UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)
[  X  ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended March 27, 1999

or

[     ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from _________________ to _____________________

Commission File Number: 0-21238

LANDSTAR SYSTEM, INC.
(Exact name of registrant as specified in its charter)

Delaware                                       06-1313069   
(State or other jurisdiction                        (I.R.S. Employer
of incorporation or organization)                     Identification No.)

4160 Woodcock Drive, Jacksonville, Florida           
(Address of principal executive offices)                      

32207
(Zip Code)

(904) 390-1234
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

Yes  (  X  )      No  (    )     

The number of shares of the registrant's Common Stock, par value $.01 per
share, outstanding as of the close of business on April 30, 1999 was
10,186,833.

PART I

FINANCIAL INFORMATION

Index

Item 1

Consolidated Balance Sheets as of March 27, 1999
and December 26, 1998 ...............................................  Page 3

Consolidated Statements of Income for the Thirteen Weeks 
Ended March 27, 1999 and March 28, 1998 .............................  Page 4

Consolidated Statements of Cash Flows for the Thirteen Weeks
Ended March 27, 1999 and March 28, 1998 .............................  Page 5

Consolidated Statement of Changes in Shareholders'
Equity for the Thirteen Weeks Ended March 27, 1999 ..................  Page 6

Notes to Consolidated Financial Statements.............................  Page 7

Item 2

Management's Discussion and Analysis of 
Financial Condition and Results of Operations........................  Page 9

Item 3

Quantitative and Qualitative Disclosures About Market Risk.............  Page 16

Item 1.  Financial Statements

The interim consolidated financial statements contained herein reflect
all adjustments (all of a normal, recurring nature) which, in the opinion of
management, are necessary for a fair statement of the financial condition,
results of operations, cash flows and changes in shareholders' equity
for the periods presented. They have been prepared in accordance with Rule
10-01 of Regulation S-X and do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements. Operating results for the thirteen weeks ended March 27,
1999 are not necessarily indicative of the results that may be expected for the
entire fiscal year ending December 25, 1999.

These interim financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the Company's
1998 Annual Report on Form 10-K.

2

LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)

March 27,    December 26,
1999            1998
----------    ------------
ASSETS

Current assets:
Cash                                                            $   33,709     $    26,681
Trade accounts receivable, less allowance of $6,208              
and $6,428                                                      163,562         172,471
Other receivables, including advances to independent
contractors, less allowance of $3,814 and $4,007                 17,948          13,980
Prepaid expenses and other current assets                            4,186           5,428
----------     -----------
Total current assets                                        219,405         218,560
----------     -----------
Operating property, less accumulated depreciation
and amortization of $31,424 and $29,603                             48,325          46,958
Goodwill, less accumulated amortization of $6,865 and $6,561           34,645          34,949
Deferred income taxes and other assets                                 12,756          13,198
----------     -----------
Total assets                                                       $  315,131     $   313,665
==========     ===========
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Cash overdraft                                                  $   13,454     $    14,746
Accounts payable                                                    55,973          50,624
Current maturities of long-term debt                                 4,881           4,708
Insurance claims                                                    30,329          29,873
Accrued compensation                                                 4,373           9,881
Other current liabilities                                           33,460          33,058
----------     -----------
Total current liabilities                                   142,470         142,890
----------     -----------
Long-term debt, excluding current maturities                           31,248          29,732
Insurance claims                                                       30,154          29,195

Shareholders' equity:
Common stock, $.01 par value, authorized 20,000,000
shares, issued 13,059,874 shares and 13,041,574 shares              131             130
Additional paid-in capital                                          65,538          65,198
Retained earnings                                                  131,712         124,237
Cost of 2,831,341 and 2,618,041 shares of common stock in 
treasury                                                        (84,248)        (76,176)
Notes receivable arising from exercise of stock options             (1,874)         (1,541)

----------     -----------
Total shareholders' equity                                  111,259         111,848
----------     -----------
Total liabilities and shareholders' equity                         $  315,131     $   313,665
==========     ===========
See accompanying notes to consolidated financial statements.

