##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 September 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
  0-21238
 
 LANDSTAR SYSTEM, INC.
  Delaware
    
    06-1313069(State or other jurisdiction 
of incorporation or organization)
    
    (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 30, 2006 and December 31, 2005
    
    Page 3Consolidated Statements of Income for the Thirty Nine and Thirteen Weeks Ended September 30, 2006 and September 24, 2005
    
    Page 4Consolidated Statements of Cash Flows for the Thirty Nine Weeks Ended September 30, 2006 and September 24, 2005
    
    Page 5Consolidated Statement of Changes in Shareholders Equity for the Thirty Nine Weeks Ended September 30, 2006
    
    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 21PART II Other InformationItem 1.Legal Proceedings
    
    Page 21Item 1A.Risk Factors
    
    Page 22Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    Page 23Item 6.Exhibits
    
    Page 23Signatures
    
    Page 25EX-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 
 
    2




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Sept 30,
    
    Dec 31,2006
    
    2005ASSETSCurrent AssetsCash and cash equivalents
    
    $
    82,819
    
    
    $
    29,398Short-term investments
    
    
    21,162
    
    
    
    20,693Trade accounts receivable, less allowance of $5,550 and $4,655
    
    
    357,482
    
    
    
    534,274Other receivables, including advances to independent contractors,
less allowance of $5,024 and $4,342
    
    
    18,827
    
    
    
    11,384Deferred income taxes and other current assets
    
    
    30,289
    
    
    
    21,106Total current assets
    
    
    510,579
    
    
    
    616,855Operating property, less accumulated depreciation and amortization
of $76,885 and $68,561
    
    
    103,346
    
    
    
    89,131Goodwill
    
    
    31,134
    
    
    
    31,134Other assets
    
    
    33,556
    
    
    
    28,694Total assets
    
    $
    678,615
    
    
    $
    765,814LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCash overdraft
    
    $
    29,495
    
    
    $
    29,829Accounts payable
    
    
    141,419
    
    
    
    164,509Current maturities of long-term debt
    
    
    16,860
    
    
    
    12,122Insurance claims
    
    
    26,526
    
    
    
    27,887Other current liabilities
    
    
    57,249
    
    
    
    65,149Total current liabilities
    
    
    271,549
    
    
    
    299,496Long-term debt, excluding current maturities
    
    
    110,250
    
    
    
    154,851Insurance claims
    
    
    38,295
    
    
    
    37,840Deferred income taxes
    
    
    18,139
    
    
    
    17,938Shareholders EquityCommon stock, $0.01 par value, authorized 160,000,000 shares,
issued 64,858,208 and 64,151,902
    
    
    649
    
    
    
    642Additional paid-in capital
    
    
    103,225
    
    
    
    84,532Retained earnings
    
    
    472,292
    
    
    
    392,549Cost of 7,988,710 and 5,344,883 shares of common stock in treasury
    
    
    (335,767
    )
    
    
    (221,776
    )Accumulated other comprehensive loss
    
    
    (17
    )
    
    
    (211
    )Note receivable arising from exercise of stock options
    
    
    0
    
    
    
    (47
    )Total shareholders equity
    
    
    240,382
    
    
    
    255,689Total liabilities and shareholders equity
    
    $
    678,615
    
    
    $
    765,814
  3




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Thirty Nine Weeks Ended
    
    Thirteen Weeks EndedSept 30,
    
    Sept 24,
    
    Sept 30,
    
    Sept 24,2006
    
    2005
    
    2006
    
    2005Revenue
    
    $
    1,902,477
    
    
    $
    1,717,386
    
    
    $
    649,197
    
    
    $
    676,070Investment income
    
    
    2,589
    
    
    
    2,087
    
    
    
    1,337
    
    
    
    852Costs and expenses:Purchased transportation
    
    
    1,430,411
    
    
    
    1,286,016
    
    
    
    486,102
    
    
    
    502,924Commissions to agents
    
    
    149,694
    
    
    
    135,689
    
    
    
    52,173
    
    
    
    53,650Other operating costs
    
    
    37,125
    
    
    
    27,400
    
    
    
    14,837
    
    
    
    10,785Insurance and claims
    
    
    30,230
    
    
    
    34,850
    
    
    
    9,656
    
    
    
    11,946Selling, general and administrative
    
    
    102,809
    
    
    
    99,923
    
    
    
