##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 June 28, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
  0-21238
 
 LANDSTAR SYSTEM, INC.
  Delaware
(State or other jurisdiction 
of incorporation or organization)
    
    06-1313069
(I.R.S. Employer
Identification No.)
 13410 Sutton Park Drive South, Jacksonville, Florida   32224   (904) 398-9400   N/A
  þ o
   Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



PART I Financial InformationItem 1.Financial StatementsConsolidated Balance Sheets as of June 28, 2008 and December 29, 2007
    
    Page 3Consolidated Statements of Income for the Twenty Six and Thirteen Weeks Ended June 28, 2008 and June 30, 2007
    
    Page 4Consolidated Statements of Cash Flows for the Twenty Six Weeks Ended June 28, 2008 and June 30, 2007
    
    Page 5Consolidated Statement of Changes in Shareholders Equity for the Twenty Six Weeks Ended June 28, 2008
    
    Page 6Notes to Consolidated Financial Statements
    
    Page 7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    Page 11Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    Page 18Item 4. Controls and Procedures
    
    Page 19PART II Other InformationItem 1.Legal Proceedings
    
    Page 19Item 1A.Risk Factors
    
    Page 20Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    Page 20Item 4.Submission of Matters to a Vote of Security Holders
    
    Page 21Item 6.Exhibits
    
    Page 21Signatures
    
    Page 23EX-31.1 Section 302 CEO CertificationEX-31.2 Section 302 CFO CertificationEX-32.1 Section 906 CEO CertificationEX-32.2 Section 906 CFO Certification




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PART I 
 
    2




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##### Table of Contents



June 28,
    
    
    Dec 29,2008
    
    
    2007ASSETSCurrent AssetsCash and cash equivalents
    
    $
    78,792
    
    
    $
    60,750Short-term investments
    
    
    24,023
    
    
    
    22,921Trade accounts receivable, less allowance of $4,858 and $4,469
    
    
    351,422
    
    
    
    310,258Other receivables, including advances to independent contractors, less allowance
of $4,446 and $4,792
    
    
    14,259
    
    
    
    11,170Deferred income taxes and other current assets
    
    
    33,840
    
    
    
    28,554Total current assets
    
    
    502,336
    
    
    
    433,653Operating property, less accumulated depreciation and amortization of $97,363
and $88,284
    
    
    126,732
    
    
    
    132,369Goodwill
    
    
    31,134
    
    
    
    31,134Other assets
    
    
    33,863
    
    
    
    31,845Total assets
    
    $
    694,065
    
    
    $
    629,001LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCash overdraft
    
    $
    30,137
    
    
    $
    25,769Accounts payable
    
    
    132,786
    
    
    
    117,122Current maturities of long-term debt
    
    
    23,514
    
    
    
    23,155Insurance claims
    
    
    28,113
    
    
    
    28,163Accrued income taxes
    
    
    13,666
    
    
    
    14,865Other current liabilities
    
    
    40,219
    
    
    
    40,501Total current liabilities
    
    
    268,435
    
    
    
    249,575Long-term debt, excluding current maturities
    
    
    117,469
    
    
    
    141,598Insurance claims
    
    
    37,241
    
    
    
    37,631Deferred income taxes
    
    
    23,109
    
    
    
    19,411Shareholders EquityCommon stock, $0.01 par value, authorized 160,000,000 shares, issued 66,073,547
and 65,630,383 shares
    
    
    661
    
    
    
    656Additional paid-in capital
    
    
    150,392
    
    
    
    132,788Retained earnings
    
    
    651,090
    
    
    
    601,537Cost of 13,121,109 shares of common stock in treasury
    
    
    (554,252
    )
    
    
    (554,252
    )Accumulated other comprehensive income (loss)
    
    
    (80
    )
    
    
    57Total shareholders equity
    
    
    247,811
    
    
    
    180,786Total liabilities and shareholders equity
    
    $
    694,065
    
    
    $
    629,001
  3




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Twenty Six Weeks Ended
    
    
    Thirteen Weeks EndedJune 28,
    
    
    June 30,
    
    
    June 28,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    $
    1,306,479
    
    
    $
    1,209,601
    
    
    $
    697,651
    
    
    $
    632,952Investment income
    
    
    1,869
    
    
    
    2,997
    
    
    
    773
    
    
    
    1,257Costs and expenses:Purchased transportation
    
    
    1,003,345
    
    
    