3

LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)

Thirteen Weeks Ended  
-----------------------       
March 27,    March 28,     
1999         1998              
----------   ----------      

Revenue                                           $  311,435   $  298,184      
Investment income                                        544          331               

Costs and expenses:
Purchased transportation                         229,430      219,934         
Commissions to agents and brokers                 24,271       23,266
Other operating costs                              6,669        7,430           
Insurance and claims                              10,145       12,223           
Selling, general and administrative               25,518       24,272          
Depreciation and amortization                      2,643        2,453        
----------   ----------      
Total costs and expenses                    298,676      289,578        
----------   ----------      
Operating income                                      13,303        8,937          
Interest and debt expense                                739          653            
----------   ----------      
Income from continuing operations
before income taxes                               12,564        8,284          
Income taxes                                           5,089        3,355           
----------   ----------      
Income from continuing operations                      7,475        4,929       
Discontinued operations, net of income taxes                         (437)      
----------   ----------      
Net income                                        $    7,475   $    4,492      
==========   ==========      
Earnings (loss) per common share:
Income from continuing operations             $     0.72   $     0.42      
Loss from discontinued operations                               (0.04)       
----------   ----------      
Earnings per common share                    $     0.72   $     0.38     
==========   ==========      
Diluted earnings (loss) per share:
Income from continuing operations             $     0.71   $     0.42      
Loss from discontinued operations                               (0.04)      
----------   ----------      
Diluted earnings per share                   $     0.71   $     0.38      
==========   ==========      
Average number of shares outstanding:                            
Earnings per common share                    10,368,000   11,686,000      
==========   ==========      
Diluted earnings per share                   10,491,000   11,746,000      
==========   ==========      
See accompanying notes to consolidated financial statements.

4

LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

Thirteen Weeks Ended
---------------------------
March 27,       March 28,
1999            1998
-----------     -----------

OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income                                                                    $     7,475     $     4,492
Adjustments to reconcile net income to net cash provided
by operating activities of continuing operations:
Discontinued operations                                                                            437
Depreciation and amortization of operating property                              2,339           2,099
Amortization of goodwill and non-competition agreement                             304             354
Non-cash interest charges                                                           81              81
Provisions for losses on trade and other accounts receivable                       934           2,050
Gains on sales of operating property                                               (61)            (97)
Deferred income taxes, net                                                         106             114
Changes in operating assets and liabilities, net of discontinued
operations:                         
Decrease (increase) in trade and other accounts receivable                4,007          (1,801)
Decrease (increase) in prepaid expenses and other assets                  1,497          (3,790)
Increase in accounts payable                                              5,349           7,837
Decrease in other liabilities                                            (5,106)         (3,987)
Increase in insurance claims                                              1,415           4,762
-----------     -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS                   18,340          12,551
-----------     -----------
INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Purchases of operating property                                                      (822)         (1,706)
Proceeds from sales of operating property                                             336             713
-----------     -----------
NET CASH USED BY INVESTING ACTIVITIES OF CONTINUING OPERATIONS                         (486)           (993)
-----------     -----------
FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Increase (decrease) in cash overdraft                                              (1,292)          2,372
Proceeds from exercise of stock options and related income tax benefit                  8             889
Purchases of common stock                                                          (8,072)        (16,912)
Principal payments on long-term debt and capital lease obligations                 (1,470)         (1,511)
-----------     -----------
NET CASH USED BY FINANCING ACTIVITIES OF CONTINUING OPERATIONS                      (10,826)        (15,162)
-----------     -----------
NET CASH USED BY DISCONTINUED OPERATIONS                                                             (3,087)
-----------     -----------
Increase (decrease) in cash                                                           7,028          (6,691)
Cash at beginning of period                                                          26,681          17,994
-----------     -----------
Cash at end of period                                                           $    33,709     $    11,303
===========     ===========
See accompanying notes to consolidated financial statements.

5

LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY
Thirteen Weeks Ended March 27, 1999
(Dollars in thousands)
(Unaudited)

Notes
Treasury Stock        Receivable
Common Stock   Additional               at Cost          Arising from
------------------  Paid-In  Retained  -------------------    Exercise of
Shares   Amount   Capital  Earnings    Shares    Amount   Stock Options    Total
---------- ------- --------- --------- --------- ---------  ------------- --------- 

Balance December 26, 1998   13,041,574 $ 130   $ 65,198  $ 124,237 2,618,041 $ (76,176) $     (1,541) $ 111,848

Net income                                                   7,475                                        7,475

Purchases of common stock                                            213,300    (8,072)                  (8,072) 

Exercise of stock options
and related income tax
benefit                      18,300     1        340                                         (333)         8 
---------- ------- --------- --------- --------- ---------  ------------- ---------

Balance March 27, 1999      13,059,874 $ 131   $ 65,538  $ 131,712 2,831,341 $ (84,248) $     (1,874) $ 111,259
========== ======= ========= ========= ========= =========  ============= =========

See accompanying notes to consolidated financial statements.

