Item 1. - Business
General
Landstar System, Inc. (herein referred to as "Landstar," the "Company" or the "Registrant") was incorporated in January 1991 under the laws of the State of Delaware and acquired all of the capital stock of its predecessor, Landstar System Holdings, Inc. ("LSHI") on March 28, 1991. LSHI owns directly or indirectly all of the common stock of Landstar Ranger, Inc. ("Landstar Ranger"), Landstar Inway, Inc. ("Landstar Inway"), Landstar Ligon, Inc. ("Landstar Ligon"), Landstar Gemini, Inc. ("Landstar Gemini"), Landstar Poole, Inc. ("Landstar Poole"), Landstar Logistics, Inc. ("Landstar Logistics"), Landstar Express America, Inc. ("Landstar Express America"), Landstar T.L.C., Inc. ("Landstar T.L.C."), Landstar Contractor Financing, Inc. ("LCFI"), Landstar Capacity Services, Inc.("LCS"), Risk Management Claim Services, Inc. ("RMCS") and Landstar Corporate Services, Inc. ("LCSI"). Landstar Ranger, Landstar Inway, Landstar Ligon, Landstar Gemini, Landstar Poole, Landstar Logistics, Landstar Express America and Landstar T.L.C. are collectively herein referred to as Landstar's "Operating Subsidiaries" or "Operating Companies". The Company's principal executive offices are located at First Shelton Place, 1000 Bridgeport Avenue, Shelton, Connecticut 06484 and its telephone number is (203) 925-2900.
Historical Background
In March 1988, EnviroSource, Inc. ("EnviroSource") acquired IU International Corporation ("IU"), the former parent of Landstar Ranger, Landstar Inway, Landstar Ligon, Landstar Gemini, Landstar Poole and RMCS in a highly leveraged transaction. IU was a large conglomerate engaged in various unrelated businesses, including metals recovery, agriculture, food distribution and transportation. EnviroSource sought to reduce its acquisition debt by selling non-strategic assets and operations. In connection with these sales, EnviroSource sought to exit the transportation market and sold or closed certain unprofitable operations. EnviroSource formed LSHI in October 1988 to acquire the assets of certain of IU's truckload operating companies and caused LSHI to incur substantial debt to pay a special dividend to EnviroSource of approximately $72.3 million, and to repay approximately $21.5 million of debt owed to EnviroSource.
In March 1991, Landstar acquired LSHI in a buy-out organized by Kelso & Company, Inc. ("Kelso"). Investors in the acquisition included Kelso Investment Associates IV L.P. ("KIA IV"), an affiliate of Kelso, ABS MB Limited Partnership ("ABSMB"), an affiliate of Alex. Brown & Sons Incorporated, and certain management employees of Landstar and its subsidiaries (the "Management Stockholders"). Landstar was capitalized by the sale of an aggregate of 8,024,000 shares of Common Stock for $20.1 million, as follows: KIA IV ($15.5 million), ABSMB ($3.0 million), Management Stockholders ($1.3
million) and certain institutional stockholders ($.3 million). In March 1993, Landstar completed a recapitalization (the "Recapitalization") that increased shareholders' equity, reduced indebtedness and improved the Company's operating and financial flexibility. The Recapitalization involved three principal components: (i) the initial public offering (the "IPO") of 5,387,000 shares of Common Stock, at an initial price to the public of $13 per share, 2,500,000 of which were sold by Landstar and 2,887,000 of which were sold by certain of the Company's stockholders (including KIA IV), (ii) the retirement of all $38 million outstanding principal amount of LSHI's 14% Senior Subordinated Notes due 1998 (the "14% Notes"), and (iii) the refinancing of the Company's then existing senior debt facility with a senior bank credit agreement. The net proceeds to the Company from the IPO (net of underwriting discounts and commissions and expenses) of $28,450,000 and proceeds from the new term loan, were used to repay outstanding borrowings under the old credit agreement and redeem or purchase the 14% Notes. In October 1993, a secondary public offering by existing stockholders of 5,547,930 shares of Common Stock at an initial price to the public of $15 per share was completed. KIA IV sold 4,492,640 shares and ABSMB sold 1,055,290 shares. Immediately subsequent to the offering, KIA IV no longer owned any Landstar shares of Common Stock, and affiliates of Alex. Brown retained approximately 1% of the Common Stock outstanding.
