What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-04 · 116 added, 87 removed, 327 unchanged (38% of the section changed)

4 unchanged sentences

and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

Operating results for the twenty six weeks ended July 1, 2023 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 30, 2023.

Operating results for the thirty-nine weeks ended September 30, 2023 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 30, 2023.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2022 Annual Report on Form 10-K.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

September 30,

Current Assets

31 unchanged sentences

(Dollars in thousands, except per share amounts)

Twenty Six Weeks Ended

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 30,

September 24,

September 30,

September 24,

Investment income

10 unchanged sentences

Income before income taxes

Diluted earnings per share

Average diluted shares outstanding

Basic and diluted earnings per share

Average basic and diluted shares outstanding

Dividends per common share

4 unchanged sentences

(Dollars in thousands)

Twenty Six Weeks Ended

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 30,

September 24,

September 30,

September 24,

Other comprehensive income (loss):

9 unchanged sentences

(Dollars in thousands)

Twenty Six Weeks Ended

Thirty-Nine Weeks Ended

September 30,

September 24,

OPERATING ACTIVITIES

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Changes in operating assets and liabilities:

Decrease (increase) in trade and other accounts receivable

Decrease in trade and other accounts receivable

Increase in other assets

9 unchanged sentences

Purchase of non-marketable

NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES

NET CASH USED BY INVESTING ACTIVITIES

FINANCING ACTIVITIES

1 unchanged sentence

Dividends paid

Payment for debt issue costs

Proceeds from exercises of stock options

11 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Twenty Six and Thirteen Weeks Ended July 1, 2023 and June 25, 2022

Thirty-Nine and Thirteen Weeks Ended September 30, 2023 and September 24, 2022

(Dollars in thousands)

14 unchanged sentences

Balance July 1, 2023

Dividends ($ 0.33 per share)

Issuance of stock related to stock-based compensation plans

Stock-based compensation

Other comprehensive loss

Balance September 30, 2023

Treasury Stock at Cost

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Balance June 25, 2022

Dividends ($ 0.30 per share)

Purchases of common stock

Issuance of stock related to stock-based compensation plans

Stock-based compensation

Other comprehensive loss

Balance September 24, 2022

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

twenty-six-week

and thirteen-week periods ended July 1, 2023 and June 25, 2022 (dollars in thousands):

Twenty Six Weeks Ended

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 thirty-nine-week and thirteen-week periods ended September 30, 2023 and September 24, 2022 (dollars in thousands):

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 30,

September 24,

September 30,

September 24,

Truck – BCO Independent Contractors

10 unchanged sentences

(2) Share-based Payment Arrangements

As of July 1, 2023, the Company has an employee equity incentive plan, the 2011 equity incentive plan (the “2011 EIP”).

As of September 30, 2023, 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 2022 Directors Stock Compensation Plan (the “2022 DSCP”), which replaced the Amended and Restated 2013 Directors Stock Compensation Plan (as amended and restated, the “2013 DSCP”).

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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 Ended

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 30,

September 24,

September 30,

September 24,

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 twenty-six-week

periods ended July 1, 2023 and June 25, 2022 were excess tax benefits from stock-based awards of $ 2,825,000 and $ 2,844,000 , respectively.

As of July 1, 2023, there were 187,260 shares of the Company’s common stock reserved for issuance under the 2022 DSCP and 3,011,856 shares of the Company’s common stock reserved for issuance under the 2011 EIP.

Included in income tax benefits recognized in the thirty-nine-week periods ended September 30, 2023 and September 24, 2022 were excess tax benefits from stock-based awards of $ 2,830,000 and $ 2,910,000 , respectively.

As of September 30, 2023, there were 187,260 shares of the Company’s common stock reserved for issuance under the 2022 DSCP and 3,014,492 shares of the Company’s common stock reserved for issuance under the 2011 EIP.

Restricted Stock Units

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Vested shares, including shares earned in excess of target

Outstanding at July 1, 2023

Outstanding at September 30, 2023

Represents additional shares earned under the February 1, 2019 and January 31, 2020 RSU awards as fiscal year 2022 financial results exceeded target performance level and under the April 24, 2018 and July 1, 2019 RSU awards as total shareholder return during the applicable performance period exceeded target performance level under each of those awards.

During the twenty-six-week

period ended July 1, 2023, the Company granted RSUs with a performance condition.

Outstanding RSUs at both December 31, 2022 and July 1, 2023 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2022 Annual Report on Form 10-K.

During the thirty-nine-week period ended September 30, 2023, the Company granted RSUs with a performance condition.

Outstanding RSUs at both December 31, 2022 and September 30, 2023 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2022 Annual Report on Form 10-K.

RSUs with a performance condition granted on February 3, 2023 may vest on January 31 of 2026, 2027 and 2028 based on growth in operating income and pre-tax

income per diluted share from continuing operations as compared to the results from the 2022 fiscal year.

