8-K

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)      October 16, 2003

                        

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

(Address of principal executive offices)

32224

(Zip Code)

(904) 398-9400

(Registrant's telephone number, including area code)

N/A

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

Item 5.  Other Events

On October 16, 2003, Landstar System, Inc. announced that its Board of Directors declared a two-for-one stock split of its common stock (“Common Stock”), to be effected in the form of a 100% stock dividend.  Stockholders of record on November 3, 2003 will be issued a certificate representing one additional share of Common Stock for each share of Common Stock held on November 3, 2003.  The distribution date for this stock dividend will be on or about November 13, 2003.

Item 12.  Results of Operations and Financial Condition

On October 16, 2003, Landstar System, Inc. issued a press release announcing results for the third quarter of fiscal 2003.  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 non-GAAP financial measures: (1) earnings per diluted share before costs related to settlement of one lawsuit and (2) net income excluding costs relating to settlement of this lawsuit.  The non-GAAP financial information presented in the attached press release should be considered in addition to, and not as a substitute for, the corresponding GAAP financial information also presented in the attached press release.

Management believes that it is appropriate to present this non-GAAP financial information for the following reasons: (1) the circumstances relating to this lawsuit are unusual and unique and thus are not likely to recur as a part of Landstar’s normal operations, (2) disclosure of the impact of these costs on earnings per diluted share and net income will allow investors to better understand the underlying trends in Landstar’s financial condition and results of operation, (3) this information will facilitate comparisons by investors of Landstar’s results as compared to the results of peer companies and (4) management considers this non-GAAP financial information in its decision making.

The information furnished under Item 12 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.

EX-99

EXHIBIT 99.1

PRESS RELEASE,

dated October 16, 2003

For Immediate Release

Contact: Henry H. Gerkens

Landstar System, Inc.

www.landstar.com

904-398-9400

October 16, 2003

LANDSTAR SYSTEM REPORTS RESULTS FOR THE 2003 THIRD QUARTER AND DECLARES TWO-FOR-ONE STOCK SPLIT

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported 2003 third quarter net income of $11.8 million, or $.76 per diluted share.  As previously disclosed, the 2003 third quarter included $3.2 million of costs to defend and settle the Gulf Bridge lawsuit.  These costs, net of related income tax benefits, reduced net income in the 2003 period by $2.0 million, or $.13 per diluted share.  Excluding the costs related to this litigation, net income was $13.9 million, or $.89 per diluted share.  Net income in the 2002 third quarter was $13.9 million, or $.83 per diluted share.  Revenue was a record $406.8 million for the thirteen-week period ended September 27, 2003, compared with $385.7 million for the thirteen-week period ended September 28, 2002.  Landstar’s carrier group of companies generated $307.8 million of reven ue in the 2003 third quarter compared with $298.9 million in the 2002 third quarter.  In the 2003 and 2002 third quarters, the carrier group invoiced customers $7.8 million and $3.0 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar’s multimodal services group of companies generated revenue of $91.9 million in the 2003 third quarter compared with $80.0 million in the 2002 third quarter.  

Net income for the thirty-nine-week period ended September 27, 2003 was $35.6 million, or $2.21 per diluted share.  The 2003 thirty-nine-week period included $4.2 million of costs to defend and settle the Gulf Bridge lawsuit.  These costs, net of related income tax benefits, reduced net income in the 2003 thirty-nine-week period by $2.7 million, or $.16 per diluted share.  Excluding the costs related to this litigation, net income was $38.2 million, or $2.37 per diluted share, compared to $34.7 million, or $2.06 per diluted share in the 2002 thirty-nine-week period.

Revenue was $1,163 million in the 2003 thirty-nine-week period, compared to revenue of $1,113 million in the 2002 period.  Landstar’s carrier group of companies generated $901.0 million of revenue in the thirty-nine-week period ended September 27, 2003 compared with $878.8 million in the thirty-nine-week period ended September 28, 2002.   In the 2003 and 2002 thirty-nine-week periods, the carrier group invoiced customers $26.4 million and $6.2 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue.  Landstar’s multimodal services group of companies generated $240.6 million of revenue in the 2003 thirty-nine-week period compared with $213.0 million in the comparable 2002 period.  

