##### 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) OFTHE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 29, 2007ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934For the transition period from _________________ to _____________________
 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
  þ o o
  o þ




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##### 



PART I Financial InformationItem 1.Financial StatementsConsolidated Balance Sheets as of September 29, 2007 and December 30, 2006
    
    Page 3Consolidated Statements of Income for the Thirty Nine and Thirteen Weeks Ended September 29, 2007 and
September 30, 2006
    
    Page 4Consolidated Statements of Cash Flows for the Thirty Nine Weeks Ended September 29, 2007 and September 30,
2006
    
    Page 5Consolidated Statement of Changes in Shareholders Equity for the Thirty Nine Weeks Ended September 29, 2007
    
    Page 6Notes to Consolidated Financial Statements
    
    Page 7Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    Page 10Item 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 5.Other Information
    
    Page 21Item 6.Exhibits
    
    Page 21Signatures
    
    Page 23EX-3.1 BylawsEX-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
   
 2




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##### Table of Contents



PART I 
 
    
 
 Sept 29,
    
    
    Dec 30,2007
    
    
    2006ASSETSCurrent AssetsCash and cash equivalents
    
    $
    59,047
    
    
    $
    91,491Short-term investments
    
    
    20,948
    
    
    
    21,548Trade accounts receivable, less allowance of $5,326 and $4,834
    
    
    310,110
    
    
    
    318,983Other receivables, including advances to independent contractors, less
allowance of $4,744 and $4,512
    
    
    11,398
    
    
    
    14,198Deferred income taxes and other current assets
    
    
    34,984
    
    
    
    25,142Total current assets
    
    
    436,487
    
    
    
    471,362Operating property, less accumulated depreciation and amortization of $83,696
and $77,938
    
    
    128,203
    
    
    
    110,957Goodwill
    
    
    31,134
    
    
    
    31,134Other assets
    
    
    36,355
    
    
    
    33,198Total assets
    
    $
    632,179
    
    
    $
    646,651LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCash overdraft
    
    $
    32,201
    
    
    $
    25,435Accounts payable
    
    
    125,068
    
    
    
    122,313Current maturities of long-term debt
    
    
    21,848
    
    
    
    18,730Insurance claims
    
    
    26,099
    
    
    
    25,238Other current liabilities
    
    
    57,096
    
    
    
    58,478Total current liabilities
    
    
    262,312
    
    
    
    250,194Long-term debt, excluding current maturities
    
    
    106,187
    
    
    
    110,591Insurance claims
    
    
    40,042
    
    
    
    36,232Deferred income taxes
    
    
    22,178
    
    
    
    19,360Shareholders EquityCommon stock, $0.01 par value, authorized 160,000,000 shares, issued
65,613,866 and 64,993,143
    
    
    656
    
    
    
    650Additional paid-in capital
    
    
    130,116
    
    
    
    108,020Retained earnings
    
    
    574,505
    
    
    
    499,273Cost of 11,855,510 and 9,028,009 shares of common stock in treasury
    
    
    (503,810
    )
    
    
    (377,662
    )Accumulated other comprehensive loss
    
    
    (7
    )
    
    
    (7
    )Total shareholders equity
    
    
    201,460
    
    
    
    230,274Total liabilities and shareholders equity
    
    $
    632,179
    
    
    $
    646,651
  3




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##### Table of Contents



Thirty Nine Weeks Ended
    
    

Thirteen
Weeks EndedSept 29,
    
    
    Sept 30,
    
    
    Sept 29,
    
    
    Sept 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    1,844,412
    
    
    $
    1,902,477
    
    
    $
    634,811
    
    
    $
    649,197Investment income
    
    
    4,103
    
    
    
    2,589
    
    
    
    1,106
    
    
    
    1,337Costs and expenses:Purchased transportation
    
    
    1,394,781
    
    
    
    1,430,411
    
    
    
    481,946
    
    
    
    486,102Commissions to agents
    
    
    148,574
    
    
    
    149,694
    
    
    
    51,170
    
    
    