The Company recognized approximately

$ 1,294,000 and $ 4,203,000 of share-based compensation expense related to RSU awards in the twenty-six-week

periods ended July 1, 2023 and June 25, 2022, respectively.

As of July 1, 2023, there was a maximum of $ 29.8

million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately

The Company recognized approximately $ 1,503,000 and $ 7,035,000 of share-based compensation expense related to RSU awards in the thirty-nine-week periods ended September 30, 2023 and September 24, 2022, respectively.

As of September 30, 2023, there was a maximum of $ 29.2 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.5 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.

6 unchanged sentences

at December 31, 2022

at July 1, 2023

The fair value of each share of non-vested

restricted stock issued and Deferred Stock Unit granted under the Plans is based on the fair value of a share of the Company’s common stock on the date of grant.

at September 30, 2023

The fair value of each share of

restricted stock issued and Deferred Stock Unit granted under the Plans is based on the fair value of a share of

the Company’s common stock on the date of grant.

Shares of non-vested

1 unchanged sentence

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.

Deferred Stock Units become vested

100 % on the first anniversary of the date of the grant.

Deferred Stock Units do not represent actual ownership in shares of the Company’s common stock and the recipient does not have voting rights or other incidents of ownership until the shares are issued.

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

As of July 1, 2023, there was $ 5,691,000 of total unrecognized compensation cost related to non-vested

As of September 30, 2023, there was $ 4,756,000 of total unrecognized compensation cost related to non-vested

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

3 unchanged sentences

All 1,900 stock options outstanding and exercisable at December 31, 2022 were exercised at an exercise price of $ 56.40 as of January 31, 2023, following which the Company had no remaining issued and outstanding vested or unvested stock options.

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

periods ended July 1, 2023 and June 25, 2022 was $ 218,000 and $ 369,000 , respectively.

As of July 1, 2023, there was no unrecognized compensation cost related to non-vested

The total intrinsic value of stock options exercised during the thirty-nine-week periods ended September 30, 2023 and September 24, 2022 was $ 218,000 and $ 429,000 , respectively.

As of September 30, 2023, there was no unrecognized compensation cost related to non-vested

stock options granted under the Plans.

(3) Income Taxes

The provisions for income taxes for the 2023 and 2022 twenty-six-week

periods were based on estimated annual effective income tax rates of 24.4 % and 24.5 %, 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 the 2023 period primarily attributable to state taxes and non-deductible

meals and entertainment.

The estimated annual effective income tax rate was higher than the statutory federal income tax rate of 21 % in the 2022 period primarily attributable to state taxes and non-deductible

executive compensation.

The effective income tax rate for the 2023 twenty-six-week

period was 23.9 %, 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.

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 provisions for income taxes for the 2023 and 2022 thirty-nine-week periods were based on estimated annual effective income tax rates of 24.4 % and 24.5 %, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The effective income tax rate for the 2023 thirty-nine-week period was 24.0 %.

The effective income tax rate was higher than the statutory federal income tax rate of 21 % in the 2023 period primarily attributable to state taxes.

The effective income tax rate for the 2022 thirty-nine-week period was 23.9 %.

The effective income tax rate was higher than the statutory federal income tax rate of 21 % in the 2022 period primarily attributable to state taxes.

(4) Earnings Per Share

Earnings per common share are based on the weighted average number of shares outstanding, including outstanding non-vested

Basic earnings per common share are based on the weighted average number of common shares outstanding

, which includes outstanding non-vested

restricted stock and outstanding Deferred Stock Units.

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 2023 and 2022 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 twenty-six-week

periods ended July 1, 2023 and June 25, 2022, no options outstanding to purchase shares of common stock were antidilutive.

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

For each of the thirty-nine-week periods ended September 30, 2023 and September 24, 2022, the weighted-average number of common shares outstanding is the same for purposes of the calculations of both basic and diluted earnings per share, as

the impact on earnings per share of future compensation expense related to outstanding, unvested time-based awards is greater than the incremental impact of outstanding dilutive stock options in each period, and would therefore have an anti-dilutive effect on earnings per share if included in the calculation of earnings per share.

Accordingly, the Company had no reconciling items between the average number of common shares outstanding used to calculate basic earnings per common share and the average number of common shares and common share equivalents outstanding used to calculate diluted earnings per share during the 2023 and 2022 thirty-nine-week and thirteen-week periods.

For each of the thirty-

nine -week periods ended September

2023 and September

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.

(5) Additional Cash Flow Information

During the 2023 twenty-six-week

period, Landstar paid income taxes and interest of $ 47,818,000 and $ 1,957,000 , respectively.

