☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
26, 2020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Each Classeach class Name of Exchange on Which RegisteredCommon Stock, $0.01 Par Value The Stock Market, Inc.
Act. Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form10-K. ☒
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
38,386,768.
Document |
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Proxy Statement relating to Landstar System, Inc.’s Annual Meeting of Stockholders scheduled to be held on May | ||
Part III |
2017
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Item 1. | 3 | |||||
Item 1A. | ||||||
Item 1B. | ||||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
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Item 5. | ||||||
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Item | 21 | |||||
Item 7. | ||||||
Item 7A. | ||||||
Item 8. | ||||||
Item 9. | ||||||
Item 9A. | ||||||
Item 9B. | ||||||
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Item 10. | ||||||
Item 11. | ||||||
Item 12. | ||||||
Item 13. | ||||||
Item 14. | ||||||
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Item 15. | ||||||
EX – 31.1 Section 302 CEO Certification | ||||||
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EX – 32.1 Section 906 CEO Certification | ||||||
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On September 20, 2017, Landstar Metro, S.A.P.I. de C.V. (“Landstar Metro”), a recently formed subsidiary of the Company, acquired substantially all of the assets of the asset-light transportation logistics business of Fletes Avella, S.A. de C.V., a Mexican transportation logistics company. In connection with the acquisition, individuals affiliated with the seller subscribed in the aggregate for a 30% equity interest in each of Landstar Metro and Landstar Metro Servicios S.A.P.I. de C.V. (“Landstar Servicios”), while the Company owns a 70% interest in each. Landstar Metro provides freight and logistics services within Mexico. Landstar Servicios provides various administrative, financial, operational, safety and compliance services to Landstar Metro.
On December 28, 2013, the Company completed the sale of Landstar Supply Chain Solutions, Inc., a Delaware corporation, including its wholly owned subsidiary, Landstar Supply Chain Solutions LLC (collectively, “LSCS”), to XPO Logistics, Inc. (“XPO”). The gain on the sale of LSCS and the operating results of LSCS for fiscal year 2013 have been reclassified herein to discontinued operations.
During 2017,year 2018.
2020.
2018.
2018.
Commissions to agents as a percentage of consolidated revenue will vary directly with fluctuations in the percentage of consolidated revenue generated by the various modes of transportation and reinsurance premiums and with changes in net revenue margin, defined as net revenue divided by revenue, on services provided by Truck Brokerage Carriers, railroads, air cargo carriers and ocean cargo carriers. Commissions to agents are recognized uponover the completion of freight delivery.
transit period as the performance obligation to the customer is completed.
experienced no change in fiscal year 2020 compared to fiscal year 2019 in the number of independent sales agents generating $5 million or more of Landstar revenue.
transit period as the performance obligation to the customer is completed.
trucks provided by BCO Independent Contractors fluctuates daily as a result of truck recruiting and truck terminations. LessMore trucks were recruited in fiscal year 20172020 than in fiscal year 2016 but2019 and trucks terminated were also lower in fiscal year 20172020 than in fiscal year 2016,2019, resulting in an overall net increase of 257748 trucks during fiscal year 2017.2020. Landstar’s BCO Independent Contractor truck
Trailers by Type | ||||
Van | ||||
Unsided/platform, including flatbeds, step decks, drop decks and low boys | ||||
Temperature-controlled | ||||
Total | ||||
2020.
and third party capacity network.
In addition,
Employees
to remove operators from service that may otherwise have been undetected or unreported.
result of the FAST Act, the FMCSA announced the removal of the BASIC scores from public view and that such scores are expected to remain hidden from public view while changes to CSA are considered. It is difficultIn 2018, the FMCSA announced significant anticipated changes to predict in what form CSA that if enacted would be expected to have a material impact on the current program. No assurances can be given with respect to the changes that may be modifiedmade to the CSA program, or enforcedany replacement or supplemental program, in the future and what impact any sucha new or revised version ofmotor carrier oversight program implemented by the CSA program regulation mayFMCSA could have on the Company, its motor carrier operations or the aggregate number of trucks that provide hauling capacity to the Company.
Disruptions or failures in the Company’s computer systems; cyber and other information security incidents.As noted above in Item 1, “Business —
protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us. Although we believe that we have robust security procedures and other safeguards in place, as threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any security vulnerabilities. For example, in the first quarter of 2016, we were subject to “spear-phishing” attacks through which third parties were able to obtain personal employee data. We have undertaken a number of remedial measures in response, including enhancing our security systems and additional training for our employees. Additional incidents may occur in the future and may have a material adverse effect on our business and operations. A significant incident, including system failure, security breach, disruption by malware, or other damage, could interrupt or delay our operations, damage our reputation, cause a loss of customers, agents and/or third party capacity providers, expose us to a risk of loss or litigation, and/or cause us to incur significant time and expense to remedy such an event, any of which could have a material adverse impact on our results of operations and financial condition.
Dependence on key vendors. As described above under “Dependence on third party insurance companies”and “Disruptions or failures in the Company’s computer systems; cyber and other information security incidents,” the Company is dependent on certain vendors, including third party insurance companies, third party data center providers, third party information technology application providers and third party payment disbursement providers. Any inability to negotiate satisfactory terms with one of these key vendors or any other significant disruption to or termination of a relationship with one of these key vendors could disrupt the Company’s operations and impose significant costs on the Company.
Catastrophic loss of a Company facility.The Company faces the risk of a catastrophic loss of the use of all or a portion of its facilities located in Jacksonville, Florida, Laredo, Texas and Rockford, Illinois due to hurricanes, flooding, tornados, other weather conditions, natural disasters, terrorist attacks or otherwise. The Company’s corporate headquarters and approximatelytwo-thirds of the Company’s employees are located in its Jacksonville, Florida facility. In particular, a significant hurricane or similar catastrophic event that impacts the Jacksonville, Florida metropolitan area could significantly disrupt the Company’s operations and impose significant costs on the Company.
The Company cannot predict the effect on its business of threatened or real terrorist attacks. It is possible that such threats could result in the catastrophic loss or disruption in use of facilities, roadways, railroads, borders or ports where the Company operates. Also, anti-terrorism security measures could slow freight movements and negatively affect consumer confidence, the overall economy and the transportation industry. Such events could adversely affect Landstar, including its results of operations and financial condition.
Although the Company maintains insurance covering its facilities, including business interruption insurance, the Company’s insurance may not be adequate to cover all losses that may be incurred in the event of a catastrophic loss of one of the Company’s facilities. In addition, such insurance, including business interruption insurance, could in the future become more expensive and difficult to maintain and may not be available on commercially reasonable terms or at all.
Operations — Legal Proceedings
2017 Market Price | 2016 Market Price | Dividends Declared | ||||||||||||||||||||||||||
Fiscal Period | High | Low | High | Low | 2017 | 2016 | 2015 | |||||||||||||||||||||
First Quarter | $ | 89.14 | $ | 80.70 | $ | 67.61 | $ | 53.03 | $ | 0.09 | $ | 0.08 | $ | 0.07 | ||||||||||||||
Second Quarter | 88.50 | 80.30 | 68.36 | 62.38 | 0.09 | 0.08 | 0.07 | |||||||||||||||||||||
Third Quarter | 100.00 | 80.00 | 72.97 | 64.82 | 0.10 | 0.09 | 0.08 | |||||||||||||||||||||
Fourth Quarter | 107.60 | 94.80 | 90.80 | 65.05 | 1.60 | 0.09 | 0.08 |
On May 19, 2015, the Landstar System, Inc. Board of Directors authorized the Company to increase the number of shares of the Company’s Common Stock that the Company is authorized to purchase from time to time in the open market and in privately negotiated transactions under a previously announced purchase program to 3,000,000 shares.
Dividends
During fiscal year 2017, Landstar paid dividends as follows:
Dividend Amount | Declaration | Record | Payment | |||||||||||
per Share | Date | Date | Date | |||||||||||
$ | 0.09 | January 30, 2017 | February 20, 2017 | March 17, 2017 | ||||||||||
$ | 0.09 | April 25, 2017 | May 11, 2017 | June 2, 2017 | ||||||||||
$ | 0.10 | July 25, 2017 | August 14, 2017 | September 1, 2017 | ||||||||||
$ | 0.10 | October 24, 2017 | November 14, 2017 | December 8, 2017 |
On January 31, 2018, the Company announced the declaration of a quarterly dividend of $0.15 per share payable on March 16, 2018, to stockholders of record on February 19, 2018. It is currently the intention of the Board of Directors to pay a quarterly dividend going forward.
On December 11, 2017, the Company announced that its Board of Directors declared a special cash dividend of $1.50 per share payable on January 26, 2018 to stockholders of record of its Common Stock as of January 12, 2018. Dividends payable of $62,985,000 related to this dividend are included in current liabilities in the consolidated balance sheet at December 30, 2017.
On June 2, 2016, Landstar entered into a 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.
9, 2019 authorization.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||||||||
Equity Compensation Plans Approved by Security Holders | 189,040 | $ | 49.34 | 3,968,788 | ||||||||
Equity Compensation Plans Not Approved by Security Holders | 0 | 0 | 0 |
26, 2020:
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | |||||||||
Equity Compensation Plans Approved by Security Holders | 17,650 | $ | 54.16 | 3,732,872 | ||||||||
Equity Compensation Plans Not Approved by Security Holders | 0 | 0 | 0 |
26, 2020.
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
Fiscal Years | ||||||||||||||||||||
Income Statement Data: | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Revenue | $ | 3,646,364 | $ | 3,167,634 | $ | 3,321,091 | $ | 3,184,790 | $ | 2,664,780 | ||||||||||
Investment income | 2,498 | 1,502 | 1,396 | 1,381 | 1,475 | |||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Purchased transportation | 2,805,109 | 2,415,663 | 2,551,343 | 2,461,143 | 2,046,927 | |||||||||||||||
Commissions to agents | 297,410 | 264,205 | 270,260 | 250,780 | 211,355 | |||||||||||||||
Other operating costs, net of gains on asset sales/dispositions | 28,687 | 29,702 | 31,618 | 25,771 | 21,568 | |||||||||||||||
Insurance and claims | 62,545 | 57,280 | 48,754 | 46,280 | 50,438 | |||||||||||||||
Selling, general and administrative | 170,583 | 143,239 | 149,704 | 150,250 | 131,710 | |||||||||||||||
Depreciation and amortization | 40,560 | 35,796 | 29,102 | 27,575 | 27,667 | |||||||||||||||
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Total costs and expenses | 3,404,894 | 2,945,885 | 3,080,781 | 2,961,799 | 2,489,665 | |||||||||||||||
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Operating income | 243,968 | 223,251 | 241,706 | 224,372 | 176,590 | |||||||||||||||
Interest and debt expense | 3,166 | 3,794 | 2,949 | 3,177 | 3,211 | |||||||||||||||
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Income from continuing operations before income taxes | 240,802 | 219,457 | 238,757 | 221,195 | 173,379 | |||||||||||||||
Income taxes | 63,806 | 82,107 | 91,068 | 82,386 | 64,457 | |||||||||||||||
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Income from continuing operations | 176,996 | 137,350 | 147,689 | 138,809 | 108,922 | |||||||||||||||
Discontinued operations: | ||||||||||||||||||||
Income from discontinued operations, net of income taxes | — | — | — | — | 4,058 | |||||||||||||||
Gain on sale of discontinued operations, net of income taxes | — | — | — | — | 33,029 | |||||||||||||||
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Income from discontinued operations, net of income taxes | — | — | — | — | 37,087 | |||||||||||||||
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Net income | 176,996 | 137,350 | 147,689 | 138,809 | 146,009 | |||||||||||||||
Less: Net loss attributable to noncontrolling interest | (92 | ) | — | — | — | — | ||||||||||||||
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Net income attributable to Landstar System, Inc. and subsidiary | $ | 177,088 | $ | 137,350 | $ | 147,689 | $ | 138,809 | $ | 146,009 | ||||||||||
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Earnings per common share attributable to Landstar System, Inc. and subsidiary: | ||||||||||||||||||||
Income from continuing operations | $ | 4.22 | $ | 3.26 | $ | 3.38 | $ | 3.09 | $ | 2.37 | ||||||||||
Income from discontinued operations | $ | — | $ | — | $ | — | $ | — | $ | 0.81 | ||||||||||
Earnings per common share | $ | 4.22 | $ | 3.26 | $ | 3.38 | $ | 3.09 | $ | 3.17 | ||||||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary: | ||||||||||||||||||||
Income from continuing operations | $ | 4.21 | $ | 3.25 | $ | 3.37 | $ | 3.07 | $ | 2.36 | ||||||||||
Income from discontinued operations | $ | — | $ | — | $ | — | $ | — | $ | 0.80 | ||||||||||
Diluted earnings per share | $ | 4.21 | $ | 3.25 | $ | 3.37 | $ | 3.07 | $ | 3.16 | ||||||||||
Dividends per common share | $ | 1.88 | $ | 0.34 | $ | 0.30 | $ | 1.26 | $ | 0.35 |
Balance Sheet Data: | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | Dec. 27, 2014 | Dec. 28, 2013 | |||||||||||||||
Total assets | $ | 1,352,460 | $ | 1,096,591 | $ | 991,518 | $ | 1,037,616 | $ | 963,576 | ||||||||||
Long-term debt, including current maturities | 125,113 | 138,304 | 124,292 | 111,321 | 101,505 | |||||||||||||||
Equity | 653,877 | 542,557 | 466,237 | 488,261 | 454,481 |
The information above for fiscal year 2013 has been adjusted for the completion of the sale of Landstar Supply Chain Solutions, Inc., including its wholly owned subsidiary, Landstar Supply Chain Solutions LLC (collectively, “LSCS”), to XPO Logistics, Inc. and the treatment of LSCS as a discontinued operation effective December 28, 2013.
