10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 27, 2014

OR

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

For the transition period from                      to                     

Commission File Number: 0-21238

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)

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

13410 Sutton Park Drive South, Jacksonville, Florida

(Address of principal executive offices)

32224

(Zip Code)

(904) 398-9400

(Registrant’s telephone number, including area code)

N/A

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):    Yes  x    No  ¨

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

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding as of the close of business on October 20, 2014 was 44,737,295.

Index

PART I – Financial Information
Item 1.	Financial Statements (unaudited)
Consolidated Balance Sheets as of September 27, 2014 and December 28, 2013		Page 4
Consolidated Statements of Income for the Thirty Nine and Thirteen Weeks Ended September  27, 2014 and September 28, 2013		Page 5
Consolidated Statements of Comprehensive Income for the Thirty Nine and Thirteen Weeks Ended September 27, 2014 and September 28, 2013		Page 6
Consolidated Statements of Cash Flows for the Thirty Nine Weeks Ended September  27, 2014 and September 28, 2013		Page 7
Consolidated Statement of Changes in Shareholders’ Equity for the Thirty Nine Weeks Ended September 27, 2014		Page 8
Notes to Consolidated Financial Statements		Page 9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	Page 16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	Page 26
Item 4.	Controls and Procedures	Page 26
PART II – Other Information
Item 1. Legal Proceedings		Page 27
Item 1A. Risk Factors		Page 27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		Page 27
Item 6. Exhibits		Page 28
Signatures		Page 30
EX – 31.1 Section 302 CEO Certification
EX – 31.2 Section 302 CFO Certification
EX – 32.1 Section 906 CEO Certification
EX – 32.2 Section 906 CFO Certification

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The interim consolidated financial statements contained herein reflect all adjustments (all of a normal, recurring nature) which, in the opinion of management, are necessary for a fair statement of the financial condition, results of operations, cash flows and changes in shareholders’ equity for the periods presented. They have been prepared in accordance with Rule 10-01 of Regulation S-X and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Operating results for the thirty nine weeks ended September 27, 2014 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 27, 2014.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2013 Annual Report on Form 10-K.

3

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

(Unaudited)

	September 27, 2014			December 28, 2013
ASSETS
Current Assets
Cash and cash equivalents	$	140,591		$	180,302
Short-term investments		37,664			34,939
Trade accounts receivable, less allowance of $4,687 and $3,773		455,478			378,732
Other receivables, including advances to independent contractors, less allowance of $3,449 and $4,253		12,355			73,903
Deferred income taxes and other current assets		16,322			14,592
Total current assets		662,410			682,468
Operating property, less accumulated depreciation and amortization of $157,379 and $157,985		203,568			177,329
Goodwill		31,134			31,134
Other assets		83,113			79,765
Total assets	$	980,225		$	970,696
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Cash overdraft	$	32,232		$	27,780
Accounts payable		203,203			157,796
Current maturities of long-term debt		34,619			27,567
Insurance claims		29,153			92,280
Other current liabilities		43,120			70,237
Total current liabilities		342,327			375,660
Long-term debt, excluding current maturities		80,507			73,938
Insurance claims		23,293			24,171
Deferred income taxes and other noncurrent liabilities		38,426			42,446
Shareholders’ Equity
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,211,626 and 67,017,858 shares		672			670
Additional paid-in capital		186,097			179,807
Retained earnings		1,264,811			1,173,044
Cost of 22,474,331 and 21,528,693 shares of common stock in treasury		(955,613	)		(899,028	)
Accumulated other comprehensive loss		(295	)		(12	)
Total shareholders’ equity		495,672			454,481
Total liabilities and shareholders’ equity	$	980,225		$	970,696

See accompanying notes to consolidated financial statements.

4

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Revenue	$	2,321,960	$	1,972,805	$	819,320	$	675,535
Investment income		1,027		1,111		332		366
Costs and expenses:
Purchased transportation		1,792,560		1,512,677		633,596		518,141
Commissions to agents		181,196		156,377		64,631		53,630
Other operating costs, net of gains on asset dispositions		19,350		15,396		6,521		6,011
Insurance and claims		37,732		36,907		12,026		13,335
Selling, general and administrative		108,567		94,967		36,215		30,990
Depreciation and amortization		20,419		20,743		7,086		7,180
Total costs and expenses		2,159,824		1,837,067		760,075		629,287
Operating income		163,163		136,849		59,577		46,614
Interest and debt expense		2,260		2,367		774		856
Income from continuing operations before income taxes		160,903		134,482		58,803		45,758
Income taxes		60,585		50,736		22,048		17,255
Income from continuing operations		100,318		83,746		36,755		28,503
Income from discontinued operations, net of income taxes		—		2,706		—		743
Net income	$	100,318	$	86,452	$	36,755	$	29,246
Earnings per common share:
Income from continuing operations	$	2.23	$	1.81	$	0.82	$	0.62
Income from discontinued operations		—		0.06		—		0.02
Earnings per common share		2.23		1.87		0.82		0.64
Diluted earnings per share:
Income from continuing operations	$	2.22	$	1.81	$	0.82	$	0.62
Income from discontinued operations		—		0.06		—		0.02
Diluted earnings per share		2.22		1.87		0.82		0.64
Average number of shares outstanding:
Earnings per common share		45,018,000		46,156,000		44,713,000		45,708,000
Diluted earnings per share		45,222,000		46,323,000		44,937,000		45,856,000
Dividends per common share	$	0.19	$	—	$	0.07	$	—

See accompanying notes to consolidated financial statements.