    31,885
    
    
    
    36,072Depreciation and amortization
    
    
    12,230
    
    
    
    11,926
    
    
    
    4,180
    
    
    
    3,998Total costs and expenses
    
    
    1,762,499
    
    
    
    1,595,804
    
    
    
    598,833
    
    
    
    619,375Operating income
    
    
    142,567
    
    
    
    123,669
    
    
    
    51,701
    
    
    
    57,547Interest and debt expense
    
    
    4,950
    
    
    
    3,194
    
    
    
    1,808
    
    
    
    1,205Income before income taxes
    
    
    137,617
    
    
    
    120,475
    
    
    
    49,893
    
    
    
    56,342Income taxes
    
    
    53,222
    
    
    
    46,664
    
    
    
    19,313
    
    
    
    21,773Net income
    
    $
    84,395
    
    
    $
    73,811
    
    
    $
    30,580
    
    
    $
    34,569Earnings per common share
    
    $
    1.45
    
    
    $
    1.24
    
    
    $
    0.53
    
    
    $
    0.59Diluted earnings per share
    
    $
    1.43
    
    
    $
    1.22
    
    
    $
    0.53
    
    
    $
    0.58Average number of shares outstanding:Earnings per common share
    
    
    58,229,000
    
    
    
    59,416,000
    
    
    
    57,287,000
    
    
    
    58,494,000Diluted earnings per share
    
    
    59,155,000
    
    
    
    60,660,000
    
    
    
    57,948,000
    
    
    
    59,526,000Dividends paid per common share
    
    $
    0.080
    
    
    $
    0.025
    
    
    $
    0.030
    
    
    $
    0.025
  4




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Thirty Nine Weeks EndedSept 30,
    
    Sept 24,2006
    
    2005OPERATING ACTIVITIESNet income
    
    $
    84,395
    
    
    $
    73,811Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of operating property
    
    
    12,230
    
    
    
    11,926Non-cash interest charges
    
    
    130
    
    
    
    131Provisions for losses on trade and other accounts receivable
    
    
    4,218
    
    
    
    4,649(Gains) losses on sales and disposals of operating property
    
    
    120
    
    
    
    (206
    )Director compensation paid in common stock
    
    
    265
    
    
    
    193Deferred income taxes, net
    
    
    (440
    )
    
    
    (4,278
    )Stock-based compensation
    
    
    5,125
    
    
    
    4,518Changes in operating assets and liabilities:Decrease (increase) in trade and other accounts receivable
    
    
    165,131
    
    
    
    (4,226
    )Increase in other assets
    
    
    (9,915
    )
    
    
    (852
    )Increase (decrease) in accounts payable
    
    
    (23,090
    )
    
    
    54,246Increase (decrease) in other liabilities
    
    
    (7,368
    )
    
    
    6,240Decrease in insurance claims
    
    
    (906
    )
    
    
    (404
    )NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    229,895
    
    
    
    145,748INVESTING ACTIVITIESNet change in other short-term investments
    
    
    (2,829
    )
    
    
    (2,728
    )Sales and maturities of investments
    
    
    25,015
    
    
    
    4,018Purchases of investments
    
    
    (25,974
    )
    
    
    (4,446
    )Purchases of operating property
    
    
    (2,756
    )
    
    
    (1,851
    )Proceeds from sales of operating property
    
    
    1,106
    
    
    
    3,992NET CASH USED BY INVESTING ACTIVITIES
    
    
    (5,438
    )
    
    
    (1,015
    )FINANCING ACTIVITIESIncrease (decrease) in cash overdraft
    
    
    (334
    )
    
    
    916Proceeds from repayment of notes receivable arising from exercises of stock
options
    
    
    47
    
    
    
    275Dividends paid
    
    
    (4,652
    )
    
    
    (1,458
    )Proceeds from exercises of stock options
    
    
    8,271
    
    
    
    5,393Excess tax benefit on stock option exercises
    
    
    5,007
    
    
    
    2,003Borrowings on revolving credit facility
    
    
    5,000
    
    
    
    2,000Purchases of common stock
    
    
    (114,597
    )
    
    
    (95,600
    )Principal payments on long-term debt and capital lease obligations
    
    
    (69,778
    )
    
    
    (7,946
    )NET CASH USED BY FINANCING ACTIVITIES
    
    
    (171,036
    )
    
