What changed in this filing

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Item 1. Financial Statements

2022-07-29 compared with 2022-04-29 · 151 added, 91 removed, 288 unchanged (46% of the section changed)

2 unchanged sentences

They have been prepared in accordance with Rule 10-01

of Regulation

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 thirteen weeks ended March 26, 2022 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2022.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form

Operating results for the twenty six weeks ended June 25, 2022 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2022.

LANDSTAR SYSTEM, INC.

6 unchanged sentences

Trade accounts receivable, less allowance of $ 9,940 and $ 7,074

Other receivables, including advances to independent contractors, less allowance of $ 8,838 and $ 8,125

Other receivables, including advances to independent contractors, less allowance

of $ 9,856 and $ 8,125

Other current assets

Total current assets

Operating property, less accumulated depreciation and amortization of $ 356,988 and $ 344,099

Operating property, less accumulated depreciation

and amortization of $ 369,344 and $ 344,099

LIABILITIES AND SHAREHOLDERS’ EQUITY

5 unchanged sentences

Dividends payable

Accrued income taxes

Other current liabilities

16 unchanged sentences

(Dollars in thousands, except per share amounts)

Twenty Six Weeks Ended

Thirteen Weeks Ended

19 unchanged sentences

(Dollars in thousands)

Twenty Six Weeks Ended

Thirteen Weeks Ended

Other comprehensive loss:

Other comprehensive (loss) income:

Unrealized holding losses on available-for-sale

investments, net of tax benefits of $ 1,421 and $ 147

investments, net of tax benefit of $ 2,025 , $ 243 , $ 604 and $ 96

Foreign currency translation gains (losses)

Other comprehensive loss

Other comprehensive (loss) income

Comprehensive income

4 unchanged sentences

(Dollars in thousands)

Thirteen Weeks Ended

Twenty Six Weeks Ended

OPERATING ACTIVITIES

7 unchanged sentences

Changes in operating assets and liabilities:

(Increase) decrease in trade and other accounts receivable

Decrease in other assets

Increase in trade and other accounts receivable

Increase in other assets

Increase in accounts payable

Increase in other liabilities

(Decrease) increase in other liabilities

Increase (decrease) in insurance claims

5 unchanged sentences

Proceeds from sales of operating property

Purchase of non-marketable

NET CASH USED BY INVESTING ACTIVITIES

FINANCING ACTIVITIES

(Decrease) increase in cash overdraft

Decrease in cash overdraft

Dividends paid

1 unchanged sentence

Taxes paid in lieu of shares issued related to stock-based compensation plans

Borrowings on revolving credit facility

Purchases of common stock

Principal payments on finance lease obligations

Payment of deferred consideration

NET CASH USED BY FINANCING ACTIVITIES

7 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Thirteen Weeks Ended March 26, 2022 and March 27, 2021

Twenty Six and Thirteen Weeks Ended June 25, 2022 and June 26, 2021

(Dollars in thousands)

4 unchanged sentences

Purchases of common stock

Issuance of stock related to stock-based

compensation plans

Issuance of stock related to stock-based compensation plans

Stock-based compensation

1 unchanged sentence

Balance March 26, 2022

Dividends ($ 0.25 per share)

Purchases of common stock

Issuance of stock related to stock-based compensation plans

Stock-based compensation

Other comprehensive loss

Balance June 25, 2022

Treasury Stock at Cost

Comprehensive

(Loss) Income

Balance December 26, 2020

Dividends ($ 0.21 per share)

Issuance of stock related to stock-based

compensation plans

Issuance of stock related to stock-based compensation plans

Stock-based compensation

Other comprehensive loss

Balance March 27, 2021

Dividends ($ 0.21 per share)

Purchases of common stock

Issuance of stock related to stock-based compensation plans

Stock-based compensation

Other comprehensive income

Balance June 26, 2021

See accompanying notes to consolidated financial statements.

10 unchanged sentences

Revenue from Contracts with Customers – Disaggregation of Revenue

The following table summarizes (i) the percentage of consolidated revenue generated by mode of transportation and (ii) the total amount of truck transportation revenue hauled by BCO Independent Contractors and Truck Brokerage Carriers generated by equipment type during the thirteen-week periods ended March 26, 2022 and March 27, 2021 (dollars in thousands):

and thirteen-week periods ended June 25, 2022 and June 26, 2021 (dollars in thousands):

Twenty Six Weeks Ended

Thirteen Weeks Ended

11 unchanged sentences

Share-based Payment Arrangements

As of March 26, 2022, the Company has an employee equity incentive plan, the 2011 equity incentive plan (the “2011 EIP”).

