##### Table of Contents



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 30, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number: 0-21238
  
  Landstar System, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

06-1313069(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)13410 Sutton Park Drive
    South

32224Jacksonville, Florida

(Zip Code)(Address of principal executive
    offices)   (904) 398-9400 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class

Name of Exchange on Which RegisteredCommon Stock, $0.01 Par Value

The NASDAQ Stock Market, Inc.   Securities Registered Pursuant to Section 12(g) of the
    Act:
    None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 Large accelerated
    filer þ     Accelerated
    filer o     Non-accelerated
    filer o
  Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K
  Part
    of 10-KDocument

into Which IncorporatedProxy Statement relating to
    Landstar System, Inc.s Annual Meeting of Stockholders
    scheduled to be held on May 3, 2007


Part III




---



##### 



LANDSTAR
    SYSTEM, INC.
  2006 ANNUAL REPORT ON
    FORM 10-K
  TABLE OF CONTENTS
  
  PagePART IItem 1.


Business


3Item 1A.


Risk
    Factors


11Item 1B.


Unresolved Staff
    Comments


15Item 2.


Properties


15Item 3.


Legal
    Proceedings


15Item 4.


Submission of
    Matters to a Vote of Security Holders


16PART IIItem 5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


16Item 6.


Selected Financial
    Data


19Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


19Item 7A.


Quantitative and
    Qualitative Disclosures About Market Risk


31Item 8.


Financial
    Statements and Supplementary Data


33Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


59Item 9A.


Controls and
    Procedures


59Item 9B.


Other
    Information


62PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


62Item 11.


Executive
    Compensation


63Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


63Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


63Item 14.


Principal
    Accounting Fees and Services


63PART IVItem 15.


Exhibits, Financial
    Statement Schedules


63Signatures


67EX-10.13 Form of Key Exec Employment AgreementEX-10.19 Amendment to Solicitation AgreementEX-21.1 List of SubsidiariesEX-23.1 Consent of KPMGEX-24.1 Powers of AttorneyEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of co-CFOEX-31.3 Section 302 Certification of co-CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of co-CFOEX-32.3 Section 906 Certification of co-CFO   2




---



##### Table of Contents



PART I  Item 1.
    Business  General
  (904) 398-9400. Form 10-K, Form 10-Q, Form 8-K
  Historical
    Background
      two-for-one
  two-for-one
  two-for-one
  Description
    of Business
   3




---



##### Table of Contents



less-than-truckload
      Form 10-K.
  short-to-long
 4




---



##### Table of Contents



agreed-upon
     5




---



##### Table of Contents



Factors
    Significant to the Companys Operations
    Agent
    Network
  pick-up), pick-up
  agreed-upon agreed-upon
           6




---



##### Table of Contents



Capacity
    BCO Independent Contractors. his/her
        Truck Brokerage Carriers. agreed-upon
     7




---



##### Table of Contents



Third Party Rail, Air, Ocean and Other Transportation
    Capacity.
  Warehouse Capacity Owners.
  Diversity
    of Services Offered
      Trailers by TypeVans


9,830Temperature-controlled


117Flatbeds, including step decks,
    drop decks and low boys


3,622Total


13,569   Customers
     8




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##### Table of Contents



Technology
      Corporate
    Services
    accounting, budgeting and taxes

quality programsfinance and treasury services

risk management insurance serviceshuman resource management

safetylegal

strategic planningpurchasing

technology and management
    information systems   Competition
      Self-Insured
    Claims
   9




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##### Table of Contents



Insurance
    Above Self-Insured Retention
    Regulation
  and/or
    and/or
  and/or
 10




---



##### Table of Contents



Seasonality
    Employees
    Item 1A.
    Risk
    Factors  Increased severity or frequency of accidents and other
    claims.
  Dependence on third party insurance
    companies.
  Dependence on independent commission sales
    agents.
 11




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##### Table of Contents



Dependence on third party capacity
    providers.
  Change in capacity mix. and/or
  Contract with the United States Department of
    Transportation/Federal Aviation
    Administration.
     12




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##### Table of Contents



Decreased demand for transportation
    services.
  Substantial industry competition. less-than-truckload
  Dependence on key personnel.
  Disruptions or failures in the Companys computer
    systems.
  Potential changes in fuel taxes.
 13




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##### Table of Contents



Status of independent contractors.
    Regulatory and legislative changes. and/or and/or and/or
  Catastrophic loss of a Company facility.
 14




---



##### Table of Contents



.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties      Item 3.
    Legal
    Proceedings       15




---



##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    2006 Market Price


2005 Market Price


Dividends DeclaredFiscal Period

High


Low


High


Low


2006


2005First Quarter

$
48.10


$
38.72


$
39.25


$
29.25


$
0.025


$
Second Quarter


47.68



40.55



35.85



26.75



0.025



Third Quarter


49.01



39.27



40.42



27.45



0.030



0.025Fourth Quarter


47.76



37.75



44.50



36.10



0.030



0.025      16




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##### Table of Contents



Purchases
    of Equity Securities by the Company
    Total Number ofShares Purchased


Maximum Number ofAverage


as Part of Publicly


Shares that May Yet beTotal Number of


Price Paid


Announced


Purchased Under theFiscal Period

Shares Purchased


per share


Programs


ProgramsOctober 1, 2006














1,866,800Oct. 1, 2006 
    Oct. 28, 2006














1,866,800Oct. 29, 2006 
    Nov. 25, 2006














1,866,800Nov. 26, 2006 
    Dec. 30, 2006


1,039,299


$
40.31



1,039,299



827,501Total


1,039,299


$
40.31



1,039,299       Number of SecuritiesNumber of Securities





Remaining Available forto be Issued Upon


Weighted-Average


Future Issuance UnderExercise of


Exercise Price of


Equity CompensationPlan Category

Outstanding Options


Outstanding Options


PlansEquity Compensation Plans Approved
    by Security Holders


2,566,571


$
27.35



3,896,800Equity Compensation Plans Not
    Approved by Security Holders


0



0



0    17




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##### Table of Contents



Financial
    Model Shareholder Returns
    
 18




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##### Table of Contents



Item 6.
    Selected
    Financial Data    LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
    SELECTED CONSOLIDATED FINANCIAL DATA
  Fiscal YearsIncome Statement Data:

