##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 27, 2008ORo
    
    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 x
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




---



##### 



PART I Financial InformationItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of September 27, 2008 and December 29, 2007
    
    Page 3Consolidated Statements of Income for the Thirty Nine and Thirteen Weeks Ended September 27, 2008 and
September 29, 2007
    
    Page 4Consolidated Statements of Cash Flows for the Thirty Nine Weeks Ended September 27, 2008 and September 29,
2007
    
    Page 5Consolidated Statement of Changes in Shareholders Equity for the Thirty Nine Weeks Ended September 27, 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 20Item 4.
    
    Controls and Procedures
    
    Page 20PART II Other InformationItem 1.
    
    Legal Proceedings
    
    Page 21Item 1A.
    
    Risk Factors
    
    Page 21Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    Page 22Item 6.
    
    Exhibits
    
    Page 23Signatures
    
    Page 24EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
   
 
 PART I 
 
 Item 1.
    
    Financial Statements
   
 2




---



##### Table of Contents



Sept 27,
    
    
    Dec 29,2008
    
    
    2007ASSETSCurrent AssetsCash and cash equivalents
    
    $
    77,604
    
    
    $
    60,750Short-term investments
    
    
    25,727
    
    
    
    22,921Trade accounts receivable, less allowance of $5,316 and $4,469
    
    
    391,873
    
    
    
    310,258Other receivables, including advances to independent contractors, less allowance
of $4,151 and $4,792
    
    
    9,398
    
    
    
    11,170Deferred income taxes and other current assets
    
    
    32,251
    
    
    
    28,554Total current assets
    
    
    536,853
    
    
    
    433,653Operating property, less accumulated depreciation and amortization of $102,008
and $88,284
    
    
    124,283
    
    
    
    132,369Goodwill
    
    
    31,134
    
    
    
    31,134Other assets
    
    
    37,310
    
    
    
    31,845Total assets
    
    $
    729,580
    
    
    $
    629,001LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCash overdraft
    
    $
    32,906
    
    
    $
    25,769Accounts payable
    
    
    144,730
    
    
    
    117,122Current maturities of long-term debt
    
    
    24,084
    
    
    
    23,155Insurance claims
    
    
    25,086
    
    
    
    28,163Accrued income taxes
    
    
    14,461
    
    
    
    14,865Other current liabilities
    
    
    41,662
    
    
    
    40,501Total current liabilities
    
    
    282,929
    
    
    
    249,575Long-term debt, excluding current maturities
    
    
    132,997
    
    
    
    141,598Insurance claims
    
    
    36,222
    
    
    
    37,631Deferred income taxes
    
    
    25,339
    
    
    
    19,411Shareholders EquityCommon stock, $0.01 par value, authorized 160,000,000 shares, issued 66,109,547
and 65,630,383 shares
    
    
    661
    
    
    
    656Additional paid-in capital
    
    
    152,845
    
    
    
    132,788Retained earnings
    
    
    681,806
    
    
    
    601,537Cost of 13,700,931 and 13,121,109 shares of common stock in treasury
    
    
    (582,771
    )
    
    
    (554,252
    )Accumulated other comprehensive income (loss)
    
    
    (448
    )
    
    
    57Total shareholders equity
    
    
    252,093
    
    
    
    180,786Total liabilities and shareholders equity
    
    $
    729,580
    
    
    $
    629,001
  3




---



##### Table of Contents



Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 27,
    
    
    Sept 29,
    
    
    Sept 27,
    
    
    Sept 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue
    
    $
    2,039,232
    
    
    $
    1,844,412
    
    
    $
    732,753
    
    
    $
    634,811Investment income
    
    
    2,686
    
    
    
    4,103
    
    
    
    817
    
    
    
    1,106Costs and expenses:Purchased transportation
    
    
    1,573,209
    
    
    
    1,394,781
    
    
    
    569,864
    
    
    
    481,946Commissions to agents
    
    
    153,857
    
    
    
    148,574
    
    
    
    54,267
    
    
    
    51,170Other operating costs
    
    
    20,814
    
    
    
    21,208
    
    
    
    6,874
    
    
    
    7,986Insurance and claims
    
    
    27,159
    
    
    
    38,878
    
    
    
    8,125
    
    
    
    9,319Selling, general and administrative
    
    
    105,457
    
    
    
    95,002
    
    
    
    34,499
    
    
    
    31,082Depreciation and amortization
    
    
    15,558
    
    
    
    14,045
    
    
    
