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Landstar System Reports 45 Percent Increase in Diluted Earnings Per Share to a Third Quarter Record of $0.64

JACKSONVILLE, Fla., Oct. 24, 2011 /PRNewswire via COMTEX/ --

Landstar System, Inc. (NASDAQ: LSTR) reported 2011 record third quarter diluted earnings per share of $0.64 per diluted share, from net income of $30.2 million, compared to net income of $21.8 million, or $0.44 per diluted share, for the 2010 third quarter. Operating margin was 44.7 percent in the 2011 third quarter compared to 35.6 percent in the 2010 third quarter. Revenue for the 2011 third quarter was $684.0 million compared to $622.8 million in the 2010 third quarter. Included in the 2010 third quarter was a one-time charge of $3.8 million, or $0.05 per diluted share, related to the buy-out by the Company of its remaining contingent payment obligation from an acquisition completed in 2009.

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2011 third quarter was $625.8 million, or 91 percent of revenue, compared to $573.5 million, or 92 percent of revenue, in the 2010 third quarter. In the 2011 and 2010 third quarters, the Company invoiced customers $72.7 million and $48.5 million, respectively, of fuel surcharges that were passed 100 percent to BCOs and excluded from revenue. Included in revenue hauled by third-party truck capacity providers in the 2011 and 2010 third quarters were $25.9 million and $20.3 million, respectively, of fuel surcharges invoiced to customers on revenue hauled by third-party truck brokerage carriers. Also included in revenue hauled by third-party truck capacity providers was revenue generated under the Company's less-than-truckload substitute line haul service offering of $17.1 million and $48.4 million in the 2011 and 2010 third quarters, respectively. Revenue hauled by rail, air and ocean cargo carriers was $44.5 million, or 7 percent of revenue, in the 2011 third quarter compared to $36.2 million, or 6 percent of revenue, in the 2010 third quarter. Transportation management fee revenue generated by the supply chain solutions companies was $5.0 million and $4.3 million in the 2011 and 2010 third quarters, respectively.

Trailing twelve-month return on average shareholder's equity was 39 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 27 percent. During the 2011 third quarter, the Company purchased 816,814 shares of its common stock under its authorized share purchase programs. In the thirty-nine week period ended September 24, 2011, the Company purchased a total of 1,013,507 shares of its common stock at a total cost of $41,966,000. Under the Company's authorized share purchase program, the Company currently has a total of 709,000 shares of its common stock available for purchase. Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.055 per share. The dividend is payable on December 2, 2011 to stockholders of record at the close of business on November 8, 2011. It is the intention of the Board of Directors to continue to pay a quarterly dividend.

"I am extremely pleased with the Company's 2011 third quarter operating performance," said Henry Gerkens, Landstar's Chairman, President and CEO. "Revenue increased ten percent over the 2010 third quarter, even after taking into account the anticipated revenue decline in our substitute line haul service offering. Excluding the substitute line haul revenue from both the 2011 and 2010 third quarters, revenue increased 16 percent. During the 2011 third quarter, the growth rate in the number of loads hauled increased each month compared to the corresponding prior year month as we moved through the quarter. Revenue per load continued to be strong. Consolidated operating income increased 38 percent, while earnings per diluted share increased 45 percent to $0.64 per diluted share, the best third quarter diluted earnings per share in Landstar history."

Gerkens continued, "Although I am very confident as Landstar enters the 2011 fourth quarter, the Company's fourth quarter revenue performance in recent years has been somewhat inconsistent, especially in the latter part of the quarter. However, recent trends in September, and thus far in October, indicate continued strength in revenue per load and load volume. Assuming these trends continue throughout the 2011 fourth quarter, I would expect 2011 fourth quarter diluted earnings per share to be within a range of $0.62 to $0.67."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2:00 pm ET. To access the webcast, visit the Company's website at www.landstar.com; click on "Investor Relations" and "Webcasts," then click on "Landstar's Third Quarter 2011 Earnings Release Conference Call."

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, expectations and intentions. Terms such as "anticipates," "believes," "estimates," "intention," "plans," "predicts," "may," "should," "will," the negative thereof and similar expressions 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 claims; dependence on independent sales agents; dependence on third-party capacity providers; disruptions or failures in our computer systems; a downturn in domestic or international 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 2010 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. is a non-asset based provider of integrated supply chain solutions. Landstar delivers safe, specialized transportation and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees. All Landstar transportation companies are certified to ISO 9001:2008 quality management system standards and RC14001:2008 environmental, health, safety and security management system standards. Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.

www.landstar.com

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 24,

September 25,

September 24,

September 25,

2011

2010

2011

2010

Revenue

$ 1,931,560

$ 1,812,635

$ 684,013

$ 622,826

Investment income

1,294

1,069

373

495

Costs and expenses:

Purchased transportation

1,459,660

1,381,955

518,300

474,665

Commissions to agents

153,165

134,695

54,990

47,316

Other operating costs

22,050

21,952

6,427

6,448

Insurance and claims

34,096

37,609

9,381

11,480

Selling, general and administrative (1)

112,252

114,886

39,206

41,070

Depreciation and amortization

19,336

18,444

6,549

6,456

Total costs and expenses (1)

1,800,559

1,709,541

634,853

587,435

Operating income (1)