5

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

	Thirty Nine Weeks Ended						Thirteen Weeks Ended
	September 27, 2014			September 28, 2013			September 27, 2014			September 28, 2013
Net income	$	100,318		$	86,452		$	36,755		$	29,246
Other comprehensive income (loss):
Unrealized holding gains (losses) on available-for-sale investments, net of tax benefit (expense) of ($19), $341, $106 and $(98)		35			(620	)		(194	)		179
Foreign currency translation (losses) gains		(318	)		(384	)		(61	)		126
Other comprehensive (loss) income		(283	)		(1,004	)		(255	)		305
Comprehensive income	$	100,035		$	85,448		$	36,500		$	29,551

See accompanying notes to consolidated financial statements.

6

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Thirty Nine Weeks Ended
	September 27, 2014			September 28, 2013
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income	$	100,318		$	86,452
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Discontinued operations		—			(2,706	)
Depreciation and amortization of operating property		20,419			20,743
Non-cash interest charges		164			164
Provisions for losses on trade and other accounts receivable		3,823			2,445
Gains on sales/disposals of operating property		(1,955	)		(2,933	)
Deferred income taxes, net		(3,346	)		4,730
Stock-based compensation		4,218			4,133
Changes in operating assets and liabilities, net of discontinued operations:
Increase in trade and other accounts receivable		(19,021	)		(16,293	)
Increase in other assets		(2,427	)		(2,032	)
Increase in accounts payable		45,407			8,246
Decrease in other liabilities		(10,998	)		(4,231	)
Increase (decrease) in insurance claims		(64,005	)		26,575
NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS		72,597			125,293
INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Net change in other short-term investments		(4,979	)		(4,091	)
Sales and maturities of investments		25,027			33,265
Purchases of investments		(26,425	)		(44,596	)
Purchases of operating property		(9,131	)		(4,800	)
Proceeds from sales of operating property		6,160			8,662
NET CASH USED BY INVESTING ACTIVITIES OF CONTINUING OPERATIONS		(9,348	)		(11,560	)
FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Increase (decrease) in cash overdraft		4,452			(3,144	)
Dividends paid		(24,472	)		—
Proceeds from exercises of stock options		2,974			2,253
Taxes paid in lieu of shares issued related to stock-based compensation plans		(2,419	)		(1,767	)
Excess tax effect on stock option exercises		1,327			343
Purchases of common stock		(56,393	)		(46,603	)
Principal payments on long-term debt and capital lease obligations		(28,111	)		(44,002	)
NET CASH USED BY FINANCING ACTIVITIES OF CONTINUING OPERATIONS		(102,642	)		(92,920	)
Cash flows from discontinued operations:
Operating activities of discontinued operations		—			6,514
Investing activities of discontinued operations		—			(66	)
Financing activities of discontinued operations		—			(3,609	)
Net cash provided by discontinued operations		—			2,839
Effect of exchange rate changes on cash and cash equivalents		(318	)		(384	)
Increase (decrease) in cash and cash equivalents		(39,711	)		23,268
Cash and cash equivalents at beginning of period		180,302			74,284
Cash and cash equivalents at end of period	$	140,591		$	97,552

See accompanying notes to consolidated financial statements.

7

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Thirty Nine Weeks Ended September 27, 2014

(Dollars in thousands)

(Unaudited)

					Additional Paid-In Capital		Retained Earnings			Treasury Stock at Cost					Accumulated Other Comprehensive Loss			Total
	Common Stock
	Shares		Amount							Shares		Amount
Balance December 28, 2013		67,017,858	$	670	$	179,807	$	1,173,044			21,528,693	$	(899,028	)	$	(12	)	$	454,481
Net income								100,318											100,318
Dividends ($0.19 per share)								(8,551	)										(8,551	)
Purchases of common stock											939,872		(56,393	)					(56,393	)
Issuance of stock related to stock-based compensation plans, including excess tax effect		193,768		2		2,072					5,766		(192	)					1,882
Stock-based compensation						4,218													4,218
Other comprehensive loss																(283	)		(283	)
Balance September 27, 2014		67,211,626	$	672	$	186,097	$	1,264,811			22,474,331	$	(955,613	)	$	(295	)	$	495,672

See accompanying notes to consolidated financial statements.

8

LANDSTAR SYSTEM, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

(1) Discontinued Operations

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”), which was part of the Company’s Transportation Logistics segment, to XPO Logistics, Inc. (“XPO”). XPO paid a purchase price of $87.0 million in cash as consideration for LSCS. The net assets of LSCS acquired by XPO were $32.5 million. Direct transaction costs related to the transaction, primarily legal and other professional fees and payments made to certain executives of LSCS in connection with the transaction, were approximately $2.4 million. Net of income taxes of $19.1 million, the sale resulted in a gain on the sale of discontinued operations of $33.0 million, or $0.71 per diluted share in fiscal year 2013. There were no interest costs or corporate overhead expenses allocated in the gain calculation. Prior year operating results of LSCS have been reclassified in the consolidated financial statements to discontinued operations.