    5,251
    
    
    
    4,766Total costs and expenses
    
    
    1,896,054
    
    
    
    1,712,488
    
    
    
    678,880
    
    
    
    586,269Operating income
    
    
    145,864
    
    
    
    136,027
    
    
    
    54,690
    
    
    
    49,648Interest and debt expense
    
    
    5,635
    
    
    
    4,464
    
    
    
    1,757
    
    
    
    1,764Income before income taxes
    
    
    140,229
    
    
    
    131,563
    
    
    
    52,933
    
    
    
    47,884Income taxes
    
    
    53,904
    
    
    
    50,941
    
    
    
    20,116
    
    
    
    18,536Net income
    
    $
    86,325
    
    
    $
    80,622
    
    
    $
    32,817
    
    
    $
    29,348Earnings per common share
    
    $
    1.64
    
    
    $
    1.46
    
    
    $
    0.62
    
    
    $
    0.54Diluted earnings per share
    
    $
    1.62
    
    
    $
    1.45
    
    
    $
    0.62
    
    
    $
    0.54Average number of shares outstanding:Earnings per common share
    
    
    52,680,000
    
    
    
    55,221,000
    
    
    
    52,586,000
    
    
    
    54,189,000Diluted earnings per share
    
    
    53,142,000
    
    
    
    55,740,000
    
    
    
    53,028,000
    
    
    
    54,608,000Dividends paid per common share
    
    $
    0.1150
    
    
    $
    0.0975
    
    
    $
    0.0400
    
    
    $
    0.0375
  4




---



##### Table of Contents



Thirty Nine Weeks EndedSept 27,
    
    
    Sept 29,2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    86,325
    
    
    $
    80,622Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of operating property
    
    
    15,558
    
    
    
    14,045Non-cash interest charges
    
    
    130
    
    
    
    130Provisions for losses on trade and other accounts receivable
    
    
    4,684
    
    
    
    3,094Losses (gains) on sales/disposals of operating property
    
    
    120
    
    
    
    (1,689
    )Director compensation paid in common stock
    
    
    634
    
    
    
    678Deferred income taxes, net
    
    
    5,984
    
    
    
    2,627Stock-based compensation
    
    
    4,994
    
    
    
    5,500Changes in operating assets and liabilities:Decrease (increase) in trade and other accounts receivable
    
    
    (84,527
    )
    
    
    8,579Increase in other assets
    
    
    (7,701
    )
    
    
    (7,641
    )Increase in accounts payable
    
    
    27,608
    
    
    
    2,755Increase (decrease) in other liabilities
    
    
    1,035
    
    
    
    (1,383
    )Increase (decrease) in insurance claims
    
    
    (4,486
    )
    
    
    4,671NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    50,358
    
    
    
    111,988INVESTING ACTIVITIESNet change in other short-term investments
    
    
    (8,866
    )
    
    
    (2,845
    )Sales and maturities of investments
    
    
    10,551
    
    
    
    30,282Purchases of investments
    
    
    (6,921
    )
    
    
    (32,133
    )Purchases of operating property
    
    
    (4,903
    )
    
    
    (5,829
    )Proceeds from sales of operating property
    
    
    25
    
    
    
    3,688NET CASH USED BY INVESTING ACTIVITIES
    
    
    (10,114
    )
    
    
    (6,837
    )FINANCING ACTIVITIESIncrease in cash overdraft
    
    
    7,137
    
    
    
    6,766Dividends paid
    
    
    (6,056
    )
    
    
    (5,390
    )Proceeds from exercises of stock options
    
    
    12,249
    
    
    
    12,264Excess tax benefit on stock option exercises
    
    
    2,185
    
    
    
    3,660Borrowings on revolving credit facility
    
    
    87,000
    
    
    
    24,000Purchases of common stock
    
    
    (28,519
    )
    
    
    (126,148
    )Principal payments on long-term debt and capital lease obligations
    
    
    (97,386
    )
    
    
    (52,747
    )NET CASH USED BY FINANCING ACTIVITIES
    
    
    (23,390
    )
    
    
    (137,595
    )Increase (decrease) in cash and cash equivalents
    
    
    16,854
    
    
    
    (32,444
    )Cash and cash equivalents at beginning of period
    
    
    60,750
    
    
    
    91,491Cash and cash equivalents at end of period
    
    $
    77,604
    
    
    $
    59,047
  5




---



##### Table of Contents



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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,325
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,325Dividends paid ($0.1150 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,056
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,056
    )Director compensation paid
in common stock
    