    52,173Other operating costs
    
    
    21,208
    
    
    
    37,125
    
    
    
    7,986
    
    
    
    14,837Insurance and claims
    
    
    38,878
    
    
    
    30,230
    
    
    
    9,319
    
    
    
    9,656Selling, general and administrative
    
    
    95,002
    
    
    
    102,809
    
    
    
    31,082
    
    
    
    31,885Depreciation and amortization
    
    
    14,045
    
    
    
    12,230
    
    
    
    4,766
    
    
    
    4,180Total costs and expenses
    
    
    1,712,488
    
    
    
    1,762,499
    
    
    
    586,269
    
    
    
    598,833Operating income
    
    
    136,027
    
    
    
    142,567
    
    
    
    49,648
    
    
    
    51,701Interest and debt expense
    
    
    4,464
    
    
    
    4,950
    
    
    
    1,764
    
    
    
    1,808Income before income taxes
    
    
    131,563
    
    
    
    137,617
    
    
    
    47,884
    
    
    
    49,893Income taxes
    
    
    50,941
    
    
    
    53,222
    
    
    
    18,536
    
    
    
    19,313Net income
    
    $
    80,622
    
    
    $
    84,395
    
    
    $
    29,348
    
    
    $
    30,580Earnings per common share
    
    $
    1.46
    
    
    $
    1.45
    
    
    $
    0.54
    
    
    $
    0.53Diluted earnings per share
    
    $
    1.45
    
    
    $
    1.43
    
    
    $
    0.54
    
    
    $
    0.53Average number of shares outstanding:Earnings per common share
    
    
    55,221,000
    
    
    
    58,229,000
    
    
    
    54,189,000
    
    
    
    57,287,000Diluted earnings per share
    
    
    55,740,000
    
    
    
    59,155,000
    
    
    
    54,608,000
    
    
    
    57,948,000Dividends paid per common share
    
    $
    0.0975
    
    
    $
    0.0800
    
    
    $
    0.0375
    
    
    $
    0.0300
  4




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##### Table of Contents



Thirty Nine Weeks EndedSept 29,
    
    
    Sept 30,2007
    
    
    2006OPERATING ACTIVITIESNet income
    
    $
    80,622
    
    
    $
    84,395Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of operating property
    
    
    14,045
    
    
    
    12,230Non-cash interest charges
    
    
    130
    
    
    
    130Provisions for losses on trade and other accounts receivable
    
    
    3,094
    
    
    
    4,218(Gains) losses on sales of operating property
    
    
    (1,689
    )
    
    
    120Director compensation paid in common stock
    
    
    678
    
    
    
    265Deferred income taxes, net
    
    
    2,627
    
    
    
    (440
    )Stock-based compensation
    
    
    5,500
    
    
    
    5,125Changes in operating assets and liabilities:Decrease in trade and other accounts receivable
    
    
    8,579
    
    
    
    165,131Increase in other assets
    
    
    (7,641
    )
    
    
    (9,915
    )Increase (decrease) in accounts payable
    
    
    2,755
    
    
    
    (23,090
    )Decrease in other liabilities
    
    
    (1,383
    )
    
    
    (7,368
    )Increase (decrease) in insurance claims
    
    
    4,671
    
    
    
    (906
    )NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    111,988
    
    
    
    229,895INVESTING ACTIVITIESNet change in other short-term investments
    
    
    (2,845
    )
    
    
    (2,829
    )Sales and maturities of investments
    
    
    30,282
    
    
    
    25,015Purchases of investments
    
    
    (32,133
    )
    
    
    (25,974
    )Purchases of operating property
    
    
    (5,829
    )
    
    
    (2,756
    )Proceeds from sales of operating property
    
    
    3,688
    
    
    
    1,106NET CASH USED BY INVESTING ACTIVITIES
    
    
    (6,837
    )
    
    
    (5,438
    )FINANCING ACTIVITIESIncrease (decrease) in cash overdraft
    
    
    6,766
    
    
    