The following table summarizes specific financial components of discontinued operations presented in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 28, 2013 (in thousands):

	Thirty Nine Weeks Ended			Thirteen Weeks Ended
Revenue	$	15,377		$	4,986
Income from discontinued operations before income taxes		4,330			1,166
Income taxes on income from discontinued operations		(1,624	)		(423	)
Income from discontinued operations, net of income taxes	$	2,706		$	743

(2) Share-based Payment Arrangements

As of September 27, 2014, the Company had two employee equity incentive plans, the 2002 employee stock option and stock incentive plan (the “ESOSIP”) and the 2011 equity incentive plan (the “2011 EIP”). No further grants can be made under the ESOSIP. The Company also has two stock compensation plans for members of its Board of Directors, the 2003 Directors Stock Compensation Plan (the “2003 DSCP”) and the 2013 Directors Stock Compensation Plan (the “2013 DSCP”). The provisions of the 2013 DSCP are substantially similar to the provisions of the 2003 DSCP. 115,000 shares of the Company’s common stock were authorized for issuance under the 2013 DSCP. The ESOSIP, 2011 EIP, 2003 DSCP and 2013 DSCP are each referred to herein as a “Plan,” and, collectively, as the “Plans.” Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):

	Thirty Nine Weeks Ended						Thirteen Weeks Ended
	September 27, 2014			September 28, 2013			September 27, 2014			September 28, 2013
Total cost of the Plans during the period	$	4,218		$	4,133		$	1,419		$	1,141
Amount of related income tax benefit recognized during the period		(2,230	)		(1,294	)		(953	)		(315	)
Net cost of the Plans during the period	$	1,988		$	2,839		$	466		$	826

Included in income tax benefits recognized in the thirty-nine-week periods ended September 27, 2014 and September 28, 2013 were income tax benefits of $583,000 and $478,000, respectively, recognized on disqualifying dispositions of the Company’s common stock by employees who obtained shares of common stock through exercises of incentive stock options. Included in income tax benefits recognized in the thirteen-week periods ended September 27, 2014 and September 28, 2013 were income tax benefits of $119,000 and $61,000, respectively, recognized on disqualifying dispositions of the Company’s common stock by employees who obtained shares of common stock through exercises of incentive stock options.

9

As of September 27, 2014, there were 95,531 shares of the Company’s common stock reserved for issuance under the 2013 DSCP and 6,078,033 shares of the Company’s common stock reserved for issuance in the aggregate under the ESOSIP and 2011 EIP.

Stock Options

The fair value of each option grant on its grant date was calculated using the Black-Scholes option pricing model with the following weighted average assumptions for grants made in the 2014 and 2013 thirty-nine-week periods:

	2014			2013
Expected volatility		26.0	%		32.0	%
Expected dividend yield		0.43	%		0.41	%
Risk-free interest rate		1.50	%		0.75	%
Expected lives (in years)		4.0			4.0

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 weighted average grant date fair value of stock options granted during the thirty-nine-week periods ended September 27, 2014 and September 28, 2013 was $12.70 per share and $14.21 per share, respectively.

The following table summarizes information regarding the Company’s outstanding stock options under the Plans:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (000s)
Options outstanding at December 28, 2013		1,454,816		$	44.55
Granted		1,000		$	58.06
Exercised		(462,545	)	$	41.18
Forfeited		(65,800	)	$	47.47
Options outstanding at September 27, 2014		927,471		$	46.04		5.6	$	24,162
Options exercisable at September 27, 2014		531,221		$	43.72		4.4	$	15,072

The total intrinsic value of stock options exercised during the thirty-nine-week periods ended September 27, 2014 and September 28, 2013 was $9,421,000 and $6,021,000, respectively.

As of September 27, 2014, there was $3,384,000 of total unrecognized compensation cost related to non-vested stock options granted under the Plans. The unrecognized compensation cost related to these non-vested options is expected to be recognized over a weighted average period of 2.4 years.

Non-vested Restricted Stock

The fair value of each share of non-vested restricted stock issued under the Plans is based on the fair value of a share of the Company’s common stock on the date of grant.

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The following table summarizes information regarding the Company’s outstanding non-vested restricted stock under the Plans:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 28, 2013		38,193		$	46.75
Granted		7,124		$	63.17
Vested		(19,196	)	$	41.85
Forfeited		(2,768	)	$	54.20
Outstanding at September 27, 2014		23,353		$	54.90

As of September 27, 2014, there was $943,000 of total unrecognized compensation cost related to non-vested shares of restricted stock granted under the Plans. The unrecognized compensation cost related to these non-vested shares of restricted stock is expected to be recognized over a weighted average period of 2.1 years.

Restricted Stock Units

The fair value of a restricted stock unit (“RSU”) is determined based on the market value of the Company’s common stock on the date of grant, discounted for lack of marketability for a minimum post-vesting holding requirement. The discount rate due to lack of marketability used for RSU award grants during both thirty-nine-week periods ended September 27, 2014 and September 28, 2013 was 7%.