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; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in this and Landstar’s other SEC filings from time to time and described in Item 1A in this Form
2020.
2020.
2020.
Fiscal Years | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Number of Million Dollar Agents | 542 | 502 | 512 | |||||||||
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Average revenue generated per Million Dollar Agent | $ | 6,191,000 | $ | 5,831,000 | $ | 5,998,000 | ||||||
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Percent of consolidated revenue generated by Million Dollar Agents | 92 | % | 92 | % | 92 | % | ||||||
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Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Number of Million Dollar Agents | 508 | 555 | 608 | |||||||||
Average revenue generated per Million Dollar Agent | $ | 7,489,000 | $ | 6,880,000 | $ | 7,150,000 | ||||||
Percent of consolidated revenue generated by Million Dollar Agents | 92 | % | 93 | % | 94 | % | ||||||
Fiscal Years | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Revenue generated through (in thousands): | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | $ | 2,163,832 | $ | 1,900,406 | $ | 1,894,221 | ||||||
Unsided/platform equipment | 1,134,660 | 963,649 | 1,109,356 | |||||||||
Less-than-truckload | 89,041 | 74,530 | 80,687 | |||||||||
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Total truck transportation | 3,387,533 | 2,938,585 | 3,084,264 |
Rail intermodal | 96,416 | 103,721 | 105,347 | |||||||||
Ocean and air cargo carriers | 110,898 | 78,513 | 86,664 | |||||||||
Other (1) | 51,517 | 46,815 | 44,816 | |||||||||
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$ | 3,646,364 | $ | 3,167,634 | $ | 3,321,091 | |||||||
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Revenue on loads hauled via BCO Independent Contractors included in total truck transportation Number of loads: Truck transportation Truckload: Van equipment Unsided/platform equipment Less-than-truckload Total truck transportation Rail intermodal Ocean and air cargo carriers Loads hauled via BCO Independent Contractors included in total truck transportation Revenue per load: Truck transportation Truckload: Van equipment Unsided/platform equipment Less-than-truckload Total truck transportation Rail intermodal Ocean and air cargo carriers Revenue per load on loads hauled via BCO Independent Contractors Revenue by capacity type (as a % of total revenue): Truck capacity providers: BCO Independent Contractors Truck Brokerage Carriers Rail intermodal Ocean and air cargo carriers Other $ 1,655,026 $ 1,488,925 $ 1,522,513 1,282,632 1,179,183 1,102,654 487,652 451,686 485,993 132,776 115,521 112,363 1,903,060 1,746,390 1,701,010 45,000 48,820 45,060 25,420 20,690 18,060 1,973,480 1,815,900 1,764,130 916,190 865,430 826,600 $ 1,687 $ 1,612 $ 1,718 2,327 2,133 2,283 671 645 718 1,780 1,683 1,813 2,143 2,125 2,338 4,363 3,795 4,799 $ 1,806 $ 1,720 $ 1,842 45 % 47 % 46 % 48 % 46 % 47 % 3 % 3 % 3 % 3 % 2 % 3 % 1 % 1 % 1 %
Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenue generated through (in thousands) : | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | $ | 2,515,940 | $ | 2,371,188 | $ | 2,791,494 | ||||||
Unsided/platform equipment | 1,202,295 | 1,295,817 | 1,386,387 | |||||||||
Less-than-truckload | 97,546 | 98,324 | 102,531 | |||||||||
Total truck transportation | 3,815,781 | 3,765,329 | 4,280,412 | |||||||||
Rail intermodal | 114,313 | 118,305 | 128,976 | |||||||||
Ocean and air cargo carriers | 132,180 | 121,485 | 134,577 | |||||||||
Other (1) | 70,707 | 79,458 | 71,179 | |||||||||
$ | 4,132,981 | $ | 4,084,577 | $ | 4,615,144 | |||||||
Revenue on loads hauled via BCO Independent Contractors included in total truck transportation | $ | 1,866,526 | $ | 1,831,752 | $ | 2,001,665 | ||||||
Number of loads : | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | 1,318,768 | 1,337,089 | 1,398,388 | |||||||||
Unsided/platform equipment | 487,348 | 513,579 | 516,613 | |||||||||
Less-than-truckload | 163,024 | 155,592 | 145,269 | |||||||||
Total truck transportation | 1,969,140 | 2,006,260 | 2,060,270 | |||||||||
Rail intermodal | 46,280 | 47,590 | 53,030 | |||||||||
Ocean and air cargo carriers | 31,900 | 30,110 | 28,970 | |||||||||
2,047,320 | 2,083,960 | 2,142,270 | ||||||||||
Loads hauled via BCO Independent Contractors included in total truck transportation | 945,210 | 954,990 | 949,330 | |||||||||
Revenue per load : | ||||||||||||
Truck transportation | ||||||||||||
Truckload: | ||||||||||||
Van equipment | $ | 1,908 | $ | 1,773 | $ | 1,996 | ||||||
Unsided/platform equipment | 2,467 | 2,523 | 2,684 | |||||||||
Less-than-truckload | 598 | 632 | 706 | |||||||||
Total truck transportation | 1,938 | 1,877 | 2,078 | |||||||||
Rail intermodal | 2,470 | 2,486 | 2,432 | |||||||||
Ocean and air cargo carriers | 4,144 | 4,035 | 4,645 | |||||||||
Revenue per load on loads hauled via BCO Independent Contractors | $ | 1,975 | $ | 1,918 | $ | 2,109 | ||||||
Revenue by capacity type (as a % of total revenue) : | ||||||||||||
Truck capacity providers: | ||||||||||||
BCO Independent Contractors | 45 | % | 45 | % | 43 | % | ||||||
Truck Brokerage Carriers | 47 | % | 47 | % | 49 | % | ||||||
Rail intermodal | 3 | % | 3 | % | 3 | % | ||||||
Ocean and air cargo carriers | 3 | % | 3 | % | 3 | % | ||||||
Other | 2 | % | 2 | % | 2 | % |
(1) | Includes primarily reinsurance premium revenue generated by the insurance |
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | ||||||||||
BCO Independent Contractors | 9,087 | 8,824 | 8,907 | |||||||||
Truck Brokerage Carriers: | ||||||||||||
Approved and active(1) | 34,243 | 31,471 | 29,728 | |||||||||
Other approved | 15,691 | 15,982 | 14,715 | |||||||||
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49,934 | 47,453 | 44,443 | ||||||||||
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Total available truck capacity providers | 59,021 | 56,277 | 53,350 | |||||||||
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Trucks provided by BCO Independent Contractors | 9,696 | 9,439 | 9,500 |
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | ||||||||||
BCO Independent Contractors | 10,242 | 9,554 | 9,884 | |||||||||
Truck Brokerage Carriers: | ||||||||||||
Approved and active (1) | 46,053 | 39,497 | 41,069 | |||||||||
Other approved | 22,972 | 16,820 | 17,985 | |||||||||
69,025 | 56,317 | 59,054 | ||||||||||
Total available truck capacity providers | 79,267 | 65,871 | 68,938 | |||||||||
Trucks provided by BCO Independent Contractors | 10,991 | 10,243 | 10,599 |
(1) | Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal year end. |
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.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 uponover the completion of freight delivery.
transit period as the performance obligation to the customer is completed.
transit period as the performance obligation to the customer is completed.
Fiscal Years | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Purchased transportation | 76.9 | 76.3 | 76.8 | |||||||||
Commissions to agents | 8.2 | 8.3 | 8.1 | |||||||||
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Gross profit margin | 14.9 | % | 15.4 | % | 15.0 | % | ||||||
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Gross profit | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Investment income | 0.5 | 0.3 | 0.3 | |||||||||
Indirect costs and expenses: | ||||||||||||
Other operating costs, net of gains on asset sales/dispositions | 5.3 | 6.1 | 6.3 | |||||||||
Insurance and claims | 11.5 | 11.7 | 9.8 | |||||||||
Selling, general and administrative | 31.4 | 29.4 | 30.0 | |||||||||
Depreciation and amortization | 7.5 | 7.3 | 5.8 | |||||||||
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Total costs and expenses | 55.6 | 54.5 | 51.9 | |||||||||
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Operating margin | 44.9 | % | 45.8 | % | 48.4 | % | ||||||
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Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Purchased transportation | 77.3 | 76.6 | 77.4 | |||||||||
Commissions to agents | 8.2 | 8.4 | 8.2 | |||||||||
Gross profit margin | 14.5 | % | 15.1 | % | 14.5 | % | ||||||
Gross profit | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Investment income | 0.6 | 0.8 | 0.6 | |||||||||
Indirect costs and expenses: | ||||||||||||
Other operating costs, net of gains on asset sales/dispositions | 5.1 | 6.1 | 4.8 | |||||||||
Insurance and claims | 14.6 | 13.1 | 11.3 | |||||||||
Selling, general and administrative | 28.0 | 25.9 | 28.2 | |||||||||
Depreciation and amortization | 7.7 | 7.2 | 6.5 | |||||||||
Impairment of intangible and other assets | 0.4 | — | — | |||||||||
Commission program termination costs | 2.6 | — | — | |||||||||
Total costs and expenses | 58.4 | 52.2 | 50.9 | |||||||||
Operating margin | 42.2 | % | 48.6 | % | 49.7 | % | ||||||
28, 2019
agencies.
Carriers, whereas commissions to agents on BCO Independent Contractor revenue were higher during the 2020 fiscal year due to the impact of
2020.
costs, partially offset by the effect of decreased gross profit.
costs and the effect of decreased gross profit.
a truck owner-operator recruitment and retention program formerly involving those agents.
2020 fiscal year of 22.8% was lower than the 24.2% estimated annual effective income tax rate primarily due to excess tax benefits recognized on stock-based compensation arrangements, the favorable resolution of certain tax matters during the 2020 fiscal year and state tax refunds in the 2020 fiscal year. The net loss attributableeffective income tax rate in the 2019 fiscal year of 23.0% was lower than the 24.2% estimated effective income tax rate primarily due to noncontrolling interest of $92,000excess tax benefits recognized on stock-based compensation arrangements in the 2019 fiscal year.
2020. Net income attributable to the Company was $177,088,000,$227,720,000, or $4.22$5.72 per common share ($4.215.72 per diluted share), in fiscal year 2017, which included approximately $19,500,000 of2019. Net income during fiscal year 2020 was unfavorably impacted by $15,494,000, or $0.31 per common share ($0.31 per diluted share) related to a
Company’s Mexico subsidiaries.
29, 2018
year.
Demand for van transportation services utilizing Company provided van trailers, primarily relating to drop and hook services, drove the growth in the number of loads hauled via van trailing equipment during fiscal year 2016. The decrease in the number of loads hauled via unsided/platform equipment was entirely attributable to the impact of approximately 51,000 loads hauled in fiscal year 2015 related to a significant project for a single account in the automotive industry. The project was completed at the end of 2015. Excluding the impact of the loads related to this project hauled during fiscal year 2015, the number of loads hauled via unsided/platform equipment increased 4% during fiscal year 2016.equipment. 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 $56,408,000$79,486,000 and $84,266,000$101,346,000 in fiscal years 20162019 and 2015,2018, respectively. It should be noted that billings to many customers of the Company’s truck brokerage services requireinclude a singlesurcharge.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.
The increase in investment income was primarily attributable to higher average rates of return on investments and a higher average investment balance held by the insurance segment during fiscal year 2019.
profit and increased depreciation costs.
transportation logistics segment.
2019 fiscal year of 23.0% was lower than the 24.2% estimated effective income tax rate primarily due to excess tax benefits recognized on stock-based compensation arrangements in the 2019 fiscal year. The effective income tax rate in the 2018 fiscal year of 22.3% was lower than the 24.5% estimated annual effective income tax rate primarily due to excess tax benefits recognized on stock-based compensation arrangements in the 2018 fiscal year, favorable adjustments recognized during the 2018 fiscal year relating to federal domestic production activities deductions and research and development credits and the favorable resolution of certain tax matters during the 2018 fiscal year.
2018.
2020, compared to $112,844,000 at December 28, 2019 and $128,425,000 at December 29, 2018.
2020, partially offset by net income. The increase in equity in fiscal year 2019 was primarily the result of net income, partially offset by purchases of shares of the Company’s Common Stock and dividends declared by the Company in fiscal year 2019.
