QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
||||
Emerging growth company |
Page 3 |
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Page 4 |
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Page 5 |
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Page 6 |
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Page 7 |
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Page 8 |
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Page 9 |
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Page 17 |
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Page 27 |
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Page 28 |
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Page 28 |
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Page 28 |
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Page 31 |
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Page 31 |
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Page 33 |
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EX – 31.1 Section 302 CEO Certification |
||||
EX – 31.2 Section 302 CFO Certification |
||||
EX – 32.1 Section 906 CEO Certification |
||||
EX – 32.2 Section 906 CFO Certification |
March 28, 2020 |
December 28, 2019 |
|||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | |
$ | |
||||
Short-term investments |
|
|
||||||
Trade accounts receivable, less allowance of $ |
|
|
||||||
Other receivables, including advances to independent contractors, less allowance of $ |
|
|
||||||
Other current assets |
|
|
||||||
Total current assets |
|
|
||||||
Operating property, less accumulated depreciation and amortization of $ |
|
|
||||||
Goodwill |
|
|
||||||
Other assets |
|
|
||||||
Total assets |
$ | |
$ | |
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current Liabilities |
||||||||
Cash overdraft |
$ | |
$ | |
||||
Accounts payable |
|
|
||||||
Current maturities of long-term debt |
|
|
||||||
Insurance claims |
|
|
||||||
Dividends payable |
— |
|
||||||
Contractor escrow |
|
|
||||||
Other current liabilities |
|
|
||||||
Total current liabilities |
|
|
||||||
Long-term debt, excluding current maturities |
|
|
||||||
Insurance claims |
|
|
||||||
Deferred income taxes and other noncurrent liabilities |
|
|
||||||
Shareholders’ Equity |
||||||||
Common stock, $ |
|
|
||||||
Additional paid-in capital |
|
|
||||||
Retained earnings |
|
|
||||||
Cost of |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total shareholders’ equity |
|
|
||||||
Total liabilities and shareholders’ equity |
$ | |
$ | |
||||
Thirteen Weeks Ended |
||||||||
March 28, 2020 |
March 30, 2019 |
|||||||
Revenue |
$ | |
$ | |
||||
Investment income |
|
|
||||||
Costs and expenses: |
||||||||
Purchased transportation |
|
|
||||||
Commissions to agents |
|
|
||||||
Other operating costs, net of gains on asset sales/dispositions |
|
|
||||||
Insurance and claims |
|
|
||||||
Selling, general and administrative |
|
|
||||||
Depreciation and amortization |
|
|
||||||
Total costs and expenses |
|
|
||||||
Operating income |
|
|
||||||
Interest and debt expense |
|
|
||||||
Income before income taxes |
|
|
||||||
Income taxes |
|
|
||||||
Net income |
|
|
||||||
Less: Net loss attributable to noncontrolling interest |
— |
( |
) | |||||
Net income attributable to Landstar System, Inc. and subsidiary |
$ | |
$ | |
||||
Earnings per common share attributable to Landstar System, Inc. and subsidiary |
$ | |
$ | |
||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary |
$ | |
$ | |
||||
Average number of shares outstanding: |
||||||||
Earnings per common share |
|
|
||||||
Diluted earnings per share |
|
|
||||||
Dividends per common share |
$ | |
$ | |
||||