    
    (94,417
    )Increase in cash and cash equivalents
    
    
    53,421
    
    
    
    50,316Cash and cash equivalents at beginning of period
    
    
    29,398
    
    
    
    61,684Cash and cash equivalents at end of period
    
    $
    82,819
    
    
    $
    112,000
  5




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NoteReceivableArisingTreasury Stock
    
    Accumulated
    
    fromCommon Stock
    
    Addl
    
    
    
    
    
    at Cost
    
    Other
    
    ExercisePaid-In
    
    Retained
    
    
    
    
    
    
    
    
    
    Comprehensive
    
    of StockShares
    
    Amount
    
    Capital
    
    Earnings
    
    Shares
    
    Amount
    
    Income (Loss)
    
    Options
    
    TotalBalance December 31, 2005
    
    
    64,151,902
    
    
    $
    642
    
    
    $
    84,532
    
    
    $
    392,549
    
    
    
    5,344,883
    
    
    $
    (221,776
    )
    
    $
    (211
    )
    
    $
    (47
    )
    
    $
    255,689Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,395
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,395Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,652
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,652
    )Director compensation paid in
common stock
    
    
    6,000
    
    
    
    
    
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265Purchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,658,427
    
    
    
    (114,597
    )
    
    
    
    
    
    
    
    
    
    
    (114,597
    )Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    5,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,125Exercises of stock options,
including
excess tax benefit
    
    
    700,306
    
    
    
    7
    
    
    
    13,271
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,278Repayment of note receivable
arising from exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    47Incentive compensation paid in
common stock
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    (14,600
    )
    
    
    606
    
    
    
    
    
    
    
    
    
    
    
    638Change in other comprehensive
income (loss) on available-for-sale
investments, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194
    
    
    
    
    
    
    
    194Balance September 30, 2006
    
    
    64,858,208
    
    
    $
    649
    
    
    $
    103,225
    
    
    $
    472,292
    
    
    
    7,988,710
    
    
    $
    (335,767
    )
    
    $
    (17
    )
    
    $
    0
    
    
    $
    240,382
  6




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Thirty Nine Weeks Ended
    
    Thirteen Weeks EndedSept 30,
    
    Sept 24,
    
    Sept 30,
    
    Sept 24,2006
    
    2005
    
    2006
    
    2005Total cost of share-based payment
plans during the period
    
    $
    5,125
    
    
    $
    4,518
    
    
    $
    1,828
    
    
    $
    1,490Amount of related income tax benefit
recognized during the period
    
    
    1,611
    
    
    
    1,333
    
    
    
    548
    
    
    
    434Net cost of share based payment plans
during the period
    
    $
    3,514
    
    
    $
    3,185
    
    
    $
    1,280
    
    
    $
    1,056
 7




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Weighted Average
    
    Weighted AverageNumber of
    
    Exercise Price
    
    Remaining Contractual
    
    Aggregate IntrinsicOptions
    
    per Share
    
    Term (years)
    
    Value (000s)Options outstanding at December 31, 2005
    
    
    2,794,652
    
    
    $
    19.07Granted
    
    
    630,000
    
    
    $
    43.60Exercised
    
    
    (700,306
    )
    
    $
    11.81Forfeited/expired
    
    
    (17,800
    )
    
    $
    15.03Options outstanding at September 30, 2006
    
    
    2,706,546
    
    
    $
    26.68
    
    
    
    7.4
    
    
    $
    42,951Options exercisable at September 30, 2006
    
    
    914,674
    
    
    $
    16.36
    
    
    
    5.7
    
    
    $
    23,951
   8




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Thirty Nine Weeks Ended
    
    Thirteen Weeks EndedSept 30,
    
    Sept 24,
    
    Sept 30,
    
    Sept 24,2006
    
    2005
    
    2006
    
    2005Average number
of common shares
outstanding
    
    
    58,229
    
    
    
    59,416
    
    
    
    57,287
    
    
    
    58,494Incremental shares
under stock option
plans
    
    
    926
    
    
    
    1,244
    
    
    
    661
    
    
    
    1,032Average number of
common shares and
common share
equivalents
outstanding
    
    
    59,155
    
    
    
    60,660
    
    
    
    57,948
    
    
    
    59,526
       Thirty Nine Weeks 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
    
    
    
    
    
    
    
    
    
    
    
    31,134Total assets
    
    
    376,026
    
    
    