Included in the $22,645,000$9,747,000 of purchases of operating property during the 2018 fiscal year 2016 was $17,237,000$2,162,000 related to a freight staging and transload facility in Laredo, Texas. Landstar also acquired $5,298,000 of operating property in fiscal year 2016 relating to the completion of theits Laredo, facility for which the Company accrued a corresponding liability in accounts payable as of December 31, 2016. Included in the $15,586,000 of purchases of operating property during fiscal year 2017 was $4,255,000 related to the Laredo facility for which the Company accrued a corresponding liability in accounts payable as of December 31, 2016. Landstar also acquired an additional $1,119,000 of operating property in fiscal year 2017 relating to the completion of the LaredoTexas facility for which the Company accrued a corresponding liability in accounts payable as of December 30, 2017. TheDuring fiscal year 2020, Landstar acquired $500,000 of operating property for which the Company accrued a corresponding liability in accounts payable as of December 30, 2017 relating26, 2020. Landstar anticipates acquiring either by purchase or lease financing approximately $77,000,000 in new trailing equipment primarily to replace older trailing equipment in fiscal 2021. Landstar anticipates spending approximately $23,000,000 on information technology hardware and software in fiscal 2021, $16,000,000 of which relates to either building or buying software applications that enhance or add to the completion ofCompany’s technology ecosystem.
On September 20, 2017 the Company completed theCompany’s 2019 Annual Report on Form
Cash consideration paid in the 2019 fiscal year to purchase these remaining equity interests was $600,000. Further, on June 15, 2020, Landstar Blue completed the acquisition of an independent agent of the Company. Cash consideration paid for the acquisition was approximately $2,766,000.
Contractual Obligations and Commitments
At December 30, 2017, the Company’s obligations and commitments to make future payments under contracts, such as debt and lease agreements, were as follows (in thousands):
Contractual Obligation | Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | |||||||||||||||
Capital lease obligations | $ | 131,090 | $ | 44,810 | $ | 65,893 | $ | 20,387 | $ | — | ||||||||||
Operating lease obligations | 487 | 302 | 185 | — | — | |||||||||||||||
Purchase obligations | 11,208 | 6,471 | 4,254 | 371 | 112 | |||||||||||||||
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$ | 142,785 | $ | 51,583 | $ | 70,332 | $ | 20,758 | $ | 112 | |||||||||||
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Capital lease obligations above include $5,977,000 of imputed interest. Purchase obligations at December 30, 2017 are primarily commitments for trailing equipment additions during fiscal 2018. At December 30, 2017, the Company has gross unrecognized tax benefits of $4,812,000. This amount is excluded from the table above as the Company cannot reasonably estimate the period of cash settlement with the respective taxing authorities. At December 30, 2017, the Company has insurance claims liabilities of $69,060,000. This amount is excluded from the table above as the Company cannot reasonably estimate the period of cash settlement on these liabilities. The short-term portion of the insurance claims liability is reported on the consolidated balance sheets primarily on an actuarially determined basis.
Off-Balance Sheet Arrangements
As of December 30, 2017, the Company had nooff-balance sheet arrangements, other than operating leases as disclosed in the table of Contractual Obligations and Commitments above, that have or are reasonably likely to have a current or future material effect on the Company’s financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Proceedings
The allowance for doubtful accounts for both trade and other receivables represents management’s estimate of the amount of outstanding receivables that will not be collected. Historically, management’s estimates for uncollectible receivables have been materially correct. Although management believes the amount of the allowance for both trade and other receivables at December 30, 2017 is appropriate, a prolonged period of low or no economic growth may adversely affect the collection of these receivables. In addition, liquidity concerns and/or unanticipated bankruptcy proceedings at any of the Company’s larger customers in which the Company is carrying a significant receivable could result in an increase in the provision for uncollectible receivables and have a significant impact on the Company’s results of operations in a given quarter or year. However, it is not expected that an uncollectible accounts receivable resulting from an individual customer would have a significant impact on the Company’s financial condition. Conversely, a more robust economic environment or the recovery of a previously provided for uncollectible receivable from an individual customer may result in the realization of some portion of the estimated uncollectible receivables.
The Company utilizes certain income tax planning strategies to reduce its overall cost of income taxes. If the Company were to be subject to an audit, it is possible that certain strategies might be disallowed resulting in an increased liability for income taxes. Certain of these tax planning strategies result in a level of uncertainty as to whether the related tax positions taken by the Company would result in a recognizable benefit. The Company has provided for its estimated exposure attributable to such tax positions due to the corresponding level of uncertainty with respect to the amount of income tax benefit that may ultimately be realized. Management believes that the provision for liabilities resulting from the uncertainty in certain income tax positions is appropriate. To date, the Company has not experienced an examination by governmental revenue authorities that would lead management to believe that the Company’s past provisions for exposures related to the uncertainty of such income tax positions are not appropriate.
On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. The Company has recognized the provisional tax impacts related to revaluation of its ending net deferred tax liabilities at December 30, 2017 and deemed repatriated earnings in its consolidated financial statements for the year ended December 30, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed in 2018.
26, 2020.
Effects of Inflation
Management does not believe inflation has had a material impact on the results of operations or financial condition of Landstar in the past five years. However, inflation in excess of historical trends might have an adverse effect on the Company’s results of operations in the future.
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.
Depending upon the specific type of borrowing, borrowings
Dec. 30, 2017 | Dec. 31, 2016 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 242,416 | $ | 178,897 | ||||
Short-term investments | 48,928 | 66,560 | ||||||
Trade accounts receivable, less allowance of $6,131 and $5,161 | 631,164 | 463,102 | ||||||
Other receivables, including advances to independent contractors, less allowance of $6,012 and $5,523 | 24,301 | 18,567 | ||||||
Other current assets | 14,394 | 10,281 | ||||||
|
|
|
| |||||
Total current assets | 961,203 | 737,407 | ||||||
|
|
|
| |||||
Operating property, less accumulated depreciation and amortization of $218,700 and $190,374 | 276,011 | 272,843 | ||||||
Goodwill | 39,065 | 31,134 | ||||||
Other assets | 76,181 | 55,207 | ||||||
|
|
|
| |||||
Total assets | $ | 1,352,460 | $ | 1,096,591 | ||||
|
|
|
| |||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Cash overdraft | $ | 42,242 | $ | 36,251 | ||||
Accounts payable | 285,132 | 219,409 | ||||||
Current maturities of long-term debt | 42,051 | 45,047 | ||||||
Insurance claims | 38,919 | 26,121 | ||||||
Dividends payable | 62,985 | — | ||||||
Accrued compensation | 30,103 | 7,769 | ||||||
Other current liabilities | 47,211 | 45,714 | ||||||
|
|
|
| |||||
Total current liabilities | 548,643 | 380,311 | ||||||
|
|
|
| |||||
Long-term debt, excluding current maturities | 83,062 | 93,257 | ||||||
Insurance claims | 30,141 | 26,883 | ||||||
Deferred income taxes and other noncurrent liabilities | 36,737 | 53,583 | ||||||
Equity | ||||||||
Landstar System, Inc. and subsidiary shareholders’ equity: | ||||||||
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,740,380 and 67,585,675 shares | 677 | 676 | ||||||
Additionalpaid-in capital | 209,599 | 199,414 | ||||||
Retained earnings | 1,611,158 | 1,512,993 | ||||||
Cost of 25,749,493 and 25,747,541 shares of common stock in treasury | (1,167,600 | ) | (1,167,437 | ) | ||||
Accumulated other comprehensive loss | (3,162 | ) | (3,089 | ) | ||||
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| |||||
Total Landstar System, Inc. and subsidiary shareholders’ equity | 650,672 | 542,557 | ||||||
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| |||||||
Noncontrolling interest | 3,205 | — | ||||||
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| |||||
Total equity | 653,877 | 542,557 | ||||||
|
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|
| |||||
Total liabilities and equity | $ | 1,352,460 | $ | 1,096,591 | ||||
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|
|
Dec. 26, 2020 | Dec. 28, 2019 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 249,354 | $ | 319,515 | ||||
Short-term investments | 41,375 | 32,901 | ||||||
Trade accounts receivable, less allowance of $8,670 and $7,284 | 764,169 | 588,549 | ||||||
Other receivables, including advances to independent contractors, less allowance of $7,239 and $7,667 | 134,757 | 35,553 | ||||||
Other current assets | 18,520 | 21,370 | ||||||
Total current assets | 1,208,175 | 997,888 | ||||||
Operating property, less accumulated depreciation and amortization of $299,407 and $280,849 | 296,996 | 285,855 | ||||||
Goodwill | 40,949 | 38,508 | ||||||
Other assets | 107,679 | 105,460 | ||||||
Total assets | $ | 1,653,799 | $ | 1,427,711 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Cash overdraft | $ | 74,748 | $ | 53,878 | ||||
Accounts payable | 380,505 | 271,996 | ||||||
Current maturities of long-term debt | 35,415 | 42,632 | ||||||
Insurance claims | 149,774 | 44,532 | ||||||
Dividends payable | 76,770 | 78,947 | ||||||
Other current liabilities | 88,925 | 60,919 | ||||||
Total current liabilities | 806,137 | 552,904 | ||||||
Long-term debt, excluding current maturities | 65,359 | 70,212 | ||||||
Insurance claims | 38,867 | 33,575 | ||||||
Deferred income taxes and other noncurrent liabilities | 51,601 | 49,551 | ||||||
Shareholders’ Equity | ||||||||
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 68,183,702 and 68,083,419 shares | 682 | 681 | ||||||
Additional paid-in capital | 228,875 | 226,123 | ||||||
Retained earnings | 2,046,238 | 1,962,161 | ||||||
Cost of 29,797,639 and 28,609,926 shares of common stock in treasury | (1,581,961 | ) | (1,465,284 | ) | ||||
Accumulated other comprehensive loss | (1,999 | ) | (2,212 | ) | ||||
Total shareholders’ equity | 691,835 | 721,469 | ||||||
Total liabilities and equity | $ | 1,653,799 | $ | 1,427,711 | ||||
Fiscal Years Ended | ||||||||||||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | ||||||||||
Revenue | $ | 3,646,364 | $ | 3,167,634 | $ | 3,321,091 | ||||||
Investment income | 2,498 | 1,502 | 1,396 | |||||||||
Costs and expenses: | ||||||||||||
Purchased transportation | 2,805,109 | 2,415,663 | 2,551,343 | |||||||||
Commissions to agents | 297,410 | 264,205 | 270,260 | |||||||||
Other operating costs, net of gains on asset sales/dispositions | 28,687 | 29,702 | 31,618 | |||||||||
Insurance and claims | 62,545 | 57,280 | 48,754 | |||||||||
Selling, general and administrative | 170,583 | 143,239 | 149,704 | |||||||||
Depreciation and amortization | 40,560 | 35,796 | 29,102 | |||||||||
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| |||||||
Total costs and expenses | 3,404,894 | 2,945,885 | 3,080,781 | |||||||||
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| |||||||
Operating income | 243,968 | 223,251 | 241,706 | |||||||||
Interest and debt expense | 3,166 | 3,794 | 2,949 | |||||||||
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| |||||||
Income before income taxes | 240,802 | 219,457 | 238,757 | |||||||||
Income taxes | 63,806 | 82,107 | 91,068 | |||||||||
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| |||||||
Net income | 176,996 | 137,350 | 147,689 | |||||||||
Less: Net loss attributable to noncontrolling interest | (92 | ) | — | — | ||||||||
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| |||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 177,088 | $ | 137,350 | $ | 147,689 | ||||||
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| |||||||
Earnings per common share attributable to Landstar System, Inc. and subsidiary | $ | 4.22 | $ | 3.26 | $ | 3.38 | ||||||
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Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 4.21 | $ | 3.25 | $ | 3.37 | ||||||
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| |||||||
Average number of shares outstanding: | ||||||||||||