Thirteen Weeks Ended |
||||||||
March 28, 2020 |
March 30, 2019 |
|||||||
Net income attributable to Landstar System, Inc. and subsidiary |
$ | |
$ | |
||||
Other comprehensive (loss) income: |
||||||||
Unrealized holding (losses) gains on available-for-sale investments, net of tax (benefit) expense of $( |
( |
) | |
|||||
Foreign currency translation (losses) gains |
( |
) | |
|||||
Other comprehensive (loss) income |
( |
) | |
|||||
Comprehensive income attributable to Landstar System, Inc. and subsidiary |
$ | |
$ | |
||||
Thirteen Weeks Ended |
||||||||
March 28, 2020 |
March 30, 2019 |
|||||||
OPERATING ACTIVITIES |
||||||||
Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization of operating property and intangible assets |
||||||||
Non-cash interest charges |
||||||||
Provisions for losses on trade and other accounts receivable |
||||||||
Gains on sales/disposals of operating property |
( |
) | ( |
) | ||||
Deferred income taxes, net |
||||||||
Stock-based compensation |
||||||||
Changes in operating assets and liabilities: |
||||||||
Decrease in trade and other accounts receivable |
||||||||
Decrease in other assets |
||||||||
Increase (decrease) in accounts payable |
( |
) | ||||||
Increase (decrease) in other liabilities |
( |
) | ||||||
Increase (decrease) in insurance claims |
( |
) | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES |
||||||||
INVESTING ACTIVITIES |
||||||||
Net changes in other short-term investments |
— |
|||||||
Sales and maturities of investments |
||||||||
Purchases of investments |
( |
) | ( |
) | ||||
Purchases of operating property |
( |
) | ( |
) | ||||
Proceeds from sales of operating property |
||||||||
NET CASH USED BY INVESTING ACTIVITIES |
( |
) | ( |
) | ||||
FINANCING ACTIVITIES |
||||||||
Decrease in cash overdraft |
( |
) | ( |
) | ||||
Dividends paid |
( |
) | ( |
) | ||||
Proceeds from exercises of stock options |
||||||||
Taxes paid in lieu of shares issued related to stock-based compensation plans |
( |
) | ( |
) | ||||
Purchases of common stock |
( |
) | ( |
) | ||||
Principal payments on finance lease obligations |
( |
) | ( |
) | ||||
Purchase of noncontrolling interest |
— |
( |
) | |||||
NET CASH USED BY FINANCING ACTIVITIES |
( |
) | ( |
) | ||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) | ||||||
(Decrease) increase in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents at beginning of period |
||||||||
Cash and cash equivalents at end of period |
$ | $ | ||||||
Common Stock |
Additional Paid-In |
Retained |
Treasury Stock at Cost |
Accumulated Other Comprehensive |
||||||||||||||||||||||||||||
Shares |
Amount |
Capital |
Earnings |
Shares |
Amount |
Loss |
Total |
|||||||||||||||||||||||||
Balance December 28, 2019 |
|
$ | |
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
||||||||||||||||
Adoption of accounting standard (Note 1 1 ) |
|
|
|
( |
) | |
|
|
( |
) | ||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Dividends ($ |
|
|
|
( |
) | |
|
|
( |
) | ||||||||||||||||||||||
Purchases of common stock |
|
|
|
|
|
( |
) | |
( |
) | ||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans |
|
|
( |
) | |
|
( |
) | |
( |
) | |||||||||||||||||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Other comprehensive loss |
|
|
|
|
|
|
( |
) | ( |
) | ||||||||||||||||||||||
Balance March 28, 2020 |
|
$ | |
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
||||||||||||||||
Landstar System, Inc. and Subsidiary Shareholders |
||||||||||||||||||||||||||||||||||||
Common Stock |
Additional Paid-In |
Retained |
Treasury Stock at Cost |
Accumulated Other Comprehensive |
Non-controlling |
|||||||||||||||||||||||||||||||
Shares |
Amount |
Capital |
Earnings |