The Company also has a stock compensation plan for members of its Board of Directors, the Amended and Restated 2013 Directors Stock Compensation Plan (as amended and restated as of May 17, 2016, the “2013 DSCP”).

As of June 25, 2022, the Company has an employee equity incentive plan, the 2011 equity incentive plan (the “2011 EIP”).

The Company also had two stock compensation plans for members of its Board of Directors, the Amended and Restated 2013 Directors Stock Compensation Plan (as amended and restated as of May 17, 2016, the “2013 DSCP”) and the 2022 Directors Stock Compensation Plan (the “2022 DSCP”), which replaced the 2013 DSCP.

At the Company’s 2022 Annual Meeting of Stockholders held on May 11, 2022, the Company’s stockholders approved the 2022 DSCP.

The provisions of the 2022 DSCP are substantially similar to the provisions of the 2013 DSCP.

6,000,000 shares of the Company’s common stock were authorized for issuance under the 2011 EIP, and 200,000 shares of the Company’s common stock were authorized for issuance under the 2022 DSCP.

The 2011 EIP and 2013 DSCP are each referred to herein as a “Plan,” and, collectively, as the “Plans.” Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):

Thirteen Weeks Ended

No further grants can be made under the 2013 DSCP, including 56,502 shares of the C

tock previously reserved for issuance, but not issued, under the 2013 DSCP.

The 2011 EIP, 2013 DSCP and 2022 DSCP are each referred to herein as a “Plan,” and, collectively, as the “Plans.” Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):

Twenty Six Weeks

Thirteen Weeks

Total cost of the Plans during the period

1 unchanged sentence

Net cost of the Plans during the period

Included in income tax benefits recognized in the thirteen-week periods ended March 26, 2022 and March 27, 2021 were excess tax benefits from stock-based awards of $ 2,869,000 and $ 343,000 , respectively.

As of March 26, 2022, there were 56,502 shares of the Company’s common stock reserved for issuance under the 2013 DSCP and 3,230,826 shares of the Company’s common stock reserved for issuance under the 2011 EIP.

Included in income tax benefits recognized in the twenty-six-

week periods ended June 25, 2022 and June 26, 2021 were excess tax benefits from stock-based awards of $ 2,844,000 and $ 1,038,000 , respectively.

As of June 25, 2022, there were 193,217 shares of the Company’s common stock reserved for issuance under the 2022 DSCP and 3,233,908 shares of the Company’s common stock reserved for issuance under the 2011 EIP.

Restricted Stock Units

4 unchanged sentences

Vested shares, including shares earned in excess of target

Outstanding at March 26, 2022

Outstanding at June 25, 2022

Represents additional shares earned under each of the February 2, 2017;

February 2, 2018 and February 1, 2019 RSU awards as fiscal year 2021 financial results exceeded target performance level.

During the thirteen-week period ended March 26, 2022, the Company granted RSUs with a performance condition.

Outstanding RSUs at both December 25, 2021 and March 26, 2022 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2021 Annual Report on Form 10-K.

During the twenty-six-week

period ended June 25, 2022, the Company granted RSUs with a performance condition.

Outstanding RSUs at both December 25, 2021 and June 25, 2022 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2021 Annual Report on Form 10-K.

RSUs with a performance condition granted on January 28, 2022 may vest on January 31 of 2025, 2026 and 2027 based on growth in operating income and pre-tax

income per diluted share from continuing operations as compared to the results from the 2021 fiscal year.

The Company recognized approximately $

1,301,000 and $ 3,223,000 of share-based compensation expense related to RSU awards in the thirteen-week periods ended March 26, 2022 and March 27, 2021, respectively.

As of March 26, 2022, there was a maximum of $ 27.3 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.9 years.

With respect to RSU awards with a performance condition, the amount of future compensation expense to be recognized will be determined based

on future operating results.

The Company recognized approximately $ 4,203,000 and $ 9,249,000 of share-based compensation expense related to RSU awards in the twenty-six-week

periods ended June 25, 2022 and June 26, 2021, respectively.