Landstar also announced that its Board of Directors has declared a two-for-one stock split to be effected in the form of a 100% stock dividend.  Stockholders will receive one additional share for every share held on the record date for the stock-split, which is November 3, 2003.  Additional shares will be mailed or delivered on or about November 13, 2003 by the Company’s Transfer Agent, The Bank of New York.

 “I am pleased with Landstar’s 2003 third quarter performance,” said Landstar Chairman and CEO, Jeff Crowe.  “Revenue in the 2003 third quarter was the highest third quarter revenue amount in Landstar history.  Overall, revenue increased 5.5 percent over the 2002 third quarter.  Revenue generated through other third party truck capacity providers (brokerage) continued to be strong and increased more than 23 percent over the 2002 third quarter.  In addition, trailing twelve-month return on average equity remained high at 36 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 23 percent.  During the 2003 third quarter, we purchased 480,000 shares of common stock at a total cost of $29,630,000,” Crowe said.  

“Based upon the current operating environment, I currently believe Landstar will earn between $.85 to $.95 per diluted share for the fourth quarter.”

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2 p.m. 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 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 our 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; and substantial industry competition. 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's carrier group is comprised of Landstar Gemini, Inc., Landstar Inway, Inc., Landstar Ligon, Inc. and Landstar Ranger, Inc. and delivers excellence in complete over-the-road transportation services. Landstar's multimodal group is comprised of Landstar Express America, Inc. and Landstar Logistics, Inc., providing expedited, contract logistics and intermodal transportation services. All Landstar operating companies are certified to ISO 9001:2000 quality management system standards. Landstar System, Inc.'s common stock trades on The NASDAQ Stock Market® under the symbol LSTR.    (Tables follow)

LANDSTAR SYSTEM/4

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)

			Thirty Nine Weeks Ended		Thirteen Weeks Ended
			Sept. 27,	Sept. 28,	Sept. 27,	Sept. 28,
			2003	2002	2003	2002
Revenue			$  1,162,574	$  1,112,569	$ 406,772	$ 385,660
Investment income			960	1,552	337	474
Costs and expenses:
	Purchased transportation		862,371	822,193	300,907	285,771
	Commissions to agents		91,224	87,550	32,601	30,645
	Other operating costs		27,571	26,274	9,731	8,460
	Insurance and claims		32,187	32,672	10,026	8,288
	Selling, general and administrative (1)		81,004	77,421	30,668	26,698
	Depreciation and amortization		9,558	8,521	3,213	2,821
		Total costs and expenses	1,103,915	1,054,631	387,146	362,683
Operating income (1)			59,619	59,490	19,963	23,451
Interest and debt expense			2,400	3,518	856	966
Income before income taxes (1)			57,219	55,972	19,107	22,485
Income taxes			21,667	21,269	7,280	8,544
Net income (1)			$       35,552	$       34,703	$    11,827	$    13,941
Earnings per common share (1)			$       2.29	$       2.14	$        0.78	$        0.86
Diluted earnings per share (1)			$       2.21	$       2.06	$        0.76	$        0.83
Average number of shares outstanding:
	Earnings per common share		15,501,000	16,223,000	15,077,000	16,224,000
	Diluted earnings per share		16,097,000	16,847,000	15,643,000	16,875,000

(1) The 2003 thirty-nine and thirteen-week periods include $4,150 and $3,180, respectively, of costs to defend and settle the Gulf Bridge lawsuit. Net of related income tax benefits, these costs reduced net income for the thirty-nine and thirteen-week periods ended September 27, 2003 by $2,650, or $0.17 per common share ($0.16 per diluted share), and $2,030, or $0.13 per common share ($0.13 per diluted share), respectively.

LANDSTAR SYSTEM/5

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

SELECTED SEGMENT INFORMATION

(Dollars in thousands)

(Unaudited)

	Thirty Nine Weeks Ended		Thirteen Weeks Ended
	Sept. 27,	Sept. 28,	Sept. 27,	Sept. 28,
	2003	2002	2003	2002
External Revenue
Carrier segment	$  901,041	$  878,836	$  307,755	$  298,872
Multimodal segment	240,551	213,018	91,911	79,959
Insurance segment	20,982	20,715	7,106	6,829
External revenue	$  1,162,574	$  1,112,569	$  406,772	$  385,660
Operating Income
Carrier segment	$    66,398	$    63,912	$    23,542	$    22,453
Multimodal segment (1)	2,756	5,007	(235)	2,222
Insurance segment	17,830	15,867	6,769	8,307
Other	(27,365)	(25,296)	(10,113)	(9,531)
Operating income (1)	$    59,619	$    59,490	$    19,963	$    23,451

(1) The 2003 thirty-nine and thirteen-week periods include $4,150 and $3,180, respectively, of costs to defend and settle the Gulf Bridge lawsuit.