Earnings per common share | 41,938,000 | 42,112,000 | 43,664,000 | |||||||||
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| |||||||
Diluted earnings per share | 42,024,000 | 42,236,000 | 43,813,000 | |||||||||
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| |||||||
Dividends per common share | $ | 1.88 | $ | 0.34 | $ | 0.30 | ||||||
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Fiscal Years Ended | ||||||||||||
December 26, 2020 | December 28, 2019 | December 29, 2018 | ||||||||||
Revenue | $ | 4,132,981 | $ | 4,084,577 | $ | 4,615,144 | ||||||
Investment income | 3,399 | 5,041 | 3,816 | |||||||||
Costs and expenses: | ||||||||||||
Purchased transportation | 3,192,850 | 3,127,474 | 3,569,961 | |||||||||
Commissions to agents | 340,780 | 342,226 | 378,002 | |||||||||
Other operating costs, net of gains/losses on asset sales/dispositions | 30,463 | 37,274 | 31,803 | |||||||||
Insurance and claims | 87,773 | 80,319 | 75,677 | |||||||||
Selling, general and administrative | 167,633 | 158,953 | 188,212 | |||||||||
Depreciation and amortization | 45,855 | 44,468 | 43,570 | |||||||||
Impairment of intangible and other assets | 2,582 | — | — | |||||||||
Commission program termination costs | 15,494 | — | — | |||||||||
Total costs and expenses | 3,883,430 | 3,790,714 | 4,287,225 | |||||||||
Operating income | 252,950 | 298,904 | 331,735 | |||||||||
Interest and debt expense | 3,953 | 3,141 | 3,354 | |||||||||
Income before income taxes | 248,997 | 295,763 | 328,381 | |||||||||
Income taxes | 56,891 | 68,060 | 73,168 | |||||||||
Net income | 192,106 | 227,703 | 255,213 | |||||||||
Less: Net loss attributable to noncontrolling interest | — | (17 | ) | (68 | ) | |||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 192,106 | $ | 227,720 | $ | 255,281 | ||||||
Earnings per common share attributable to Landstar System, Inc. and subsidiary | $ | 4.98 | $ | 5.72 | $ | 6.19 | ||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 4.98 | $ | 5.72 | $ | 6.18 | ||||||
Average number of shares outstanding: | ||||||||||||
Earnings per common share | 38,602,000 | 39,786,000 | 41,273,000 | |||||||||
Diluted earnings per share | 38,602,000 | 39,786,000 | 41,310,000 | |||||||||
Dividends per common share | $ | 2.79 | $ | 2.70 | $ | 0.63 | ||||||
Fiscal Years Ended | ||||||||||||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | ||||||||||
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| |||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 177,088 | $ | 137,350 | $ | 147,689 | ||||||
Other comprehensive income (loss): | ||||||||||||
Unrealized holding (losses) gains onavailable-for-sale investments, net of tax (benefit) expense of $(41), $13, ($109) | (73 | ) | 23 | (199 | ) | |||||||
Foreign currency translation gains (losses) | — | 376 | (2,104 | ) | ||||||||
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| |||||||
Other comprehensive (loss) income | (73 | ) | 399 | (2,303 | ) | |||||||
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| |||||||
Comprehensive income attributable to Landstar System, Inc. and subsidiary | $ | 177,015 | $ | 137,749 | $ | 145,386 | ||||||
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|
Fiscal Years Ended | ||||||||||||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | ||||||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 192,106 | $ | 227,720 | $ | 255,281 | ||||||
Other comprehensive income (loss): | ||||||||||||
Unrealized holding gains (losses) on available-for-sale | 1,688 | 2,050 | (786 | ) | ||||||||
Foreign currency translation (losses) gains | (1,475 | ) | 1,613 | (1,927 | ) | |||||||
Other comprehensive income (loss) | 213 | 3,663 | (2,713 | ) | ||||||||
Comprehensive income attributable to Landstar System, Inc. and subsidiary | $ | 192,319 | $ | 231,383 | $ | 252,568 | ||||||
Fiscal Years Ended | ||||||||||||
Dec. 30, 2017 | Dec. 31, 2016 | Dec. 26, 2015 | ||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 176,996 | $ | 137,350 | $ | 147,689 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization of operating property and intangible assets | 40,560 | 35,796 | 29,102 | |||||||||
Non-cash interest charges | 253 | 238 | 218 | |||||||||
Provisions for losses on trade and other accounts receivable | 7,439 | 5,735 | 5,890 | |||||||||
Gains on sales/disposals of operating property | (774 | ) | (3,477 | ) | (216 | ) | ||||||
Deferred income taxes, net | (17,031 | ) | 6,328 | 6,792 | ||||||||
Stock-based compensation | 7,721 | 2,747 | 6,925 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
(Increase) decrease in trade and other accounts receivable | (181,235 | ) | (6,233 | ) | 20,713 | |||||||
(Increase) decrease in other assets | (1,966 | ) | 9,298 | (1,177 | ) | |||||||
Increase (decrease) in accounts payable | 68,859 | (9,598 | ) | 3,632 | ||||||||
Increase in other liabilities | 22,085 | 288 | 1,222 | |||||||||
Increase (decrease) in insurance claims | 16,056 | 11,770 | (4,768 | ) | ||||||||
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NET CASH PROVIDED BY OPERATING ACTIVITIES | 138,963 | 190,242 | 216,022 | |||||||||
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INVESTING ACTIVITIES | ||||||||||||
Sales and maturities of investments | 56,442 | 41,795 | 38,684 | |||||||||
Purchases of investments | (58,504 | ) | (43,529 | ) | (44,238 | ) | ||||||
Purchases of operating property | (15,586 | ) | (22,645 | ) | (4,804 | ) | ||||||
Proceeds from sales of operating property | 4,032 | 10,212 | 1,685 | |||||||||
Consideration paid for acquisitions | (8,460 | ) | — | — | ||||||||
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NET CASH USED BY INVESTING ACTIVITIES | (22,076 | ) | (14,167 | ) | (8,673 | ) | ||||||
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FINANCING ACTIVITIES | ||||||||||||
Increase in cash overdraft | 5,991 | 642 | 980 | |||||||||
Dividends paid | (15,938 | ) | (14,332 | ) | (57,882 | ) | ||||||
Payment for debt issue costs | — | (1,048 | ) | — | ||||||||
Proceeds from exercises of stock options | 3,183 | 2,329 | 1,459 | |||||||||
Taxes paid in lieu of shares issued related to stock-based compensation plans | (881 | ) | (3,043 | ) | (2,225 | ) | ||||||
Excess tax benefits from stock-based awards | — | 1,386 | 671 | |||||||||
Purchases of common stock | — | (50,516 | ) | (161,152 | ) | |||||||
Principal payments on capital lease obligations | (46,751 | ) | (47,492 | ) | (36,520 | ) | ||||||
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NET CASH USED BY FINANCING ACTIVITIES | (54,396 | ) | (112,074 | ) | (254,669 | ) | ||||||
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Effect of exchange rate changes on cash and cash equivalents | 1,028 | 376 | (2,104 | ) | ||||||||
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| |||||||
Increase (decrease) in cash and cash equivalents | 63,519 | 64,377 | (49,424 | ) | ||||||||
Cash and cash equivalents at beginning of period | 178,897 | 114,520 | 163,944 | |||||||||
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Cash and cash equivalents at end of period | $ | 242,416 | $ | 178,897 | $ | 114,520 | ||||||
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|
Fiscal Years Ended | ||||||||||||
Dec. 26, 2020 | Dec. 28, 2019 | Dec. 29, 2018 | ||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 192,106 | $ | 227,703 | $ | 255,213 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization of operating property and intangible assets | 45,855 | 44,468 | 43,570 | |||||||||
Non-cash interest charges | 334 | 253 | 253 | |||||||||
Provisions for losses on trade and other accounts receivable | 9,415 | 9,831 | 7,415 | |||||||||
Gains on sales/disposals of operating property | (2,576 | ) | (1,016 | ) | (979 | ) | ||||||
Impairment of intangible and other assets | 2,582 | — | — | |||||||||
Deferred income taxes, net | 1,130 | 4,767 | 2,115 | |||||||||
Stock-based compensation | 4,639 | 4,236 | 18,256 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
(Increase) decrease in trade and other accounts receivable | (285,169 | ) | 81,415 | (57,419 | ) | |||||||
Increase in other assets | (4,719 | ) | (11,395 | ) | (2,962 | ) | ||||||
Increase (decrease) in accounts payable | 108,090 | (42,138 | ) | 22,527 | ||||||||
Increase (decrease) in other liabilities | 28,496 | (17,786 | ) | 8,367 | ||||||||
Increase in insurance claims | 110,534 | 7,502 | 1,545 | |||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 210,717 | 307,840 | 297,901 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Net change in other short-term investments | 131 | (131 | ) | — | ||||||||
Sales and maturities of investments | 22,632 | 62,922 | 51,576 | |||||||||
Purchases of investments | (25,550 | ) | (65,922 | ) | (54,041 | ) | ||||||
Purchases of operating property | (30,626 | ) | (19,416 | ) | (9,747 | ) | ||||||
Proceeds from sales of operating property | 7,760 | 3,991 | 4,018 | |||||||||
Consideration paid for acquisition | (2,766 | ) | — | — | ||||||||
NET CASH USED BY INVESTING ACTIVITIES | (28,419 | ) | (18,556 | ) | (8,194 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||||
Increase (decrease) in cash overdraft | 20,870 | (1,461 | ) | 13,097 | ||||||||
Dividends paid | (109,504 | ) | (27,891 | ) | (88,918 | ) | ||||||
Payment for debt issue costs | (1,132 | ) | — | — | ||||||||
Proceeds from exercises of stock options | 725 | 1,056 | 1,435 | |||||||||
Taxes paid in lieu of shares issued related to stock-based compensation plans | (3,326 | ) | (8,456 | ) | (3,938 | ) | ||||||
Purchases of common stock | (115,962 | ) | (88,578 | ) | (208,087 | ) | ||||||
Principal payments on finance lease obligations | (43,703 | ) | (44,635 | ) | (43,283 | ) | ||||||
Purchase of noncontrolling interest | — | (600 | ) | — | ||||||||
Payment of contingent consideration | — | — | (985 | ) | ||||||||
NET CASH USED BY FINANCING ACTIVITIES | (252,032 | ) | (170,565 | ) | (330,679 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (427 | ) | 1,060 | (1,708 | ) | |||||||
(Decrease) increase in cash and cash equivalents | (70,161 | ) | 119,779 | (42,680 | ) | |||||||
Cash and cash equivalents at beginning of period | 319,515 | 199,736 | 242,416 | |||||||||
Cash and cash equivalents at end of period | $ | 249,354 | $ | 319,515 | $ | 199,736 | ||||||
26, 2020,
29, 2018
Landstar System, Inc. and Subsidiary Shareholders | ||||||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||||||
Additional | Other | Non- | ||||||||||||||||||||||||||||||||||
Common Stock | Paid-In | Retained | Treasury Stock at Cost | Comprehensive | controlling | |||||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | (Loss) Income | Interests | Total | ||||||||||||||||||||||||||||
Balance December 27, 2014 | 67,268,817 | $ | 673 | $ | 189,012 | $ | 1,255,374 | 22,474,331 | $ | (955,613 | ) | $ | (1,185 | ) | $ | — | $ | 488,261 | ||||||||||||||||||
Net income | 147,689 | 147,689 | ||||||||||||||||||||||||||||||||||
Dividends ($0.30 per share) | (13,088 | ) | (13,088 | ) | ||||||||||||||||||||||||||||||||
Purchases of common stock | 2,497,748 | (161,152 | ) | (161,152 | ) | |||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans, including excess tax effect | 122,799 | 1 | (96 | ) | (95 | ) | ||||||||||||||||||||||||||||||
Stock-based compensation | 6,925 | 6,925 | ||||||||||||||||||||||||||||||||||
Other comprehensive loss | (2,303 | ) | (2,303 | ) | ||||||||||||||||||||||||||||||||
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Balance December 26, 2015 | 67,391,616 | $ | 674 | $ | 195,841 | $ | 1,389,975 | 24,972,079 | $ | (1,116,765 | ) | $ | (3,488 | ) | $ | — | $ | 466,237 | ||||||||||||||||||
Net income | 137,350 | 137,350 | ||||||||||||||||||||||||||||||||||
Dividends ($0.34 per share) | (14,332 | ) | (14,332 | ) | ||||||||||||||||||||||||||||||||
Purchases of common stock | 773,281 | (50,516 | ) | (50,516 | ) | |||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans, including excess tax effect | 194,059 | 2 | 826 | 2,181 | (156 | ) | 672 | |||||||||||||||||||||||||||||
Stock-based compensation | 2,747 | 2,747 | ||||||||||||||||||||||||||||||||||
Other comprehensive income | 399 | 399 | ||||||||||||||||||||||||||||||||||
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Balance December 31, 2016 | 67,585,675 | $ | 676 | $ | 199,414 | $ | 1,512,993 | 25,747,541 | $ | (1,167,437 | ) | $ | (3,089 | ) | $ | — | $ | 542,557 | ||||||||||||||||||
Net income (loss) | 177,088 | (92 | ) | 176,996 | ||||||||||||||||||||||||||||||||
Dividends ($1.88 per share) | (78,923 | ) | (78,923 | ) | ||||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans, including excess tax effect | 154,705 | 1 | 2,464 | 1,952 | (163 | ) | 2,302 | |||||||||||||||||||||||||||||
Stock-based compensation | 7,721 | 7,721 | ||||||||||||||||||||||||||||||||||
Other comprehensive loss | (73 | ) | (344 | ) | (417 | ) | ||||||||||||||||||||||||||||||
Acquired business and noncontrolling interests | 3,641 | 3,641 | ||||||||||||||||||||||||||||||||||
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Balance December 30, 2017 | 67,740,380 | $ | 677 | $ | 209,599 | $ | 1,611,158 | 25,749,493 | $ | (1,167,600 | ) | $ | (3,162 | ) | $ | 3,205 | $ | 653,877 | ||||||||||||||||||
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In thousands, except share and per share amounts)
