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Item 8. Financial Statements and Supplementary Data

2025-02-24 compared with 2024-02-26 · 201 added, 142 removed, 592 unchanged (37% of the section changed)

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investments, net of tax expense (benefit) of $ 604 , $ 942 and ($ 2,345 )

Foreign currency translation gains (losses)

Other comprehensive income (loss)

Foreign currency translation (losses) gains

Other comprehensive (loss) income

Comprehensive income

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Changes in operating assets and liabilities:

Decrease (increase) in trade and other accounts receivable

(Increase) decrease in other assets

(Decrease) increase in accounts payable

(Decrease) increase in other liabilities

(Decrease) increase in insurance claims

Decrease in trade and other accounts receivable

Increase in other assets

Decrease in accounts payable

Increase (decrease) in other liabilities

Increase (decrease) in insurance claims

NET CASH PROVIDED BY OPERATING ACTIVITIES

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FINANCING ACTIVITIES

(Decrease) increase in cash overdraft

Decrease in cash overdraft

Dividends paid

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Principal payments on finance lease obligations

Payment of deferred consideration

NET CASH USED BY FINANCING ACTIVITIES

Effect of exchange rate changes on cash and cash equivalents

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

Increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Cash, cash equivalents at end of period

See accompanying notes to consolidated financial statements.

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Stock-based compensation

Other comprehensive income

Other comprehensive loss

Balance December 28, 2024

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Effective May 1, 2023, the Company entered into a three year commercial auto liability insurance arrangement for losses incurred between $ 5 million and $ 10 million (the “2023 Initial Excess Policy”) with a third party insurance company.

The Company subsequently extended the 2019 Initial Excess Policy for one additional policy year, from May 1, 2022 through April 30, 2023.

For commercial trucking claims incurred on or after May 1, 2022 through April 30, 2023, the extended 2019 Initial Excess Policy provides for a limit for a single loss of $ 5 million, with an aggregate limit of $ 10 million for the policy period ended April 30, 2023.

Effective May 1, 2023, the Company entered into a new three year commercial auto liability insurance arrangement for losses incurred between $ 5

million and $ 10 million (the “2023 Initial Excess Policy”) with a third party insurance company.

For commercial trucking claims incurred on or after May 1, 2023 through April 30, 2026, the 2023 Initial Excess Policy provides for an aggregate deductible of $ 18

million over the thirty-six

month term ending April 30, 2026.

After payment of the deductible, the 2023 Initial Excess Policy provides for a limit for a single loss of $ 5 million, with an aggregate limit of $ 15 million for the thirty-six

month term ending April 30, 2026.

For commercial trucking claims incurred on or after May 1, 2023 through April 30, 2026, the 2023 Initial Excess Policy provides for an aggregate deductible of $ 18 million over the thirty-six-month

term ending April 30, 2026.

After payment of the deductible, the 2023 Initial Excess Policy provides for a limit for a single loss of $ 5 million, with an aggregate limit of $ 15 million for the thirty-six-month

term ending April 30, 2026.

The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of

$ 10 million.

These third party arrangements provide coverage on a per occurrence or aggregated basis.

The Company from year to year manages the level of its financial exposure to commercial trucking claims in excess

of $ 10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage.

The Company from year to year manages the level of its financial exposure to commercial trucking claims in excess of $ 10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage.

Further, the Company retains liability of up to $ 2,000,000 for each general liability claim, $ 250,000 for each workers’ compensation claim and $ 250,000 for each cargo claim.

In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $ 500,000 , $ 1,000,000 or $ 2,000,000 with respect to certain occupational accident claims and up to $ 750,000 with respect to certain workers’ compensation claims.

In addition, under reinsurance arrangements by Signature Insurance Company (“Signature”) of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $ 500,000 , $ 1,000,000 or $ 2,000,000 with respect to certain occupational accident claims and up to $ 750,000 with respect to certain workers’ compensation claims.

Tires purchased as part of trailing equipment are capitalized as part of the cost of the equipment.

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Included in cash and cash equivalents are all investments, except those provided for collateral, with an original maturity of 3 months or less.

