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) April 20, 2006

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)

Delaware		021238		06-1313069
(State or other jurisdiction		(Commission		(I.R.S. Employer
of incorporation)		File Number)		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:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		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 April 20, 2006, Landstar System, Inc. (“Landstar”) issued a press release announcing results for the first quarter of fiscal 2006. A copy of the press release is attached hereto as Exhibit 99.1.

In the press release attached hereto as Exhibit 99.1, Landstar provided the following information that may be deemed non-GAAP financial measures: (1) with respect to the fiscal quarter periods ended April 1, 2006 and March 26, 2005, revenue per load for the global logistics segment, excluding revenue and loads related to emergency transportation services provided primarily under the FAA Contract.

Each of the foregoing financial measures should be considered in addition to, and not as a substitute for, the corresponding GAAP financial information also presented in the press release.

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 Landstar’s financial condition and results of operations; (2) this information will facilitate comparisons by investors of Landstar’s results as compared to the results of peer companies; (3) a significant portion of the emergency transportation services previously provided under the FAA Contract were provided on the basis of a daily rate for the use of transportation equipment in question, and therefore load and per load information is not necessarily available or appropriate for a significant portion of the related revenue; and (4) 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 April 20, 2006 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.

RCL/ac

Exhibit 99.1

Landstar System, Inc.
13410 Sutton Park Drive, South
Jacksonville, FL 32224
904 398 9400

For Immediate Release		Contact: Bob LaRose
		Landstar System, Inc.
		www.landstar.com
April 20, 2006		904-398-9400

LANDSTAR SYSTEM REPORTS FIRST QUARTER REVENUE INCREASE OF
21 PERCENT AND A 52 PERCENT INCREASE IN EARNINGS PER DILUTED
SHARE TO A RECORD $.41 PER DILUTED SHARE

Jacksonville, FL — Landstar System, Inc. (NASDAQ: LSTR) reported revenue rose 21 percent to a record $610 million in the 2006 first quarter from $502 million in the 2005 first quarter. Net income for the 2006 first quarter was a record $24.4 million, or $.41 per diluted share, compared to net income of $16.8 million, or $.27 per diluted share, for the 2005 first quarter. Operating margin was 6.8 percent in the 2006 first quarter compared to 5.7 percent in the 2005 first quarter.

Landstar’s carrier group of companies generated $428 million of revenue in the 2006 first quarter, compared with revenue of $371 million in the 2005 first quarter. In the 2006 and 2005 first quarters, the carrier group invoiced customers $33.8 million and $20.6 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Revenue at Landstar Global Logistics was $173 million in the 2006 first quarter compared with $124 million in the 2005 first quarter. The 2006 and 2005 first quarter for Landstar Global Logistics included approximately $35 million and $7 million of revenue, respectively, from disaster relief services provided under a contract between Landstar Express America and the United States Department of Transportation/Federal Aviation Administration.

LANDSTAR SYSTEM/2

 

Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.025 per share. The dividend is payable on May 31, 2006, to stockholders of record at the close of business on May 10, 2006. It is the intention of the Board of Directors to continue to pay a quarterly dividend on a go forward basis.

“Landstar’s 2006 first quarter performance was the best first quarter operating performance in its history,” said Landstar President and CEO Henry Gerkens. “Consolidated revenue increased by 21 percent and diluted earnings per share increased 52 percent. Both revenue and earnings were the highest first quarter amounts in Landstar history. This increase reflected strong revenue growth at the carrier segment of 15 percent and a 40 percent increase in revenue at Landstar Global Logistics. On a consolidated basis, revenue generated through BCOs increased 9 percent, truck brokerage revenue increased 34 percent and rail intermodal revenue increased 44 percent. In addition to strong revenue growth, we continue to improve our operating margin, which increased 116 basis points compared to the 2005 first quarter to 6.8 percent.”

“Trailing twelve-month return on average equity remained high at 55 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 36 percent. During the 2006 first quarter, we purchased 249,300 shares of common stock at a total cost of $11,131,000, while reducing long-term debt by $63 million,” Gerkens said. “The Company has the ability to purchase an additional 2,275,927 shares of its common stock under its authorized share repurchase program.”

“So far, demand for our services remains strong. Based upon the continuation of the current operating environment, I would anticipate revenue growth for the 2006 second quarter to be within a range of 16 to 20 percent compared to the 2005 second quarter. I anticipate earnings for the second quarter of 2006 to be within a range of $.42 to $.48 per diluted share, including an anticipated charge of approximately $.02 per diluted share attributable to the adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payment,” said Gerkens.

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2 pm ET. To access the webcast, visit the Company’s website at www.landstar.com. Click on Investors and then the webcast icon.

