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Item 1. Financial Statements

2025-10-28 compared with 2025-07-29 · 210 added, 114 removed, 382 unchanged (46% 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 June 28, 2025 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 27, 2025.

Operating results for the thirty-nine weeks ended September 27, 2025 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 27, 2025.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2024 Annual Report on Form 10-K.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

September 27,

Current Assets

3 unchanged sentences

Other receivables, including advances to independent contractors, less allowance of $ 18,665 and $ 17,812

Assets held for sale

Other current assets

8 unchanged sentences

Dividends payable

Contractor escrow

Liabilities held for sale

Other current liabilities

16 unchanged sentences

(Dollars in thousands, except per share amounts)

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 27,

September 28,

September 27,

September 28,

Investment income

6 unchanged sentences

Depreciation and amortization

Impairment of intangible and other assets

Total costs and expenses

10 unchanged sentences

(Dollars in thousands)

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 27,

September 28,

September 27,

September 28,

Other comprehensive income (loss):

Unrealized holding gains on available-for-sale

investments, net of tax expense of $ 424 , $ 204 , $ 160 and $ 112

investments, net of tax expense of $ 570 ,

$ 828 , $ 146 and $ 624

Foreign currency translation gains (losses)

6 unchanged sentences

(Dollars in thousands)

Thirty-Nine Weeks Ended

September 27,

September 28,

OPERATING ACTIVITIES

4 unchanged sentences

Gains on sales/disposals of operating property

Impairment of intangible and other assets

Deferred income taxes, net

12 unchanged sentences

Proceeds from sales of operating property

NET CASH USED BY INVESTING ACTIVITIES

NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES

FINANCING ACTIVITIES

6 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Decrease in cash and cash equivalents

Decrease in cash and cash equivalents, including cash and cash equivalents classified as assets held for sale

Net change in cash and cash equivalents classified as assets held for sale

Net change in cash and cash equivalents

Cash and cash equivalents at beginning of period

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

and Thirteen Weeks Ended June 28, 2025 and June 29, 2024

Thirty-Nine and Thirteen Weeks Ended September 27, 2025 and September 28, 2024

(Dollars in thousands)

9 unchanged sentences

Balance March 29, 2025

Dividends ($ 0.40

Dividends ($ 0.40 per share)

Purchases of common stock

3 unchanged sentences

Balance June 28, 2025

Dividends ($ 0.40 per share)

Purchases of common stock

Issuance of stock related to stock-based compensation plans

Stock-based compensation

Other comprehensive income

Balance September 27, 2025

Treasury Stock at Cost

13 unchanged sentences

Balance June 29, 2024

Dividends ($ 0.36 per share)

Purchases of common stock

Issuance of stock related to stock-based compensation plans

Stock-based compensation

Other comprehensive income

Balance September 28, 2024

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 June 28, 2025 and June 29, 2024 (dollars in thousands):

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 27,

September 28,

September 27,

September 28,

Truck – BCO Independent Contractors

10 unchanged sentences

Share-based Payment Arrangements

As of June 28, 2025, the Company has an employee equity incentive plan, the 2011 equity incentive plan (the “2011 EIP”).

As of September 27, 2025, 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”).

1 unchanged sentence

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):

Twenty-Six Weeks Ended

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 27,

September 28,

September 27,

September 28,

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 June 28, 2025 and June 29, 2024 were tax deficiencies (excess tax benefits) from stock-based awards of $ 104,000 and ($ 799,000 ), respectively.

As of June 28, 2025, there were 174,149 shares of the Company’s common stock reserved for issuance under the 2022 DSCP and 2,672,870 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 27, 2025 and September 28, 2024 were tax deficiencies (excess tax benefits) from stock-based awards of $ 106,000 and ($ 1,122,000 ), respectively.

As of September 27, 2025, there were 174,149 shares of the Company’s common stock reserved for issuance under the 2022 DSCP and 2,672,025 shares of the Company’s common stock reserved for issuance under the 2011 EIP.