At December 30, 2023 and December 31, 2022, the Company had no restricted cash held by the Company’s insurance segment.

At December 25, 2021, the Company had

$ 4,049 ,000 of restricted cash held by the Company’s insurance segment included in the short-term investments balance of $ 35,778 ,000, providing collateral, along with certain other investments, for the letters of credit issued to guarantee payment of insurance claims.

At December 28, 2024, December 30, 2023 and December 31, 2022, the Company had no restricted cash held by the Company’s insurance segment.

At December 25, 2021, the Company had $ 4,049 ,000 of restricted cash held by the Company’s insurance segment included in the short-term investments balance of $ 35,778 ,000, providing collateral, along with certain other investments, for the letters of credit issued to guarantee payment of insurance claims.

Financial Instruments

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Other non-current

Other Receivables and Other Assets

The Company provides financing to certain independent commission sales agents.

Generally, these notes receivable include personal guarantees, may be collateralized by the assets and equity of the borrower and are due in periodic installments, including principal and interest payments, for terms of one to seven years.

Notes receivable are recorded at amortized cost, net of the allowance for doubtful accounts.

At December 28, 2024 and December 30, 2023, the Company had $ 26,606 ,000 and $ 5,079 ,000, respectively, of gross notes receivable from independent commission sales agents.

The current portion is included within other receivables and the long-term portion is included in other assets in the consolidated balance sheets.

Operating Property

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Earnings Per Share

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.

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

During the fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021, 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 fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021.

For the fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021, no options outstanding to purchase shares of Common Stock were antidilutive.

As of December 30, 2023, there were no outstanding options issued by the Company .

During the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 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.

During and as of the fiscal year ended December 28, 2024, there were no outstanding stock options issued by the

During the fiscal years ended December 30, 2023 and December 31, 2022, 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.

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 fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022.

For the fiscal years ended December 30, 2023 and December 31, 2022, 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.

Dividends Payable

On December 4, 2023 , the Company announced that its Board of Directors declared a special cash dividend of $ 2.00 per share payable on

January 19, 2024

to stockholders of record of its Common Stock as of

January 3, 2024 .

On December 9, 2024 , the Company announced that its Board of Directors declared a special cash dividend of $ 2.00 per share payable on January 21, 2025 to stockholders of record of its Common Stock as of January 7, 2025 .

Dividends payable of $ 70,632 ,000 related to this special dividend were included in current liabilities in the consolidated balance sheet at December 28, 2024.

December 6, 2022 , the Company announced that its Board of Directors declared a special cash dividend of $ 2.00

per share payable on

January 20, 2023

to stockholders of record of its Common Stock as of

January 6, 2023 .

On December 4, 2023 , the Company announced that its Board of Directors declared a special cash dividend of $ 2.00 per share payable on January 19, 2024 to stockholders of record of its Common Stock as of January 3, 2024 .

Dividends payable of $ 71,433 ,000 related to this special dividend were included in current liabilities in the consolidated balance sheet at December 30, 2023.

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Balance as of December 31, 2022

Other comprehensive loss

Balance as of December 31, 2022

Other comprehensive income

Balance as of December 30, 2023

Other comprehensive income (loss)

Balance as of December 28, 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 fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022.

(3) Investments

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

reasury obligations 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 commercial paper 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

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Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, are classified within Level 2.

As Level 2 investments include positions that are not traded in active markets, valuations may be

adjusted to reflect illiquidity and/or non-transferability,

As Level 2 investments include positions that are not traded in active markets, valuations may be adjusted to reflect illiquidity and/or non-transferability,

which are generally based on available market information.

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.

Fair value of the bond portfolio was determined using Level 1 inputs related to money market investments and Level 2 inputs related to investment-grade corporate bonds, asset-backed securities, commercial paper and direct obligations of government agencies.

Unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $ 3,573,000 and $ 6,382,000 at December 28, 2024 and December 30, 2023, respectively.