In connection with the secondary offering, Landstar granted the underwriters an over-allotment option of up to 554,793 shares of Common Stock. The option was exercised and Landstar sold the 554,793 shares of Common Stock at an initial price to the public of $15 per share. Landstar received proceeds, net of underwriting discounts and commissions and expenses of the secondary offering, in the amount of $7,386,000.
During the first quarter of 1995, Landstar, through different subsidiaries of LSHI acquired the businesses and net assets of Intermodal Transport Company ("ITCO"), a California-based intermodal marketing company, LDS Truck Lines, Inc., a California-based drayage company, and T.L.C. Lines, Inc., a Missouri-based temperature-controlled and long-haul, time sensitive dry van carrier. Also in the 1995 first quarter, Landstar, through another subsidiary of LSHI, acquired all of the outstanding common stock of Express America Freight Systems, Inc., ("Express"), a North Carolina-based air freight and truck expedited service provider. The business acquired from ITCO comprises the majority of Landstar Logistics' intermodal operations, while the business acquired with Express comprises the majority of Landstar Express America's operations.
On December 18, 1996, the Company announced a plan to restructure its Landstar T.L.C. and Landstar Poole operations, in addition to the relocation of its Shelton, Connecticut corporate office headquarters to Jacksonville, Florida in the second quarter of 1997. The plan to restructure Landstar T.L.C. included the merger of Landstar T.L.C. into Landstar
Inway, the closing of the Landstar T.L.C. headquarters in St. Clair, Missouri and the disposal of all of Landstar T.L.C.'s company-owned tractors. The plan to restructure Landstar Poole included the transfer of the variable cost business component of Landstar Poole to Landstar Ranger and the disposal of 175 Landstar Poole company-owned tractors.
Description of Business
Landstar, a transportation services company, operates one of the largest truckload carrier businesses in North America, with revenue of $1,283.8 million in 1996. The Company seeks to provide transportation services which emphasize information coordination and customer service delivered primarily by a network of approximately 1,200 independent commission sales agents. Landstar utilizes a wide range of specialized equipment designed to meet customers' varied transportation requirements, which distinguishes the Company from many other large truckload carriers. The Company transports a variety of freight, including iron and steel, automotive products, paper, lumber and building products, aluminum, chemicals, foodstuffs, heavy machinery, ammunition and explosives, and military hardware. The Company provides truckload carrier services, intermodal transportation services and expedited air and truck services to shippers throughout the continental United States and, to a lesser extent, between the United States and each of Canada and Mexico. Four of Landstar's Operating Subsidiaries, Landstar Ranger, Landstar Inway, Landstar Ligon and Landstar Gemini (collectively the "Owner-Operator Companies") provide truckload transportation services through a network of independent commission sales agents and independent contractors. Management believes the Owner-Operator Companies utilize more independent contractors than any other U.S. truckload carrier. The use of independent contractors enables the Company to utilize a large fleet of revenue equipment while minimizing its capital investment and fixed costs, thereby enhancing the Company's return on investment.
Landstar Poole and Landstar T.L.C. use company-owned or leased equipment and company-employed drivers for a substantial portion of their operations. In 1992, Landstar Poole began to provide truckload transportation services through independent contractors and independent commission sales agents. In 1996, revenue generated through independent contractors was approximately 44% of Landstar Poole's total revenue and approximately 65% of Landstar T.L.C.'s total revenue. During the fourth quarter of 1996, the Company announced its plan to restructure the operations of both Landstar Poole and Landstar T.L.C. The Landstar Poole restructuring plan included the transfer of the variable cost business component of Landstar Poole to Landstar Ranger and the disposal of 175 company-owned tractors. The Landstar T.L.C. restructuring plan included the merger of Landstar T.L.C. into Landstar Inway and the disposal of all the company-owned tractors.
Landstar Logistics provides customers with contract logistics and intermodal services. Contract logistics services include
single source alternatives, truck brokerage and other transportation solutions for large customers. Intermodal transportation services primarily involves arranging for the movement of customers' goods by a combination of rail and truck. Both the railroad and drayage carriers utilized by Landstar Logistics are independent contractors. Landstar Logistics enables Landstar to market the full range of services offered by the entire Landstar system to customers with significant transportation needs, in addition to marketing separate logistics services.
Historically, Landstar T.L.C. and the intermodal operations of Landstar Logistics have principally utilized a company employee sales structure and to a lesser degree, independent commission sales agents. During 1996, management completed the process of converting the majority of company-owned sales locations at Landstar Logistics and Landstar T.L.C. to independent commission sales agent locations.