    912,835
    
    
    
    538,316
    
    
    
    478,777Commissions to agents
    
    
    99,590
    
    
    
    97,404
    
    
    
    52,776
    
    
    
    50,772Other operating costs
    
    
    13,940
    
    
    
    13,222
    
    
    
    7,356
    
    
    
    7,716Insurance and claims
    
    
    19,034
    
    
    
    29,559
    
    
    
    9,513
    
    
    
    12,019Selling, general and administrative
    
    
    70,958
    
    
    
    63,920
    
    
    
    35,101
    
    
    
    30,755Depreciation and amortization
    
    
    10,307
    
    
    
    9,279
    
    
    
    5,177
    
    
    
    4,662Total costs and expenses
    
    
    1,217,174
    
    
    
    1,126,219
    
    
    
    648,239
    
    
    
    584,701Operating income
    
    
    91,174
    
    
    
    86,379
    
    
    
    50,185
    
    
    
    49,508Interest and debt expense
    
    
    3,878
    
    
    
    2,700
    
    
    
    1,736
    
    
    
    1,108Income before income taxes
    
    
    87,296
    
    
    
    83,679
    
    
    
    48,449
    
    
    
    48,400Income taxes
    
    
    33,788
    
    
    
    32,405
    
    
    
    18,684
    
    
    
    18,730Net income
    
    $
    53,508
    
    
    $
    51,274
    
    
    $
    29,765
    
    
    $
    29,670Earnings per common share
    
    $
    1.01
    
    
    $
    0.92
    
    
    $
    0.56
    
    
    $
    0.53Diluted earnings per share
    
    $
    1.01
    
    
    $
    0.91
    
    
    $
    0.56
    
    
    $
    0.53Average number of shares outstanding:Earnings per common share
    
    
    52,726,000
    
    
    
    55,761,000
    
    
    
    52,851,000
    
    
    
    55,597,000Diluted earnings per share
    
    
    53,198,000
    
    
    
    56,328,000
    
    
    
    53,373,000
    
    
    
    56,191,000Dividends paid per common share
    
    $
    0.0750
    
    
    $
    0.0600
    
    
    $
    0.0375
    
    
    $
    0.0300
  4




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Twenty Six Weeks EndedJune 28,
    
    
    June 30,2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    53,508
    
    
    $
    51,274Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of operating property
    
    
    10,307
    
    
    
    9,279Non-cash interest charges
    
    
    87
    
    
    
    87Provisions for losses on trade and other accounts receivable
    
    
    3,156
    
    
    
    2,040Losses (gains) on sales/disposals of operating property
    
    
    7
    
    
    
    (1,735
    )Director compensation paid in common stock
    
    
    634
    
    
    
    600Deferred income taxes, net
    
    
    4,183
    
    
    
    1,758Stock-based compensation
    
    
    3,352
    
    
    
    3,644Changes in operating assets and liabilities:Decrease (increase) in trade and other accounts receivable
    
    
    (47,409
    )
    
    
    6,097Increase in other assets
    
    
    (7,056
    )
    
    
    (11,804
    )Increase in accounts payable
    
    
    15,664
    
    
    
    6,298Decrease in other liabilities
    
    
    (1,405
    )
    
    
    (2,303
    )Increase (decrease) in insurance claims
    
    
    (440
    )
    
    
    7,684NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    34,588
    
    
    
    72,919INVESTING ACTIVITIESNet change in other short-term investments
    
    
    (2,783
    )
    
    
    (934
    )Sales and maturities of investments
    
    
    7,529
    
    
    
    23,507Purchases of investments
    
    
    (6,881
    )
    
    
    (26,101
    )Purchases of operating property
    
    
    (3,997
    )
    
    
    (3,652
    )Proceeds from sales of operating property
    
    
    23
    
    
    
    3,672NET CASH USED BY INVESTING ACTIVITIES
    
    
    (6,109
    )
    
    
    (3,508
    )FINANCING ACTIVITIESIncrease in cash overdraft
    
    
    4,368
    
    
    
    2,632Dividends paid
    
    
    (3,955
    )
    
    
    (3,355
    )Proceeds from exercises of stock options
    
    
    11,993
    
    
    
    9,398Excess tax benefit on stock option exercises
    
    
    1,630
    
    
    
    1,702Borrowings on revolving credit facility
    
    
    67,000
    
    
    