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

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

The amortized cost and fair values of available-for-sale investments are as follows at December 28, 2024 and December 30, 2023 (in thousands):

December 28, 2024

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Asset-backed securities

Corporate bonds and direct obligations of government agencies

Treasury obligations

Corporate bonds, commercial paper and direct obligations of government agencies

December 30, 2023

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Asset-backed securities

Corporate bonds and direct obligations of government agencies

Corporate bonds, commercial paper and direct obligations of government agencies

Treasury obligations

For those available-for-sale

available-for-sale

investments with unrealized losses at December 28, 2024 and December 30, 2023, the following table summarizes the duration of the unrealized loss (in thousands):

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Asset-backed securities

Corporate bonds and direct obligations of government agencies

Treasury obligations

Corporate bonds, commercial paper, and direct obligations of government agencies

December 30, 2023

Asset-backed securities

Corporate bonds and direct obligations of government agencies

Corporate bonds, commercial paper, and direct obligations of government agencies

Treasury obligations

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Total deferred

Temporary differences and carryforwards which gave rise to deferred tax assets and liabilities consisted of the following (in thousands):

Temporary differences and carryforwards which gave rise to deferred tax assets and liabilities consisted of the following

(in thousands):

Deferred tax assets:

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Net deferred tax liability

The following table summarizes the differences between income taxes calculated at the federal income tax rate of 21 % on income before income taxes and the provisions for income taxes (in thousands):

The following table summarizes the differences between income taxes calculated at the federal income tax rate of

21 % on income before income taxes and the provisions for income taxes (in thousands):

Income taxes at federal income tax rate

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Meals and entertainment exclusion

Share-based payments

Research and development credits

Share-based payments

The Company files a consolidated U.S.

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federal or state income tax examinations by tax authorities for 2020 and prior years.

The Company’s wholly-owned Canadian subsidiary,

Landstar Canada, Inc., is subject to Canadian income and other taxes.

The Company’s wholly-owned Canadian subsidiary, Landstar Canada, Inc., is subject to Canadian income and other taxes.

The Company’s wholly-owned Mexican subsidiaries, Landstar Holdings, S.

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income and other taxes.

As of December 30, 2023 and December 31, 2022, the Company had $

4,467,000 and $

3,046,000 , respectively, of net unrecognized tax benefits representing the provision for the uncertainty of certain tax positions plus a component of interest and penalties.

As of December 28, 2024 and December 30, 2023, the Company had $ 5,396,000 and $ 4,467,000 , respectively, of net unrecognized tax benefits representing the provision for the uncertainty of certain tax positions plus a component of interest and penalties.

Estimated interest and penalties on the provision for the uncertainty of certain tax positions is included in income tax expense.

At December 30, 2023 and December 31, 2022, there was $

1,249,000 and $

845,000 , respectively, accrued for estimated interest and penalties related to the uncertainty of certain tax positions.

At December 28, 2024 and December 30, 2023, there was $ 1,793,000 and $ 1,249,000 , respectively, accrued for estimated interest and penalties related to the uncertainty of certain tax positions.

The Company does not currently anticipate any significant increase or decrease to the unrecognized tax benefit during fiscal year 2025.

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Gross increases related to prior year tax positions

Gross decreases related to prior year tax positions

Lapse of statute of limitations

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Other than the finance lease obligations as presented on the consolidated balance sheets, the Company had no outstanding debt as of December 28, 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”).

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 (as further amended as of June 21, 2024, the “Credit Agreement”).

The 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.

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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.

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.

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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

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

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

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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 as of December 30, 2023 were (in thousands):

The components of lease cost for finance leases and operating leases for the fiscal year ended December 28, 2024 were (in thousands):

Finance leases:

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As of December 28, 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”), 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.

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):

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):

Total cost of the Plans during the period

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Outstanding at December 28, 2024

Represents shares earned in excess of target under the May 1, 2015 RSU award as total shareholder return exceeded the target under the award.

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 under each such award.

Represents additional shares earned (i) under the February 1, 2019 and January 31, 2020 RSU awards as fiscal year 2022 financial results exceeded target performance level and (ii) 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.

Represents additional shares earned 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 fiscal years 2024, 2023 and 2022, the Company granted RSUs with a performance condition.

During fiscal year 2024, the Company also granted RSUs with a market condition.

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.

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

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.

