UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 29, 2001
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-21238
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LANDSTAR SYSTEM, INC.
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(Exact name of registrant as specified in its charter)
Delaware 06-1313069
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
13410 Sutton Park Drive South, Jacksonville, Florida 32224
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(Address of principal executive offices) (Zip Code)
(904) 398-9400
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value Common Stock Rights
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(Title of class) (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
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Documents Incorporated by Reference
Portions of the following documents are incorporated by reference in this
Form 10-K as indicated herein:
Part of 10-K into
Document which incorporated
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2001 Annual Report to Shareholders Part II
Proxy Statement relating to Part III
Landstar System, Inc.'s Annual
Meeting of Shareholders
The number of shares of the registrant's common stock, par value $.01 per
share, (the "Common Stock") outstanding as of the close of business on
March 15, 2002 was 8,105,753; and the aggregate market value of the voting
stock held by non-affiliates of the registrant was $757,861,419 (based on the
$94.400 per share closing price on that date, as reported by NASDAQ National
Market System). In making this calculation, the registrant has assumed,
without admitting for any purpose, that all directors and executive officers
of the registrant, and no other person, are affiliates.
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LANDSTAR SYSTEM, INC.
2001 Annual Report on Form 10-K
Table of Contents
Part I
Page
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Item 1. Business 4
Item 2. Properties 13
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 14
Part II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 14
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
Item 7a. Quantitative and Qualitative Disclosures about
Market Risk 15
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 15
Part III
Item 10. Directors and Executive Officers of the Registrant 16
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial Owners
and Management 16
Item 13. Certain Relationships and Related Transactions 16
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 16
Signatures 18
Index to Exhibits 20
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Part I
Item 1. - Business
General
Landstar System, Inc. (herein referred to as "Landstar" or the "Company")
was incorporated in January 1991 under the laws of the State of
Delaware and acquired all of the capital stock of its predecessor, Landstar
System Holdings, Inc. ("LSHI") on March 28, 1991. LSHI owns directly or
indirectly all of the common stock of Landstar Ranger, Inc. ("Landstar
Ranger"), Landstar Inway, Inc. ("Landstar Inway"), Landstar Ligon, Inc.
("Landstar Ligon"), Landstar Gemini, Inc. ("Landstar Gemini"),
Landstar Carrier Services, Inc., Landstar Logistics, Inc.
("Landstar Logistics"), Landstar Express America, Inc.
("Landstar Express America"), Landstar Contractor Financing, Inc. ("LCFI"),
Landstar Capacity Services, Inc., Risk Management Claim Services, Inc.
("RMCS"), Signature Technology Services, Inc. ("STSI") and Signature Insurance
Company ("Signature"). Landstar Ranger, Landstar Inway, Landstar Ligon,
Landstar Gemini, Landstar Logistics and Landstar Express America are
collectively herein referred to as Landstar's "Operating Subsidiaries." The
Company's principal executive offices are located at 13410 Sutton Park Drive
South, Jacksonville, Florida 32224 and its telephone number is (904) 398-9400.
The Company's website is www.landstar.com.
Historical Background
In March 1991, Landstar acquired LSHI in a buy-out organized by Kelso &
Company, Inc. ("Kelso"). Investors in the acquisition included Kelso
Investment Associates IV L.P. ("KIA IV"), an affiliate of Kelso, ABS MB
Limited Partnership ("ABSMB"), an affiliate of DB Alex. Brown LLC
(formerly known as Alex. Brown & Sons Incorporated), and certain
management employees of Landstar and its subsidiaries (the "Management
Stockholders"). In March 1993, Landstar completed a recapitalization
(the "Recapitalization") that increased shareholders' equity, reduced
indebtedness and improved the Company's operating and financial flexibility.
The Recapitalization involved three principal components: (i) the initial
public offering (the "IPO") of 5,387,000 shares of Common Stock, at an
initial price to the public of $13 per share, (ii) the retirement
of all $38 million outstanding principal amount of LSHI's 14% Senior
Subordinated Notes due 1998 (the "14% Notes"), and (iii) the refinancing of
the Company's then existing senior debt facility with a senior bank credit
agreement. In October 1993, the Company completed a secondary
public offering. Immediately subsequent to the offering, KIA IV no longer
owned any shares of Landstar Common Stock, and affiliates of DB Alex. Brown LLC
retained approximately 1% of the Common Stock outstanding.
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During the first quarter of 1995, Landstar, through different subsidiaries of
LSHI, acquired the businesses and net assets of Intermodal Transport Company
("ITCO"), a California-based intermodal marketing company, LDS Truck Lines,
Inc., a California-based drayage company, and T.L.C. Lines, Inc., a Missouri-
based temperature-controlled and long-haul, time sensitive dry van carrier.
Also in the 1995 first quarter, Landstar, through another subsidiary of LSHI,
acquired all of the outstanding common stock of Express America Freight
Systems, Inc., ("Express"), a North Carolina-based air freight and truck
expedited service provider. The businesses acquired from ITCO and Express
comprise the majority of the multimodal segment's operations, and are now
operated through Landstar Logistics and Landstar Express America, respectively.
On December 18, 1996, the Company announced a plan to restructure its Landstar
T.L.C. and Landstar Poole operations, in addition to the relocation of its
Shelton, Connecticut corporate office headquarters to Jacksonville, Florida in
the second quarter of 1997. The plan to restructure Landstar T.L.C. included
the merger of the operations of Landstar T.L.C. into Landstar Inway, the
closing of the Landstar T.L.C. headquarters in St. Clair, Missouri and the
disposal of all of Landstar T.L.C.'s company-owned tractors. The restructuring
was completed during 1997.
