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JACKSONVILLE, Fla., Jan. 28 /PRNewswire-FirstCall/ -- Landstar System,Inc. (Nasdaq: LSTR) reported 2008 fourth quarter net income of $24.6 million,or $0.47 per diluted share, on revenue of $603.8 million compared to netincome of $29.0 million, or $0.54 per diluted share, on revenue of $642.9million in the 2007 fourth quarter. Revenue hauled by BCO Independent Contractors in the fourth quarter of2008 was $317 million, or 53 percent of revenue, compared to $341 million, or53 percent of revenue, in the 2007 fourth quarter. In the 2008 and 2007fourth quarters, the Company invoiced customers $55 million and $54 million,respectively, in fuel surcharges that were passed on 100 percent to BCOIndependent Contractors and excluded from revenue. Revenue hauled by third-party truck brokerage carriers was $230 million, or 38 percent of revenue, inthe 2008 fourth quarter compared to $236 million, or 37 percent of revenue, inthe 2007 fourth quarter. Revenue hauled by rail, air and ocean cargo carrierswas $47 million, or 8 percent of revenue, in the 2008 fourth quarter comparedto $54 million, or 8 percent of revenue, in the 2007 fourth quarter. Revenue in the fiscal year ended December 27, 2008 was $2.643 billioncompared to $2.487 billion in the 2007 fiscal year. Net income for the 2008fiscal year was $110.9 million, or $2.10 per diluted share, compared to netincome of $109.7 million, or $1.99 per diluted share, for fiscal year 2007. Revenue hauled by BCO Independent Contractors in the 2008 fiscal year was$1.388 billion, or 53 percent of revenue, compared to $1.377 billion, or 55percent of revenue, in 2007. In fiscal years 2008 and 2007, the Companyinvoiced customers $295 million and $179 million, respectively, in fuelsurcharges that were passed on 100 percent to BCO Independent Contractors andexcluded from revenue. Revenue hauled by third-party truck brokerage carrierswas $996 million, or 38 percent of revenue, in fiscal year 2008 compared to$885 million, or 36 percent of revenue, in fiscal year 2007. Revenue hauledby rail, air and ocean cargo carriers was $193 million, or 7 percent ofrevenue, in fiscal year 2008 compared to $180 million, or 7 percent ofrevenue, in fiscal year 2007. Landstar System, Inc. announced that its Board of Directors has declared aquarterly dividend of $0.04 per share. The dividend is payable on February27, 2009 to stockholders of record at the close of business on February 6,2009. It is the intention of the Board of Directors to continue to pay aquarterly dividend. In addition, Landstar System, Inc. announced that itsBoard of Directors authorized the purchase of an additional 1,569,000 sharesof its common stock from time to time in the open market and in privatelynegotiated transactions. During the 2008 fourth quarter, Landstar purchasedapproximately 724,000 shares of its common stock at a total cost of $23.1million bringing the total number of shares purchased during fiscal year 2008to 1,304,000 at an aggregate cost of $51.6 million. Currently, there areapproximately 3,000,000 shares of the Company's common stock available forpurchase under Landstar's authorized share purchase program. "Landstar's 2008 fourth quarter revenue was significantly impacted bylower freight demand related to the severe downturn in the domestic and globaleconomies," said Landstar President and Chief Executive Officer Henry Gerkens."The number of loads hauled by BCO Independent Contractors, truck brokeragecarriers and rail intermodal carriers were each below the number of loadshauled by each of these modes during the 2007 fourth quarter. Pricing, basedon rate per load, also softened throughout the quarter as weak freight demandcreated additional excess capacity. However, rate per load in the 2008 fourthquarter continued to exceed prior year rates, and the current environmentcontinues to present Landstar with great opportunities in adding new agentsand capacity." "Regardless of the current economic environment, Landstar's non-assetbased variable cost business model continues to generate significant cash flowand outstanding returns. During the 2008 fourth quarter, cash from operationswas $69 million, compared to $29 million in the 2007 fourth quarter. Duringthe 2008 fourth quarter, the Company purchased $23 million of its common stockin the open market while, at the same time, it reduced borrowings on itssenior credit facility by $21 million. At December 27, 2008, there was $127million available for borrowings under the Company's senior credit facility,while the ratio of debt to capital was 35 percent. Since September 2008, cashand short term investments increased $19 million to $122 million at December27, 2008. Return on average equity for fiscal year 2008 was 48 percent andreturn on invested capital, net income divided by the sum of average equityplus average debt was 29 percent. Landstar's balance sheet remains strong." Gerkens continued, "In the last four weeks of 2008, consolidated loadvolume was 15 percent below the