Landstar System, Inc. and Subsidiary Shareholders | ||||||||||||||||||||||||||||||||||||
Additional | Accumulated Other | Non- | ||||||||||||||||||||||||||||||||||
Common Stock | Paid-In | Retained | Treasury Stock at Cost | Comprehensive | controlling | |||||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | (Loss) Income | Interests | Total | ||||||||||||||||||||||||||||
Balance December 30, 2017 | 67,740,380 | $ | 677 | $ | 209,599 | $ | 1,611,158 | 25,749,493 | $ | (1,167,600 | ) | $ (3,162) | $ | 3,205 | $ | 653,877 | ||||||||||||||||||||
Adoption of accounting standards (Note 1) | 773 | 773 | ||||||||||||||||||||||||||||||||||
Net income (loss) | 255,281 | (68 | ) | 255,213 | ||||||||||||||||||||||||||||||||
Dividends ($0.63 per share) | (25,933 | ) | (25,933 | ) | ||||||||||||||||||||||||||||||||
Purchases of common stock | 2,000,000 | (208,087 | ) | (208,087 | ) | |||||||||||||||||||||||||||||||
Transaction with noncontrolling interests | 1,078 | (1,078 | ) | — | ||||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 130,582 | 2 | (2,081 | ) | 5,508 | (424 | ) | (2,503 | ) | |||||||||||||||||||||||||||
Stock-based compensation | 18,256 | 18,256 | ||||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | (2,713 | ) | 250 | (2,463 | ) | |||||||||||||||||||||||||||||||
Balance December 29, 2018 | 67,870,962 | $ | 679 | $ | 226,852 | $ | 1,841,279 | 27,755,001 | $ | (1,376,111 | ) | $ | (5,875 | ) | $ | 2,309 | $ | 689,133 | ||||||||||||||||||
Net income (loss) | 227,720 | (17 | ) | 227,703 | ||||||||||||||||||||||||||||||||
Dividends ($2.70 per share) | (106,838 | ) | (106,838 | ) | ||||||||||||||||||||||||||||||||
Purchases of common stock | 849,068 | (88,578 | ) | (88,578 | ) | |||||||||||||||||||||||||||||||
Purchase noncontrolling interests | 1,842 | (2,442 | ) | (600 | ) | |||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 212,457 | 2 | (6,807 | ) | 5,857 | (595 | ) | (7,400 | ) | |||||||||||||||||||||||||||
Stock-based compensation | 4,236 | 4,236 | ||||||||||||||||||||||||||||||||||
Other comprehensive income | 3,663 | 150 | 3,813 | |||||||||||||||||||||||||||||||||
Balance December 28, 2019 | 68,083,419 | $ | 681 | $ | 226,123 | $ | 1,962,161 | 28,609,926 | $ | (1,465,284 | ) | $ | (2,212 | ) | $ | — | $ | 721,469 | ||||||||||||||||||
Adoption of accounting standards (Note 1 6 ) | (702 | ) | (702 | ) | ||||||||||||||||||||||||||||||||
Net income | 192,106 | �� | 192,106 | |||||||||||||||||||||||||||||||||
Dividends ($2.79 per share) | (107,327 | ) | (107,327 | ) | ||||||||||||||||||||||||||||||||
Purchases of common stock | 1,178,970 | (115,962 | ) | (115,962 | ) | |||||||||||||||||||||||||||||||
Issuance of stock related to stock-based compensation plans | 100,283 | 1 | (1,887 | ) | 8,743 | (715 | ) | (2,601 | ) | |||||||||||||||||||||||||||
Stock-based compensation | 4,639 | 4,639 | ||||||||||||||||||||||||||||||||||
Other comprehensive income | 213 | — | 213 | |||||||||||||||||||||||||||||||||
Balance December 26, 2020 | 68,183,702 | $ | 682 | $ | 228,875 | $ | 2,046,238 | 29,797,639 | $ | (1,581,961 | ) | $ | (1,999 | ) | $ | — | $ | 691,835 | ||||||||||||||||||
When providing
Fiscal Years Ended | ||||||||||||
Mode | December 26, 2020 | December 28, 2019 | December 29, 2018 | |||||||||
Truck – BCO Independent Contractors | 45 | % | 45 | % | 43 | % | ||||||
Truck – Truck Brokerage Carriers | 47 | % | 47 | % | 49 | % | ||||||
Rail intermodal | 3 | % | 3 | % | 3 | % | ||||||
Ocean and air cargo carriers | 3 | % | 3 | % | 3 | % | ||||||
Truck Equipment Type | ||||||||||||
Van equipment | $ | 2,515,940 | $ | 2,371,188 | $ | 2,791,494 | ||||||
Unsided/platform equipment | $ | 1,202,295 | $ | 1,295,817 | $ | 1,386,387 | ||||||
Less-than-truckload | $ | 97,546 | $ | 98,324 | $ | 102,531 |
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.
Balance at Beginning of Period | Charged to Costs and Expenses | Write-offs, Net of Recoveries | Balance at End of Period | |||||||||||||
For the Fiscal Year Ended December 30, 2017 | ||||||||||||||||
Trade receivables | $ | 5,161 | $ | 3,982 | $ | (3,012 | ) | $ | 6,131 | |||||||
Other receivables | 6,549 | 3,450 | (3,047 | ) | 6,952 | |||||||||||
Othernon-current receivables | 244 | 7 | — | 251 | ||||||||||||
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$ | 11,954 | $ | 7,439 | $ | (6,059 | ) | $ | 13,334 | ||||||||
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For the Fiscal Year Ended December 31, 2016 | ||||||||||||||||
Trade receivables | $ | 4,327 | $ | 2,772 | $ | (1,938 | ) | $ | 5,161 | |||||||
Other receivables | 5,555 | 2,963 | (1,969 | ) | 6,549 | |||||||||||
Othernon-current receivables | 238 | — | 6 | 244 | ||||||||||||
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$ | 10,120 | $ | 5,735 | $ | (3,901 | ) | $ | 11,954 | ||||||||
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For the Fiscal Year Ended December 26, 2015 | ||||||||||||||||
Trade receivables | $ | 4,338 | $ | 3,985 | $ | (3,996 | ) | $ | 4,327 | |||||||
Other receivables | 5,103 | 1,897 | (1,445 | ) | 5,555 | |||||||||||
Othernon-current receivables | 230 | 8 | — | 238 | ||||||||||||
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| |||||||||
$ | 9,671 | $ | 5,890 | $ | (5,441 | ) | $ | 10,120 | ||||||||
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Balance at Beginning of Period | Charged to Costs and Expenses | Write-offs, Net of Recoveries | Balance at End of Period | |||||||||||||
For the Fiscal Year Ended December 26, 2020 | ||||||||||||||||
Trade receivables | $ | 7,284 | $ | 6,121 | $ | (4,735 | ) | $ | 8,670 | |||||||
Other receivables | 8,806 | 3,291 | (3,698 | ) | 8,399 | |||||||||||
Other non-current receivables | 260 | 3 | 1 | 264 | ||||||||||||
$ | 16,350 | $ | 9,415 | $ | (8,432 | ) | $ | 17,333 | ||||||||
For the Fiscal Year Ended December 28, 2019 | ||||||||||||||||
Trade receivables | $ | 6,413 | $ | 4,309 | $ | (3,438 | ) | $ | 7,284 | |||||||
Other receivables | 7,211 | 5,518 | (3,923 | ) | 8,806 | |||||||||||
Other non-current receivables | 256 | 4 | — | 260 | ||||||||||||
$ | 13,880 | $ | 9,831 | $ | (7,361 | ) | $ | 16,350 | ||||||||
For the Fiscal Year Ended December 29, 2018 | ||||||||||||||||
Trade receivables | $ | 6,131 | $ | 3,886 | $ | (3,604 | ) | $ | 6,413 | |||||||
Other receivables | 6,952 | 3,520 | (3,261 | ) | 7,211 | |||||||||||
Other non-current receivables | 251 | 9 | (4 | ) | 256 | |||||||||||
$ | 13,334 | $ | 7,415 | $ | (6,869 | ) | $ | 13,880 | ||||||||
and also provides a basis for determining whether it is necessary to perform thetwo-step goodwill impairment test quantitative analysis required by ASC Topic 350. In the fourth fiscal quarter of 2017,2020, the Company performed the qualitative assessment of goodwill and determined it was more likely than not that the fair value of each of its reporting units would be greater than its carrying amount. Therefore, the Company determined it was not necessary to perform thetwo-step quantitative goodwill impairment test. Furthermore, there has been no historical impairment of the Company’s goodwill.
Fiscal Years | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Average number of common shares outstanding | 41,938 | 42,112 | 43,664 | |||||||||
Incremental shares from assumed exercises of stock options | 86 | 124 | 149 | |||||||||
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Average number of common shares and common share equivalents outstanding | 42,024 | 42,236 | 43,813 | |||||||||
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Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Average number of common shares outstanding | 38,602 | 39,786 | 41,273 | |||||||||
Incremental shares from assumed exercises of stock options | — | — | 37 | |||||||||
Average number of common shares and common share equivalents outstanding | 38,602 | 39,786 | 41,310 | |||||||||
26, 2020.
During 2017,
As it relates to the noncontrolling interests of Landstar Metro and Landstar Servicios, the Company has the option to purchase, and the minority equityholders have the option to sell, during the period commencing on the third anniversary of September 20, 2017, the closing date of the subscription by the minority equityholders (the “Closing Date”), and at any time after the fourth anniversary of the Closing Date, at fair value all but not less than all of the noncontrolling interests in Landstar Metro and Landstar Servicios. The noncontrolling interests are also subject to customary restrictions on transfer, including a right of first refusal in favor of the Company.
were insignificant.
Unrealized Holding Gains (Losses) on Available-for-Sale Securities | Foreign Currency Translation | Total | ||||||||||
Balance as of December 27, 2014 | $ | 105 | $ | (1,290 | ) | $ | (1,185 | ) | ||||
Other comprehensive loss | (199 | ) | (2,104 | ) | (2,303 | ) | ||||||
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| |||||||
Balance as of December 26, 2015 | (94 | ) | (3,394 | ) | (3,488 | ) | ||||||
Other comprehensive income | 23 | 376 | 399 | |||||||||
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| |||||||
Balance as of December 31, 2016 | (71 | ) | (3,018 | ) | (3,089 | ) | ||||||
Other comprehensive loss | (73 | ) | — | (73 | ) | |||||||
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| |||||||
Balance as of December 30, 2017 | $ | (144 | ) | $ | (3,018 | ) | $ | (3,162 | ) | |||
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|
Unrealized Holding (Losses) Gains on Available-for-Sale Securities | Foreign Currency Translation | Total | ||||||||||
Balance as of December 30, 2017 | $ | (144 | ) | $ | (3,018 | ) | $ | (3,162 | ) | |||
Other comprehensive loss | (786 | ) | (1,927 | ) | (2,713 | ) | ||||||
Balance as of December 29, 2018 | (930 | ) | (4,945 | ) | (5,875 | ) | ||||||
Other comprehensive income | 2,050 | 1,613 | 3,663 | |||||||||
Balance as of December 28, 2019 | 1,120 | (3,332 | ) | (2,212 | ) | |||||||
Other comprehensive income (loss) | 1,688 | (1,475 | ) | 213 | ||||||||
Balance as of December 26, 2020 | $ | 2,808 | $ | (4,807 | ) | $ | (1,999 | ) | ||||
29, 2018.
Gross | Gross | |||||||||||||||
Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||
December 30, 2017 | ||||||||||||||||
Money market investments | $ | 27,895 | $ | — | $ | — | $ | 27,895 | ||||||||
Asset-backed securities | 2,805 | — | 5 | 2,800 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 80,442 | 117 | 335 | 80,224 | ||||||||||||
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| |||||||||
Total | $ | 111,142 | $ | 117 | $ | 340 | $ | 110,919 | ||||||||
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| |||||||||
December 31, 2016 | ||||||||||||||||
Money market investments | $ | 12,395 | $ | — | $ | — | $ | 12,395 | ||||||||
Asset-backed securities | 4,027 | 3 | 19 | 4,011 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 70,069 | 150 | 239 | 69,980 | ||||||||||||
U.S. Treasury obligations | 23,037 | 2 | 6 | 23,033 | ||||||||||||
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| |||||||||
Total | $ | 109,528 | $ | 155 | $ | 264 | $ | 109,419 | ||||||||
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|
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
December 26, 2020 | ||||||||||||||||
Money market investments | $ | 17,867 | $ | — | $ | — | $ | 17,867 | ||||||||
Asset-backed securities | 567 | — | 26 | 541 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 98,241 | 3,551 | 72 | 101,720 | ||||||||||||
U.S. Treasury obligations | 2,338 | 125 | — | 2,463 | ||||||||||||
Total | $ | 119,013 | $ | 3,676 | $ | 98 | $ | 122,591 | ||||||||
December 28, 2019 | ||||||||||||||||
Money market investments | $ | 15,691 | $ | — | $ | — | $ | 15,691 | ||||||||
Asset-backed securities | 572 | — | 1 | 571 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 97,583 | 1,465 | 44 | 99,004 | ||||||||||||
U.S. Treasury obligations | 2,335 | 12 | 5 | 2,342 | ||||||||||||
Total | $ | 116,181 | $ | 1,477 | $ | 50 | $ | 117,608 | ||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
December 30, 2017 | ||||||||||||||||||||||||
Asset-backed securities | $ | 1,864 | $ | 4 | $ | 632 | $ | 1 | $ | 2,496 | $ | 5 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 41,322 | 220 | 14,016 | 115 | 55,338 | 335 | ||||||||||||||||||
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|
|
|
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|
|
| |||||||||||||
Total | $ | 43,186 | $ | 224 | $ | 14,648 | $ | 116 | $ | 57,834 | $ | 340 | ||||||||||||
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| |||||||||||||
December 31, 2016 | ||||||||||||||||||||||||
Asset-backed securities | $ | 1,363 | $ | 6 | $ | 2,314 | $ | 13 | $ | 3,677 | $ | 19 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 28,809 | 195 | 1,367 | 44 | 30,176 | 239 | ||||||||||||||||||
U.S. Treasury obligations | 12,734 | 6 | — | — | 12,734 | 6 | ||||||||||||||||||
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|
| |||||||||||||
Total | $ | 42,906 | $ | 207 | $ | 3,681 | $ | 57 | $ | 46,587 | $ | 264 | ||||||||||||
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The Company believes that unrealized losses on investments were primarily caused by rising interest rates rather than changes in credit quality.