As of June 25, 2022, there was a maximum of $ 23.9 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.8 years.

With respect to RSU awards with a performance condition, the amount of future compensation expense to be recognized will be determined based on future operating results.

Restricted Stock and Deferred Stock Units

2 unchanged sentences

Number of Shares

and Deferred Stock

Weighted Average

at December 25, 2021

at March 26, 2022

at June 25, 2022

The fair value of each share of non-vested

2 unchanged sentences

restricted stock are generally subject to vesting in three equal annual installments either on the first, second and third anniversary of the date of the grant or the third, fourth and fifth anniversary of the date of the grant, or 100 % on the first or fifth anniversary of the date of the grant.

For restricted stock awards granted under the 2013 DSCP plan, each recipient may elect to defer receipt of shares and instead receive restricted stock units (“Deferred Stock Units”), which represent contingent rights to receive shares of the Company’s common stock on the date of recipient separation from service from the Board of Directors, or, if earlier, upon a change in control event of the Company.

For restricted stock awards granted under the 2022 DSCP, each recipient may elect to defer receipt of shares and instead receive restricted stock units (“Deferred Stock Units”), which represent contingent rights to receive shares of the Company’s common stock on the date of recipient separation from service from the Board of Directors, or, if earlier, upon a change in control event of the Company.

Deferred Stock Units become vested 100 % on the first anniversary of the date of the grant.

1 unchanged sentence

However, Deferred Stock Units do contain the right to receive dividend equivalent payments prior to settlement into shares.

As of March 26, 2022, there was $ 5,555,000 of total unrecognized compensation cost related to non-vested

As of June 25, 2022, there was $ 5,692,000 of total unrecognized compensation cost related to non-vested

shares of restricted stock and Deferred Stock Units granted under the Plans.

4 unchanged sentences

Weighted Average

Exercise Price per

Exercise Price

Weighted Average

1 unchanged sentence

Options outstanding at December 25, 2021

Options outstanding at March 26, 2022

Options exercisable at March 26, 2022

The total intrinsic value of stock options exercised during the thirteen-week periods ended March 26, 2022 and March 27, 2021 was $ 369,000 and $ 521,000 , respectively.

As of March 26, 2022, there was no unrecognized compensation cost related to stock options granted under the Plans.

The provisions for income taxes for the 2022 and 2021 thirteen-week periods were based on an estimated annual effective income tax rate of 24.5 % and 24.4 %, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The estimated annual effective income tax rate was higher than the statutory federal income tax rate

of 21 % in both periods primarily attributable to state taxes and non-deductible

Options outstanding at June 25, 2022

Options exercisable at June 25, 2022

The total intrinsic value of stock options exercised during the twenty-six-week

periods ended June 25, 2022 and June 26, 2021 was $ 369,000 and $ 521,000 , respectively.

As of June 25, 2022, there was no unrecognized compensation cost related to stock options granted under the Plans.

The provisions for income taxes for the 2022 and 2021 twenty-six-week

periods were based on estimated annual effective income tax rate of 24.5 % and 24.4 %, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The estimated annual effective income tax rate was higher than the statutory federal income tax rate of 21 % in both periods primarily attributable to state taxes and non-deductible

executive compensation.

The effective income tax rate for the 2022 thirteen-week period w

as 22.8 %, which was lower than the estimated annual effective income tax rate of 24.5 %, primarily attributable to excess tax benefits realized on stock-based awards.

The effective income tax rate for the 2021 thirteen-week period o

f 24.4 % was equal to the estimated annual effective income tax rate during the 2021 period.

The effective income tax rate for the 2022 twenty-six-week

period was 23.7 %, which was lower than the estimated annual effective income tax rate of 24.5 %, primarily attributable to excess tax benefits realized on stock-based awards.

The effective income tax rate for the 2021 twenty-six-week

period was 24.1 %, which was lower than the estimated annual effective income tax rate of 24.4 % primarily attributable to excess tax benefits realized on stock-based awards.

Earnings Per Share

2 unchanged sentences

Diluted earnings per share are based on the weighted average number of common shares and Deferred Stock Units outstanding plus the incremental shares that would have been outstanding upon the assumed exercise of all dilutive stock options.