    135,167
    
    
    
    97,609
    
    
    
    69,813
    
    
    
    678,615
 9




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Thirty Nine Weeks Ended September 24, 2005Carrier
    
    Global Logistics
    
    Insurance
    
    Other
    
    TotalExternal revenue
    
    $
    1,197,614
    
    
    $
    496,769
    
    
    $
    23,003
    
    
    
    
    
    
    $
    1,717,386Investment income
    
    
    
    
    
    
    
    
    
    
    2,087
    
    
    
    
    
    
    
    2,087Internal revenue
    
    
    43,587
    
    
    
    1,304
    
    
    
    24,440
    
    
    
    
    
    
    
    69,331Operating income
    
    
    112,979
    
    
    
    33,403
    
    
    
    17,697
    
    
    $
    (40,410
    )
    
    
    123,669Goodwill
    
    
    20,496
    
    
    
    10,638
    
    
    
    
    
    
    
    
    
    
    
    31,134Total assets
    
    
    331,110
    
    
    
    131,796
    
    
    
    73,567
    
    
    
    110,524
    
    
    
    646,997
 Thirteen Weeks 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
 Thirteen Weeks Ended September 24, 2005Carrier
    
    Global Logistics
    
    Insurance
    
    Other
    
    TotalExternal revenue
    
    $
    414,093
    
    
    $
    254,181
    
    
    $
    7,796
    
    
    
    
    
    
    $
    676,070Investment income
    
    
    
    
    
    
    
    
    
    
    852
    
    
    
    
    
    
    
    852Internal revenue
    
    
    31,947
    
    
    
    416
    
    
    
    6,592
    
    
    
    
    
    
    
    38,955Operating income
    
    
    42,700
    
    
    
    24,261
    
    
    
    6,069
    
    
    $
    (15,483
    )
    
    
    57,547
   Thirty Nine Weeks Ended
    
    Thirteen Weeks EndedSept 30,
    
    Sept 24,
    
    Sept 30,
    
    Sept 24,2006
    
    2005
    
    2006
    
    2005Net income
    
    $
    84,395
    
    
    $
    73,811
    
    
    $
    30,580
    
    
    $
    34,569Unrealized holding gains (losses) on available
-for-sale investments, net of income taxes
    
    
    194
    
    
    
    (229
    )
    
    
    41
    
    
    
    (120
    )Comprehensive income
    
    $
    84,589
    
    
    $
    73,582
    
    
    $
    30,621
    
    
    $
    34,449
      10




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##### Table of Contents



Introduction
   11




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##### Table of Contents



Changes in Financial Condition and Results of Operations
    Thirty Nine Weeks Ended
    
    Thirteen Weeks EndedSept 30,
    
    Sept 24,
    
    Sept 30,
    
    Sept 24,2006
    
    2005
    
    2006
    
    2005Carrier Segment:External revenue generated through (in thousands):BCO Independent Contractors
    
    $
    964,260
    
    
    $
    906,581
    
    
    $
    323,664
    
    
    $
    307,359Truck Brokerage Carriers
    
    
    392,520
    
    
    
    291,033
    
    
    
    137,183
    
    
    
    106,734$
    1,356,780
    
    
    $
    1,197,614
    
    
    $
    460,847
    
    
    $
    414,093Revenue per revenue mile
    
    $
    2.02
    
    
    $
    1.85
    
    
    $
    2.05
    
    
    $
    1.92Revenue per load
    
    $
    1,613
    
    
    $
    1,484
    
    
    $
    1,652
    
    
    $
    1,545Average length of haul (miles)
    
    
    800
    
    
    
    803
    
    
    
    807
    
    
    
    806Number of loads
    
    
    841,000
    
    
    
    807,000
    
    
    
    279,000
    
    
    
    268,000Global Logistics Segment:External revenue generated through (in thousands):BCO Independent Contractors (1)
    
    $
    78,308
    
    
    $
    91,508
    
    
    $
    31,145
    
    
    $
    56,173Truck Brokerage Carriers
    
    
    302,746
    
    
    
    285,369
    
    
    
    104,445
    
    
    
    130,704Rail, air, ocean and bus carriers (2)
    
    
    139,026
    
    
    
    119,892
    
    
    
    44,023
    
    
    
    67,304$
    520,080
    
    
    $
    496,769
    
    
    $
    179,613
    
    
    $
    254,181Revenue per load (3)
    