2006


2005


2004


2003


2002(Dollars in thousands, except per share amounts)Revenue

$
2,513,756


$
2,517,828


$
2,019,936


$
1,596,571


$
1,506,555Investment income


4,250



2,695



1,346



1,220



1,950Costs and expenses:Purchased transportation


1,890,755



1,880,431



1,510,963



1,185,043



1,116,009Commissions to agents


199,775



203,730



161,011



125,997



118,864Other operating costs


45,700



36,709



37,130



37,681



34,325Insurance and claims


39,522



50,166



60,339



45,690



42,188Selling, general and administrative


134,239



140,345



124,357



111,227



106,192Depreciation and amortization


16,796



15,920



13,959



12,736



11,520Total costs and expenses


2,326,787



2,327,301



1,907,759



1,518,374



1,429,098Operating income


191,219



193,222



113,523



79,417



79,407Interest and debt expense


6,821



4,744



3,025



3,240



4,292Income before income taxes


184,398



188,478



110,498



76,177



75,115Income taxes


71,313



72,880



42,661



29,146



28,867Net income

$
113,085


$
115,598


$
67,837


$
47,031


$
46,248Earnings per common share

$
1.95


$
1.95


$
1.13


$
0.77


$
0.72Diluted earnings per share

$
1.93


$
1.91


$
1.10


$
0.75


$
0.70Dividends paid per common share

$
0.11


$
0.05   Dec. 30,


Dec. 31,


Dec. 25,


Dec. 27,


Dec. 28,Balance Sheet Data:

2006


2005


2004


2003


2002Total assets

$
646,651


$
765,814


$
586,802


$
441,072


$
402,984Long-term debt, including current
    maturities


129,321



166,973



92,090



91,456



77,360Shareholders equity


230,274



255,689



215,129



145,130



151,329   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Statements
  Form 10-K
 19




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Form 10-K
  Introduction
    short-to-long
     20




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Changes
    in Financial Condition and Results of Operations
      Fiscal Year2006


2005


2004Number of Million Dollar Agents


490



466



427Average revenue generated per
    Million Dollar Agent

$
4,700,000


$
5,063,000


$
4,374,000Percent of consolidated revenue
    generated by Million Dollar Agents


92
%


94
%


92
%Number of independent commission
    sales agent locations at year end


1,345



1,150



1,025  21




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##### Table of Contents



Fiscal Year2006


2005


2004Carrier Segment:External revenue generated through
    (in thousands):BCO Independent Contractors

$
1,270,649


$
1,249,159


$
1,191,605Truck Brokerage Carriers


525,967



442,509



263,257$
1,796,616


$
1,691,668


$
1,454,862Revenue per revenue mile

$
2.02


$
1.92


$
1.79Revenue per load

$
1,621


$
1,542


$
1,391Average length of haul (miles)


803



804



779Number of loads


1,108,000



1,097,000



1,046,000Global Logistics Segment:External revenue generated through
    (in thousands):BCO Independent Contractors(1)

$
103,588


$
159,273


$
105,815Truck Brokerage Carriers


396,141



439,604



308,106Rail, Air, Ocean and Bus
    Carriers(2)


182,813



196,259



121,001$
682,542


$
795,136


$
534,922Revenue per load(3)

$
1,504


$
1,555


$
1,454Number of loads(3)


387,000



334,000



324,000     (1)
    
    Includes revenue from freight hauled by carrier segment BCO
    Independent Contractors for global logistics customers.(2)
    
    Included in the 2006 and 2005 fiscal year was $25,067,000 and
    $44,007,000, respectively, of revenue attributable to buses
    provided under a contract between Landstar Express America, Inc.
    and the United States Department of Transportation/Federal
    Aviation Administration (the FAA).(3)
    
    Number of loads and revenue per load for the 2006, 2005 and 2004
    fiscal years exclude the effect of $100,655,000, $275,929,000
    and $63,790,000, respectively, of revenue derived from
    transportation services provided primarily under a contract with
    the FAA as discussed further in the paragraphs that follow. (See
    the section Use of Non-GAAP Financial
    Measures on page 27.) 22




---



##### Table of Contents



Dec. 30,


Dec. 31,


Dec. 25,2006


2005


2004BCO Independent Contractors


8,516



8,011



7,800Truck Brokerage Carriers:Approved and active(1)


15,247



14,014



11,077Other approved


8,574



8,497



7,14423,821



22,511



18,221Total available truck capacity
    providers


32,337



30,522



26,021Number of trucks provided by BCO
    Independent Contractors


9,205



8,728



8,677     (1)
    
    Active refers to Truck Brokerage Carriers who moved at least one
    load in the 180 days immediately preceding the fiscal year
    end.      agreed-upon agreed-upon agreed-upon
  agreed-upon
   23




