10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 26, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 0-21238

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)

Delaware	06-1313069
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

13410 Sutton Park Drive South, Jacksonville, Florida

(Address of principal executive offices)

32224

(Zip Code)

(904) 398-9400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	LSTR	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files):    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of the close of business on April 18, 2022 was 37,127,333.

Index

PART I – Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of March 26, 2022 and December 25, 2021	Page 4
Consolidated Statements of Income for the Thirteen Weeks Ended March 26, 2022 and March 27, 2021	Page 5
Consolidated Statements of Comprehensive Income for the Thirteen Weeks Ended March 26, 2022 and March 27, 2021	Page 6
Consolidated Statements of Cash Flows for the Thirteen Weeks Ended March 26, 2022 and March 27, 2021	Page 7
Consolidated Statements of Changes in Shareholders’ Equity for the Thirteen Weeks Ended March 26, 2022 and March 27, 2021	Page 8
Notes to Consolidated Financial Statements	Page 9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	Page 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	Page 28
Item 4. Controls and Procedures	Page 29
PART II – Other Information
Item 1. Legal Proceedings	Page 29
Item 1A. Risk Factors	Page 29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	Page 31
Item 6. Exhibits	Page 32
Signatures	Page 34
EX – 31.1 Section 302 CEO Certification
EX – 31.2 Section 302 CFO Certification
EX – 32.1 Section 906 CEO Certification
EX – 32.2 Section 906 CFO Certification

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The interim consolidated financial statements contained herein reflect all adjustments (all of a normal, recurring nature) which, in the opinion of management, are necessary for a fair statement of the financial condition, results of operations, cash flows and changes in shareholders’ equity for the periods presented. They have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the thirteen weeks ended March 26, 2022 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2022.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 10-K.

3

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

(Unaudited)

	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

See accompanying notes to consolidated financial statements.

4

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)

	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

See accompanying notes to consolidated financial statements.

5

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

	Thirteen Weeks Ended
	March 26, 2022			March 27, 2022
Net income	$	124,839		$	77,240
Other comprehensive loss:
Unrealized holding losses on available-for-sale investments, net of tax benefits of $1,421 and $147		(5,187	)		(534	)
Foreign currency translation gains (losses)		1,275			(420	)
Other comprehensive loss		(3,912	)		(954	)
Comprehensive income	$	120,927		$	76,286

See accompanying notes to consolidated financial statements.

6

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	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			—
Purchases of common stock		(109,332	)		—
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

See accompanying notes to consolidated financial statements.

7

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Thirteen Weeks Ended March 26, 2022 and March 27, 2021

(Dollars in thousands)

(Unaudited)

	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

See accompanying notes to consolidated financial statements.

8

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The consolidated financial statements include the accounts of Landstar System, Inc. and its subsidiary, Landstar System Holdings, Inc., and reflect all adjustments (all of a normal, recurring nature) which are, in the opinion of management, necessary for a fair statement of the results for the periods presented. The preparation of the consolidated financial statements requires the use of management’s estimates. Actual results could differ from those estimates. Landstar System, Inc. and its subsidiary are herein referred to as “Landstar” or the “Company.” Significant intercompany accounts have been eliminated in consolidation.

(1) Significant Accounting Policies

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 thirteen-week periods ended March 26, 2022 and March 27, 2021 (dollars in thousands):

	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.

9

(2) Share-based Payment Arrangements

As of March 26, 2022, 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 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 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
	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

Included in income tax benefits recognized in the thirteen-week periods ended March 26, 2022 and March 27, 2021 were excess tax benefits from stock-based awards of $2,869,000 and $343,000, respectively.

As of March 26, 2022, there were 56,502 shares of the Company’s common stock reserved for issuance under the 2013 DSCP and 3,230,826 shares of the Company’s common stock reserved for issuance under the 2011 EIP.

Restricted Stock Units

The following table summarizes information regarding the Company’s outstanding restricted stock unit (“RSU”) awards with either a performance condition or a market condition under the Plans:

	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.

During the thirteen-week period ended March 26, 2022, the Company granted RSUs with a performance condition. Outstanding RSUs at both December 25, 2021 and March 26, 2022 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2021 Annual Report on Form 10-K.

RSUs with a performance condition granted on January 28, 2022 may vest on January 31 of 2025, 2026 and 2027 based on growth in operating income and pre-tax income per diluted share from continuing operations as compared to the results from the 2021 fiscal year.

The Company recognized approximately $1,301,000 and $3,223,000 of share-based compensation expense related to RSU awards in the thirteen-week periods ended March 26, 2022 and March 27, 2021, respectively. As of March 26, 2022, there was a maximum of $27.3 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.9 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.

10

Non-vested Restricted Stock and Deferred Stock Units

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

	Number of Shares 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

The fair value of each share of non-vested restricted stock issued and Deferred Stock Unit granted under the Plans is based on the fair value of a share of the Company’s common stock on the date of grant. Shares of non-vested restricted stock are generally subject to vesting in three equal annual installments either on the first, second and third anniversary of the date of the grant or the third, fourth and fifth anniversary of the date of the grant, or 100% on the first or fifth anniversary of the date of the grant. For restricted stock awards granted under the 2013 DSCP plan, each recipient may elect to defer receipt of shares and instead receive restricted stock units (“Deferred Stock Units”), which represent contingent rights to receive shares of the Company’s common stock on the date of recipient separation from service from the Board of Directors, or, if earlier, upon a change in control event of the Company. Deferred Stock Units become vested 100% on the first anniversary of the date of the grant. Deferred Stock Units do not represent actual ownership in shares of the Company’s common stock and the recipient does not have voting rights or other incidents of ownership until the shares are issued. However, Deferred Stock Units do contain the right to receive dividend equivalent payments prior to settlement into shares.

As of March 26, 2022, there was $5,555,000 of total unrecognized compensation cost related to non-vested shares of restricted stock and Deferred Stock Units granted under the Plans. The unrecognized compensation cost related to these non-vested shares of restricted stock and Deferred Stock Units is expected to be recognized over a weighted average period of 2.4 years.

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 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

The total intrinsic value of stock options exercised during the thirteen-week periods ended March 26, 2022 and March 27, 2021 was $369,000 and $521,000, respectively.

As of March 26, 2022, there was no unrecognized compensation cost related to stock options granted under the Plans.

(3) Income Taxes

The provisions for income taxes for the 2022 and 2021 thirteen-week periods were based on an estimated annual effective income tax rate of 24.5% and 24.4%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards. The estimated annual effective income tax rate was higher than the statutory federal income tax rate of 21% in both periods primarily attributable to state taxes and non-deductible executive compensation. The effective income tax rate for the 2022 thirteen-week period was 22.8%, which was lower than the estimated annual effective income tax rate of 24.5%, primarily attributable to excess tax benefits realized on stock-based awards. The effective income tax rate for the 2021 thirteen-week period of 24.4% was equal to the estimated annual effective income tax rate during the 2021 period.

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(4) Earnings Per Share

Earnings per common share are based on the weighted average number of shares outstanding, including outstanding non-vested restricted stock and outstanding Deferred Stock Units. Diluted earnings per share are based on the weighted average number of common shares and Deferred Stock Units outstanding plus the incremental shares that would have been outstanding upon the assumed exercise of all dilutive stock options. During the 2022 and 2021 thirteen-week periods, in reference to the determination of diluted earnings per share, the future compensation cost attributable to outstanding shares of non-vested restricted stock exceeded the impact of incremental shares that would have been outstanding upon the assumed exercise of all dilutive stock options.

For each of the thirteen-week periods ended March 26, 2022 and March 27, 2021, no options outstanding to purchase shares of common stock were antidilutive. Outstanding RSUs were excluded from the calculation of diluted earnings per share for all periods because the performance metric requirements or market condition for vesting had not been satisfied.

(5) Additional Cash Flow Information

During the 2022 thirteen-week period, Landstar paid income taxes and interest of $2,031,000 and $1,029,000, respectively. During the 2021 thirteen-week period, Landstar paid income taxes and interest of $353,000 and $983,000, respectively. Landstar did not acquire any operating property by entering into finance leases in either the 2022 or 2021 thirteen-week periods.

(6) Segment Information

The following table summarizes information about the Company’s reportable business segments as of and for the thirteen-week periods ended March 26, 2022 and March 27, 2021 (in thousands):

	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

In the thirteen-week periods ended March 26, 2022 and March 27, 2021, no single customer accounted for more than 10% of the Company’s consolidated revenue.

(7) Other Comprehensive Income

The following table presents the components of and changes in accumulated other comprehensive income (loss), net of related income taxes, as of and for the thirteen-week period ended March 26, 2022 (in thousands):

	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	)

Amounts reclassified from accumulated other comprehensive income to investment income due to the realization of previously unrealized gains and losses in the accompanying consolidated statements of income were not significant for the thirteen-week period ended March 26, 2022.

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(8) Investments

Investments include primarily investment-grade corporate bonds and asset-backed securities 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 and are carried at fair value. Investments maturing less than one year from the balance sheet date are included in short-term investments and investments maturing more than one year from the balance sheet date are included in other assets in the consolidated balance sheets. Management performs an analysis of the nature of the unrealized losses on available-for-sale investments to determine whether an allowance for credit loss is necessary. Unrealized losses, representing the excess of the purchase price of an investment over its fair value as of the end of a period, considered to be a result of credit-related factors, are to be included as a charge in the statement of income, while unrealized losses considered to be a result of noncredit-related factors are to be included as a component of shareholders’ equity. Investments whose values are based on quoted market prices 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 non-transferability, which are generally based on available market information. Any transfers between levels are recognized as of the beginning of any reporting period. Fair value of the bond portfolio was determined using Level 1 inputs related to U.S. Treasury obligations and money market investments and Level 2 inputs related to investment-grade corporate bonds, asset-backed securities and direct obligations of government agencies. Unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $6,464,000 at March 26, 2022, while unrealized gains, net of unrealized losses, on the investments in the bond portfolio were $144,000 at December 25, 2021.

The amortized cost and fair values of available-for-sale investments are as follows at March 26, 2022 and December 25, 2021 (in thousands):

	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

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For those available-for-sale investments with unrealized losses at March 26, 2022 and December 25, 2021, the following table summarizes the duration of the unrealized loss (in thousands):

	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

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

(9) Leases

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. Substantially all of Landstar’s operating lease right-of-use assets and operating lease liabilities represent leases for facilities maintained in support of the Company’s network of BCO Independent Contractors and office space used to conduct Landstar’s business. These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives or other build-out clauses. Further, the leases do not contain contingent rent provisions. Landstar also rents certain trailing equipment to supplement the Company-owned trailer fleet under “month-to-month” lease terms, which are not required to be recorded on the balance sheet due to the less than twelve month lease term exemption. Sublease income is primarily comprised of weekly trailing equipment rentals to BCO Independent Contractors.

Most of Landstar’s operating leases include one or more options to renew. The exercise of lease renewal options is typically at Landstar’s sole discretion, and, as such, the majority of renewals to extend the lease terms are not included in the right-of-use assets and lease liabilities as they are not reasonably certain of exercise. Landstar regularly evaluates the renewal options, and when they are reasonably certain of exercise, Landstar includes the renewal period in the lease term.

As most of Landstar’s operating leases do not provide an implicit rate, Landstar utilized its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. Landstar has a centrally managed treasury function; therefore, based on the applicable lease terms and the current economic environment, the Company applies a portfolio approach for determining the incremental borrowing rate.

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The components of lease cost for finance leases and operating leases for the thirteen weeks ended March 26, 2022 were (in thousands):

Finance leases:
Amortization of right-of-use assets	$	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

A summary of the lease classification on our consolidated balance sheet as of March 26, 2022 is as follows (in thousands):

Assets:

Operating lease right-of-use assets	Other assets	$	1,916
Finance lease assets	Operating property, less accumulated depreciation and amortization		137,818
Total lease assets		$	139,734

Liabilities:

The following table reconciles the undiscounted cash flows for the finance and operating leases to the finance and operating lease liabilities recorded on the balance sheet at March 26, 2022 (in thousands):

	Finance Leases		Operating Leases
2022 Remainder	$	28,777	$	583
2023		31,916		638
2024		22,045		534
2025		15,820		282
2026		7,668		—
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

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of March 26, 2022 were:

	Finance Leases			Operating Leases
Weighted average remaining lease term (years)		3.4			3.4
Weighted average discount rate		2.5	%		4.0	%

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(10) Debt

In addition to the finance lease obligations as presented on the consolidated balance sheets, the Company had $70,000,000 in outstanding debt as of March 26, 2022, consisting of borrowings under the Company’s revolving credit facility. The Company had no borrowings under the revolving credit facility as of December 25, 2021.