In March 1997, Landstar formed Signature, a wholly-owned offshore insurance
subsidiary. Signature reinsures certain property, casualty and occupational
accident risks of certain independent contractors who have contracted to haul
freight for Landstar. In addition, Signature provides certain property and
casualty insurance directly to Landstar's operating subsidiaries.
On August 22, 1998, Landstar Poole, which comprised the entire company-owned
tractor segment, completed the sale of all of its tractors and trailers,
certain operating assets and the Landstar Poole business to Schneider
National, Inc. for $40,435,000 in cash. Accordingly, the financial results
of this segment have been reported as discontinued operations.
Description of Business
Landstar, a non asset based provider of transportation capacity, provides
transportation services to shippers throughout the United States and, to
a lesser extent, between the United States, Canada and Mexico. These business
services, which emphasize safe transportation, information coordination and
customer service, are delivered through a network of independent sales agents
and independent contractors linked together by a series of technological
applications. Through this network, Landstar operates a $1.4 billion
transportation services business throughout North America, providing truckload
services, truck brokerage services, intermodal transportation services and
expedited time definite air and ground transportation services.
Landstar provides transportation services to a variety of industries, including
iron and steel, automotive products, paper, lumber and building products,
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aluminum, chemicals, foodstuffs, heavy machinery, ammunition and explosives,
and military hardware. Landstar's transportation services include a full array
of truckload transportation utilizing a wide range of specialized equipment
including dry vans of various sizes, flatbeds, including drop decks and light
specialty trailers, and temperature-controlled vans and containers, dedicated
contract and logistics solutions, including freight optimization and less than
truckload freight consolidations, truck brokerage and expedited land and air
delivery of time-critical freight.
The Company has three reportable business segments. These are the carrier,
multimodal and insurance segments. The following table provides financial
information relating to the Company's reportable business segments as of and
for the fiscal years ending 2001, 2000 and 1999 (dollars in thousands):
Fiscal Year
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2001 2000 1999
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Revenue from unaffiliated customers:
Carrier segment $1,098,268 $1,117,042 $1,111,912
Multimodal segment 270,849 277,087 250,395
Insurance segment 23,654 24,363 25,776
Inter-segment revenue:
Carrier segment $ 28,587 $ 34,669 $ 35,194
Multimodal segment 2,367 1,241 196
Insurance segment 27,313 21,919 21,790
Operating income:
Carrier segment $ 76,105 $ 88,507 $ 86,282
Multimodal segment 5,343 9,346 7,949
Insurance segment 30,644 24,464 27,141
Other (35,706) (39,704) (39,658)
Identifiable assets:
Carrier segment $ 234,164 $ 256,690 $ 251,922
Multimodal segment 47,795 54,294 57,337
Insurance segment 46,440 33,267 28,180
Other 36,252 26,111 28,002
The carrier segment consists of Landstar Ranger, Landstar Inway, Landstar
Ligon and Landstar Gemini. The carrier segment provides truckload
transportation for a wide range of general commodities over irregular
routes with its fleet of dry and specialty vans and unsided trailers,
including flatbed, drop deck and specialty. It also provides short-to-long haul
movement of containers by truck, dedicated power-only truck capacity and truck
brokerage. The carrier segment markets its services primarily through
independent commission
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sales agents and exclusively utilizes tractors provided by independent
contractors. The nature of the carrier segment business is such that a
significant portion of its operating costs varies directly with revenue. At
December 29, 2001, the carrier segment operated a fleet of approximately 8,450
tractors, provided by over 7,220 independent contractors, and 14,519 trailers,
6,067 of which are supplied by independent contractors. Approximately 70% of
the trailers available to the carrier segment are provided by independent
contractors or are leased by the Company at rental rates that vary with the
revenue generated by the trailer. The carrier segment's trailer fleet is
comprised of 10,320 dry vans, 3,285 flatbeds, 687 specialty and 227
refrigerated vans. The carrier segment has a network of more than 880
independent commission sales agents. Independent commission sales agents in
the carrier segment receive a commission generally between 5% and 8% of the
revenue they generate. The use of independent contractors enables the carrier
segment to utilize a large fleet of revenue equipment while minimizing capital
investment and fixed costs, thereby enhancing return on investment. Independent
contractors who provide tractor power receive a percentage of the revenue
generated for the freight hauled and a larger percentage for providing both a
tractor and trailer. The carrier segment also utilizes capacity provided by
third party truck brokerage services. Truck brokerage services are paid a
negotiated rate for each load they haul.
The multimodal segment is comprised of Landstar Logistics and Landstar Express
America. Transportation services provided by the multimodal segment include the
arrangement of intermodal moves, contract logistics, truck brokerage and
emergency and expedited ground and air freight. The multimodal segment markets
its services through independent commission sales agents and utilizes capacity
provided by independent contractors, including railroads and air cargo
carriers. Multimodal independent sales agents generally receive a percentage
of the gross profit, revenue less the cost of the transportation, from each
load they generate. Independent contractors who provide truck capacity to the
multimodal segment are compensated based on a percentage of the revenue
generated by the haul depending on the type and timing of the shipment.
Railroads and air cargo carriers receive a fixed amount per load. The nature of
the multimodal segment business is such that a significant portion of its
operating costs also varies directly with revenue. At December 29, 2001, the
multimodal segment operated a fleet of 332 trucks, provided by approximately
267 independent contractors. Multimodal segment independent contractors provide
cargo vans and straight trucks that are utilized for emergency and expedited
freight services. The multimodal segment has a network of approximately 170
independent commission sales agents.
The insurance segment is comprised of Signature, a wholly-owned offshore
insurance subsidiary and RMCS. The insurance segment provides risk and claims
management services for Landstar's operating companies. In addition, it
reinsures certain property, casualty and occupational accident risks of certain
independent contractors who have contracted to haul freight for Landstar and
provides certain property and casualty insurance directly to Landstar's
operating subsidiaries.