During the 2022 and 2021 thirteen-week periods, in reference to the determination of diluted earnings per share, the future compensation cost attributable to outstanding shares of non-vested

During the 2022 and 2021 twenty-six-week

and thirteen-week periods, in reference to the determination of diluted earnings per share, the future compensation cost attributable to outstanding shares of non-vested

restricted stock exceeded the impact of incremental shares that would have been outstanding upon the assumed exercise of all dilutive stock options.

For each of the thirteen-week periods ended March 26, 2022 and March 27, 2021, no options outstanding to purchase shares of common stock were antidilutive.

For each of the twenty-six-week

periods ended June 25, 2022 and June 26, 2021, no options outstanding to purchase shares of common stock were antidilutive.

Outstanding RSUs were excluded from the calculation of diluted earnings per share for all periods because the performance metric requirements or market condition for vesting had not been satisfied.

Additional Cash Flow Information

During the 2022 thirteen-week period, Landstar paid income taxes and interest of $ 2,031,000 and $ 1,029,000 , respectively.

During the 2021 thirteen-week period, Landstar paid income taxes and interest of $ 353,000 and $ 983,000 , respectively.

Landstar did no t acquire any operating property by entering into finance leases in either the 2022 or 2021 thirteen-week periods.

During the 2022 twenty-six-week

period, Landstar paid income taxes and interest of $ 95,730,000 and $ 2,098,000 , respectively.

During the 2021 twenty-six-week

period, Landstar paid income taxes and interest of $ 51,679,000 and $ 1,883,000 , respectively.

Landstar acquired operating property by entering into finance leases in the amount of $ 18,073,000 in the 2022 twenty-six-week

Landstar did no t acquire any operating property by entering into finance leases in the 2021 twenty-six-week

Segment Information

The following table summarizes information about the Company’s reportable business segments as of and for the thirteen-week periods ended March 26, 2022 and March 27, 2021 (in thousands):

The following table summarizes information about the Company’s reportable business segments as of and for the twenty-six-week

and thirteen-week periods ended June 25, 2022 and June 26, 2021:

Twenty Six Weeks Ended

June 25, 2022

June 26, 2021

Transportation

External revenue

Internal revenue

Investment income

Operating income

Expenditures on long-lived assets

Thirteen Weeks Ended

March 26, 2022

March 27, 2021

June 25, 2022

June 26, 2021

Transportation

5 unchanged sentences

Expenditures on long-lived assets

In the thirteen-week periods ended March 26, 2022 and March 27, 2021, no single customer accounted for more than 10 % of the Company’s consolidated revenue.

In the twenty-six-week

periods ended June 25, 2022 and June 26, 2021, no single customer accounted for more than 10 % of the Company’s consolidated revenue.

Other Comprehensive Income

The following table presents the components of and changes in accumulated other comprehensive income (loss), net of related income taxes, as of and for the thirteen-week period ended March 26, 2022 (in thousands):

The following table presents the components of and changes in accumulated other comprehensive income (loss), net of related income taxes, as of and for the twenty-six-week

period ended June 25, 2022 (in thousands):

Holding Gains

2 unchanged sentences

Other comprehensive (loss) income

Balance as of March 26, 2022

Amounts reclassified from accumulated other comprehensive income to investment income due to the realization of previously unrealized gains and losses in the accompanying consolidated statements of income were not significant for the thirteen-week period ended March 26, 2022.

Balance as of June 25, 2022

period ended June 25, 2022.

Investments include primarily investment-grade corporate bonds and asset-backed securities having maturities of up to five years (the “bond portfolio”) and money market investments.

12 unchanged sentences

Treasury obligations and money market investments and Level 2 inputs related to investment-grade corporate bonds, asset-backed securities and direct obligations of government agencies.

Unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $ 6,464,000 at March 26, 2022, while unrealized gains, net of unrealized losses, on the investments in the bond portfolio were $ 144,000 at December 25, 2021.

The amortized cost and fair values of available-for-sale

investments are as follows at March 26, 2022 and December 25, 2021 (in thousands):

March 26, 2022

Unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $ 9,272,000 at June 25, 2022, while unrealized gains, net of unrealized losses, on the investments in the bond portfolio were $ 144,000 at December 25, 2021.