    (334
    )Proceeds from repayment of notes receivable arising from exercises of stock
options
    
    
    
    
    
    
    47Dividends paid
    
    
    (5,390
    )
    
    
    (4,652
    )Proceeds from exercises of stock options
    
    
    12,264
    
    
    
    8,271Excess tax benefit on stock option exercises
    
    
    3,660
    
    
    
    5,007Borrowings on revolving credit facility
    
    
    24,000
    
    
    
    5,000Purchases of common stock
    
    
    (126,148
    )
    
    
    (114,597
    )Principal payments on long-term debt and capital lease obligations
    
    
    (52,747
    )
    
    
    (69,778
    )NET CASH USED BY FINANCING ACTIVITIES
    
    
    (137,595
    )
    
    
    (171,036
    )Increase (decrease) in cash and cash equivalents
    
    
    (32,444
    )
    
    
    53,421Cash and cash equivalents at beginning of period
    
    
    91,491
    
    
    
    29,398Cash and cash equivalents at end of period
    
    $
    59,047
    
    
    $
    82,819
  5




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##### Table of Contents



AccumulatedAddl
    
    
    
    
    
    
    Treasury Stock
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    at Cost
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    TotalBalance December 30, 2006
    
    
    64,993,143
    
    
    $
    650
    
    
    $
    108,020
    
    
    $
    499,273
    
    
    
    9,028,009
    
    
    $
    (377,662
    )
    
    $
    (7
    )
    
    $
    230,274Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,622
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,622Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,390
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,390
    )Director compensation paid
in common stock
    
    
    13,577
    
    
    
    
    
    
    
    678
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    678Purchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,827,501
    
    
    
    (126,148
    )
    
    
    
    
    
    
    (126,148
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    5,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,500Exercises of stock
options, including
excess tax benefit
    
    
    607,146
    
    
    
    6
    
    
    
    15,918
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,924Balance September 29, 2007
    
    
    65,613,866
    
    
    $
    656
    
    
    $
    130,116
    
    
    $
    574,505
    
    
    
    11,855,510
    
    
    $
    (503,810
    )
    
    $
    (7
    )
    
    $
    201,460
  6




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##### Table of Contents



Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 29,
    
    
    Sept 30,
    
    
    Sept 29,
    
    
    Sept 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Total cost of the Plans during
the period
    
    $
    5,500
    
    
    $
    5,125
    
    
    $
    1,856
    
    
    $
    1,828Amount of related income tax
benefit recognized during the
period
    
    
    1,732
    
    
    
    1,611
    
    
    
    547
    
    
    
    548Net cost of the Plans during
the period
    
    $
    3,768
    
    
    $
    3,514
    
    
    $
    1,309
    
    
    $
    1,280
  2007
    
    
    2006Expected volatility
    
    
    33.0
    %
    
    
    34.0
    %Expected dividend yield
    
    
    0.3
    %
    
    
    0.3
    %Risk-free interest rate
    
    
    4.75
    %
    
    
    4.75
    %Expected lives (in years)
    
    
    4.2
    
    
    
    4.5
   Weighted Average
    
    
    Weighted AverageNumber of
    
    
    Exercise Price
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicOptions
    
    
    per Share
    
    
    Term (years)
    
    
    Value (000s)Options outstanding at December 30, 2006
    
    
    2,566,571
    
    
    $
    27.35Granted
    
    
    275,500
    
    
    $
    43.00Exercised
    
    
    (607,146
    )
    
    $
    20.20Forfeited
    
    
    (18,100
    )
    
    $
    39.47Options outstanding at September 29, 2007
    
    
    2,216,825
    
    
    $
    31.15
    
    
    
    7.1
    
    
    $
    23,987Options exercisable at September 29, 2007
    
    
    760,343
    
    
    $
    24.92
    
    
    
    5.9
    
    
    $
    12,966
  7




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##### Table of Contents



Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 29,
    
    
    Sept 30,
    
    
    Sept 29,
    
    
    Sept 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Average number
of common shares
outstanding
    
    
    55,221
    
    
    