The following table summarizes information regarding the Company’s outstanding RSU awards under the Plans:

	Number of Units			Weighted Average Grant Date Fair Value
Outstanding at December 28, 2013		308,007		$	49.63
Granted		146,000		$	53.11
Vested		(24,641	)	$	51.47
Forfeited		(3,736	)	$	49.53
Outstanding at September 27, 2014		425,630		$	50.72

RSU awards have contractual lives of three or five years from the date of grant. In general, for RSUs with five-year contractual lives, the number of RSUs that vest is determined annually, for each year in the five-year period from date of grant, by multiplying the number of RSUs granted by the sum of (a) the average of the percentage change (positive or negative) in operating income and diluted earnings per share in each of the five years as compared to operating income and diluted earnings per share reported in the base year (base year being the year immediately preceding the year in which the RSUs were granted), plus (b) 5%, rounded to the nearest whole number, less (c) the number of RSUs from that grant that have previously vested. For RSUs granted in 2014, the number of RSUs that vest will be determined annually, for each year in the five-year period from date of grant, by multiplying the number of RSUs granted by the sum of (a) the average of the percentage change (positive or negative) in operating income and diluted earnings per share in each of the five years as compared to the results from continuing operations in the 2013 fiscal year (that is the average of the change in operating income and diluted earnings per share for the year ended as compared to the 2013 fiscal year results from continuing operations, which reflects the treatment of Landstar Supply Chain Solutions, Inc. and its wholly owned subsidiary, Landstar Supply Chain Solutions LLC as a discontinued operation effective December 28, 2013) plus (b) 5%, rounded to the nearest whole number, less (c) the number of RSUs from that grant that have previously vested. On January 23, 2013, the Company granted 100,000 RSUs to the Company’s Chairman and Chief Executive Officer. These 100,000 RSUs have three-year contractual lives with vesting dates of January 31 of 2014, 2015, and 2016, with the number of RSUs that vest on each vesting date determined by multiplying 100,000 by the sum of (1) the percentage increase in operating income in the most recently completed fiscal year as compared to the results from the immediately preceding fiscal year, plus (2) the percentage increase in diluted earnings per share in the most recently completed fiscal year as compared to the results from the preceding fiscal year. The Company reports compensation expense over the life of the award based on an estimated number of shares that will vest over the life of the award, multiplied by the fair value of a RSU. The Company recognized approximately $2,434,000 and $1,332,000 of share-based compensation expense related to RSU awards in the thirty-nine-week periods ended September 27, 2014 and September 28, 2013, respectively. As of September 27, 2014, there was a maximum of $19.2 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.1 years. The amount of future compensation expense to be recognized will be determined based on future operating results.

(3) Income Taxes

The provisions for income taxes for both the 2014 and 2013 thirty-nine-week periods were based on estimated annual effective income tax rates of 38.2%, adjusted for discrete events, such as benefits resulting from disqualifying dispositions of the Company’s common stock by employees who obtained the stock through exercises of incentive stock options. The effective income tax rates on income from continuing operations for the 2014 and 2013 thirty-nine-week periods were each 37.7%, which were higher than the statutory federal income tax rate primarily as a result of state taxes, the meals and entertainment exclusion and non-deductible stock-based compensation.

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(4) Earnings Per Share

Earnings per common share are based on the weighted average number of shares outstanding, including outstanding non-vested restricted stock. Diluted earnings per share are based on the weighted average number of common shares outstanding plus the incremental shares that would have been outstanding upon the assumed exercise of all dilutive stock options.

The following table provides a reconciliation of the average number of common shares outstanding used to calculate earnings per common share to the average number of common shares and common share equivalents outstanding used to calculate diluted earnings per share (in thousands):

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Average number of common shares outstanding		45,018		46,156		44,713		45,708
Incremental shares from assumed exercises of stock options		204		167		224		148
Average number of common shares and common share equivalents outstanding		45,222		46,323		44,937		45,856

For each of the thirty-nine-week and thirteen-week periods ended September 27, 2014, no options outstanding to purchase shares of common stock were antidilutive. For each of the thirty-nine-week and thirteen-week periods ended September 28, 2013, there were 149,000 options outstanding to purchase shares of common stock excluded from the calculation of diluted earnings per share because they were antidilutive. Outstanding RSUs were excluded from the calculation of diluted earnings per share for all periods because the performance metric requirements for vesting had not been satisfied.

(5) Additional Cash Flow Information

During the 2014 thirty-nine-week period, Landstar paid income taxes and interest of $76,834,000 and $2,303,000, respectively. During the 2013 thirty-nine-week period, Landstar paid income taxes and interest of $44,966,000 and $2,347,000, respectively. Landstar acquired operating property by entering into capital leases in the amount of $41,732,000 and $47,917,000 in the 2014 and 2013 thirty-nine-week periods, respectively.

(6) Segment Information

The following table summarizes information about the Company’s reportable business segments as of and for the thirty-nine-week and thirteen-week periods ended September 27, 2014 and September 28, 2013 (in thousands):

	Thirty Nine Weeks Ended
	September 27, 2014						September 28, 2013
	Transportation Logistics		Insurance		Total		Transportation Logistics		Insurance		Total
External revenue from continuing operations	$	2,292,982	$	28,978	$	2,321,960	$	1,945,572	$	27,233	$	1,972,805
Investment income				1,027		1,027				1,111		1,111
Internal revenue				22,373		22,373				22,808		22,808
Operating income from continuing operations		143,828		19,335		163,163		116,861		19,988		136,849
Expenditures on long-lived assets from continuing operations		9,131				9,131		4,800				4,800
Goodwill		31,134				31,134		57,470				57,470

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	Thirteen Weeks Ended
	September 27, 2014						September 28, 2013
	Transportation Logistics		Insurance		Total		Transportation Logistics		Insurance		Total
External revenue from continuing operations	$	809,309	$	10,011	$	819,320	$	666,404	$	9,131	$	675,535
Investment income				332		332				366		366
Internal revenue				5,791		5,791				5,999		5,999
Operating income from continuing operations		51,626		7,951		59,577		41,040		5,574		46,614
Expenditures on long-lived assets from continuing operations		7,777				7,777		2,056				2,056

Included in goodwill in the Transportation Logistics segment at September 28, 2013 is goodwill of $26,336,000 relating to the LSCS discontinued operations.

