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United States securities and exchange commission logo
August 10, 2021
James Todd
Vice President & Corporate Controller
Landstar System Inc.
13410 Sutton Park Drive South
Jacksonville, FL 32224
Re: Landstar System
Inc.
Form 10-K for the
Fiscal Year ended December 26, 2020
Filed February 23,
2021
File No. 000-21238
Dear Mr. Todd:
We have reviewed your May 21, 2021 response to our comment
letter and have the
following comment. In our comment, we may ask you to provide us with
information so we may
better understand your disclosure.
Please respond to this comment 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
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your response to this comment, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
April 14, 2021 letter.
Form 10-K for the Fiscal Year ended December 26, 2020
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Changes in Financial Condition and Results of Operations, page 22
1. We have read your
response to prior comment one and continue to believe, as advised in
our April 14, 2021
comment letter and subsequently during our July 27, 2021 conference
call, that you will
need to revise the manner by which you identify and present non-GAAP
measures and metrics
based on non-GAAP measures in your various communications
with investors, as
prescribed by Item 10(e) of Regulation S-K and Regulation G.
The FASB Master
Glossary, as you have observed, defines Gross Margin, which we
regard as synonymous
with Gross Profit, and while the FASB indicates it does not include
all operating expenses,
we do not believe this accommodates the latitude you have applied
James Todd
Landstar System Inc.
August 10, 2021
Page 2
in calculating the margin metrics referenced and utilized in your
disclosures, when
considering other provisions in GAAP and SEC reporting requirements.
Rule 5-03 of Regulation S-X requires the separate presentation of
costs and expenses
applicable to revenues from services (as it does for sales of tangible
products when
material), which is a measure that is differentiated from other
operating costs and
expenses not applicable to revenues, selling, general and
administrative expenses, and
various other items. We have referred you to FASB ASC 705-10-25-3 and
4A, and the
corresponding guidance in FASB ASC 330-10-30-1 through 8, and FASB ASC
340-40-
25-7, which may be utilized by analogy in determining the types of
costs that should be
allocated to cost and expenses applicable to revenues from services.
As indicated in prior comment one and during our conference call, we
do not believe that
your costs of purchased transportation and commissions to agents
represent all costs and
expenses that are applicable to revenues from services in accordance
with GAAP, and
since your resulting measure of gross profit would thereby meet
the definition of a non-
GAAP measure in Item 10(e)(2)(i) of Regulation S-K, the margin metrics
that you
disclose based on this measure would not be scoped-out of the non-GAAP
disclosure
guidance based on Item 10(e)(4)(ii), as suggested in your prior
response.
Please submit the revisions that you propose to address the concerns
outlined above and in
prior comment one, as necessary to conform to the requirements of Item
10(e) of
Regulation S-K and Regulation G. Please ensure that you include
comparable tabulations
of metrics as reported on page 27 of your annual report and pages 22
and 23 of your two
most recent interim reports, using GAAP measures of gross profit, and
a reconciliation
between gross profit in accordance with GAAP and your relabeled
non-GAAP measure,
along with appropriate narratives. We reissue prior comment one.
You may contact Mark Wojciechowski, Staff Accountant, at (202) 551-3759
or Karl
Hiller, Branch Chief, at (202) 551-3686 if you have questions regarding
comments on the
financial statements and related matters.
FirstName LastNameJames Todd Sincerely,
Comapany NameLandstar System Inc.
Division of
Corporation Finance
August 10, 2021 Page 2 Office of Energy
& Transportation
FirstName LastName