Landstar Express America provides air and surface expedited transportation services through independent contractors, including air cargo carriers, and principally utilizes independent commission sales agents.
Landstar's business strategy is to offer high quality, specialized transportation services primarily in the truckload market to service-sensitive customers. Landstar focuses on providing transportation services which emphasize information coordination among its commission sales agents, customers and Operating Subsidiaries, as well as customer service, rather than the volume-driven approach of the generic dry van carriers. Landstar intends to continue developing appropriate systems and technologies to offer integrated transportation and logistic solutions to its customers' total transportation needs.
Since the Company is larger than most of its competitors, Landstar has competitive marketing and operating advantages. The Company has the overall size, geographic coverage, equipment and service capability to meet the needs of even the largest shippers and thereby qualifies as a "core carrier." Increasingly, the larger shippers are substantially reducing the number of authorized carriers in favor of a small number of core carriers whose size and diverse service capability enable these core carriers to satisfy most of the shippers' transportation needs. Examples of national account customers include the U.S. Department of Defense and shippers in particular industries, such as automobile manufacturers.
Landstar's network of approximately 1,200 independent commission sales agents allows the Company to provide both large and small shippers a level of local service and quality typically offered only by small, entrepreneurial carriers. The Company has a number of significant competitive advantages, including:
DIVERSITY OF SERVICES OFFERED. The Company offers its customers a wide range of transportation services, primarily truckload, through its Operating Subsidiaries, including a fleet of diverse equipment and extensive geographic coverage. Examples of the specialized services offered include a large fleet of flatbed trailers, multi-axle trailers capable of hauling extremely heavy or oversized loads, drivers certified to handle ammunition and explosive shipments for the U.S. Department of Defense, and intermodal capability with railroads and steamship lines, including short-to-medium haul movement of ocean-going containers between U.S. ports and inland cities. The Company's fleet (including revenue equipment leased from independent contractors) consists of 9,883 power units and 14,692 trailers, including dry vans of various capacities, a variety of flatbeds (including drop decks and light specialty trailers), specialty and temperature-controlled vans and containers.
The following table illustrates the diversity of this equipment as of December 28, 1996:
MARKETING NETWORK. The Company's network of approximately 1,200 independent commission sales agents results in regular contact with shippers at the local level and the capability to be highly responsive to shippers' changing needs. The agent network enables Landstar to be responsive both in providing specialized equipment to both large and small shippers and in providing capacity on short notice from the Company's large fleet to high volume shippers. Through its agent network, the Company believes it offers smaller shippers a level of service comparable to that typically reserved by other truckload carriers only for their largest customers. Examples of services that Landstar is able to make available through the
agent network to smaller shippers include the ability to haul shipments on short notice (often within hours from notification to time of pick-up), multiple pick-up and delivery points, electronic data interchange capability and access to specialized equipment. In addition, a number of the Company's agents specialize in certain types of freight and transportation services (such as oversized or heavy loads). An agent is typically paid 7% of the revenue generated through that agent, with volume-based incentive commissions that can increase the percentage to 10% of revenue. During 1996, more than 350 agents generated revenue for Landstar of at least $1 million each, or approximately $924 million of Landstar's total revenue. The majority of the agents who generate revenue of $1 million or more have chosen to represent Landstar exclusively. Many of the agents represent one or more of the Operating Companies. The ten largest agencies in 1996 generated average revenue of approximately $10.9 million. The typical Landstar agent maintains a relationship with a number of shippers, and services these shippers by providing a base of operations for independent contractors, both single- unit owner-operator and multi-unit contractors. Contracts with agents are typically terminable upon 30 days' notice. Historically, Landstar has experienced very limited agent turnover, especially among its larger volume agents. The Operating Companies emphasize programs to support the agents' operations and to establish pricing parameters, The Operating Companies contract directly with customers and generally assume the credit risk and liability for freight losses or damages. Landstar Ranger, Landstar Inway, Landstar Gemini, Landstar T.L.C. and Landstar Express America generally dispatch their fleets through their local agents, while Landstar Ligon and Landstar Poole generally operate through a central dispatch system. The operating subsidiaries who utilize independent commission sales agents hold regular regional agent meetings and Landstar holds an annual Company-wide agent convention.