In the thirty-nine-week and thirteen-week periods ended September 27, 2014 and September 28, 2013, no single customer accounted for more than 10% of the Company’s consolidated revenue.

(7) Other Comprehensive Income

The following table presents the components of and changes in accumulated other comprehensive income, net of related income taxes, as of and for the thirty-nine-week period ended September 27, 2014 (in thousands):

	Unrealized Gains on Available-for- Sale Securities		Foreign Currency Translation			Total
Balance as of December 28, 2013	$	244	$	(256	)	$	(12	)
Other comprehensive income (loss)		35		(318	)		(283	)
Balance as of September 27, 2014	$	279	$	(574	)	$	(295	)

Amounts reclassified from accumulated other comprehensive income to investment income due to the realization of previously unrealized gains and losses in the accompanying consolidated statements of income were not significant for the thirty-nine-week period ended September 27, 2014.

(8) Investments

Investments include primarily investment-grade corporate bonds and U.S. Treasury obligations having maturities of up to five years (the “bond portfolio”). Investments in the bond portfolio are reported as available-for-sale and are carried at fair value. Investments maturing less than one year from the balance sheet date are included in short-term investments and investments maturing more than one year from the balance sheet date are included in other assets in the consolidated balance sheets. Management performs an analysis of the nature of the unrealized losses on available-for-sale investments to determine whether such losses are other-than-temporary. Unrealized losses, representing the excess of the purchase price of an investment over its fair value as of the end of a period, considered to be other-than-temporary, are to be included as a charge in the statement of income, while unrealized losses considered to be temporary are to be included as a component of shareholders’ equity. Investments whose values are based on quoted market prices in active markets are classified within Level 1. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, are classified within Level 2. As Level 2 investments include positions that are not traded in active markets, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. Any transfers between levels are recognized as of the beginning of any reporting period. Fair value of the bond portfolio was determined using Level 1 inputs related to U.S. Treasury obligations and money market investments and Level 2 inputs related to investment-grade corporate bonds, asset-backed securities and direct obligations of government agencies. Unrealized gains, net of unrealized losses, on the investments in the bond portfolio were $432,000 and $378,000 at September 27, 2014 and December 28, 2013, respectively.

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The amortized cost and fair values of available-for-sale investments are as follows at September 27, 2014 and December 28, 2013 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 27, 2014
Money market investments	$	1,168	$	—	$	—	$	1,168
Asset-backed securities		5,450		3		55		5,398
Corporate bonds and direct obligations of government agencies		76,924		689		221		77,392
U.S. Treasury obligations		19,516		24		8		19,532
Total	$	103,058	$	716	$	284	$	103,490
December 28, 2013
Money market investments	$	2,499	$	—	$	—	$	2,499
Asset-backed securities		4,350		19		72		4,297
Corporate bonds and direct obligations of government agencies		76,786		783		370		77,199
U.S. Treasury obligations		18,524		31		13		18,542
Total	$	102,159	$	833	$	455	$	102,537

For those available-for-sale investments with unrealized losses at September 27, 2014 and December 28, 2013, the following table summarizes the duration of the unrealized loss (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 27, 2014
Asset-backed securities	$	2,652	$	13	$	2,445	$	42	$	5,097	$	55
Corporate bonds and direct obligations of government agencies		13,264		59		11,385		162		24,649		221
U.S. Treasury obligations		—		—		760		8		760		8
Total	$	15,916		72	$	14,590	$	212	$	30,506	$	284
December 28, 2013
Asset -backed securities	$	3,429	$	72	$	—	$	—	$	3,429	$	72
Corporate bonds and direct obligations of government agencies		22,169		370		—		—		22,169		370
U.S. Treasury obligations		757		13		—		—		757		13
Total	$	26,355	$	455	$	—	$	—	$	26,355	$	455

The Company believes that unrealized losses on investments were primarily caused by rising interest rates rather than changes in credit quality. The Company expects to recover the amortized cost basis of these securities as it does not intend to sell, and does not anticipate being required to sell, these securities before recovery of the cost basis. For these reasons, the Company does not consider the unrealized losses on these securities to be other-than-temporary at September 27, 2014.

(9) Commitments and Contingencies

Short-term investments include $32,685,000 in current maturities of investments and $4,979,000 of cash equivalents held by the Company’s insurance segment at September 27, 2014. The non-current portion of the bond portfolio of $70,805,000 is included in other assets. The short-term investments, together with $35,318,000 of non-current investments, provide collateral for the $66,182,000 of letters of credit issued to guarantee payment of insurance claims. As of September 27, 2014, Landstar also had $33,045,000 of additional letters of credit outstanding under the Company’s Credit Agreement.

As further described in periodic and current reports previously filed by the Company with the Securities and Exchange Commission (the “SEC”), in connection with an accident (the “Accident”) that occurred in February 2007 involving a BCO Independent Contractor leased to Landstar Ranger, Inc., a trial court in Cobb County, Georgia entered an amended judgment on May 28, 2013 against Landstar Ranger, Inc., Landstar System Holdings, Inc. and Landstar System, Inc. (the “Landstar Defendants”) awarding the plaintiffs an aggregate sum of approximately $55.2 million plus post-judgment interest at the rate of 6.25% per annum from and after September 23, 2011 (the “Damage Award”). As previously disclosed in the Company’s Quarterly Report on Form 10-Q for its 2014 second quarter, while an Appeal of the Damage Award was pending before the Court of Appeals of the State of Georgia, on July 9, 2014, the plaintiffs and the Landstar Defendants entered into an agreement in principle providing for the settlement of all claims of the plaintiffs against the Landstar

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Defendants. Pursuant to the settlement and release agreement executed by the parties on August 13, 2014, all sums payable to the plaintiffs under such agreement have been paid in full and the plaintiffs have released and discharged the Landstar Defendants from all liability arising out of the Accident.