Restricted Stock Units

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Outstanding at December 28, 2024

Outstanding at June 28, 2025

During the twenty-six-week

period ended June 28, 2025, the Company granted RSUs with a performance condition and RSUs with a market condition, as further described below.

Outstanding RSUs at both December 28, 2024 and June 28, 2025 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2024 Annual Report on Form 10-K.

Outstanding at September 27, 2025

During the thirty-nine-week period ended September 27, 2025, the Company granted RSUs with a performance condition and RSUs with a market condition, as further described below.

Outstanding RSUs at both December 28, 2024 and September 27, 2025 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2024 Annual Report on Form 10-K.

RSUs with a performance condition granted on January 31, 2025 and February 3, 2025 may vest on January 31 of 2028, 2029 and 2030 based on growth in operating income and pre-tax

5 unchanged sentences

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 $ 1,253,000 and $ 1,315,000 of share-based compensation expense related to RSU awards in the twenty-six-week

periods ended June 28, 2025 and June 29, 2024, respectively.

As of June 28, 2025, there was a maximum of $ 52.5 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.

The Company recognized approximately $ 1,586,000 and $ 408,000 of share-based compensation expense related to RSU awards in the thirty-nine-week periods ended September 27, 2025 and September 28, 2024, respectively.

As of September 27, 2025, there was a maximum of $ 52.3 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.0 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 28, 2024

at June 28, 2025

at September 27, 2025

The fair value of each share of non-vested

6 unchanged sentences

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

As of June 28, 2025, there was $ 6,981,000 of total unrecognized compensation cost related to non-vested

As of September 27, 2025, there was $ 5,727,000 of total unrecognized compensation cost related to non-vested

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

1 unchanged sentence

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

The provisions for income taxes for the 2025 and 2024 twenty-six-week

periods were based on estimated annual effective income tax rates of 24.3 % and 24.5 %, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The effective income tax rate for the 2025 twenty-six-week

period was 24.7 %.

The effective income tax rate was higher than the statutory federal income tax rate of 21 % in the 2025 period primarily attributable to state taxes.

The effective income tax rate for the 2024 twenty-six-week

period was 24.1 %.

The provisions for income taxes for the 2025 and 2024 thirty-nine-week periods were based on estimated annual effective income tax rates of 24.6 % and 24.3 %, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards.

The effective income tax rate for the 2025 thirty-nine-week period was 24.9 %.

The effective income tax rate was higher than the statutory federal income tax rate of 21 % in the 2025 period primarily attributable to state taxes.

The effective income tax rate for the 2024 thirty-nine-week period was 23.4 %.

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, partially offset by federal tax credits.

Earnings Per Share

3 unchanged sentences

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.

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 each of the 2025 and 2024 twenty-six-week

Additional Cash Flow Information

During the 2025 twenty-six-week

period, Landstar paid income taxes and interest of $ 33,972,000 and $ 2,816,000 , respectively.

During the 2024 twenty-six-week

period, Landstar paid income taxes and interest of $ 28,096,000 and $ 1,628,000 , respectively.

Landstar did not acquire any operating property by entering into finance leases in the 2025 twenty-six-week

Landstar acquired operating property by entering into finance leases in the amount of $ 17,144,000 in the 2024 twenty-six-week

During the 2025 twenty-six-week

period, the Company purchased its common stock at a total cost of $ 103,295 ,000, including $ 102,300 ,000 in cash purchases and accrued excise tax of $ 995,000 , which is included in other current liabilities in the consolidated balance sheet at June 28, 2025.

During the 2024 twenty-six-week

period, the Company purchased its common stock at a total cost of $ 56,995 ,000, including $ 56,515 ,000 in cash purchases and accrued excise tax of $ 480,000 , which was included in other current liabilities in the consolidated balance sheet at June 29, 2024.

During the 2025 thirty-nine-week period, Landstar paid income taxes and interest of $ 45,646,000 and $ 4,107,000 , respectively.

During the 2024 thirty-nine-week period, Landstar paid income taxes and interest of $ 45,638,000 and $ 2,641,000 , respectively.