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

LANDSTAR SYSTEM/3

 

facts are “forward-looking statements.” This press release contains forward-looking statements, such as statements, which relate to Landstar’s business objectives, plans, strategies and expectations. Terms such as “anticipates,” “believes,” “estimates,” “plans,” “predicts,” “may,” “should,” “will,” the negative thereof and similar expressions, including any such expressions with respect to the level of comfort with analyst estimates, 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 accident claims; dependence on independent sales agents; dependence on third party capacity providers; disruptions or failures in our computer systems; a downturn in domestic 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 2005 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. delivers safe, specialized transportation services to a broad range of customers worldwide. The Company identifies and fulfills shippers’ needs through the coordination of individual businesses comprised of independent sales agents and third-party transportation capacity providers. Landstar’s carrier group, which is comprised of Landstar Gemini, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Ranger, Inc. and Landstar Carrier Services, Inc., delivers excellence in complete over-the-road transportation services. Landstar’s global logistics group, which is comprised of Landstar Global Logistics, Inc. and its subsidiaries Landstar Express America, Inc. and Landstar Logistics, Inc., provides international and domestic multimodal (over-the-road, air, ocean and rail) transportation, expedited and contract logistics services. All Landstar operating companies are certified to ISO 9001:2000 quality 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.
Selected Segment Information
(Dollars in thousands)
(Unaudited)

		Thirteen Weeks Ended
		April 1,				March 26,
		2006				2005
External Revenue
Carrier segment		$	428,313			$	371,043
Global Logistics segment			173,425				123,696
Insurance segment			8,304				7,473
External revenue		$	610,042			$	502,212
Operating Income
Carrier segment (1)		$	40,571			$	31,031
Global Logistics segment (1)			8,727				5,166
Insurance segment			6,676				4,092
Other (1)			(14,363	)			(11,842	)
Operating income (1)		$	41,611			$	28,447

LANDSTAR SYSTEM/6

 

Landstar System, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)

		April 1,				Dec. 31,
		2006				2005
ASSETS
Current assets:
Cash and cash equivalents		$	49,401			$	29,398
Short-term investments			20,496				20,693
Trade accounts receivable, less allowance of $5,439 and $4,655			437,286				534,274
Other receivables, including advances to independent contractors, less allowance of $4,444 and $4,342			21,644				11,384
Deferred income taxes and other current assets(1)			17,797				21,106
Total current assets(1)			546,624				616,855
Operating property, less accumulated depreciation and amortization of $71,501 and $68,561			85,449				89,131
Goodwill			31,134				31,134
Other assets			29,821				28,694
Total assets(1)		$	693,028			$	765,814
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Cash overdraft		$	23,995			$	29,829
Accounts payable			146,141				164,509
Current maturities of long-term debt			12,250				12,122
Insurance claims			31,923				27,887
Other current liabilities			62,579				65,149
Total current liabilities			276,888				299,496
Long-term debt, excluding current maturities			91,735				154,851
Insurance claims			32,244				37,840
Deferred income taxes			18,471				17,938
Shareholders’ equity:
Common stock, $.01 par value, authorized 160,000,000 shares, issued 64,391,342 and 64,151,902 shares			644				642
Additional paid-in capital(1)			90,043				84,532
Retained earnings(1)			415,425				392,549
Cost of 5,579,583 and 5,344,883 shares of common stock in treasury			(232,301	)			(221,776	)
Accumulated other comprehensive loss			(74	)			(211	)
Notes receivable arising from exercises of stock options			(47	)			(47	)
Total shareholders’ equity(1)			273,690				255,689
Total liabilities and shareholders’ equity(1)		$	693,028			$	765,814

LANDSTAR SYSTEM/7

 

Landstar System, Inc.
Supplemental Information
(Unaudited)

		Thirteen Weeks Ended
		April 1,				March 26,
		2006				2005
Carrier Segment
External revenue generated through (in thousands):
Business Capacity Owners (1)		$	303,793			$	282,675
Other third party truck capacity providers			124,520				88,368
		$	428,313			$	371,043
Revenue per revenue mile		$	1.99			$	1.80
Revenue per load		$	1,580			$	1,444
Average length of haul (miles)			793				802
Number of loads			271,000				257,000
Global Logistics Segment
External revenue generated through (in thousands):
Business Capacity Owners (1) (2)		$	24,832			$	17,838
Other third party truck capacity providers			100,627				79,081
Rail, Air, Ocean and Bus Carriers(3)			47,966				26,777
		$	173,425			$	123,696
Revenue per load (4)		$	1,500			$	1,541
Number of loads (4)			92,000				76,000

		As of				As of
		April 1,				March 26,
		2006				2005
Capacity
Business Capacity Owners (1) (5)			8,219				7,828
Other third party truck capacity providers:
Approved and active (6)			13,698				11,737
Approved			8,381				7,255
			22,079				18,992
Total available truck capacity providers			30,298				26,820