    
    12,000
    
    
    
    
    
    
    
    634
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634Purchases of Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    579,822
    
    
    
    (28,519
    )
    
    
    
    
    
    
    (28,519
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    4,994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,994Exercises of stock options,
including excess tax benefit
    
    
    467,164
    
    
    
    5
    
    
    
    14,429
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,434Unrealized loss on
available-for-sale investments,
net of income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (505
    )
    
    
    (505
    )Balance September 27, 2008
    
    
    66,109,547
    
    
    $
    661
    
    
    $
    152,845
    
    
    $
    681,806
    
    
    
    13,700,931
    
    
    $
    (582,771
    )
    
    $
    (448
    )
    
    $
    252,093
  6




---



##### Table of Contents



(1)
    
    Share-based Payments
  Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 27,
    
    
    Sept 29,
    
    
    Sept 27,
    
    
    Sept 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Total cost of the Plans during
the period
    
    $
    4,994
    
    
    $
    5,500
    
    
    $
    1,642
    
    
    $
    1,856Amount of related income tax
benefit recognized during the
period
    
    
    1,534
    
    
    
    1,732
    
    
    
    474
    
    
    
    547Net cost of the Plans during the period
    
    $
    3,460
    
    
    $
    3,768
    
    
    $
    1,168
    
    
    $
    1,309
  2008
    
    2007Expected volatility
    
    
    33.0
    %
    
    
    33.0
    %Expected dividend yield
    
    
    0.375
    %
    
    
    0.300
    %Risk-free interest rate
    
    
    3.00
    %
    
    
    4.75
    %Expected lives (in years)
    
    
    4.1
    
    
    
    4.2
  The following table summarizes information regarding the Companys stock options under the
Plans:
 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
    
    
    (467,164
    )
    
    $
    26.22Forfeited
    
    
    (3,000
    )
    
    $
    44.74Options outstanding at September 27, 2008
    
    
    2,506,644
    
    
    $
    35.47
    
    
    
    7.2
    
    
    $
    21,023Options exercisable at September 27, 2008
    
    
    820,211
    
    
    $
    30.72
    
    
    
    5.8
    
    
    $
    10,780
 7




---



##### Table of Contents



(2)
    
    Debt
    (3)
    
    Income Taxes
  8




---



##### Table of Contents



(4)
    
    Earnings Per Share
   Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 27,
    
    
    Sept 29,
    
    
    Sept 27,
    
    
    Sept 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Average number
of common shares
outstanding
    
    
    52,680
    
    
    
    55,221
    
    
    
    52,586
    
    
    
    54,189Incremental shares
from assumed
exercises of stock
options
    
    
    462
    
    
    
    519
    
    
    
    442
    
    
    
    419Average number of
common shares and
common share
equivalents
outstanding
    
    
    53,142
    
    
    
    55,740
    
    
    
    53,028
    
    
    
    54,608
 (5)
    
    Additional Cash Flow Information
  (6)
    
    Segment Information
   Thirty Nine Weeks EndedSept 27, 2008
    
    
    Sept 29, 2007Transportation
    
    
    
    
    
    
    
    
    
    
    TransportationLogistics
    
    
    Insurance
    
    
    Total
    
    
    Logistics
    
    
    Insurance
    
    
    TotalExternal revenue
    
    $
    2,011,766
    
    
    $
    27,466
    
    
    $
    2,039,232
    
    
    $
    1,816,751
    
    
    $
    27,661
    
    
    $
    1,844,412Investment income
    
    
    
    
    
    
    2,686
    
    
    
    2,686
    
    
    
    
    
    
    
    4,103
    
    
    
    4,103Internal revenue
    
    
    
    
    
    
    21,713
    
    
    
    21,713
    
    
    
    
    
    
    
    23,019
    
    
    
    23,019Operating income
    
    
    118,171
    
    
    
    27,693
    
    
    
    145,864
    
    
    
    110,441
    
    
    
    25,586
    
    
    
    136,027Goodwill
    
    
    31,134
    
    
    
    
    
    
    
    31,134
    
    
    
    31,134
    
    
    
    
    
    
    
    31,134
 9




---



##### Table of Contents



Thirteen Weeks EndedSept 27, 2008
    
    
    Sept 29, 2007Transportation
    
    
    
    
    
    
    
    
    