Shares |
Amount |
(Loss) Income |
Interests |
Total |
||||||||||||||||||||||||||||
Balance December 29, 2018 |
|
$ | |
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||||
Net income (loss) |
|
( |
) | |
||||||||||||||||||||||||||||||||
Dividends ($ share) |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Purchases of common stock |
|
( |
) | ( |
) | |||||||||||||||||||||||||||||||
Purchase of noncontrolling interests |
|
( |
) | ( |
) | |||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans |
|
|
( |
) | |
( |
) | ( |
) | |||||||||||||||||||||||||||
Stock-based compensation |
|
|
||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
|
|
|||||||||||||||||||||||||||||||||
Balance March 30, 2019 |
|
$ | |
$ | |
$ | |
|
$ | ( |
) | $ | ( |
) | $ | |
$ | |
||||||||||||||||||
(1) |
Significant Accounting Policies |
(2) |
Share-based Payment Arrangements |
Thirteen Weeks Ended |
||||||||
March 28, 2020 |
March 30, 2019 |
|||||||
Total cost of the Plans during the period |
$ | |
$ | |
||||
Amount of related income tax benefit recognized during the period |
( |
) | ( |
) | ||||
Net cost of the Plans during the period |
$ | ( |
) | $ | ( |
) | ||
Number of RSUs |
Weighted Average Grant Date Fair Value |
|||||||
Outstanding at December 28, 2019 |
|
$ | |
|||||
Granted |
|
$ | |
|||||
Shares earned in excess of target (1) |
|
$ | |
|||||
Vested shares, including shares earned in excess of target |
( |
) | $ | |
||||
Forfeited |
( |
) | $ | |
||||
Outstanding at March 28, 2020 |
|
$ | |
|||||
(1) |
Represents shares earned in excess of target under the February 2, 2017 RSU awards as actual results exceeded the target under the awards as a result of fiscal year 2019 results. |
Number of Options |
Weighted Average Exercise Price per Share |
Weighted Average Remaining Contractual Term (years) |
Aggregate Intrinsic Value (000s) |
|||||||||||||
Options outstanding at December 28, 2019 |
|
$ | |
|||||||||||||
Exercised |
( |
) | $ | |
||||||||||||
Options outstanding at March 28, 2020 |
|
$ | |
|
$ | |
||||||||||
Options exercisable at March 28, 2020 |
|
$ | |
|
$ | |
||||||||||
Number of Shares and Deferred Stock Units |
Weighted Average Grant Date Fair Value |
|||||||
Non-vested at December 28, 2019 |
|
$ | |
|||||
Granted |
|
$ | |
|||||
Vested |
( |
) | $ | |
||||
Forfeited |
( |
) | $ | |
||||
Non-vested at March 28, 2020 |
|
$ | |
|||||
(3) |
Income Taxes |
(4) |
Earnings Per Share |
Thirteen Weeks Ended |
||||||||
March 28, 2020 |
March 30, 2019 |
|||||||
Average number of common shares outstanding |
|
|
||||||
Incremental shares from assumed exercises of stock options |
— |
|
||||||
Average number of common shares and common share equivalents outstanding |
|
|
||||||
(5) |
Additional Cash Flow Information |
(6) |
Segment Information |
Thirteen Weeks Ended |
||||||||||||||||||||||||
March 28, 2020 |
March 30, 2019 |
|||||||||||||||||||||||
Transportation Logistics |
Insurance |
Total |
Transportation Logistics |
Insurance |
Total |
|||||||||||||||||||
External revenue |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
Internal revenue |
|
|
|
|
|
|||||||||||||||||||
Investment income |
|
|
|
|
|
|||||||||||||||||||
Operating income |
|
( |
) |
|
|
|
|
|||||||||||||||||
Expenditures on long-lived assets |
|
|
|
|
|
|||||||||||||||||||
Goodwill |
|
|
|
|
|
(7) |
Other Comprehensive Income |
Unrealized Holding Gains (Losses) on Available-for-Sale Securities |
Foreign Currency Translation |
Total |
||||||||||
Balance as of December 28, 2019 |
$ | |
$ | ( |
) | $ | ( |
) | ||||
Other comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||
Balance as of March 28, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
(8) |
