10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 25, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____________ to ___________

Commission File Number: 0-21238

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)


Delaware		06-1313069
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

13410 Sutton Park Drive South, Jacksonville, Florida

(Address of principal executive offices)

32224

(Zip Code)

(904)

398-9400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	LSTR	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes

☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in

Rule 12b-2

of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of the close of business on October 18, 2021 was 38,108,586.

Table of Contents

Index


PART I – Financial Information

Item 1. Financial Statements (unaudited)

Consolidated Balance Sheets as of September 25, 2021 and December 26, 2020		Page 4

Consolidated Statements of Income for the Thirty Nine and Thirteen Weeks Ended September 25, 2021 and September 26, 2020		Page 5

Consolidated Statements of Comprehensive Income for the Thirty Nine and Thirteen Weeks Ended September 25, 2021 and September 26, 2020		Page 6

Consolidated Statements of Cash Flows for the Thirty Nine Weeks Ended September 25, 2021 and September 26, 2020		Page 7

Consolidated Statements of Changes in Shareholders’ Equity for the Thirty Nine and Thirteen Weeks Ended September 25, 2021 and September 26, 2020		Page 8

Notes to Consolidated Financial Statements		Page 9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		Page 17

Item 3. Quantitative and Qualitative Disclosures About Market Risk		Page 31

Item 4. Controls and Procedures		Page 32

PART II – Other Information

Item 1. Legal Proceedings		Page 32

Item 1A. Risk Factors		Page 32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		Page 33

Item 6. Exhibits		Page 33

Signatures		Page 35

EX – 31.1 Section 302 CEO Certification

EX – 31.2 Section 302 CFO Certification

EX – 32.1 Section 906 CEO Certification

EX – 32.2 Section 906 CFO Certification

Table of Contents

PART I -

FINANCIAL INFORMATION

Item 1. Financial Statements

The interim consolidated financial statements contained herein reflect all adjustments (all of a normal, recurring nature) which, in the opinion of management, are necessary for a fair statement of the financial condition, results of operations, cash flows and changes in shareholders’ equity for the periods presented. They have been prepared in accordance with Rule

10-01

of Regulation

S-X

and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the thirty nine weeks ended September 25, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 25, 2021.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2020 Annual Report on Form

10-K.

Table of Contents

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

(Unaudited)


	September 25, 2021			December 26, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	230,564		$	249,354
Short-term investments		36,644			41,375
Trade accounts receivable, less allowance of $6,543 and $8,670		1,010,538			764,169
Other receivables, including advances to independent contractors, less allowance of $7,696 and $7,239		109,007			134,757
Other current assets		25,375			18,520

Total current assets		1,412,128			1,208,175

Operating property, less accumulated depreciation and amortization of $332,785 and $299,407		301,373			296,996
Goodwill		40,980			40,949
Other assets		159,561			107,679

Total assets	$	1,914,042		$	1,653,799

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Cash overdraft	$	88,958		$	74,748
Accounts payable		548,385			380,505
Current maturities of long-term debt		34,617			35,415
Insurance claims		64,958			149,774
Dividends payable		—			76,770
Other current liabilities		110,394			88,925

Total current liabilities		847,312			806,137

Long-term debt, excluding current maturities		62,724			65,359
Insurance claims		46,914			38,867
Deferred income taxes and other noncurrent liabilities		57,402			51,601
Shareholders’ Equity
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,231,013 and 68,183,702 shares		682			682
Additional paid-in capital		246,302			228,875
Retained earnings		2,288,754			2,046,238
Cost of 30,122,427 and 29,797,639 shares of common stock in treasury		(1,633,109	)		(1,581,961	)
Accumulated other comprehensive loss		(2,939	)		(1,999	)

Total shareholders’ equity		899,690			691,835

Total liabilities and shareholders’ equity	$	1,914,042		$	1,653,799

See accompanying notes to consolidated financial statements.

Table of Contents

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)


	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020
Revenue	$	4,592,551	$	2,836,626	$	1,734,299	$	1,085,546
Investment income		2,138		2,716		706		714
Costs and expenses:
Purchased transportation		3,583,197		2,183,143		1,356,671		838,753
Commissions to agents		356,997		236,490		135,295		85,848
Other operating costs, net of gains on asset sales/dispositions		27,117		23,035		10,572		7,361
Insurance and claims		75,198		66,563		29,569		21,855
Selling, general and administrative		158,720		124,779		59,198		38,851
Depreciation and amortization		36,532		34,212		12,288		11,240
Impairment of intangible and other assets		—		2,582		—		—

Total costs and expenses		4,237,761		2,670,804		1,603,593		1,003,908

Operating income		356,928		168,538		131,412		82,352
Interest and debt expense		2,974		2,936		965		1,008

Income before income taxes		353,954		165,602		130,447		81,344
Income taxes		85,745		38,567		31,772		19,458

Net income	$	268,209	$	127,035	$	98,675	$

SEC Form 10-Q filed by Landstar System, Inc.