6

LANDSTAR SYSTEM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The consolidated financial statements include the accounts of Landstar System,
Inc. and its subsidiary, Landstar System Holdings, Inc., and reflect all 
adjustments (all of a normal, recurring nature) which are, in the opinion of
management, necessary for a fair statement of the results for the periods 
presented. The preparation of the consolidated financial statements requires
the use of management's estimates.  Actual results could differ from those 
estimates. Landstar System, Inc. and its subsidiary are herein referred to as 
"Landstar."

(1) Discontinued Operations

On August 22, 1998, Landstar Poole, Inc. ("Landstar Poole"), a wholly-owned 
subsidiary of Landstar which comprised the entire company-owned tractor 
segment, completed the sale of all of its tractors and trailers, certain 
operating assets and the Landstar Poole business to Schneider National, Inc. 
for approximately $40,435,000 in cash. Certain liabilities of the company-owned
tractor segment were retained by Landstar, primarily insurance claims, capital 
lease obligations and accounts payable. Accordingly, the financial results 
of this segment have been reported as discontinued operations in the 
accompanying financial statements.

The loss from discontinued operations for the thirteen-week period ended 
March 28, 1998 was $437,000, net of income tax benefits of $168,000. 

The company-owned tractor segment had revenue of $21,984,000 
for the thirteen weeks ended March 28, 1998. 

(2)   Income Taxes

The provisions for income taxes on continuing operations for the 1999 and
1998 thirteen-week periods were based on an estimated combined full year 
effective income tax rate of 40.5%, which is higher than the statutory 
federal income tax rate primarily as a result of state income taxes, 
amortization of certain goodwill and the meals and entertainment 
exclusion.

7

(3)   Earnings Per Share

Earnings per common share amounts are based on the weighted average 
number of common shares outstanding and diluted earnings per share 
amounts are based on the weighted average number of common shares 
outstanding plus the incremental shares that would have been outstanding
upon the assumed exercise of all dilutive stock options.

(4)   Additional Cash Flow Information

During the 1999 period, Landstar paid income taxes and interest of 
$4,031,000 and $777,000, respectively, and acquired operating property
by entering into capital leases in the amount of $3,159,000. During the 
1998 period, Landstar paid income taxes and interest of $4,049,000 and 
$821,000 ($360,000 related to Landstar Poole), respectively. 

(5)   Segment Information

The following tables summarize information about Landstar's reportable 
business segments for the thirteen weeks ended
March 27, 1999 and March 28, 1998 (in thousands): 

Thirteen Weeks Ended March 27, 1999          
------------------------------------------                 

Carrier    Multimodal   Insurance    Other      Total     
-------    ----------   ---------    -----      -----

External revenue          $  240,744    $  64,459   $  6,232                $ 311,435 
Investment income                                        544                      544
Internal revenue               6,554           96      8,900                   15,550
Operating income              16,399        1,815      4,178    $ (9,089)      13,303

Thirteen Weeks Ended March 28, 1998                 
------------------------------------------                

Carrier    Multimodal   Insurance    Other      Total     
-------    ----------   ---------    -----      ----- 

External revenue          $  229,696   $   62,578   $  5,910               $  298,184
Investment income                                        331                      331
Internal revenue               8,610          120      5,242                   13,972
Operating income              12,389          934      2,725    $ (7,111)       8,937

8

(6)   Commitments and Contingencies

At March 27, 1999, Landstar had commitments for letters of
credit outstanding in the amount of $22,400,000, primarily as
collateral for insurance claims. The commitments for letters of credit
outstanding included $12,340,000 under the Second Amended and Restated 
Credit Agreement and $10,060,000 secured by assets deposited with a 
financial institution.

Landstar is involved in certain claims and pending litigation 
arising from the normal conduct of business. Based on the 
knowledge of the facts and, in certain cases, opinions of 
outside counsel, management believes that adequate provisions
have been made for probable losses with respect to the resolution
of all claims and pending litigation and that the ultimate outcome,
after provisions thereof, will not have a material adverse effect
on the financial condition of Landstar, but could have a material
effect on the results of operations in a given quarter or year.