Landstar's business strategy is to offer high quality, specialized
transportation services through its transportation group to service-sensitive
customers. Landstar focuses on providing transportation services which
emphasize customer service and information coordination among its independent
commission sales agents, customers and capacity providers, rather
than the volume-driven approach of generic dry van carriers. Landstar intends
to continue developing appropriate systems and technologies that offer
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integrated transportation solutions to meet the total
transportation needs of its customers.
The Company's overall size, geographic coverage, equipment and service
capability offer the Company significant competitive marketing and operating
advantages. These advantages allow the Company to meet the needs of even the
largest shippers and thereby qualify it as a "core carrier." Increasingly, the
larger shippers are substantially reducing the number of authorized carriers
in favor of a small number of core carriers whose size and diverse service
capability enable these core carriers to satisfy most of the shippers'
transportation needs. Examples of national account customers include the U.S.
Department of Defense and shippers in particular industries such as the three
major U.S. automobile manufacturers.
Management believes the Company has a number of significant competitive
advantages, including:
TECHNOLOGY. Management believes leadership in the development and application
of technology is an ongoing part of providing high quality service at
competitive prices. Landstar manages its carrier and multimodal segments'
technology programs centrally through its information services department.
DIVERSITY OF SERVICES OFFERED. The Company offers its customers a wide range
of transportation services through the carrier and multimodal groups, including
a fleet of diverse trailing equipment and extensive geographic coverage.
Examples of the specialized services offered include a large fleet of flatbed
trailers, multi-axle trailers capable of hauling extremely heavy or oversized
loads, drivers certified to handle ammunition and explosive shipments for the
U.S. Department of Defense, emergency and expedited surface and air cargo
services and intermodal capability with railroads and steamship lines,
including short-to-medium haul movement of ocean-going containers between U.S.
ports and inland cities.
The following table illustrates the diversity of this equipment as of
December 29, 2001:
Trailers:
Vans 10,194
Specialty Vans 143
Temperature-Controlled 227
Flatbeds, Including Drop Decks and Low Boys 3,286
Other Specialized Flatbeds 687
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Total 14,537
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MARKETING NETWORK. Landstar's network of more than 1,000 independent
commission sales agents results in regular contact with shippers at the local
level and the capability to be highly responsive to shippers' changing needs.
The agent network enables Landstar to be responsive both in providing
specialized equipment to both large and small shippers and in providing
capacity on short notice from the Company's large fleet to high volume
shippers. Through its agent network, the Company believes it offers smaller
shippers a level of service comparable to that typically reserved for larger
customers. Examples of services that Landstar is able to make available through
the agent network to smaller shippers include the ability to provide
transportation services on short notice (often within hours from notification
to time of pick-up), multiple pick-up and delivery points, electronic data
interchange capability and access to specialized equipment. In addition, a
number of the Company's agents specialize in certain types of freight and
transportation services (such as oversized or heavy loads). An agent in the
carrier segment is typically paid a percentage of the revenue generated through
that agent, with volume-based incentives. An agent in the multimodal segment is
typically paid a contractually agreed-upon percentage of the gross profit on
revenue generated through that agent. During 2001, 357 agents generated
revenue for Landstar of at least $1 million each, or approximately $1.2 billion
of Landstar's total revenue. The majority of the agents who generate revenue of
$1 million or more have chosen to represent Landstar exclusively. The typical
Landstar agent maintains a relationship with a number of shippers and services
these shippers by providing a base of operations for independent contractors,
both single-unit and multi-unit contractors. Contracts with agents are
typically terminable upon 30 days' notice. Historically, Landstar has
experienced very limited agent turnover among its larger-volume agents.
The carrier segment and multimodal segment emphasize programs to support the
agents' operations and to establish pricing parameters. Each operating
subsidiary contracts directly with customers and generally assumes the credit
risk and liability for freight losses or damages.
The independent commission sales agents are responsible for locating freight
and making that freight available to the Company's independent contractors and
coordinating the transportation of the freight with independent contractors.
The carrier segment's independent commission sales agents use the
Company's Landstar Electronic Administrative Dispatch System (LEADS) software
program which enables its independent commission sales agents to dispatch
freight and process most administrative procedures and then communicate that
information to Landstar and its independent contractors via the worldwide web.
The multimodal segment's independent commission sales agents use other Landstar
proprietary software to process customer shipments and communicate the
necessary information to independent contractors and Landstar. The Company's
web-based available freight and truck information system provides a listing of
available trucks to the Company's independent commission sales agents.
The carrier segment and multimodal segment hold regular regional agent meetings
for their independent commission sales agents and Landstar holds an annual
company-wide agent convention.
INDEPENDENT CONTRACTORS. Landstar operates the largest fleet of truckload
independent contractors in North America. This provides marketing, operating,
safety, recruiting, retention and financial advantages to the Company. Most
of the Company's truckload independent contractors are compensated based on
a fixed percentage of the revenue generated from the freight they haul. This
percentage generally ranges from 60% to 70% where the independent contractor
provides a tractor and from 75% to 79% where the independent contractor
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provides both a tractor and trailer. The independent contractor must pay all
the expenses of operating his/her equipment, including driver wages and
benefits, fuel, physical damage insurance, maintenance, highway use taxes
and debt service.
The Company maintains an internet site through which independent contractors
can view a complete listing of all the Company's available freight, allowing
them to consider size, origin and destination when planning trips.
In 2001, Landstar's truck turnover ratio was approximately 60%. A significant
portion of this turnover was attributable to independent contractors who had
been independent contractors with the Company for less than one year.
Management believes that factors that tend to limit turnover include the
Company's extensive agent network, the Company's programs to reduce the
operating costs of its independent contractors and Landstar's reputation for
quality, service and reliability. Management believes, however, that a
reduction in the amount of available freight may cause an increase in truck
turnover.