TECHNOLOGY. The Company believes leadership in the development and application of technology is an ongoing part of providing high quality service at competitive prices. Landstar manages its technology program centrally through a Vice President of Management Information Systems ("MIS") who directs each of the Operating Companies' MIS departments.
The following technologies have been adopted by Landstar in recent years:
CUSTOMER COMMUNICATION. The Company has capability in Electronic Document and Data Interchange ("EDI"). These capabilities provide operating advantages to Landstar and enhanced customer service, including real time information flow, reduction or elimination of paperwork, error-free transcription and reductions in clerical personnel. EDI allows the Company to exchange data with its customers regarding their shipments in a variety of formats, which significantly enhances quality control and customer service.
AGENT COMMUNICATION. The Company has developed a proprietary personal computer-based software system called Landstar Electronic Administrative Dispatch System ("LEADS") to communicate electronically with its agents. LEADS interconnects agents' personal computers with the information systems of the Operating Subsidiaries. As of December 28, 1996, approximately 446 of the independent agents had installed LEADS. The Company encourages all of its agents to join the LEADS program. LEADS provides an agent with a variety of functions for sending information to and receiving information from the Operating Subsidiary. LEADS is used by an agent to dispatch trucks, to authorize cash advances to drivers in route (i.e., to purchase fuel or supplies) and to transmit and receive freight invoices. The Company is in the process of converting its current LEADS system to a Windows environment. The Company is also in the process of the development of an internet/intranet technology in order to more effectively match available loads with available equipment.
DRIVER COMMUNICATION. Management believes that onboard communications capability will be increasingly important, and intends to increase this capability throughout the Landstar system. Landstar has established and will continue to develop its Driver Communications Network, which consists of a variety of communications methods monitored and controlled at each Operating Subsidiary. Methods currently in use are pagers, cellular telephones, daily driver check-ins via telephone calls to a Company "800" number and satellite transceivers. The most common communications device, utilized by over 7,300 employee drivers and independent contractors, is the pager. Using the Company's directory of drivers, an agent is able to communicate with a specific driver to ascertain shipment status, pickup and delivery information, load availability and other relevant information. Management believes that pagers provide the communications capabilities required by most shippers, but at a substantially lower cost than the satellite communications now employed by a number of the Company's competitors. Satellite communications that provide instant location information and communication with the driver are used by the Company for highly critical movements such as Department of Defense ammunitions and explosives and "just-in- time" automotive shipments.
Landstar has also developed and continues to try to improve a number of additional technologies, including: an optical character recognition system (which scans documents such as bills of lading, driver logs and fuel receipts on to optical disks), designed to speed information retrieval and enhance availability and flexible utilization of data; bar coding of load documentation; image and workflow technology to speed paperwork processes; the use of portable computers to provide instant price quotes, marketing support and other information; the use of the Landstar debit card to track driver fuel and equipment purchases; and movement towards a client/server network computer environment.
CORPORATE SERVICES. Significant advantages result from the collective expertise and corporate services afforded by Landstar's headquarters management. The primary services provided are:
safety purchasing risk and claims management strategic planning technology and management information systems human resource management marketing, particularly national accounts finance quality programs accounting, budgeting and taxes legal
INDEPENDENT CONTRACTORS. The Company operates the largest fleet of truckload independent contractors in North America. This provides marketing, operating, safety, recruiting and retention and financial advantages to the Company. Most of the Companies' truckload independent contractors are compensated on the basis of a fixed percentage of the revenue generated from the shipments they haul. This percentage generally ranges from 60% to 70% where the independent contractor supplies only the tractor and from 75% to 79% where the independent contractor supplies both the tractor and the trailer. The independent contractor must pay all the expenses of operating his equipment, including driver wages and benefits, fuel, physical damage insurance, maintenance, highway use taxes and debt service. In 1996, Landstar experienced a turnover rate among independent contractors of approximately 82%. A significant percentage of this turnover was attributable to independent contractors who had been independent contractors with the Company for less than one year. Management believes that the availability of loads is a significant factor in turnover. Management believes other factors that tend to limit turnover include the Company's extensive agent network, the Company's programs to reduce the operating costs of its independent contractors, and Landstar's reputation for quality, service and reliability. The Landstar Contractors' Advantage Purchasing Program ("LCAPP") leverages Landstar's purchasing power as one of the largest truckload carriers in North America to provide discounts to the independent contractors when they purchase equipment, fuel, tires and other items. Landstar also benefits from its use of independent contractors because the Company does not have to maintain a significant capital investment. As a result, the Owner-Operator Companies tend to have higher variable costs and lower fixed costs.