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following discussion should be read in conjunction with the
attached interim consolidated financial statements and notes
thereto, and with the Company's audited financial statements and
notes thereto for the fiscal year ended December 26, 1998 and
Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the 1998 Annual Report to
Shareholders.

9

RESULTS OF OPERATIONS

Landstar System, Inc. and its subsidiary, Landstar System Holdings, Inc. 
("Landstar" or the "Company"), provide transportation services to a variety 
of market niches throughout the United States and to a lesser extent in Canada
and between the United States and Canada and Mexico through its operating 
subsidiaries which employ different operating strategies. Under the provisions 
of Financial Accounting Standards Board Statement of Financial Accounting 
Standards No. 131, "Disclosure about Segments of an Enterprise and Related 
Information," the Company determined it has three reportable business segments.
These are the carrier, multimodal and insurance segments.

The carrier segment consists of Landstar Ranger, Inc.("Landstar Ranger"), 
Landstar Inway, Inc. ("Landstar Inway") and Landstar Ligon, Inc.("Landstar 
Ligon"). The carrier segment provides truckload transportation for a wide 
range of general commodities over irregular routes with its fleet of dry and 
specialty vans and unsided trailers, including flatbed, drop deck and 
specialty. The carrier segment markets its services primarily through 
independent commission sales agents and utilizes tractors provided by 
independent contractors.  The nature of the carrier segment's business is 
such that a significant portion of its operating costs varies directly with 
revenue. 

The multimodal segment is comprised of Landstar Logistics, Inc. and Landstar 
Express America, Inc. Transportation services provided by the multimodal 
segment include the arrangement of intermodal moves, contract logistics, truck
brokerage, short-to-long haul movement of containers by truck and emergency and
expedited air freight and truck services. The multimodal segment markets its 
services through independent commission sales agents and utilizes capacity 
provided by independent contractors, including railroads and air cargo 
carriers. The nature of the multimodal segment's business is such that a 
significant portion of its operating costs also varies directly with revenue. 

The insurance segment is comprised of Signature Insurance Company 
("Signature"), a wholly-owned offshore insurance subsidiary that was formed in 
March 1997, and Risk Management Claim Services, Inc. The insurance segment 
provides risk and claims management services to Landstar's operating companies.
In addition, it reinsures certain property, casualty and occupational accident 
risks of certain independent contractors who have contracted to haul freight 
for Landstar and provides certain property and casualty insurance directly to 
Landstar's operating subsidiaries. 

On August 22, 1998, Landstar Poole, Inc. ("Landstar Poole"), a wholly-owned 
subsidiary of Landstar which comprised the entire company-owned tractor 
segment, completed the sale of all of its tractors and trailers, certain 
operating assets and the Landstar Poole business to Schneider National, Inc. 
for approximately $40,435,000 in cash. Accordingly, the financial results of 
this segment have been reported as discontinued operations in the accompanying 
financial statements. 

10

Purchased transportation represents the amount an independent contractor 
is paid to haul freight and is primarily based on a contractually agreed-upon
percentage of revenue generated by the haul for truck capacity provided by
independent contractors. Purchased transportation for the intermodal services 
operations and the air freight operations of the multimodal segment is based on
a contractually agreed-upon fixed rate. Purchased transportation as a 
percentage of revenue for the intermodal services operations is normally higher
than that of Landstar's other transportation operations. Purchased 
transportation is the largest component of costs and expenses and, on a 
consolidated basis, increases or decreases in proportion to the revenue 
generated through independent contractors. Commissions to agents and brokers 
are primarily based on contractually agreed-upon percentages of revenue at 
the carrier segment and of gross profit at the multimodal segment. Commissions 
to agents and brokers as a percentage of consolidated revenue will vary 
directly with revenue generated through independent commission sales agents. 
Both purchased transportation and commissions to agents and brokers generally 
will also increase or decrease as a percentage of the Company's consolidated 
revenue if there is a change in the percentage of revenue contributed by 
Signature or by the intermodal services or air freight operations of the 
multimodal segment.

Trailer rental and maintenance costs paid to third parties are the largest 
component of other operating costs.

Potential liability associated with accidents in the trucking industry is 
severe and occurrences are unpredictable. A material increase in the 
frequency or severity of accidents or workers' compensation claims or the 
unfavorable development of existing claims can be expected to adversely affect
Landstar's operating income.