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
December 26, 2020 | ||||||||||||||||||||||||
Asset-backed securities | $ | 541 | $ | 26 | $ | — | $ | — | $ | 541 | $ | 26 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 2,681 | 72 | — | — | 2,681 | 72 | ||||||||||||||||||
Total | $ | 3,222 | $ | 98 | $ | — | $ | — | $ | 3,222 | $ | 98 | ||||||||||||
December 28, 2019 | ||||||||||||||||||||||||
Asset-backed securities | $ | 571 | $ | 1 | $ | — | $ | — | $ | 571 | $ | 1 | ||||||||||||
Corporate bonds and direct obligations of government agencies | 8,728 | 41 | 4,260 | 3 | 12,988 | 44 | ||||||||||||||||||
U.S. Treasury obligations | 1,226 | 5 | — | — | 1,226 | 5 | ||||||||||||||||||
Total | $ | 10,525 | $ | 47 | $ | 4,260 | $ | 3 | $ | 14,785 | $ | 50 | ||||||||||||
Company’s consolidated statements of income.
Fiscal Years | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Current: | ||||||||||||
Federal | $ | 72,025 | $ | 68,548 | $ | 74,289 | ||||||
State | 8,312 | 6,668 | 9,550 | |||||||||
Foreign | 500 | 563 | 437 | |||||||||
|
|
|
|
|
| |||||||
Total current | $ | 80,837 | $ | 75,779 | $ | 84,276 | ||||||
|
|
|
|
|
| |||||||
Deferred: | ||||||||||||
Federal | $ | (17,110 | ) | $ | 6,104 | $ | 6,524 | |||||
State | 79 | 224 | 268 | |||||||||
|
|
|
|
|
| |||||||
Total deferred | $ | (17,031 | ) | $ | 6,328 | $ | 6,792 | |||||
|
|
|
|
|
| |||||||
Income taxes | $ | 63,806 | $ | 82,107 | $ | 91,068 | ||||||
|
|
|
|
|
|
On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. With respect to the change in corporate tax rates, the Tax Reform Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1,
2018. In connection with this reduction in the U.S. corporate income tax rate, the Company revalued its ending net deferred tax liabilities at December 30, 2017 resulting in a provisional $20,430,000 tax benefit in the Company’s consolidated statement of income for the year ended December 30, 2017. With respect to the repatriation tax on deemed repatriated earnings of foreign subsidiaries, the Tax Reform Act provided for aone-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Company had an estimated $17,981,000 of undistributed foreign E&P at the Company’s Canadian subsidiary, Landstar Canada, Inc. subject to the deemed mandatory repatriation and, accordingly, recognized a provisional $900,000 of income tax expense in the Company’s consolidated statement of income for the year ended December 30, 2017. After the utilization of existing tax credits, the Company expects to pay U.S. federal cash taxes of approximately $500,000 on the deemed mandatory repatriation, payable over eight years.
On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. The Company has recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 30, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed in 2018.
Also during fiscal year 2017, the Company adopted ASU2016-09, as further described in footnote 15. As required by ASU2016-09, the Company recognized $1,299,000 of excess tax benefits on stock-based awards in its provision for income taxes in the 2017 fiscal year.
Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Current: | ||||||||||||
Federal | $ | 47,955 | $ | 52,422 | $ | 60,650 | ||||||
State | 7,249 | 10,367 | 9,410 | |||||||||
Foreign | 557 | 504 | 993 | |||||||||
Total current | $ | 55,761 | $ | 63,293 | $ | 71,053 | ||||||
Deferred: | ||||||||||||
Federal | $ | 1,523 | $ | 4,212 | $ | 1,730 | ||||||
State | (393 | ) | 555 | 385 | ||||||||
Total deferred | $ | 1,130 | $ | 4,767 | $ | 2,115 | ||||||
Income taxes | $ | 56,891 | $ | 68,060 | $ | 73,168 | ||||||
Dec. 30, 2017 | Dec. 31, 2016 | |||||||
Deferred tax assets: | ||||||||
Receivable valuations | $ | 3,244 | $ | 4,518 | ||||
Share-based payments | 2,182 | 1,185 | ||||||
Self-insured claims | 4,688 | 6,270 | ||||||
Other | 3,666 | 4,336 | ||||||
|
|
|
| |||||
Total deferred tax assets | $ | 13,780 | $ | 16,309 | ||||
|
|
|
| |||||
Deferred tax liabilities: | ||||||||
Operating property | $ | 43,105 | $ | 59,720 | ||||
Goodwill | 3,773 | 5,883 | ||||||
Other | 2,016 | 2,851 | ||||||
|
|
|
| |||||
Total deferred tax liabilities | $ | 48,894 | $ | 68,454 | ||||
|
|
|
| |||||
Net deferred tax liability | $ | 35,114 | $ | 52,145 | ||||
|
|
|
|
Dec. 26, 2020 | Dec. 28, 2019 | |||||||
Deferred tax assets: | ||||||||
Receivable valuations | $ | 4,286 | $ | 4,004 | ||||
Share-based payments | 2,020 | 2,923 | ||||||
Self-insured claims | 3,613 | 3,565 | ||||||
Other | 6,056 | 2,935 | ||||||
Total deferred tax assets | $ | 15,975 | $ | 13,427 | ||||
Deferred tax liabilities: | ||||||||
Operating property | $ | 52,014 | $ | 49,669 | ||||
Goodwill | 3,772 | 4,223 | ||||||
Other | 3,087 | 1,531 | ||||||
Total deferred tax liabilities | $ | 58,873 | $ | 55,423 | ||||
Net deferred tax liability | $ | 42,898 | $ | 41,996 | ||||
Fiscal Years | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Income taxes at federal income tax rate | $ | 84,281 | $ | 76,810 | $ | 83,565 | ||||||
State income taxes, net of federal income tax benefit | 5,417 | 4,505 | 7,201 | |||||||||
Meals and entertainment exclusion | 1,021 | 958 | 946 | |||||||||
Share-based payments | (1,549 | ) | (239 | ) | (61 | ) | ||||||
Section 199 deductions and R&D credits | (5,546 | ) | (250 | ) | — | |||||||
Tax Reform Act | (19,530 | ) | — | — | ||||||||
Other, net | (288 | ) | 323 | (583 | ) | |||||||
|
|
|
|
|
| |||||||
Income taxes | $ | 63,806 | $ | 82,107 | $ | 91,068 | ||||||
|
|
|
|
|
|
Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Income taxes at federal income tax rate | $ | 52,289 | $ | 62,110 | $ | 68,960 | ||||||
State income taxes, net of federal income tax benefit | 5,375 | 8,876 | 7,713 | |||||||||
Non-deductible executive compensation | 96 | — | 1,012 | |||||||||
Meals and entertainment exclusion | 326 | 644 | 719 | |||||||||
Share-based payments | (977 | ) | (3,093 | ) | (2,138 | ) | ||||||
Section 199 deductions and R&D credits | (717 | ) | (714 | ) | (3,309 | ) | ||||||
Other, net | 499 | 237 | 211 | |||||||||
Income taxes | $ | 56,891 | $ | 68,060 | $ | 73,168 | ||||||
2021.
Fiscal Years | ||||||||
2017 | 2016 | |||||||
Gross unrecognized tax benefits – beginning of the year | $ | 2,635 | $ | 2,704 | ||||
Gross increases related to current year tax positions | 645 | 428 | ||||||
Gross increases related to prior year tax positions | 2,189 | 596 | ||||||
Gross decreases related to prior year tax positions | (75 | ) | (399 | ) | ||||
Settlements | (100 | ) | (133 | ) | ||||
Lapse of statute of limitations | (482 | ) | (561 | ) | ||||
|
|
|
| |||||
Gross unrecognized tax benefits – end of the year | $ | 4,812 | $ | 2,635 | ||||
|
|
|
|
Fiscal Years | ||||||||
2020 | 2019 | |||||||
Gross unrecognized tax benefits – beginning of the year | $ | 3,014 | $ | 3,519 | ||||
Gross increases related to current year tax positions | 349 | 468 | ||||||
Gross increases related to prior year tax positions | 232 | 469 | ||||||
Gross decreases related to prior year tax positions | — | (295 | ) | |||||
Settlements | — | (356 | ) | |||||
Lapse of statute of limitations | (1,010 | ) | (791 | ) | ||||
Gross unrecognized tax benefits – end of the year | $ | 2,585 | $ | 3,014 | ||||
2018.
Dec. 30, 2017 | Dec. 31, 2016 | |||||||
Land | $ | 15,259 | $ | 15,259 | ||||
Buildings and improvements | 57,758 | 56,413 | ||||||
Trailing equipment | 363,377 | 342,813 | ||||||
Other equipment | 58,317 | 48,732 | ||||||
|
|
|
| |||||
Total operating property, gross | 494,711 | 463,217 | ||||||
Less accumulated depreciation and amortization | 218,700 | 190,374 | ||||||
|
|
|
| |||||
Total operating property, net | $ | 276,011 | $ | 272,843 | ||||
|
|
|
|
Dec. 26, 2020 | Dec. 28, 2019 | |||||||
Land | $ | 16,328 | $ | 15,834 | ||||
Buildings and improvements | 64,314 | 58,484 | ||||||
Trailing equipment | 433,400 | 425,595 | ||||||
Other equipment | 82,361 | 66,791 | ||||||
Total operating property, gross | 596,403 | 566,704 | ||||||
Less accumulated depreciation and amortization | 299,407 | 280,849 | ||||||
Total operating property, net | $ | 296,996 | $ | 285,855 | ||||
2018.
2018.
28, 2019.
Depending upon the specific type of borrowing, borrowings under the Credit Agreement bear interest based on either (a) the prime rate, (b) the Federal Reserve Bank of New York rate plus 0.5% or (c) the London Interbank Offered Rate, plus 1.25%.which financial statements have been delivered. The unused portion of the revolving credit facility under the Credit Agreement carriesbears a commitment fee, determinedpayable quarterly in arrears, of 0.25% to 0.35%, based on the levelCompany’s Leverage Ratio at the end of the Leverage Ratio. The commitment feemost recent applicable fiscal quarter for the unused portion of the revolving credit facility under the Credit Agreement ranges from .15% to .25%, based on achieving certain levels of the Leverage Ratio.which financial statements have been delivered. As of December 30, 201726, 2020 and December 31, 2016,28, 2019, the Company had no0 borrowings outstanding under the Credit Agreement.
2018.