The Landstar Contractors' Advantage Purchasing Program leverages Landstar's
purchasing power to provide discounts to the independent contractors when they
purchase equipment, fuel, tires and other items. In addition, LCFI provides a
source of funds at competitive interest rates to the independent contractors to
purchase tractors, trailers or mobile communication equipment.
Landstar also benefits from its use of independent contractors. This allows the
Company to maintain a lower level of capital investment, which results in lower
fixed costs.
CORPORATE SERVICES. Significant advantages result from the collective
expertise and corporate services afforded by Landstar's corporate
management. The primary services provided are:
safety purchasing
strategic planning human resource management
technology and management information systems finance
legal accounting, budgeting and taxes
operator and equipment compliance quality programs
risk management insurance services
Competition
Landstar competes primarily in the transportation services industry.
The transportation services industry is extremely competitive and fragmented.
Landstar competes primarily with truckload carriers, intermodal
transportation service providers, railroads, less-than-truckload carriers,
third party broker carriers and other non-asset based transportation service
providers.
Management believes that competition for the freight transported by the Company
is based primarily on service and efficiency and, to a lesser degree, on
freight rates alone. Management believes that Landstar's overall size and
availability of a wide range of equipment, together with its geographically
dispersed local independent agent network, present the Company with significant
competitive advantages over many transportation service providers.
The Company also competes with motor carriers for the services of
independent contractors and with motor carriers and other transportation
services companies for the services of independent commission sales agents,
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contracts with whom are terminable upon short notice. The Company's overall
size, coupled with its reputation for good relations with agents and
independent contractors, have enabled the Company to attract a sufficient
number of qualified agents and independent contractors.
Insurance and Claims
Potential liability associated with accidents in the trucking portion of the
transportation services industry is severe and occurrences are unpredictable.
Landstar retains liability for each individual commercial trucking claim up to
$1,000,000 through April 30, 2001 and $5,000,000 thereafter. The Company also
retains liability for each general liability claim up to $1,000,000, $250,000
for each workers' compensation claim and $250,000 for each cargo claim. The
Company provides, primarily on an actuarially determined basis, for the
estimated cost of property, casualty and general liability claims reported and
for claims incurred but not reported. Although Landstar has an active training
and safety program, there can be no assurance that the frequency or severity of
accidents will not increase in the future, that there will not be unfavorable
development of existing claims or that insurance premiums will not increase. A
material increase in the frequency or severity of accidents or the unfavorable
development of existing claims can be expected to adversely affect Landstar's
operating results. Management believes that Landstar realizes significant
savings in insurance premiums by retaining a larger amount of risk than might
be prudent for a smaller company.
Potential Changes in Fuel Taxes
From time to time, various legislative proposals are introduced to increase
federal, state, or local taxes, including taxes on motor fuels. The Company
cannot predict whether, or in what form, any increase in such taxes applicable
to the transportation services provided by the Company will be enacted and, if
enacted, whether or not the Company will be able to reflect the increases in
prices to customers. Competition from other transportation service companies
including those that provide non-trucking modes of transportation and
intermodal transportation would be likely to increase if state or federal taxes
on fuel were to increase without a corresponding increase in taxes imposed upon
other modes of transportation.
Independent Contractor Status
From time to time, various legislative or regulatory proposals are introduced
at the federal or state levels to change the status of independent contractors'
classification to employees for either employment tax purposes (withholding,
social security, Medicare and unemployment taxes) or other benefits
available to employees. Currently, most individuals are classified as
employees or independent contractors for employment tax purposes based on 20
"common-law" factors rather than any definition found in the Internal Revenue
Code or Internal Revenue Service regulations. In addition, under Section 530
of the Revenue Act of 1978, taxpayers that meet certain criteria may treat an
individual as an independent contractor for employment tax purposes if they
have been audited without being told to treat similarly situated workers as
employees, if they have received a ruling from the Internal Revenue Service
or a court decision affirming their treatment, or if they are following a
long-standing recognized practice.
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Although management is unaware of any proposals currently pending that would
change the employee/independent contractor classification of independent
contractors currently doing business with the Company, the costs associated
with potential changes, if any, in the employee/independent contractor
classification could adversely affect Landstar's results of operations if
Landstar were unable to reflect them in its fee arrangements with the
independent contractors and agents or in the prices charged to its customers.
Regulation
Each of the Operating Subsidiaries is a motor carrier which is regulated by
the United States Department of Transportation ("DOT") and by various state
agencies. The DOT has broad powers, generally governing activities such as the
regulation of, to a limited degree, motor carrier operations, rates, accounting
systems, periodic financial reporting and insurance. Subject to federal and
state regulatory authorities or regulation, the Company may transport most
types of freight to and from any point in the United States over any route
selected by the Company.
The trucking industry is subject to possible regulatory and legislative changes
(such as increasingly stringent environmental and/or safety/security
regulations or limits on vehicle weight and size) that may affect the economics
of the industry by requiring changes in operating practices or by changing the
demand for common or contract carrier services or the cost of providing
truckload services.
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. All of the Company's drivers are required to have
national commercial driver's licenses and are subject to mandatory drug and
alcohol testing. The DOT's national commercial driver's license and drug and
alcohol testing requirements have not adversely affected the availability of
qualified drivers to the Company.
At December 25, 1999, approximately 100 Landstar Ranger drivers were
represented by the International Brotherhood of Teamsters (the "Teamsters").
The vast majority of these unionized drivers participated in the Teamsters'
Central States Southeast and Southwest Areas Pension Fund (the "Fund"). Under
a prior collective bargaining agreement, Landstar Ranger was required to make
contributions to various Teamster pension funds for 205 drivers regardless of
the actual number of unionized drivers. Effective April 1, 2000, a new
collective bargaining agreement required Landstar Ranger to make pension
contributions for only the actual number of unionized drivers. As a result of
the elimination of the requirement to make contributions for more than the
actual number of unionized drivers, the Trustees of the Fund terminated
participation in the Fund by Landstar Ranger effective October 1, 2000. The
Trustees of the Fund regard this action as a withdrawal by Landstar Ranger.