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##### Table of Contents



Fiscal Year2006


2005


2004Revenue


100.0
%


100.0
%


100.0
%Investment income


0.2



0.1



0.1Costs and expenses:Purchased transportation


75.2



74.7



74.8Commissions to agents


8.0



8.1



8.0Other operating costs


1.8



1.5



1.8Insurance and claims


1.6



2.0



3.0Selling, general and administrative


5.3



5.5



6.2Depreciation and amortization


0.7



0.6



0.7Total costs and expenses


92.6



92.4



94.5Operating income


7.6



7.7



5.6Interest and debt expense


0.3



0.2



0.1Income before income taxes


7.3



7.5



5.5Income taxes


2.8



2.9



2.1Net income


4.5
%


4.6
%


3.4
%   Fiscal
    Year Ended December 30, 2006 Compared to Fiscal Year Ended
    December 31, 2005
   24




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##### Table of Contents



25




---



##### Table of Contents



Fiscal
    Year Ended December 31, 2005 Compared to Fiscal Year Ended
    December 25, 2004
         26




---



##### Table of Contents



Use of
    Non-GAAP Financial Measures
  Form 10-K, Form 10-K.
    Capital
    Resources and Liquidity
   27




---



##### Table of Contents



28




---



##### Table of Contents



Contractual
    Obligations and Commitments
    Payments Due By PeriodLess Than


1-3


4-5


More ThanContractual Obligation

Total


1 Year


Years


Years


5 YearsLong-term debt

$
60,000






$
60,000Capital lease obligations


76,915


$
21,857



36,761


$
18,297Operating leases


28,155



7,241



10,373



4,605


$
5,936$
165,070


$
29,098


$
107,134


$
22,902


$
5,936     Off-Balance
    Sheet Arrangements
    Legal
    Matters
   29




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
     30




---



##### Table of Contents



Effects
    of Inflation
    Seasonality
    Recently
    Issued Accounting Standards Not Currently Effective
    Item 7a.
    Quantitative
    and Qualitative Disclosures about Market Risk       31




---



##### Table of Contents



available-for-sale,
 32




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  CONSOLIDATED
    BALANCE SHEETS
 (Dollars in thousands, except per share amounts)
  Dec. 30,


Dec. 31,2006


2005ASSETSCurrent AssetsCash and cash equivalents

$
91,491


$
29,398Short-term investments


21,548



20,693Trade accounts receivable, less
    allowance of $4,834 and $4,655


318,983



534,274Other receivables, including
    advances to independent contractors, less allowance of $4,512
    and $4,342


14,198



11,384Deferred income taxes and other
    current assets


25,142



21,106Total current assets


471,362



616,855Operating property, less
    accumulated depreciation and amortization of $77,938 and $68,561


110,957



89,131Goodwill


31,134



31,134Other assets


33,198



28,694Total assets

$
646,651


$
765,814LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent LiabilitiesCash overdraft

$
25,435


$
29,829Accounts payable


122,313



164,509Current maturities of long-term
    debt


18,730



12,122Insurance claims


25,238



27,887Accrued compensation


11,993



20,299Other current liabilities


46,485



44,850Total current liabilities


250,194



299,496Long-term debt, excluding current
    maturities


110,591



154,851Insurance claims


36,232



37,840Deferred income taxes


19,360



17,938Shareholders EquityCommon stock, $0.01 par
    value, authorized 160,000,000 shares, issued 64,993,143 and
    64,151,902 shares


650



642Additional paid-in capital


108,020



84,532Retained earnings


499,273



392,549Cost of 9,028,009 and
    5,344,883 shares of common stock in treasury


(377,662
)


(221,776
)Accumulated other comprehensive
    loss


(7
)


(211
)Note receivable arising from
    exercise of stock options






(47
)Total shareholders equity


230,274



255,689Total liabilities and
    shareholders equity

$
646,651


$
765,814    33




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  CONSOLIDATED
    STATEMENTS OF INCOME
 (Dollars in thousands, except per share amounts)
  Fiscal Years EndedDec. 30,


Dec. 31,


Dec. 25,2006


2005


2004Revenue

$
2,513,756


$
2,517,828


$
2,019,936Investment income


4,250



2,695



1,346Costs and expenses:Purchased transportation


1,890,755



1,880,431



1,510,963Commissions to agents


199,775



203,730



161,011Other operating costs


45,700



36,709



37,130Insurance and claims


39,522



50,166



60,339Selling, general and administrative


134,239



140,345



124,357Depreciation and amortization


16,796



15,920



13,959Total costs and expenses


2,326,787



2,327,301



1,907,759Operating income


191,219



193,222



113,523Interest and debt expense


6,821



4,744



3,025Income before income taxes


184,398



188,478



110,498Income taxes


71,313



72,880



42,661Net income

$
113,085


$
115,598


$
67,837Earnings per common share

$
1.95


$
1.95


$
1.13Diluted earnings per share

$
1.93


$
1.91


$
1.10Average number of shares
    outstanding:Earnings per common share


57,854,000



59,199,000



60,154,000Diluted earnings per share


58,654,000



60,413,000



61,757,000Dividends paid per common share

$
0.11


$
0.05    34




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands) Fiscal Years EndedDec. 30,


Dec. 31,


Dec. 25,2006


2005


2004OPERATING ACTIVITIESNet income

$
113,085


$
115,598


$
67,837Adjustments to reconcile net
    income to net cash provided (used) by operating activities:Depreciation and amortization of
    operating property


16,796



15,920



13,959Non-cash interest charges


174



174



348Provisions for losses on trade and
    other accounts receivable


5,349



5,939



6,250(Gains) losses on sales and
    disposals of operating property


(475
)


(340
)


215Deferred income taxes, net


3,297



(2,019
)


4,292Stock-based compensation


7,173



6,453



6,298Changes in operating assets and
    liabilities:Decrease (increase) in trade and
    other accounts receivable


207,128



(198,894
)


(126,718
)Decrease (increase) in other assets


(7,761
)


686



677Increase (decrease) in accounts
    payable


(42,196
)