On August 18, 2020, Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement, which matures on August 18, 2023, provides $250,000,000 of borrowing capacity in the form of a revolving credit facility, $35,000,000 of which may be utilized in the form of letters of credit. The Credit Agreement includes an “accordion” feature providing for a possible increase up to an aggregate borrowing capacity of $400,000,000.

The revolving credit loans under the Credit Agreement, at the option of Landstar, bear interest at (i) the Eurocurrency rate plus 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. The revolving credit facility bears a commitment fee, payable quarterly in arrears, of 0.25% to 0.35%, based on the Company’s Leverage Ratio at the end of the most recent applicable fiscal quarter for which financial statements have been delivered. As of March 26, 2022, the weighted average interest rate on borrowings outstanding was 1.66%.

The Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness. The Company is required to, among other things, maintain a minimum Fixed Charge Coverage Ratio, as defined in the Credit Agreement, and maintain a Leverage Ratio, as defined in the Credit Agreement, below a specified maximum. The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Company’s capital stock to the extent there is a default under the Credit Agreement. In addition, the Credit Agreement under certain circumstances limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect such cash dividend or other distribution, the Leverage Ratio would exceed 2.5 to 1 on a pro forma basis as of the end of the Company’s most recently completed fiscal quarter. The Credit Agreement provides for an event of default in the event that, among other things, a person or group acquires 35% or more of the outstanding capital stock of the Company or obtains power to elect a majority of the Company’s directors or the directors cease to consist of a majority of Continuing Directors, as defined in the Credit Agreement. None of these covenants are presently considered by management to be materially 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.

The interest rates on borrowings under the revolving credit facility are typically tied to short-term interest rates that adjust monthly and, 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

Short-term investments include $34,292,000 in current maturities of investments and $1,387,000 in restricted cash held by the Company’s insurance segment at March 26, 2022. The non-current portion of the bond portfolio of $131,403,000 is included in other assets. The short-term investments, together with $44,463,000 of non-current investments, provide collateral for the $72,267,000 of letters of credit issued to guarantee payment of insurance claims. As of March 26, 2022, Landstar also had $33,170,000 of additional letters of credit outstanding under the Company’s Credit Agreement.

The Company is involved in certain claims and pending litigation arising from the normal conduct of business. Many of these claims are covered in whole or in part by insurance. Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the interim consolidated financial statements and notes thereto included herein, and with the Company’s audited financial statements and notes thereto for the fiscal year ended December 25, 2021 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2021 Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this document that are not based on historical facts are “forward-looking statements.” This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form 10-Q contain forward-looking statements, such as statements which relate to Landstar’s business objectives, plans, strategies and expectations. Terms such as “anticipates,” “believes,” “estimates,” “intention,” “expects,” “plans,” “predicts,” “may,” “should,” “could,” “will,” the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: the impact of the Russian conflict with Ukraine on the operations of certain independent commission sales agents, including the Company’s largest such agent by revenue in the 2021 fiscal year; the impact of the coronavirus (COVID-19) pandemic; an increase in the frequency or severity of accidents or other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; decreased demand for transportation services; U.S. foreign trade relationships; substantial industry competition; disruptions or failures in the Company’s computer systems; cyber and other information security incidents; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; regulations focused on diesel emissions and other air quality matters; intellectual property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2021 fiscal year, 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

Landstar System, Inc. and its subsidiary, Landstar System Holdings, Inc. (collectively referred to herein with their subsidiaries and other affiliated companies as “Landstar” or the “Company”), is a worldwide technology-enabled, asset-light provider of integrated transportation management solutions. The Company offers services to its customers across multiple transportation modes, with the ability to arrange for individual shipments of freight to comprehensive third party logistics solutions to meet all of a customer’s transportation needs. Landstar provides services principally throughout the United States and to a lesser extent in Canada and Mexico, and between the United States and Canada, Mexico and other countries around the world. The Company’s services emphasize safety, information coordination and customer service and are delivered through a network of over 1,200 independent commission sales agents and over 108,000 third party capacity providers, primarily truck capacity providers, linked together by a series of digital technologies which are provided and coordinated by the Company. The nature of the Company’s business is such that a significant portion of its operating costs varies directly with revenue.

Landstar markets its integrated transportation management solutions primarily through independent commission sales agents and exclusively utilizes third party capacity providers to transport customers’ freight. Landstar’s independent commission sales agents enter into contractual arrangements with the Company and are responsible for locating freight, making that freight available to Landstar’s capacity providers and coordinating the transportation of the freight with customers and capacity providers. The Company’s third party capacity providers consist of independent contractors who provide truck capacity to the Company under exclusive lease arrangements (the “BCO Independent Contractors”), unrelated trucking companies who provide truck capacity to the Company under non-exclusive contractual arrangements (the “Truck Brokerage Carriers”), air cargo carriers, ocean cargo carriers and railroads. Through this network of agents and capacity providers linked together by Landstar’s ecosystem of digital technologies, Landstar operates an integrated transportation management solutions business primarily throughout North America with revenue of $6.5 billion during the most recently completed fiscal year. The Company reports the results of two operating segments: the transportation logistics segment and the insurance segment.

The transportation logistics segment provides a wide range of integrated transportation management solutions. Transportation services are provided by Landstar’s “Operating Subsidiaries”: Landstar Ranger, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Gemini, Inc., Landstar Transportation Logistics, Inc., Landstar Global Logistics, Inc., Landstar Express America, Inc., Landstar Canada, Inc.,

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Landstar Metro, S.A.P.I. de C.V., and as further described below, Landstar Blue. Transportation services offered by the Company include truckload and less-than-truckload transportation and other truck transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul/specialized, U.S.-Canada and U.S.-Mexico cross-border, intra-Mexico, intra-Canada, project cargo and customs brokerage. Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, consumer durables, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics and military equipment. In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers. The independent commission sales agents market services provided by the transportation logistics segment. Billings for freight transportation services are typically charged to customers on a per shipment basis for the physical transportation of freight and are referred to as transportation revenue. During the thirteen weeks ended March 26, 2022, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 37%, 52% and 2%, respectively, of the Company’s consolidated revenue. Collectively, revenue generated by air and ocean cargo carriers represented approximately 8% of the Company’s consolidated revenue in the thirteen-week period ended March 26, 2022.

On May 6, 2020, the Company formed a new subsidiary that was subsequently renamed Landstar Blue, LLC (“Landstar Blue”). Landstar Blue arranges truckload brokerage services with a focus on the contract services market. Landstar Blue also helps the Company to develop and test digital technologies and processes for the benefit of all Landstar independent commission sales agents. On June 15, 2020, Landstar Blue completed the acquisition of an independent agent of the Company whose business focused on truckload brokerage services. The results of operations from Landstar Blue are presented as part of the Company’s transportation logistics segment. Revenue from Landstar Blue represented less than 1% of the Company’s transportation logistics segment revenue in the thirteen-week period ended March 26, 2022.

The insurance segment is comprised of Signature Insurance Company (“Signature”), a wholly owned offshore insurance subsidiary, and Risk Management Claim Services, Inc. The insurance segment provides risk and claims management services to certain of Landstar’s operating subsidiaries. In addition, it reinsures certain risks of the Company’s BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstar’s operating subsidiaries. Revenue at the insurance segment represents reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk is ultimately borne by Signature. Revenue at the insurance segment represented approximately 1% of the Company’s consolidated revenue for the thirteen-week period ended March 26, 2022.

Changes in Financial Condition and Results of Operations

Management believes the Company’s success principally depends on its ability to generate freight revenue through its network of independent commission sales agents and to deliver freight safely and efficiently utilizing third party capacity providers. Management believes the most significant factors to the Company’s success include increasing revenue, sourcing capacity, empowering its network through technology-based tools and controlling costs, including insurance and claims.

Revenue

While customer demand, which is subject to overall economic conditions, ultimately drives increases or decreases in revenue, the Company primarily relies on its independent commission sales agents to establish customer relationships and generate revenue opportunities. Management’s emphasis with respect to revenue growth is on revenue generated by independent commission sales agents who on an annual basis generate $1 million or more of Landstar revenue (“Million Dollar Agents”). Management believes future revenue growth is primarily dependent on its ability to increase both the revenue generated by Million Dollar Agents and the number of Million Dollar Agents through a combination of recruiting new agents, increasing the revenue opportunities generated by existing independent commission sales agents and providing its independent commission sales agents with digital technologies they may use to grow revenue and increase efficiencies at their businesses. During the 2021 fiscal year, 593 independent commission sales agents generated $1 million or more of Landstar revenue and thus qualified as Million Dollar Agents. During the 2021 fiscal year, the average revenue generated by a Million Dollar Agent was $6,150,000 and revenue generated by Million Dollar Agents in the aggregate represented 94% of consolidated revenue.

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Management monitors business activity by tracking the number of loads (volume) and revenue per load by mode of transportation. Revenue per load can be influenced by many factors other than a change in price. Those factors include the average length of haul, freight type, special handling and equipment requirements, fuel costs and delivery time requirements. For shipments involving two or more modes of transportation, revenue is generally classified by the mode of transportation having the highest cost for the load. The following table summarizes this information by trailer type for truck transportation and by mode for all others:

	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.

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(2) Includes primarily reinsurance premium revenue generated by the insurance segment and intra-Mexico transportation services revenue generated by Landstar Metro.

Expenses

Purchased transportation

Also critical to the Company’s success is its ability to secure capacity, particularly truck capacity, at rates that allow the Company to profitably transport customers’ freight. The following table summarizes the number of available truck capacity providers on the dates indicated:

	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.

Purchased transportation represents the amount a BCO Independent Contractor or other third party capacity provider is paid to haul freight. The amount of purchased transportation paid to a BCO Independent Contractor is primarily based on a contractually agreed-upon percentage of revenue generated by loads hauled by the BCO Independent Contractor. Purchased transportation paid to a Truck Brokerage Carrier is based on either a negotiated rate for each load hauled or, to a lesser extent, a contractually agreed-upon fixed rate per load. Purchased transportation paid to railroads is based on either a negotiated rate for each load hauled or a contractually agreed-upon fixed rate per load. Purchased transportation paid to air cargo carriers is generally based on a negotiated rate for each load hauled and purchased transportation paid to ocean cargo carriers is generally based on contractually agreed-upon fixed rates per load. Purchased transportation as a percentage of revenue for truck brokerage, rail intermodal and ocean cargo services is normally higher than that of BCO Independent Contractor and air cargo services. Purchased transportation is the largest component of costs and expenses and, on a consolidated basis, increases or decreases as a percentage of consolidated revenue in proportion to changes in the percentage of consolidated revenue generated through BCO Independent Contractors and other third party capacity providers and external revenue from the insurance segment, consisting of reinsurance premiums. Purchased transportation as a percent 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 over the freight transit period as the performance obligation to the customer is completed.

Commissions to agents

Commissions to agents are based on contractually agreed-upon percentages of (i) revenue, (ii) revenue less the cost of purchased transportation, or (iii) revenue less a contractually agreed upon percentage of revenue retained by Landstar and the cost of purchased transportation (the “retention contracts”). Commissions to agents as a percentage of consolidated revenue vary directly with fluctuations in the percentage of consolidated revenue generated by the various modes of transportation and reinsurance premiums and, in general, vary inversely with changes in the amount of purchased transportation as a percentage of revenue on services provided by Truck Brokerage Carriers, railroads, air cargo carriers and ocean cargo carriers. Commissions to agents are recognized over the freight transit period as the performance obligation to the customer is completed.