In the third quarter of 2000, the Company recorded a charge in the amount of
$2,230,000 for the cost of withdrawal from the Fund.
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Seasonality
Landstar's operations are subject to seasonal trends common to the trucking
industry. Results of operations for the quarter ending in March are typically
lower than the quarters ending in June, September and December due to reduced
shipments and higher operating costs in the winter months.
Employees
As of December 29, 2001, the Company and its subsidiaries employed
1,231 individuals. Approximately 50 Landstar Ranger drivers (out of a total
of approximately 4,600) are members of the International Brotherhood of
Teamsters. The Company considers relations with its employees to be good.
Item 2. - Properties
The Company owns or leases various properties in the U.S. for the Company's
operations and administrative staff that support the independent commission
sales agents and independent contractors. The carrier segment's primary
facilities are located in Jacksonville, Florida and Rockford, Illinois.
The multimodal segment's primary facilities are located in Jacksonville,
Florida. In addition, the Company's corporate headquarters are located in
Jacksonville, Florida. The Rockford, Illinois facility of the carrier segment
is owned by the Company. All other primary facilities are leased.
Management believes that Landstar's owned and leased properties are adequate
for its current needs and that leased properties can be retained or replaced
at acceptable cost.
Item 3. - Legal Proceedings
The Company is routinely a party to litigation incidental to its business,
primarily involving claims for personal injury and property damage incurred
in the transportation of freight. The Company maintains insurance which covers
liability amounts in excess of retained liabilities from personal injury and
property damages claims.
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Item 4. - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 2001.
Part II
Item 5. - Market for Registrant's Common Equity and Related Stockholder Matters
The Common Stock of the Company is quoted through the National Association of
Securities Dealers, Inc. National Market System (the "NASDAQ National Market
System") under the symbol "LSTR." The following table sets forth the high and
low reported sale prices for the Common Stock as quoted through the NASDAQ
National Market System for the periods indicated.
Calendar Period 2001 Market Price 2000 Market Price
--------------- ----------------- -----------------
High Low High Low
First Quarter $ 72.875 $ 55.250 $ 64.625 $ 38.063
Second Quarter 72.000 62.500 69.750 48.531
Third Quarter 81.140 60.000 60.625 42.500
Fourth Quarter 75.840 60.500 59.000 37.625
The reported last sale price per share of the Common Stock as quoted through
the NASDAQ National Market System on March 15, 2002 was $94.400 per share. As
of such date, Landstar had 8,105,753 shares of Common Stock outstanding. As
of March 15, 2001, the Company had 64 stockholders of record of its Common
Stock. However, the Company estimates that it has a significantly greater
number of stockholders because a substantial number of the Company's
shares are held by brokers or dealers for their customers in street name.
The Company has not paid any cash dividends on the Common Stock within the past
three years and does not intend to pay dividends on the Common Stock for the
foreseeable future. The declaration and payment of any future dividends will
be determined by the Company's Board of Directors, based on Landstar's results
of operations, financial condition, cash requirements, certain corporate law
requirements and other factors deemed relevant.
Item 6. - Selected Financial Data
The information required by this Item is set forth under the caption "Selected
Consolidated Financial Data" in Exhibit 13 attached hereto, and is
incorporated by reference in this Annual Report on Form 10-K. This
information is also included on page 44 of the Company's 2001 Annual Report to
Shareholders.
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Item 7. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this Item is set forth under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Exhibit 13 attached hereto, and is incorporated by reference in
this Annual Report on Form 10-K. This information is also included on pages
21 to 27 of the Company's 2001 Annual Report to Shareholders.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
The Company has a credit agreement with a syndicate of banks and JPMorgan
Chase Bank, as the administrative agent, (the "Third Amended and
Restated Credit Agreement") that provides $175,000,000 of borrowing
capacity. Borrowings under the Third Amended and Restated Credit Agreement
bear interest at rates equal to, at the option of Landstar, either (i) the
greatest of (a) the prime rate as publicly announced from time to time by
JPMorgan Chase Bank, (b) the three month CD rate adjusted for statutory
reserves and FDIC assessment costs plus 1% and (c) the federal funds
effective rate plus 1/2%, or, (ii) the rate at the time offered to JPMorgan
Chase Bank in the Eurodollar market for amounts and periods comparable to
the relevant loan plus a margin that is determined based on the level of the
Company's Leverage Ratio, as defined in the Third Amended and Restated Credit
Agreement. The margin is subject to an increase of .125% if the aggregate
amount outstanding under the Third Amended and Restated Credit Agreement
exceeds 50% of the total borrowing capacity. As of December 29, 2001, the
weighted average interest rate on borrowings outstanding was 2.81%. During
fiscal 2001, the average outstanding balance under the Third Amended and
Restated Credit Agreement (combined with borrowings that were
outstanding on the Second Amended and Restated Credit Agreement from
December 30, 2000 to December 20, 2001 which was refinanced on
December 20, 2001 with funds received on the Third Amended and Restated Credit
Agreement) was $89,929,000. Based on the borrowing rates in the Third Amended
and Restated Credit Agreement and the repayment terms, the fair value of the
outstanding borrowings as of December 29, 2001 was estimated to approximate
carrying value.
The Third Amended and Restated Credit Agreement expires on
January 5, 2005. The amount outstanding on the Third Amended and Restated
Credit Agreement is payable upon the expiration of the Third Amended
and Restated Credit Agreement.