Under the terms of the commercial trucking insurance program that Landstar had in place in 2007, Landstar retained liability for up to $5 million with respect to the Accident giving rise to the Damage Award. The Company recorded a $5 million charge representing its self-insured retention in respect of this Accident in the consolidated financial results of the Company in the 2007 first quarter. Third party insurance and/or reinsurance policies provided coverage to the Landstar Defendants for all amounts related to the Accident in excess of such retained liability, including all related out-of-pocket expenses, such as the costs of an appeal bond and interest. No assurances can be given regarding the impact of the Damage Award or the settlement thereof on the premiums charged by the Company’s third party insurers from time to time for commercial trucking insurance.

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

(10) Change in Accounting Estimate

Landstar provides for the estimated costs of self-insured claims primarily on an actuarial basis. The amount recorded for the estimated liability for claims incurred is based upon the facts and circumstances known on the applicable balance sheet date. The ultimate resolution of these claims may be for an amount greater or less than the amount estimated by management. The Company continually revises its existing claim estimates as new or revised information becomes available on the status of each claim. Historically, the Company has experienced both favorable and unfavorable development of prior years’ claims estimates.

The following table summarizes the effect of the increase in the cost of insurance claims resulting from unfavorable development of prior year self-insured claims estimates on operating income, income from continuing operations and earnings per share from continuing operations amounts in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 27, 2014 and September 28, 2013 (in thousands, except per share amounts):

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Operating income	$	7,119	$	8,236	$	372	$	3,592
Income from continuing operations		4,400		5,090		230		2,220
Earnings per share from continuing operations	$	0.10	$	0.11	$	0.01	$	0.05
Diluted earnings per share from continuing operations	$	0.10	$	0.11	$	0.01	$	0.05

(11) Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09 - Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 is a comprehensive revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. ASU 2014-09 is not expected to have a material impact on the Company’s financial statements.

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

The following discussion should be read in conjunction with the attached interim consolidated financial statements and notes thereto, and with the Company’s audited financial statements and notes thereto for the fiscal year ended December 28, 2013 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2013 Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this document that are not based on historical facts are “forward-looking statements.” This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Form 10-Q contain forward-looking statements, such as statements which relate to Landstar’s business objectives, plans, strategies and expectations. Terms such as “anticipates,” “believes,” “estimates,” “intention,” “expects,” “plans,” “predicts,” “may,” “should,” “could,” “will,” the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: an increase in the frequency or severity of accidents or other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; decreased demand for transportation services; substantial industry competition; disruptions or failures in the Company’s computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10-K for the 2013 fiscal year, described in Item 1A “Risk Factors”, this report or in Landstar’s other Securities and Exchange Commission filings from time to time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward-looking statements and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Introduction

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

Landstar markets its integrated transportation management solutions primarily through independent commission sales agents and exclusively utilizes third party capacity providers to transport and store customers’ freight. Landstar’s independent commission sales agents enter into contractual arrangements with the Company and are responsible for locating freight, making that freight available to Landstar’s capacity providers and coordinating the transportation of the freight with customers and capacity providers. The Company’s third party capacity providers consist of independent contractors who provide truck capacity to the Company under exclusive lease arrangements (the “BCO Independent Contractors”), unrelated trucking companies who provide truck capacity to the Company under non-exclusive contractual arrangements (the “Truck Brokerage Carriers”), air cargo carriers, ocean cargo carriers, railroads and independent warehouse capacity providers. Through this network of agents and capacity providers linked together by Landstar’s information technology systems, Landstar operates an integrated transportation management solutions business primarily throughout North America with revenue of $2.7 billion during the most recently completed fiscal year. The Company reports the results of two operating segments: the transportation logistics segment and the insurance segment.

The transportation logistics segment provides a wide range of integrated transportation management solutions. Transportation services 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. Transportation management solutions offered by the Company may include integrated multi-modal solutions and warehousing. Industries serviced by the transportation logistics segment include automotive products, 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

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the independent commission sales agents has the opportunity to market all of the services provided by the transportation logistics segment. Billings for freight transportation services are typically charged to customers on a per shipment basis for the physical transportation of freight and are referred to as transportation revenue. During the thirty-nine-weeks ended September 27, 2014, revenue hauled by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 49%, 45% and 3%, respectively, of the Company’s consolidated revenue. Collectively, revenue hauled by air and ocean cargo carriers represented approximately 2% of the Company’s consolidated revenue in the thirty-nine-week period ended September 27, 2014.

The insurance segment is comprised of Signature Insurance Company, a wholly owned offshore insurance subsidiary (“Signature”), and Risk Management Claim Services, Inc. This segment provides risk and claims management services to certain of Landstar’s operating subsidiaries. In addition, it reinsures certain risks of the Company’s BCO Independent Contractors and provides certain property and casualty insurance directly to certain of Landstar’s operating subsidiaries. Revenue at the insurance segment represents reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk is ultimately borne by Signature. Revenue at the insurance segment represented approximately 1% of the Company’s consolidated revenue for the thirty-nine-week period ended September 27, 2014.