Employee compensation and benefits account for over half of the Company's
selling, general and administrative expense. Other significant components of
selling, general and administrative expense are communications costs and rent 
expense.

Depreciation and amortization primarily relates to depreciation of 
trailers and management information services equipment.

11

The following table sets forth the percentage relationships of
income and expense items to revenue for the periods indicated:

Thirteen Weeks Ended
------------------------    
March 27,     March 28,    
1999          1998    
----------    ----------    

Revenue                                                100.0%        100.0%     
Investment income                                        0.2           0.1      

Costs and expenses:
Purchased transportation                            73.7          73.8     
Commissions to agents and brokers                    7.8           7.8
Other operating costs                                2.1           2.5     
Insurance and claims                                 3.3           4.1      
Selling, general and administrative                  8.2           8.1     
Depreciation and amortization                        0.8           0.8                           
-------        ------     
Total costs and expenses                    95.9          97.1     
-------        ------     
Operating income                                         4.3           3.0     
Interest and debt expense                                0.3           0.2     
-------        ------     
Income from continuing operations 
before income taxes                                  4.0           2.8     
Income taxes                                             1.6           1.1     
-------        ------     
Income from continuing operations                        2.4           1.7     
Discontinued operations, net of income taxes                          (0.2)    
-------        ------     
Net income                                               2.4%          1.5%  
=======        ======  

THIRTEEN WEEKS ENDED MARCH 27, 1999 COMPARED TO THIRTEEN WEEKS
ENDED MARCH 28, 1998

Revenue for the 1999 thirteen-week period was $311,435,000, an increase of 
$13,251,000, or 4.4%, over the 1998 thirteen-week period. The increase was 
attributable to increased revenue of $11,048,000, $1,881,000 and $322,000
at the carrier, multimodal and insurance segments, respectively. Overall,
revenue per revenue mile increased approximately 2%, which reflected 
improved freight quality, while revenue miles were approximately 2%
higher than 1998. The insurance segment generated investment income of 
$544,000 and $331,000 during the 1999 and 1998 periods, respectively.

12

Purchased transportation was 73.7% of revenue in 1999 compared with 73.8% in 
1998. Excluding the effect of increased revenue at the insurance segment, 
purchased transportation was approximately the same percentage of revenue in 
the 1999 period as it was in the 1998 period. Commissions to agents and brokers
were 7.8% of revenue in 1999 and 1998. Other operating costs were 2.1% of 
revenue in 1999 compared with 2.5% in 1998. The decrease in other operating 
costs as a percentage of revenue was due to lower net trailer costs, resulting 
from the conversion of a portion of the Company's trailer fleet from operating 
leases to capital leases, and a one-time reduction in the cost of fuel taxes
and permits, resulting from a favorable fuel tax audit and a permit refund. 
Insurance and claims were 3.3% of revenue in 1999 compared with 4.1% in 1998. 
The decrease in insurance and claims as a percentage of revenue was primarily
attributable to lower premium expense and favorable development of prior year 
claims. Selling, general and administrative costs were 8.2% of revenue in 1999 
compared with 8.1% of revenue in 1998. This increase was primarily due to a 
higher provision for bonuses under the Company's management incentive 
compensation plan, increased management information services costs and 
increased wages and benefits, partially offset by a decrease in the provision 
for customer bad debts and $400,000 of one time costs incurred in the 1998 
relocation of Landstar Express America, Inc. from Charlotte, North Carolina to
Jacksonville, Florida.

Interest and debt expense was 0.3% and 0.2% of revenue in 1998 and 1997, 
respectively. The increase in interest and debt expense as a percentage of 
revenue was due to increased capital lease obligations and increased average 
borrowings on the senior credit facility.

The provisions for income taxes from continuing operations for the 1999 and 
1998 thirteen-week periods were based on an estimated full year combined 
effective income tax rate of approximately 40.5%, which is higher than the 
statutory federal income tax rate primarily as a result of state income taxes, 
amortization of certain goodwill and the meals and entertainment exclusion. 

Net income was $7,475,000, or $0.72 per common share ($0.71 per diluted share),
in the 1999 period compared with $4,492,000, or $0.38 per common share ($0.38
per diluted share), in the 1998 period. The 1998 period included a loss from 
discontinued operations $437,000, or $0.04 loss per common share ($0.04 loss 
per diluted share). 