    
    TransportationLogistics
    
    
    Insurance
    
    
    Total
    
    
    Logistics
    
    
    Insurance
    
    
    TotalExternal revenue
    
    $
    723,535
    
    
    $
    9,218
    
    
    $
    732,753
    
    
    $
    625,581
    
    
    $
    9,230
    
    
    $
    634,811Investment income
    
    
    
    
    
    
    817
    
    
    
    817
    
    
    
    
    
    
    
    1,106
    
    
    
    1,106Internal revenue
    
    
    
    
    
    
    5,852
    
    
    
    5,852
    
    
    
    
    
    
    
    6,196
    
    
    
    6,196Operating income
    
    
    44,611
    
    
    
    10,079
    
    
    
    54,690
    
    
    
    38,071
    
    
    
    11,577
    
    
    
    49,648
 (7)
    
    Comprehensive Income
  Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 27,
    
    
    Sept 29,
    
    
    Sept 27,
    
    
    Sept 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    86,325
    
    
    $
    80,622
    
    
    $
    32,817
    
    
    $
    29,348Unrealized holding losses on
available-for-sale
investments, net of income
taxes
    
    
    (505
    )
    
    
    
    
    
    
    (368
    )
    
    
    (15
    )Comprehensive income
    
    $
    85,820
    
    
    $
    80,622
    
    
    $
    32,449
    
    
    $
    29,333
  (8)
    
    Commitments and Contingencies
    10




---



##### Table of Contents



(9)
    
    Concentrations of Credit Risk in Key Customers
  
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  11




---



##### Table of Contents



Introduction
     Changes in Financial Condition and Results of Operations
   12




---



##### Table of Contents



Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 27,
    
    
    Sept 29,
    
    
    Sept 27,
    
    
    Sept 29,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenue generated through (in thousands):BCO Independent Contractors
    
    $
    1,070,982
    
    
    $
    1,036,155
    
    
    $
    370,787
    
    
    $
    351,451Truck Brokerage Carriers
    
    
    766,262
    
    
    
    648,267
    
    
    
    275,928
    
    
    
    225,300Rail intermodal
    
    
    106,936
    
    
    
    91,931
    
    
    
    35,338
    
    
    
    34,254Ocean cargo carriers
    
    
    29,329
    
    
    
    18,691
    
    
    
    11,109
    
    
    
    7,152Air cargo carriers
    
    
    10,135
    
    
    
    15,412
    
    
    
    2,686
    
    
    
    4,606Other (1)
    
    
    55,588
    
    
    
    33,956
    
    
    
    36,905
    
    
    
    12,048$
    2,039,232
    
    
    $
    1,844,412
    
    
    $
    732,753
    
    
    $
    634,811Number of loads:BCO Independent Contractors
    
    
    638,330
    
    
    
    646,720
    
    
    
    209,250
    
    
    
    213,350Truck Brokerage Carriers
    
    
    435,250
    
    
    
    441,010
    
    
    
    146,280
    
    
    
    152,160Rail intermodal
    
    
    45,610
    
    
    
    43,240
    
    
    
    14,610
    
    
    
    16,480Ocean cargo carriers
    
    
    3,990
    
    
    
    3,330
    
    
    
    1,400
    
    
    
    1,230Air cargo carriers
    
    
    5,520
    
    
    
    9,260
    
    
    
    1,650
    
    
    
    2,8201,128,700
    
    
    
    1,143,560
    
    
    
    373,190
    
    
    
    386,040Revenue per load:BCO Independent Contractors
    
    $
    1,678
    
    
    $
    1,602
    
    
    $
    1,772
    
    
    $
    1,647Truck Brokerage Carriers
    
    
    1,761
    
    
    
    1,470
    
    
    
    1,886
    
    
    
    1,481Rail intermodal
    
    
    2,345
    
    
    
    2,126
    
    
    
    2,419
    
    
    
    2,079Ocean cargo carriers
    
    
    7,351
    
    
    
    5,613
    
    
    
    7,935
    
    
    
    5,815Air cargo carriers
    
    
    1,836
    
    
    
    1,664
    
    
    
    1,628
    
    
    
    1,633
 
 (1)
    
    Includes premium revenue generated by the insurance segment and warehousing revenue
generated by the Transportation Logistics segment. Also, included in the 2008
thirty-nine-week and thirteen-week periods was $27,638,000 of Bus Revenue. Included in the
2007 thirty-nine-week and thirteen-week periods was $6,209,000 and $2,764,000,
respectively, of revenue derived from transportation services provided in support of
disaster relief efforts provided under a contract between Landstar Express America, Inc.
and the United States Department of Transportation/Federal Aviation Administration. 13