    58,229
    
    
    
    54,189
    
    
    
    57,287Incremental shares
from assumed
exercises of stock
options
    
    
    519
    
    
    
    926
    
    
    
    419
    
    
    
    661Average number of
common shares and
common share
equivalents
outstanding
    
    
    55,740
    
    
    
    59,155
    
    
    
    54,608
    
    
    
    57,948
 8




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##### Table of Contents



Thirty-Nine-Week Period Ended September 29, 2007Carrier
    
    
    Global Logistics
    
    
    Insurance
    
    
    Other
    
    
    TotalExternal revenue
    
    $
    1,354,855
    
    
    $
    461,896
    
    
    $
    27,661
    
    
    
    
    
    
    $
    1,844,412Investment income
    
    
    
    
    
    
    
    
    
    
    4,103
    
    
    
    
    
    
    
    4,103Internal revenue
    
    
    33,583
    
    
    
    2,568
    
    
    
    23,019
    
    
    
    
    
    
    
    59,170Operating income
    
    
    135,542
    
    
    
    12,874
    
    
    
    25,586
    
    
    $
    (37,975
    )
    
    
    136,027Goodwill
    
    
    20,496
    
    
    
    10,638
    
    
    
    
    
    
    
    
    
    
    
    31,134
 Thirty-Nine-Week Period Ended September 30, 2006Carrier
    
    
    Global Logistics
    
    
    Insurance
    
    
    Other
    
    
    TotalExternal revenue
    
    $
    1,356,780
    
    
    $
    520,080
    
    
    $
    25,617
    
    
    
    
    
    
    $
    1,902,477Investment income
    
    
    
    
    
    
    
    
    
    
    2,589
    
    
    
    
    
    
    
    2,589Internal revenue
    
    
    39,343
    
    
    
    1,604
    
    
    
    22,351
    
    
    
    
    
    
    
    63,298Operating income
    
    
    137,398
    
    
    
    25,353
    
    
    
    24,056
    
    
    $
    (44,240
    )
    
    
    142,567Goodwill
    
    
    20,496
    
    
    
    10,638
    
    
    
    
    
    
    
    
    
    
    
    31,134
 Thirteen-Week Period Ended September 29, 2007Carrier
    
    
    Global Logistics
    
    
    Insurance
    
    
    Other
    
    
    TotalExternal revenue
    
    $
    460,894
    
    
    $
    164,687
    
    
    $
    9,230
    
    
    
    
    
    
    $
    634,811Investment income
    
    
    
    
    
    
    
    
    
    
    1,106
    
    
    
    
    
    
    
    1,106Internal revenue
    
    
    10,357
    
    
    
    1,048
    
    
    
    6,196
    
    
    
    
    
    
    
    17,601Operating income
    
    
    45,664
    
    
    
    4,858
    
    
    
    11,577
    
    
    $
    (12,451
    )
    
    
    49,648
 Thirteen-Week Period Ended September 30, 2006Carrier
    
    
    Global Logistics
    
    
    Insurance
    
    
    Other
    
    
    TotalExternal revenue
    
    $
    460,847
    
    
    $
    179,613
    
    
    $
    8,737
    
    
    
    
    
    
    $
    649,197Investment income
    
    
    
    
    
    
    
    
    
    
    1,337
    
    
    
    
    
    
    
    1,337Internal revenue
    
    
    15,435
    
    
    
    605
    
    
    
    5,940
    
    
    
    
    
    
    
    21,980Operating income
    
    
    49,334
    
    
    
    8,331
    
    
    
    8,967
    
    
    $
    (14,931
    )
    
    
    51,701
   Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 29,
    
    
    Sept 30,
    
    
    Sept 29,
    
    
    Sept 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    80,622
    
    
    $
    84,395
    
    
    $
    29,348
    
    
    $
    30,580Unrealized holding gains/(losses) on available-for-sale investments, net of income taxes
    
    
    
    
    
    
    194
    
    
    
    (15
    )
    