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 2020 fiscal year, adjusted to reflect the add back of non-cash

impairment charges recorded in the Company’s 2020 fiscal year related to certain assets, primarily customer contract and related customer relationship intangible assets, held by the Company’s Mexican subsidiaries.

At the time of grant, the target number of common shares available for issuance under the February 3, 2023, January 28, 2022 and January 29, 2021 grants equals 100 % of the number of RSUs granted, and the maximum number of common shares available for issuance under the February 3, 2023, January 28, 2022 and January 29, 2021 grants equals 200 % of the number of RSUs credited to the recipient.

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

At the time of grant, the target number of common shares available for issuance under the February 2, 2024, February 3, 2023 and January 28, 2022 grants equals 100 % of the number of RSUs granted, and the maximum number of common shares available for issuance under the February 2, 2024, February 3, 2023 and January 28, 2022 grants equals 200 % of the number of RSUs credited to the recipient.

In the event actual results exceed the target, the number of shares that will be granted will exceed the number of RSUs granted.

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With respect to RSU awards with a performance condition, the Company reports compensation expense over the life of the award based on an estimated number of units that will vest over the life of the award, multiplied by the fair value of an RSU at the time of grant.

The Company recognized approximately $ 581,000 , $ 9,100,000 and $ 24,197,000 of share-based compensation expense related to RSU awards in fiscal years 2023, 2022 and 2021, respectively.

On February 2, 2024, the Company granted 58,268

RSUs that vest based on a market condition.

These RSUs may vest based on the Company’s achievement of a target total shareholder return (“TSR”) compound annual growth rate (adjusted to reflect dividends (if any) paid during the period the awards are outstanding and capital adjustments as may be necessary), to be measured 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 ($ 800,000 ), $ 581,000 and $ 9,100,000 of share-based compensation (benefit) expense related to RSU awards in fiscal years 2024, 2023 and 2022, respectively.

As of December 28, 2024, there was a maximum of $ 41.9 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.3 years.

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Restricted Stock and Deferred Stock Units

The 2011 EIP provides the Compensation Committee of the Board of Directors with the authority to issue shares of Common Stock of the Company, subject to certain vesting and other restrictions on transfer (“restricted stock”).

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

The 2011 EIP provides the Compensation Committee of the Board of Directors with the authority to issue shares of Common Stock of the Company, subject to certain vesting and other restrictions on

transfer (“restricted stock”).

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

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

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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 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.

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

December 30, 2023, there was $ 3,821,000 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

As of December 28, 2024, there was $ 4,684,000 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 1.6 years.

Stock Options

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Treasury bonds for terms that approximated the terms of the options granted.

The following table summarizes information regarding the Company’s outstanding stock options under the Plans:

The Company had no issued and outstanding vested or unvested stock options or unrecognized compensation costs related to non-vested

stock options granted under the Plans as of or for the fiscal year ended December 28, 2024.

The following table summarizes information regarding the Company’s outstanding stock options under the Plans for fiscal years 2023 and 2022:

Options Outstanding

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Options at December 30, 2023

The total intrinsic value of stock options exercised during fiscal years 2023, 2022 and 2021 was $ 218,000 , $ 704,000 and $ 965,000 , respectively.

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

stock options granted under the Plans and no outstanding options issued by the Company.

The total intrinsic value of stock options exercised during fiscal years 2023 and 2022 was $

218,000 and $

704,000 , respectively.

Directors’ Stock Compensation Plan

Directors of the Company who are not employees of the Company (each an “Eligible Director”) are entitled under the 2022 DSCP to receive a grant of such number of restricted shares of the Company’s Common Stock or Deferred Stock Units equal to the quotient of $ 150,000 divided by the fair market value of a share of Common Stock on the date immediately following the date of each annual

meeting of the stockholders of the Company (an “Annual Meeting”).

Each eligible Director was previously entitled under the 2013 DSCP to receive a grant of such number of restricted shares of the Company’s Common Stock or Deferred Stock Units equal to the quotient of $ 110,000 divided by the fair market value of a share of Common Stock on the date immediately following the date of each Annual Meeting.

In fiscal year 2024, 5,810 restricted shares were granted to Eligible Directors.