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

Maintenance costs for Company-provided trailing equipment and BCO Independent Contractor recruiting and qualification costs are the largest components of other operating costs. Also included in other operating costs are trailer rental costs, the provision for uncollectible advances and other receivables due from BCO Independent Contractors and independent commission sales agents and gains/losses, if any, on sales of Company-owned trailing equipment.

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Insurance and claims

With respect to insurance and claims cost, potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable.

Effective May 1, 2019, the Company entered into a new three year commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the “Initial Excess Policy”) with a third party insurance company. For commercial trucking claims incurred on or after May 1, 2019 through April 30, 2022, the Initial Excess Policy provides for a limit for a single loss of $5 million, with an aggregate limit of $15 million for each policy year, an aggregate limit of $20 million for the thirty-six month term ended April 30, 2022, and options to increase such aggregate limits for pre-established amounts of additional premium. If aggregate losses under the Initial Excess Policy exceed either the annual aggregate limit or the aggregate limit for the three year period ending April 30, 2022, and the Company did not elect to increase such aggregate limits for a pre-established amount of additional premium, Landstar would retain liability of up to $10 million per occurrence, inclusive of its $5 million self-insured retention for commercial trucking claims during the remainder of the applicable policy year(s). Moreover, as a result of the Company’s aggregate loss experience since it entered into the Initial Excess Policy, the Initial Excess Policy required the Company to pay additional premium relating to its existing coverage up to a pre-established maximum amount of $3.5 million, which was provided for in insurance and claims costs for the Company’s 2020 fiscal first quarter.

The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10 million. These third party arrangements provide coverage on a per occurrence or aggregated basis. In recent years, there has been a significant increase in the occurrence of trials in courts throughout the United States involving catastrophic injury and fatality claims against commercial motor carriers that have resulted in verdicts in excess of $10 million. Within the transportation logistics industry, these verdicts are often referred to as “Nuclear Verdicts.” The increase in Nuclear Verdicts has had a significant impact on the cost of commercial auto liability claims throughout the United States. Due to the increasing cost of commercial auto liability claims, the availability of excess coverage has significantly decreased, and the pricing associated with such excess coverage, to the extent available, has significantly increased. With respect to the annual policy year ended April 30, 2021, as compared to the annual policy year ended April 30, 2020, the Company experienced an increase of approximately $14 million, or over 170%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million. Effective May 1, 2021, with respect to the annual policy year ending April 30, 2022, as compared to the annual policy year ended April 30, 2021, the Company experienced an increase of approximately $3 million, or 19%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million. Moreover, the Company increased the level of its financial exposure to commercial trucking claims in excess of $10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage. For example, with respect to a hypothetical claim in the amount of $35 million incurred during the annual policy year ending April 30, 2022, the Company would have an aggregate financial exposure of approximately $10 million. Furthermore, the Company’s third party insurance arrangements provide excess coverage up to an uppermost coverage layer, in excess of which the Company retains additional financial exposure. No assurances can be given that the availability of excess coverage for commercial trucking claims will not continue to deteriorate, that the pricing associated with such excess coverage, to the extent available, will not continue to increase, nor that insurance coverage from third party insurers for excess coverage of commercial trucking claims will even be available on commercially reasonable terms at certain levels. Moreover, the occurrence of a Nuclear Verdict, or the settlement of a catastrophic injury and/or fatality claim that could have otherwise resulted in a Nuclear Verdict, could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.

Further, the Company retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim. In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers’ compensation claims. The Company’s exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company is reduced by various factors including the extent to which such carriers maintain their own insurance coverage. A material increase in the frequency or severity of accidents, cargo claims or workers’ compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.

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Selling, general and administrative

During the thirteen-week period ended March 26, 2022, employee compensation and benefits accounted for approximately 70% of the Company’s selling, general and administrative costs. 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.

Depreciation and amortization

Depreciation and amortization primarily relate to depreciation of trailing equipment and information technology hardware and software.

Costs of revenue

The Company incurs costs of revenue related to the transportation of freight and, to a much lesser extent, to reinsurance premiums received by Signature. Costs of revenue include variable costs of revenue and other costs of revenue. Variable costs of revenue include purchased transportation and commissions to agents, as these costs are entirely variable on a shipment-by-shipment basis. Other costs of revenue include fixed costs of revenue and semi-variable costs of revenue, where such costs may vary over time based on certain economic factors or operational metrics such as the number of Company-controlled trailers, the number of BCO Independent Contractors, the frequency and severity of insurance claims, the number of miles traveled by BCO Independent Contractors, or the number and/or scale of information technology projects in process or in-service to support revenue generating activities, rather than on a shipment-by-shipment basis. Other costs of revenue associated with the transportation of freight include: (i) other operating costs, primarily consisting of trailer maintenance and BCO Independent Contractor recruiting and qualification costs, as reported in the Company’s Consolidated Statements of Income, (ii) transportation-related insurance premiums paid and claim costs incurred, included as a portion of insurance and claims in the Company’s Consolidated Statements of Income, (iii) costs incurred related to internally developed software including ASC 350-40 amortization, implementation costs, hosting costs and other support costs utilized to support our independent commission sales agents, third party capacity providers, and customers, included as a portion of depreciation and amortization and of selling, general and administrative in the Company’s Consolidated Statements of Income; and (iv) depreciation on Company-owned trailing equipment, included as a portion of depreciation and amortization in the Company’s Consolidated Statements of Income. Other costs of revenue associated with reinsurance premiums received by Signature are comprised of broker commissions and other fees paid related to the administration of insurance programs to BCO Independent Contractors and are included in selling, general and administrative in the Company’s Consolidated Statements of Income. In addition to costs of revenue, the Company incurs various other costs relating to its business, including most selling, general and administrative costs and portions of costs attributable to insurance and claims and depreciation and amortization. Management continually monitors all components of the costs incurred by the Company and establishes annual cost budgets that, in general, are used to benchmark costs incurred on a monthly basis.

Gross Profit, Variable Contribution, Gross Profit Margin and Variable Contribution Margin

The following table sets forth calculations of gross profit, defined as revenue less costs of revenue, and gross profit margin defined as gross profit divided by revenue, for the periods indicated. The Company refers to revenue less variable costs of revenue as “variable contribution” and variable contribution divided by revenue as “variable contribution margin”. Variable contribution and variable contribution margin are each non-GAAP financial measures. The closest comparable GAAP financial measures to variable contribution and variable contribution margin are, respectively, gross profit and gross profit margin. The Company believes variable contribution and variable contribution margin are useful measures of the variable costs that we incur at a shipment-by-shipment level attributable to our transportation network of third-party capacity providers and independent commission sales agents in order to provide services to our customers. The Company believes variable contribution and variable contribution margin are important performance measurements and management considers variable contribution and variable contribution margin in evaluating the Company’s financial performance and in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs.

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The reconciliations of gross profit to variable contribution and gross profit margin to variable contribution margin are each presented below:

	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.

In general, variable contribution margin on revenue generated by BCO Independent Contractors represents a fixed percentage due to the nature of the contracts that pay a fixed percentage of revenue to both the BCO Independent Contractors and independent commission sales agents. For revenue generated by Truck Brokerage Carriers, variable contribution margin may be either a fixed or variable percentage, depending on the contract with each individual independent commission sales agent. Variable contribution margin on revenue generated from shipments hauled by railroads, air cargo carriers, ocean cargo carriers and Truck Brokerage Carriers, other than those under retention contracts, is variable in nature, as the Company’s contracts with independent commission sales agents provide commissions to agents at a contractually agreed upon percentage of the amount represented by revenue less purchased transportation for these types of shipments. Approximately 41% of the Company’s consolidated revenue in the thirteen-week period ended March 26, 2022 was generated under transactions that pay a fixed percentage of revenue to the third party capacity provider and/or agents while 59% was generated under transactions that pay a variable percentage of revenue to the third party capacity provider and/or agents.

Operating income as a percentage of gross profit and operating income as a percentage of variable contribution

The following table presents operating income as a percentage of gross profit and operating income as a percentage of variable contribution. The Company’s operating income as a percentage of variable contribution is a non-GAAP financial measure calculated as operating income divided by variable contribution. The Company believes that operating income as a percentage of variable contribution is useful and meaningful to investors for the following principal reasons: (i) the variable costs of revenue for a significant portion of the business are highly influenced by short-term market-based trends in the freight transportation industry, whereas other costs, including other costs of revenue, are much less impacted by short-term freight market trends; (ii) disclosure of this measure allows investors to better

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understand the underlying trends in the Company’s results of operations; (iii) this measure is meaningful to investors’ evaluations of the Company’s management of costs attributable to operations other than the purely variable costs associated with purchased transportation and commissions to agents that the Company incurs to provide services to our customers; and (iv) management considers this financial information in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs.

	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	%

The increase in operating income as a percentage of gross profit from the 2021 thirteen-week period to the 2022 thirteen-week period resulted from operating income increasing at a more rapid percentage rate than the increase in gross profit, as the Company was able to scale our fixed cost infrastructure, primarily certain components of selling, general and administrative costs, across a larger gross profit base.

The increase in operating income as a percentage of variable contribution from the 2021 thirteen-week period to the 2022 thirteen-week period resulted from operating income increasing at a more rapid percentage rate than the increase in variable contribution, as the Company was able to scale our fixed cost infrastructure, primarily certain components of selling, general and administrative costs, as well as our other costs of revenue, across a larger variable contribution base.

Also, as previously mentioned, the Company reports two operating segments: the transportation logistics segment and the insurance segment. External revenue at the insurance segment, representing reinsurance premiums, has historically been relatively consistent on an annual basis at 2% or less of consolidated revenue and generally corresponds directly with the number of trucks provided by BCO Independent Contractors. The discussion of cost line items in Management’s Discussion and Analysis of Financial Condition and Results of Operations considers the Company’s costs on a consolidated basis rather than on a segment basis. Management believes this presentation format is the most appropriate to assist users of the financial statements in understanding the Company’s business for the following reasons: (1) the insurance segment has no other operating costs; (2) discussion of insurance and claims at either segment without reference to the other may create confusion amongst investors and potential investors due to intercompany arrangements and specific deductible programs that affect comparability of financial results by segment between various fiscal periods but that have no effect on the Company from a consolidated reporting perspective; (3) selling, general and administrative costs of the insurance segment comprise less than 10% of consolidated selling, general and administrative costs and have historically been relatively consistent on a year-over-year basis; and (4) the insurance segment has no depreciation and amortization.

THIRTEEN WEEKS ENDED MARCH 26, 2022 COMPARED TO THIRTEEN WEEKS ENDED MARCH 27, 2021

Revenue for the 2022 thirteen-week period was $1,970,599,000, an increase of $683,065,000, or 53%, compared to the 2021 thirteen-week period. Transportation revenue increased $680,840,000, or 54%. The increase in transportation revenue was attributable to increased revenue per load of approximately 28% and an increased number of loads hauled of approximately 20% compared to the 2021 thirteen-week period. Reinsurance premiums were $19,260,000 and $17,035,000 for the 2022 and 2021 thirteen-week periods, respectively. 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.

Truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for the 2022 thirteen-week period was $1,751,284,000, representing 89% of total revenue, an increase of $557,795,000, or 47%, compared to the 2021 thirteen-week period. Revenue per load on loads hauled by third party truck capacity providers increased approximately 22% compared to the 2021 thirteen-week period, and the number of loads hauled by third party truck capacity providers increased approximately 20% in the 2022 thirteen-week period compared to the 2021 thirteen-week period.

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The increase in revenue per load on loads hauled via truck was primarily due to a continuation into the 2022 first fiscal quarter of the extremely tight truck capacity environment experienced during the fourth fiscal quarter of 2021, which resulted in less readily available truck capacity as compared to the 2021 thirteen-week period. Revenue per load on loads hauled via van equipment increased 27%, revenue per load on loads hauled via unsided/platform equipment increased 19%, revenue per load on less-than-truckload loadings increased 12% and revenue per load on loads hauled via other truck transportation increased 12% as compared to the 2021 thirteen-week period. Revenue per load on loads hauled via truck increased 25% in January, 29% in February and 17% in March, respectively, as compared to the corresponding periods in 2021, as the comparisons to prior year periods became more challenging in March due to an atypical increase in truck revenue per load of 11% on a sequential basis from fiscal February 2021 to fiscal March 2021.

The increase in the number of loads hauled via truck compared to the 2021 thirteen-week period was due to a broad-based increase in demand for the Company’s truck transportation services, particularly van services and power-only services included in other truck transportation services. Loads hauled via van equipment increased 17%, loads hauled via unsided/platform equipment increased 15%, loads hauled via less-than-truckload increased 18% and loads hauled via other truck transportation increased 44% as compared to the 2021 thirteen-week period. The number of loads hauled via truck increased 17% in January, 30% in February and 14% in March, respectively, as compared to the corresponding periods in 2021, as the comparisons to prior year periods became more challenging in March due to (1) the impact of the Russian invasion of Ukraine on one independent commission sales agency that maintains administrative operations in Ukraine and (2) an atypical increase in the number of loads hauled via truck from fiscal February 2021 to fiscal March 2021 that resulted from severe winter weather experienced during the last week of fiscal February 2021, which shifted truck volume in 2021 from fiscal February to fiscal March.

Fuel surcharges billed to customers on revenue generated by BCO Independent Contractors are excluded from revenue. Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $37,485,000 and $19,234,000 in the 2022 and 2021 thirteen-week periods, respectively. It should be noted that billings to many customers of the Company’s truck brokerage services include a single all-in rate that do not separately identify fuel surcharges on loads hauled via Truck Brokerage Carriers. Accordingly, the overall impact of changes in fuel prices on revenue and revenue per load on loads hauled via truck is likely to be greater than that indicated.

Transportation revenue generated by rail intermodal, air cargo and ocean cargo carriers (collectively, the “multimode capacity providers”) for the 2022 thirteen-week period was $194,745,000, or 10% of total revenue, an increase of $115,437,000, or 146%, compared to the 2021 thirteen-week period. Revenue per load on revenue generated by multimode capacity providers increased approximately 112% in the 2022 thirteen-week period compared to the 2021 thirteen-week period, and the number of loads hauled by multimode capacity providers increased approximately 16% over the same period. Revenue per load on loads hauled by multimode capacity providers increased for all modes, primarily due to strong U.S. and global economic recoveries coupled with the impact of global supply chain disruptions which were particularly acute with respect to international ocean and air freight. Revenue per load on loads hauled via ocean, air and rail intermodal increased 128%, 122% and 25%, respectively, during the 2022 thirteen-week period as compared to the 2021 thirteen-week period. Revenue per load on revenue generated by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity. The increase in the number of loads hauled by multimode capacity providers was due to a 64% increase in ocean loadings and an 8% increase in rail loadings, partially offset by a 32% decrease in air loadings. The 64% increase in ocean loadings was due to a broad-based increase in demand across many customers for the Company’s ocean services, whereas the 8% increase in rail loadings was primarily attributable to one specific agency. The 32% decrease in air loadings was entirely attributable to decreased loadings at one specific customer.

Purchased transportation was 78.7% and 77.5% of revenue in the 2022 and 2021 thirteen-week periods, respectively. The increase in purchased transportation as a percentage of revenue was primarily due to (i) an increased percentage of revenue generated by Truck Brokerage Carriers, which typically has a higher rate of purchased transportation than revenue generated by BCO Independent Contractors; (ii) an increased percentage of revenue generated by multimode capacity providers, which typically has a higher rate of purchased transportation than third party truck capacity providers; and (iii) to a lesser extent, an increased rate of purchased transportation paid to Truck Brokerage Carriers, partially offset by a lower rate of purchased transportation on revenue generated by BCO Independent Contractors due to an increased percentage of revenue generated by BCO Independent Contractors who use their own tractors and Landstar-owned trailers, which has a lower rate of purchased transportation than revenue generated by BCO Independent Contractors who use their own tractors and their own trailers. Commissions to agents were 7.6% and 7.8% of revenue in the 2022 and 2021 thirteen-week periods, respectively. The decrease in commissions to agents as a percentage of revenue was primarily attributable to an increased cost of purchased transportation as a percentage of revenue on revenue generated by Truck Brokerage Carriers.

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Investment income was $721,000 and $684,000 in the 2022 and 2021 thirteen-week periods, respectively.

Other operating costs increased $3,499,000 in the 2022 thirteen-week period compared to the 2021 thirteen-week period. The increase in other operating costs compared to the prior year was primarily due to increased trailing equipment maintenance costs as a result of (i) increased labor and parts costs as the Company retained older equipment to support current business levels; and (ii) an increased average trailer fleet size during the 2022 thirteen-week period, an increased provision for contractor bad debt and the impact of the resumption of large in-person events for the Company’s BCO Independent Contractors and independent commission sales agents.

Insurance and claims increased $9,263,000 in the 2022 thirteen-week period compared to the 2021 thirteen-week period. The increase in insurance and claims expense compared to the prior year was primarily due to the impact of net unfavorable development of prior years’ claims in the 2022 thirteen-week period, as well as increased severity of current year trucking claims during the 2022 period and an increase in insurance premiums, primarily for commercial auto and excess liability coverage. During the 2022 and 2021 thirteen-week periods, insurance and claims costs included $4,273,000 of net unfavorable and $292,000 of net favorable adjustments to prior years’ claims estimates, respectively.

Selling, general and administrative costs increased $7,305,000 in the 2022 thirteen-week period compared to the 2021 thirteen-week period. The increase in selling, general and administrative costs compared to prior year was attributable to increased wages and employee benefit costs, an increased provision for customer bad debt and an increased provision for incentive compensation, partially offset by decreased stock-based compensation expense. Included in selling, general and administrative costs was stock-based compensation expense of $1,995,000 and $4,029,000 for the 2022 and 2021 thirteen-week periods, respectively, and incentive compensation expense of $5,199,000 and $4,289,000 for the 2022 and 2021 thirteen-week periods, respectively.

Depreciation and amortization increased $1,656,000 in the 2022 thirteen-week period compared to the 2021 thirteen-week period. The increase in depreciation and amortization expenses was primarily due to increased depreciation on information technology assets.

Interest and debt expense in the 2022 thirteen-week period increased $81,000 compared to the 2021 thirteen-week period. The increase in interest and debt expense was primarily attributable to increased average borrowings on the Company’s revolving credit facility during the 2022 period, as the Company had no borrowings during the 2021 period.

The provisions for income taxes for the 2022 and 2021 thirteen-week periods were each based on an estimated annual effective income tax rate of 24.5% and 24.4%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards. The estimated annual effective income tax rate was higher than the statutory federal income tax rate of 21% in both periods primarily attributable to state taxes and nondeductible executive compensation. The effective income tax rate for the 2022 thirteen-week period was 22.8%, which was lower than the estimated annual effective income tax rate of 24.5%, primarily attributable to excess tax benefits realized on stock-based awards. The effective income tax rate for the 2021 thirteen-week period of 24.4% was equal to the estimated annual effective income tax rate during the 2021 period.

Net income was $124,839,000, or $3.34 per diluted share, in the 2022 thirteen-week period. Net income was $77,240,000, or $2.01 per diluted share, in the 2021 thirteen-week period.

CAPITAL RESOURCES AND LIQUIDITY

Working capital and the ratio of current assets to current liabilities were $588,247,000 and 1.6 to 1, respectively, at March 26, 2022, compared with $512,917,000 and 1.5 to 1, respectively, at December 25, 2021. Landstar has historically operated with current ratios within the range of 1.5 to 1 to 2.0 to 1. Cash provided by operating activities was $94,965,000 in the 2022 thirteen-week period compared with $69,891,000 in the 2021 thirteen-week period. The increase in cash flow provided by operating activities for fiscal year 2021 was primarily attributable to increased net income, partially offset by the 53% increase in revenue year-over-year, which increased net receivables, defined as accounts receivable less accounts payable.

The Company declared and paid $0.25 per share, or $9,324,000 in the aggregate, in cash dividends during the thirteen-week period ended March 26, 2022 and, during such period, also paid $75,387,000 of dividends payable which were declared during fiscal year 2021 and included in current liabilities in the consolidated balance sheet at December 25, 2021. The Company declared and paid $0.21 per share, or $8,067,000 in the aggregate, in cash dividends during the thirteen-week period ended March 27, 2021 and, during such period,

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also paid $76,770,000 of dividends payable which were declared during fiscal year 2020 and included in current liabilities in the consolidated balance sheet at December 26, 2020. During the thirteen-week period ended March 26, 2022, the Company purchased 693,550 shares of its common stock at a total cost of $109,332,000. During the thirteen-week period ended March 27, 2021, the Company did not purchase any shares of its common stock. As of March 26, 2022, the Company may purchase in the aggregate up to 2,306,450 shares of its common stock under its authorized stock purchase programs. Long-term debt, including current maturities, was $172,272,000 at March 26, 2022, $60,468,000 higher than at December 25, 2021.

Shareholders’ equity was $856,149,000, or 83% of total capitalization (defined as long-term debt including current maturities plus equity), at March 26, 2022, compared to $862,010,000, or 89% of total capitalization, at December 25, 2021. The decrease in shareholders’ equity was primarily the result of purchases of shares of the Company’s common stock, taxes paid in lieu of shares issued related to stock-based compensation plans and dividends declared by the Company in the 2022 thirteen-week period, partially offset by net income.

On August 18, 2020, Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement, which matures on August 18, 2023, provides $250,000,000 of borrowing capacity in the form of a revolving credit facility, $35,000,000 of which may be utilized in the form of letters of credit. The Credit Agreement includes an “accordion” feature providing for a possible increase up to an aggregate borrowing capacity of $400,000,000.

The Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness. The Company is required to, among other things, maintain a minimum Fixed Charge Coverage Ratio, as defined in the Credit Agreement, and maintain a Leverage Ratio, as defined in the Credit Agreement, below a specified maximum. The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Company’s capital stock to the extent there is a default under the Credit Agreement. In addition, the Credit Agreement under certain circumstances limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect such cash dividend or other distribution, the Leverage Ratio would exceed 2.5 to 1 on a pro forma basis as of the end of the Company’s most recently completed fiscal quarter. The Credit Agreement provides for an event of default in the event that, among other things, a person or group acquires 35% or more of the outstanding capital stock of the Company or obtains power to elect a majority of the Company’s directors or the directors cease to consist of a majority of Continuing Directors, as defined in the Credit Agreement. None of these covenants are presently considered by management to be materially 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.

At March 26, 2022, the Company had $70,000,000 in borrowings outstanding and $33,170,000 of letters of credit outstanding under the Credit Agreement. At March 26, 2022, there was $146,830,000 available for future borrowings under the Credit Agreement. In addition, the Company has $72,267,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments and restricted cash totaling $80,142,000 at March 26, 2022. Investments, all of which are carried at fair value, include primarily investment-grade bonds and asset-backed securities having maturities of up to five years. Fair value of investments is based primarily on quoted market prices. See “Notes to Consolidated Financial Statements” included herein for further discussion on measurement of fair value of investments.

Historically, the Company has generated sufficient operating cash flow to meet its debt service requirements, fund continued growth, both organic and through acquisitions, complete or execute share purchases of its common stock under authorized share purchase programs, pay dividends and meet working capital needs. As an asset-light provider of integrated transportation management solutions, the Company’s annual capital requirements for operating property are generally for trailing equipment and information technology hardware and software. In addition, a significant portion of the trailing equipment used by the Company is provided by third party capacity providers, thereby reducing the Company’s capital requirements. During the 2022 thirteen-week period, the Company purchased $3,609,000 of operating property. Landstar anticipates acquiring either by purchase or lease financing during the remainder of fiscal year 2022 approximately $81,000,000 in operating property, consisting primarily of new trailing equipment to replace older trailing equipment and information technology equipment.

Management believes that cash flow from operations combined with the Company’s borrowing capacity under the Credit Agreement will be adequate to meet Landstar’s debt service requirements, fund continued growth, both internal and through acquisitions, pay dividends, complete the authorized share purchase programs and meet working capital needs.

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LEGAL MATTERS

The Company is involved in certain claims and pending litigation arising from the normal conduct of business. Many of these claims are covered in whole or in part by insurance. Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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. During the 2022 and 2021 thirteen-week periods, insurance and claims costs included $4,273,000 of net unfavorable and $292,000 of net favorable adjustments to prior years’ claims estimates, respectively. It is reasonably likely that the ultimate outcome of settling all outstanding claims will be more or less than the estimated claims liability at March 26, 2022.

Significant variances from management’s estimates for the ultimate resolution of self-insured claims could be expected to positively or negatively affect Landstar’s earnings in a given quarter or year. However, management believes that the ultimate resolution of these items, given a range of reasonably likely outcomes, will not significantly affect the long-term financial condition of Landstar or its ability to fund its continuing operations.

SEASONALITY

Landstar’s operations are subject to seasonal trends common to the trucking industry. Truckload shipments for the quarter ending in March are typically lower than for the quarters ending June, September and December.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to changes in interest rates as a result of its financing activities, primarily its borrowings on its revolving credit facility, if any, and investing activities with respect to investments held by the insurance segment.

On August 18, 2020, Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement, which matures on August 18, 2023, provides $250,000,000 of borrowing capacity in the form of a revolving credit facility, $35,000,000 of which may be utilized in the form of letters of credit. The Credit Agreement includes an “accordion” feature providing for a possible increase up to an aggregate borrowing capacity of $400,000,000.

The revolving credit loans under the Credit Agreement, at the option of Landstar, bear interest at (i) the Eurocurrency rate plus 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. The revolving credit facility bears a commitment fee, payable in arrears, of 0.25% to 0.35%, based on the Company’s Leverage Ratio at the end of the most recent applicable fiscal quarter for which financial statements have been delivered. As of March 26, 2022, the weighted average interest rate on borrowings outstanding was 1.66%. During the first quarter of 2022, the average outstanding balance under the Credit Agreement was approximately $33,077,000. Assuming that debt levels on the Credit Agreement remain at $70,000,000, the balance at March 26, 2022, a hypothetical increase of 100 basis points in current rates provided for under the Credit Agreement is estimated to result in an increase in interest expense of $700,000 on an annualized basis. As of December 25, 2021, the Company had no borrowings outstanding under the Credit Agreement.

Long-term investments, all of which are available-for-sale and are carried at fair value, include primarily investment-grade bonds and asset-backed securities having maturities of up to five years. Assuming that the long-term portion of investments remains at $131,403,000, the balance at March 26, 2022, a hypothetical increase or decrease in interest rates of 100 basis points would not have a material impact on future earnings on an annualized basis. Short-term investments consist of short-term investment-grade instruments and the current maturities of investment-grade corporate bonds and asset-backed securities. Accordingly, any future interest rate risk on these short-term investments would not be material to the Company’s operating results.

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Assets and liabilities of the Company’s Canadian and Mexican operations are translated from their functional currency to U.S. dollars using exchange rates in effect at the balance sheet date and revenue and expense accounts are translated at average monthly exchange rates during the period. Adjustments resulting from the translation process are included in accumulated other comprehensive income. Transactional gains and losses arising from receivable and payable balances, including intercompany balances, in the normal course of business that are denominated in a currency other than the functional currency of the operation are recorded in the statements of income when they occur. The assets held at the Company’s Canadian and Mexican subsidiaries at March 26, 2022 were collectively, as translated to U.S. dollars, approximately 2% of total consolidated assets. Accordingly, translation gains or losses of 50% or less related to the Canadian and Mexican operations would not be material.

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report on Form 10-Q, an evaluation was carried out, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of March 26, 2022 to provide reasonable assurance that information required to be disclosed by the Company in reports that it filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There were no changes in the Company’s internal control over financial reporting during the first quarter of 2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

In designing and evaluating disclosure controls and procedures, Company management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitation in any control system, no evaluation or implementation of a control system can provide complete assurance that all control issues and all possible instances of fraud have been or will be detected.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Legal Matters”

Item 1A. Risk Factors

For a discussion identifying risk factors and other important factors that could cause actual results to differ materially from those anticipated, see the discussions under Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021 and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements” in this Quarterly Report on Form 10-Q.

Except as set forth below, there have been no material changes to the Risk Factors described in Part I “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021 as filed with the SEC.

Increased severity or frequency of accidents and other claims or a material unfavorable development of existing claims. As noted above in Item 1, “Business — Factors Significant to the Company’s Operations — Self-Insured Claims,” potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. For periods prior to May 1, 2019, Landstar retains liability for commercial trucking claims up to $5 million per occurrence and maintains various third party insurance arrangements for liabilities in excess of its $5 million self-insured retention. Effective May 1, 2019, the Company entered into a new three year

29

commercial auto liability insurance arrangement for losses incurred between $5 million and $10 million (the “Initial Excess Policy”) with a third party insurance company. For commercial trucking claims incurred on or after May 1, 2019 through April 30, 2022, the Initial Excess Policy provides for a limit for a single loss of $5 million, with an aggregate limit of $15 million for each policy year, an aggregate limit of $20 million for the thirty-six month term ended April 30, 2022, and options to increase such aggregate limits for pre-established amounts of additional premium. If aggregate losses under the Initial Excess Policy exceed either the annual aggregate limit or the aggregate limit for the three year period ending April 30, 2022, and the Company did not elect to increase such aggregate limits for a pre-established amount of additional premium, Landstar would retain liability of up to $10 million per occurrence, inclusive of its $5 million self-insured retention for commercial trucking claims during the remainder of the applicable policy year(s).

The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10 million. These third party arrangements provide coverage on a per occurrence or aggregated basis. In recent years, there has been a significant increase in the occurrence of trials in courts throughout the United States involving catastrophic injury and fatality claims against commercial motor carriers that have resulted in verdicts in excess of $10 million. Within the transportation logistics industry, these verdicts are often referred to as “Nuclear Verdicts.” The increase in Nuclear Verdicts has had a significant impact on the cost of commercial auto liability claims throughout the United States. Due to the increasing cost of commercial auto liability claims, the availability of excess coverage has significantly decreased, and the pricing associated with such excess coverage, to the extent available, has significantly increased. With respect to the annual policy year ending April 30, 2021, as compared to the annual policy year ended April 30, 2020, the Company experienced an increase of approximately $14 million, or over 170%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million. Effective May 1, 2021, with respect to the annual policy year ending April 30, 2022, as compared to the annual policy year ended April 30, 2021, the Company experienced an increase of approximately $3 million, or 19%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10 million. Moreover, the Company increased the level of its financial exposure to commercial trucking claims in excess of $10 million, including through the use of additional self-insurance, deductibles, aggregate loss limits, quota shares and other arrangements with third party insurance companies, based on the availability of coverage within certain excess insurance coverage layers and estimated cost differentials between proposed premiums from third party insurance companies and historical and actuarially projected losses experienced by the Company at various levels of excess insurance coverage. For example, with respect to a hypothetical claim in the amount of $35 million incurred during the annual policy year ending April 30, 2022, the Company would have an aggregate financial exposure of approximately $10 million. Furthermore, the Company’s third party insurance arrangements provide excess coverage up to an uppermost coverage layer, in excess of which the Company retains additional financial exposure. No assurances can be given that the availability of excess coverage for commercial trucking claims will not continue to deteriorate, that the pricing associated with such excess coverage, to the extent available, will not continue to increase, nor that insurance coverage from third party insurers for excess coverage of commercial trucking claims will even be available on commercially reasonable terms at certain levels. Moreover, the occurrence of a Nuclear Verdict, or the settlement of a catastrophic injury and/or fatality claim that could have otherwise resulted in a Nuclear Verdict, could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.

Further, the Company retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim. In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers’ compensation claims. The Company’s exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company is reduced by various factors including the extent to which such carriers maintain their own insurance coverage. A material increase in the frequency or severity of accidents, cargo claims or workers’ compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.

Dependence on independent commission sales agents. As noted above in Item 1, “Business — Factors Significant to the Company’s Operations — Agent Network,” the Company markets its services primarily through independent commission sales agents. During fiscal year 2021, 593 agents generated revenue for Landstar of at least $1 million each, or in the aggregate approximately 94% of Landstar’s consolidated revenue. Included among these Million Dollar Agents, 115 agents generated at least $10,000,000 of Landstar revenue during the 2021 fiscal year, or in the aggregate approximately 71% of Landstar’s consolidated revenue. Of these larger agencies, one such Landstar independent commission sales agency, itself with a very diversified customer base, generated approximately $740,000,000, or 11%, of Landstar’s consolidated revenue and approximately 7% of Landstar’s consolidated variable contribution in fiscal year 2021.

30

A number of these larger agencies, including the largest of Landstar’s independent commission sales agents, maintain business operations in countries outside of North America where the risks of doing business may be different than in the United States or Canada due to geopolitical, legal or other risks associated with doing business in such foreign jurisdictions. There can be no assurance regarding the potential disruption and impact adverse geopolitical developments in these foreign jurisdictions could have on the ability of certain large independent commission sales agents to generate and maintain business operations in support of significant amounts of Landstar revenue. As disclosed in a Current Report on Form 8-K filed by the Company on February 28, 2022, the largest Landstar independent commission sales agency referenced above, while based in the United States, has significant administrative operations located in eastern Ukraine. The administrative operations of this agency were significantly disrupted during the onset of the Russian invasion of Ukraine. The Company also has another of its largest independent commission sales agencies, as measured by revenue generated in fiscal year 2021, that is based in the United States but conducts a portion of its operations in western Ukraine. The priority for Landstar and both of these agencies is the safety and well-being of these agencies’ Ukrainian workforces and their families. It should also be noted that load volumes arranged by these two independent commission sales agencies with significant administrative operations located in Ukraine were significantly less impacted to date than initially anticipated by the Company at the onset of the Russian invasion. Nevertheless, no assurances can be provided regarding the conflict between Russia and Ukraine and the extent of potential future operational disruption the conflict may have on either of these Landstar agencies and the related impact of these disruptions on the Company.

Landstar competes with motor carriers and other third parties for the services of independent commission sales agents. Landstar has historically experienced very limited agent turnover in the number of its Million Dollar Agents. There can be no assurances, however, that Landstar will continue to experience very limited turnover of its Million Dollar Agents in the future. Landstar’s contracts with its agents, including its Million Dollar Agents, are typically terminable without cause upon 10 to 30 days’ notice by either party and generally contain significant but not unqualified non-compete provisions limiting the ability of a former agent to compete with Landstar for a specified period of time post-termination, and other restrictive covenants. The loss of some of the Company’s Million Dollar Agents and/or a significant decrease in revenue generated by Million Dollar Agents could have a material adverse effect on Landstar, including its results of operations and revenue.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Company

The following table provides information regarding the Company’s purchase of its common stock during the period from December 25, 2021 to March 26, 2022, the Company’s first fiscal 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

On December 7, 2021, the Landstar System, Inc. Board of Directors authorized the Company to purchase up to 1,912,824 additional shares of the Company’s Common Stock from time to time in the open market and in privately negotiated transactions. On December 9, 2019, the Landstar System, Inc. Board of Directors authorized the Company to purchase up to 1,849,068 shares of the Company’s Common Stock from time to time in the open market and in privately negotiated transactions. As of March 26, 2022, the Company had authorization to purchase in the aggregate up to 2,306,450 shares of its Common Stock under these programs. No specific expiration date has been assigned to the December 7, 2021 or December 9, 2019 authorizations.

Dividends

On August 18, 2020, Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Company’s capital stock in the event there is a default under the Credit Agreement. In addition, the Credit Agreement, under certain circumstances, limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect such cash dividend or other distribution, the Leverage Ratio, 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.

31

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits listed on the Exhibit Index are furnished as part of this quarterly report on Form 10-Q.

32

EXHIBIT INDEX

Registrant’s Commission File No.: 0-21238

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 Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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 Taxonomy Extension Label Linkbase Document
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

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LANDSTAR SYSTEM, INC.
Date: April 29, 2022	/s/ James B. Gattoni
	James B. Gattoni
	President and Chief Executive Officer
Date: April 29, 2022	/s/ Federico L. Pensotti
	Federico L. Pensotti
	Vice President and Chief
	Financial Officer

34

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, James B. Gattoni, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Landstar System, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 29, 2022

/s/ James B. Gattoni

James B. Gattoni

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Federico L. Pensotti, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Landstar System, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 29, 2022

/s/ Federico L. Pensotti

Federico L. Pensotti

Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landstar System, Inc. (the “Company”) on Form 10-Q for the period ending March 26, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James B. Gattoni, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 29, 2022

/s/ James B. Gattoni

James B. Gattoni

President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landstar System, Inc. (the “Company”) on Form 10-Q for the period ending March 26, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Federico L. Pensotti, Vice President and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 29, 2022

/s/ Federico L. Pensotti

Federico L. Pensotti

Vice President and Chief Financial Officer

XML

Cover Page - shares	3 Months Ended
	Mar. 26, 2022	Apr. 18, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Document Quarterly Report	true
Entity Central Index Key	0000853816
Document Transition Report	false
Current Fiscal Year End Date	--12-31
Document Period End Date	Mar. 26, 2022
Entity Registrant Name	LANDSTAR SYSTEM, INC.
Entity Filer Category	Large Accelerated Filer
Trading Symbol	LSTR
Title of 12(b) Security	Common Stock
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		37,127,333
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity File Number	0-21238
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	06-1313069
Entity Address, Address Line One	13410 Sutton Park Drive South
Entity Address, City or Town	Jacksonville
Entity Address, Postal Zip Code	32224
City Area Code	904
Local Phone Number	398-9400
Entity Address, State or Province	FL

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
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
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

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Allowance on trade accounts receivable	$ 7,940	$ 7,074
Allowance on other receivables	8,838	8,125
Accumulated depreciation and amortization on operating property	$ 356,988	$ 344,099
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized shares	160,000,000	160,000,000
Common stock, issued shares	68,370,151	68,232,975
Treasury stock, shares	31,242,818	30,539,235

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 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

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Net income	$ 124,839	$ 77,240
Other comprehensive loss:
Unrealized holding losses on available-for-sale investments, net of tax benefits of $1,421 and $147	(5,187)	(534)
Foreign currency translation gains (losses)	1,275	(420)
Other comprehensive loss	(3,912)	(954)
Comprehensive income	$ 120,927	$ 76,286

XML

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Unrealized holding losses on available-for-sale investments, net of tax (benefit) expense	$ 1,421	$ 147

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 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

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock at Cost	Accumulated Other Comprehensive Loss
Beginning Balance (in shares) at Dec. 26, 2020		68,183,702			29,797,639
Beginning Balance at Dec. 26, 2020	$ 691,835	$ 682	$ 228,875	$ 2,046,238	$ (1,581,961)	$ (1,999)
Net income	77,240			77,240
Dividends	(8,067)			(8,067)
Issuance of stock related to stock-based compensation plans (in shares)		28,594			6,087
Issuance of stock related to stock-based compensation plans	(1,164)		(307)		$ (857)
Stock-based compensation	4,029		4,029
Other comprehensive loss	(954)					(954)
Ending Balance (in shares) at Mar. 27, 2021		68,212,296			29,803,726
Ending Balance at Mar. 27, 2021	762,919	$ 682	232,597	2,115,411	$ (1,582,818)	(2,953)
Beginning Balance (in shares) at Dec. 25, 2021		68,232,975			30,539,235
Beginning Balance at Dec. 25, 2021	862,010	$ 682	255,148	2,317,184	$ (1,705,601)	(5,403)
Net income	124,839			124,839
Dividends	(9,324)			(9,324)
Purchases of common stock (in shares)					693,550
Purchases of common stock	(109,332)				$ (109,332)
Issuance of stock related to stock-based compensation plans (in shares)		137,176			10,033
Issuance of stock related to stock-based compensation plans	(10,127)	$ 2	(8,913)		$ (1,216)
Stock-based compensation	1,995		1,995
Other comprehensive loss	(3,912)					(3,912)
Ending Balance (in shares) at Mar. 26, 2022		68,370,151			31,242,818
Ending Balance at Mar. 26, 2022	$ 856,149	$ 684	$ 248,230	$ 2,432,699	$ (1,816,149)	$ (9,315)

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Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Dividends per common share	$ 0.25	$ 0.21

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Significant Accounting Policies

3 Months Ended

Mar. 26, 2022

Significant Accounting Policies

(1) Significant Accounting Policies

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 thirteen-week periods ended March 26, 2022 and March 27, 2021 (dollars in thousands):

	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.

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Share-based Payment Arrangements

3 Months Ended

Mar. 26, 2022

Share-based Payment Arrangements

(2) Share-based Payment Arrangements

As of March 26, 2022, 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 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 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
	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

Included in income tax benefits recognized in the thirteen-week periods ended March 26, 2022 and March 27, 2021 were excess tax benefits from stock-based awards of $2,869,000 and $343,000, respectively.

As of March 26, 2022, there were 56,502 shares of the Company’s common stock reserved for issuance under the 2013 DSCP and 3,230,826 shares of the Company’s common stock reserved for issuance under the 2011 EIP.

Restricted Stock Units

The following table summarizes information regarding the Company’s outstanding restricted stock unit (“RSU”) awards with either a performance condition or a market condition under the Plans:

	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.

During the thirteen-week period ended March 26, 2022, the Company granted RSUs with a performance condition. Outstanding RSUs at both December 25, 2021 and March 26, 2022 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2021 Annual Report on Form 10-K.

RSUs with a performance condition granted on January 28, 2022 may vest on January 31 of 2025, 2026 and 2027 based on growth in operating income and pre-tax income per diluted share from continuing operations as compared to the results from the 2021 fiscal year.

The Company recognized approximately $1,301,000 and $3,223,000 of share-based compensation expense related to RSU awards in the thirteen-week periods ended March 26, 2022 and March 27, 2021, respectively. As of March 26, 2022, there was a maximum of $27.3 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.9 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.

Non-vested Restricted Stock and Deferred Stock Units

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

	Number of Shares 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

The fair value of each share of non-vested restricted stock issued and Deferred Stock Unit granted under the Plans is based on the fair value of a share of the Company’s common stock on the date of grant. Shares of non-vested restricted stock are generally subject to vesting in three equal annual installments either on the first, second and third anniversary of the date of the grant or the third, fourth and fifth anniversary of the date of the grant, or 100% on the first or fifth anniversary of the date of the grant. For restricted stock awards granted under the 2013 DSCP plan, each recipient may elect to defer receipt of shares and instead receive restricted stock units (“Deferred Stock Units”), which represent contingent rights to receive shares of the Company’s common stock on the date of recipient separation from service from the Board of Directors, or, if earlier, upon a change in control event of the Company. Deferred Stock Units become vested 100% on the first anniversary of the date of the grant. Deferred Stock Units do not represent actual ownership in shares of the Company’s common stock and the recipient does not have voting rights or other incidents of ownership until the shares are issued. However, Deferred Stock Units do contain the right to receive dividend equivalent payments prior to settlement into shares.

As of March 26, 2022, there was $5,555,000 of total unrecognized compensation cost related to non-vested shares of restricted stock and Deferred Stock Units granted under the Plans. The unrecognized compensation cost related to these non-vested shares of restricted stock and Deferred Stock Units is expected to be recognized over a weighted average period of 2.4 years.

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 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

The total intrinsic value of stock options exercised during the thirteen-week periods ended March 26, 2022 and March 27, 2021 was $369,000 and $521,000, respectively.

As of March 26, 2022, there was no unrecognized compensation cost related to stock options granted under the Plans.

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Income Taxes

3 Months Ended

Mar. 26, 2022

Income Taxes

(3) Income Taxes

The provisions for income taxes for the 2022 and 2021 thirteen-week periods were based on an estimated annual effective income tax rate of 24.5% and 24.4%, respectively, adjusted for discrete events, such as benefits resulting from stock-based awards. The estimated annual effective income tax rate was higher than the statutory federal income tax rate of 21% in both periods primarily attributable to state taxes and non-deductible executive compensation. The effective income tax rate for the 2022 thirteen-week period was 22.8%, which was lower than the estimated annual effective income tax rate of 24.5%, primarily attributable to excess tax benefits realized on stock-based awards. The effective income tax rate for the 2021 thirteen-week period of 24.4% was equal to the estimated annual effective income tax rate during the 2021 period.

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Earnings Per Share

3 Months Ended

Mar. 26, 2022

Earnings Per Share

(4) Earnings Per Share

Earnings per common share are based on the weighted average number of shares outstanding, including outstanding non-vested restricted stock and outstanding Deferred Stock Units. Diluted earnings per share are based on the weighted average number of common shares and Deferred Stock Units outstanding plus the incremental shares that would have been outstanding upon the assumed exercise of all dilutive stock options. During the 2022 and 2021 thirteen-week periods, in reference to the determination of diluted earnings per share, the future compensation cost attributable to outstanding shares of non-vested restricted stock exceeded the impact of incremental shares that would have been outstanding upon the assumed exercise of all dilutive stock options.

For each of the thirteen-week periods ended March 26, 2022 and March 27, 2021, no options outstanding to purchase shares of common stock were antidilutive. Outstanding RSUs were excluded from the calculation of diluted earnings per share for all periods because the performance metric requirements or market condition for vesting had not been satisfied.

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Additional Cash Flow Information

3 Months Ended

Mar. 26, 2022

Additional Cash Flow Information

(5) Additional Cash Flow Information

During the 2022 thirteen-week period, Landstar paid income taxes and interest of $2,031,000 and $1,029,000, respectively. During the 2021 thirteen-week period, Landstar paid income taxes and interest of $353,000 and $983,000, respectively. Landstar did not acquire any operating property by entering into finance leases in either the 2022 or 2021 thirteen-week periods.

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Segment Information

3 Months Ended

Mar. 26, 2022

Segment Information

(6) Segment Information

The following table summarizes information about the Company’s reportable business segments as of and for the thirteen-week periods ended March 26, 2022 and March 27, 2021 (in thousands):

	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

In the thirteen-week periods ended March 26, 2022 and March 27, 2021, no single customer accounted for more than 10% of the Company’s consolidated revenue.

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Other Comprehensive Income

3 Months Ended

Mar. 26, 2022

Other Comprehensive Income

(7) Other Comprehensive Income

The following table presents the components of and changes in accumulated other comprehensive income (loss), net of related income taxes, as of and for the thirteen-week period ended March 26, 2022 (in thousands):

	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	)

Amounts reclassified from accumulated other comprehensive income to investment income due to the realization of previously unrealized gains and losses in the accompanying consolidated statements of income were not significant for the thirteen-week period ended March 26, 2022.

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Investments

3 Months Ended

Mar. 26, 2022

Investments

(8) Investments

Investments include primarily investment-grade corporate bonds and asset-backed securities 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 and are carried at fair value. Investments maturing less than one year from the balance sheet date are included in short-term investments and investments maturing more than one year from the balance sheet date are included in other assets in the consolidated balance sheets. Management performs an analysis of the nature of the unrealized losses on available-for-sale investments to determine whether an allowance for credit loss is necessary. Unrealized losses, representing the excess of the purchase price of an investment over its fair value as of the end of a period, considered to be a result of credit-related factors, are to be included as a charge in the statement of income, while unrealized losses considered to be a result of noncredit-related factors are to be included as a component of shareholders’ equity. Investments whose values are based on quoted market prices 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 non-transferability, which are generally based on available market information. Any transfers between levels are recognized as of the beginning of any reporting period. Fair value of the bond portfolio was determined using Level 1 inputs related to U.S. Treasury obligations and money market investments and Level 2 inputs related to investment-grade corporate bonds, asset-backed securities and direct obligations of government agencies. Unrealized losses, net of unrealized gains, on the investments in the bond portfolio were $6,464,000 at March 26, 2022, while unrealized gains, net of unrealized losses, on the investments in the bond portfolio were $144,000 at December 25, 2021.

The amortized cost and fair values of available-for-sale investments are as follows at March 26, 2022 and December 25, 2021 (in thousands):

	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

For those available-for-sale investments with unrealized losses at March 26, 2022 and December 25, 2021, the following table summarizes the duration of the unrealized loss (in thousands):

	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

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

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Leases

3 Months Ended

Mar. 26, 2022

Leases

(9) Leases

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. Substantially all of Landstar’s operating lease right-of-use assets and operating lease liabilities represent leases for facilities maintained in support of the Company’s network of BCO Independent Contractors and office space used to conduct Landstar’s business. These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives or other build-out clauses. Further, the leases do not contain contingent rent provisions. Landstar also rents certain trailing equipment to supplement the Company-owned trailer fleet under “month-to-month” lease terms, which are not required to be recorded on the balance sheet due to the less than twelve month lease term exemption. Sublease income is primarily comprised of weekly trailing equipment rentals to BCO Independent Contractors.

Most of Landstar’s operating leases include one or more options to renew. The exercise of lease renewal options is typically at Landstar’s sole discretion, and, as such, the majority of renewals to extend the lease terms are not included in the right-of-use assets and lease liabilities as they are not reasonably certain of exercise. Landstar regularly evaluates the renewal options, and when they are reasonably certain of exercise, Landstar includes the renewal period in the lease term.

As most of Landstar’s operating leases do not provide an implicit rate, Landstar utilized its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. Landstar has a centrally managed treasury function; 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 thirteen weeks ended March 26, 2022 were (in thousands):

Finance leases:
Amortization of right-of-use assets	$	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

A summary of the lease classification on our consolidated balance sheet as of March 26, 2022 is as follows (in thousands):

Assets:

Operating lease right-of-use assets	Other assets	$	1,916
Finance lease assets	Operating property, less accumulated depreciation and amortization		137,818
Total lease assets		$	139,734

Liabilities:

The following table reconciles the undiscounted cash flows for the finance and operating leases to the finance and operating lease liabilities recorded on the balance sheet at March 26, 2022 (in thousands):

	Finance Leases		Operating Leases
2022 Remainder	$	28,777	$	583
2023		31,916		638
2024		22,045		534
2025		15,820		282
2026		7,668		—
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

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of March 26, 2022 were:

	Finance Leases			Operating Leases
Weighted average remaining lease term (years)		3.4			3.4
Weighted average discount rate		2.5	%		4.0	%

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Debt

3 Months Ended

Mar. 26, 2022

Debt

(10) Debt

In addition to the finance lease obligations as presented on the consolidated balance sheets, the Company had $70,000,000 in outstanding debt as of March 26, 2022, consisting of borrowings under the Company’s revolving credit facility. The Company had no borrowings under the revolving credit facility as of December 25, 2021.

On August 18, 2020, Landstar entered into an amended and restated credit agreement with a syndicate of banks and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement, which matures on August 18, 2023, provides $250,000,000 of borrowing capacity in the form of a revolving credit facility, $35,000,000 of which may be utilized in the form of letters of credit. The Credit Agreement includes an “accordion” feature providing for a possible increase up to an aggregate borrowing capacity of $400,000,000.

The revolving credit loans under the Credit Agreement, at the option of Landstar, bear interest at (i) the Eurocurrency rate plus 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. The revolving credit facility bears a commitment fee, payable quarterly in arrears, of 0.25% to 0.35%, based on the Company’s Leverage Ratio at the end of the most recent applicable fiscal quarter for which financial statements have been delivered. As of March 26, 2022, the weighted average interest rate on borrowings outstanding was 1.66%.

The Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness. The Company is required to, among other things, maintain a minimum Fixed Charge Coverage Ratio, as defined in the Credit Agreement, and maintain a Leverage Ratio, as defined in the Credit Agreement, below a specified maximum. The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Company’s capital stock to the extent there is a default under the Credit Agreement. In addition, the Credit Agreement under certain circumstances limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect such cash dividend or other distribution, the Leverage Ratio would exceed 2.5 to 1 on a pro forma basis as of the end of the Company’s most recently completed fiscal quarter. The Credit Agreement provides for an event of default in the event that, among other things, a person or group acquires 35% or more of the outstanding capital stock of the Company or obtains power to elect a majority of the Company’s directors or the directors cease to consist of a majority of Continuing Directors, as defined in the Credit Agreement. None of these covenants are presently considered by management to be materially 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.

The interest rates on borrowings under the revolving credit facility are typically tied to short-term interest rates that adjust monthly and, 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.

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Commitments and Contingencies

3 Months Ended

Mar. 26, 2022

Commitments and Contingencies

(11) Commitments and Contingencies

Short-term investments include $34,292,000 in current maturities of investments and $1,387,000 in restricted cash held by the Company’s insurance segment at March 26, 2022. The non-current portion of the bond portfolio of $131,403,000 is included in other assets. The short-term investments, together with $44,463,000 of non-current investments, provide collateral for the $72,267,000 of letters of credit issued to guarantee payment of insurance claims. As of March 26, 2022, Landstar also had $33,170,000 of additional letters of credit outstanding under the Company’s Credit Agreement.

The Company is involved in certain claims and pending litigation arising from the normal conduct of business. Many of these claims are covered in whole or in part by insurance. Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 26, 2022

Revenue from Contracts with Customers – Disaggregation of Revenue

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 thirteen-week periods ended March 26, 2022 and March 27, 2021 (dollars in thousands):

	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.

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Significant Accounting Policies (Tables)

3 Months Ended

Mar. 26, 2022

Schedule of 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 thirteen-week periods ended March 26, 2022 and March 27, 2021 (dollars in thousands):

	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.

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Share-based Payment Arrangements (Tables)

3 Months Ended

Mar. 26, 2022

Amounts Recognized in Financial Statements with Respect to Plans

Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):

	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

Schedule of Information on Restricted Stock Units

The following table summarizes information regarding the Company’s outstanding restricted stock unit (“RSU”) awards with either a performance condition or a market condition under the Plans:

	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.

Schedule of Information on Non-Vested Restricted Stock and Deferred Stock Units

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

	Number of Shares 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

Summary of Information Regarding 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 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

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Segment Information (Tables)

3 Months Ended

Mar. 26, 2022

Information Regarding Reportable Business Segments

The following table summarizes information about the Company’s reportable business segments as of and for the thirteen-week periods ended March 26, 2022 and March 27, 2021 (in thousands):

	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

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Other Comprehensive Income (Tables)

3 Months Ended

Mar. 26, 2022

Components of and Changes in Accumulated Other Comprehensive Income, Net of Related Income Taxes

The following table presents the components of and changes in accumulated other comprehensive income (loss), net of related income taxes, as of and for the thirteen-week period ended March 26, 2022 (in thousands):

	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	)

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Investments (Tables)

3 Months Ended

Mar. 26, 2022

Amortized Cost and Fair Value of Available-for-Sale Investments

The amortized cost and fair values of available-for-sale investments are as follows at March 26, 2022 and December 25, 2021 (in thousands):

	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

Schedule of Unrealized Loss on Available-for-Sale Investments

For those available-for-sale investments with unrealized losses at March 26, 2022 and December 25, 2021, the following table summarizes the duration of the unrealized loss (in thousands):

	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

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Leases (Tables)

3 Months Ended

Mar. 26, 2022

Lease, Cost [Table Text Block]

The components of lease cost for finance leases and operating leases for the thirteen weeks ended March 26, 2022 were (in thousands):

Finance leases:
Amortization of right-of-use assets	$	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

Schedule Of Supplemental Balance Sheet Information Related To Leases [Table Text Block]

A summary of the lease classification on our consolidated balance sheet as of March 26, 2022 is as follows (in thousands):

Assets:

Operating lease right-of-use assets	Other assets	$	1,916
Finance lease assets	Operating property, less accumulated depreciation and amortization		137,818
Total lease assets		$	139,734

Finance And Operating Lease Maturity [Table Text Block]

Liabilities:

The following table reconciles the undiscounted cash flows for the finance and operating leases to the finance and operating lease liabilities recorded on the balance sheet at March 26, 2022 (in thousands):

	Finance Leases		Operating Leases
2022 Remainder	$	28,777	$	583
2023		31,916		638
2024		22,045		534
2025		15,820		282
2026		7,668		—
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

Schedule Discount Rate And Lease Term Used In Calculating Lease Liabilities And Assets [Table Text Block]

The weighted average remaining lease term and the weighted average discount rate for finance and operating leases as of March 26, 2022 were:

	Finance Leases			Operating Leases
Weighted average remaining lease term (years)		3.4			3.4
Weighted average discount rate		2.5	%		4.0	%

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Schedule Of Revenue By Major Customers By Reporting Segments (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Disaggregation of Revenue [Line Items]
Revenue	$ 1,970,599	$ 1,287,534
BCO Independent Contractors – Truck
Disaggregation of Revenue [Line Items]
Percentage of Consolidated Revenue	37.00%	44.00%
Brokerage Carriers - Truck
Disaggregation of Revenue [Line Items]
Percentage of Consolidated Revenue	52.00%	49.00%
Rail Intermodal
Disaggregation of Revenue [Line Items]
Percentage of Consolidated Revenue	2.00%	2.00%
Ocean and air cargo carriers
Disaggregation of Revenue [Line Items]
Percentage of Consolidated Revenue	8.00%	4.00%
BCO Independent Contractor Truck and Brokerage Carriers Truck | Van Equipment
Disaggregation of Revenue [Line Items]
Revenue	$ 1,081,206	$ 729,402
BCO Independent Contractor Truck and Brokerage Carriers Truck | Unsided/Platform Equipment
Disaggregation of Revenue [Line Items]
Revenue	408,757	297,485
BCO Independent Contractor Truck and Brokerage Carriers Truck | Less than Truckload
Disaggregation of Revenue [Line Items]
Revenue	33,720	25,670
BCO Independent Contractor Truck and Brokerage Carriers Truck | Other Truck Transportation
Disaggregation of Revenue [Line Items]
Revenue	$ 227,601	$ 140,932

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Share-based Payment Arrangements - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Excess tax benefit from stock-based awards	$ 2,869,000	$ 343,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized share-based compensation (benefit)/expense	1,301,000	3,223,000
Unrecognized compensation cost, other than options	$ 27,300,000
Unrecognized compensation cost expected to be recognized over period, years	3 years 10 months 24 days
Non Vested Restricted Stock and Deferred Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, other than options	$ 5,555,000
Unrecognized compensation cost expected to be recognized over period, years	2 years 4 months 24 days
Terms of award	Company’s common stock on the date of grant. Shares of non-vested restricted stock are generally subject to vesting in three equal annual installments either on the first, second and third anniversary of the date of the grant or the third, fourth and fifth anniversary of the date of the grant, or 100% on the first or fifth anniversary of the date of the grant. For restricted stock awards granted under the 2013 DSCP plan, each recipient may elect to defer receipt of shares and instead receive restricted stock units (“Deferred Stock Units”), which represent contingent rights to receive shares of the Company’s common stock on the date of recipient separation
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total intrinsic value of stock options exercised during periods	$ 369,000	$ 521,000
Maximum | Restricted Stock Units (RSUs) | Prior to 2015 grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of target available for common share issuance	100.00%
2011 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for issuance	3,230,826
2011 Equity Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock authorized for issuance	6,000,000
2013 Directors Stock Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock authorized for issuance	115,000
Common stock reserved for issuance	56,502
2013 Directors Stock Compensation Plan | Deferred Stock Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock vesting percentage	100.00%

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Amounts Recognized in Financial Statements with Respect to Plans (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
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

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Schedule of Information on Restricted Stock Units (Detail) - Restricted Stock Units (RSUs)	3 Months Ended
	Mar. 26, 2022 $ / shares shares
Number of Shares
Beginning Balance | shares	209,399
Granted | shares	49,405
Shares earned in excess of target | shares	91,497
Vested shares, including shares earned in excess of target | shares	(174,366)
Forfeited | shares	(15,044)
Ending Balance | shares	160,891
Weighted Average Grant Date Fair Value
Beginning Balance | $ / shares	$ 102.90
Granted | $ / shares	139.78
Shares earned in excess of target | $ / shares	92.58
Vested shares, including shares earned in excess of target | $ / shares	96.14
Forfeited | $ / shares	103.31
Ending Balance | $ / shares	$ 115.64

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Schedule of Information on Non - Vested Restricted Stock Units (Detail) - Non Vested Restricted Stock and Deferred Stock Units	3 Months Ended
	Mar. 26, 2022 $ / shares shares
Number of Shares and Deferred Stock Units
Beginning Balance | shares	56,436
Granted | shares	17,008
Vested | shares	(21,500)
Forfeited | shares	(2,302)
Ending Balance | shares	49,642
Weighted Average Grant Date Fair Value
Beginning Balance | $ / shares	$ 125.16
Granted | $ / shares	152.44
Vested | $ / shares	110.16
Forfeited | $ / shares	108.59
Ending Balance | $ / shares	$ 141.77

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Summary of Information Regarding Stock Options (Detail) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 26, 2022 USD ($) $ / shares shares
Number of Options
Beginning Balance, number of options | shares	8,570
Exercised, number of options | shares	(3,500)
Ending Balance, number of options | shares	5,070
Weighted Average Exercise Price per Share
Beginning Balance, Weighted Average Exercise Price per Share | $ / shares	$ 55.42
Exercised, Weighted Average Exercise Price per Share | $ / shares	54.01
Ending Balance, Weighted Average Exercise Price per Share | $ / shares	$ 56.40
Options Exercisable, Number of Options
Options exercisable at the ending, Number of Options | shares	5,070
Options Exercisable, Weighted Average Exercise Price per Share
Options exercisable at the ending, Weighted Average Exercise Price per Share | $ / shares	$ 56.40
Weighted Average Remaining Contractual Term (years)
Options outstanding at March 26, 2022	9 months 18 days
Options exercisable at March 26, 2022	9 months 18 days
Aggregate Intrinsic Value
Options outstanding at March 26, 2022 | $	$ 495
Options exercisable at March 26, 2022 | $	$ 495

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Income Taxes - Additional Information (Detail)	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Income Taxes [Line Items]
Corporate income tax rate	21.00%	21.00%
Estimated annual effective income tax rate	24.50%	24.40%
Effective income tax rate	22.80%	24.40%

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Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options excluded from calculation of diluted earnings per share, antidilutive	0	0

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Additional Cash Flow Information - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Supplemental Cash Flow Information [Abstract]
Income taxes paid	$ 2,031,000	$ 353,000
Interest paid	1,029,000	983,000
Capital Lease Obligations Incurred	$ 0	$ 0

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Segment Information - Additional Information (Detail) - Customer	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Segment Reporting Information [Line Items]
Number of customers accounting for 10 percent or more of total revenue	0	0
No single customer accounted for benchmark percentage to be considered major customer	10.00%	10.00%

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Information Regarding Reportable Business Segments (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021	Dec. 25, 2021
Segment Reporting Information [Line Items]
External revenue	$ 1,970,599	$ 1,287,534
Internal revenue	12,884	9,534
Investment income	721	684
Operating income	162,833	103,268
Expenditures on long-lived assets	3,609	4,076
Goodwill	40,945	40,732	$ 40,768
Transportation Logistics
Segment Reporting Information [Line Items]
External revenue	1,951,339	1,270,499
Operating income	151,946	89,732
Expenditures on long-lived assets	3,609	4,076
Goodwill	40,945	40,732
Insurance
Segment Reporting Information [Line Items]
External revenue	19,260	17,035
Internal revenue	12,884	9,534
Investment income	721	684
Operating income	$ 10,887	$ 13,536

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Components of and Changes in Accumulated Other Comprehensive Income, Net of Related Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ 862,010
Other comprehensive (loss) income	(3,912)	$ (954)
Ending Balance	856,149
Unrealized Holding Gains (Losses) on Available-for-Sale Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	113
Other comprehensive (loss) income	(5,187)
Ending Balance	(5,074)
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(5,516)
Other comprehensive (loss) income	1,275
Ending Balance	(4,241)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(5,403)
Other comprehensive (loss) income	(3,912)
Ending Balance	$ (9,315)

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Investments - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 26, 2022	Dec. 25, 2021
Debt Securities, Available-for-sale [Line Items]
Investments maximum maturity period	5 years
Unrealized gain (loss), net of unrealized gains/losses, on the investments in the bond portfolio	$ (6,464,000)	$ 144,000

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Amortized Cost and Fair Value of Available-for-Sale Investments (Detail) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 172,159	$ 171,449
Gross Unrealized Gains	212	1,456
Gross Unrealized Losses	6,676	1,312
Fair Value	165,695	171,593
Money market investments
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	14,913	8,750
Fair Value	14,913	8,750
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	21,259	22,441
Gross Unrealized Losses	1,435	346
Fair Value	19,824	22,095
Corporate bonds and direct obligations of government agencies
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	133,645	137,916
Gross Unrealized Gains	212	1,406
Gross Unrealized Losses	5,203	966
Fair Value	128,654	138,356
U.S. Treasury obligations
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	2,342	2,342
Gross Unrealized Gains		50
Gross Unrealized Losses	38
Fair Value	$ 2,304	$ 2,392

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Schedule of Unrealized Loss on Available-for-Sale Investments (Detail) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Debt Securities, Available-for-sale [Line Items]
Available-for-sale investments with unrealized losses, Less than 12 months, Fair Value	$ 119,090	$ 94,621
Available-for-sale investments with unrealized losses, Less than 12 months, Unrealized Loss	6,241	1,312
Available-for-sale investments with unrealized losses, 12 months or longer, Fair Value	4,147
Available-for-sale investments with unrealized losses, 12 months or longer, Unrealized Loss	435
Available-for-sale investments with unrealized losses, Fair Value, Total	123,237	94,621
Available-for-sale investments with unrealized losses, Unrealized Loss, Total	6,676	1,312
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
Available-for-sale investments with unrealized losses, Less than 12 months, Fair Value	19,824	22,095
Available-for-sale investments with unrealized losses, Less than 12 months, Unrealized Loss	1,435	346
Available-for-sale investments with unrealized losses, Fair Value, Total	19,824	22,095
Available-for-sale investments with unrealized losses, Unrealized Loss, Total	1,435	346
Corporate bonds and direct obligations of government agencies
Debt Securities, Available-for-sale [Line Items]
Available-for-sale investments with unrealized losses, Less than 12 months, Fair Value	96,962	72,526
Available-for-sale investments with unrealized losses, Less than 12 months, Unrealized Loss	4,768	966
Available-for-sale investments with unrealized losses, 12 months or longer, Fair Value	4,147
Available-for-sale investments with unrealized losses, 12 months or longer, Unrealized Loss	435
Available-for-sale investments with unrealized losses, Fair Value, Total	101,109	72,526
Available-for-sale investments with unrealized losses, Unrealized Loss, Total	5,203	$ 966
U.S. Treasury obligations
Debt Securities, Available-for-sale [Line Items]
Available-for-sale investments with unrealized losses, Less than 12 months, Fair Value	2,304
Available-for-sale investments with unrealized losses, Less than 12 months, Unrealized Loss	38
Available-for-sale investments with unrealized losses, Fair Value, Total	2,304
Available-for-sale investments with unrealized losses, Unrealized Loss, Total	$ 38

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Leases - Additional Information (Detail)	Mar. 26, 2022 USD ($)
Leases Disclosure [Line Items]
Finance Lease Option to Purchase Option Value	$ 1
Lessee, Finance Lease, Term of Contract	5 years

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Leases - Components of Lease Cost for Finance Leases and Operating Leases (Detail) $ in Thousands	3 Months Ended
	Mar. 26, 2022 USD ($)
Finance leases:
Amortization of right-of-use assets	$ 5,327
Interest on lease liability	700
Total finance lease cost	6,027
Operating leases:
Lease cost	926
Sublease income	(1,213)
Total net operating lease income	(287)
Total net lease cost	$ 5,740

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Leases - Classification on our Consolidated Balance Sheet (Detail) $ in Thousands	Mar. 26, 2022 USD ($)
Total lease assets	$ 139,734
Other Assets [Member]
Operating lease right-of-use assets	1,916
Property Plant and Equipment Net [Member]
Finance lease assets	$ 137,818

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Leases - Undiscounted Cash Flows for the Finance and Operating Leases (Detail) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Operating Leased Assets [Line Items]
2022 Remainder	$ 28,777
2023	31,916
2024	22,045
2025	15,820
2026	7,668
Total future minimum lease payments	106,226
Less amount representing interest (1.6% to 4.4%)	3,954
Present value of minimum lease payments	102,272
Current maturities of long-term debt	34,983	$ 36,561
Long-term debt, excluding current maturities	67,289
2022 Remainder	583
2023	638
2024	534
2025	282
2026	0
Total future minimum lease payments	2,037
Less amount representing interest (1.6% to 4.4%)	121
Present value of minimum lease payments	1,916
Other current liabilities [Member]
Operating Leased Assets [Line Items]
Operating lease, liability, current	744
Deferred income taxes and other noncurrent liabilities [Member]
Operating Leased Assets [Line Items]
Operating lease, liability, non-current	$ 1,172

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Leases - Undiscounted Cash Flows for the Finance and Operating Leases (Parenthetical) (Details)	Mar. 26, 2022
Maximum [Member]
Finance lease Interest rate percentage	4.40%
Minimum [Member]
Finance lease Interest rate percentage	1.60%

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Leases - Weighted Average Remaining Lease Term and the Weighted Average Discount Rate for Finance and Operating leases (Detail)	Mar. 26, 2022
Weighted average remaining lease term (years)	3 years 4 months 24 days
Weighted average discount rate	2.50%
Weighted average remaining lease term (years)	3 years 4 months 24 days
Weighted average discount rate	4.00%

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Debt - Additional Information (Detail) - USD ($)		3 Months Ended
	Aug. 18, 2020	Mar. 26, 2022	Dec. 25, 2021
Debt Instrument [Line Items]
Debt Outstanding Excluding Capital Lease Obligations		$ 70,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Debt Outstanding Excluding Capital Lease Obligations			$ 0
Credit facility, initiation date	Aug. 18, 2020
Credit facility, borrowing capacity		250,000,000
Credit facility, maximum borrowing capacity		$ 400,000,000
Credit facility, debt covenants compliance		The Company is currently in compliance with all of the debt covenants under the Credit Agreement.
Weighted average interest rate on borrowings outstanding		1.66%
Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Credit facility, unused credit commitment fee		0.25%
Credit facility event of default, minimum percentage that a person or group should acquire outstanding capital stock		35.00%
Revolving Credit Facility | Minimum | Eurodollar [Member]
Debt Instrument [Line Items]
Borrowings, basis spread on variable rate		1.25%
Revolving Credit Facility | Minimum | Base Rate [Member]
Debt Instrument [Line Items]
Borrowings, basis spread on variable rate		0.25%
Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Credit facility, unused credit commitment fee		0.35%
Maximum Leverage ratio beyond which amount of cash dividends and other distributions to stockholders is limited		250.00%
Revolving Credit Facility | Maximum | Eurodollar [Member]
Debt Instrument [Line Items]
Borrowings, basis spread on variable rate		2.00%
Revolving Credit Facility | Maximum | Base Rate [Member]
Debt Instrument [Line Items]
Borrowings, basis spread on variable rate		1.00%
Letter of Credit
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity		$ 35,000,000

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Commitments and Contingencies - Additional Information (Detail)	Mar. 26, 2022 USD ($)
Current Investments | Collateral Pledged [Member]
Commitments and Contingencies Disclosure [Line Items]
Investments providing collateral for letters of credit to guarantee insurance claims	$ 34,292,000
Restricted cash	1,387,000
Non-Current Investments
Commitments and Contingencies Disclosure [Line Items]
Total non-current investments	131,403,000
Non-Current Investments | Collateral Pledged [Member]
Commitments and Contingencies Disclosure [Line Items]
Investments providing collateral for letters of credit to guarantee insurance claims	44,463,000
Revolving Credit Facility
Commitments and Contingencies Disclosure [Line Items]
Letters of credit outstanding	33,170,000
Guarantee Payment of Insurance Claims
Commitments and Contingencies Disclosure [Line Items]
Letters of credit outstanding	$ 72,267,000