LANDSTAR SYSTEM/6

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

(Unaudited)

ASSETS			Sept. 27, 2003	Dec. 28, 2002
Current Assets
	Cash		$   9,743	$   9,775
	Short-term investments		53,961	58,802
	Trade accounts receivable, less allowance of $3,120 and $3,953		201,747	190,052
	Other receivables, including advances to independent
		contractors, less allowance of $5,782 and $5,331	11,850	12,640
	Prepaid expenses and other current assets		9,326	3,338
		Total current assets	286,627	274,607
	Operating property, less accumulated depreciation and
		amortization of $58,296 and $52,841	69,212	76,774
	Goodwill		31,134	31,134
	Other assets		17,864	18,233
	Total assets		$  404,837	$  400,748
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
	Cash overdraft		$   15,435	$   16,545
	Accounts payable		76,721	60,297
	Current maturities of long-term debt		10,629	12,123
	Insurance claims		26,878	24,419
	Other current liabilities		39,749	40,593
		Total current liabilities	169,412	153,977
Long-term debt, excluding current maturities			78,493	65,237
Insurance claims			26,874	25,276
Deferred income taxes			7,073	7,165
Shareholders’ equity
	Common stock, $0.01 par value, authorized 50,000,000 and  20,000,000
	shares, issued 16,699,269 and 16,337,506 shares		167	163
	Additional paid-in capital		14,356	2,609
	Retained earnings		209,369	173,817
	Cost of 1,809,930 and 554,879 shares of common stock in  treasury		(100,150)	(26,306)
	Notes receivable arising from exercise of stock options		(757)	(1,190)
		Total shareholders’ equity	122,985	149,093
Total liabilities and shareholders’ equity			$  404,837	$  400,748

LANDSTAR SYSTEM/7

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

SUPPLEMENTAL INFORMATION

September 27, 2003

(Unaudited)

	Thirty Nine Weeks Ended		Thirteen Weeks Ended
	Sept. 27,	Sept. 28,	Sept. 27,	Sept. 28,
	2003	2002	2003	2002
Carrier Segment
External revenue generated through (in thousands):
Business Capacity Owners (1)	$  775,696	$  781,990	$  265,824	$  262,366
Other third party truck capacity providers	125,345	96,846	41,931	36,506
	$  901,041	$  878,836	$  307,755	$  298,872
Revenue per revenue mile	$        1.72	$        1.68	$        1.70	$       1.68
Revenue per load	$      1,210	$      1,163	$      1,243	$     1,188
Average length of haul (miles)	702	693	730	706
Number of loads	744,875	755,987	247,585	251,623
Multimodal Segment
External revenue generated through (in thousands):
Business capacity Owners (1) (2)	$    37,674	$    42,553	$    14,921	$    14,833
Other third party truck capacity providers	131,155	101,588	50,354	38,126
Rail and Air Carriers	71,722	68,877	26,636	27,000
	$  240,551	$  213,018	$    91,911	$    79,959
Revenue per load	$      1,305	$      1,110	$      1,348	$      1,133
Number of loads	184,282	191,923	68,163	70,599
	As of Sept. 27, 2003	As of Dec. 28,  2002
Capacity
Business Capacity Owners (1) (3)	7,461	7,365
Other third party truck capacity providers:
Approved and active (4)	9,139	8,610
Approved	6,204	5,310
	15,343	13,920
Total available truck capacity providers	22,804	21,285

(1) Business Capacity Owners are independent contractors who provide truck capacity to the Company under exclusive

      lease arrangements.

(2) Includes revenue generated through Carrier Segment Business Capacity Owners.

(3) Trucks provided by business capacity owners were 8,451 and 8,402, respectively.

(4) Active refers to other third party truck capacity providers who have moved at least one load in the past 180 days.