Investments |
Gross |
Gross |
|||||||||||||||
Amortized Cost |
Unrealized Gains |
Unrealized Losses |
Fair Value |
|||||||||||||
March 28, 2020 |
||||||||||||||||
Money market investments |
$ | |
$ | — |
$ | — |
$ | |
||||||||
Asset-backed securities |
|
— |
|
|
||||||||||||
Corporate bonds and direct obligations of government agencies |
|
|
|
|
||||||||||||
U.S. Treasury obligations |
|
|
— |
|
||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
||||||||
December 28, 2019 |
||||||||||||||||
Money market investments |
$ | |
$ | — |
$ | — |
$ | |
||||||||
Asset-backed securities |
|
— |
|
|
||||||||||||
Corporate bonds and direct obligations of government agencies |
|
|
|
|
||||||||||||
U.S. Treasury obligations |
|
|
|
|
||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
||||||||
Less than 12 months |
12 months or longer |
Total |
||||||||||||||||||||||
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
|||||||||||||||||||
March 28, 2020 |
||||||||||||||||||||||||
Asset-backed securities |
$ | |
$ | |
$ | — |
$ | — |
$ | |
$ | |
||||||||||||
Corporate bonds and direct obligations of government agencies |
|
|
— |
— |
|
|
||||||||||||||||||
Total |
$ | |
$ | |
$ | — |
$ | — |
$ | |
$ | |
||||||||||||
December 28, 2019 |
||||||||||||||||||||||||
Asset-backed securities |
$ | |
$ | |
$ | — |
$ | — |
$ | |
$ | |
||||||||||||
Corporate bonds and direct obligations of government agencies |
|
|
|
|
|
|
||||||||||||||||||
U.S. Treasury obligations |
|
|
— |
— |
|
|
||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
Finance leases: |
||||
Amortization of right-of-use assets |
$ | |
||
Interest on lease liability |
|
|||
Total finance lease cost |
|
|||
Operating leases: |
||||
Lease cost |
|
|||
Variable lease cost |
— |
|||
Sublease income |
( |
) | ||
Total operating lease (income)/cost |
( |
) | ||
Total lease cost |
$ | |
||
Assets: |
||||||
Operating lease right-of-use assets |
Other assets |
$ | |
|||
Finance lease assets |
Operating property, less accumulated depreciation and amortization |
|
||||
Total lease assets |
$ | |
||||
Liabilities: |
Finance Leases |
Operating Leases |
|||||||
2020 Remainder |
$ | $ | ||||||
2021 |
||||||||
2022 |
||||||||
2023 |
||||||||
2024 |
||||||||
Thereafter |
— |
|||||||
Total future minimum lease payments |
||||||||
Less amount representing interest ( |
||||||||
Present value of minimum lease payments |
$ | $ | ||||||
Current maturities of long-term debt |
||||||||
Long-term debt, excluding current maturities |
||||||||
Other current liabilities |
||||||||
Deferred income taxes and other noncurrent liabilities |
Finance Leases |
Operating Leases |
|||||||
Weighted average remaining lease term (years) |
||||||||
Weighted average discount rate |
% | % |
Thirteen Weeks Ended |
||||||||
March 28, |
March 30, |
|||||||
2020 |
2019 |
|||||||
Revenue generated through (in thousands): |
||||||||
Truck transportation |
||||||||
Truckload: |
||||||||
Van equipment |
$ | 545,307 |
$ | 619,014 |
||||
Unsided/platform equipment |
286,328 |
310,721 |
||||||
Less-than-truckload |
22,941 |
23,376 |
||||||
Total truck transportation |
854,576 |
953,111 |
||||||
Rail intermodal |
28,129 |
30,015 |
||||||
Ocean and air cargo carriers |
26,587 |
30,669 |
||||||
Other (1) |
18,274 |
19,205 |
||||||
$ | 927,566 |
$ | 1,033,000 |
|||||
Revenue on loads hauled via BCO Independent Contractors included in total truck transportation |
$ | 431,279 |
$ | 449,308 |
||||
Number of loads: |
||||||||
Truck transportation |
||||||||
Truckload: |
||||||||
Van equipment |
315,345 |
341,821 |
||||||
Unsided/platform equipment |
120,589 |
125,170 |
||||||
Less-than-truckload |
38,356 |
35,309 |
||||||
Total truck transportation |