13

CAPITAL RESOURCES AND LIQUIDITY

Shareholders' equity decreased to $111,259,000 at March 27, 1999 compared 
with $111,848,000 at December 26, 1998, as a result of the purchase of 213,300
shares of the Company's common stock at an aggregate cost of $8,072,000, 
partially offset by net income. Shareholders' equity was 75% and 76% of total
capitalization at March 27, 1999 and December 26, 1998, respectively. 

Working capital and the ratio of current assets to current liabilities were 
$76,935,000 and 1.54 to 1, respectively, at March 27, 1999, compared with 
$75,670,000 and 1.53 to 1, respectively, at December 26, 1998. Landstar has 
historically operated with current ratios approximating 1.5 to 1. Cash 
provided by operating activities of continuing operations was $18,340,000 in 
the 1999 period compared with $12,551,000 in the 1998 period. The increase in 
cash flow provided by operating activities of continuing operations was 
primarily attributable to increased earnings and an improvement in the timing 
of accounts receivable cash collections. During the 1999 period, Landstar 
purchased $822,000 of operating property and acquired $3,159,000 of revenue 
equipment by entering into capital leases. Management anticipates 
acquiring approximately $26,000,000 of operating property during the remainder 
of fiscal year 1999 either by purchase or lease financing.

Management believes that cash flow from operations combined with the Company's
borrowing capacity under its revolving credit agreement will be adequate to
meet Landstar's debt service requirements, fund continued growth, both internal
and through acquisitions, and meet working capital needs.

The Company is aware of the issues associated with the programming code in its
existing computer systems in order for the systems to recognize date sensitive
information when the year changes to 2000. The Company believes it has 
identified all of its information technology ("IT") and non-information 
technology ("non-IT") systems which require change to ensure all of its systems
will be year 2000 compliant. The Company plans to replace all non-IT systems 
that are not year 2000 compliant with year 2000 compliant systems prior to 
year-end 1999. The Company is utilizing in-house staff, with third 
party assistance, to convert its IT systems to year 2000 compliance. The 
Company believes that its pricing, billing and settlement systems are 
critical to the Company's operations. These systems enable the Company to 
invoice customers and pay independent contractors and commission sales agents 
properly. The operating subsidiaries comprising the multimodal segment are 
already year 2000 compliant. Several years ago the Company began to implement a
strategy to standardize the carrier group's critical IT systems using the 
Landstar Ranger system as the base. The critical IT systems of Landstar Ranger,
whose revenue represents 43% of the carrier segment's revenue, have been 
reprogrammed to be year 2000 compliant. The Company has successfully tested 
each of the major subsystems independently and intends to perform an additional
system-wide comprehensive test during the third quarter of 1999. As part of its
ongoing system development, the Company is in the process of converting the 
critical IT systems of Landstar Ligon, whose revenue represents approximately
22% of the carrier segment's revenue, to the same systems as Landstar Ranger. 
This conversion is expected to be completed by July 1999. Landstar Inway, the 
remaining operating company in the carrier segment, has successfully converted 
approximately 90% of its critical IT systems and expects to complete the 
project by May 1999. In addition, as part of the overall standardization plan,
the Company intends to convert all of its operating companies to a generic, 
year 2000 compliant general ledger and accounts payable software system 
during 1999.

14

As part of the Company's comprehensive review of its systems, it is continuing 
to verify the year 2000 readiness of third parties (customers and vendors) who 
provide services that are material to the Company's operations. The Company is 
currently communicating with its material vendors and customers to assess their
year 2000 readiness and will continue to monitor their progress throughout 
1999.

The vast majority of the changes necessary to make the Company's IT systems 
year 2000 compliant were incurred as part of ongoing system development or as
part of a Company-wide strategy to standardize computer systems.  As such,
management has not separately quantified the cost of year 2000 compliance.
However, management estimates the total cost of third party assistance for
year 2000 compliance will approximate $600,000, of which approximately 
$450,000 has been incurred.  Although management expects the cost of 
maintaining and upgrading the Company's computer systems to increase
over the next few years compared to prior years, management does not believe 
that the future costs of maintaining and upgrading Landstar's computer systems
will have a material adverse effect on the results of operations.

In the event the Company determines that one or more of its material vendors 
will not become year 2000 compliant, the Company's contingency plan is to 
select alternative vendors or implement alternate procedures for an interim 
period.