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In fiscal year 2022, 7,063 restricted shares were granted to Eligible Directors.

Restricted shares granted in 2021, 2022 and 2023 vest on the date of the next Annual Meeting.

During fiscal years 2023, 2022 and 2021, $ 1,050,000 , $ 964,000 and $ 669,000 , respectively, of compensation cost was recorded for the grant of these restricted shares and Deferred Stock Units.

December 7, 2021, the Landstar System, Inc.

Deferred Stock Units were issued in fiscal years 2024, 2023 or 2022.

Restricted shares granted in 202 4

, 2023 and 202 2

vest on the date of the next Annual Meeting.

During fiscal years 2024, 2023 and 2022, $ 1,053,000 , $ 1,050,000 and $ 964,000 , respectively, of compensation cost was recorded for the grant of these restricted shares.

On December 7, 2021, the Landstar System, Inc.

Board of Directors authorized the Company to purchase up to 1,912,824 shares of the Company’s Common Stock from time to time in the open market and in privately negotiated transactions.

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No specific expiration date has been assigned to the December 7, 2021, December 6, 2022 or December 4, 2023 authorizations.

During fiscal year 2023, Landstar purchased a total of 319,332 shares of its Common Stock at a total cost of $ 54,267 ,000 pursuant to its previously announced stock purchase program, including $

,000 in cash purchases and accrued excise tax of $

which is included in other current liabilities in the consolidated balance sheet at December 30, 2023.

During fiscal year 2024, Landstar purchased a total of 452,019 shares of its Common Stock at a total cost of $ 82,117 ,000 pursuant to its previously announced stock purchase program, including $ 81,400 ,000 in cash purchases and accrued excise tax of $ 717 ,000, which is included in other current liabilities in the consolidated balance sheet at December 28, 2024.

The Company has 2,000,000 shares of preferred stock authorized and unissued.

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Transportation services offered by the Company include truckload, less-than-truckload and other truck transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul/specialized, U.S.-Canada and U.S.-Mexico cross-border, intra-Mexico, intra-Canada, project cargo and customs brokerage.

Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, consumer durables, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics and military equipment.

In addition, the transportation logistics segment provides transportation services

to other transportation companies, including third party logistics and less-than-truckload service providers.

In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers.

The independent commission sales agents market services provided by the transportation logistics segment.

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The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The Company evaluates a segment’s performance based on operating income.

The Company’s chief operating decision maker (“CODM”) is our Chief Executive Officer.

The CODM evaluates each segment’s performance and makes decisions about resource allocations primarily based on operating income, which is the principal financial metric utilized to monitor budgeted versus actual results by segment of the Company.

Asset information by segment is not typically provided to the CODM for purposes of evaluating performance or allocating resources, and therefore such information has not been presented.

No single customer accounted for more than 10 % of the Company’s consolidated revenue in fiscal years 2024, 2023 and 2022.

4 unchanged sentences

Internal revenue

Total revenue

Investment income

Interest and debt (income) expense

Purchased transportation

Commissions to agents

Other operating costs, net of gains on asset sales/dispositions

Insurance and claims

Selling, general and administrative

Depreciation and amortization

Operating income

Expenditures on long-lived assets

Finance lease additions

Transportation

External revenue

Internal revenue

Total revenue

Investment income

Interest and debt expense

Purchased transportation

Commissions to agents

Other operating costs, net of gains on asset sales/dispositions

Insurance and claims

Selling, general and administrative

Depreciation and amortization

Operating income

Expenditures on long-lived assets

Finance lease additions

Transportation

External revenue

Internal revenue

Total revenue

Investment income

Interest and debt expense

Purchased transportation

Commissions to agents

Other operating costs, net of gains on asset sales/dispositions

Insurance and claims

Selling, general and administrative

Depreciation and amortization

Operating income

Expenditures on long-lived assets

Finance lease additions

Fiscal Years Ended

Total revenue

Elimination of internal revenue

Total consolidated revenue

Operating income

Interest and debt (income) expense (1)

Income before income taxes

Interest and debt (income) expense includes (1) interest income earned on cash balances held by the transportation logistics segment of $ 9,495 , $ 7,811 an

d $ 900 in 2024, 2023 and 2022, respectively an d

(2) consolidated

total interest expense of $

4,076 , $ 3,865 and $ 4,520

(1) in 2024, 2023 an d 2022, respectively.