474,290 |
502,300 |
||||||
Rail intermodal |
11,540 |
12,460 |
||||||
Ocean and air cargo carriers |
7,070 |
7,510 |
||||||
492,900 |
522,270 |
|||||||
Loads hauled via BCO Independent Contractors included in total truck transportation |
233,400 |
234,850 |
||||||
Revenue per load: |
||||||||
Truck transportation |
||||||||
Truckload: |
||||||||
Van equipment |
$ | 1,729 |
$ | 1,811 |
||||
Unsided/platform equipment |
2,374 |
2,482 |
||||||
Less-than-truckload |
598 |
662 |
||||||
Total truck transportation |
1,802 |
1,897 |
||||||
Rail intermodal |
2,438 |
2,409 |
||||||
Ocean and air cargo carriers |
3,761 |
4,084 |
||||||
Revenue per load on loads hauled via BCO Independent Contractors |
$ | 1,848 |
$ | 1,913 |
||||
Revenue by capacity type (as a % of total revenue): |
||||||||
Truck capacity providers: |
||||||||
BCO Independent Contractors |
46 |
% | 43 |
% | ||||
Truck Brokerage Carriers |
46 |
% | 49 |
% | ||||
Rail intermodal |
3 |
% | 3 |
% | ||||
Ocean and air cargo carriers |
3 |
% | 3 |
% | ||||
Other |
2 |
% | 2 |
% |
(1) |
Includes primarily reinsurance premium revenue generated by the insurance segment and intra-Mexico transportation services revenue generated by Landstar Metro. |
March 28, 2020 |
March 30, 2019 |
|||||||
BCO Independent Contractors |
9,444 |
9,911 |
||||||
Truck Brokerage Carriers: |
||||||||
Approved and active (1) |
38,879 |
40,404 |
||||||
Other approved |
16,657 |
18,659 |
||||||
55,536 |
59,063 |
|||||||
Total available truck capacity providers |
64,980 |
68,974 |
||||||
Trucks provided by BCO Independent Contractors |
10,112 |
10,637 |
(1) |
Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end. |
Thirteen Weeks Ended |
||||||||
March 28, 2020 |
March 30, 2019 |
|||||||
Revenue |
100.0 |
% | 100.0 |
% | ||||
Purchased transportation |
76.5 |
76.6 |
||||||
Commissions to agents |
8.1 |
8.3 |
||||||
Gross profit margin |
15.4 |
% | 15.1 |
% | ||||
Gross profit |
100.0 |
% | 100.0 |
% | ||||
Investment income |
0.8 |
0.7 |
||||||
Indirect costs and expenses: |
||||||||
Other operating costs, net of gains on asset sales/dispositions |
5.8 |
5.3 |
||||||
Insurance and claims |
17.5 |
9.6 |
||||||
Selling, general and administrative |
31.7 |
26.5 |
||||||
Depreciation and amortization |
8.0 |
7.3 |
||||||
Total costs and expenses |
63.0 |
48.7 |
||||||
Operating margin |
37.8 |
% | 52.0 |
% | ||||
Fiscal Period |
Total Number of Shares Purchased |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Programs |
Maximum Number of Shares That May Yet Be Purchased Under the Programs |
||||||||||||
December 28, 2019 |
3,000,000 |
|||||||||||||||
December 29, 2019 – January 25, 2020 |
— |
$ | — |
— |
3,000,000 |
|||||||||||
January 26, 2020 – February 22, 2020 |
27,206 |
109.39 |
27,206 |
2,972,794 |
||||||||||||
February 23, 2020 – March 28, 2020 |
1,151,764 |
98.10 |
1,151,764 |
1,821,030 |
||||||||||||
Total |
1,178,970 |
$ | 98.36 |
1,178,970 |
||||||||||||
Exhibit No. |
Description | |||
(31) |
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.1* |
||||
31.2* |
||||
(32) |
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.1** |
||||
32.2** |
||||
101.INS* |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||
101.SCH* |
Inline XBRL Taxonomy Extension Schema Document | |||
101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||
104* |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed herewith |
** | Furnished herewith |
LANDSTAR SYSTEM, INC. | ||||
Date: May 1, 2020 |
/s/ James B. Gattoni | |||
James B. Gattoni | ||||
President and | ||||
Chief Executive Officer | ||||
Date: May 1, 2020 |
/s/ L. Kevin Stout | |||
L. Kevin Stout | ||||
Vice President and Chief | ||||
Financial Officer |