Description of Operating Subsidiaries
The following table presents financial and operating information about each of the Company's Operating Subsidiaries at or for the fiscal years ended December 28, 1996 and December 30, 1995.
The reported last sale price per share of the Common Stock as quoted through the NASDAQ National Market System on March 7, 1997 was $22.875 per share. As of such date, Landstar had 12,615,833 shares of Common Stock outstanding. As of March 7, 1997, the Company had 139 stockholders of record of its Common Stock. However, the Company estimates that it has a significantly greater number of stockholders of record because a substantial number of the Company's shares are held by broker or dealers for their customers in street name.
The Company has not within the past three years paid any cash dividends on the Common Stock, and does not intend to pay dividends on the Common Stock for the foreseeable future. The declaration and payment of any future dividends will be determined by the Company's Board of Directors, based on Landstar's results of operations, financial condition, cash requirements, certain corporate law requirements, restrictions under loan agreements and other factors deemed relevant. Landstar's ability to pay dividends on the Common Stock depends on LSHI's ability to pay dividends to Landstar. The Company's credit agreement limits the amount of dividends payable by LSHI to Landstar and thereby limits Landstar's ability to pay dividends on the Common Stock.
Item 6.
Item 6. - Selected Financial Data
The information required by this item is set forth under the caption "Selected Consolidated Financial Data" in Exhibit 13 attached hereto, and is incorporated by reference in this Annual Report on Form 10-K. This information is also included on page 38 of the Company's 1996 Annual Report to Shareholders.
Item 7.
Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations
The information required by this item is set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Exhibit 13 attached hereto, and is incorporated by reference in this Annual Report on Form 10-K. This information is also included on pages 21 to 25 of the Company's 1996 Annual Report to Shareholders.
Item 8.
Item 8. - Financial Statements and Supplementary Data
The information required by this item is set forth under the captions "Consolidated Balance Sheets", "Consolidated Statements of Income", "Consolidated Statements of Cash Flows", "Consolidated Statements of Changes in Shareholders' Equity", "Notes to Consolidated Financial Statements", "Independent Auditors' Report" and "Quarterly Financial Data" in Exhibit 13 attached hereto, and are incorporated by reference in this Annual Report on Form 10-K. This information is also included on pages 26 through 37 of the Company's 1996 Annual Report to Shareholders.
Item 9.
Item 9. - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None. Part III
Item 10.
Item 10. - Directors and Executive Officers of the Registrant
The information required by this Item concerning the Directors (and nominees for Directors) and Executive Officers of the Company is set forth under the captions "Election of Directors", "Directors of the Company", "Information Regarding Board of Directors and Committees", and "Executive Officers of the Company" on pages 2 through 8, and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" on page 16 of the Company's definitive Proxy Statement for its annual meeting of shareholders filed with the Securities and Exchange Commission pursuant to Regulation 14A, and is incorporated herein by reference.
Item 11.
Item 11. - Executive Compensation
The information required by this Item is set forth under the captions "Compensation of Directors and Executive Officers", "Summary Compensation Table", "Options Granted in Last Fiscal Year", "Fiscal Year End Option Values", "Report of the Compensation Committee on Executive Compensation", "Performance Comparison" and "Employment Contracts with Management" on pages 9 through 13 of the Company's definitive Proxy Statement for its annual meeting of shareholders filed with the Securities and Exchange Commission pursuant to Regulation 14A, and is incorporated herein by reference.
Item 12.
Item 12. - Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is set forth under the caption "Security Ownership by Management and Others" on pages 14 through 17 of the Company's definitive Proxy Statement for its annual meeting of shareholders filed with the Securities and Exchange Commission pursuant to Regulation 14A, and is incorporated herein by reference.
Item 13.
Item 13. - Certain Relationships and Related Transactions
The information required by this Item is set forth under the caption "Indebtedness of Management" on page 11 of the Company's definitive Proxy
Statement for its annual meeting of shareholders filed with the Securities and Exchange Commission pursuant to Regulation 14A, and is incorporated herein by reference.
Part IV
Item 14.