    Purchases of common stock
    
    
    
    
    
    
    (67,754
    )Principal payments on long-term debt and capital lease obligations
    
    
    (91,473
    )
    
    
    (47,363
    )NET CASH USED BY FINANCING ACTIVITIES
    
    
    (10,437
    )
    
    
    (104,740
    )Increase (decrease) in cash and cash equivalents
    
    
    18,042
    
    
    
    (35,329
    )Cash and cash equivalents at beginning of period
    
    
    60,750
    
    
    
    91,491Cash and cash equivalents at end of period
    
    $
    78,792
    
    
    $
    56,162
  5




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AccumulatedAdditional
    
    
    
    
    
    
    Treasury Stock
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    at Cost
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Shares
    
    
    Amount
    
    
    Income (Loss)
    
    
    TotalBalance December 29, 2007
    
    
    65,630,383
    
    
    $
    656
    
    
    $
    132,788
    
    
    $
    601,537
    
    
    
    13,121,109
    
    
    $
    (554,252
    )
    
    $
    57
    
    
    $
    180,786Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,508Dividends paid ($0.075 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,955
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,955
    )Director compensation paid
in common stock
    
    
    12,000
    
    
    
    
    
    
    
    634
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    3,352
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,352Exercises of stock options,
including
excess tax benefit
    
    
    431,164
    
    
    
    5
    
    
    
    13,618
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,623Unrealized loss on
available-for-sale investments,
net of income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (137
    )Balance June 28, 2008
    
    
    66,073,547
    
    
    $
    661
    
    
    $
    150,392
    
    
    $
    651,090
    
    
    
    13,121,109
    
    
    $
    (554,252
    )
    
    $
    (80
    )
    
    $
    247,811
  6




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Twenty Six Weeks Ended
    
    
    Thirteen Weeks EndedJune 28,
    
    
    June 30,
    
    
    June 28,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Total cost of the Plans during
the period
    
    $
    3,352
    
    
    $
    3,644
    
    
    $
    1,659
    
    
    $
    1,852Amount of related income tax
benefit recognized during the
period
    
    
    1,060
    
    
    
    1,185
    
    
    
    530
    
    
    
    662Net cost of the Plans during
the period
    
    $
    2,292
    
    
    $
    2,459
    
    
    $
    1,129
    
    
    $
    1,190
  2008
    
    
    2007Expected volatility
    
    
    33.0
    %
    
    
    33.0
    %Expected dividend yield
    
    
    0.0375
    %
    
    
    0.0300
    %Risk-free interest rate
    
    
    3.00
    %
    
    
    4.75
    %Expected lives (in years)
    
    
    4.1
    
    
    
    4.2
   Weighted Average
    
    Weighted AverageNumber of
    
    Exercise Price
    
    Remaining Contractual
    
    Aggregate IntrinsicOptions
    
    per Share
    
    Term (years)
    
    Value (000s)Options outstanding at December 29, 2007
    
    
    2,199,308
    
    
    $
    31.10Granted
    
    
    777,500
    
    
    $
    42.30Exercised
    
    
    (431,164
    )
    
    $
    27.78Forfeited
    
    
    (2,000
    )
    
    $
    43.99Options outstanding at June 28, 2008
    
    
    2,543,644
    
    
    $
    35.08
    
    
    
    7.4
    
    
    $
    48,416Options exercisable at June 28, 2008
    
    
    856,111
    
    
    $
    29.72
    
    
    
    5.9
    
    
    $
    20,876
 7




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8




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Twenty Six Weeks Ended
    
    
    Thirteen Weeks EndedJune 28,
    
    
    June 30,
    
    
    June 28,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Average number of
common shares
outstanding
    
    
    52,726
    
    
    
    55,761
    
    
    
    52,851
    
    
    
    55,597Incremental shares
from assumed
exercises of stock
options
    
    
    472
    
    
    
    567
    
    
    
    522
    
    
    
    594Average number of
common shares and
common share
equivalents
outstanding
    
    
    53,198
    
    
    
    56,328
    
    
    
    53,373
    
    
    
    56,191
      Twenty Six Weeks EndedJune 28, 2008
    
    
    June 30, 2007Transportation
    
    
    
    
    
    
    
    
    
