What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2023-11-03 · 122 added, 187 removed, 256 unchanged (55% 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 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.

Operating results for the thirteen weeks ended March 30, 2024 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 28, 2024.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2023 Annual Report on Form 10-K.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

September 30,

Current Assets

1 unchanged sentence

Short-term investments

Trade accounts receivable, less allowance of $ 12,054 and $ 12,121

Other receivables, including advances to independent contractors, less allowance of $ 14,405 and $ 10,579

Trade accounts receivable, less allowance of $ 11,764

Other receivables, including advances to independent contractors, less allowance of $ 14,310

Other current assets

Total current assets

Operating property, less accumulated depreciation and amortization of $ 426,984 and $ 393,274

Operating property, less accumulated depreciation and amortization of $ 442,898

and $ 436,682

LIABILITIES AND SHAREHOLDERS’ EQUITY

11 unchanged sentences

Shareholders’ Equity

Common stock, $ 0.01 par value, authorized 160,000,000 shares, issued 68,497,324 and 68,382,310 shares

Additional paid-in

Common stock, $ 0.01 par value, authorized 160,000,000 shares, issued 68,547,553

and 68,497,324

Additional paid-in capital

Retained earnings

Cost of 32,550,980 and 32,455,300 shares of common stock in treasury

Cost of 32,785,515

and 32,780,651

shares of common stock in treasury

Accumulated other comprehensive loss

6 unchanged sentences

(Dollars in thousands, except per share amounts)

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 30,

September 24,

September 30,

September 24,

Investment income

18 unchanged sentences

(Dollars in thousands)

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 30,

September 24,

September 30,

September 24,

Other comprehensive income (loss):

Unrealized holding gains (losses) on available-for-sale

investments, net of tax expense (benefit) of $ 263 , ($ 2,461 ), $ 49 and ($ 436 )

Foreign currency translation gains (losses)

Other comprehensive income (loss)

Unrealized holding gains on available-for-sale investments, net of tax expense of $ 92

Foreign currency translation (losses) gains

Other comprehensive income

Comprehensive income

4 unchanged sentences

(Dollars in thousands)

Thirty-Nine Weeks Ended

September 30,

September 24,

Thirteen Weeks Ended

OPERATING ACTIVITIES

1 unchanged sentence

Depreciation and amortization

interest charges

Non-cash interest charges

Provisions for losses on trade and other accounts receivable

4 unchanged sentences

Decrease in trade and other accounts receivable

Increase in other assets

(Decrease) increase in accounts payable

Decrease in other liabilities

(Decrease) increase in insurance claims

Decrease in other assets

Decrease in accounts payable

Increase in other liabilities

Decrease in insurance claims

NET CASH PROVIDED BY OPERATING ACTIVITIES

4 unchanged sentences

Proceeds from sales of operating property

Purchase of non-marketable

NET CASH USED BY INVESTING ACTIVITIES

NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES

FINANCING ACTIVITIES

1 unchanged sentence

Dividends paid

Payment for debt issue costs

Proceeds from exercises of stock options

4 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

Thirteen Weeks Ended March 30, 2024 and April 1, 2023

(Dollars in thousands)

3 unchanged sentences

Balance December 30, 2023

Dividends ($ 0.30 per share)

Purchases of common stock

Issuance of stock related to stock-based compensation plans

Stock-based compensation

Other comprehensive income

Balance April 1, 2023

Dividends ($ 0.30 per share)

Dividends ($ 0.33

Issuance of stock related to stock-based compensation plans

1 unchanged sentence

Other comprehensive income

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

Balance March 30, 2024

Treasury Stock at Cost

Comprehensive

(Loss) Income

Balance December 31, 2022

3 unchanged sentences

Stock-based compensation

Other comprehensive loss

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

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

Other comprehensive income

Balance April 1, 2023

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

Thirty-Nine 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 thirteen-week periods ended March 30, 2024 and April 1, 2023 (dollars in thousands):

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 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”).

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

As of March 30, 2024, 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”).

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, 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):

Thirty-Nine Weeks Ended

The 2011 EIP 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):

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 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.

Included in income tax benefits recognized in the thirteen-week periods ended March 30, 2024 and April 1, 2023 were excess tax benefits from stock-based awards of $ 729,000 and $ 2,296,000 , respectively.

As of March 30, 2024, there were 187,260 shares of the Company’s common stock reserved for issuance under the 2022 DSCP and 2,750,207 shares of the Company’s common stock reserved for issuance under the 2011 EIP.

Restricted Stock Units

2 unchanged sentences

Outstanding at December 30, 2023

Shares earned in excess of target (1)

Vested shares, including shares earned in excess of target

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 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 $ 1,503,000 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.

Vested shares

Outstanding at March 30, 2024

During the thirteen-week period ended March 30, 2024, the Company granted RSUs with a performance condition and RSUs with a market condition, as further described below.