Item 8. - Financial Statements and Supplementary Data
The information required by this Item is set forth under the captions
"Consolidated Balance Sheets," "Consolidated Statements of Income,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Changes
in Shareholders' Equity," "Notes to Consolidated Financial Statements,"
"Independent Auditors' Report" and "Quarterly Financial Data" in Exhibit 13
attached hereto, and are incorporated by reference in this Annual Report on
Form 10-K. This information is also included on pages 28 through 43 of the
Company's 2001 Annual Report to Shareholders.
Item 9. - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
15
Part III
Item 10. - Directors and Executive Officers of the Registrant
The information required by this Item concerning the Directors (and nominees
for Directors) and Executive Officers of the Company is set forth under the
captions "Election of Directors," "Directors of the Company," "Information
Regarding Board of Directors and Committees," and "Executive Officers of the
Company" on pages 2 through 8, and "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" on page 17 of the Company's definitive Proxy
Statement for its annual meeting of shareholders filed with the Securities and
Exchange Commission pursuant to Regulation 14A, and is incorporated herein by
reference.
Item 11. - Executive Compensation
The information required by this Item is set forth under the captions
"Compensation of Directors and Executive Officers," "Summary Compensation
Table," "Fiscal Year-End Option Values," "Report of the Compensation
Committee on Executive Compensation," "Performance Comparison" and
"Key Executive Employment Protection Agreements" on pages 9 through 15 of
the Company's definitive Proxy Statement for its annual meeting of shareholders
filed with the Securities and Exchange Commission pursuant to Regulation 14A,
and is incorporated herein by reference.
Item 12. - Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is set forth under the caption "Security
Ownership by Management and Others" on pages 16 through 18 of the Company's
definitive Proxy Statement for its annual meeting of shareholders filed with
the Securities and Exchange Commission pursuant to Regulation 14A, and is
incorporated herein by reference.
Item 13. - Certain Relationships and Related Transactions
The information required by this Item is set forth under the caption
"Indebtedness of Management" on pages 12 and 13 of the Company's definitive
Proxy Statement for its annual meeting of shareholders filed with the
Securities and Exchange Commission pursuant to Regulation 14A, and is
incorporated herein by reference.
Part IV
Item 14. - Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements
Financial statements of the Company and related notes thereto, together with
the report thereon of KPMG LLP dated February 5, 2002, are in Exhibit 13
attached hereto, and are incorporated by reference in this Annual Report on
Form 10-K. This information is also included on pages 28 through 42 of the
Company's 2001 Annual Report to Shareholders.
16
(2) Financial Statement Schedules
The report of the Company's independent public accountants with respect to the
financial statement schedules listed below appears on page 23 of this Annual
Report on Form 10-K.
Schedule Number Description Page
- --------------- ----------- ----
I Condensed Financial Information of Registrant
Parent Company Only Balance Sheet Information S-1
I Condensed Financial Information of Registrant
Parent Company Only Statement of Income Information S-2
I Condensed Financial Information of Registrant
Parent Company Only Statement of Cash
Flows Information S-3
II Valuation and Qualifying Accounts
For the Fiscal Year Ended December 29, 2001 S-4
II Valuation and Qualifying Accounts
For the Fiscal Year Ended December 30, 2000 S-5
II Valuation and Qualifying Accounts
For the Fiscal Year Ended December 25, 1999 S-6
All other financial statement schedules not listed above have been omitted
because the required information is included in the consolidated financial
statements or the notes thereto, or is not applicable or required.
(3) Exhibits
The response to this portion of Item 14 is submitted as a separate
section of this report (see "Exhibit Index").
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO ANY SHAREHOLDER OF THE COMPANY WHO
SO REQUESTS IN WRITING, A COPY OF ANY EXHIBITS, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE DIRECTED TO LANDSTAR
SYSTEM, INC., ATTENTION: INVESTOR RELATIONS, 13410 SUTTON PARK DRIVE SOUTH,
JACKSONVILLE, FLORIDA 32224.
(b)The Company's Form 8-K filed with the Securities and Exchange Commission on
December 21, 2001 reported the execution of the "Third Amended and Restated
Credit Agreement" as of December 20, 2001.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LANDSTAR SYSTEM, INC.
By: Henry H. Gerkens
----------------------------------------
Henry H. Gerkens
President & Chief Operating Officer
By: Robert C. LaRose
----------------------------------------
Robert C. LaRose
Vice President, Chief Financial Officer
and Secretary
Date: March 21, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Jeffrey C. Crowe Chairman of the Board and Chief March 21, 2002