Landstar did not acquire any operating property by entering into finance leases in the 2025 thirty-nine-week period.

Landstar acquired operating property by entering into finance leases in the amount of $ 24,238,000 in the 2024 thirty-nine-week period.

During the 2025 thirty-nine-week period, the Company purchased its common stock at a total cost of $ 143,908,000 , including $ 142,512,000 in cash purchases and accrued excise tax of $ 1,396,000 , which is included in other current liabilities in the consolidated balance sheet at September 27, 2025.

The Company also paid $ 718,000 in excise tax on its common stock purchases, which was included in other current liabilities in the consolidated balance sheet at December 28, 2024.

During the 2024 thirty-nine-week period, the Company purchased its common stock at a total cost of $ 79,388,000 , including $ 78,697 ,000 in cash purchases and accrued excise tax of $ 691,000 , which was included in other current liabilities in the cons

olidated balance sheet at September 28, 2024.

Segment Information

4 unchanged sentences

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.

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

and thirteen-week periods ended June 28, 2025 and June 29, 2024 (in thousands):

June 28, 2025

June 29, 2024

The following tables summarize information about the Company’s reportable business segments as of and for the thirty-nine-week and thirteen-week periods ended September 27, 2025 and September 28, 2024 (in thousands):

Thirty-Nine Weeks Ended

September 27, 2025

September 28, 2024

Transportation

10 unchanged sentences

Depreciation and amortization

Impairment of intangible and other assets

Operating income

3 unchanged sentences

Thirteen Weeks Ended

June 28, 2025

June 29, 2024

September 27, 2025

September 28, 2024

Transportation

10 unchanged sentences

Depreciation and amortization

Impairment of intangible and other assets

Operating income

2 unchanged sentences

Income before income taxes

Interest and debt expense (income) includes (i) interest income earned on cash balances held by the transportation logistics segment of $ 2,409 and $ 5,045 in the 2025 and 2024 twenty-six-week

periods, respectively, and $ 741 and $ 2,545 in the 2025 and 2024 thirteen-week periods, respectively, and (ii) consolidated total interest expense of $ 2,948 and $ 1,759 in the 2025 and 2024 twenty-six-week

periods, respectively, and $ 1,439 and $ 870 in the 2025 and 2024 thirteen-week periods, respectively.

In the twenty-six-week

periods ended June 28, 2025 and June 29, 2024, no single customer accounted for more than 10 % of the Company’s consolidated revenue.

Interest and debt expense (income) includes (i) interest income earned on cash balances held by the transportation logistics segment of $ 3,549

in the 2025 and 2024 thirty-nine-week periods, respectively, and $ 1,140

in the 2025 and 2024 thirteen-week periods, respectively, and (ii) consolidated total interest expense of $ 4,305

in the 2025 and 2024 thirty-nine-week periods, respectively, and $ 1,357

in the 2025 and 2024 thirteen-week periods, respectively.

In the thirty-nine-week periods ended September 27, 2025 and September 28, 2024, no single customer accounted for more than 10 % of the Company’s consolidated revenue.

Other Comprehensive Income

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

period ended June 28, 2025 (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 27, 2025 (in thousands):

Holding (Losses)

Available-for-Sale

Foreign Currency

Balance as of December 28, 2024

Other comprehensive income

Balance as of June 28, 2025

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 June 28, 2025.

Balance as of September 27, 2025

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

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

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

12 unchanged sentences

Treasury obligations and 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 $ 1,603,000 and $ 3,573,000 at June 28, 2025 and December 28, 2024, respectively.

Unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $ 922,000

and $ 3,573,000

at September 27, 2025 and December 28, 2024, respectively.