    
    41Comprehensive income
    
    $
    80,622
    
    
    $
    84,589
    
    
    $
    29,333
    
    
    $
    30,621
 9




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##### Table of Contents



Introduction
  10




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##### Table of Contents



Changes in Financial Condition and Results of Operations
    Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 29,
    
    
    Sept 30,
    
    
    Sept 29,
    
    
    Sept 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Carrier Segment:External revenue generated through (in thousands):BCO Independent Contractors
    
    $
    970,432
    
    
    $
    964,260
    
    
    $
    330,776
    
    
    $
    323,664Truck Brokerage Carriers
    
    
    384,423
    
    
    
    392,520
    
    
    
    130,118
    
    
    
    137,183$
    1,354,855
    
    
    $
    1,356,780
    
    
    $
    460,894
    
    
    $
    460,847Revenue per revenue mile
    
    $
    2.02
    
    
    $
    2.02
    
    
    $
    2.06
    
    
    $
    2.05Revenue per load
    
    $
    1,608
    
    
    $
    1,613
    
    
    $
    1,645
    
    
    $
    1,651Average length of haul (miles)
    
    
    795
    
    
    
    800
    
    
    
    798
    
    
    
    806Number of loads
    
    
    842,500
    
    
    
    841,200
    
    
    
    280,200
    
    
    
    279,200
 11




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##### Table of Contents



Thirty Nine Weeks Ended
    
    
    Thirteen Weeks EndedSept 29,
    
    
    Sept 30,
    
    
    Sept 29,
    
    
    Sept 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Global Logistics Segment:External revenue generated through (in thousands):BCO Independent Contractors (1)
    
    $
    76,175
    
    
    $
    78,308
    
    
    $
    23,990
    
    
    $
    31,145Truck Brokerage Carriers
    
    
    261,344
    
    
    
    302,746
    
    
    
    95,449
    
    
    
    104,445Rail, air, ocean and bus carriers (2)
    
    
    124,377
    
    
    
    139,026
    
    
    
    45,248
    
    
    
    44,023$
    461,896
    
    
    $
    520,080
    
    
    $
    164,687
    
    
    $
    179,613Revenue per load (3)
    
    $
    1,514
    
    
    $
    1,510
    
    
    $
    1,530
    
    
    $
    1,520Number of loads (3) (4)
    
    
    301,000
    
    
    
    287,400
    
    
    
    105,800
    
    
    
    98,600
 
 (1)
    
    Includes revenue from freight hauled by carrier segment BCO Independent Contractors
for global logistics customers.(2)
    
    Included in the 2007 and 2006 thirty-nine-week periods was $481,000 and
$23,032,000, 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). Included in the 2006
thirteen-week period was $3,594,000 of revenue attributable to buses provided under the FAA
contract.(3)
    
    Revenue per load and number of loads in the thirty-nine and thirteen-week periods
ended September 29, 2007 exclude the effect of $6,209,000 and $2,764,000, respectively, of
revenue derived under the FAA contract. Revenue per load and number of loads in the
thirty-nine and thirteen-week periods ended September 30, 2006 exclude the effect of
$85,998,000 and $29,701,000, respectively, of revenue derived from transportation services
provided under the FAA contract. See Use of Non-GAAP Financial Measures.(4)
    
    The number of loads in the thirty-nine and thirteen-week periods ended 2006 were
restated. This change had no impact on reported revenue in any period.  Sept 29, 2007
    
    
    Sept 30, 2006BCO Independent Contractors
    
    
    8,452
    
    
    
    8,463Truck Brokerage Carriers:Approved and active (1)
    
    
    15,765
    
    
    
    14,604Other approved
    
    
    9,224
    
    
    
    8,00924,989
    
    
    
    22,613Total available truck capacity providers
    
    
    33,441
    
    
    
    31,076Number of trucks provided by BCO Independent Contractors
    
    
    9,056
    
    
    
    9,164
 
 (1)
    
    Active refers to Truck Brokerage Carriers who moved at least one load in the 180
days immediately preceding the fiscal quarter end.   12