The amortized cost and fair values of available-for-

investments are as follows at June 25, 2022 and December 25, 2021 (in thousands):

June 25, 2022

Money market investments

Asset-backed securities

Corporate bonds and direct obligations of government agencies

Corporate bonds and direct obligations of

government agencies

Treasury obligations

2 unchanged sentences

Asset-backed securities

Corporate bonds and direct obligations of government agencies

Corporate bonds and direct obligations of

government agencies

Treasury obligations

For those available-for-sale

investments with unrealized losses at March 26, 2022 and December 25, 2021, the following table summarizes the duration of the unrealized loss (in thousands):

investments with unrealized losses at June 25, 2022 and December 25, 2021, the following table summarizes the duration of the unrealized loss (in thousands):

Less than 12 months

12 months or longer

March 26, 2022

June 25, 2022

Asset-backed securities

Corporate bonds and direct obligations of government agencies

Corporate bonds and direct obligations of

government agencies

Treasury obligations

6 unchanged sentences

For these reasons, no losses have been recognized in the Company’s consolidated statements of income.

noncancelable leases are primarily comprised of finance leases for the acquisition of new trailing equipment.

Landstar’s noncancelable leases are primarily comprised of finance leases for the acquisition of new trailing equipment.

Each finance lease for the acquisition of trailing equipment is a five year lease with a $ 1 purchase option for the applicable equipment at lease expiration.

13 unchanged sentences

therefore, based on the applicable lease terms and the current economic environment, the Company applies a portfolio approach for determining the incremental borrowing rate.

The components

of lease cost for finance leases and operating leases for the thirteen weeks ended March 26, 2022 were (in thousands):

The components of lease cost for finance leases and operating leases for the twenty six weeks ended June 25, 2022 were (in thousands):

Finance leases:

7 unchanged sentences

Total net lease cost

A summary of the lease classification on our consolidated balance sheet as of March 26, 2022 is as follows (in thousands):

A summary of the lease classification on our consolidated balance sheet as of June 25, 2022 is as follows (in thousands):

Operating lease right-of-use

2 unchanged sentences

Total lease assets

The following table reconciles the undiscounted cash flows for the finance and operating leases to the finance and operating lease liabilities recorded on the balance sheet at March 26, 2022 (in thousands):

The following table reconciles the undiscounted cash flows for the finance and operating leases to the finance and operating lease liabilities recorded on the balance sheet at June 25, 2022 (in thousands):

2022 Remainder

6 unchanged sentences

Deferred income taxes and other noncurrent liabilities

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of March 26, 2022 were:

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of June 25, 2022 were:

Finance Leases

2 unchanged sentences

Weighted average discount rate

In addition to the finance lease obligations as presented on the consolidated balance sheets, the Company had

in outstanding debt as of March 26, 2022, consisting of borrowings under the Company’s revolving credit facility.

The Company had

borrowings under the revolving credit facility as of December 25, 2021.

On August 18, 2020 , Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”).

The Credit Agreement, which matures on August 18, 2023, provides $ 250,000,000 of borrowing capacity in the form of a revolving credit facility, $ 35,000,000 of which may be utilized in the form of letters of credit.

The Credit Agreement includes an “accordion” feature providing for a possible increase up to an aggregate borrowing capacity of $ 400,000,000 .

The revolving credit loans under the Credit Agreement, at the option of Landstar, bear interest at (i) the Eurocurrency rate plus an applicable margin ranging from 1.25 % to 2.00 %, or (ii) an alternate base rate plus an applicable margin ranging from 0.25 % to 1.00 %, in each case with the applicable margin determined based upon the Company’s Leverage Ratio, as defined in the Credit Agreement, at the end of the most recent applicable fiscal quarter for which financial statements have been delivered.

Other than finance lease obligations as presented on the consolidated balance sheets, the Company had no outstanding debt as of June 25, 2022 and December 25, 2021.

On August 18, 2020 ,

Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “First Amended and Restated Credit Agreement”).

As previously disclosed in a Form 8-K

filed with the SEC on July 8, 2022, Landstar entered into a second amended and restated credit agreement, dated July 1, 2022, with a bank syndicate led by JPMorgan Chase Bank, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”) that superseded and replaced the First Amended and Restated Credit Agreement.