Item 14. - Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements
Financial statements of the Company and related notes thereto, together with the report thereon of KPMG Peat Marwick LLP dated February 12, 1997, are in Exhibit 13 attached hereto, and are incorporated by reference in this Annual Report on Form 10-K. This information is also included on pages 26 through 36 of the Company's 1996 Annual Report to Shareholders.
(2) Financial Statement Schedules
The report of the Company's independent public accountants with respect to the financial statement schedules listed below appears on page 30 of this Annual Report on Form 10-K.
All other financial statement schedules not listed above have been omitted because the required information is included in the consolidated financial statements or the notes thereto, or is not applicable or required.
(3) Exhibits
The response to this portion of Item 14 is submitted as a separate section of this report (see "Exhibit Index").
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO ANY SHAREHOLDER OF THE COMPANY WHO SO REQUESTS IN WRITING, A COPY OF ANY EXHIBITS, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE DIRECTED TO LANDSTAR SYSTEM, INC., ATTENTION: INVESTOR RELATIONS, FIRST SHELTON PLACE, 1000 BRIDGEPORT AVENUE, P.O. BOX 898, SHELTON, CONNECTICUT 06484-0898.
(b) No reports on Form 8-K were filed during the last quarter of fiscal year 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
LANDSTAR SYSTEM, INC.
By: Henry H. Gerkens ---------------------------------------- Henry H. Gerkens Executive Vice President & Chief Financial Officer
By: Robert C. LaRose ---------------------------------------- Robert C. LaRose Vice President Finance & Treasurer Date: March 14, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- Jeffrey C. Crowe Chairman of the Board, President & March 14, 1997 - ------------------- Chief Executive Officer, Principal Jeffrey C. Crowe Executive Officer
Henry H. Gerkens Executive Vice President & March 14, 1997 - ------------------- Chief Financial Officer; Principal Henry H. Gerkens Financial Officer
Robert C. LaRose Vice President Finance & Treasurer; - ------------------- Principal Accounting Officer March 14, 1997 Robert C. LaRose
* Senior Vice President and Director March 14, 1997 - ------------------- John B. Bowron
* Director March 14, 1997 - ------------------- David G. Bannister
* Director March 14, 1997 - ------------------- Ronald W. Drucker
* Director March 14, 1997 - ------------------- Arthur J. Fritz, Jr.
* Director March 14, 1997 - ------------------- Merritt J. Mott
* Michael L. Harvey Attorney In Fact - ---------------------- By: Michael L. Harvey
EXHIBIT INDEX Form 10-K for fiscal year ended 12/28/96
Exhibit No. Description - ----------- -----------
(3) Articles of Incorporation and Bylaws:
3.1 Amended and Restated Certificate of Incorporation of the Company dated February 9, 1993 and Certificate of Designation of Junior Participating Preferred Stock. (Incorporated by reference to Exhibit 3.1 to the Registrant's Registration Statement on Form S-1 (Registration No. 33- 57174))
3.2 The Company's Bylaws, as amended and restated on February 9, 1993. (Incorporated by reference to Exhibit 3.2 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
(4) Instruments defining the rights of security holders, including indentures:
4.1 Specimen of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
4.2 Credit Agreement, dated as of March 12, 1993, among LSHI, Landstar, the lenders named therein, and Chemical Bank, as agent (including the exhibits and schedules thereto). (Incorporated by reference to Exhibit 2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 27, 1993 (Commission File No. 0-21238))
4.3 Amended and Restated Credit Agreement, dated as of October 7, 1994, among LSHI, Landstar, the lenders named therein, and Chemical Bank, as agent (including the exhibits and schedules thereto). (Incorporated by reference to Exhibit III to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 24, 1994 (Commission File No. 0-21238))
Exhibit Index (continued) Form 10-K for fiscal year ended 12/28/96
Exhibit No. Description - ----------- -----------
4.4 First Amendment, dated as of October 4, 1995, to the Amended and Restated Credit Agreement, dated as of October 7, 1994, among LSHI, Landstar, the lenders named therein, and Chemical Bank, as agent. (Incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 (Commission File No. 0- 21238))
4.5* Second Amendment, dated as of March 1, 1996, to the Amended and Restated Credit Agreement, dated as of October 7, 1994, among LSHI, Landstar, the lenders named therein, and Chemical Bank (n/k/a Chase Manhattan Bank), as agent.