The Company believes that the year 2000 project will be completed in sufficient
time to ensure that transactions affecting the year 2000 will be properly 
recognized by the revised programming code. Failure to complete the 
year 2000 project, both internal and the readiness of third party vendors, 
could have a material adverse effect on the Company's future operating results
or financial condition.

INFLATION

Management does not believe inflation has had a material impact on the 
results of operations or financial condition of Landstar in the past five
years.  However, inflation higher than that experienced in the past five
years might have an adverse effect on the Company's results of operations.

15

FORWARD-LOOKING STATEMENTS

The Company has included various statements in Management's Discussion and 
Analysis of Financial Condition and Results of Operations, which may be 
considered as forward-looking statements of expected future results of 
operations or events. Such statements, based upon management's interpretation 
of currently available information, are subject to risks and uncertainties that
could cause future financial results or events to differ materially from those 
which are presented. Such risks and factors which are outside of the Company's 
control include general economic conditions, competition in the transportation 
industry, governmental regulation, the Company's ability to recruit and retain 
qualified independent contractors, fuel prices, adverse weather conditions and 
the conversion of the Company's or its vendors' critical IT systems to year 
2000 compliance.

SEASONALITY 

Landstar's operations are subject to seasonal trends common to the
trucking industry.  Results of operations for the quarter ending in
March is typically lower than the quarters ending June, September
and December due to reduced shipments and higher operating costs in
the winter months.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company maintains a credit agreement with a syndicate of banks and The 
Chase Manhattan Bank, as the administrative agent, (the "Second Amended and 
Restated Credit Agreement") that provides $200,000,000 of borrowing 
capacity, consisting of $150,000,000 revolving credit and $50,000,000 revolving
credit to finance acquisitions. Borrowings under the Second Amended and 
Restated Credit Agreement bear interest at rates equal to, at the option of 
Landstar, either (i) the greatest of (a) the prime rate as publicly announced
from time to time by The Chase Manhattan Bank, (b) the three month CD rate 
adjusted for statutory reserves and FDIC assessment costs plus 1% and (c) the 
federal funds effective rate plus 1/2%, or, (ii) the rate at the time offered 
to The Chase Manhattan Bank in the Eurodollar market for amounts and periods
comparable to the relevant loan plus a margin that is determined based on the 
level of the Company's Leverage Ratio, as defined in the Second Amended and 
Restated Credit Agreement. There have been no significant changes that would 
affect the information provided in Item 7a of the 1998 Annual Report on 
Form 10-K regarding quantitative and qualitative disclosures about market risk.

16

PART II

OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is routinely a party to litigation incidental to its business, 
primarily involving claims for personal injury and property damage incurred 
in the transportation of freight. The Company maintains insurance which covers 
liability amounts in excess of retained liabilities from personal injury and 
property damages claims.

Item 2.  Changes in Securities

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to a Vote of Security Holders

None.

17

Item 5.  Other Information

None.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

The exhibits listed on the Exhibit Index are filed as part
of this quarterly report on Form 10-Q.

(b)      Form 8-K

None.

18

EXHIBIT INDEX

Registrant's Commission File No.: 0-21238

Exhibit No.       Description
- ------------      -----------

(11)           Statement re: Computation of Per Share Earnings:

11.1 *   Landstar System, Inc. and Subsidiary Calculation of Earnings
Per Common Share for the Thirteen Weeks Ended
March 27, 1999 and March 28, 1998

11.2  *   Landstar System, Inc. and Subsidiary Calculation of Diluted 
Earnings Per Share for the Thirteen Weeks 
Ended March 27, 1999 and March 28, 1998

(27)           Financial Data Schedules:

27.1 *   Restated 1998 Financial Data Schedule

27.2 *   1999 Financial Data Schedule
__________________
* Filed herewith

19

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, thereunto duly authorized.

LANDSTAR SYSTEM, INC.