The future minimum lease payments under all
Capital Leases | Operating Leases | |||||||
2018 | $ | 44,810 | $ | 302 | ||||
2019 | 36,632 | 180 | ||||||
2020 | 29,261 | 5 | ||||||
2021 | 14,799 | — | ||||||
2022 | 5,588 | — | ||||||
Thereafter | — | — | ||||||
|
|
|
| |||||
Total future minimum lease payments | 131,090 | $ | 487 | |||||
|
| |||||||
Less amount representing interest (2.0% to 3.5%) | 5,977 | |||||||
|
| |||||||
Present value of minimum lease payments | $ | 125,113 | ||||||
|
|
Finance leases: | ||||
Amortization of right-of-use | $ | 24,589 | ||
Interest on lease liability | 3,155 | |||
Total finance lease cost | 27,744 | |||
Operating leases: | ||||
Lease cost | 3,075 | |||
Variable lease cost | — | |||
Sublease income | (4,695 | ) | ||
Total net operating lease income | (1,620 | ) | ||
Total net lease cost | $ | 26,124 | ||
Operating lease right-of-use | Other assets | $ | 2,595 | |||
Finance lease assets | Operating property, less accumulated depreciation and amortization | 139,259 | ||||
Total lease assets | $ | 141,854 | ||||
operating leases to the finance and operating lease liabilities recorded on the balance sheet at December 26, 2020 (in thousands):
Finance Leases | Operating Leases | |||||||
2021 | $ | 37,917 | $ | 762 | ||||
2022 | 28,774 | 697 | ||||||
2023 | 21,759 | 612 | ||||||
2024 | 11,827 | 528 | ||||||
2025 | 5,580 | 216 | ||||||
Thereafter | — | — | ||||||
Total future minimum lease payments | 105,857 | 2,815 | ||||||
Less amount representing interest (1.9% to 4.4%) | 5,083 | 220 | ||||||
Present value of minimum lease payments | $ | 100,774 | $ | 2,595 | ||||
Current maturities of long-term debt | 35,415 | |||||||
Long-term debt, excluding current maturities | 65,359 | |||||||
Other current liabilities | 739 | |||||||
Deferred income taxes and other noncurrent liabilities | 1,856 |
Finance Leases | Operating Leases | |||||||
Weighted average remaining lease term (years) | 3.4 | 4.0 | ||||||
Weighted average discount rate | 3.0 | % | 4.0 | % |
Fiscal Years | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Total cost of the Plans during the period | $ | 7,721 | $ | 2,747 | $ | 6,925 | ||||||
Amount of related income tax benefit recognized during the period | (3,285 | ) | (1,238 | ) | (2,432 | ) | ||||||
|
|
|
|
|
| |||||||
Net cost of the Plans during the period | $ | 4,436 | $ | 1,509 | $ | 4,493 | ||||||
|
|
|
|
|
|
Fiscal Years | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Total cost of the Plans during the period | $ | 4,639 | $ | 4,236 | $ | 18,256 | ||||||
Amount of related income tax benefit recognized during the period | (2,114 | ) | (4,130 | ) | (6,610 | ) | ||||||
Net cost of the Plans during the period | $ | 2,525 | $ | 106 | $ | 11,646 | ||||||
$941,000, $3,019,000 and $2,060,000, respectively.
Number of | Weighted Average Grant Date | |||||||
RSUs | Fair Value | |||||||
Outstanding at December 27, 2014 | 425,630 | $ | 50.72 | |||||
Granted | 111,922 | $ | 53.30 | |||||
Vested | (91,382 | ) | $ | 51.98 | ||||
Forfeited | (2,013 | ) | $ | 52.81 | ||||
|
| |||||||
Outstanding at December 26, 2015 | 444,157 | $ | 51.10 | |||||
Granted | 79,948 | $ | 51.58 | |||||
Vested | (81,344 | ) | $ | 53.08 | ||||
Forfeited | (64,523 | ) | $ | 52.99 | ||||
|
| |||||||
Outstanding at December 31, 2016 | 378,238 | $ | 50.46 | |||||
Granted | 67,913 | $ | 76.81 | |||||
Forfeited | (58,779 | ) | $ | 46.00 | ||||
|
| |||||||
Outstanding at December 30, 2017 | 387,372 | $ | 55.75 | |||||
|
|
Number of RSUs | Weighted Average Grant Date Fair Value | |||||||
Outstanding at December 30, 2017 | 387,372 | $ | 55.75 | |||||
Granted | 65,824 | $ | 95.94 | |||||
Vested | (67,971 | ) | $ | 53.92 | ||||
Forfeited | (92,880 | ) | $ | 52.36 | ||||
Outstanding at December 29, 2018 | 292,345 | $ | 66.31 | |||||
Granted | 68,820 | $ | 89.34 | |||||
Shares earned in excess of target (1) | 71,172 | $ | 54.78 | |||||
Vested shares, including shares earned in excess of target | (226,981 | ) | $ | 53.27 | ||||
Forfeited | (6,481 | ) | $ | 86.60 | ||||
Outstanding at December 28, 2019 | 198,875 | $ | 84.37 | |||||
Granted | 59,967 | $ | 102.58 | |||||
Shares earned in excess of target (2) | 11,648 | $ | 77.00 | |||||
Vested shares, including shares earned in excess of target | (76,290 | ) | $ | 73.44 | ||||
Forfeited | (10,987 | ) | $ | 100.55 | ||||
Outstanding at December 26, 2020 | 183,213 | $ | 93.44 | |||||
(1) | Represents additional shares earned under both the January 27, 2015 and January 29, 2016 RSU awards as fiscal year 2018 financial results exceeded target performance level and under the May 1, 2015 RSU award as total shareholder return exceeded the target under the award. |
(2) | Represents additional shares earned under the February 2, 2017 RSU awards as fiscal year 2019 financial results exceeded target performance level. |
and subsidiary as compared to a base year, being the year immediately preceding the year of grant. At the time of grant, the target number of common shares available for issuance under the January 31, 2020, February 1, 2019 and February 2, 2017, January 29, 2016 and January 27, 20152018 grants equals 100%
On May 1, 2015,RSU at the time of grant.
Stock Options
The Company did not grant any stock options during its 2015, 2016 or 2017 fiscal years. Options outstanding under the Plans generally become exercisable in either five equal annual installments commencing on the first anniversary of the date of grant or 100% on the fifth anniversary from the date of grant, subject to acceleration in certain circumstances. All options granted under the Plans expire on the tenth anniversary of the date of grant. Under the Plans, the exercise price of each option equals the fair market value of the Company’s Common Stock on the date of grant.
The fair value of each option grant on its grant date was calculated using the Black-Scholes option pricing model. The Company utilizes historical data, including exercise patterns and employee departure behavior, in estimating the term that options will be outstanding. Expected volatility was based on historical volatility and other factors, such as expected changes in volatility arising from planned changes to the Company’s business, if any. The risk-free interest rate was based on the yield of zero coupon U.S. Treasury bonds for terms that approximated the terms of the options granted.
The following table summarizes information regarding the Company’s outstanding stock options under the Plans:
Options Outstanding | Options Exercisable | |||||||||||||||
Number of Options | Weighted Average Exercise Price per Share | Number of Options | Weighted Average Exercise Price per Share | |||||||||||||
Options at December 27, 2014 | 773,839 | $ | 46.92 | 379,389 | $ | 44.61 | ||||||||||
Exercised | (133,518 | ) | $ | 45.25 | ||||||||||||
Forfeited | (3,100 | ) | $ | 52.91 | ||||||||||||
|
| |||||||||||||||
Options at December 26, 2015 | 637,221 | $ | 47.24 | 415,121 | $ | 45.12 | ||||||||||
Exercised | (257,460 | ) | $ | 45.63 | ||||||||||||
Forfeited | (7,200 | ) | $ | 53.63 | ||||||||||||
|
| |||||||||||||||
Options at December 31, 2016 | 372,561 | $ | 48.24 | 282,461 | $ | 46.39 | ||||||||||
Exercised | (180,321 | ) | $ | 47.01 | ||||||||||||
Forfeited | (3,200 | ) | $ | 52.47 | ||||||||||||
|
| |||||||||||||||
Options at December 30, 2017 | 189,040 | $ | 49.34 | 169,240 | $ | 48.50 | ||||||||||
|
|
The following tables summarize stock options outstanding and exercisable at December 30, 2017:
Options Outstanding | ||||||||||||
Range of Exercise Prices Per Share | Number Outstanding | Weighted Average Remaining Contractual Term (years) | Weighted Average Exercise Price per Share | |||||||||
$35.64 - $40.00 | 15,400 | 1.6 | $ | 36.46 | ||||||||
$40.01 - $45.00 | 49,250 | 3.1 | $ | 41.76 | ||||||||
$45.01 - $58.06 | 124,390 | 4.5 | $ | 53.93 | ||||||||
|
| |||||||||||
189,040 | 3.9 | $ | 49.34 | |||||||||
|
| |||||||||||
Options Exercisable | ||||||||||||
Range of Exercise Prices Per Share | Number Exercisable | Weighted Average Remaining Contractual Term (years) | Weighted Average Exercise Price per Share | |||||||||
$35.64 - $40.00 | 15,400 | 1.6 | $ | 36.46 | ||||||||
$40.01 - $45.00 | 49,250 | 3.1 | $ | 41.76 | ||||||||
$45.01 - $56.40 | 104,590 | 4.4 | $ | 53.45 | ||||||||
|
| |||||||||||
169,240 | 3.8 | $ | 48.50 | |||||||||
|
|
At December 30, 2017, the total intrinsic value of options outstanding was $10,352,000. At December 30, 2017, the total intrinsic value of options outstanding and exercisable was $9,410,000. The total intrinsic value of stock options exercised during fiscal years 2017, 2016 and 2015 was $7,599,000, $7,427,000 and $2,954,000, respectively.
As of December 30, 2017, there was $29,000 of total unrecognized compensation cost related tonon-vested stock options granted under the Plans. The unrecognized compensation cost related to thesenon-vested options is expected to be recognized during 2018.
Number of Shares and Deferred Stock Units | Weighted Average Grant Date Fair Value | |||||||
Outstanding at December 27, 2014 | 23,353 | $ | 54.90 | |||||
Granted | 1,197 | $ | 62.46 | |||||
Vested | (6,490 | ) | $ | 57.79 | ||||
|
| |||||||
Outstanding at December 26, 2015 | 18,060 | $ | 54.36 | |||||
Granted | 26,033 | $ | 58.53 | |||||
Vested | (15,684 | ) | $ | 53.03 | ||||
|
| |||||||
Outstanding at December 31, 2016 | 28,409 | $ | 58.91 | |||||
Granted | 42,573 | $ | 84.47 | |||||
Vested | (16,227 | ) | $ | 61.50 | ||||
|
| |||||||
Outstanding at December 30, 2017 | 54,755 | $ | 78.02 | |||||
|
|
Number of Shares and Deferred Stock Units | Weighted Average Grant Date Fair Value | |||||||
Non-vested at December 30, 2017 | 54,755 | $ | 78.02 | |||||
Granted | 22,803 | $ | 113.35 | |||||
Vested | (19,814 | ) | $ | 75.11 | ||||
Forfeited | (1,757 | ) | $ | 71.12 | ||||
Non-vested at December 29, 2018 | 55,987 | $ | 93.66 | |||||
Granted | 30,338 | $ | 102.76 | |||||
Vested | (21,517 | ) | $ | 92.70 | ||||
Non-vested at December 28, 2019 | 64,808 | $ | 98.24 | |||||
Granted | 26,604 | $ | 111.88 | |||||
Vested | (28,621 | ) | $ | 98.83 | ||||
Forfeited | (2,351 | ) | $ | 106.34 | ||||
Non-vested at December 26, 2020 | 60,440 | $ | 103.65 | |||||
Options Outstanding | Options Exercisable | |||||||||||||||
Number of Options | Weighted Average Exercise Price per Share | Number of Options | Weighted Average Exercise Price per Share | |||||||||||||
Options at December 30, 2017 | 189,040 | $ | 49.34 | 169,240 | $ | 48.50 | ||||||||||
Exercised | (99,926 | ) | $ | 48.36 | ||||||||||||
Options at December 29, 2018 | 89,114 | $ | 50.44 | 88,114 | $ | 50.35 | ||||||||||
Exercised | (44,647 | ) | $ | 49.64 | ||||||||||||
Options at December 28, 2019 | 44,467 | $ | 51.24 | 44,467 | $ | 51.24 | ||||||||||
Exercised | (26,817 | ) | $ | 49.31 | ||||||||||||
Options at December 26, 2020 | 17,650 | $ | 54.16 | 17,650 | $ | 54.16 | ||||||||||
Options Outstanding | ||||||||||||
Range of Exercise Prices Per Share | Number Outstanding | Weighted Average Remaining Contractual Term (years) | Weighted Average Exercise Price per Share | |||||||||
$ | 1,500 | 0.1 | $ | 41.80 | ||||||||
$ | 16,150 | 1.9 | $ | 55.31 | ||||||||
17,650 | 1.7 | $ | 54.16 | |||||||||
Options Exercisable | ||||||||||||
Range of Exercise Prices Per Share | Number Exercisable | Weighted Average Remaining Contractual Term (years) | Weighted Average Exercise Price per Share | |||||||||
$ | 1,500 | 0.1 | $ | 41.80 | ||||||||
$ | 16,150 | 1.9 | $ | 55.31 | ||||||||
17,650 | 1.7 | $ | 54.16 | |||||||||
Commencing as of the 2016 annual meeting of the stockholders of the Company (an “Annual Meeting”),
On May 19, 2015, the Landstar System, Inc. Board of Directors authorized the Company to increase the number of shares of the Company’s Common Stock that the Company is authorized to purchase from time to time in the open market and in privately negotiated transactions under a previously announced purchase program to 3,000,000 shares.
time to time in the open market and in privately negotiated transactions. As of December 30, 2017,26, 2020, the Company hashad authorization to purchase 3,000,000in the aggregate up to 1,821,030 shares of its Common Stock in the aggregate under these programs.this program. No specific expiration date has been assigned to either the May 19, 2015 or December 11, 2017 authorizations.9, 2019 authorization. During fiscal year 2017,2020, Landstar did not purchase anypurchased a total of 1,178,970 shares of its Common Stock.