load volumes reported in the correspondingperiod of 2007. This downward revenue trend has continued into the first fewweeks of January but is not necessarily an accurate indicator of the revenuethat might be expected for the entire fiscal year. At this time, due to theuncertainty of the current economic environment and related weak freightdemand, and the difficulty in forecasting when there may be a pickup inoverall economic activity, Landstar will not be providing 2009 revenue andearnings guidance. However, as an example of how Landstar's variable costbusiness model would react under certain negative assumptions, it is worthnoting that if one were to assume fiscal year 2009 Company revenue performanceof a twenty percent decline to flat compared to fiscal year 2008, and takinginto account certain cost reduction actions taken by the Company, Landstarshould generate diluted earnings per share in a range of $1.65 to $2.12. Thisin no way should be interpreted as any sort of guidance, but rather ademonstration of the resiliency of our model and that Landstar's ability togenerate earnings is somewhat insulated from possible effects of a prolongedrecession." Landstar will provide a live webcast of its quarterly earnings conferencecall this afternoon at 4:15 pm ET. To access the webcast, visit the Company'swebsite at www.landstar.com; click on "Investor Relations" and "Webcasts,"then click on "Landstar's Fourth Quarter 2008 Earnings Release ConferenceCall." The following is a "safe harbor" statement under the Private SecuritiesLitigation Reform Act of 1995. Statements contained in this press releasethat are not based on historical facts are "forward-looking statements". Thispress release contains forward-looking statements, such as statements whichrelate to Landstar's business objectives, plans, strategies, expectations andintentions. Terms such as "anticipates," "believes," "estimates,""intention," "plans," "predicts," "may," "should," "will," the negativethereof and similar expressions are intended to identify forward-lookingstatements. Such statements are by nature subject to uncertainties and risks,including but not limited to: an increase in the frequency or severity ofaccidents or workers' compensation claims; unfavorable development of existingclaims; dependence on independent sales agents; dependence on third-partycapacity providers; disruptions or failures in our computer systems; adownturn in domestic or international economic growth or growth in thetransportation sector; substantial industry competition; and otheroperational, financial or legal risks or uncertainties detailed in Landstar'sForm 10K for the 2007 fiscal year, described in Item 1A Risk Factors, andother SEC filings from time to time. These risks and uncertainties couldcause actual results or events to differ materially from historical results orthose anticipated. Investors should not place undue reliance on such forward-looking statements, and Landstar undertakes no obligation to publicly updateor revise any forward-looking statements. About Landstar: Landstar System, Inc. delivers safe, specialized transportation andlogistics services to a broad range of customers worldwide. The Companyidentifies and fulfills shippers' needs through the coordination of individualbusinesses comprised of independent sales agents and third-partytransportation and logistics capacity providers. Through its operatingsubsidiaries, Landstar delivers excellence in complete transportationlogistics services and solutions. All Landstar operating companies arecertified to ISO 9001:2000 quality management system standards. LandstarSystem, Inc. is headquartered in Jacksonville, Florida. Its common stocktrades on The NASDAQ Stock Market(R) under the symbol LSTR.
(Tables follow)
Landstar System, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Fiscal Year Ended Thirteen Weeks Ended
Dec. 27, Dec. 29, Dec. 27, Dec. 29,
2008 2007 2008 2007
Revenue $2,643,069 $2,487,277 $603,837 $642,865
Investment income 3,339 5,347 653 1,244
Costs and expenses:
Purchased transportation 2,033,384 1,884,207 460,175 489,426
Commissions to agents 203,058 200,630 49,201 52,056
Other operating costs 28,033 28,997 7,219 7,789
Insurance and claims 36,374 49,832 9,215 10,954
Selling, general and
administrative 137,758 125,177 32,301 30,175
Depreciation and
amortization 20,960 19,088 5,402 5,043
Total costs and
expenses 2,459,567 2,307,931 563,513 595,443
Operating income 186,841 184,693 40,977 48,666
Interest and debt expense 7,351 6,685 1,716 2,221
Income before income taxes 179,490 178,008 39,261 46,445
Income taxes 68,560 68,355 14,656 17,414
Net income $110,930 $109,653 $24,605 $29,031
Earnings per common share $2.11 $2.01 $0.47 $0.55
Diluted earnings per share $2.10 $1.99 $0.47 $0.54
Average number of shares
outstanding:
Earnings per common
share 52,503,000 54,681,000 51,973,000 53,062,000
Diluted earnings per
share 52,854,000 55,156,000 52,197,000 53,422,000
Dividends paid per common
share $0.1550 $0.1350 $0.0400 $0.0375
Landstar System, Inc.