    
    TransportationLogistics
    
    
    Insurance
    
    
    Total
    
    
    Logistics
    
    
    Insurance
    
    
    TotalExternal revenue
    
    $
    1,288,231
    
    
    $
    18,248
    
    
    $
    1,306,479
    
    
    $
    1,191,170
    
    
    $
    18,431
    
    
    $
    1,209,601Investment income
    
    
    
    
    
    
    1,869
    
    
    
    1,869
    
    
    
    
    
    
    
    2,997
    
    
    
    2,997Internal revenue
    
    
    
    
    
    
    15,861
    
    
    
    15,861
    
    
    
    
    
    
    
    16,823
    
    
    
    16,823Operating income
    
    
    73,560
    
    
    
    17,614
    
    
    
    91,174
    
    
    
    72,370
    
    
    
    14,009
    
    
    
    86,379Goodwill
    
    
    31,134
    
    
    
    
    
    
    
    31,134
    
    
    
    31,134
    
    
    
    
    
    
    
    31,134
 Thirteen Weeks EndedJune 28, 2008
    
    
    June 30, 2007Transportation
    
    
    
    
    
    
    
    
    
    
    TransportationLogistics
    
    
    Insurance
    
    
    Total
    
    
    Logistics
    
    
    Insurance
    
    
    TotalExternal revenue
    
    $
    688,631
    
    
    $
    9,020
    
    
    $
    697,651
    
    
    $
    623,731
    
    
    $
    9,221
    
    
    $
    632,952Investment income
    
    
    
    
    
    
    773
    
    
    
    773
    
    
    
    
    
    
    
    1,257
    
    
    
    1,257Internal revenue
    
    
    
    
    
    
    10,009
    
    
    
    10,009
    
    
    
    
    
    
    
    10,627
    
    
    
    10,627Operating income
    
    
    41,174
    
    
    
    9,011
    
    
    
    50,185
    
    
    
    38,858
    
    
    
    10,650
    
    
    
    49,508Goodwill
    
    
    31,134
    
    
    
    
    
    
    
    31,134
    
    
    
    31,134
    
    
    
    
    
    
    
    31,134
 9




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Twenty Six Weeks Ended
    
    
    Thirteen Weeks EndedJune 28,
    
    
    June 30,
    
    
    June 28,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    53,508
    
    
    $
    51,274
    
    
    $
    29,765
    
    
    $
    29,670Unrealized holding gains/(losses) on
available-for-sale investments, net
of income taxes
    
    
    (137
    )
    
    
    15
    
    
    
    (341
    )
    
    
    Comprehensive income
    
    $
    53,371
    
    
    $
    51,289
    
    
    $
    29,424
    
    
    $
    29,670
       10




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Introduction
    11




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Changes in Financial Condition and Results of Operations
    Twenty Six Weeks Ended
    
    
    Thirteen Weeks EndedJune 28,
    
    
    June 30,
    
    
    June 28,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue generated through (in thousands):BCO Independent Contractors
    
    $
    700,195
    
    
    $
    684,704
    
    
    $
    375,391
    
    
    $
    364,171Truck Brokerage Carriers
    
    
    490,334
    
    
    
    422,967
    
    
    
    261,701
    
    
    
    217,070Rail intermodal
    
    
    71,598
    
    
    
    57,677
    
    
    
    37,809
    
    
    
    30,706Ocean carriers
    
    
    18,220
    
    
    
    11,539
    
    
    
    9,786
    
    
    
    5,569Air carriers
    
    
    7,449
    
    
    
    10,806
    
    
    
    3,860
    
    
    
    6,191Other (1)
    
    
    18,683
    
    
    
    21,908
    
    
    
    9,104
    
    
    
    9,245$
    1,306,479
    
    
    $
    1,209,601
    
    
    $
    697,651
    
    
    $
    632,952Number of loads:BCO Independent Contractors
    
    
    429,080
    
    
    
    433,370
    
    
    
    225,880
    
    
    
    227,770Truck Brokerage Carriers
    
    
    288,970
    
    
    
    288,850
    
    
    
    146,940
    
    
    
    151,030Rail intermodal
    
    
    31,000
    
    
    
    26,760
    
    
    
    16,020
    
    
    
    14,660Ocean carriers
    
    
    2,590
    
    
    
    2,100
    
    
    
    1,340
    
    
    
    1,060Air carriers
    
    
    3,870
    
    
    
    6,440
    
    
    
    1,880
    
    
    
    3,160755,510
    
    
    
    757,520
    
    
    