Date:     May 7, 1999                     Henry H. Gerkens
----------------------------
Henry H. Gerkens
Executive Vice President and
Chief Financial Officer;
Principal Financial Officer

Date:     May 7, 1999                     Robert C. LaRose
----------------------------
Robert C. LaRose
Vice President Finance and Treasurer;
Principal Accounting Officer

20

EXHIBIT 11.1

LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CALCULATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)

Thirteen     
Weeks Ended             
---------------------------   
March 27,      March 28,   
1999           1998      
---------------------------   

Earnings available for earnings per share:

Income from continuing operations                 $      7,475   $      4,929   
Discontinued operations, net of income taxes                             (437)  
------------   ------------   
Net income                                        $      7,475   $      4,492   
============   ============   

Average number of common shares outstanding             10,368         11,686   
============   ============   

Earnings (loss) per common share:
Income from continuing operations               $       0.72   $       0.42   
Loss from discontinued operations                                     (0.04)  
------------   ------------   
Earnings per common share                         $       0.72   $       0.38   
============   ============   

21

EXHIBIT 11.2

LANDSTAR SYSTEM, INC. AND SUBSIDIARY
CALCULATION OF DILUTED EARNINGS PER SHARE
(In thousands, except per share amounts)
(Unaudited)

Thirteen     
Weeks Ended               
---------------------------   
March 27,      March 28,   
1999            1998          
---------------------------   

Income from continuing operations                 $      7,475   $      4,929   
Discontinued operations, net of income taxes                             (437)  
------------   ------------   
Net income                                        $      7,475   $      4,492   
============   ============   

Average number of common shares
outstanding                                         10,368         11,686   

Plus: Incremental shares from
assumed exercise of stock 
options                                                123             60   
------------   ------------   
Average number of common shares              
and common share equivalents                                
outstanding                                         10,491         11,746   
============   ============   

Diluted earnings (loss) per share:                        
Income from continuing operations               $       0.71   $       0.42   
Loss from discontinued operations                                     (0.04)  
------------   ------------   
Diluted earnings per share                        $       0.71   $       0.38   
============   ============   

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

22

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets at March 28, 1998 (Unaudited) and the Consolidated
Statements of Income for the thirteen weeks ended March 28, 1998 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<PERIOD-TYPE>                                    OTHER
<FISCAL-YEAR-END>                          DEC-26-1998
<PERIOD-START>                             DEC-28-1997
<PERIOD-END>                               MAR-28-1998
<CASH>                                          11,303
<SECURITIES>                                     3,036
<RECEIVABLES>                                  180,841
<ALLOWANCES>                                     7,199
<INVENTORY>                                          0
<CURRENT-ASSETS>                               216,137
<PP                                         130,219
<DEPRECIATION>                                  52,685
<TOTAL-ASSETS>                                 351,679
<CURRENT-LIABILITIES>                          146,654
<BONDS>                                         33,149
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           129
<OTHER-SE>                                     140,036
<TOTAL-LIABILITY-AND-EQUITY>                   351,679
<SALES>                                              0
<TOTAL-REVENUES>                               298,184
<CGS>                                                0
<TOTAL-COSTS>                                  227,364
<OTHER-EXPENSES>                                12,223
<LOSS-PROVISION>                                 2,050
<INTEREST-EXPENSE>                                 653
<INCOME-PRETAX>                                  8,284
<INCOME-TAX>                                     3,355
<INCOME-CONTINUING>                              4,929
<DISCONTINUED>                                    (437)
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     4,492
<EPS-PRIMARY>                                     0.42
<EPS-DILUTED>                                     0.42

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets at March 27, 1999 (Unaudited) and the Consolidated
Statements of Income for the thirteen weeks ended March 27, 1999 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<PERIOD-TYPE>                                    OTHER
<FISCAL-YEAR-END>                          DEC-25-1999
<PERIOD-START>                             DEC-27-1998
<PERIOD-END>                               MAR-27-1999
<CASH>                                          33,709
<SECURITIES>                                         0
<RECEIVABLES>                                  169,770
<ALLOWANCES>                                     6,208
<INVENTORY>                                          0
<CURRENT-ASSETS>                               219,405
<PP                                          79,749
<DEPRECIATION>                                  31,424
<TOTAL-ASSETS>                                 315,131
<CURRENT-LIABILITIES>                          142,470
<BONDS>                                         31,248
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           131
<OTHER-SE>                                     111,128
<TOTAL-LIABILITY-AND-EQUITY>                   315,131
<SALES>                                              0
<TOTAL-REVENUES>                               311,435
<CGS>                                                0
<TOTAL-COSTS>                                  236,099
<OTHER-EXPENSES>                                10,145
<LOSS-PROVISION>                                   934
<INTEREST-EXPENSE>                                 739
<INCOME-PRETAX>                                 12,564
<INCOME-TAX>                                     5,089
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     7,475
<EPS-PRIMARY>                                     0.72
<EPS-DILUTED>                                     0.71