44,312



48,484Increase (decrease) in other
    liabilities


(6,145
)


10,979



9,786Increase (decrease) in insurance
    claims


(4,257
)


685



11,467NET CASH PROVIDED (USED) BY
    OPERATING ACTIVITIES


292,168



(507
)


42,895INVESTING ACTIVITIESNet change in other short-term
    investments


(4,462
)


(1,747
)


8,461Sales and maturities of investments


42,334



4,977



4,006Purchases of investments


(41,239
)


(6,450
)


(12,606
)Purchases of operating property


(4,173
)


(3,857
)


(6,377
)Proceeds from sales of operating
    property


2,620



4,492



971NET CASH USED BY INVESTING
    ACTIVITIES


(4,920
)


(2,585
)


(5,545
)FINANCING ACTIVITIESIncrease (decrease) in cash
    overdraft


(4,394
)


6,282



3,024Proceeds from repayment of notes
    receivable arising from exercises of stock options


47



423



115Dividends paid


(6,361
)


(2,922
)Proceeds from exercises of stock
    options


10,533



9,216



16,036Excess tax benefit on stock option
    exercises


5,758



7,036



6,849Borrowings on revolving credit
    facility


5,000



57,000



71,000Purchases of common stock


(156,492
)


(95,600
)


(27,001
)Principal payments on long-term
    debt and capital lease obligations


(79,246
)


(10,629
)


(88,329
)NET CASH USED BY FINANCING
    ACTIVITIES


(225,155
)


(29,194
)


(18,306
)Increase (decrease) in cash and
    cash equivalents


62,093



(32,286
)


19,044Cash and cash equivalents at
    beginning of period


29,398



61,684



42,640Cash and cash equivalents at end
    of period

$
91,491


$
29,398


$
61,684    35




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  CONSOLIDATED
    STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
 For the Fiscal Years Ended December 30, 2006,
 December 31, 2005 and December 25, 2004
 (Dollars in thousands)
 NotesReceivableArisingAccumulated


fromAddl











Other


ExercisesCommon Stock


Paid-In


Retained


Treasury Stock at Cost


Comprehensive


of StockShares


Amount


Capital


Earnings


Shares


Amount


Income (Loss)


Options


TotalBalance December 27, 2003


31,816,860


$
318


$
33,025


$
212,340



1,809,930


$
(100,150
)

$
182


$
(585
)

$
145,130Net income














67,837



















67,837Purchases of common stock


















681,000



(27,001
)










(27,001
)Exercises of stock options,
    including excess tax benefit


996,700



10



22,875























22,885Director compensation paid in
    common stock


9,000







402























402Stock-based compensation expense










5,896























5,896Repayment of notes receivable
    arising from exercises of stock options






























115



115Unrealized loss on
    available-for-sale
    investments, net of income taxes


























(135
)






(135
)Stock split effected in the form of
    a 100% stock dividend


30,331,630



304







(304
)Balance December 25, 2004


63,154,190



632



62,198



279,873



2,490,930



(127,151
)


47



(470
)


215,129Net income














115,598



















115,598Dividends paid ($0.05 per
    share)














(2,922
)


















(2,922
)Purchases of common stock


















2,873,053



(95,600
)










(95,600
)Exercises of stock options,
    including excess tax benefit


991,712



10



16,242























16,252Director compensation paid in
    common stock


6,000







193























193Stock-based compensation expense










6,260























6,260Repayment of notes receivable
    arising from exercises of stock options






























423



423Incentive compensation paid in
    common stock










(361
)






(19,100
)


975











614Unrealized loss on
    available-for-sale
    investments, net of income taxes


























(258
)






(258
)Balance December 31, 2005


64,151,902



642



84,532



392,549



5,344,883



(221,776
)


(211
)


(47
)


255,689Net income














113,085



















113,085Dividends paid ($0.11 per
    share)














(6,361
)


















(6,361
)Purchases of common stock


















3,697,726



(156,492
)










(156,492
)Exercises of stock options,
    including excess tax benefit


835,241



8



16,283























16,291Director compensation paid in
    common stock


6,000







265























265Stock-based compensation expense










6,908























6,908Repayment of note receivable
    arising from exercise of stock options






























47



47Incentive compensation paid in
    common stock










32







(14,600
)


606











638Unrealized gain on
    available-for-sale
    investments, net of income taxes


























204







204Balance December 30, 2006


64,993,143


$
650


$
108,020


$
499,273



9,028,009


$
(377,662
)

$
(7
)

$
0


$
230,274    36




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  (1)  Significant
    Accounting Policies
  Consolidation
    Fiscal
    Year
    Revenue
    Recognition
    Insurance
    Claim Costs
    Tires
    Cash
    and Cash Equivalents
    Investments
  available-for-sale,
 37




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Operating
    Property
    Income
    Taxes
    Earnings
    Per Share
      Fiscal Year2006


2005


2004Average number of common shares
    outstanding


57,854



59,199



60,154Incremental shares under stock
    option plans


800



1,214



1,603Average number of common shares
    and common share equivalents outstanding


58,654



60,413



61,757     Share-Based
    Payments
   38




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (2)  Comprehensive
    Income
    Fiscal Year2006


2005


2004Net income

$
113,085


$
115,598


$
67,837Unrealized holding gains (losses)
    on
    available-for-sale
    investments, net of income taxes


204



(258
)


(135
)Comprehensive income

$
113,289


$
115,340


$
67,702   available-for-sale mark-to-market available-for-sale mark-to- available-for-sale mark-to-market
  (3)  Income
    Taxes
    Fiscal Year2006


2005


2004Current:Federal

$
60,599


$
65,804


$
35,333State


7,417



9,095



3,03668,016



74,899



38,369Deferred:Federal


2,650



(2,104
)