132,295

104,163

49,533

35,886

Interest and debt expense

2,340

2,699

735

1,035

Income before income taxes (1)

129,955

101,464

48,798

34,851

Income taxes

49,642

38,761

18,640

13,315

Net income(1)

80,313

62,703

30,158

21,536

Less: Net loss attributable to noncontrolling interest

(62)

(712)

-

(266)

Net income attributable to Landstar System,

Inc. and subsidiary (1)

$ 80,375

$ 63,415

$ 30,158

$ 21,802

Earnings per common share attributable to

Landstar System, Inc. and subsidiary (1)

$ 1.69

$ 1.27

$ 0.64

$ 0.44

Diluted earnings per share attributable to

Landstar System, Inc. and subsidiary (1)

$ 1.68

$ 1.27

$ 0.64

$ 0.44

Average number of shares outstanding:

Earnings per common share

47,670,000

49,921,000

47,358,000

49,434,000

Diluted earnings per share

47,735,000

49,990,000

47,387,000

49,447,000

Dividends paid per common share

$ 0.155

$ 0.1400

$ 0.055

$ 0.0500

(1)

The 2010 thirty-nine and thirteen-week periods include a $3,800 one-time charge for the buyout by the Company of its remaining

contingent payment obligation from an acquisition completed in 2009. Net of related income tax benefits, these costs reduced net

income for the thirty-nine and thirteen-week periods ended September 25, 2010 by $2,348, or $0.05 per common share ($0.05 per

diluted share).

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

Sept. 24,

Dec. 25,

2011

2010

ASSETS

Current assets:

Cash and cash equivalents

$ 69,409

$ 44,706

Short-term investments

28,177

23,266

Trade accounts receivable, less allowance

of $4,652 and $5,324

388,235

307,350

Other receivables, including advances to independent

contractors, less allowance of $5,018 and $5,511

53,515

23,943

Deferred income taxes and other current assets

19,073

21,652

Total current assets

558,409

420,917

Operating property, less accumulated depreciation

and amortization of $147,237 and $137,830

128,388

132,649

Goodwill

57,470

57,470

Other assets

59,090

72,846

Total assets

$ 803,357

$ 683,882

LIABILITIES AND EQUITY

Current liabilities:

Cash overdraft

$ 23,061

$ 24,877

Accounts payable

180,488

137,297

Current maturities of long-term debt

16,548

22,172

Insurance claims

75,511

40,215

Other current liabilities

68,268

53,785

Total current liabilities

363,876

278,346

Long-term debt, excluding current maturities

110,526

99,439

Insurance claims

30,336

31,468

Deferred income taxes

20,078

23,662

Equity

Landstar System, Inc. and subsidiary shareholders' equity

Common stock, $0.01 par value, authorized 160,000,000

shares, issued 66,595,036 and 66,535,169 shares

666

665

Additional paid-in capital

164,766

169,268

Retained earnings

917,100

844,132

Cost of 19,689,466 and 18,674,902 shares of common

stock in treasury

(805,189)

(763,182)

Accumulated other comprehensive income

1,198

881

Total Landstar System, Inc. and subsidiary shareholders'

equity

278,541

251,764

Noncontrolling interest

-

(797)

Total equity

278,541

250,967

Total liabilities and equity

$ 803,357

$ 683,882

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

Thirty Nine Weeks Ended

Thirteen Weeks Ended

September 24,

September 25,

September 24,

September 25,

2011

2010

2011

2010

Revenue generated through (in thousands):

Business Capacity Owners (1)

$ 1,020,856

$ 966,221

$ 351,108

$ 334,485

Truck Brokerage Carriers

747,122

705,189

274,731

239,026

Rail intermodal

53,991

51,840

19,159

17,748

Ocean cargo carriers

38,733

34,045

12,702

13,210

Air cargo carriers

29,528

13,853

12,628

5,291

Other (2)

41,330

41,487

13,685

13,066

$ 1,931,560

$ 1,812,635

$ 684,013

$ 622,826

Number of loads:

Business Capacity Owners (1)

601,990

624,270

199,260

203,500

Truck Brokerage Carriers

441,930

456,410

154,720

148,080

Rail intermodal

22,750

23,120

7,920

7,630

Ocean cargo carriers

6,040

4,930

2,090

1,820

Air cargo carriers

6,110

4,870

2,110

1,740

1,078,820

1,113,600

366,100

362,770

Revenue per load:

Business Capacity Owners (1)

$ 1,696

$ 1,548

$ 1,762

$ 1,644

Truck Brokerage Carriers

1,691

1,545

1,776

1,614

Rail intermodal

2,373

2,242

2,419

2,326

Ocean cargo carriers

6,413

6,906

6,078

7,258

Air cargo carriers

4,833

2,845

5,985

3,041

September 24,

September 25,

2011

2010

Truck Capacity Providers

Business Capacity Owners (1) (3)

7,798

7,893

Truck Brokerage Carriers:

Approved and active (4)

18,402

17,393

Approved

9,088

9,490

27,490

26,883

Total available truck capacity providers

35,288

34,776

(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 and transportation management fee revenue

generated by the transportation logistics segment.

(3) Trucks provided by Business Capacity Owners were 8,314 and 8,481 at September 24, 2011 and September 25, 2010, respectively.

(4) Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.

SOURCE Landstar System, Inc.