 32,632 | $ | 24,099 | ||||||||
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| Earnings per common share attributable to Landstar System, Inc. and subsidiary |
$ | 2.38 | $ | 1.77 | $ | 0.70 | $ | 0.50 | ||||||||
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| Diluted earnings per share attributable to Landstar System, Inc. and subsidiary |
$ | 2.38 | $ | 1.77 | $ | 0.70 | $ | 0.50 | ||||||||
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| Average number of shares outstanding: |
||||||||||||||||
| Earnings per common share |
47,444,000 | 49,523,000 | 46,812,000 | 48,327,000 | ||||||||||||
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| Diluted earnings per share |
47,524,000 | 49,580,000 | 46,939,000 | 48,358,000 | ||||||||||||
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| Dividends paid per common share |
$ | 0.210 | $ | 0.190 | $ | 0.055 | $ | 0.050 | ||||||||
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LANDSTAR SYSTEM/6
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| Dec. 31, | Dec. 25, | |||||||
| 2011 | 2010 | |||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 80,900 | $ | 44,706 | ||||
| Short-term investments |
27,944 | 23,266 | ||||||
| Trade accounts receivable, less allowance of $6,591 and $5,324 |
368,377 | 307,350 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $5,384 and $5,511 |
53,263 | 23,943 | ||||||
| Deferred income taxes and other current assets |
21,308 | 21,652 | ||||||
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| Total current assets |
551,792 | 420,917 | ||||||
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| Operating property, less accumulated depreciation and amortization of $145,804 and $137,830 |
142,146 | 132,649 | ||||||
| Goodwill |
57,470 | 57,470 | ||||||
| Other assets |
57,041 | 72,846 | ||||||
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| Total assets |
$ | 808,449 | $ | 683,882 | ||||
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| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
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| Cash overdraft |
$ | 25,905 | $ | 24,877 | ||||
| Accounts payable |
163,307 | 137,297 | ||||||
| Current maturities of long-term debt |
17,212 | 22,172 | ||||||
| Insurance claims |
76,624 | 40,215 | ||||||
| Other current liabilities |
48,065 | 53,785 | ||||||
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| Total current liabilities |
331,113 | 278,346 | ||||||
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| Long-term debt, excluding current maturities |
115,130 | 99,439 | ||||||
| Insurance claims |
27,494 | 31,468 | ||||||
| Deferred income taxes |
34,135 | 23,662 | ||||||
| Equity |
||||||||
| Landstar System, Inc. and subsidiary shareholders’ equity |
||||||||
| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,602,486 and 66,535,169 shares |
666 | 665 | ||||||
| Additional paid-in capital |
165,712 | 169,268 | ||||||
| Retained earnings |
947,156 | 844,132 | ||||||
| Cost of 19,882,289 and 18,674,902 shares of common stock in treasury |
(813,684 | ) | (763,182 | ) | ||||
| Accumulated other comprehensive income |
727 | 881 | ||||||
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| Total Landstar System, Inc. and subsidiary shareholders’ equity |
300,577 | 251,764 | ||||||
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| Noncontrolling interest |
— | (797 | ) | |||||
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| Total equity |
300,577 | 250,967 | ||||||
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| Total liabilities and equity |
$ | 808,449 | $ | 683,882 | ||||
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LANDSTAR SYSTEM/7
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Fiscal Year Ended | Fiscal Quarter Ended | |||||||||||||||
| December 31, 2011 |
December 25, 2010 |
December 31, 2011 |
December 25, 2010 |
|||||||||||||
| Revenue generated through (in thousands): |
||||||||||||||||
| Business Capacity Owners (1) |
$ | 1,374,664 | $ | 1,289,395 | $ | 353,808 | $ | 323,174 | ||||||||
| Truck Brokerage Carriers |
1,052,605 | 919,605 | 305,483 | 214,416 | ||||||||||||
| Rail intermodal |
75,979 | 70,299 | 21,988 | 18,459 | ||||||||||||
| Ocean cargo carriers |
52,744 | 46,064 | 14,011 | 12,019 | ||||||||||||
| Air cargo carriers |
37,680 | 20,104 | 8,152 | 6,251 | ||||||||||||
| Other (2) |
55,410 | 54,703 | 14,080 | 13,216 | ||||||||||||
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| $ | 2,649,082 | $ | 2,400,170 | $ | 717,522 | $ | 587,535 | |||||||||
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| Number of loads: |
||||||||||||||||
| Business Capacity Owners (1) |
808,210 | 821,330 | 206,220 | 197,060 | ||||||||||||
| Truck Brokerage Carriers |
613,790 | 591,810 | 171,860 | 135,400 | ||||||||||||
| Rail intermodal |
31,370 | 31,070 | 8,620 | 7,950 | ||||||||||||
| Ocean cargo carriers |
8,490 | 6,830 | 2,450 | 1,900 | ||||||||||||
| Air cargo carriers |
7,950 | 6,880 | 1,840 | 2,010 | ||||||||||||
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| 1,469,810 | 1,457,920 | 390,990 | 344,320 | |||||||||||||
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| Revenue per load: |
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| Business Capacity Owners (1) |
$ | 1,701 | $ | 1,570 | $ | 1,716 | $ | 1,640 | ||||||||
| Truck Brokerage Carriers |
1,715 | 1,554 | 1,778 | 1,584 | ||||||||||||
| Rail intermodal |
2,422 | 2,263 | 2,551 | 2,322 | ||||||||||||
| Ocean cargo carriers |
6,212 | 6,744 | 5,719 | 6,326 | ||||||||||||
| Air cargo carriers |
4,740 | 2,922 | 4,430 | 3,110 | ||||||||||||
| December 31, 2011 |
December 25, 2010 |
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| Truck Capacity Providers |
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| Business Capacity Owners (1) (3) |
7,871 | 7,865 | ||||||||||||||
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| Truck Brokerage Carriers: |
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| Approved and active (4) |
19,223 | 18,049 | ||||||||||||||
| Approved |
9,272 | 9,938 | ||||||||||||||
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| 28,495 | 27,987 | |||||||||||||||
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| Total available truck capacity providers |
36,366 | 35,852 | ||||||||||||||
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| Million Dollar Agents (5) |
504 | 468 | ||||||||||||||
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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 8,371 and 8,452 at December 31, 2011 and December 25, 2010, respectively. |
| (4) | Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days. |
| (5) | Independent commission sales agents who on an annual basis generate $1 million or more of Landstar revenue. |