3,683State


647



85



6093,297



(2,019
)


4,292Income taxes

$
71,313


$
72,880


$
42,661  39




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Dec. 30,


Dec. 31,2006


2005Deferred tax assets:Receivable valuations

$
3,847


$
3,702Share-based payments


3,989



3,054Self-insured claims


4,081



4,365State net operating loss
    carryforwards


130



633Other


4,432



5,165$
16,479


$
16,919Deferred tax liabilities:Operating property

$
18,718


$
16,384Goodwill


4,982



4,459$
23,700


$
20,843Net deferred tax liability

$
7,221


$
3,924     Fiscal Year2006


2005


2004Income taxes at federal income tax
    rate

$
64,539


$
65,967


$
38,674State income taxes, net of federal
    income tax benefit


5,234



5,967



2,369Meals and entertainment exclusion


720



229



789Share-based payments


443



457



362Other, net


377



260



467Income taxes

$
71,313


$
72,880


$
42,661     (4)  Operating
    Property
    Dec. 30,


Dec. 31,2006


2005Land

$
1,921


$
1,921Leasehold improvements


8,955



8,926Buildings and improvements


7,741



8,117Trailing equipment


140,426



110,226Other equipment


29,852



28,502188,895



157,692Less accumulated depreciation and
    amortization


77,938



68,561$
110,957


$
89,131  40




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (5)  Retirement
    Plan
      (6)  Debt
    Dec. 30,


Dec. 31,2006


2005Capital leases

$
69,321


$
46,973Revolving credit facility


60,000



120,000129,321



166,973Less current maturities


18,730



12,122Total long-term debt

$
110,591


$
154,851        41




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             (7)  Leases
    Capital


OperatingLeases


Leases2007

$
21,857


$
7,2412008


18,847



6,8102009


17,914



3,5632010


12,255



2,3882011


6,042



2,217Thereafter






5,93676,915


$
28,155Less amount representing interest
    (3.6% to 5.9%)


7,594Present value of minimum lease
    payments

$
69,321     (8)  Stock
    Compensation Plans
  Retrospective
    Application
   42




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  paid-in
  paid-in-capital
      Share-based
    payment arrangements
      Fiscal YearsDec. 30,


Dec. 31,


Dec. 25,2006


2005


2004Total cost of share-based payment
    plans during the period

$
6,908


$
6,260


$
5,896Amount of related income tax
    benefit recognized during the period


2,169



1,902



1,861Net cost of share based payment
    plans during the period

$
4,739


$
4,358


$
4,035  43




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Employee
    and director stock option plans
             44




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Options Outstanding


Options ExercisableWeighted Average





Weighted AverageExercise Price





Exercise PriceShares


per Share


Shares


per ShareOptions at December 27, 2003


4,559,324


$
9.18



1,328,204


$
7.11Granted


660,000


$
20.59Exercised


(1,993,400
)

$
8.04Forfeited


(110,160
)

$
9.85Options at December 25, 2004


3,115,764


$
12.31



664,324


$
8.56Granted


683,000


$
35.77Exercised


(991,712
)

$
9.29Forfeited


(12,400
)

$
22.31Options at December 31, 2005


2,794,652


$
19.07



855,816


$
10.37Granted


650,000


$
43.61Exercised


(835,241
)

$
12.61Forfeited


(42,840
)

$
21.14Options at December 30, 2006


2,566,571


$
27.35



779,739


$
16.29     Options OutstandingWeighted


WeightedNumber


Average


AverageOutstanding


Remaining


ExerciseDec. 30,


Contractual


PriceRange of Exercise Prices per Share

2006


Life (Years)


per Share$ 3.99 - $ 6.00


64,000



1.4


$
3.99$ 6.01 - $ 9.00


305,600



4.2


$
7.94$ 9.01 - $13.50


221,372



5.9


$
13.06$13.51 - $20.00


540,532



6.7


$
17.74$20.01 - $30.00


146,000



7.5


$
26.10$30.01 - $40.00


646,067



8.0


$
35.87$40.01 - $45.76


643,000



9.1


$
43.602,566,571



7.2


$
27.35   45




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Options ExercisableNumber


Weighted AverageExercisable


Exercise PriceRange of Exercise Prices per Share

Dec. 30, 2006


per Share$ 3.99 - $ 6.00


64,000


$
3.99$ 6.01 - $ 9.00


305,600


$
7.94$ 9.01 - $13.50


92,732


$
13.00$13.51 - $20.00


139,734


$
16.80$20.01 - $30.00






$30.01 - $37.31


177,673


$
36.40779,739


$
16.29     (9)  Shareholders
    Equity
        (10)  Segment
    Information
  short-to-long
 46




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##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         47




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Carrier


Global Logistics


Insurance


Other


Total2006External revenue

$
1,796,616


$
682,542


$
34,598






$
2,513,756Internal revenue


54,837



2,478



28,293







85,608Investment income










4,250







4,250Interest and debt expense













$
6,821



6,821Depreciation and amortization


12,814



152







3,830



16,796Operating income


181,550



31,433



35,673



(57,437
)


191,219Expenditures on long-lived assets


637



174







3,362



4,173Goodwill


20,496



10,638











31,134Capital lease additions


36,594















36,594Total assets


357,575



115,729



106,322



67,025



646,6512005External revenue

$
1,691,668


$
795,136


$
31,024






$
2,517,828Internal revenue


95,872



2,222



31,036







129,130Investment income










2,695







2,695Interest and debt expense













$
4,744



4,744Depreciation and amortization


11,262



309







4,349



15,920Operating income


169,882



60,115



19,374



(56,149
)