Stock at a total cost of $115,962,000 pursuant to its previously announced stock purchase programs.
During 2017, the Company incorporated each of Landstar Metro and Landstar Servicios. On September 20, 2017, Landstar Metro acquired substantially all of the assets of the asset-light transportation logistics business of Fletes Avella, S.A. de C.V., a Mexican transportation logistics company. In connection with the acquisition, individuals affiliated with the seller subscribed in the aggregate for a 30% equity interest in each of Landstar Metro and Landstar Servicios. As it relates to the noncontrolling interests of Landstar Metro and Landstar Servicios, the Company has the option to purchase, and the minority equityholders have the option to sell, during the period commencing on the third anniversary of September 20, 2017, the closing date of the subscription by the minority equityholders (the “Closing Date”), and at any time after the fourth anniversary of the Closing Date, at fair value all but not less than all of the noncontrolling interests in Landstar Metro and Landstar Servicios. The noncontrolling interests are also subject to customary restrictions on transfer, including a right of first refusal in favor of the Company.
During 2017, the Company incorporated Landstar Metro, S.A.P.I. de C.V., a transportation logistics company (“Landstar Metro”), and Landstar Metro Servicios S.A.P.I. de C.V., a services company (“Landstar Servicios”), each based in Mexico City, Mexico. On September 20, 2017, Landstar Metro acquired substantially all of the assets of the asset-light transportation logistics business of a Mexican transportation logistics company. In connection with the acquisition, individuals affiliated with the seller subscribed in the
aggregate for a 30% equity interest in each of Landstar Metro and Landstar Servicios. Landstar Metro provides freight and logistics services within the country of Mexico and in conjunction with Landstar’s U.S./Mexico cross-border services. Landstar Servicios provides various administrative, financial, operational, safety and compliance servicesare referred to Landstar Metro.as transportation revenue. The results of operations from Landstar Blue, Landstar Metro and Landstar Servicios are presented as part of the Company’s transportation logistics segment.
No
Transportation | ||||||||||||
Logistics | Insurance | Total | ||||||||||
2017 | ||||||||||||
External revenue | $ | 3,599,382 | $ | 46,982 | $ | 3,646,364 | ||||||
Internal revenue | 37,110 | 37,110 | ||||||||||
Investment income | 2,498 | 2,498 | ||||||||||
Interest and debt expense | 3,166 | 3,166 | ||||||||||
Depreciation and amortization | 40,560 | 40,560 | ||||||||||
Operating income | 209,615 | 34,353 | 243,968 | |||||||||
Expenditures on long-lived assets | 15,586 | 15,586 | ||||||||||
Goodwill | 39,065 | 39,065 | ||||||||||
Capital lease additions | 33,560 | 33,560 | ||||||||||
Total assets | 1,132,766 | 219,694 | 1,352,460 | |||||||||
2016 | ||||||||||||
External revenue | $ | 3,121,210 | $ | 46,424 | $ | 3,167,634 | ||||||
Internal revenue | 36,118 | 36,118 | ||||||||||
Investment income | 1,502 | 1,502 | ||||||||||
Interest and debt expense | 3,794 | 3,794 | ||||||||||
Depreciation and amortization | 35,796 | 35,796 | ||||||||||
Operating income | 187,813 | 35,438 | 223,251 | |||||||||
Expenditures on long-lived assets | 22,645 | 22,645 | ||||||||||
Goodwill | 31,134 | 31,134 | ||||||||||
Capital lease additions | 61,504 | 61,504 | ||||||||||
Total assets | 913,667 | 182,924 | 1,096,591 | |||||||||
2015 | ||||||||||||
External revenue | $ | 3,276,677 | $ | 44,414 | $ | 3,321,091 | ||||||
Internal revenue | 31,342 | 31,342 | ||||||||||
Investment income | 1,396 | 1,396 | ||||||||||
Interest and debt expense | 2,949 | 2,949 | ||||||||||
Depreciation and amortization | 29,102 | 29,102 | ||||||||||
Operating income | 207,883 | 33,823 | 241,706 | |||||||||
Expenditures on long-lived assets | 4,804 | 4,804 | ||||||||||
Goodwill | 31,134 | 31,134 | ||||||||||
Capital lease additions | 49,491 | 49,491 | ||||||||||
Total assets | 842,550 | 148,968 | 991,518 |
Transportation | ||||||||||||
Logistics | Insurance | Total | ||||||||||
2020 | ||||||||||||
External revenue | $ | 4,076,519 | $ | 56,462 | $ | 4,132,981 | ||||||
Internal revenue | 54,003 | 54,003 | ||||||||||
Investment income | 3,399 | 3,399 | ||||||||||
Interest and debt expense | 3,953 | 3,953 | ||||||||||
Depreciation and amortization | 45,855 | 45,855 | ||||||||||
Operating income | 221,210 | 31,740 | 252,950 | |||||||||
Expenditures on long-lived assets | 30,626 | 30,626 | ||||||||||
Goodwill | 40,949 | 40,949 | ||||||||||
Finance lease additions | 31,633 | 31,633 | ||||||||||
Total assets | 1,301,991 | 351,808 | 1,653,799 | |||||||||
2019 | ||||||||||||
External revenue | $ | 4,028,336 | $ | 56,241 | $ | 4,084,577 | ||||||
Internal revenue | 46,587 | 46,587 | ||||||||||
Investment income | 5,041 | 5,041 | ||||||||||
Interest and debt expense | 3,141 | 3,141 | ||||||||||
Depreciation and amortization | 44,468 | 44,468 | ||||||||||
Operating income | 258,742 | 40,162 | 298,904 | |||||||||
Expenditures on long-lived assets | 19,416 | 19,416 | ||||||||||
Goodwill | 38,508 | 38,508 | ||||||||||
Finance lease additions | 29,054 | 29,054 | ||||||||||
Total assets | 1,168,944 | 258,767 | 1,427,711 | |||||||||
2018 | ||||||||||||
External revenue | $ | 4,562,796 | $ | 52,348 | $ | 4,615,144 | ||||||
Internal revenue | 37,872 | 37,872 | ||||||||||
Investment income | 3,816 | 3,816 | ||||||||||
Interest and debt expense | 3,354 | 3,354 | ||||||||||
Depreciation and amortization | 43,570 | 43,570 | ||||||||||
Operating income | 303,426 | 28,309 | 331,735 | |||||||||
Expenditures on long-lived assets | 9,747 | 9,747 | ||||||||||
Goodwill | 38,232 | 38,232 | ||||||||||
Finance lease additions | 46,595 | 46,595 | ||||||||||
Total assets | 1,175,040 | 205,524 | 1,380,564 |
Fiscal Years Ended | ||||||||||||
December 30, 2017 | December 31, 2016 | December 26, 2015 | ||||||||||
Operating income | $ | 4,144 | $ | 1,079 | $ | 4,852 | ||||||
Net income attributable to Landstar System, Inc. and subsidiary | 2,578 | 667 | 2,999 | |||||||||
Earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 0.06 | $ | 0.02 | $ | 0.07 | ||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 0.06 | $ | 0.02 | $ | 0.07 |
Fiscal Years Ended | ||||||||||||
December 26, 2020 | December 28, 2019 | December 29, 2018 | ||||||||||
Operating income | $ | 9,196 | $ | 16,679 | $ | 13,960 | ||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 6,989 | $ | 12,683 | $ | 10,582 | ||||||
Earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 0.18 | $ | 0.32 | $ | 0.26 | ||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary | $ | 0.18 | $ | 0.32 | $ | 0.26 |
In May 2014, the Financial
In February 2016, the FASB issued Accounting Standards Update2016-02 –Leases (“ASU2016-02”). ASU2016-02 requires a company to recognize aright-of-use asset and lease liability for the obligation to make lease payments measured at the present value of the lease payments for all leases with terms greater than twelve months. Companies are required to use a modified retrospective transition approach to recognize leases at the beginning of the earliest period presented. ASU2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods therein, and early adoption is permitted. ASU2016-02 is not expected to have a material impact on the Company’s financial statements.
In March 2016, the FASB issued Accounting Standards Update2016-09 –Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU2016-09”), which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods therein. As such, the Company adopted ASU2016-09 during the first quarter of 2017 with an effective date of January 1, 2017. As a result of the adoption, the Company recognized excess tax benefits in the consolidated statement of income of $1,299,000 for fiscal year 2017. Prior period amounts have not been reclassified.
ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Directors
Certified Public Accountants
LANDSTAR SYSTEM, INC. AND SUBSIDIARY
QUARTERLY FINANCIAL DATA
(Dollars in thousands, except per share amounts)
(Unaudited)
Fourth Quarter 2017 | Third Quarter 2017 | Second Quarter 2017 | First Quarter 2017 | |||||||||||||
Revenue | $ | 1,051,592 | $ | 943,430 | $ | 870,434 | $ | 780,908 | ||||||||
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|
|
|
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| |||||||||
Operating income | $ | 70,049 | $ | 60,567 | $ | 61,018 | $ | 52,334 | ||||||||
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| |||||||||
Income before income taxes | $ | 69,442 | $ | 59,910 | $ | 60,199 | $ | 51,251 | ||||||||
Income taxes | 4,759 | 17,490 | 22,689 | 18,868 | ||||||||||||
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|
|
|
|
|
| |||||||||
Net income | $ | 64,683 | $ | 42,420 | $ | 37,510 | $ | 32,383 | ||||||||
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|
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| |||||||||
Less: Net loss attributable to noncontrolling interest | (69 | ) | (23 | ) | — | — | ||||||||||
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|
|
|
|
| |||||||||
Net income attributable to Landstar System, Inc. and subsidiary | $ | 64,752 | $ | 42,443 | $ | 37,510 | $ | 32,383 | ||||||||
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|
|
|
|
|
|
| |||||||||
Earnings per common share attributable to Landstar System, Inc. and subsidiary(1) | $ | 1.54 | $ | 1.01 | $ | 0.89 | $ | 0.77 | ||||||||
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|
|
|
|
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|
| |||||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary(1) | $ | 1.54 | $ | 1.01 | $ | 0.89 | $ | 0.77 | ||||||||
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|
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|
| |||||||||
Dividends per common share | $ | 1.60 | $ | 0.10 | $ | 0.09 | $ | 0.09 | ||||||||
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|
|
|
|
| |||||||||
Fourth Quarter 2016 | Third Quarter 2016 | Second Quarter 2016 | First Quarter 2016 | |||||||||||||
Revenue | $ | 892,829 | $ | 787,938 | $ | 775,223 | $ | 711,644 | ||||||||
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|
|
|
|
|
| |||||||||
Operating income | $ | 63,765 | $ | 58,461 | $ | 53,093 | $ | 47,932 | ||||||||
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|
|
|
|
| |||||||||
Income before income taxes | $ | 62,696 | $ | 57,513 | $ | 52,205 | $ | 47,043 | ||||||||
Income taxes | 23,122 | 21,235 | 19,891 | 17,859 | ||||||||||||
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|
|
|
|
|
| |||||||||
Net income | $ | 39,574 | $ | 36,278 | $ | 32,314 | $ | 29,184 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings per common share attributable to Landstar System, Inc. and subsidiary(1) | $ | 0.95 | $ | 0.86 | $ | 0.77 | $ | 0.69 | ||||||||
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|
|
|
|
|
|
| |||||||||
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary(1) | $ | 0.94 | $ | 0.86 | $ | 0.76 | $ | 0.69 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Dividends per common share | $ | 0.09 | $ | 0.09 | $ | 0.08 | $ | 0.08 | ||||||||
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2021
26, 2020.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Directors
/s/
Certified Public Accountants
2021
reference.
Page | ||||
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39 | ||||
40 | ||||
101* | The following materials from the Company’s Annual Report on Form 10-K for the fiscal year ended December | |
104* | Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101). |
+ | management contract or compensatory plan or arrangement |
* | Filed herewith. |
** | Furnished herewith. |
Date: February 23, | LANDSTAR SYSTEM, INC. | |||||
By: | /s/ JAMES B. GATTONI | |||||
James B. Gattoni | ||||||
President and | ||||||
Chief Executive Officer | ||||||
| ||||||
Signature | Title | Date | ||
/s/ JAMES B. GATTONI | President and Chief Executive | February 23, | ||
James B. Gattoni | Officer; Principal Executive Officer; | |||
Principal | ||||
/s/ | Vice President and | February 23, | ||
| ||||
Principal Accounting Officer | ||||
* | Director | February 23, | ||
Homaira Akbari | ||||
* | Director | February 23, | ||
David G. Bannister | ||||
* | Chairman of the Board | February 23, | ||
Diana M. Murphy | ||||
* | Director | February 23, | ||
Anthony J. Orlando | ||||
* | Director | February 23, | ||
George P. Scanlon | ||||
* | Director | February 23, | ||
Larry J. Thoele |
By: | /s/ MICHAEL K. KNELLER | |
Michael K. Kneller | ||
Attorney In Fact* |
63