---



##### Table of Contents



Sept 27,
    
    
    Sept 29,2008
    
    
    2007BCO Independent Contractors
    
    
    8,363
    
    
    
    8,452Truck Brokerage Carriers:Approved and active (1)
    
    
    16,400
    
    
    
    15,765Other approved
    
    
    9,120
    
    
    
    9,22425,520
    
    
    
    24,989Total available truck capacity providers
    
    
    33,883
    
    
    
    33,441Number of trucks provided by BCO Independent Contractors
    
    
    8,949
    
    
    
    9,056
 
 (1)
    
    Active refers to Truck Brokerage Carriers who moved at least one load in the 180
days immediately preceding the fiscal quarter end.        14




---



##### Table of Contents



Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 27,
    
    
    Sept 29,
    
    
    Sept 27,
    
    
    Sept 29,2008
    
    
    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
    
    
    77.1
    
    
    
    75.6
    
    
    
    77.8
    
    
    
    75.9Commissions to agents
    
    
    7.5
    
    
    
    8.1
    
    
    
    7.4
    
    
    
    8.1Other operating costs
    
    
    1.0
    
    
    
    1.1
    
    
    
    0.9
    
    
    
    1.3Insurance and claims
    
    
    1.3
    
    
    
    2.1
    
    
    
    1.1
    
    
    
    1.5Selling, general and administrative
    
    
    5.2
    
    
    
    5.1
    
    
    
    4.7
    
    
    
    4.9Depreciation and amortization
    
    
    0.8
    
    
    
    0.8
    
    
    
    0.7
    
    
    
    0.7Total costs and expenses
    
    
    92.9
    
    
    
    92.8
    
    
    
    92.6
    
    
    
    92.4Operating income
    
    
    7.2
    
    
    
    7.4
    
    
    
    7.5
    
    
    
    7.8Interest and debt expense
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.3Income before income taxes
    
    
    6.9
    
    
    
    7.2
    
    
    
    7.2
    
    
    
    7.5Income taxes
    
    
    2.7
    
    
    
    2.8
    
    
    
    2.7
    
    
    
    2.9Net income
    
    
    4.2
    %
    
    
    4.4
    %
    
    
    4.5
    %
    
    
    4.6
    %
     15




---



##### Table of Contents



16




---



##### Table of Contents



17




---



##### Table of Contents



18




---



##### Table of Contents



19




---



##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
      
 Item 4.
    
    Controls and Procedures
    20




---



##### Table of Contents



Item 1.
    
    Legal Proceedings
        
 Item 1A.
    
    Risk Factors
  21




---



##### Table of Contents



Concentrations of Credit Risk in Key Customers
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
 Purchases of Equity Securities by the Company
  Total number of shares
    
    
    Maximum number ofpurchased as part of
    
    
    shares that may yet beTotal number of
    
    
    Average price paid
    
    publicly announced
    
    
    purchased under theFiscal period
    
    shares purchased
    
    
    per share
    
    programs
    
    
    programsJune 28, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    734,401June 29, 2008  July 26, 2008
    
    
    429,822
    
    
    $
    49.63
    
    
    
    429,822
    
    
    
    2,304,579July 27, 2008  Aug. 23, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,304,579Aug. 24,
2008  Sept. 27, 2008
    
    
    150,000
    
    
    $
    47.90
    
    
    
    150,000
    
    
    
    2,154,579Total
    
    
    579,822
    
    
    $
    49.19
    
    
    
    579,822
   Dividend Amount
    
    Declaration
    
    Record
    
    Paymentper share
    
    Date
    
    Date
    
    Date$0.0375
    
    January 31, 2008
    
    February 8, 2008
    
    February 29, 2008$0.0375
    
    April 17, 2008
    
    May 9, 2008
    
    May 30, 2008$0.0400
    
    July 16, 2008
    
    August 11, 2008
    
    August 29, 2008
  22




---



##### Table of Contents



Item 3.
    
    Defaults Upon Senior Securities
  Item 4.
    
    Submission of Matters to a Vote of Security Holders
  Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
    Exhibit No.
    
    Description(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 23




---



##### Table of Contents



LANDSTAR SYSTEM, INC.Date:  October 31, 2008
    /s/ Henry H. GerkensHenry H. GerkensPresident and
Chief Executive Officer Date:  October 31, 2008
    /s/ James B. GattoniJames B. GattoniVice President and Chief
Financial Officer 24