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

investments are as follows at June 28, 2025 and December 28, 2024 (in thousands):

June 28, 2025

investments are as follows at September 27, 2025 and December 28, 2024 (in thousands):

September 27, 2025

Money market investments

7 unchanged sentences

For those available-for-sale

investments with unrealized losses at June 28, 2025 and December 28, 2024, the following table summarizes the duration of the unrealized loss (in thousands):

investments with unrealized losses at September 27, 2025 and December 28, 2024, the following table summarizes the duration of the unrealized loss (in thousands):

Less than 12 months

12 months or longer

June 28, 2025

September 27, 2025

Asset-backed securities

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

Treasury obligations

December 28, 2024

2 unchanged sentences

The Company believes unrealized losses on investments were primarily caused by rising interest rates rather than changes in credit quality.

The Company expects to recover, through collection of all of the contractual cash flows of each security, the amortized cost basis of these securities as it does not intend to sell, and does not anticipate being required to sell, these securities before recovery of the cost basis.

The Company expects to recover, through collection of

all of the contractual cash flows of each security, the amortized cost basis of these securities as it does not intend to sell, and does not anticipate being required to sell, these securities before recovery of the cost basis.

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

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

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

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

12 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 June 28, 2025 were (in thousands):

The components of lease cost for finance leases and operating leases for the thirty-nine weeks ended September 27, 2025 were (in thousands):

Finance leases:

7 unchanged sentences

Total net lease cost

A summary of the lease classification on the Company’s consolidated balance sheet as of June 28, 2025 is as follows (in thousands):

A summary of the lease classification on the Company’s consolidated balance sheet as of September 27, 2025 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 June 28, 2025 (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 27, 2025 (in thousands):

2025 Remainder

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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 June 28, 2025 were:

Finance Leases

Operating Leases

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of September 27, 2025 were:

Weighted average remaining lease term (years)

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 June 28, 2025 and December 28, 2024.

Other than the finance lease obligations as presented on the consolidated balance sheets, the Company had no outstanding debt as of September 27, 2025 and December 28, 2024.

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.

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.

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 June 28, 2025, 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.

As of September 27, 2025, 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

%, or (ii) an alternate base rate plus an applicable margin ranging from 0.25

%, in each case with the applicable margin determined based upon the Company’s Leverage Ratio, as defined in the Credit Agreement, at the end of the most recent applicable fiscal quarter for which financial statements have been delivered.

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

9 unchanged sentences

Commitments and Contingencies

Short-term investments include $ 66,935,000 in current maturities of investments held by the Company’s insurance segment at June 28, 2025.

Short-term investments include $ 59,227,000

in current maturities of investments held by the Company’s insurance segment at September 27, 2025.

The non-current

portion of the bond portfolio of $ 81,246,000 is included in other assets.

The short-term investments, together with $ 15,644,000 of non-current

investments, provide collateral for the $ 74,321,000 of letters of credit issued to guarantee payment of insurance claims.

As of June 28, 2025, Landstar also had $ 35,415,000 of additional letters of credit outstanding under the Company’s Credi t

On July 22, 2025, a jury trial (the “Trial”) began in state court in El Paso County, Texas, in connection with a tragic vehicular accident (the “Accident”) that occurred on December 31, 2021, near El Paso.

The Accident involved a collision between a recreational vehicle, or RV, rented by a family and a tractor-trailer owned and operated by an independent trucking company licensed by the U.S.

Department of Transportation.

This independent motor carrier was not a Landstar BCO Independent Contractor, but rather was providing truck capacity to Landstar Ranger, Inc., a wholly-owned subsidiary of the Company (“Landstar Ranger”), under a non-exclusive truck brokerage contractual arrangement.

The plaintiffs principally assert that Landstar Ranger acted as a motor carrier rather than as a broker with respect to the shipment involved in the Accident and, as a result, should be determined to be legally responsible for the operation of the independent, non-exclusive truck brokerage carrier involved in the Accident and the conduct of its driver.

Based on knowledge of the facts, available insurance coverage and the analysis of the Company’s outside counsel, an immaterial accrual was included in insurance claims in the Company’s consolidated balance sheet as of June 28, 2025.

No assurances can be provided as to the amount of the verdict that may be entered against Landstar Ranger at the conclusion of the Trial, which is expected to occur during the Company’s 2025 third quarter.