The Second Amended and Restated Credit Agreement, which matures July 1, 2027, provides for borrowing capacity in the form of a revolving credit facility of

$ 300,000,000 , $ 45,000,000 of which may be utilized in the form of letters of credit.

The Second Amended and Restated Credit Agreement also includes an “accordion” feature providing for a possible increase of up to an aggregate amount of borrowing capacity of

$ 600,000,000 .

The Second Amended and Restated Credit Agreement, which superseded and replaced the First Amended and Restated Credit Agreement, is referred to herein as the “Credit Agreement.” As of June 25, 2022, there were no borrowings outstanding under the revolving credit facility of the Credit Agreement.

The revolving credit loans under the Credit Agreement, at the option of Landstar, bear interest at (i) a forward-looking term rate based on the secured overnight financing rate plus 0.10 % and an applicable margin ranging from 1.25 % to 2.00 %, or (ii) an alternate base rate plus an applicable margin ranging from 0.25 % to 1.00 %, in each case with the applicable margin determined based upon the Company’s Leverage Ratio, as defined in the Credit Agreement, at the end of the most recent applicable fiscal quarter for which financial statements have been delivered.

The revolving credit facility bears a commitment fee, payable quarterly in arrears, of 0.20 % to 0.30 %, based on the Company’s Leverage Ratio at the end of the most recent applicable fiscal quarter for which financial statements have been delivered.

As of March 26, 2022, the weighted average interest rate on borrowings outstanding was 1.66 %.

The Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness.

The Company is required to, among other things, maintain a minimum Fixed Charge Coverage Ratio, as defined in the Credit Agreement, and maintain a Leverage Ratio, as defined in the Credit Agreement, below a specified maximum.

The Company is required to, among other things, maintain a minimum fixed charge coverage ratio, as described in the Credit Agreement, and maintain a Leverage Ratio, as defined in the Credit Agreement, below a specified maximum.

The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Company’s capital stock to the extent there is a default under the Credit Agreement.

In addition, the Credit Agreement under certain circumstances limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect such cash dividend or other distribution, the Leverage Ratio would exceed 2.5 to 1 on a pro forma basis as of the end of the Company’s most recently completed fiscal quarter.

The Credit Agreement provides for an event of default in the event that, among other things, a person or group acquires 35 % or more of the outstanding capital stock of the Company or obtains power to elect a majority of the Company’s directors or the directors cease to consist of a majority of Continuing Directors, as defined in the Credit Agreement.

to 1 on a pro forma basis as of the end of the Company’s most recently completed fiscal quarter.

The Credit Agreement provides for an event of default in the event that, among other things, a person or group acquires

or more of the outstanding capital stock of the Company or obtains power to elect a majority of the Company’s directors or the directors cease to consist of a majority of Continuing Directors, as defined in the Credit Agreement.

None of these covenants are presently considered by management to be materially restrictive to the Company’s operations, capital resources or liquidity.

3 unchanged sentences

(11) Commitments and Contingencies

Short-term investments include $ 34,292,000 in current maturities of investments and $ 1,387,000 in restricted cash held by the Company’s insurance segment at March 26, 2022.

Short-term investments include $ 41,549,000 in current maturities of investments held by the Company’s insurance segment at June 25, 2022.

The non-current

2 unchanged sentences

investments, provide collateral for the $ 76,567,000 of letters of credit issued to guarantee payment of insurance claims.

As of March 26, 2022, Landstar also had $ 33,170,000 of additional letters of credit outstanding under the Company’s Credit Agreement.

As of June 25, 2022, Landstar also had $ 33,495,000 of additional letters of credit outstanding under the Credit Agreement.

The Company is involved in certain claims and pending litigation arising from the normal conduct of business.

1 unchanged sentence

Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.

(12) Equity investment

On April 1, 2022, Landstar Investment Holdco, LLC, a newly formed Delaware LLC and wholly-owned subsidiary of Landstar System Holdings, Inc., purchased Class A units of Cavnue, LLC, for approximately

in cash consideration.

Cavnue, LLC is a privately held company focused on combining technology and road infrastructure to unlock the full potential of connected and autonomous vehicles.

This non-controlling investment

in units of Cavnue, LLC, is considered an investment in non-marketable

equity securities without a readily determinable market value.

The carrying value of our non-marketable

equity securities going forward will be adjusted to fair value upon observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements