☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock | LSTR | NASDAQ |
Yes ☑☒ No ☐
Yes ☑☒ No ☐
Large accelerated filer | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
Yes ☐ No ☑
☒
37,127,333.
PART I – Financial Information | ||||
Item 1. Financial Statements (unaudited) | ||||
Page 4 | ||||
Page 5 | ||||
Page 6 | ||||
Page 7 | ||||
Page 8 | ||||
Page 9 | ||||
Page 17 | ||||
Page 28 | ||||
Page 29 | ||||
PART II – Other Information | ||||
Page 29 | ||||
Page 29 | ||||
Page 31 | ||||
Page | ||||
Page 34 | ||||
31, 2022.
September 30, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 249,741 | $ | 178,897 | ||||
Short-term investments | 45,687 | 66,560 | ||||||
Trade accounts receivable, less allowance of $6,163 and $5,161 | 546,826 | 463,102 | ||||||
Other receivables, including advances to independent contractors, less allowance of $6,306 and $5,523 | 18,704 | 18,567 | ||||||
Other current assets | 16,925 | 10,281 | ||||||
|
|
|
| |||||
Total current assets | 877,883 | 737,407 | ||||||
|
|
|
| |||||
Operating property, less accumulated depreciation and amortization of $210,018 and $190,374 | 261,465 | 272,843 | ||||||
Goodwill | 39,914 | 31,134 | ||||||
Other assets | 84,077 | 55,207 | ||||||
|
|
|
| |||||
Total assets | $ | 1,263,339 | $ | 1,096,591 | ||||
|
|
|
| |||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Cash overdraft | $ | 33,853 | $ | 36,251 | ||||
Accounts payable | 269,389 | 219,409 | ||||||
Current maturities of long-term debt | 40,610 | 45,047 | ||||||
Insurance claims | 34,211 | 26,121 | ||||||
Other current liabilities | 68,854 | 53,483 | ||||||
|
|
|
| |||||
Total current liabilities | 446,917 | 380,311 | ||||||
|
|
|
| |||||
Long-term debt, excluding current maturities | 76,792 | 93,257 | ||||||
Insurance claims | 32,804 | 26,883 | ||||||
Deferred income taxes and other noncurrent liabilities | 52,853 | 53,583 | ||||||
Equity | ||||||||
Landstar System, Inc. and subsidiary shareholders’ equity | ||||||||
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,715,290 and 67,585,675 shares | 677 | 676 | ||||||
Additional paid-in capital | 205,396 | 199,414 | ||||||
Retained earnings | 1,613,590 | 1,512,993 | ||||||
Cost of 25,749,493 and 25,747,541 shares of common stock in treasury | (1,167,600 | ) | (1,167,437 | ) | ||||
Accumulated other comprehensive loss | (1,708 | ) | (3,089 | ) | ||||
|
|
|
| |||||
Total Landstar System, Inc. and subsidiary shareholders’ equity | 650,355 | 542,557 | ||||||
Noncontrolling interest | 3,618 | — | ||||||
|
|
|
| |||||
Total equity | 653,973 | 542,557 | ||||||
|
|
|
| |||||
Total liabilities and equity | $ | 1,263,339 | $ | 1,096,591 | ||||
|
|
|
|
March 26, 2022 | December 25, 2021 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 146,025 | $ | 215,522 | ||||
Short-term investments | 35,679 | 35,778 | ||||||
Trade accounts receivable, less allowance of $7,940 and $7,074 | 1,223,123 | 1,154,314 | ||||||
Other receivables, including advances to independent contractors, less allowance of $8,838 and $8,125 | 123,231 | 101,124 | ||||||
Other current assets | 10,441 | 16,162 | ||||||
Total current assets | 1,538,499 | 1,522,900 | ||||||
Operating property, less accumulated depreciation and amortization of $356,988 and $344,099 | 307,044 | 317,386 | ||||||
Goodwill | 40,945 | 40,768 | ||||||
Other assets | 159,325 | 164,411 | ||||||
Total assets | $ | 2,045,813 | $ | 2,045,465 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Cash overdraft | $ | 96,215 | $ | 116,478 | ||||
Accounts payable | 626,337 | 604,130 | ||||||
Current maturities of long-term debt | 34,983 | 36,561 | ||||||
Insurance claims | 52,644 | 46,896 | ||||||
Dividends payable | — | 75,387 | ||||||
Accrued income taxes | 50,280 | 18,403 | ||||||
Other current liabilities | 89,793 | 112,128 | ||||||
Total current liabilities | 950,252 | 1,009,983 | ||||||
Long-term debt, excluding current maturities | 137,289 | 75,243 | ||||||
Insurance claims | 51,132 | 49,509 | ||||||
Deferred income taxes and other noncurrent liabilities | 50,991 | 48,720 | ||||||
Shareholders’ Equity | ||||||||
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,370,151 and 68,232,975 shares | 684 | 682 | ||||||
Additional paid-in capital | 248,230 | 255,148 | ||||||
Retained earnings | 2,432,699 | 2,317,184 | ||||||
Cost of 31,242,818 and 30,539,235 shares of common stock in treasury | (1,816,149 | ) | (1,705,601 | ) | ||||
Accumulated other comprehensive loss | (9,315 | ) | (5,403 | ) | ||||
Total shareholders’ equity | 856,149 | 862,010 | ||||||
Total liabilities and shareholders’ equity | $ | 2,045,813 | $ | 2,045,465 | ||||
Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||||||||||||
Revenue | $ | 2,594,772 | $ | 2,274,805 | $ | 943,430 | $ | 787,938 | ||||||||
Investment income | 1,733 | 1,100 | 711 | 357 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Purchased transportation | 1,989,938 | 1,730,745 | 726,827 | 601,002 | ||||||||||||
Commissions to agents | 210,678 | 189,075 | 76,598 | 65,144 | ||||||||||||
Other operating costs, net of gains on asset sales/dispositions | 22,497 | 21,484 | 8,097 | 7,492 | ||||||||||||
Insurance and claims | 46,333 | 42,795 | 17,927 | 12,488 | ||||||||||||
Selling, general and administrative | 123,179 | 106,211 | 43,995 | 34,692 | ||||||||||||
Depreciation and amortization | 29,961 | 26,109 | 10,130 | 9,016 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total costs and expenses | 2,422,586 | 2,116,419 | 883,574 | 729,834 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating income | 173,919 | 159,486 | 60,567 | 58,461 | ||||||||||||
Interest and debt expense | 2,559 | 2,725 | 657 | 948 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income before income taxes | 171,360 | 156,761 | 59,910 | 57,513 | ||||||||||||
Income taxes | 59,047 | 58,985 | 17,490 | 21,235 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | 112,313 | 97,776 | 42,420 | 36,278 | ||||||||||||
Less: Net loss attributable to noncontrolling interest | (23 | ) | — | (23 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 112,336 | $ | 97,776 | $ | 42,443 | $ | 36,278 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings per common share attributable to Landstar System, Inc. and subsidiary | $ | 2.68 | $ | 2.32 | $ | 1.01 | $ | 0.86 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 2.67 | $ | 2.31 | $ | 1.01 | $ | 0.86 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Average number of shares outstanding: | ||||||||||||||||
Earnings per common share | 41,924,000 | 42,223,000 | 41,957,000 | 42,039,000 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted earnings per share | 42,013,000 | 42,341,000 | 42,028,000 | 42,170,000 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Dividends per common share | $ | 0.28 | $ | 0.25 | $ | 0.10 | $ | 0.09 | ||||||||
|
|
|
|
|
|
|
|
Thirteen Weeks Ended | ||||||||
March 26, 2022 | March 27, 2021 | |||||||
Revenue | $ | 1,970,599 | $ | 1,287,534 | ||||
Investment income | 721 | 684 | ||||||
Costs and expenses: | ||||||||
Purchased transportation | 1,550,330 | 998,285 | ||||||
Commissions to agents | 149,778 | 100,009 | ||||||
Other operating costs, net of gains on asset sales/dispositions | 11,141 | 7,642 | ||||||
Insurance and claims | 30,768 | 21,505 | ||||||
Selling, general and administrative | 52,713 | 45,408 | ||||||
Depreciation and amortization | 13,757 | 12,101 | ||||||
Total costs and expenses | 1,808,487 | 1,184,950 | ||||||
Operating income | 162,833 | 103,268 | ||||||
Interest and debt expense | 1,123 | 1,042 | ||||||
Income before income taxes | 161,710 | 102,226 | ||||||
Income taxes | 36,871 | 24,986 | ||||||
Net income | $ | 124,839 | $ | 77,240 | ||||
Diluted earnings per share | $ | 3.34 | $ | 2.01 | ||||
Average diluted shares outstanding | 37,418,000 | 38,404,000 | ||||||
Dividends per common share | $ | 0.25 | $ | 0.21 | ||||
Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||||||||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 112,336 | $ | 97,776 | $ | 42,443 | $ | 36,278 | ||||||||
Other comprehensive income: | ||||||||||||||||
Unrealized holding gains (losses) on available-for-sale investments, net of tax expense (benefit) of $136, $198, $47 and ($19) | 251 | 363 | 86 | (34 | ) | |||||||||||
Foreign currency translation gains (losses) | 1,130 | 656 | 545 | (181 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income (loss) | 1,381 | 1,019 | 631 | (215 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income attributable to Landstar System, Inc. and subsidiary | $ | 113,717 | $ | 98,795 | $ | 43,074 | $ | 36,063 | ||||||||
|
|
|
|
|
|
|
|
Thirteen Weeks Ended | ||||||||
March 26, 2022 | March 27, 202 2 | |||||||
Net income | $ | 124,839 | $ | 77,240 | ||||
Other comprehensive loss: | ||||||||
Unrealized holding losses on available-for-sale | (5,187 | ) | (534 | ) | ||||
Foreign currency translation gains (losses) | 1,275 | (420 | ) | |||||
Other comprehensive loss | (3,912 | ) | (954 | ) | ||||
Comprehensive income | $ | 120,927 | $ | 76,286 | ||||
Thirty Nine Weeks Ended | ||||||||
September 30, 2017 | September 24, 2016 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 112,313 | $ | 97,776 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization of operating property and intangible assets | 29,961 | 26,109 | ||||||
Non-cash interest charges | 189 | 175 | ||||||
Provisions for losses on trade and other accounts receivable | 5,643 | 4,076 | ||||||
Gains on sales/disposals of operating property | (900 | ) | (3,221 | ) | ||||
Deferred income taxes, net | (708 | ) | 8,925 | |||||
Stock-based compensation | 3,660 | 2,718 | ||||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in trade and other accounts receivable | (89,504 | ) | 50,957 | |||||
(Increase) decrease in other assets | (8,671 | ) | 3,820 | |||||
Increase (decrease) in accounts payable | 53,290 | (25,074 | ) | |||||
Increase (decrease) in other liabilities | 12,980 | (5,436 | ) | |||||
Increase in insurance claims | 14,011 | 10,472 | ||||||
|
|
|
| |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 132,264 | 171,297 | ||||||
|
|
|
| |||||
INVESTING ACTIVITIES | ||||||||
Sales and maturities of investments | 42,917 | 30,580 | ||||||
Purchases of investments | (44,423 | ) | (31,938 | ) | ||||
Purchases of operating property | (8,800 | ) | (17,833 | ) | ||||
Proceeds from sales of operating property | 3,594 | 8,622 | ||||||
Consideration paid for acquisitions | (8,199 | ) | — | |||||
|
|
|
| |||||
NET CASH USED BY INVESTING ACTIVITIES | (14,911 | ) | (10,569 | ) | ||||
|
|
|
| |||||
FINANCING ACTIVITIES | ||||||||
Decrease in cash overdraft | (2,398 | ) | (7,884 | ) | ||||
Dividends paid | (11,739 | ) | (10,572 | ) | ||||
Payment for debt issue costs | — | (1,048 | ) | |||||
Proceeds from exercises of stock options | 2,531 | 1,440 | ||||||
Taxes paid in lieu of shares issued related to stock-based compensation plans | (371 | ) | (1,715 | ) | ||||
Excess tax benefits from stock-based awards | — | 343 | ||||||
Purchases of common stock | — | (50,516 | ) | |||||
Principal payments on capital lease obligations | (35,662 | ) | (35,147 | ) | ||||
|
|
|
| |||||
NET CASH USED BY FINANCING ACTIVITIES | (47,639 | ) | (105,099 | ) | ||||
|
|
|
| |||||
Effect of exchange rate changes on cash and cash equivalents | 1,130 | 656 | ||||||
|
|
|
| |||||
Increase in cash and cash equivalents | 70,844 | 56,285 | ||||||
Cash and cash equivalents at beginning of period | 178,897 | 114,520 | ||||||
|
|
|
| |||||
Cash and cash equivalents at end of period | $ | 249,741 | $ | 170,805 | ||||
|
|
|
|
Thirteen Weeks Ended | ||||||||
March 26, 2022 | March 27, 2021 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 124,839 | $ | 77,240 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 13,757 | 12,101 | ||||||
Non-cash interest charges | 112 | 112 | ||||||
Provisions for losses on trade and other accounts receivable | 2,626 | 547 | ||||||
Gains on sales/disposals of operating property | (165 | ) | (24 | ) | ||||
Deferred income taxes, net | 1,324 | (1,110 | ) | |||||
Stock-based compensation | 1,995 | 4,029 | ||||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in trade and other accounts receivable | (93,542 | ) | 33,440 | |||||
Decrease in other assets | 2,531 | 6,175 | ||||||
Increase in accounts payable | 22,207 | 33,935 | ||||||
Increase in other liabilities | 11,910 | 13,008 | ||||||
Increase (decrease) in insurance claims | 7,371 | (109,562 | ) | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 94,965 | 69,891 | ||||||
INVESTING ACTIVITIES | ||||||||
Sales and maturities of investments | 12,420 | 7,957 | ||||||
Purchases of investments | (13,428 | ) | (8,716 | ) | ||||
Purchases of operating property | (3,609 | ) | (4,076 | ) | ||||
Proceeds from sales of operating property | 643 | 500 | ||||||
NET CASH USED BY INVESTING ACTIVITIES | (3,974 | ) | (4,335 | ) | ||||
FINANCING ACTIVITIES | ||||||||
(Decrease) increase in cash overdraft | (20,263 | ) | 6 | |||||
Dividends paid | (84,711 | ) | (84,837 | ) | ||||
Proceeds from exercises of stock options | 56 | 77 | ||||||
Taxes paid in lieu of shares issued related to stock-based compensation plans | (10,183 | ) | (1,241 | ) | ||||
Borrowings on revolving credit facility | 70,000 | 0 | ||||||
Purchases of common stock | (109,332 | ) | 0 | |||||
Principal payments on finance lease obligations | (9,532 | ) | (9,778 | ) | ||||
NET CASH USED BY FINANCING ACTIVITIES | (163,965 | ) | (95,773 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 815 | 252 | ||||||
Decrease in cash, cash equivalents and restricted cash | (72,159 | ) | (29,965 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 219,571 | 249,354 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 147,412 | $ | 219,389 | ||||
Thirty Nine
March 26, 2022 and March 27, 2021
Landstar System, Inc. and Subsidiary Shareholders | ||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In | Retained | Treasury Stock at Cost | Accumulated Other Comprehensive | Non- controlling | |||||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | (Loss) Income | Interests | Total | ||||||||||||||||||||||||||||
Balance December 31, 2016 | 67,585,675 | $ | 676 | $ | 199,414 | $ | 1,512,993 | 25,747,541 | $ | (1,167,437 | ) | $ | (3,089 | ) | — | $ | 542,557 | |||||||||||||||||||
Net income (loss) | 112,336 | (23 | ) | 112,313 | ||||||||||||||||||||||||||||||||
Dividends ($0.28 per share) | (11,739 | ) | (11,739 | ) | ||||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 129,615 | 1 | 2,322 | 1,952 | (163 | ) | 2,160 | |||||||||||||||||||||||||||||
Stock-based compensation | 3,660 | 3,660 | ||||||||||||||||||||||||||||||||||
Other comprehensive income | 1,381 | 1,381 | ||||||||||||||||||||||||||||||||||
Acquired business and noncontrolling interests | 3,641 | 3,641 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Balance September 30, 2017 | 67,715,290 | $ | 677 | $ | 205,396 | $ | 1,613,590 | 25,749,493 | $ | (1,167,600 | ) | $ | (1,708 | ) | $ | 3,618 | $ | 653,973 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock at Cost | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance December 25, 2021 | 68,232,975 | $ | 682 | $ | 255,148 | $ | 2,317,184 | 30,539,235 | $ | (1,705,601 | ) | $ | (5,403 | ) | $ | 862,010 | ||||||||||||||||
Net income | 124,839 | 124,839 | ||||||||||||||||||||||||||||||
Dividends ($0.25 per share) | (9,324 | ) | (9,324 | ) | ||||||||||||||||||||||||||||
Purchases of common stock | 693,550 | (109,332 | ) | (109,332 | ) | |||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 137,176 | 2 | (8,913 | ) | 10,033 | (1,216 | ) | (10,127 | ) | |||||||||||||||||||||||
Stock-based compensation | 1,995 | 1,995 | ||||||||||||||||||||||||||||||
Other comprehensive loss | (3,912 | ) | (3,912 | ) | ||||||||||||||||||||||||||||
Balance March 26, 2022 | 68,370,151 | $ | 684 | $ | 248,230 | $ | 2,432,699 | 31,242,818 | $ | (1,816,149 | ) | $ | (9,315 | ) | $ | 856,149 | ||||||||||||||||
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock at Cost | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance December 26, 2020 | 68,183,702 | $ | 682 | $ | 228,875 | $ | 2,046,238 | 29,797,639 | $ | (1,581,961 | ) | $ | (1,999 | ) | $ | 691,835 | ||||||||||||||||
Net income | 77,240 | 77,240 | ||||||||||||||||||||||||||||||
Dividends ($0.21 per share) | (8,067 | ) | (8,067 | ) | ||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 28,594 | — | (307 | ) | 6,087 | (857 | ) | (1,164 | ) | |||||||||||||||||||||||
Stock-based compensation | 4,029 | 4,029 | ||||||||||||||||||||||||||||||
Other comprehensive loss | (954 | ) | (954 | ) | ||||||||||||||||||||||||||||
Balance March 27, 2021 | 68,212,296 | $ | 682 | $ | 232,597 | $ | 2,115,411 | 29,803,726 | $ | (1,582,818 | ) | $ | (2,953 | ) | $ | 762,919 | ||||||||||||||||
Landstar owns, through various subsidiaries, a controlling interest
(1) | Significant Accounting Policies |
Thirteen Weeks Ended | ||||||||
Mode | March 26, 2022 | March 27, 2021 | ||||||
Truck – BCO Independent Contractors | 37 | % | 44 | % | ||||
Truck – Truck Brokerage Carriers | 52 | % | 49 | % | ||||
Rail intermodal | 2 | % | 2 | % | ||||
Ocean and air cargo carriers | 8 | % | 4 | % | ||||
Truck Equipment Type | ||||||||
Van equipment | $ | 1,081,206 | $ | 729,402 | ||||
Unsided/platform equipment | $ | 408,757 | $ | 297,485 | ||||
Less-than-truckload | $ | 33,720 | $ | 25,670 | ||||
Other truck transportation (1) | $ | 227,601 | $ | 140,932 |
(1) | Includes power-only, expedited, straight truck, cargo van, and miscellaneous other truck transportation revenue generated by the transportation logistics segment. Power-only refers to shipments where the Company furnishes a power unit and an operator but not trailing equipment, which is typically provided by the shipper or consignee. |
(2) | Share-based Payment Arrangements |
(1) Acquired Business and Noncontrolling Interests
During 2017, the Company incorporated each of Landstar Metro and Landstar Servicios. On September 20, 2017, Landstar Metro acquired substantially all of the assets of the asset-light transportation logistics business of Fletes Avella, S.A. de C.V., a Mexican transportation logistics company. Cash consideration paid in the quarter for the acquisition was approximately $8,199,000. In addition, the Company assumed approximately $2,200,000 in liabilities consisting of additional contingent purchase price and associated indirect taxes. In connection with the acquisition, individuals affiliated with the seller subscribed in the aggregate for a 30% equity interest in each of Landstar Metro and Landstar Servicios. The asset acquisition by Landstar Metro was accounted for as a business combination in accordance with Accounting Standards Codification 805,Business Combinations (“ASC 805”). The resulting goodwill arising from the acquisition was approximately $8,800,000. With respect to this goodwill, 70% is expected to be deductible by the Company for U.S. income tax purposes, and following the purchase of the noncontrolling interests by the Company, up to 100% of this goodwill would be expected to be deductible by the Company. Pro forma financial information for prior periods is not presented as the Company does not believe the acquisition to be material to our consolidated results. The results of operations from Landstar Metro and Landstar Servicios are presented as part of the Company’s transportations logistics segment. It is not anticipated that Landstar Metro and Landstar Servicios will have a material effect on the revenue and earnings of the Company for the remainder of fiscal year 2017. During the thirty-nine-week period ended September 30, 2017, the Company incurred approximately $1,000,000, or $0.01 per common share ($0.01 per diluted share), inone-time costs related to the completion of the acquisition and subscription of thenon-controlling interests.
As it relates to the noncontrolling interests of Landstar Metro and Landstar Servicios,March 26, 2022, the Company has the option to purchase, and the minority equityholders have the option to sell, during the period commencing on the third anniversary of September 20, 2017, the closing date of the subscription by the minority equityholders (the “Closing Date”), and at any time after the fourth anniversary of the Closing Date, at fair value all but not less than all of the noncontrolling interests in Landstar Metro and Landstar Servicios. The noncontrolling interests are also subject to customary restrictions on transfer, including a right of first refusal in favor of the Company.
(2) Share-based Payment Arrangements
As of September 30, 2017, the Company had twoan employee equity incentive plans, the 2002 employee stock option and stock incentive plan, (the “ESOSIP”) and the 2011 equity incentive plan (the “2011 EIP”). No further grants can be made under the ESOSIP. The Company also has a stock compensation plan for members of its Board of Directors, the Amended and Restated 2013 Directors Stock Compensation Plan (as amended and restated as of May 17, 2016, the “2013 DSCP”). 6,000,000 shares of the Company’s common stock were authorized for issuance under the 2011 EIP and 115,000 shares of the Company’s common stock were authorized for issuance under the 2013 DSCP. The ESOSIP, 2011 EIP and 2013 DSCP are each referred to herein as a “Plan,” and, collectively, as the “Plans.” Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):
Thirteen Weeks Ended Total cost of the Plans during the period Amount of related income tax benefit Net cost of the Plans during the period Thirty Nine Weeks Ended September 30,
2017 September 24,
2016 September 30,
2017 September 24,
2016 $ 3,660 $ 2,718 $ 1,423 $ 652
recognized during the period (2,492 ) (1,128 ) (678 ) (292 ) $ 1,168 $ 1,590 $ 745 $ 360
Thirteen Weeks Ended | ||||||||
March 26, 2022 | March 27, 2021 | |||||||
Total cost of the Plans during the period | $ | 1,995 | $ | 4,029 | ||||
Amount of related income tax benefit recognized during the period | (3,360 | ) | (1,341 | ) | ||||
Net cost of the Plans during the period | $ | (1,365 | ) | $ | 2,688 | |||
$2,869,000 and $343,000, respectively.
Number of RSUs | Weighted Average Grant Date Fair Value | |||||||
Outstanding at December 31, 2016 | 378,238 | $ | 50.46 | |||||
Granted | 67,769 | $ | 76.85 | |||||
Forfeited | (58,779 | ) | $ | 46.00 | ||||
|
| |||||||
Outstanding at September 30, 2017 | 387,228 | $ | 55.75 | |||||
|
|
Number of RSUs | Weighted Average Grant Date Fair Value | |||||||
Outstanding at December 25, 2021 | 209,399 | $ | 102.90 | |||||
Granted | 49,405 | $ | 139.78 | |||||
Shares earned in excess of target (1) | 91,497 | $ | 92.58 | |||||
Vested shares, including shares earned in excess of target | (174,366 | ) | $ | 96.14 | ||||
Forfeited | (15,044 | ) | $ | 103.31 | ||||
Outstanding at March 26, 2022 | 160,891 | $ | 115.64 | |||||
(1) | 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. |
Stock Options
The following table summarizes information regarding the Company’s outstanding stock options under the Plans:
Number of Options | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (000s) | |||||||||||||
Options outstanding at December 31, 2016 | 372,561 | $ | 48.24 | |||||||||||||
Exercised | (134,461 | ) | $ | 46.38 | ||||||||||||
Forfeited | (1,200 | ) | $ | 55.67 | ||||||||||||
|
| |||||||||||||||
Options outstanding at September 30, 2017 | 236,900 | $ | 49.25 | 4.0 | $ | 11,940 | ||||||||||
|
| |||||||||||||||
Options exercisable at September 30, 2017 | 217,000 | $ | 48.59 | 3.9 | $ | 11,081 | ||||||||||
|
|
The total intrinsic value of stock options exercised during the thirty-nine-week periods ended September 30, 2017 and September 24, 2016 was $5,303,000 and $1,938,000, respectively.
As of September 30, 2017, there was $91,000 of total unrecognized compensation cost related tonon-vested stock options granted under the Plans. The unrecognized compensation cost related to thesenon-vested options is expected to be recognized during 2017.
Number of Shares and Deferred Stock Units | Weighted Average Grant Date Fair Value | |||||||
Non-vested at December 31, 2016 | 28,409 | $ | 58.91 | |||||
Granted | 42,123 | $ | 84.26 | |||||
Vested | (16,227 | ) | $ | 61.50 | ||||
|
| |||||||
Non-vested at September 30, 2017 | 54,305 | $ | 77.80 | |||||
|
|
Number of Shares and Deferred Stock Units | Weighted Average Grant Date Fair Value | |||||||
Non-vested at December 25, 2021 | 56,436 | $ | 125.16 | |||||
Granted | 17,008 | $ | 152.44 | |||||
Vested | �� | (21,500 | ) | $ | 110.16 | |||
Forfeited | (2,302 | ) | $ | 108.59 | ||||
Non-vested at March 26, 2022 | 49,642 | $ | 141.77 | |||||
(3) Income Taxes
Number of Options | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (000s) | |||||||||||||
Options outstanding at December 25, 2021 | 8,570 | $ | 55.42 | |||||||||||||
Exercised | (3,500 | ) | $ | 54.01 | ||||||||||||
Options outstanding at March 26, 2022 | 5,070 | $ | 56.40 | 0.8 | $ | 495 | ||||||||||
Options exercisable at March 26, 2022 | 5,070 | $ | 56.40 | 0.8 | $ | 495 | ||||||||||
(3) | Income Taxes |
During2022 thirteen-week period w
(4) Earnings Per Share
2021 period.
(4) | Earnings Per Share |
The following table provides a reconciliation of During the average number of common shares outstanding used to calculate earnings per common share attributable to Landstar System, Inc.2022 and subsidiary2021 thirteen-week periods, in reference to the average numberdetermination of common shares and common share equivalents outstanding used to calculate diluted earnings per share, the future compensation cost attributable to Landstar System, Inc. and subsidiary (in thousands):
Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||||||||||||
Average number of common shares outstanding | 41,924 | 42,223 | 41,957 | 42,039 | ||||||||||||
Incremental shares from assumed exercises of stock options | 89 | 118 | 71 | 131 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Average number of common shares and common share equivalents outstanding | 42,013 | 42,341 | 42,028 | 42,170 | ||||||||||||
|
|
|
|
|
|
|
|
outstanding shares of
(5) Additional Cash Flow Information
(5) | Additional Cash Flow Information |
(6) Segment Information
2022 or 2021 thirteen-week periods.
(6) | Segment Information |
Thirty Nine Weeks Ended | ||||||||||||||||||||||||
September 30, 2017 | September 24, 2016 | |||||||||||||||||||||||
Transportation Logistics | Insurance | Total | Transportation Logistics | Insurance | Total | |||||||||||||||||||
External revenue | $ | 2,559,847 | $ | 34,925 | $ | 2,594,772 | $ | 2,240,169 | $ | 34,636 | $ | 2,274,805 | ||||||||||||
Internal revenue | 29,773 | 29,773 | 28,890 | 28,890 | ||||||||||||||||||||
Investment income | 1,733 | 1,733 | 1,100 | 1,100 | ||||||||||||||||||||
Operating income | 148,693 | 25,226 | 173,919 | 133,342 | 26,144 | 159,486 | ||||||||||||||||||
Expenditures on long-lived assets | 8,800 | 8,800 | 17,833 | 17,833 | ||||||||||||||||||||
Goodwill | 39,914 | 39,914 | 31,134 | 31,134 |
Thirteen Weeks Ended | ||||||||||||||||||||||||
September 30, 2017 | September 24, 2016 | |||||||||||||||||||||||
Transportation Logistics | Insurance | Total | Transportation Logistics | Insurance | Total | |||||||||||||||||||
External revenue | $ | 931,692 | $ | 11,738 | $ | 943,430 | $ | 776,397 | $ | 11,541 | $ | 787,938 | ||||||||||||
Internal revenue | 7,335 | 7,335 | 7,229 | 7,229 | ||||||||||||||||||||
Investment income | 711 | 711 | 357 | 357 | ||||||||||||||||||||
Operating income | 54,181 | 6,386 | 60,567 | 47,541 | 10,920 | 58,461 | ||||||||||||||||||
Expenditures on long-lived assets | 2,172 | 2,172 | 8,878 | 8,878 |
Thirteen Weeks Ended | ||||||||||||||||||||||||
March 26, 2022 | March 27, 2021 | |||||||||||||||||||||||
Transportation Logistics | Insurance | Total | Transportation Logistics | Insurance | Total | |||||||||||||||||||
External revenue | $ | 1,951,339 | $ | 19,260 | $ | 1,970,599 | $ | 1,270,499 | $ | 17,035 | $ | 1,287,534 | ||||||||||||
Internal revenue | 12,884 | 12,884 | 9,534 | 9,534 | ||||||||||||||||||||
Investment income | 721 | 721 | 684 | 684 | ||||||||||||||||||||
Operating income | 151,946 | 10,887 | 162,833 | 89,732 | 13,536 | 103,268 | ||||||||||||||||||
Expenditures on long-lived assets | 3,609 | 3,609 | 4,076 | 4,076 | ||||||||||||||||||||
Goodwill | 40,945 | 40,945 | 40,732 | 40,732 |
(7) Other Comprehensive Income
(7) | Other Comprehensive Income |
Unrealized Holding (Losses) Gains on Available-for-Sale Securities | Foreign Currency Translation | Total | ||||||||||
Balance as of December 31, 2016 | $ | (71 | ) | $ | (3,018 | ) | $ | (3,089 | ) | |||
Other comprehensive income | 251 | 1,130 | 1,381 | |||||||||
|
|
|
|
|
| |||||||
Balance as of September 30, 2017 | $ | 180 | $ | (1,888 | ) | $ | (1,708 | ) | ||||
|
|
|
|
|
|
Unrealized Holding Gains (Losses) on Available-for-Sale Securities | Foreign Currency Translation | Total | ||||||||||
Balance as of December 25, 2021 | $ | 113 | $ | (5,516 | ) | $ | (5,403 | ) | ||||
Other comprehensive (loss) income | (5,187 | ) | 1,275 | (3,912 | ) | |||||||
Balance as of March 26, 2022 | $ | (5,074 | ) | $ | (4,241 | ) | $ | (9,315 | ) | |||
(8) Investments
March 26, 2022.
(8) | Investments |
in active markets are classified within Level 1. 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$278,000 at September 30, 2017, while unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $109,000$144,000 at December 31, 2016, respectively.
25, 2021.
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
September 30, 2017 | ||||||||||||||||
Money market investments | $ | 16,823 | $ | — | $ | — | $ | 16,823 | ||||||||
Asset-backed securities | 3,497 | 2 | 5 | 3,494 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 84,885 | 373 | 91 | 85,167 | ||||||||||||
U.S. Treasury obligations | 5,496 | — | 1 | 5,495 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 110,701 | $ | 375 | $ | 97 | $ | 110,979 | ||||||||
|
|
|
|
|
|
|
| |||||||||
December 31, 2016 | ||||||||||||||||
Money market investments | $ | 12,395 | $ | — | $ | — | $ | 12,395 | ||||||||
Asset-backed securities | 4,027 | 3 | 19 | 4,011 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 70,069 | 150 | 239 | 69,980 | ||||||||||||
U.S. Treasury obligations | 23,037 | 2 | 6 | 23,033 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 109,528 | $ | 155 | $ | 264 | $ | 109,419 | ||||||||
|
|
|
|
|
|
|
|
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
March 26, 2022 | ||||||||||||||||
Money market investments | $ | 14,913 | $ | — | $ | — | $ | 14,913 | ||||||||
Asset-backed securities | 21,259 | — | 1,435 | 19,824 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 133,645 | 212 | 5,203 | 128,654 | ||||||||||||
U.S. Treasury obligations | 2,342 | — | 38 | 2,304 | ||||||||||||
Total | $ | 172,159 | $ | 212 | $ | 6,676 | $ | 165,695 | ||||||||
December 25, 2021 | ||||||||||||||||
Money market investments | $ | 8,750 | $ | — | $ | — | $ | 8,750 | ||||||||
Asset-backed securities | 22,441 | — | 346 | 22,095 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 137,916 | 1,406 | 966 | 138,356 | ||||||||||||
U.S. Treasury obligations | 2,342 | 50 | — | 2,392 | ||||||||||||
Total | $ | 171,449 | $ | 1,456 | $ | 1,312 | $ | 171,593 | ||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||||||
Asset-backed securities | $ | — | $ | — | $ | 2,311 | $ | 5 | $ | 2,311 | $ | 5 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 15,429 | 21 | 13,215 | 70 | 28,644 | 91 | ||||||||||||||||||
U.S. Treasury obligations | 5,495 | 1 | — | — | 5,495 | 1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 20,924 | $ | 22 | $ | 15,526 | $ | 75 | $ | 36,450 | $ | 97 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
December 31, 2016 | ||||||||||||||||||||||||
Asset-backed securities | $ | 1,363 | $ | 6 | $ | 2,314 | $ | 13 | $ | 3,677 | $ | 19 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 28,809 | 195 | 1,367 | 44 | 30,176 | 239 | ||||||||||||||||||
U.S. Treasury obligations | 12,734 | 6 | — | — | 12,734 | 6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 42,906 | $ | 207 | $ | 3,681 | $ | 57 | $ | 46,587 | $ | 264 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
March 26, 2022 | ||||||||||||||||||||||||
Asset-backed securities | $ | 19,824 | $ | 1,435 | $ | — | $ | — | $ | 19,824 | $ | 1,435 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 96,962 | 4,768 | 4,147 | 435 | 101,109 | 5,203 | ||||||||||||||||||
U.S. Treasury obligations | 2,304 | 38 | — | — | 2,304 | 38 | ||||||||||||||||||
Total | $ | 119,090 | $ | 6,241 | $ | 4,147 | $ | 435 | $ | 123,237 | $ | 6,676 | ||||||||||||
December 25, 2021 | ||||||||||||||||||||||||
Asset-backed securities | $ | 22,095 | $ | 346 | $ | — | $ | — | $ | 22,095 | $ | 346 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 72,526 | 966 | — | — | 72,526 | 966 | ||||||||||||||||||
Total | $ | 94,621 | $ | 1,312 | $ | — | $ | — | $ | 94,621 | $ | 1,312 | ||||||||||||
(9) | Leases |
Finance leases: | ||||
Amortization of right-of-use | $ | 5,327 | ||
Interest on lease liability | 700 | |||
Total finance lease cost | 6,027 | |||
Operating leases: | ||||
Lease cost | 926 | |||
Variable lease cost | — | |||
Sublease income | (1,213 | ) | ||
Total net operating lease income | (287 | ) | ||
Total net lease cost | $ | 5,740 | ||
Operating lease right-of-use | Other assets | $ | 1,916 | |||
Finance lease assets | Operating property, less accumulated depreciation and amortization | 137,818 | ||||
Total lease assets | $ | 139,734 | ||||
Finance Leases | Operating Leases | |||||||
2022 Remainder | $ | 28,777 | $ | 583 | ||||
2023 | 31,916 | 638 | ||||||
2024 | 22,045 | 534 | ||||||
2025 | 15,820 | 282 | ||||||
2026 | 7,668 | 0 | ||||||
Thereafter | — | — | ||||||
Total future minimum lease payments | 106,226 | 2,037 | ||||||
Less amount representing interest (1.6% to 4.4%) | 3,954 | 121 | ||||||
Present value of minimum lease payments | $ | 102,272 | $ | 1,916 | ||||
Current maturities of long-term debt | 34,983 | |||||||
Long-term debt, excluding current maturities | 67,289 | |||||||
Other current liabilities | 744 | |||||||
Deferred income taxes and other noncurrent liabilities | 1,172 |
Finance Leases | Operating Leases | |||||||
Weighted average remaining lease term (years) | 3.4 | 3.4 | ||||||
Weighted average discount rate | 2.5 | % | 4.0 | % |
(10) | Debt |
(9) Commitmentsmaterially restrictive to the Company’s operations, capital resources or liquidity. The Company is currently in compliance with all of the debt covenants under the Credit Agreement.
as such, carrying value approximates fair value. Interest rates on borrowings under finance leases approximate the interest rates that would currently be available to the Company under similar terms and, as such, carrying value approximates fair value.
(11) | Commitments and Contingencies |
During 2017, the Company incorporated each of Landstar Metro and Landstar Servicios. On September 20, 2017, Landstar Metro acquired substantially all of the assets of the asset-light transportation logistics business of Fletes Avella, S.A. de C.V., a Mexican transportation logistics company. In connection with the acquisition, individuals affiliated with the seller subscribed in the aggregate for a 30% equity interest in each of Landstar Metro and Landstar Servicios. As it relates to the noncontrolling interests of Landstar Metro and Landstar Servicios, the Company has the option to purchase, and the minority equityholders have the option to sell, during the period commencing on the third anniversary of September 20, 2017, the closing date of the subscription by the minority equityholders (the “Closing Date”), and at any time after the fourth anniversary of the Closing Date, at fair value all but not less than all of the noncontrolling interests in Landstar Metro and Landstar Servicios. The noncontrolling interests are also subject to customary restrictions on transfer, including a right of first refusal in favor of the Company.
(10) Change in Accounting Estimate for Self-Insured Claims
Landstar provides for the estimated costs of self-insured claims primarily on an actuarial basis. The amount recorded for the estimated liability for claims incurred is based upon the facts and circumstances known on the applicable balance sheet date. The ultimate resolution of these claims may be for an amount greater or less than the amount estimated by management. 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.
The following table summarizes the effect of the increase (decrease) in the cost of insurance claims resulting from unfavorable (favorable) development of prior year self-insured claims estimates on operating income, net income attributable to Landstar System, Inc. and subsidiary and earnings per share attributable to Landstar System, Inc. and subsidiary amounts in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 30, 2017 and September 24, 2016 (in thousands, except per share amounts):
Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||||||||||||
Operating income | $ | 1,327 | $ | 698 | $ | 1,124 | $ | (2,118 | ) | |||||||
Net income attributable to Landstar System, Inc. and subsidiary | 825 | 431 | 699 | (1,309 | ) | |||||||||||
Earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 0.02 | $ | 0.01 | $ | 0.02 | $ | (0.03 | ) | |||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 0.02 | $ | 0.01 | $ | 0.02 | $ | (0.03 | ) |
(11) Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update2014-09-Revenue from Contracts with Customers (“ASU2014-09”). ASU2014-09 is a comprehensive revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. The standard requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU2014-09 becomes effective for us January 1, 2018 and permits either a full retrospective or a modified retrospective transition approach. We plan to adopt this new standard on January 1, 2018 under the modified retrospective transition method with a cumulative adjustment to retained earnings instead of retrospectively adjusting prior periods. We anticipate the adoption of this standard will change the timing of revenue recognition for most of our transportation business from at delivery to over the transit period as our performance obligation is completed. Due to our average length of haul for our truckload movements as well as our corresponding direct costs of revenue, purchased transportation and commissions to agents, we do not expect this change to have a material impact on our results of operations, financial position or cash flows once implemented.
In February 2016, the FASB issued Accounting Standards Update2016-02 –Leases (“ASU2016-02”). ASU2016-02 requires a company to recognize aright-of-use asset and lease liability for the obligation to make lease payments measured at the present value of the lease payments for all leases with terms greater than twelve months. Companies are required to use a modified retrospective transition approach to recognize leases at the beginning of the earliest period presented. ASU2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods therein, and early adoption is permitted. ASU2016-02 is not expected to have a material impact on the Company’s financial statements.
In March 2016, the FASB issued Accounting Standards Update2016-09 –Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU2016-09”), which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods therein. As such, the Company adopted ASU2016-09 during the first quarter of 2017 with an effective date of January 1, 2017. As a result of the adoption, the Company recognized excess tax benefits in the consolidated statement of income of $868,000 for the thirty-nine-week period ended September 30, 2017. Prior period amounts have not been reclassified.
In June 2016, the FASB issued Accounting Standards Update2016-13–Financial Instruments –Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU2016-13”), which requires measurement and recognition of expected versus incurred credit losses for financial assets held. ASU2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods therein. The Company is currently evaluating the impact of ASU2016-13 on its financial statements.
described in Item 1A “Risk Factors”, in this report or in Landstar’s other Securities and Exchange Commission filings from time to time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements.
Introduction
Introduction |
During 2017,March 26, 2022.
thirteen-week period ended March 26, 2022.
Mar
Operati
Revenue |
Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||||||||||||
Revenue generated through (in thousands): | ||||||||||||||||
Truck transportation | ||||||||||||||||
Truckload: | ||||||||||||||||
Van equipment | $ | 1,529,402 | $ | 1,351,980 | $ | 550,484 | $ | 465,785 | ||||||||
Unsided/platform equipment | 825,194 | 700,369 | 304,536 | 248,939 | ||||||||||||
Less-than-truckload | 65,397 | 54,066 | 22,598 | 18,139 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total truck transportation | 2,419,993 | 2,106,415 | 877,618 | 732,863 | ||||||||||||
Rail intermodal | 68,570 | 76,987 | 24,213 | 24,650 | ||||||||||||
Ocean and air cargo carriers | 70,708 | 56,500 | 29,523 | 18,790 | ||||||||||||
Other (1) | 35,501 | 34,903 | 12,076 | 11,635 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 2,594,772 | $ | 2,274,805 | $ | 943,430 | $ | 787,938 | |||||||||
|
|
|
|
|
|
|
| |||||||||
Revenue on loads hauled via BCO Independent Contractors included in total truck transportation | $ | 1,211,564 | $ | 1,086,848 | $ | 435,479 | $ | 379,196 | ||||||||
Number of loads: | ||||||||||||||||
Truck transportation | ||||||||||||||||
Truckload: | ||||||||||||||||
Van equipment | 942,894 | 847,208 | 329,329 | 291,089 | ||||||||||||
Unsided/platform equipment | 362,936 | 331,226 | 126,509 | 112,192 | ||||||||||||
Less-than-truckload | 98,740 | 84,316 | 34,232 | 28,589 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total truck transportation | 1,404,570 | 1,262,750 | 490,070 | 431,870 | ||||||||||||
Rail intermodal | 32,040 | 36,120 | 11,080 | 11,940 | ||||||||||||
Ocean and air cargo carriers | 18,150 | 14,910 | 6,210 | 5,130 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
1,454,760 | 1,313,780 | 507,360 | 448,940 | |||||||||||||
|
|
|
|
|
|
|
|
Loads hauled via BCO Independent Contractors included in total truck transportation Revenue per load: Truck transportation Truckload: Van equipment Unsided/platform equipment Less-than-truckload Total truck transportation Rail intermodal Ocean and air cargo carriers Revenue per load on loads hauled via BCO Independent Contractors 686,830 630,880 232,970 216,220 $ 1,622 $ 1,596 $ 1,672 $ 1,600 2,274 2,114 2,407 2,219 662 641 660 634 1,723 1,668 1,791 1,697 2,140 2,131 2,185 2,064 3,896 3,789 4,754 3,663 $ 1,764 $ 1,723 $ 1,869 $ 1,754
Revenue by capacity type (as a % of total revenue): | ||||||||||||||||
Truck capacity providers: | ||||||||||||||||
BCO Independent Contractors | 47 | % | 48 | % | 46 | % | 48 | % | ||||||||
Truck Brokerage Carriers | 47 | % | 45 | % | 47 | % | 45 | % | ||||||||
Rail intermodal | 3 | % | 3 | % | 3 | % | 3 | % | ||||||||
Ocean and air cargo carriers | 3 | % | 2 | % | 3 | % | 2 | % | ||||||||
Other | 1 | % | 2 | % | 1 | % | 1 | % |
Thirteen Weeks Ended | ||||||||
March 26, 2022 | March 27, 2021 | |||||||
Revenue generated through (in thousands): | ||||||||
Truck transportation | ||||||||
Truckload: | ||||||||
Van equipment | $ | 1,081,206 | $ | 729,402 | ||||
Unsided/platform equipment | 408,757 | 297,485 | ||||||
Less-than-truckload | 33,720 | 25,670 | ||||||
Other truck transportation (1) | 227,601 | 140,932 | ||||||
Total truck transportation | 1,751,284 | 1,193,489 | ||||||
Rail intermodal | 42,688 | 31,708 | ||||||
Ocean and air cargo carriers | 152,057 | 47,600 | ||||||
Other (2) | 24,750 | 14,737 | ||||||
$ | 1,970,599 | $ | 1,287,534 | |||||
Revenue on loads hauled via BCO Independent Contractors included in total truck transportation | $ | 727,574 | $ | 560,114 | ||||
Number of loads: | ||||||||
Truck transportation | ||||||||
Truckload: | ||||||||
Van equipment | 376,268 | 321,212 | ||||||
Unsided/platform equipment | 131,829 | 114,263 | ||||||
Less-than-truckload | 47,843 | 40,692 | ||||||
Other truck transportation (1) | 85,930 | 59,663 | ||||||
Total truck transportation | 641,870 | 535,830 | ||||||
Rail intermodal | 12,630 | 11,700 | ||||||
Ocean and air cargo carriers | 11,560 | 9,230 | ||||||
666,060 | 556,760 | |||||||
Loads hauled via BCO Independent Contractors included in total truck transportation | 262,240 | 245,950 | ||||||
Revenue per load: | ||||||||
Truck transportation | ||||||||
Truckload: | ||||||||
Van equipment | $ | 2,873 | $ | 2,271 | ||||
Unsided/platform equipment | 3,101 | 2,604 | ||||||
Less-than-truckload | 705 | 631 | ||||||
Other truck transportation (1) | 2,649 | 2,362 | ||||||
Total truck transportation | 2,728 | 2,227 | ||||||
Rail intermodal | 3,380 | 2,710 | ||||||
Ocean and air cargo carriers | 13,154 | 5,157 | ||||||
Revenue per load on loads hauled via BCO Independent Contractors | $ | 2,774 | $ | 2,277 |
Revenue by capacity type (as a % of total revenue): | ||||||||
Truck capacity providers: | ||||||||
BCO Independent Contractors | 37 | % | 44 | % | ||||
Truck Brokerage Carriers | 52 | % | 49 | % | ||||
Rail intermodal | 2 | % | 2 | % | ||||
Ocean and air cargo carriers | 8 | % | 4 | % | ||||
Other | 1 | % | 1 | % |
(1) | Includes power-only, expedited, straight truck, cargo van, and miscellaneous other truck transportation revenue generated by the transportation logistics segment. Power-only refers to shipments where the Company furnishes a power unit and an operator but not trailing equipment, which is typically provided by the shipper or consignee. |
(2) | Includes primarily reinsurance premium revenue generated by the insurance |
September 30, 2017 | September 24, 2016 | |||||||
BCO Independent Contractors | 8,939 | 8,889 | ||||||
Truck Brokerage Carriers: | ||||||||
Approved and active(1) | 32,925 | 30,860 | ||||||
Other approved | 15,138 | 15,691 | ||||||
|
|
|
| |||||
48,063 | 46,551 | |||||||
|
|
|
| |||||
Total available truck capacity providers | 57,002 | 55,440 | ||||||
|
|
|
| |||||
Trucks provided by BCO Independent Contractors | 9,548 | 9,510 |
March 26, 2022 | March 27, 2021 | |||||||
BCO Independent Contractors | 11,089 | 10,498 | ||||||
Truck Brokerage Carriers: | ||||||||
Approved and active (1) | 68,859 | 49,538 | ||||||
Other approved | 28,094 | 23,246 | ||||||
96,953 | 72,784 | |||||||
Total available truck capacity providers | 108,042 | 83,282 | ||||||
Trucks provided by BCO Independent Contractors | 11,935 | 11,268 |
(1) | Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end. |
The Company incurs costs that are directly related to the transportation of freight that include purchased transportation and commissions to agents. The Company incurs indirect costs associated with the transportation of freight that include other operating costs and insurance and claims. In addition, the Company incurs selling, general and administrative costs essential to administering its business operations. Management continually monitors all components of the costs incurred by the Company and establishes annual cost budgets which, in general, are used to benchmark costs incurred on a monthly basis.
of revenue also increases or decreases in relation to the availability of truck brokerage capacity and with changes in the price of fuel on revenue generated from shipments hauled by Truck Brokerage Carriers. The Company passes 100% of fuel surcharges billed to customers for freight hauled by BCO Independent Contractors to its BCO Independent Contractors. These fuel surcharges are excluded from revenue and the cost of purchased transportation. Purchased transportation costs are recognized uponover the completion of freight delivery.
transit period as the performance obligation to the customer is completed.
The Company defines gross profittransit period as revenue less the cost of purchased transportation and commissions to agents. Gross profit divided by revenue is referred to as gross profit margin. The Company’s operating margin is defined as operating income divided by gross profit.
In general, gross profit margin on revenue generated by BCO Independent Contractors represents a fixed percentage of revenue dueperformance obligation to the naturecustomer is completed.
asset sales/dispositions
Employee compensation and benefits include wages and employee benefit costs as well as incentive compensation and stock-based compensation expense. Incentive compensation and stock-based compensation expense is highly variable in nature in comparison to wages and employee benefit costs.
Thirteen Weeks Ended | ||||||||
March 26, 2022 | March 27, 2021 | |||||||
Revenue | $ | 1,970,599 | $ | 1,287,534 | ||||
Costs of revenue: | ||||||||
Purchased transportation | 1,550,330 | 998,285 | ||||||
Commissions to agents | 149,778 | 100,009 | ||||||
Variable costs of revenue | 1,700,108 | 1,098,294 | ||||||
Trailing equipment depreciation | 9,083 | 8,907 | ||||||
Information technology costs | 4,046 | 2,938 | ||||||
Insurance-related costs (1) | 31,655 | 22,622 | ||||||
Other operating costs | 11,141 | 7,642 | ||||||
Other costs of revenue | 55,925 | 42,109 | ||||||
Total costs of revenue | 1,756,033 | 1,140,403 | ||||||
Gross profit | $ | 214,566 | $ | 147,131 | ||||
Gross profit margin | 10.9 | % | 11.4 | % | ||||
Plus: other costs of revenue | 55,925 | 42,109 | ||||||
Variable contribution | $ | 270,491 | $ | 189,240 | ||||
Variable contribution margin | 13.7 | % | 14.7 | % |
(1) | Insurance-related costs in the table above include (i) other costs of revenue related to the transportation of freight that are included as a portion of insurance and claims in the Company’s Consolidated Statements of Income and (ii) certain other costs of revenue related to reinsurance premiums received by Signature that are included as a portion of selling, general and administrative in the Company’s Consolidated Statements of Income. Insurance and claims costs included in other costs of revenue relating to the transportation of freight primarily consist of insurance premiums paid for commercial auto liability, general liability, cargo and other lines of coverage related to the transportation of freight and the related cost of claims incurred under those programs, and, to a lesser extent, the cost of claims incurred under insurance programs available to BCO Independent Contractors that are reinsured by Signature. Other insurance and claims costs included in costs of revenue that are included in selling, general and administrative in the Company’s Consolidated Statements of Income consist of brokerage commissions and other fees incurred by Signature relating to the administration of insurance programs available to BCO Independent Contractors that are reinsured by Signature. |
Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
September 30, 2017 | September 24, 2016 | September 30, 2017 | September 24, 2016 | |||||||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Purchased transportation | 76.7 | 76.1 | 77.0 | 76.3 | ||||||||||||
Commissions to agents | 8.1 | 8.3 | 8.1 | 8.3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit margin | 15.2 | % | 15.6 | % | 14.8 | % | 15.5 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Investment income | 0.4 | 0.3 | 0.5 | 0.3 | ||||||||||||
Indirect costs and expenses: | ||||||||||||||||
Other operating costs, net of gains on asset sales/dispositions | 5.7 | 6.1 | 5.8 | 6.2 | ||||||||||||
Insurance and claims | 11.8 | 12.1 | 12.8 | 10.3 | ||||||||||||
Selling, general and administrative | 31.3 | 29.9 | 31.4 | 28.5 | ||||||||||||
Depreciation and amortization | 7.6 | 7.4 | 7.2 | 7.4 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total costs and expenses | 56.3 | 55.4 | 57.2 | 52.3 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating margin | 44.1 | % | 44.9 | % | 43.3 | % | 48.0 | % | ||||||||
|
|
|
|
|
|
|
|
Management believes thatand operating income as a discussionpercentage of indirect costsvariable contribution
Thirteen Weeks Ended | ||||||||
March 26, 2022 | March 27, 2021 | |||||||
Gross profit | $ | 214,566 | $ | 147,131 | ||||
Operating income | $ | 162,833 | $ | 103,268 | ||||
Operating income as % of gross profit | 75.9 | % | 70.2 | % | ||||
Variable contribution | $ | 270,491 | $ | 189,240 | ||||
Operating income | $ | 162,833 | $ | 103,268 | ||||
Operating income as % of variable contribution | 60.2 | % | 54.6 | % |
costs of revenue, across a larger variable contribution base.
THIRTY NINE
MARCH 27, 2021
The increase in revenue from reinsurance premiums was primarily attributable to an increase in the average number of trucks provided by BCO Independent Contractors and an increase in the aggregate value of equipment insured by BCO Independent Contractors under a physical damage program reinsured by Signature in the 2022 thirteen-week period compared to the 2021 thirteen-week period.
Purchased transportation was 76.7% and 76.1% of revenue in the 2017 and 2016 thirty-nine-week periods, respectively. The increase in purchased transportation as a percentage of revenue was primarily due to an increased rate of purchased transportation paid to Truck Brokerage Carriers and a decrease in the percentage of revenue contributed by BCO Independent Contractors, which typically has a lower rate of purchased transportation than revenue generated by Truck Brokerage Carriers. Commissions to agents were 8.1% and 8.3% of revenue in the 2017 and 2016 thirty-nine-week periods, respectively. The decrease in commissions to agents as a percentage of revenue was primarily attributable to a decreased net revenue margin on revenue generated by Truck Brokerage Carriers.
Investment income was $1,733,000 and $1,100,000 in the 2017 and 2016 thirty-nine-week periods, respectively. The increase in investment income was primarily due to higher average rates of return on investments during the 2017 period and a higher average investment balance held by the insurance segment in the 2017 period.
Other operating costs increased $1,013,000 in the 2017 thirty-nine-week period compared to the 2016 thirty-nine-week period and represented 5.7% of gross profit in the 2017 period compared to 6.1% of gross profit in the 2016 period. The increase in other operating costs compared to the prior year was primarily due to decreased gains on sales of used trailing equipment and an increased provision for contractor bad debt, partially offset by decreased trailing equipment maintenance costs due to a lower average age of the Company-owned trailer fleet. The decrease in other operating costs as a percentage of gross profit was caused by the effect of increased gross profit, partially offset by the increase in other operating costs.
Insurance and claims increased $3,538,000 in the 2017 thirty-nine-week period compared to the 2016 thirty-nine-week period and represented 11.8% of gross profit in the 2017 period compared to 12.1% of gross profit in the 2016 period. The increase in insurance and claims expense compared to prior year was due to increased severity of current year claims in the 2017 period, increased net unfavorable development of prior years’ claims in the 2017 period and increased insurance premiums on the Company’s commercial trucking liability coverage. Unfavorable development of prior years’ claims was $1,327,000 and $698,000 in the 2017 and 2016 thirty-nine-week periods, respectively. The decrease in insurance and claims as a percent of gross profit was caused by the effect of increased gross profit, partially offset by the increase in insurance and claims costs.
Selling, general and administrative costs increased $16,968,000 in the 2017 thirty-nine-week period compared to the 2016 thirty-nine-week period and represented 31.3% of gross profit in the 2017 period compared to 29.9% of gross profit in the 2016 period. The increase in selling, general and administrative costs compared to prior year was attributable to a $13,634,000 provision for incentive compensation in the 2017 thirty-nine-week period compared to an $875,000 provision in the 2016 thirty-nine-week period and increased wages. The increase in selling, general and administrative costs as a percent of gross profit was due primarily to the increase in selling, general and administrative costs, partially offset by the effect of increased gross profit.
Depreciation and amortization increased $3,852,000 in the 2017 thirty-nine-week period compared to the 2016 thirty-nine-week period and represented 7.6% of gross profit in the 2017 period compared to 7.4% of gross profit in the 2016 period. The increase in depreciation and amortization expenses was due to an increased number of owned trailers in response to increased customer demand for the Company’s drop and hook services and a lower average age of the trailer fleet during the 2017 thirty-nine-week period as compared to the 2016 thirty-nine-week period. The increase in depreciation and amortization as a percentage of gross profit was primarily due to the increased depreciation costs, partially offset by the effect of increased gross profit.
Interest and debt expense in the 2017 thirty-nine-week period decreased $166,000 compared to the 2016 thirty-nine-week period.
The provisions for income taxes for the 2017 and 2016 thirty-nine-week periods were based on estimated annual effective income tax rates of 37.8% and 38.1%, respectively, adjusted for discrete events, such as benefits resulting from disqualifying dispositions of the Company’s common stock by employees who obtained the stock through exercises of incentive stock options. The effective income tax rates for the 2017 and 2016 thirty-nine-week periods were 34.5% and 37.6%, respectively. The effective income tax rate for the 2017 thirty-nine week period was lower than the 35% statutory federal income tax rate primarily as a result of federal domestic production activities deductions and research and development credits recognized as discrete items during the thirteen-week period ended September 30, 2017, partially offset by the effect of state taxes and the meals and entertainment exclusion. The effective income tax rate for the 2016 thirty-nine-week period was higher than the statutory federal income tax rate primarily as a result of state taxes and the meals and entertainment exclusion. The effective income tax rate in the 2017 thirty-nine-week period of 34.5% was less than the 37.8% estimated annual effective income tax rate primarily as a result of federal domestic production activities deductions and research and development credits recognized during 2017 of approximately $5,200,000, excess tax benefits recognized on stock-based compensation arrangements resulting from the Company’s adoption of ASU2016-09 during 2017 and disqualifying dispositions of the Company’s common stock by employees who obtained the stock through the exercises of incentive stock options in the 2017 period. The effective income tax rate in the 2016 thirty-nine-week period of 37.6% was less than the 38.1% estimated annual effective income tax rate primarily due to certain federal income tax credits realized in the 2016 period and disqualifying dispositions of the Company’s common stock by employees who obtained the stock through exercises of incentive stock options in the 2016 period.
The net loss attributable to noncontrolling interest of $23,000 in the 2017 thirty-nine-week period represents the noncontrolling investors’ 30% share of the net loss incurred by Landstar Metro and Landstar Servicios.
Net income attributable to the Company was $112,336,000, or $2.68 per common share ($2.67 per diluted share), in the 2017 thirty-nine-week period. Net income attributable to the Company was $97,776,000, or $2.32 per common share ($2.31 per diluted share), in the 2016 thirty-nine-week period.
THIRTEEN WEEKS ENDED SEPTEMBER 30, 2017 COMPARED TO THIRTEEN WEEKS ENDED SEPTEMBER 24, 2016
Revenue for the 2017 thirteen-week period was $943,430,000, an increase of $155,492,000, or 20%, compared to the 2016 thirteen-week period. Transportation revenue increased $155,295,000, or 20%. The increase in transportation revenue was attributable to an increased number of loads hauled of approximately 13% and increased revenue per load of approximately 6%. The Company recognized approximately $23,000,000 in revenue, on approximately 16,000 loads, in the 2017 third quarter in support of local, state and federal relief efforts related to recent hurricanes that impacted Texas, the southeastern United States and Puerto Rico. Reinsurance premiums were $11,738,000 and $11,541,000 for the 2017 and 2016 thirteen-week periods, respectively.