Moreover, the Trial could result in a substantial verdict against Landstar Ranger and could have a material negative effect on the results of operations for the Company’s 2025 third quarter and fiscal year.

The Company intends to preserve its right to appeal any such verdict.

No assurances can be provided as to the probability of success with respect to any potential appeal of any such verdict or the ultimate outcome of any such appeal.

The total cost associated with this matter, which may include post-judgment interest, bonding-related costs and legal and other professional fees, will depend on many factors.

The ultimate financial impact, as well as the timing of the ultimate resolution of this matter, are difficult to predict and could have a material negative effect on the results of operations in the quarter or year in which such ultimate resolution occurs.

portion of the bond portfolio of $ 86,139,000

is included in other assets.

The short-term investments, together with $ 24,474,000

of non-current

investments, provide collateral for the $ 75,331,000

of letters of credit issued to guarantee payment of insurance claims.

As of September 27, 2025, Landstar also had $ 34,916,000

of additional letters of credit outstanding under the Company’s Credit Agreement.

As previously disclosed by the Company in its Quarterly Report on Form 10-Q

for the 2025 second quarter and in a Current Report on Form 8-K

filed on August 13, 2025, a trial verdict (the “Verdict”) was rendered on August 6, 2025 in state court in El Paso County, Texas, in the matter of Eduardo Cabral, et.

Landstar Ranger, Inc., et.

(the “Cabral Matter”).

The Verdict included a determination by the jury that Landstar Ranger acted as a broker and not as a motor carrier with respect to the transportation of the shipment involved in a tragic, catastrophic accident.

The Verdict also determined that 15 % of the total monetary damages were attributed to Landstar Ranger, or $ 3.42 million, of the $ 22.8 million total monetary damages, with the remainder of the total monetary damages being attributed to the hauling motor carrier, MyUniverse, and the MyUniverse truck driver.

The plaintiffs, as well as Landstar Ranger, have filed post-trial motions and may attempt to appeal the Verdict.

No assurances can be provided as to the probability of success with respect to any post-trial motions or appeals relating to the Verdict or the ultimate outcome of any such motions or appeals.

The total cost associated with this matter, which may include post-judgment interest, bonding-related costs and legal and other professional fees, will depend on many factors and the ultimate financial impact, as well as the timing of the ultimate resolution of this matter, are difficult to predict.

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

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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 fro m net u

nfavorable development of prior year self-insured claims estimates on operating income, net income and basic and diluted earnings per share set forth in the consolidated statements of income for the twenty-six-week

and thirteen-week periods ended June 28, 2025 and June 29, 2024 (in thousands, except per share amounts):

Twenty-Six Weeks Ended

The following table summarizes the adverse effect of the increase in the cost of insurance claims resulting from net unfavorable development of prior year self-insured claims estimates on operating income, net income and basic and diluted earnings per share set forth in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 27, 2025 and September 28, 2024 (in thousands, except per share amounts):

Thirty-Nine Weeks Ended

Thirteen Weeks Ended

September 27,

September 28,

September 27,

September 28,

Operating income

Basic and diluted earnings per share

The unfavorable development of prior years’ claims during the twenty-six-week

period ended June 28, 2025 was primarily attributable to elevated cargo loss experience as a result of fraud and theft in the supply chain and several specific commercial trucking claims.

The unfavorable development of prior years’ claims during the thirty-nine-week period ended September 27, 2025 was primarily attributable to elevated cargo loss experience as a result of fraud and theft in the supply chain and several specific commercial trucking claims.

Gain Contingency

2 unchanged sentences

Within the Company’s third party insurance arrangements providing excess coverage for commercial trucking liabilities, structured arrangements with third party reinsurers within a specific loss layer may include provisions that provide for a refund of premium in the event of favorable loss experience.