(13) Change in Accounting Estimate for Self-Insured Claims

3 unchanged sentences

The Company continually revises its existing claim estimates as new or revised information becomes available on the status of each claim.

Historically, the Company has experienced both favorable and unfavorable development of prior years’ claims estimates.

Historically, the Company has experienced both favorable and unfavorable development of prior years’ claims estimates within its various programs.

The following table summarizes the adverse effect of the increase in the cost of insurance claims resulting from unfavorable development of prior year self-insured claims estimates on operating income, net income and earnings per share set forth in the consolidated statements of income for the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022 (in thousands, except per share amounts):

2 unchanged sentences

Basic and diluted earnings per share

The unfavorable development of prior years’ claims in the fiscal year ended December 30, 2023 was primarily attributable to several specific claims.

The unfavorable development of prior years’ claims in the fiscal year ended December 31, 2022 was primarily attributable to several specific claims.

The unfavorable development of prior years’ claims in the fiscal year ended December 25, 2021 was primarily attributable to five claims.

The unfavorable development of prior years’ claims in the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022 was primarily attributable in each year to several specific claims.

(14) Equity investment

1 unchanged sentence

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).

This non-controlling investment in units of Cavnue, LLC, is considered an investment in non-marketable equity securities without a

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).

(15) Gain Contingency

The Company does not allow for the recognition of a gain contingency within its consolidated financial statements prior to the settlement of the underlying events or contingencies associated with the gain contingency.

As a result, the consideration related to a gain contingency is recorded in the consolidated financial statements during the period in which all underlying events or contingencies are resolved and the gain is realized.

It is anticipated that during the 2025 second fiscal quarter, the Company will receive a $ 12,000,000

cash payment from a third party reinsurance provider in the form of a “no claims bonus” resulting from favorable loss experience under a three year commercial auto liability reinsurance arrangement relating to claims incurred between May 1, 2020 through April 30, 2023.

The Company intends to record the receipt of this payment as a deferred gain on the balance sheet, until such time as all underlying claims with exposure under the applicable excess layer insurance arrangement are resolved and the gain can be recognized.

(16) Recent Accounting Pronouncements

Accounting Standards Issued But Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07,

Segment Reporting (Topic 280):

Adoption of New Accounting Standards

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.

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):

(“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 adopted ASU 2023-07 on December 28, 2024 retrospectively to all prior periods presented in the consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

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.

(“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.

is effective for annual periods beginning after December 15, 2024.

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

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.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

(“ASU 2024-03”), which expands disclosures about certain categories of expenses.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026.

The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and disclosures.

Report of Independent Registered Public Accounting Firm

38 unchanged sentences

For certain claims, we obtained letters received directly from the Company’s external legal counsel to evaluate the liability recorded.

Additionally, we assessed the development of the self-insurance claims liability in the current year compared to recent historical trends and considered the implications on the current year assumptions.

Additionally, we assessed the development of the self-insurance claims liability in the current year compared to recent historical trends and considered implications on the current year assumptions.

We also assessed facts and circumstances received by the Company after the balance sheet date, but before the consolidated financial statements were issued, and the impact, if any, of such facts and circumstances on the self-insurance claims liability.

2 unchanged sentences

February 24, 2025

KPMG LLP (PCAOB ID:

185 ), the independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K for the fiscal year ended December 28, 2024, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting.

Such report appears immediately below.

(b) Attestation Report of the Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Landstar System, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Landstar System, Inc.

and subsidiary’s (the Company) internal control over financial reporting as of December 28, 2024, based on criteria established in

Internal Control – Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2024, based on criteria established in

Internal Control – Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 28, 2024 and December 30, 2023, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the fiscal years in the three-year period ended December 28, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated February 24, 2025 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Jacksonville, Florida

February 24, 2025

There were no significant changes in the Company’s internal control over financial reporting during the Company’s fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data