193,222Expenditures on long-lived assets


798



20







3,039



3,857Goodwill


20,496



10,638











31,134Capital lease additions


28,512















28,512Total assets


360,083



304,727



58,379



42,625



765,8142004External revenue

$
1,454,862


$
534,922


$
30,152






$
2,019,936Internal revenue


48,673



4,967



30,538







84,178Investment income










1,346







1,346Interest and debt expense













$
3,025



3,025Depreciation and amortization


9,473



270







4,216



13,959Operating income


126,831



25,392



12,456



(51,156
)


113,523Expenditures on long-lived assets


730



206







5,441



6,377Goodwill


20,496



10,638











31,134Capital lease additions


17,963















17,963Total assets


317,466



136,311



91,183



41,842



586,802   (11)  Commitments
    and Contingencies
     48




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         49




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               KPMG
    LLP
     50




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
  QUARTERLY
    FINANCIAL DATA
 (Dollars in thousands, except per share amounts)
 (Unaudited)
  Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter2006


2006


2006


2006Revenue

$
611,279


$
649,197


$
643,238


$
610,042Operating income

$
48,652


$
51,701


$
49,255


$
41,611Income before income taxes

$
46,781


$
49,893


$
47,963


$
39,761Income taxes


18,091



19,313



18,498



15,411Net income

$
28,690


$
30,580


$
29,465


$
24,350Earnings per common share(1)

$
0.51


$
0.53


$
0.50


$
0.41Diluted earnings per share(1)

$
0.50


$
0.53


$
0.50


$
0.41Dividends paid per common share

$
0.030


$
0.030


$
0.025


$
0.025   Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter2005


2005


2005


2005Revenue

$
800,442


$
676,070


$
539,104


$
502,212Operating income(2)

$
69,553


$
57,547


$
37,675


$
28,447Income before income taxes(2)

$
68,003


$
56,342


$
36,623


$
27,510Income taxes(2)


26,216



21,773



14,199



10,692Net income(2)

$
41,787


$
34,569


$
22,424


$
16,818Earnings per common share(1)(2)

$
0.71


$
0.59


$
0.38


$
0.28Diluted earnings per share(1)(2)

$
0.70


$
0.58


$
0.37


$
0.27Dividends paid per common share

$
0.025


$
0.025     (1)
    
    Due to the changes in the number of average common shares and
    common stock equivalents outstanding during the year, the sum of
    earnings per share amounts for each quarter do not necessarily
    add to the earnings per share amounts for the full year.(2)
    
    On January 1, 2006, the Company adopted the provisions of
    Statement of Financial Accounting Standards No. 123R,
    Share-Based Payment (FAS 123R), under the
    modified retrospective method. Financial information for 2005
    has been adjusted to reflect the retrospective implementation of
    FAS 123R. 51




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           KPMG
    LLP
     52




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC.
 SCHEDULE I 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
    PARENT COMPANY ONLY BALANCE SHEET INFORMATION

(Dollars in thousands, except per share amounts) Dec. 30,


Dec. 31,2006


2005ASSETSInvestment in Landstar System
    Holdings, Inc., net of advances

$
230,274


$
255,689Total assets

$
230,274


$
255,689LIABILITIES AND
    SHAREHOLDERS EQUITYShareholders equity:Common stock, $.01 par value,
    authorized 160,000,000 shares, issued 64,993,143 and
    64,151,902

$
650


$
642Additional paid-in capital


108,020



84,532Retained earnings


499,273



392,549Cost of 9,028,009 and
    5,344,883 shares of common stock in treasury


(377,662
)


(221,776
)Accumulated other comprehensive
    loss


(7
)


(211
)Note receivable arising from
    exercise of stock options






(47
)Total shareholders equity


230,274



255,689Total liabilities and
    shareholders equity

$
230,274


$
255,689  53




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##### Table of Contents



LANDSTAR
    SYSTEM, INC.
 SCHEDULE I 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
    PARENT COMPANY ONLY STATEMENT OF INCOME INFORMATION

(Dollars in thousands, except per share amounts) Fiscal Years EndedDec. 30,


Dec. 31,


Dec. 25,2006


2005


2004Equity in undistributed earnings
    of Landstar System Holdings, Inc

$
113,079


$
115,020


$
67,933Income taxes


(6
)


(578
)


96Net income

$
113,085


$
115,598


$
67,837Earnings per common share

$
1.95


$
1.95


$
1.13Diluted earnings per share

$
1.93


$
1.91


$
1.10Dividends paid per common share

$
0.11


$
0.05Average number of shares
    outstanding:Earnings per common share


57,854,000



59,199,000



60,154,000Diluted earnings per share


58,654,000



60,413,000



61,757,000  54




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC.
 SCHEDULE I 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
    PARENT COMPANY ONLY STATEMENT OF CASH FLOWS
    INFORMATION

(Dollars in thousands) Fiscal Years EndedDec. 30,


Dec. 31,


Dec. 25,2006


2005


2004Operating ActivitiesNet income

$
113,085


$
115,598


$
67,837Adjustments to reconcile net
    income to net cash provided by operating activities:Equity in undistributed earnings
    of Landstar System Holdings, Inc.