    $
    1,482
    
    
    $
    1,489
    
    
    $
    1,428
    
    
    $
    1,498Number of loads (3)
    
    
    294,000
    
    
    
    241,000
    
    
    
    105,000
    
    
    
    83,000
 
 (1)
    
    Includes revenue from freight hauled by carrier segment BCO Independent Contractors
for global logistics customers.(2)
    
    Included in the 2006 thirty nine and thirteen week periods was $23,032,000 and
$3,594,000, respectively, of revenue attributable to buses provided under contract between
Landstar Express America, Inc. and the United States Department of Transportation/Federal
Aviation Administration (the FAA). Included in the 2005 thirty nine and thirteen week
periods ended September 24, 2005 was $24,471,000 of revenue attributable to buses provided
under the FAA contract.(3)
    
    The number of loads and revenue per load 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. The number of loads and revenue per load in the thirty nine and thirteen week
periods ended September 24, 2005, exclude the effect of $137,887,000 and $129,812,000,
respectively, of revenue derived under the FAA contract. See Use of Non-GAAP Financial
Measures. 12




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Sept 30, 2006
    
    Sept 24, 2005BCO Independent Contractors
    
    
    8,463
    
    
    
    7,846Truck Brokerage Carriers:Approved and active (1)
    
    
    14,604
    
    
    
    13,328Other approved
    
    
    8,009
    
    
    
    8,17822,613
    
    
    
    21,506Total available truck capacity providers
    
    
    31,076
    
    
    
    29,352Number of trucks provided by BCO Independent Contractors
    
    
    9,164
    
    
    
    8,581
 
 (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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Thirty Nine Weeks Ended
    
    Thirteen Weeks EndedSept 30,
    
    Sept 24,
    
    Sept 30,
    
    Sept 24,2006
    
    2005
    
    2006
    
    2005Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Investment income
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1Costs and expenses:Purchased transportation
    
    
    75.2
    
    
    
    74.9
    
    
    
    74.9
    
    
    
    74.4Commissions to agents
    
    
    7.9
    
    
    
    7.9
    
    
    
    8.0
    
    
    
    7.9Other operating costs
    
    
    1.9
    
    
    
    1.6
    
    
    
    2.3
    
    
    
    1.6Insurance and claims
    
    
    1.6
    
    
    
    2.0
    
    
    
    1.5
    
    
    
    1.8Selling, general and administrative
    
    
    5.4
    
    
    
    5.8
    
    
    
    4.9
    
    
    
    5.3Depreciation and amortization
    
    
    0.6
    
    
    
    0.7
    
    
    
    0.6
    
    
    
    0.6Total costs and expenses
    
    
    92.6
    
    
    
    92.9
    
    
    
    92.2
    
    
    
    91.6Operating income
    
    
    7.5
    
    
    
    7.2
    
    
    
    8.0
    
    
    
    8.5Interest and debt expense
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.2Income before income taxes
    
    
    7.2
    
    
    
    7.0
    
    
    
    7.7
    
    
    
    8.3Income taxes
    
    
    2.8
    
    
    
    2.7
    
    
    
    3.0
    
    
    
    3.2Net income
    
    
    4.4
    %
    
    
    4.3
    %
    
    
    4.7
    %
    
    
    5.1
    %
   14




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Expiration of contract with the United States Department of Transportation/Federal Aviation
Administration
     22




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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
    
    programsJuly 1, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,282,279July 2, 2006  July 29, 2006
    
    
    607,800
    
    
    $
    41.90
    
    
    
    607,800
    
    
    
    674,479July 30, 2006  Aug. 26, 2006
    
    
    674,479
    
    
    $
    42.89
    
    
    
    674,479
    
    
    
    2,000,000Aug. 27, 2006  Sept. 30, 2006
    
    
    133,200
    
    
    $
    41.36
    
    
    
    133,200
    
    
    
    1,866,800Total
    
    
    1,415,479
    
    
    $
    42.32
    
    
    
    1,415,479
           
   23




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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 24




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LANDSTAR SYSTEM, INC.Date: November 3, 2006
    /s/ Henry H. GerkensHenry H. GerkensPresident and
Chief Executive OfficerDate: November 3, 2006
    /s/ Robert C. LaRoseRobert C. LaRoseExecutive Vice President and Chief
Financial Officer 25