During the 2022 twenty-six-week

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

Landstar did not acquire any operating property by entering into finance leases in the 2023 twenty-six-week

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

During the 2023 thirty-nine-week period, Landstar paid income taxes and interest of $ 68,136,000 and $ 2,814,000 , respectively.

During the 2022 thirty-nine-week period, Landstar paid income taxes and interest of $ 125,690,000 and $ 3,101,000 , respectively.

Landstar did not acquire any operating property by entering into finance leases in the 2023 thirty-nine-week period.

Landstar acquired operating property by entering into finance leases in the amount of $ 26,741,000 in the 2022 thirty-nine-week period.

(6) Segment Information

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 July 1, 2023 and June 25, 2022 (in thousands):

Twenty Six Weeks Ended

June 25, 2022

The following table summarizes information about the Company’s reportable business segments as of and for the thirty-nine-week and thirteen-week periods ended September 30, 2023 and September 24, 2022 (in thousands):

Thirty-Nine Weeks Ended

September 30, 2023

September 24, 2022

Transportation

6 unchanged sentences

Thirteen Weeks Ended

June 25, 2022

September 30, 2023

September 24, 2022

Transportation

5 unchanged sentences

Expenditures on long-lived assets

the twenty- six

periods ended July 1, 2023 and June 25, 2022, no single customer accounted for more than 10 % of the Company’s consolidated revenue.

In the thirty-nine-week periods ended September

30, 2023 and September 24, 2022, no single customer accounted for more than 10 % of the Company’s consolidated revenue.

(7) Other Comprehensive Income

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

period ended July 1, 2023 (in thousands):

The following table presents the components of and changes in accumulated other comprehensive (loss) income, net of related income taxes, as of and for the thirty-nine-week period ended September 30, 2023 (in thousands):

Holding (Losses)

3 unchanged sentences

Other comprehensive income

Balance as of July 1, 2023

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 twenty-six-week

period ended July 1, 2023.

Balance as of September 30, 2023

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 thirty-nine-week period ended September 30, 2023.

(8) Investments

12 unchanged sentences

which are generally based on available market information.

Any transfers between levels are recognized as of the beginning of any reporting period.

Any transfers between levels are reco g

nized as of the beginning of any reporting period.

Fair value of the bond portfolio was determined using Level 1 inputs related to U.S.

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 $ 9,767,000 and $ 10,763,000 at July 1, 2023 and December 31, 2022, respectively.

Unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $ 9,542,000 and $ 10,763,000 at September 30, 2023 and December 31, 2022, respectively.

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

investments are as follows at July 1, 2023 and December 31, 2022 (in thousands):

investments are as follows at September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023

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 July 1, 2023 and December 31, 2022, the following table summarizes the duration of the unrealized loss (in thousands):

investments with unrealized losses a

t September 30, 2023 and December 31, 2022, the following table summarizes the duration of the unrealized loss (in thousands):

Less than 12 months

12 months or longer

September 30, 2023

Asset-backed securities

24 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 twenty six weeks ended July 1, 2023 were (in thousands):

The components of lease cost for finance leases and operating leases for the thirty -

nine weeks ended September 30, 2023 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 July 1, 2023 is as follows (in thousands):

Operating lease

A summary of the lease classification on our consolidated balance sheet as of September 30, 2023 is as follows (in thousands):

Operating lease right-of-use

Finance lease assets

1 unchanged sentence

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 July 1, 2023 (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 September 30, 2023 (in thousands):

2023 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 July 1, 2023 were:

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of September 30, 2023 were:

Finance Leases

2 unchanged sentences

Weighted average discount rate

Other than the finance lease obligations as presented on the consolidated balance sheets, the Company had no outstanding debt as of July 1, 2023 and December 31, 2022.

Other than the finance lease obligations as presented on the consolidated balance sheets, the Company had no outstanding debt as of September 30, 2023 and December 31, 2022.

On July 1, 2022, Landstar entered into a second amended and restated credit agreement with a bank syndicate led by JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”).

1 unchanged sentence

The 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 .

As of July 1, 2023, the Company had no borrowings outstanding under the Credit Agreement.

As of September 30, 2023, the Company had no borrowings outstanding under 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.

10 unchanged sentences

(11) Commitments and Contingencies

Short-term investments include $ 58,574,000 in current maturities of investments held by the Company’s insurance segment at July 1, 2023.

Short-term investments include $ 57,099,000 in current maturities of investments held by the Company’s insurance segment at September 30, 2023.

The non-current

2 unchanged sentences

investments, provide collateral for the $ 77,054,000 of letters of credit issued to guarantee payment of insurance claims.

As of July 1, 2023, Landstar also had $ 33,492,000 of additional letters of credit outstanding under the Company’s Credit Agreement.

As of September 30, 2023, Landstar also had $ 33,492,000 of additional letters of credit outstanding under the Company’s Credit Agreement.

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

Many of these claims are covered in whole or in part by insurance.

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.

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.

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