(113,079
)


(115,020
)


(67,933
)Net Cash Provided (Used) By
    Operating Activities


6



578



(96
)Investing ActivitiesAdditional investments in and
    advances from Landstar System Holdings, Inc., net


146,509



81,269



4,097Net Cash Provided By Investing
    Activities


146,509



81,269



4,097Financing ActivitiesExcess tax benefit on stock option
    exercises


5,758



7,036



6,849Proceeds from repayment of notes
    arising from exercises of stock options


47



423



115Proceeds from exercises of stock
    options


10,533



9,216



16,036Dividends paid


(6,361
)


(2,922
)Purchases of common stock


(156,492
)


(95,600
)


(27,001
)Net Cash Used By Financing
    Activities


(146,515
)


(81,847
)


(4,001
)Change in cash


0



0



0Cash at beginning of period


0



0



0Cash at end of period

$
0


$
0


$
0  55




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
 SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTSFor the Fiscal Year Ended December 30, 2006 COL A

COL B


COL C


COL D


COL EAdditionsCharged toBalance at


Charged to


Other


Deductions


Balance atBeginning of


Costs and


Accounts


Describe


End ofPeriod


Expenses


Describe


(A)


Period(Dollars in thousands)DescriptionAllowance for doubtful accounts:Deducted from trade receivables

$
4,655


$
3,235






$
(3,056
)

$
4,834Deducted from other receivables


4,342



2,099







(1,929
)


4,512Deducted from other non-current
    receivables


282



15











297$
9,279


$
5,349






$
(4,985
)

$
9,643     (A)
    
    Write-offs, net of recoveries. 56




---



##### Table of Contents



SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTSFor the Fiscal Year Ended December 31, 2005 COL A

COL B


COL C


COL D


COL EAdditionsCharged toBalance at


Charged to


Other


Deductions


Balance atBeginning of


Costs and


Accounts


Describe


End ofPeriod


Expenses


Describe


(A)


Period(Dollars in thousands)DescriptionAllowance for doubtful accounts:Deducted from trade receivables

$
4,021


$
3,399






$
(2,765
)

$
4,655Deducted from other receivables


4,245



2,521







(2,424
)


4,342Deducted from other non-current
    receivables


263



19











282$
8,529


$
5,939






$
(5,189
)

$
9,279     (A)
    
    Write-offs, net of recoveries. 57




---



##### Table of Contents



LANDSTAR
    SYSTEM, INC. AND SUBSIDIARY
 SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTSFor the Fiscal Year Ended December 25, 2004 COL A

COL B


COL C


COL D


COL EAdditionsCharged toBalance at


Charged to


Other


Deductions


Balance atBeginning of


Costs and


Accounts


Describe


End ofPeriod


Expenses


Describe


(A)


Period(Dollars in thousands)DescriptionAllowance for doubtful accounts:Deducted from trade receivables

$
3,410


$
2,883






$
(2,272
)

$
4,021Deducted from other receivables


4,077



3,348







(3,180
)


4,245Deducted from other non-current
    receivables


244



19











263$
7,731


$
6,250






$
(5,452
)

$
8,529     (A)
    
    Write-offs, net of recoveries. 58




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedure
  Form 10-K, Rule 13a-15(e)
    Internal
    Control Over Financial Reporting
  (a)
    Managements
    Report on Internal Control over Financial
    Reporting  Rules 13a-15(f) 15d-15(f)
       59




---



##### Table of Contents



Form 10-K
  (b)
    Attestation
    Report of the Registered Public Accounting Firm 60




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                 KPMG
    LLP
     61




---



##### Table of Contents



(c)
    Changes
    in Internal Control Over Financial Reporting    Item 9B.
    Other
    Information  sixty-day gross-up
 PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance     62




---



##### Table of Contents



www.landstar.com Form 8-K
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Regulation S-K
  Regulation S-K
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Financial Statements and Supplementary Data
  PageConsolidated
    Balance Sheets


33Consolidated
    Statements of Income


34Consolidated
    Statements of Cash Flows


35Consolidated
    Statement of Changes in Shareholders Equity


36Notes to
    Consolidated Financial Statements


37Report of
    Independent Registered Public Accounting Firm


50  63




---



##### Table of Contents



Financial Statement Sch
  Form 10-K.
  ScheduleNumber

Description

PageI

Condensed Financial
    Information of Registrant Parent Company Only Balance Sheet
    Information


53I

Condensed Financial
    Information of Registrant Parent Company Only Statement of
    Income Information


54I

Condensed Financial
    Information of Registrant Parent Company Only Statement of Cash
    Flows Information


55II

Valuation and
    Qualifying Accounts For the Fiscal Year Ended
    December 30, 2006


56II

Valuation and
    Qualifying Accounts For the Fiscal Year Ended
    December 31, 2005


57II

Valuation and
    Qualifying Accounts For the Fiscal Year Ended
    December 25, 2004


58     Exhibits
  ExhibitNo.

Description(2)


Plan of acquisition,
    reorganization, arrangement, liquidation or succession2
.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
    By-Laws:3
.1

Restated Certificate of
    Incorporation of the Company dated March 6, 2006, including
    Certificate of Designation of Junior Participating Preferred
    Stock dated February 10, 1993. (Incorporated by reference
    to Exhibit 3.1 to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2005 (Commission
    File
    No. 0-21238))3
.2

The Companys Bylaws, as
    amended and restated on February 9, 1993. (Incorporated by
    reference to Exhibit 3 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

Fourth Amended and Restated Credit
    Agreement, dated July 8, 2004, among LSHI, Landstar, the
    lenders named therein and JPMorgan Chase Bank as administrative
    agent (including exhibits and schedules thereto). (Incorporated
    by reference to Exhibit 99.1 to the Registrants
    Form 8-K
    filed on July 12, 2004 (Commission File
    No. 0-21238))(10)


Material contracts:10
.1+

Landstar System, Inc. Executive
    Incentive Compensation Plan (Incorporated by reference to
    Exhibit B to the Registrants Definitive Proxy
    Statement filed on March 22, 2002 (Commission File
    No. 0-21238))10
.2+

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
.3+

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)) 64




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##### Table of Contents



ExhibitNo.

Description10
.4+

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
.5+

Landstar System, Inc. 2002
    Employee Stock Option Plan (Incorporated by reference to
    Exhibit A to the Registrants Definitive Proxy
    Statement filed on March 22, 2002 (Commission File
    No. 0-21238))10
.6+

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
.7+

First Amendment to the Landstar
    System, Inc. 1994 Directors Stock Option Plan (Incorporated
    by reference to Exhibit 10.8 to the Registrants
    Annual Report on
    Form 10-K
    for the fiscal year ended December 30, 2000 (Commission
    File
    No. 0-21238))10
.8+

Second Amendment to the Landstar
    System, Inc. 1994 Directors Stock Option Plan (Incorporated
    by reference to Exhibit 10.9 to the Registrants
    Annual Report on
    Form 10-K
    for the fiscal year ended December 30, 2000 (Commission
    File
    No. 0-21238))10
.9+

Directors Stock Compensation Plan,
    dated May 15, 2003 (Incorporated by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 28, 2003 (Commission File
    No. 0-21238))10
.10+

Form of Indemnification Agreement
    between the Company and each of the directors and certain
    executive officers of the Company. (Incorporated by reference to
    Exhibit 10.2 to the Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 27, 2003 (Commission
    No. 0-21238))10
.11+

Form of Key Executive Employment
    Protection Agreement dated January 30, 1998 between
    Landstar System, Inc. and Robert C. LaRose (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))10
.12+

Amendment to Key Executive
    Employment Protection Agreement, dated August 7, 2002,
    between Landstar System, Inc. and Robert C. LaRose (Incorporated
    by reference to Exhibit 10.8 to the Registrants
    Annual Report on
    Form 10-K
    for the fiscal year ended December 28, 2002 (Commission
    File
    No. 0-21238))10
.13*+

Form of Key Executive Employment
    Protection Agreement between Landstar System, Inc. and each of
    Joseph J. Beacom, James B. Gattoni, Henry H. Gerkens, Jim M.
    Handoush, Michael K. Kneller, Jeffrey L. Pundt, Ronald G.
    Stanley and Larry S. Thomas10
.14+

Letter Agreement, dated
    July 2, 2002 from Jeffrey C. Crowe to Henry H. Gerkens.
    (Incorporated by reference to Exhibit 10.17 to the
    Registrants Annual Report on
    Form 10-K
    for the fiscal year ended December 28, 2002 (Commission
    File
    No. 0-21238))10
.15+

Letter agreement, dated
    April 27, 2004, between Landstar System, Inc. and Henry H.
    Gerkens (Incorporated by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on April 28, 2004 (Commission File
    No. 0-21238))10
.16+

Letter Agreement, dated
    April 27, 2004, between Landstar System, Inc. and Jeffrey
    C. Crowe (Incorporated by reference to Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K
    filed on April 28, 2004 (Commission
    No. 0-21238))10
.17+

Letter Agreement, dated
    January 2, 2007, between Landstar System, Inc. and Robert
    C. LaRose (incorporated by reference to Exhibit 99.1 to the
    Registrants Current Report on
    Form 8-K
    filed January 3, 2007 (Commission
    No. 0-21238))10
.18+

Solicitation, Offer and Award
    Agreement, dated October 1, 2002, as amended
    January 31, 2003, January 1, 2004, January 10,
    2005 and September 12, 2005, between the United States
    Department of Transportation/Federal Aviation Administration and
    Landstar Express America, Inc. (Incorporated by reference to
    Exhibit 10.1 to the Registrants Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 24, 2005.)
    (Commission File
    No. 0-21238) 65




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##### Table of Contents



ExhibitNo.

Description10
.19*

Amendment to Solicitation, Offer
    and Award Agreement (as previously amended), dated
    December 20, 2006, between the United States Department of
    Transportation/Federal Aviation Administration and Landstar
    Express America, Inc.(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
    Registered Public Accounting Firm of the Registrant(24)


Power of attorney:24
.1*

Powers of Attorney(31)


Certifications pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002:31
.1*

Chief Executive Officer
    certification, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200231
.2*

Co-Chief Financial Officer
    certification, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200231
.3*

Co-Chief Financial Officer
    certification, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002(32)


Certifications pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002:32
.1**

Chief Executive Officer
    certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.2**

Co-Chief Financial Officer
    certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 200232
.3**

Co-Chief Financial Officer
    certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002     +
    
    management contract or compensatory plan or arrangement*
    
    Filed herewith.**
    
    Furnished herewith.   66




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##### Table of Contents



SIGNATURES      By:
    /s/  Henry
    H. Gerkens   President and
 Chief Executive Officer
  By:
    /s/  Robert
    C. LaRose   Executive Vice President and Co-Chief
 Financial Officer
  By:
    /s/  James
    B. Gattoni   Vice President and Co-Chief
 Financial Officer
      Signature

Title

Date*Jeffrey
    C. Crowe

Chairman of the Board

February 26, 2007/s/  Henry
    H. GerkensHenry
    H. Gerkens

Director, President and Chief
    Executive Officer; Principal
    Executive Officer

February 26, 2007/s/  Robert
    C. LaRoseRobert
    C. LaRose

Executive Vice President and
    Co-Chief Financial Officer

February 26, 2007/s/  James
    B. GattoniJames
    B. Gattoni

Vice President and Co-Chief
    Financial Officer;
    Principal Accounting Officer

February 26, 2007*David
    G. Bannister

Director

February 26, 2007 67




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##### Table of Contents



Signature

Title

Date*Ronald
    W. Drucker

Director

February 26, 2007*Merritt
    J. Mott

Director

February 26, 2007*William
    S. Elston

Director

February 26, 2007*Diana
    M. Murphy

Director

February 26, 2007By: /s/  Michael
    K. KnellerMichael
    K. KnellerAttorney In Fact*  68