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. LSCS was previously reported as a unit of the transportation logistics segment. The prior year operating results of LSCS have been reclassified in the consolidated financial statements to discontinued operations.

Changes in Financial Condition and Results of Operations

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

While customer demand, which is subject to overall economic conditions, ultimately drives increases or decreases in revenue, the Company primarily relies on its independent commission sales agents to establish customer relationships and generate revenue opportunities. Management’s emphasis with respect to revenue growth is on revenue generated by independent commission sales agents who on an annual basis generate $1 million or more of Landstar revenue (“Million Dollar Agents”). Management believes future revenue growth is primarily dependent on its ability to increase both the revenue generated by Million Dollar Agents and the number of Million Dollar Agents through a combination of recruiting new agents and increasing the revenue opportunities generated by existing independent commission sales agents. During the 2013 fiscal year, 478 independent commission sales agents generated $1 million or more of Landstar revenue and thus qualified as Million Dollar Agents. During the 2013 fiscal year, the average revenue generated by a Million Dollar Agent was $5,081,000 and revenue generated by Million Dollar Agents in the aggregate represented 91% of consolidated revenue.

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

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Revenue from continuing operations generated through (in thousands):
BCO Independent Contractors	$	1,126,213	$	987,914	$	385,524	$	342,366
Truck Brokerage Carriers		1,051,118		837,005		381,964		285,183
Rail intermodal		58,957		55,450		21,936		18,762
Ocean and air cargo carriers		56,168		65,082		19,731		20,061
Other (1)		29,504		27,354		10,165		9,163
	$	2,321,960	$	1,972,805	$	819,320	$	675,535
Number of loads:
BCO Independent Contractors		614,800		591,200		203,430		198,830
Truck Brokerage Carriers		555,100		495,240		197,930		163,500
Rail intermodal		22,840		22,100		8,560		7,710
Ocean and air cargo carriers		12,110		12,370		4,100		4,330
		1,204,850		1,120,910		414,020		374,370
Revenue per load:
BCO Independent Contractors	$	1,832	$	1,671	$	1,895	$	1,722
Truck Brokerage Carriers		1,894		1,690		1,930		1,744
Rail intermodal		2,581		2,509		2,563		2,433
Ocean and air cargo carriers		4,638		5,261		4,812		4,633

(1) Includes premium revenue generated by the insurance segment and warehousing revenue generated by the transportation logistics segment.

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

	September 27, 2014		September 28, 2013
BCO Independent Contractors		8,252		7,890
Truck Brokerage Carriers:
Approved and active (1)		25,250		21,171
Other approved		11,884		11,143
		37,134		32,314
Total available truck capacity providers		45,386		40,204
Number of trucks provided by BCO Independent Contractors		8,792		8,410

⁽¹⁾ Active refers to Truck Brokerage Carriers who moved at least one load in the 180 days immediately preceding the fiscal quarter end.

The Company incurs costs that are directly related to the transportation of freight that include purchased transportation and commissions to agents. The Company incurs indirect costs associated with the transportation of freight that include other operating costs and insurance and claims. In addition, the Company incurs selling, general and administrative costs essential to administering its business operations. Management continually monitors all components of the costs incurred by the Company and establishes annual cost budgets which, in general, are used to benchmark costs incurred on a monthly basis.

Purchased transportation represents the amount a BCO Independent Contractor or other third party capacity provider is paid to haul freight. The amount of purchased transportation paid to a BCO Independent Contractor is primarily based on a contractually agreed-upon percentage of revenue generated by the haul. Purchased transportation paid to a Truck Brokerage Carrier is based on either a negotiated rate for each load hauled or, to a lesser extent, a contractually agreed-upon fixed rate. Purchased transportation paid to railroads is based on either a negotiated rate for each load hauled or a contractually agreed-upon fixed rate. 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. 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 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 hauled by Truck Brokerage Carriers. Purchased transportation costs are recognized upon the completion of freight delivery.

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Commissions to agents are based on contractually agreed-upon percentages of revenue or net revenue, defined as revenue less the cost of purchased transportation, or net revenue less a contractually agreed upon percentage of revenue retained by Landstar. 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 upon the completion of freight delivery.

The Company defines gross profit as revenue less the cost of purchased transportation and commissions to agents. Gross profit divided by revenue is referred to as gross profit margin. The Company’s operating margin is defined as operating income divided by gross profit.

In general, gross profit margin on revenue hauled by BCO Independent Contractors represents a fixed percentage of revenue due to the nature of the contracts that pay a fixed percentage of revenue to both the BCO Independent Contractors and independent commission sales agents. For revenue hauled by Truck Brokerage Carriers, gross profit margin is either fixed or variable as a percent of revenue, depending on the contract with each individual independent commission sales agent. Under certain contracts with independent commission sales agents, the Company retains a fixed percentage of revenue and the agent retains the amount remaining less the cost of purchased transportation (the “retention contracts”). Gross profit margin on revenue hauled by railroads, air cargo carriers, ocean cargo carriers and Truck Brokerage Carriers, other than those under retention contracts, is variable in nature as the Company’s contracts with independent commission sales agents provide commissions to agents at a contractually agreed upon percentage of net revenue. Approximately 57% of the Company’s consolidated revenue in the thirty-nine-week period ended September 27, 2014 was generated under contracts that have a fixed gross profit margin while 43% was under contracts that have a variable gross profit margin.

