Segment Information

12 Months Ended

Dec. 29, 2012

Segment Information

(12)    Segment Information

Landstar markets its freight transportation services and supply chain solutions primarily through independent commission sales agents who enter into contractual arrangements with the Company and are responsible for locating freight, making that freight available to Landstar’s capacity providers and coordinating the transportation of the freight with customers and capacity providers. The Company’s third party capacity providers consist of independent contractors who provide truck capacity to the Company under exclusive lease arrangements (the “BCO Independent Contractors”), unrelated trucking companies who provide truck capacity to the Company under non-exclusive contractual arrangements (the “Truck Brokerage Carriers”), air cargo carriers, ocean cargo carriers, railroads and independent warehouse capacity providers (“Warehouse Capacity Owners”). Through this network of agents and capacity providers linked together by Landstar’s information technology systems, Landstar operates a transportation services and supply chain solutions business primarily throughout North America with revenue of $2.8 billion during the most recently completed fiscal year. The Company reports the results of two operating segments: the transportation logistics segment and the insurance segment.

The transportation logistics segment provides a wide range of transportation services and supply chain solutions. Transportation services offered by the Company include truckload and less-than-truckload transportation, rail intermodal, air cargo, ocean cargo, expedited ground and air delivery of time-critical freight, heavy-haul/specialized, U.S.-Canada and U.S.-Mexico cross-border, project cargo and customs brokerage. Supply chain solutions are based on advanced technology solutions utilizing intellectual property that may be owned by the Company or licensed from third parties. Such solutions as offered by the Company may include integrated multi-modal solutions, outsourced logistics, supply chain engineering and warehousing. Industries serviced by the transportation logistics segment include automotive products, lumber and building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics, ammunition and explosives and military equipment. In addition, the transportation logistics segment provides transportation services to other transportation companies, including logistics and less-than-truckload service providers. Each of the independent commission sales agents has the opportunity to market all of the services provided by the transportation logistics segment. Freight transportation services are typically charged to customers on a per shipment basis for the physical transportation of freight. Supply chain solutions customers are generally charged fees for the services provided.

The insurance segment is comprised of Signature Insurance Company, a wholly owned offshore insurance subsidiary, and Risk Management Claim Services, Inc. The insurance segment provides risk and claims management services to certain of Landstar’s operating subsidiaries. In addition, it reinsures certain risks of the Company’s BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstar’s operating subsidiaries. Internal revenue for premiums billed by the insurance segment to the transportation logistics segment is calculated each fiscal period based primarily on an actuarial calculation of historical loss experience and is believed to approximate the cost that would have been incurred by the transportation logistics segment had similar insurance been obtained from an unrelated third party.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates a segment’s performance based on operating income.

No single customer accounted for more than 10% of consolidated revenue in 2012, 2011 or 2010. Substantially all of the Company’s revenue is generated in North America, primarily through customers located in the United States.

The following tables summarize information about the Company’s reportable business segments as of and for the fiscal years ending December 29, 2012, December 31, 2011 and December 25, 2010 (in thousands):

	Transportation Logistics		Insurance		Total
2012
External revenue	$	2,757,559	$	35,861	$	2,793,420
Internal revenue				28,446		28,446
Investment income				1,563		1,563
Interest and debt expense		3,104				3,104
Depreciation and amortization		27,456				27,456
Operating income		172,740		33,113		205,853
Expenditures on long-lived assets		7,072				7,072
Goodwill		57,470				57,470
Capital lease additions		43,077				43,077
Total assets		708,233		171,188		879,421
2011
External revenue	$	2,614,739	$	34,343	$	2,649,082
Internal revenue				27,544		27,544
Investment income				1,705		1,705
Interest and debt expense		3,112				3,112
Depreciation and amortization		25,814				25,814
Operating income		156,354		26,891		183,245
Expenditures on long-lived assets		4,337				4,337
Goodwill		57,470				57,470
Capital lease additions		34,044				34,044
Total assets		647,002		161,447		808,449
2010
External revenue	$	2,366,032	$	34,138	$	2,400,170
Internal revenue				27,535		27,535
Investment income				1,558		1,558
Interest and debt expense		3,623				3,623
Depreciation and amortization		24,804				24,804
Operating income		116,512		23,459		139,971
Expenditures on long-lived assets		27,505				27,505
Goodwill		57,470				57,470
Capital lease additions		14,986				14,986
Total assets		576,334		107,548		683,882