During the 2025 second fiscal quarter, with respect to one such three-year commercial auto liability reinsurance arrangement relating to certain excess claims incurred between May 1, 2020 through April 30, 2023, the Company received $

9,000,000 of an

anticipated $ 12,000,000 cash payment from third party reinsurance providers in the form of a “no claims bonus” due to favorable loss experience with respect to claims incurred during the applicable policy period.

The Company recorded this payment as a deferred gain within other current liabilities in the consolidated balance sheet as of June 28, 2025, until such time as all underlying claims with exposure under the applicable excess layer insurance arrangement are resolved and the gain can be recognized.

On the first business day of the 2025 third fiscal quarter, the Company received the remaining $

3,000,000 cash payment.

During the 2025 thirty-nine-week period, with respect to one such three-year commercial auto liability reinsurance arrangement relating to certain excess claims incurred between May 1, 2020 through April 30, 2023, the Company received $ 12,000,000

of cash payments from third party reinsurance providers in the form of a “no claims bonus” due to favorable loss experience with respect to claims incurred during the applicable policy period.

The Company recorded this payment as a deferred gain within other current liabilities in the consolidated balance sheet as of September 27, 2025, until such time as all underlying claims with exposure under the applicable excess layer insurance arrangement are resolved and the gain can be recognized.

Based on the Verdict, the Cabral Matter referenced above in footnote 11 is not anticipated to adversely impact the Company’s ability to meet the requirements of such “no claims bonus”.

No assurances can be provided, however, regarding whether the Company will ultimately be able to recognize a gain with respect to the “no claims bonus.”

Held for Sale Subsidiary

During the 2025 third fiscal quarter, the Company entered into an arrangement with a financial advisor to actively market its Mexican subsidiary, Landstar Metro, S.A.P.I.

(“Landstar Metro”) and to consider other strategic alternatives for this subsidiary, which may involve a sale or other disposition in whole or in part of Landstar Metro during the Company’s 2025 fiscal year.

The Company determined that this planned divestiture does not represent a strategic shift that would be expected to have a significant effect on our consolidated results of operations, and therefore the results of Landstar Metro are not reported as discontinued operations.

It is not anticipated that a sale or other disposition of Landstar Metro will adversely affect the Company’s ability to provide U.S./Mexico cross-border services, given that Landstar Metro is principally engaged in intra-Mexico truck transportation services.

In connection with the decision to actively market Landstar Metro, management identified a triggering event to perform a quantitative goodwill impairment test.

As part of its analysis, the Company used a combination of the discounted cash flow method and the market approach.

Based on the quantitative assessment, the Company concluded that Landstar Metro’s goodwill was impaired and recorded a non-cash

impairment charge of $ 7,530,000 to goodwill within the transportation logistics segment.

Further, based on the expected fair value of Landstar Metro, net of costs to sell, the Company recognized an impairment on assets held for sale of $ 8,612,000 .

Both impairments are included in impairment of intangible and other assets within the Company’s consolidated statements of income.

No assurances can be provided that there will not be additional charges and expenses incurred by the Company in connection with this sale process or upon any ultimate disposition of Landstar Metro.

As of September 27, 2025, the assets and liabilities of Landstar Metro are presented as held for sale at carrying value.

A summary of assets and liabilities associated with Landstar Metro that are held for sale, is presented below (in thousands):

As of September 27, 2025

Assets held for sale:

Cash and cash equivalents

Trade and other receivables

Operating property

valuation allowance

Total assets held for sale (1)

Liabilities held for sale:

Accounts payable

Deferred income taxes and other liabilities

Total liabilities held for sale (1)

Cumulative translation loss of foreign entities held for sale (2)

Assets and liabilities held for sale are separately presented on the consolidated balance sheets.

Cumulative translation loss of foreign entities held for sale is included within accumulated other comprehensive loss on the consolidated balance sheets.

Impairment of Software Assets

The Company evaluates its operating property whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with ASC 360, Property,

Plant and Equipment

When such events or changes in circumstances occur, a recoverability test is performed based on projected undiscounted cash flows expected to be realized from the use and eventual disposition of the asset or asset group.

An impairment is recorded for any excess of the carrying amount over the estimated fair value.

