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August 8, 2018
L. Kevin Stout
Chief Financial Officer
Landstar System, Inc.
13410 Sutton Park Drive South
Jacksonville, Florida 32224
Re: Landstar System, Inc.
Form 10-K for the Fiscal Year Ended December 30, 2017
Filed February 23, 2018
Form 10-Q for the Quarterly Period Ended June 30, 2018
Filed August 3, 2018
File No. 000-21238
Dear Mr. Stout:
We have limited our review of your filing to the financial statements
and related
disclosures and have the following comments. In some of our comments, we may
ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-Q for the Quarterly Period Ended June 30, 2018
Note 12. Recent Accounting Pronouncements, page 16
1. Please expand your revenue recognition policy to disclose the nature of
your
transportation services, including any performance obligations to arrange
for another party
to transfer goods or services. Please also include significant payment
terms pursuant to
ASC 606-10-50-12.
2. We note your disclosure in the revenue recognition policy footnote on
page 38 of your
December 30, 2017 Form 10-K states you are the primary obligor with
respect to freight
delivery and assume the related credit risk when providing physical
transportation of
L. Kevin Stout
Landstar System, Inc.
August 8, 2018
Page 2
freight; thus, transportation revenue and related freight expenses are
recognized on a gross
basis from BCO Independent Contracts and Truck Brokerage Carriers,
railroad intermodal
services and air and ocean services. It appears upon adoption of ASC
606 you continue to
recognize revenue on a gross basis from the majority of, if not all,
the transactions where a
third party is involved in the transportation of freight to a
customer. In this regard, please
tell us your consideration of the principal agent guidance under the
new standard,
including the nature of your performance obligation(s) with respect to
freight delivery.
Your response should include your assessment of control over each
service(s) (i.e. BCO
Independent Contracts and Truck Brokerage Carriers, railroad
intermodal services and air
and ocean services) that is transferred to a customer. Where a
contract with a customer
involves more than one mode of transportation, please identify and
describe the nature of
the performance obligation(s) and its recognition under ASC 606.
Please be detailed in
your response to us. Refer to ASC 606-10-25-25 and 606-10-55-36
through 40.
3. We note from your disclosure in footnote 12 that the adoption of the
new standard
changed the timing of revenue recognition for most of your
transportation business from
at delivery to over the transit period as the performance obligation
is completed. Please
tell us the average transit period to complete a shipment. Pursuant to
ASC 606-10-50-18,
please discuss the method(s) used to recognize your revenue over the
transit period, such
as a description of the output or input methods and how those methods
are applied, in
addition to why the methods used provide a faithful depiction of the
transfer of goods or
services.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Beverly Singleton at (202) 551-3328 or Jean Yu at (202)
551-3305 with
any questions.
FirstName LastNameL. Kevin Stout Sincerely,
Comapany NameLandstar System, Inc.
Division of
Corporation Finance
August 8, 2018 Page 2 Office of
Transportation and Leisure
FirstName LastName