Outstanding RSUs at both December 30, 2023 and March 30, 2024 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2023 Annual Report on Form 10-K.

RSUs with a performance condition granted on February 2, 2024 may vest on January 31 of 2027, 2028 and 2029 based on growth in operating income and pre-tax income per diluted share from continuing operations as compared to the results from the 2023 fiscal year.

On February 2, 2024, the Company granted 58,268 RSUs that vest based on a market condition.

These RSUs may vest based on the achievement of the target Company’s total shareholder return (“TSR”) compound annual growth rate, adjusted to reflect dividends (if any) paid during such periods and capital adjustments as may be necessary, and are eligible to vest annually starting after the sixth anniversary of the grant date and concluding after the tenth anniversary of the grant date.

The fair value of this RSU award was determined at the time of grant based on the expected achievement of the market condition.

With respect to these RSU awards, the Company reports compensation expense ratably over the service period of the award based on the number of units granted multiplied by the grant date fair value of the RSU.

Previously recognized compensation cost would be reversed only if the employee did not complete the requisite service period due to termination of employment.

The Company recognized approximately $ 632,000 and $ 958,000 of share-based compensation expense related to RSU awards in the thirteen-week periods ended March 30, 2024 and April 1, 2023, respectively.

As of March 30, 2024, there was a maximum of $ 49.3 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 4.5 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.

Restricted Stock and Deferred Stock Units

The following table summarizes information regarding the Company’s outstanding shares of non-vested

restricted stock and Deferred Stock Units (defined below) under the Plans:

Non-vested Restricted Stock and Deferred Stock Units

The following table summarizes information regarding the Company’s outstanding shares of non-vested restricted stock and Deferred Stock Units (defined below) under the Plans:

Number of Shares

1 unchanged sentence

Weighted Average

at December 31, 2022

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

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, third or fifth anniversary of the date of the grant.

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.

Non-vested at December 30, 2023

Non-vested at March 30, 2024

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.

Shares of non-vested 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, in two equal annual installments on the first and second anniversary of the date of the grant or 100 % on the first, third or fifth anniversary of the date of the grant.

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 the recipient’s 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 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 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.

The unrecognized compensation cost related to these non-vested

shares of restricted stock and Deferred Stock Units is expected to be recognized over a weighted average period of 2.0 years.

As of March 30, 2024, there was $ 7,427,000 of total unrecognized compensation cost related to non-vested shares of restricted stock and Deferred Stock Units granted under the Plans.

The unrecognized compensation cost related to these non-vested shares of restricted stock and Deferred Stock Units is expected to be recognized over a weighted average period of 2.2 years.

Stock Options

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 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.

The Company had no remaining issued and outstanding vested or unvested stock options or unrecognized compensation costs related to non-vested stock options granted under the Plans as of December 30, 2023 and March 30, 2024.

The total intrinsic value of stock options exercised during the thirteen-week period ended April 1, 2023 was $ 218,000 .

(3) Income Taxes

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 provisions for income taxes for the 2024 and 2023 thirteen-week periods were based on estimated annual effective income tax rates of 24.5 % and 24.4 %, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The effective income tax rate for the 2024 thirteen-week period was 23.5 %.

The effective income tax rate was higher than the statutory federal income tax rate of 21 % in the 2024 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 for the 2023 thirteen-week period was 23.3 %.

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.

(4) Earnings Per Share

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

, which includes outstanding non-vested

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

For each of the thirteen-week periods ended March 30, 2024 and April 1, 2023, the weighted-average number of common shares outstanding is the same for purposes of the calculations of both basic and diluted earnings per share.

During and as of the thirteen-week

period ended March 30, 2024, there were no outstanding stock options issued by the Company.

For the thirteen-week period ended April 1, 2023, the impact on earnings per share of future compensation expense related to outstanding, unvested time-based awards was greater than the incremental impact of outstanding dilutive stock options, and would therefore have an anti-dilutive effect on earnings per share if included in the calculation of earnings per share.

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 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.

During the 2024 thirteen-week period, Landstar received income tax refunds, net of income tax payments, of $ 495,000 and paid interest of $ 825,000 .

During the 2023 thirteen-week period, Landstar paid income taxes and interest of $ 895,000 and $ 1,030,000 , respectively.

Landstar acquired operating property by entering into finance leases in the amount of $ 1,325,000 in the 2024 thirteen-week period.

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

(6) Segment Information

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

External revenue

Internal revenue

Investment income

Operating income

Expenditures on long-lived assets

The following table summarizes information about the Company’s reportable business segments as of and for the thirteen-week periods ended March 30, 2024 and April 1, 2023 (in thousands):

Thirteen Weeks Ended

September 30, 2023

September 24, 2022

March 30, 2024

April 1, 2023

Transportation

5 unchanged sentences

Expenditures on long-lived assets

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.