Fair value is determined based on quoted market values, discounted cash flows or external appraisals, as appropriate.

During the 2025 third fiscal quarter, the Company performed a strategic review of its operations.

In connection with this strategic review, management evaluated its transportation management systems (“TMSs”), including the Landstar TMS, a cloud-based platform for truckload freight agent workflow, and the Blue TMS, a cloud-based platform built specifically to service the truckload brokerage contract services market.

Management determined that the Landstar TMS, rather than the Blue TMS, would be the Company’s primary TMS used in the future to service the truckload brokerage contract services market.

As a result of this decision, the Company also determined to wind-down the Blue TMS and, in connection therewith, the Company performed a recoverability test with respect to potential impairment of the software assets associated with the Blue TMS and determined estimated fair value based on discounted cash flows.

The Company subsequently recorded a $ 8,963,000 non-cash impairment charge within its transportation logistics segment, which is included in impairment of intangible and other assets within the Company’s consolidated statements of income.

Impairment of Equity Investment

In 2022, the Company acquired a minority equity investment in Cavnue, LLC (“Cavnue”), a privately held start-up

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 is considered an investment in non-marketable

equity securities without a readily determinable market value.

The carrying value of the non-marketable

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

During the 2025 third fiscal quarter, the Company determined that there were indicators of potential impairment related to the value of its equity investment in Cavnue related to the financial performance of the company and its ability to raise additional capital to finance continued investment in its operations.

As such, the Company recorded a non-cash

impairment charge for the carrying value of its investment in Cavnue of $ 4,999,000 during the thirteen-week period ended September 27, 2025, which is included in impairment of intangible and other assets within the Company’s consolidated statements of income.

Recent Accounting Pronouncements

19 unchanged sentences

This supply chain fraud matter does not involve the Company’s core North American truckload services.

In connection with this supply chain fraud matter, consolidated revenue and purchased transportation as reported in the Company’s fiscal year 2024, 2023 and 2022 financial results were each overstated by approximately 2 %, 1 %, and less than 0.5 %, respectively.

As the overstated amount of revenue was approximately equal to the overstated amount of purchased transportation, the impact on each of operating income and net income, as reported, was less than 1 % in fiscal year 2024 and less than 0.2 % in fiscal years 2023 and 2022, respectively.

%, and less than 0.5

%, respectively.

As the overstated amount of revenue was approximately equal to the overstated amount of purchased transportation, the impact on each of operating income and net income, as reported, was less than 1

% in fiscal year 2024 and less than 0.2

% in fiscal years 2023 and 2022, respectively.

The Company has performed a quantitative and qualitative analysis of the impact of this supply chain fraud matter in respect of the 2025 first quarter and the financial statements for each prior fiscal year period during which identified instances of fraud relating to this matter occurred.

In connection therewith, the Company concluded that such impact was immaterial with respect to each such fiscal period.

The Company’s financial results for the 2025 first quarter and for the twenty-six

week period ended June 28, 2025 included a $

The Company’s financial results for the 2025 first quarter and for the thirty-nine week period ended September 27, 2025 included a $ 4.8

million pre-tax

expense, or $ 0.10 per basic and diluted share, relating to this matter.

expense, or $ 0.10

per basic and diluted share, relating to this matter.

This expense reflects the total currently anticipated aggregate adverse financial impact to Landstar relating to the fraud, net of certain actual and anticipated recoveries and before taking into account the cost of legal and other professional fees as well as additional potential recoveries in the future.

1 unchanged sentence

In the 2025 second quarter, this expense was reclassified from the provision for customer bad debt expense within selling, general and administrative costs to the provision for contractor bad debt expense within other operating costs due to the finalization of certain agreements with the affected independent commission sales agency during the 2025 second fiscal quarter.

As of the June 28, 2025 consolidated balance sheet, this amount was included in the allowance for doubtful accounts related to other receivables.

As of the September 27, 2025 consolidated balance sheet, this amount was included in the allowance for doubtful accounts related to other receivables.

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