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Thirty Nine Weeks Ended
    
    

Thirteen Weeks EndedSept 29,
    
    
    Sept 30,
    
    
    Sept 29,
    
    
    Sept 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Investment income
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.2Costs and expenses:Purchased transportation
    
    
    75.6
    
    
    
    75.2
    
    
    
    75.9
    
    
    
    74.9Commissions to agents
    
    
    8.1
    
    
    
    7.9
    
    
    
    8.1
    
    
    
    8.0Other operating costs
    
    
    1.1
    
    
    
    1.9
    
    
    
    1.3
    
    
    
    2.3Insurance and claims
    
    
    2.1
    
    
    
    1.6
    
    
    
    1.5
    
    
    
    1.5Selling, general and administrative
    
    
    5.1
    
    
    
    5.4
    
    
    
    4.9
    
    
    
    4.9Depreciation and amortization
    
    
    0.8
    
    
    
    0.6
    
    
    
    0.7
    
    
    
    0.6Total costs and expenses
    
    
    92.8
    
    
    
    92.6
    
    
    
    92.4
    
    
    
    92.2Operating income
    
    
    7.4
    
    
    
    7.5
    
    
    
    7.8
    
    
    
    8.0Interest and debt expense
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.3Income before income taxes
    
    
    7.2
    
    
    
    7.2
    
    
    
    7.5
    
    
    
    7.7Income taxes
    
    
    2.8
    
    
    
    2.8
    
    
    
    2.9
    
    
    
    3.0Net income
    
    
    4.4
    %
    
    
    4.4
    %
    
    
    4.6
    %
    
    
    4.7
    %
   13




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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 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,320,786July 1, 2007  July 28, 2007
    
    
    282,800
    
    
    $
    46.34
    
    
    
    282,800
    
    
    
    1,037,986July 29, 2007  Aug. 25, 2007
    
    
    1,037,986
    
    
    $
    43.63
    
    
    
    1,037,986
    
    
    
    0Aug. 26, 2007  Sept. 29, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000,000Total
    
    
    1,320,786
    
    
    $
    44.21
    
    
    
    1,320,786
   Dividend Amount
    
    Declaration
    
    Record
    
    Paymentper share
    
    Date
    
    Date
    
    Date$0.0300
    
    February 1, 2007
    
    February 13, 2007
    
    February 28, 2007$0.0300
    
    April 19, 2007
    
    May 10, 2007
    
    May 31, 2007$0.0375
    
    July 19, 2007
    
    August 10, 2007
    
    August 31, 2007
  20




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
    
    Section 5.01 provides for the use of uncertificated shares, which will permit book
entry ownership of the Companys capital stock, as required in order to comply with
NASDAQs new listing requirement that all listed companies become DRS Eligible by
January 1, 2008. The Previous Bylaws did not permit the use of uncertificated shares.
    
    Section 1.12(b) requires that stockholders wishing to make nominations to the Board or
proposals to be considered by the Companys stockholders must deliver written notice
thereof to the Company not less than 90 days nor more than 120 days prior to the first
anniversary of the date of the Companys proxy statement for the preceding years annual
meeting, other than in certain circumstances. The Previous Bylaws required that such
notice be given at least 35 days prior to the meeting at which any such nomination or
proposal was to be considered.
    
    Section 2.09 expressly permits the Board to take action without a meeting if all of
the members of the Board consent to such action in writing or by electronic transmission.
    
    Certain other changes were made in the Amended and Restated Bylaws to conform to
changes in the General Corporation Law of the State of Delaware since the date that the
Previous Bylaws were adopted.
  
   21




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Exhibit No.
    
    Description(3)
    
    Articles of Incorporation and By-laws3.1*
    
    The Companys Bylaws, as amended and restated on November 1, 2007.(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: November 2, 2007
    /s/ Henry H. GerkensHenry H. GerkensPresident and
Chief Executive Officer Date:  November 2, 2007
    /s/ James B. GattoniJames B. GattoniVice President and Chief
Financial Officer 23