In the thirteen-week periods ended March 30, 2024 and April 1, 2023, 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 thirty-nine-week period ended September 30, 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 thirteen-week period ended March 30, 2024 (in thousands):

Holding (Losses)

2 unchanged sentences

Balance as of December 30, 2023

Other comprehensive income

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.

Other comprehensive income (loss)

Balance as of March 30, 2024

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 30, 2024.

(8) Investments

Investments include primarily investment-grade corporate bonds, U.S.

treasury obligations and asset-backed securities having maturities of up to five years (the “bond portfolio”) and money market investments.

Investments include primarily investment-grade corporate bonds, asset-backed securities and U.S.

treasury obligations having maturities of up to five years (the “bond portfolio”) and money market investments.

Investments in the bond portfolio are reported as available-for-sale

9 unchanged sentences

which are generally based on available market information.

Any transfers between levels are reco g

nized as of the beginning of any reporting period.

Any transfers between levels are recognized 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 $ 9,542,000 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 September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023

Unrealized losses, net of unrealized gains, on the investments in the bond portfolio

were $ 5,954,000 and $ 6,382,000 at March 30, 2024 and December 30, 2023, respectively.

The amortized cost and fair values of available-for-sale investments are as follows at March 30, 2024 and December 30, 2023 (in thousands):

March 30, 2024

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 a

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

investments with unrealized losses at March 30, 2024 and December 30, 2023, the following table summarizes the duration of the unrealized loss (in thousands):

Less than 12 months

12 months or longer

September 30, 2023

March 30, 2024

Asset-backed securities

10 unchanged sentences

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.

Substantially all of Landstar’s operating lease right-of-use

assets and operating lease liabilities represent leases for facilities maintained in support of the Company’s network of BCO Independent Contractors and office space used to conduct Landstar’s business.

These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives or other build-out

Substantially all of Landstar’s operating lease right-of-use assets and operating lease liabilities represent leases for facilities maintained in support of the Company’s network of BCO Independent Contractors and office space used to conduct Landstar’s business.

These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives or other build-out clauses.

Further, the leases do not contain contingent rent provisions.

Landstar also rents certain trailing equipment to supplement the Company-owned trailer fleet under “month-to-month”

lease terms, which are not required to be recorded on the balance sheet due to the less than twelve month lease term exemption.

Landstar also rents certain trailing equipment to supplement the Company-owned trailer fleet under “month-to-month” lease terms, which are not required to be recorded on the balance sheet due to the less than twelve month lease term exemption.

Sublease income is primarily comprised of weekly trailing equipment rentals to BCO Independent Contractors.

Most of Landstar’s operating leases include one or more options to renew.

The exercise of lease renewal options is typically at Landstar’s sole discretion, and, as such, the majority of renewals to extend the lease terms are not included in the right-of-use

assets and lease liabilities as they are not reasonably certain of exercise.

The exercise of lease renewal options is typically at Landstar’s sole discretion, and, as such, the majority of renewals to extend the lease terms are not included in the right-of-use assets and lease liabilities as they are not reasonably certain of exercise.

Landstar regularly evaluates the renewal options, and when they are reasonably certain of exercise, Landstar includes the renewal period in the lease term.

2 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 thirty -

nine weeks ended September 30, 2023 were (in thousands):

The components of lease cost for finance leases and operating leases for the thirteen weeks ended March 30, 2024 were (in thousands):

Finance leases:

Amortization of right-of-use

Amortization of right-of-use assets

Interest on lease liability

5 unchanged sentences

Total net lease cost

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

A summary of the lease classification on the Company’s consolidated balance sheet as of March 30, 2024 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 September 30, 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 March 30, 2024 (in thousands):

2024 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 September 30, 2023 were:

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of March 30, 2024 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 September 30, 2023 and December 31, 2022.

than the finance lease obligations as presented on the consolidated balance sheets, the Company had no outstanding debt as of March 30, 2024 and December 30, 2023.

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 September 30, 2023, the Company had no borrowings outstanding under the Credit Agreement.

As of March 30, 2024, 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.

3 unchanged sentences

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.

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.

4 unchanged sentences

(11) Commitments and Contingencies

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

portion of the bond portfolio of $ 95,270,000 is included in other assets.

The short-term investments, together with $ 28,516,000 of non-current

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

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

Short-term investments include $ 62,781,000 in current maturities of investments held by the Company’s insurance segment at March 30, 2024.

The non-current portion of the bond portfolio of $ 85,298,000 is included in other assets.

The short-term investments, together with $ 22,834,000 of non-current investments, provide collateral for the $ 77,054,000 of letters of credit issued to guarantee payment of insurance claims.

As of March 30, 2024, 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.

(12) Recent Accounting Pronouncements

Accounting Standards Issued But Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

(“ASU 2023-07”), which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023.

The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

(“ASU 2023-09”), which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

ASU 2023-09 is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

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