Selected Segment Information
(Dollars in thousands)
(Unaudited)
Fiscal Year Ended Thirteen Weeks Ended
Dec. 27, Dec. 29, Dec. 27, Dec. 29,
2008 2007 2008 2007
Revenue
Transportation logistics
segment $2,606,216 $2,450,411 $594,450 $633,660
Insurance segment 36,853 36,866 9,387 9,205
Revenue $2,643,069 $2,487,277 $603,837 $642,865
Operating Income
Transportation logistics
segment $148,385 $150,638 $30,214 $40,197
Insurance segment 38,456 34,055 10,763 8,469
Operating income $186,841 $184,693 $40,977 $48,666
Landstar System, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
Dec. 27, Dec. 29,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $98,904 $60,750
Short-term investments 23,479 22,921
Trade accounts receivable, less
allowance of $6,230 and $4,469 315,065 310,258
Other receivables, including
advances to independent
contractors, less allowance of
$4,298 and $4,792 10,083 11,170
Deferred income taxes and other
current assets 27,871 28,554
Total current assets 475,402 433,653
Operating property, less accumulated
depreciation and amortization of
$106,635 and $88,284 124,178 132,369
Goodwill 31,134 31,134
Other assets 32,816 31,845
Total assets $663,530 $629,001
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $32,065 $25,769
Accounts payable 105,882 117,122
Current maturities of long-term debt 24,693 23,155
Insurance claims 23,545 28,163
Accrued income taxes 12,239 14,865
Other current liabilities 38,161 40,501
Total current liabilities 236,585 249,575
Long-term debt, excluding current
maturities 111,752 141,598
Insurance claims 38,278 37,631
Deferred income taxes 23,779 19,411
Shareholders' equity:
Common stock, $0.01 par value,
authorized 160,000,000 shares,
issued 66,109,547 and 65,630,383
shares 661 656
Additional paid-in capital 154,533 132,788
Retained earnings 704,331 601,537
Cost of 14,424,887 and 13,121,109
shares of common stock in treasury (605,828) (554,252)
Accumulated other comprehensive
income/(loss) (561) 57
Total shareholders' equity 253,136 180,786
Total liabilities and shareholders'
equity $663,530 $629,001
Landstar System, Inc.
Supplemental Information
(Unaudited)
Fiscal Year Ended Thirteen Weeks Ended
Dec. 27, Dec. 29, Dec. 27, Dec. 29,
2008 2007 2008 2007
Revenue generated through
(in thousands):
Business Capacity Owners
(1) $1,388,353 $1,377,083 $317,371 $340,928
Truck Brokerage Carriers 996,269 884,577 230,007 236,310
Rail intermodal 136,367 133,878 29,431 41,947
Ocean cargo carriers 42,153 26,498 12,824 7,807
Air cargo carriers 14,891 19,692 4,756 4,280
Other (2) 65,036 45,549 9,448 11,593
$2,643,069 $2,487,277 $603,837 $642,865
Number of loads:
Business Capacity Owners
(1) 820,680 857,200 182,350 210,480
Truck Brokerage Carriers 571,600 588,660 136,350 147,650
Rail intermodal 58,510 62,720 12,900 19,480
Ocean cargo carriers 5,380 4,620 1,390 1,290
Air cargo carriers 8,260 11,600 2,740 2,340
1,464,430 1,524,800 335,730 381,240
Revenue per load:
Business Capacity Owners
(1) $1,692 $1,606 $1,740 $1,620
Truck Brokerage Carriers 1,743 1,503 1,687 1,600
Rail intermodal 2,331 2,135 2,281 2,153
Ocean cargo carriers 7,835 5,735 9,226 6,052
Air cargo carriers 1,803 1,698 1,736 1,829
Dec. 27, Dec. 29,
2008 2007
Truck Capacity
Business Capacity Owners (1) (3) 8,455 8,403
Truck Brokerage Carriers:
Approved and active (4) 16,135 16,053
Approved 10,036 9,362
26,171 25,415
Total available truck capacity providers 34,626 33,818
Agent Locations 1,428 1,397
(1) Business Capacity Owners are independent contractors who provide truck
capacity to the Company under exclusive lease arrangements.
(2) Includes premium revenue generated by the insurance segment and
warehousing revenue generated by the transportation logistics segment.
Also, included in the 2008 fiscal year was $27,638 of revenue for bus
capacity provided for evacuation assistance related to the storms that
impacted the Gulf Coast in September 2008. Included in the 2007 fiscal
year and thirteen-week periods was $8,511 and $2,302, respectively, of
revenue derived from transportation services provided in support of
disaster relief efforts provided under a contract between Landstar
Express America, Inc. and the United States Department of
Transportation/Federal Aviation Administration.
(3) Trucks provided by Business Capacity Owners were 9,039 and 8,993 at
December 27, 2008 and December 29, 2007, respectively.
(4) Active refers to Truck Brokerage Carriers who have moved at least one
load in the past 180 days.
Source: PRNewsWire
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