- ------------------- Executive Officer; Principal
Jeffrey C. Crowe Executive Officer
Henry H. Gerkens Director, President and Chief March 21, 2002
- ------------------- Operating Officer
Henry H. Gerkens
Robert C. LaRose Vice President, Chief Financial March 21, 2002
- ------------------- Officer and Secretary; Principal
Robert C. LaRose Accounting Officer
* Director March 21, 2002
- -------------------
David G. Bannister
* Director March 21, 2002
- -------------------
Ronald W. Drucker
18
* Director March 21, 2002
- -------------------
Merritt J. Mott
* Director March 21, 2002
- -------------------
William S. Elston
* Director March 21, 2002
- -------------------
Diana M. Murphy
Robert C. LaRose Attorney In Fact *
- -------------------
By: Robert C. LaRose
19
EXHIBIT INDEX
Form 10-K for fiscal year ended 12/29/01
Exhibit No. Description
- ----------- -----------
(1) Plan of acquisition, reorganization, arrangement, liquidation
or succession
2.1 Asset Purchase Agreement by and between Landstar Poole, Inc.
as the seller, and Landstar System, Inc., as the guarantor, and Schneider
National, Inc., as the purchaser, dated as of July 15, 1998. (Incorporated by
reference to Exhibit 2.1 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 27, 1998 (Commission File No. 0-21238))
(3) Articles of Incorporation and Bylaws:
3.1 Amended and Restated Certificate of Incorporation of the
Company dated February 9, 1993 and Certificate of Designation of Junior
Participating Preferred Stock. (Incorporated by reference to Exhibit 3.1 to
the Registrant's Registration Statement on Form S-1 (Registration No. 33-
57174))
3.2 The Company's Bylaws, as amended and restated on February 9,
1993. (Incorporated by reference to Exhibit 3.2 to the Registrant's
Registration Statement on Form S-1. (Registration No. 33-57174))
(4) Instruments defining the rights of security holders,
including indentures:
4.1 Specimen of Common Stock Certificate. (Incorporated by
reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-1
(Registration No. 33-57174))
4.2 Rights Agreement, dated as of February 10, 1993, between the
Company and Chemical Bank, as Rights Agent. (Incorporated by reference to
Exhibit 4.14 of Amendment No. 1 to the Registrant's Registration Statement on
Form S-1 (Registration No. 33-57174))
4.3 The Company agrees to furnish copies of any instrument defining
the rights of holders of long-term debt of the Company and its respective
consolidated subsidiaries that does not exceed 10% of the total assets of the
Company and its respective consolidated subsidiaries to the Securities and
Exchange Commission upon request.
4.4 Second Amended and Restated Credit Agreement, dated
October 10, 1997, among LSHI, Landstar, the lenders named therein and The
Chase Manhattan Bank as administrative agent (including exhibits and schedules
thereto).(Incorporated by reference to Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 27, 1997
(Registration No. 0-21238))
20
Exhibit Index (continued)
Form 10-K for fiscal year ended 12/29/01
Exhibit No. Description
- ----------- -----------
4.6 First Amendment, dated October 30, 1998, to the Second Amended
and Restated Credit Agreement, dated October 10, 1997, among LSHI, Landstar,
the lenders named therein and The Chase Manhattan Bank as administrative agent.
(Incorporated by reference to Exhibit 4.6 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 26, 1998)
4.7 Second Amendment, dated September 8, 1999, to the Second
Amended and Restated Credit Agreement, dated as of October 10, 1997.
(Incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended December 25, 1999)
4.8 First Amendment of the Rights Agreement, dated December 22, 2000,
between the Company and Mellon Investor Services, LLC, as successor by merger
to Chemical Bank.
4.9 Third Amended and Restated Credit Agreement, dated December 20,
2001, among LSHI, Landstar, the lenders named therein and JPMorgan Chase
Bank as administrative agent (including exhibits and schedules thereto).
(Incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K filed
on December 21, 2001 (Registration No. 0-21238))
(10) Material Contracts:
10.1+ Landstar System, Inc. 1993 Stock Option Plan. (Incorporated by
reference to Exhibit 10.1 to the Registrant's Registration Statement on Form
S-1. (Registration No. 33-67666))
10.2 Form of Indemnification Agreement between the Company and each
of the directors and executive officers of the Company. (Incorporated by
reference to Exhibit 10.7 of Amendment No. 1 to the Registrant's Registration
Statement on Form S-1. (Registration No. 33-57174))
10.3+ LSHI Management Incentive Compensation Plan. (Incorporated by
reference to Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 25, 1993. (Commission File No. 0-21238))
10.4+ Landstar System, Inc. 1994 Director's Stock Option Plan.
(Incorporated by reference to Exhibit 99 to the Registrant's Registration
Statement on Form S-8 filed July 5, 1995. (Registration No. 33-94304))
10.5+ Key Executive Employment Protection Agreement dated
January 30, 1998 between Landstar System, Inc. and certain officers of the
Company. (Incorporated by reference to Exhibit 10.9 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 27, 1997 (Commission
File NO. 0-21238))
21
Exhibit Index (continued)
Form 10-K for fiscal year ended 12/29/01
Exhibit No. Description
- ----------- -----------
10.6+ Amendment to the Landstar System, Inc. 1993 Stock Option
Plan (Incorporated by reference to Exhibit 10.10 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 27, 1997 (Commission
File No. 0-21238))
10.7+ Form of Promissory Notes between the Company and certain
directors, executive officers and management of the Company.
10.8+ First Amendment to the Landstar System, Inc. 1994 Directors Stock
Option Plan
10.9+ Second Amendment to the Landstar System, Inc. 1994 Directors Stock
Option Plan
(11) Statement re: Computation of Per Share Earnings:
11.1* Landstar System, Inc. and Subsidiary Calculation of Earnings
Per Common Share
11.2* Landstar System, Inc. and Subsidiary Calculation of Diluted
Earnings Per Share
(13) Annual Report to Shareholders, Form 10-Q or Quarterly Report to
Shareholders:
13.1* Excerpts from the 2001 Annual Report to Shareholders
(21) Subsidiaries of the Registrant:
21.1* List of Subsidiary Corporations of the Registrant
(23) Consents of Experts and Counsel:
23.1* Consent of KPMG LLP as Independent Auditors of the Registrant
(24) Power of Attorney:
24.1* Powers of Attorney
___________________
+management contract or compensatory plan or arrangement
*Filed herewith.