Truck transportation revenue generated by third party capacity providers for the 2017 thirteen-week period was $877,618,000, representing 93% of total revenue, an increase of $144,755,000, or 20%, compared to the 2016 thirteen-week period. The number of loads hauled by third party truck capacity providers increased approximately 13% in the 2017 thirteen-week period compared to the 2016 thirteen-week period, and revenue per load increased approximately 6% compared to the 2016 thirteen-week period. The
increase in the number of loads hauled via truck compared to the 2016 thirteen-week periodloadings was due to a broad-based increase in demand across many customers and industries for Landstar’s various truck service offerings and the impact of approximately 16,000 loads hauled in support of disaster relief efforts. TheCompany’s ocean services, whereas the 8% increase in revenue per load on loads hauled via truck of 6% was due to a tighter freight environment experienced during the 2017 thirteen-week period, which resulted in less readily available truck capacity as compared to the 2016 thirteen-week period, and the impact of higher diesel fuel costs on loads hauled via Truck Brokerage Carriers. The freight environment during the 2017 thirteen-week period was also impacted by the hurricanes experienced in Texas and the southeastern United States, which further tightened capacity in the latter part of the quarter. Revenue per load on loads hauled via unsided/platform equipment increased 8%, revenue per load on loads hauled via van equipment increased 5% and revenue per load on less-than-truckloadrail loadings increased 4% as compared to the 2016 thirteen-week period. Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $16,171,000 and $14,016,000 in the 2017 and 2016 thirteen-week periods, respectively.
Transportation revenue generated by multimode capacity providers for the thirteen-week period ended September 30, 2017 was $53,736,000, or 6% of total revenue, an increase of $10,296,000, or 24%, compared to the 2016 thirteen-week period, primarily attributable to approximately $9,000,000 of revenue generated in support of disaster relief efforts. Revenue per load on revenue generated by multimode capacity providers increased approximately 22% compared to the prior year period and the number of loads hauled by multimode capacity providers in the 2017 thirteen-week period increased approximately 1% compared to the 2016 thirteen-week period. The increase in revenue per load of 22% was primarily attributable to the impact ofone specific agency. The 32% decrease in air loadings provided in support of disaster relief efforts during the 2017 thirteen-week period. The increase in loads hauled by multimode capacity providers was primarily due to a 21% increase in loads hauled by air and ocean cargo carriers, where the demand was broad-based across many customers, partially offset by a 7% decrease in loads hauled by rail intermodal loads, entirely attributable to decreased loadings at one specific agency.
customer.
resumption of large
net unfavorable and $292,000 of net favorable adjustments to prior years’ claims estimates, respectively.
2022 and 2021 thirteen-week periods, respectively.
on information technology assets.
Company’s revolving credit facility during the 2022 period, as the Company had no borrowings during the 2021 period.
The net loss attributable to noncontrolling interest of $23,000 in the 2017 thirteen-week period represents the noncontrolling investors’ 30% share of the net loss incurred by Landstar Metro and Landstar Servicios.
Net income attributable to the Company was $42,443,000, or $1.01 per common share ($1.01 per diluted share), in the 20172022 thirteen-week period. Net income attributable to the Company was $36,278,000,$77,240,000, or $0.86 per common share ($0.86$2.01 per diluted share),share, in the 20162021 thirteen-week period.
The Company declared and paid $0.28 per share, or $11,739,00053% increase in the aggregate, in cash dividends during the thirty-nine-week period ended September 30, 2017. revenue year-over-year, which increased net receivables, defined as accounts receivable less accounts payable.
Equity25, 2021.
2022 thirteen-week period, partially offset by net income.
As it relates to thenon-controlling interests of Landstar Metro and Landstar Servicios, the Company has the option to purchase, and the minority equityholders have the option to sell, during the period commencing on the third anniversary of September 20, 2017, the closing date of the subscription by the minority equityholders (the “Closing Date”), and at any time after the fourth anniversary of the Closing Date, at fair value all but not less than all of the noncontrolling interests in Landstar Metro and Landstar Servicios. The noncontrolling interests are also subject to customary restrictions on transfer, including a right of first refusal in favor of the Company.
The allowance for doubtful accounts for both trade and other receivables represents management’s estimate of the amount of outstanding receivables that will not be collected. Historically, management’s estimates for uncollectible receivables have been materially correct. Although management believes the amount of the allowance for both trade and other receivables at September 30, 2017 is appropriate, a prolonged period of low or no economic growth may adversely affect the collection of these receivables. In addition, liquidity concerns and/or unanticipated bankruptcy proceedings at any of the Company’s larger customers in which the Company is carrying a significant receivable could result in an increase in the provision for uncollectible receivables and have a significant impact on the Company’s results of operations in a given quarter or year. However, it is not expected that an uncollectible accounts receivable resulting from an individual customer would have a significant impact on the Company’s financial condition. Conversely, a more robust economic environment or the recovery of a previously provided for uncollectible receivable from an individual customer may result in the realization of some portion of the estimated uncollectible receivables.
The Company utilizes certain income tax planning strategies to reduce its overall cost of income taxes. If the Company were to be subject to an audit, it is possible that certain strategies might be disallowed resulting in an increased liability for income taxes. Certain of these tax planning strategies result in a level of uncertainty as to whether the related tax positions taken by the Company would result in a recognizable benefit. The Company has provided for its estimated exposure attributable to such tax positions due to the corresponding level of uncertainty with respect to the amount of income tax benefit that may ultimately be realized. Management believes that the provision for liabilities resulting from the uncertainty in certain income tax positions is appropriate. To date, the Company has not experienced an examination by governmental revenue authorities that would lead management to believe that the Company’s past provisions for exposures related to the uncertainty of such income tax positions are not appropriate.
March 26, 2022.
EFFECTS OF INFLATION
Management does not believe inflation has had a material impact on the results of operations or financial condition of Landstar in the past five years. However, inflation in excess of historic trends might have an adverse effect on the Company’s results of operations in the future.
Depending upon the specific type of borrowing, borrowings
Acquired business and noncontrolling interests.During 2017, Landstar Metro, a recently formed subsidiary of the Company, acquired substantially all of the assets of the asset-light transportation logistics business of a Mexican transportation logistics company. In connection with the acquisition, individuals affiliated with the seller subscribed in the aggregate for a 30% equity interest in each of Landstar Metro and its sister company, Landstar Servicios. As it relates to the noncontrolling interests of Landstar Metro and Landstar Servicios, the Company has the option to purchase, and the minority equityholders have the option to sell, during the period commencing on the third anniversary of September 20, 2017, the closing date of the subscription by the minority equityholders (the “Closing Date”), and at any time after the fourth anniversary of the Closing Date, at fair value all but not less than all of the noncontrolling interests in Landstar Metro and Landstar Servicios. No assurances can be provided regarding the exercise of the option to purchase by the Company or the option to sell by the minority equityholders, or the amount that may be required to be paid to purchase the minority interests should either option be exercised.
quarter:
Fiscal Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Maximum Number of Shares That May Yet Be Purchased Under the Programs | ||||||||||||
December 25, 2021 | 3,000,000 | |||||||||||||||
December 26, 2021 – January 22, 2022 | — | $ | — | — | 3,000,000 | |||||||||||
January 23, 2022 – February 19, 2022 | 571,871 | 158.72 | 571,871 | 2,428,129 | ||||||||||||
February 20, 2022 – March 26, 2022 | 121,679 | 152.56 | 121,679 | 2,306,450 | ||||||||||||
Total | 693,550 | $ | 157.64 | 693,550 | ||||||||||||
December 7, 2021 or December 9, 2019 authorizations.
During the thirty-nine-week period ended September 30, 2017, Landstar paid dividends as follows:
|
|
|
| |||
| ||||||
| ||||||
|
the extent that, after giving effect to any payment made to effect such cash dividend or other distribution, the Leverage Ratio, as defined in the Credit Agreement, would exceed 2.5 to 1 on a pro forma basis as of the end of the Company’s most recently completed fiscal quarter.
Exhibit No. | Description | |
(31) | Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.1* | Chief Executive Officer certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Chief Financial Officer certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
(32) | Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.1** | Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2** | Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS* | Inline XBRL Instance | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith
** Furnished herewith
* | Filed herewith |
** | Furnished herewith |
LANDSTAR SYSTEM, INC. | ||||||||
Date: | /s/ James B. Gattoni | |||||||
James B. Gattoni | ||||||||
President and Chief Executive Officer | ||||||||
Date: | /s/ Federico L. | |||||||
Federico L. | ||||||||
Vice President and Chief | ||||||||
Financial Officer |
32