Landstar System (LSTR) 8-K Landstar System Reports Fourth Quarter Diluted Earnings Per Share of $0.47

Exhibit 99.1

For Immediate Release	Contact: Jim Gattoni
	Landstar System, Inc.
	www.landstar.com
January 28, 2009	904-398-9400

LANDSTAR SYSTEM REPORTS FOURTH QUARTER
DILUTED EARNINGS PER SHARE OF $0.47

Jacksonville, FL — 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 net income of $29.0 million, or $0.54 per diluted share, on revenue of $642.9 million in the 2007 fourth quarter.

Revenue hauled by BCO Independent Contractors in the fourth quarter of 2008 was $317 million, or 53 percent of revenue, compared to $341 million, or 53 percent of revenue, in the 2007 fourth quarter. In the 2008 and 2007 fourth quarters, the Company invoiced customers $55 million and $54 million, respectively, in fuel surcharges that were passed on 100 percent to BCO Independent Contractors and excluded from revenue. Revenue hauled by third-party truck brokerage carriers was $230 million, or 38 percent of revenue, in the 2008 fourth quarter compared to $236 million, or 37 percent of revenue, in the 2007 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $47 million, or 8 percent of revenue, in the 2008 fourth quarter compared to $54 million, or 8 percent of revenue, in the 2007 fourth quarter.

Revenue in the fiscal year ended December 27, 2008 was $2.643 billion compared to $2.487 billion in the 2007 fiscal year. Net income for the 2008 fiscal year was $110.9 million, or $2.10 per diluted share, compared to net income of $109.7 million, or $1.99 per diluted share, for fiscal year 2007.

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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 55 percent of revenue, in 2007. In fiscal years 2008 and 2007, the Company invoiced customers $295 million and $179 million, respectively, in fuel surcharges that were passed on 100 percent to BCO Independent Contractors and excluded from revenue. Revenue hauled by third-party truck brokerage carriers was $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 hauled by rail, air and ocean cargo carriers was $193 million, or 7 percent of revenue, in fiscal year 2008 compared to $180 million, or 7 percent of revenue, in fiscal
year 2007.

Landstar System, Inc. announced that its Board of Directors has declared a quarterly dividend of $0.04 per share. The dividend is payable on February 27, 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 a quarterly dividend. In addition, Landstar System, Inc. announced that its Board of Directors authorized the purchase of an additional 1,569,000 shares of its common stock from time to time in the open market and in privately negotiated transactions. During the 2008 fourth quarter, Landstar purchased approximately 724,000 shares of its common stock at a total cost of $23.1 million bringing the total number of shares purchased during fiscal year 2008 to 1,304,000 at an aggregate cost of $51.6 million. Currently, there are approximately 3,000,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase program.

“Landstar’s 2008 fourth quarter revenue was significantly impacted by lower freight demand related to the severe downturn in the domestic and global economies,” said Landstar President and Chief Executive Officer Henry Gerkens. “The number of loads hauled by BCO Independent Contractors, truck brokerage carriers and rail intermodal carriers were each below the number of loads hauled by each of these modes during the 2007 fourth quarter. Pricing, based on rate per load, also softened throughout the quarter as weak freight demand created additional excess capacity. However, rate per load in the 2008 fourth quarter continued to exceed prior year rates, and the current environment continues to present Landstar with great opportunities in adding new agents and capacity.”

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“Regardless of the current economic environment, Landstar’s non-asset based variable cost business model continues to generate significant cash flow and outstanding returns. During the 2008 fourth quarter, cash from operations was $69 million, compared to $29 million in the 2007 fourth quarter. During the 2008 fourth quarter, the Company purchased $23 million of its common stock in the open market while, at the same time, it reduced borrowings on its senior credit facility by $21 million. At December 27, 2008, there was $127 million available for borrowings under the Company’s senior credit facility, while the ratio of debt to capital was 35 percent. Since September 2008, cash and short term investments increased $19 million to $122 million at December 27, 2008. Return on average equity for fiscal year 2008 was 48 percent and return on invested capital, net income divided by the sum of average equity plus average debt was 29 percent. Landstar’s balance sheet remains strong.”

Gerkens continued, “In the last four weeks of 2008, consolidated load volume was 15 percent below the load volumes reported in the corresponding period of 2007. This downward revenue trend has continued into the first few weeks of January but is not necessarily an accurate indicator of the revenue that might be expected for the entire fiscal year. At this time, due to the uncertainty of the current economic environment and related weak freight demand, and the difficulty in forecasting when there may be a pickup in overall economic activity, Landstar will not be providing 2009 revenue and earnings guidance. However, as an example of how Landstar’s variable cost business model would react under certain negative assumptions, it is worth noting that if one were to assume fiscal year 2009 Company revenue performance of a twenty percent decline to flat compared to fiscal year 2008, and taking into account certain cost reduction actions taken by the Company, Landstar should generate diluted earnings per share in a range of $1.65 to $2.12. This in no way should be interpreted as any sort of guidance, but rather a demonstration of the resiliency of our model and that Landstar’s ability to generate earnings is somewhat insulated from possible effects of a prolonged recession. ”

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Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 4:15 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 Fourth Quarter 2008 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 2007 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 and logistics 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 and logistics capacity providers. Through its operating subsidiaries, Landstar delivers excellence in complete transportation logistics services and solutions. 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)

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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

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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

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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

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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.