22
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Landstar System, Inc.:
Under date of February 5, 2002, we reported on the consolidated balance sheets
of Landstar System, Inc. and subsidiary as of December 29, 2001 and December
30, 2000, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the fiscal years ended December 29,
2001, December 30, 2000 and December 25, 1999, as contained in the 2001 annual
report to shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 2001. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related financial statement schedules
as listed in Item 14 (a)(2). These financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
KPMG LLP
Stamford, Connecticut
February 5, 2002
23
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT COMPANY ONLY BALANCE SHEET INFORMATION
(Dollars in thousands, except per share amounts)
Dec. 29, Dec. 30,
2001 2000
-------- --------
Assets
- ------
Investment in Landstar System Holdings, Inc.,
net of advances $117,440 $107,859
-------- --------
Total assets $117,440 $107,859
======== ========
Liabilities and Shareholders' Equity
- -----------------------------------
Shareholders' equity:
Common stock, $.01 par value, authorized
20,000,000 shares, issued 13,328,834
and 13,233,874 shares $ 133 $ 132
Additional paid-in capital 75,036 71,325
Retained earnings 258,162 215,368
Cost of 5,241,841 and 4,741,841 shares of
common stock in treasury (209,926) (172,727)
Notes receivable arising from exercise of
stock options (5,965) (6,239)
-------- --------
Total shareholders' equity 117,440 107,859
-------- --------
Total liabilities and shareholders' equity $117,440 $107,859
======== ========
S-1
24
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT COMPANY ONLY STATEMENT OF INCOME INFORMATION
(Dollars in thousands, except per share amounts)
FISCAL YEARS ENDED
----------------------------------------------
Dec. 29, Dec. 30, Dec. 25,
2001 2000 1999
---------- ---------- ----------
Equity in undistributed earnings
of Landstar System Holdings, Inc. $ 42,838 $ 45,296 $ 46,018
Income taxes 44 102 81
---------- ---------- -----------
Net income $ 42,794 $ 45,194 $ 45,937
========== ========== ===========
Earnings per common share $ 5.13 $ 5.15 $ 4.60
========== ========== ===========
Diluted earnings per share $ 5.01 $ 5.03 $ 4.55
========== ========== ===========
Average number of shares
outstanding:
Earnings per common share 8,336,000 8,781,000 9,982,000
========== ========== ===========
Diluted earnings per share 8,546,000 8,981,000 10,102,000
========== ========== ===========
S-2
25
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT COMPANY ONLY STATEMENT OF CASH FLOWS INFORMATION
(Dollars in thousands)
FISCAL YEARS ENDED
-----------------------------------------------
Dec. 29, Dec. 30, Dec. 25,
2001 2000 1999
---------- ---------- -----------
Operating Activities
- --------------------
Net income $ 42,794 $ 45,194 $ 45,937
Adjustments to reconcile net income
to net cash used by
operating activities:
Equity in undistributed earnings of
Landstar System Holdings, Inc. (42,838) (45,296) (46,018)
---------- ---------- -----------
Net Cash Used By Operating
Activities (44) (102) (81)
---------- ---------- -----------
Investing Activities
- --------------------
Additional investments in and advances
from Landstar System Holdings,
Inc., net 34,082 46,144 51,172
---------- ---------- -----------
Net Cash Provided By Investing
Activities 34,082 46,144 51,172
---------- ---------- -----------
Financing Activities
- --------------------
Proceeds from sales of common stock 3,161 143 293
Purchases of common stock (37,199) (46,185) (51,384)
---------- ---------- ----------
Net Cash Used By Financing
Activities (34,038) (46,042) (51,091)
---------- ---------- ----------
Change in cash 0 0 0
Cash at beginning of period 0 0 0
---------- ---------- ----------
Cash at end of period $ 0 $ 0 $ 0
========== ========== ==========
S-3
26
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEAR ENDED DECEMBER 29, 2001
(Dollars in thousands)
COL. A COL. B COL. C COL. D COL. E
- ------ ------ ------ ------ ------
Balance Additions
at --------------------------
Beginning Charged to Charged to Balance
of Costs and Other Accounts Deductions at End
Description Period Expenses Describe Describe (A) of Period
- ----------- --------- ---------- -------------- ---------- ---------
Allowance for doubtful
accounts:
Deducted from trade
receivables $ 4,450 $ 4,384 $ - $ (4,418) $ 4,416
Deducted from other
receivables 5,089 3,958 - (4,307) 4,740
Deducted from other non-
current receivables 1,816 (189) - (1,399) 228
------- --------- ----------- -------- -------
$11,355 $ 8,153 $ - $ (10,124) $ 9,384
======= ========= =========== ======== =======
(A) Write-offs, net of recoveries.
S-4
27
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEAR ENDED DECEMBER 30, 2000
(Dollars in thousands)
COL. A COL. B COL. C COL. D COL. E
- ------ ------ ------ ------ ------
Balance Additions
at --------------------------
Beginning Charged to Charged to Balance
of Costs and Other Accounts Deductions at End
Description Period Expenses Describe Describe(A) of Period
- ----------- --------- ---------- -------------- ---------- ---------
Allowance for doubtful
accounts:
Deducted from trade
receivables $ 4,002 $ 1,915 $ - $ (1,467) $ 4,450
Deducted from other
receivables 5,033 2,479 - (2,423) 5,089
Deducted from other
non-current
receivables 1,626 198 - (8) 1,816
------- --------- --------- -------- -------
$10,661 $ 4,592 $ - $ (3,898) $11,355
======= ========= ========= ======== =======
(A) Write-offs, net of recoveries.
S-5
28
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEAR ENDED DECEMBER 25, 1999
(Dollars in thousands)
COL. A COL. B COL. C COL. D COL. E
- ------ ------ ------ ------ ------
Balance Additions
at --------------------------
Beginning Charged to Charged to Balance
of Costs and Other Accounts Deductions at End
Description Period Expenses Describe Describe(A) of Period
- ----------- --------- ---------- -------------- ---------- ---------
Allowance for doubtful
accounts:
Deducted from trade
receivables $ 6,428 $ 94 $ - $ (2,520) $ 4,002
Deducted from other
receivables 4,007 1,226 - (200) 5,033
Deducted from other non-
current receivables 303 1,323 - - 1,626
------- --------- --------- -------- -------
$10,738 $ 2,643 $ - $ (2,720) $10,661
======= ========= ========= ======== =======
(A) Write-offs, net of recoveries.
S-6
29