    392,060
    
    
    
    397,680Revenue per load:BCO Independent Contractors
    
    $
    1,632
    
    
    $
    1,580
    
    
    $
    1,662
    
    
    $
    1,599Truck Brokerage Carriers
    
    
    1,697
    
    
    
    1,464
    
    
    
    1,781
    
    
    
    1,437Rail intermodal
    
    
    2,310
    
    
    
    2,155
    
    
    
    2,360
    
    
    
    2,095Ocean carriers
    
    
    7,035
    
    
    
    5,495
    
    
    
    7,303
    
    
    
    5,254Air carriers
    
    
    1,925
    
    
    
    1,678
    
    
    
    2,053
    
    
    
    1,959
 
 (1)
    
    Includes premium revenue generated by the insurance segment, warehousing revenue
generated by the transportation logistics segment and revenue, if any for the periods
presented, derived from transportation services provided in support of disaster relief
efforts provided primarily under a contract between Landstar Express America, Inc. and the
United States Department of Transportation/Federal Aviation Administration. 12




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##### Table of Contents



June 28,
    
    
    June 30,2008
    
    
    2007BCO Independent Contractors
    
    
    8,222
    
    
    
    8,431Truck Brokerage Carriers:Approved and active (1)
    
    
    16,080
    
    
    
    15,100Other approved
    
    
    9,219
    
    
    
    8,70025,299
    
    
    
    23,800Total available truck capacity providers
    
    
    33,521
    
    
    
    32,231Number of trucks provided by BCO Independent Contractors
    
    
    8,804
    
    
    
    9,036
 
 (1) Active refers to Truck Brokerage Carriers who moved at least one load in the 180
days immediately preceding the fiscal quarter end.      13




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Twenty Six Weeks Ended
    
    
    Thirteen Weeks EndedJune 28,
    
    
    June 30,
    
    
    June 28,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Investment income
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.2Costs and expenses:Purchased transportation
    
    
    76.8
    
    
    
    75.5
    
    
    
    77.2
    
    
    
    75.7Commissions to agents
    
    
    7.6
    
    
    
    8.0
    
    
    
    7.6
    
    
    
    8.0Other operating costs
    
    
    1.0
    
    
    
    1.1
    
    
    
    1.0
    
    
    
    1.2Insurance and claims
    
    
    1.5
    
    
    
    2.4
    
    
    
    1.4
    
    
    
    1.9Selling, general and administrative
    
    
    5.4
    
    
    
    5.3
    
    
    
    5.0
    
    
    
    4.9Depreciation and amortization
    
    
    0.8
    
    
    
    0.8
    
    
    
    0.7
    
    
    
    0.7Total costs and expenses
    
    
    93.1
    
    
    
    93.1
    
    
    
    92.9
    
    
    
    92.4Operating income
    
    
    7.0
    
    
    
    7.1
    
    
    
    7.2
    
    
    
    7.8Interest and debt expense
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.2Income before income taxes
    
    
    6.7
    
    
    
    6.9
    
    
    
    6.9
    
    
    
    7.6Income taxes
    
    
    2.6
    
    
    
    2.7
    
    
    
    2.6
    
    
    
    2.9Net income
    
    
    4.1
    %
    
    
    4.2
    %
    
    
    4.3
    %
    
    
    4.7
    %
     14




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Purchases of Equity Securities by the Company
   Dividend Amount 
per share
    
    Declaration
Date
    
    Record
Date
    
    Payment
Date$0.0375
    
    January 31, 2008
    
    February 8, 2008
    
    February 29, 2008$0.0375
    
    April 17, 2008
    
    May 9, 2008
    
    May 30, 2008
    20




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Exhibit No.
    
    Description4.1
    
    Credit Agreement dated as of June 27, 2008, among Landstar System Holdings, Inc., the
Company, the lenders named therein, and JPMorgan Chase Bank, N.A. 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 3, 2008 (Commission File No. 0-21238))(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 2002.31.2*
    
    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 2002.32.2**
    
    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.
 
 *
    
    Filed herewith**
    
    Furnished herewith 22




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LANDSTAR SYSTEM, INC.Date:  August 1, 2008
    /s/ Henry H. GerkensHenry H. GerkensPresident and
Chief Executive Officer Date:  August 1, 2008
    /s/ James B. GattoniJames B. GattoniVice President and Chief
Financial Officer 23