4.6 Stockholders Agreement, dated as of March 12, 1993, among KIA IV, ABSMB and the Company. (Incorporated by reference to Exhibit 4.9 of Amendment No. 3 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
4.7 Rights Agreement, dated as of February 10, 1993, between the Company and Chemical Bank, as Rights Agent. (Incorporated by reference to Exhibit 4.14 of Amendment No. 1 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
4.8 The Company agrees to furnish copies of any instrument defining the rights of holders of long-term debt of the Company and its respective consolidated subsidiaries that does not exceed 10% of the total assets of the Company and its respective consolidated subsidiaries to the Securities and Exchange Commission upon request.
(10) Material Contracts:
10.1+ Landstar System, Inc. 1993 Stock Option Plan. (Incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-67666))
10.2+ LSHI Investors' Plan. (Incorporated by reference to Exhibit 10.2 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
10.3 Directors' and Consulting Service Agreement, dated March 27, 1991, between Alex. Brown & Sons Incorporated and the Company. (Incorporated by reference to Exhibit 10.4 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
10.4 Management Services Agreement, dated March 27, 1991, between Kelso and the Company. (Incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
Exhibit Index (continued) Form 10-K for fiscal year ended 12/28/96
Exhibit No. Description - ----------- -----------
10.5 Irrevocable Guaranty, dated as of March 30, 1992, among the Company, Kelso Insurance Services, Inc., and the American Telephone and Telegraph Company. (Incorporated by reference to Exhibit 10.6 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
10.6 Form of Indemnification Agreement between the Company and each of the directors and executive officers of the Company. (Incorporated by reference to Exhibit 10.7 of Amendment No. 1 to the Registrant's Registration Statement on Form S-1 (Registration No. 33-57174))
10.7+ LSHI Management Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 25, 1993 (Commission File No. 0-21238))
10.8+ Landstar System, Inc. 1994 Director's Stock Option Plan. (Incorporated by reference to Exhibit 99 to the Registrant's Registration Statement on Form S-8 filed July 5, 1995 (Registration No. 33-94304))
(11) Statement re Computation of Per Share Earnings:
11.1* Landstar System, Inc. and Subsidiary Calculation of Earnings Per Share.
(13) Annual Report to Shareholders, Form 10-Q or Quarterly Report to Shareholders:
13.1* Excerpts from the 1996 Annual Report to Shareholders.
Exhibit Index (continued) Form 10-K for fiscal year ended 12/28/96
Exhibit No. Description - ----------- -----------
(21) Subsidiaries of the Registrant:
21.1* List of Subsidiary Corporations of the Registrant.
(23) Consents of Experts and Counsel:
23.1* Consent of KPMG Peat Marwick LLP as Independent Auditors of the Registrant.
(24) Power of Attorney
24.1* Powers of Attorney.
(27) Financial Data Schedule
27.1* Financial Data Schedule
___________________ +management contract or compensatory plan or arrangement *Filed herewith.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders Landstar System, Inc.:
Under date of February 12, 1997, we reported on the consolidated balance sheets of Landstar System, Inc. and subsidiary as of December 28, 1996 and December 30, 1995, and the related consolidated statements of income, changes in shareholders' equity and cash flows for the fiscal years ended December 28, 1996, December 30, 1995, and December 31, 1994, as contained in the 1996 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1996. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedules as listed in Item 14 (a)(2). These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Stamford, Connecticut February 12, 1997
LANDSTAR SYSTEM, INC. AND SUBSIDIARY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY BALANCE SHEET INFORMATION (Dollars in thousands, except per share amounts)
S-1
LANDSTAR SYSTEM, INC. AND SUBSIDIARY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY STATEMENT OF INCOME INFORMATION (Dollars in thousands, except per share amounts)
S-2
LANDSTAR SYSTEM, INC. AND SUBSIDIARY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY STATEMENT OF CASH FLOWS INFORMATION (Dollars in thousands)
S-3
LANDSTAR SYSTEM, INC. AND SUBSIDIARY SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996 (Dollars in thousands)
(A) Write-offs, net of recoveries. S-4
LANDSTAR SYSTEM, INC. AND SUBSIDIARY SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995 (Dollars in thousands)
(A) Amounts in this column represent opening balances from new businesses acquired during 1995.
(B) Write-offs, net of recoveries. S-5
LANDSTAR SYSTEM, INC. AND SUBSIDIARY SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 (Dollars in thousands)
(A) Amounts in this column represent recoveries and reclassifications from trade receivables to other receivables.
(B) Write-offs. S-6