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

With respect to insurance and claims cost, potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. For commercial trucking claims, Landstar retains liability up to $5,000,000 per occurrence. The Company also retains liability of up to $1,000,000 for each general liability claim, $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim. The Company’s exposure to liability associated with accidents incurred by Truck Brokerage Carriers, railroads and air and ocean cargo carriers who transport freight on behalf of the Company is reduced by various factors including the extent to which such carriers maintain their own insurance coverage. A material increase in the frequency or severity of accidents, cargo claims or workers’ compensation claims or the material unfavorable development of existing claims could have a material adverse effect on Landstar’s cost of insurance and claims and its results of operations.

During the thirty-nine-week period ended September 27, 2014, employee compensation and benefits accounted for over seventy percent of the Company’s selling, general and administrative costs.

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

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The following table sets forth the percentage relationship of purchased transportation and commissions to agents, both being direct costs, to revenue and indirect costs as a percentage of gross profit for the periods indicated:

	Thirty Nine Weeks Ended						Thirteen Weeks Ended
	September 27, 2014			September 28, 2013			September 27, 2014			September 28, 2013
Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Purchased transportation		77.2			76.7			77.3			76.7
Commissions to agents		7.8			7.9			7.9			7.9
Gross profit margin		15.0	%		15.4	%		14.8	%		15.4	%
Gross profit		100.0	%		100.0	%		100.0	%		100.0	%
Investment income		0.3			0.4			0.3			0.4
Indirect costs and expenses:
Other operating costs, net of gains on asset dispositions		5.6			5.1			5.4			5.8
Insurance and claims		10.8			12.2			9.9			12.9
Selling, general and administrative		31.2			31.3			29.9			29.9
Depreciation and amortization		5.9			6.8			5.9			6.9
Total costs and expenses		53.4			55.3			51.1			55.4
Operating margin		46.9	%		45.1	%		49.2	%		44.9	%

Management believes that a discussion of indirect costs as a percentage of gross profit is useful and meaningful to potential investors for the following principal reasons: (1) disclosure of these relative measures (i.e., each indirect operating cost line item as a percentage of gross profit) allows investors to better understand the underlying trends in Landstar’s results of operations; (2) due to the generally fixed nature of these indirect costs (other than insurance and claims costs), these relative measures are meaningful to investors’ evaluations of the Company’s management of its indirect costs attributable to operations; (3) management considers this financial information in its decision-making, such as budgeting for infrastructure, trailing equipment and selling, general and administrative costs; and (4) this information facilitates comparisons by investors of Landstar’s results to the results of peer non-asset or asset-light companies in the transportation and logistics services industry who report “net revenue” in Management Discussion and Analysis, which represents revenue less the cost of purchased transportation. The difference between Landstar’s use of the term “gross profit” versus its peers’ use of the term “net revenue” is due to the direct cost of commissions to agents under the Landstar model, whereas peer companies generally have no commissions to agents.

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

THIRTY NINE WEEKS ENDED SEPTEMBER 27, 2014 COMPARED TO THIRTY NINE WEEKS ENDED SEPTEMBER 28, 2013

Revenue for the 2014 thirty-nine-week period was $2,321,960,000, an increase of $349,155,000, or 18%, compared to the 2013 thirty-nine-week period. Transportation revenue increased $347,410,000, or 18%. The increase in transportation revenue was primarily attributable to approximately an 8% increase in the number of loads hauled and increased revenue per load of approximately 10%. Reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk of loss is ultimately borne by Signature, were $28,978,000 and $27,233,000 for the 2014 and 2013 thirty-nine-week periods, respectively.

Truck transportation revenue hauled by BCO Independent Contractors and Truck Brokerage Carriers (together, the “third party truck capacity providers”) for the thirty-nine-week period ended September 27, 2014, was $2,177,331,000, or 94% of total revenue, an increase of $352,412,000, or 19%, compared to the 2013 thirty-nine-week period. The number of loads hauled by third party truck capacity providers in the 2014 thirty-nine-week period increased approximately 8% compared to the 2013 thirty-nine-week period, and revenue per load increased approximately 11% compared to the 2013 thirty-nine-week period. The increase in the number of loads hauled via third party truck capacity providers was due to a broad-based increase in underlying demand for truck transportation services and increased market share from new agents. The increase in revenue per load on loads hauled via truck was primarily attributable to increased demand and a tight truck capacity environment. Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $88,070,000 and $80,884,000 in the 2014 and 2013 periods, respectively. Fuel surcharges billed to customers on revenue hauled by BCO Independent Contractors are excluded from revenue.

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Transportation revenue hauled by rail intermodal, air cargo and ocean cargo carriers (collectively, the “multimode capacity providers”) for the thirty-nine-week period ended September 27, 2014, was $115,125,000, or 5% of total revenue, a decrease of $5,407,000, or 4%, compared to the 2013 thirty-nine-week period. The number of loads hauled by multimode capacity providers in the 2014 thirty-nine-week period increased approximately 2% compared to the 2013 thirty-nine-week period, while revenue per load on revenue hauled by multimode capacity providers decreased approximately 6% over the same period. The increase in loads hauled by multimode capacity providers was primarily due to increased rail intermodal loads. The decrease in revenue per load on revenue hauled by multimode capacity providers was primarily due to decreased loads hauled by ocean cargo carriers, which typically have a higher revenue per load amount compared to other types of multimode shipments. Also, revenue per load on revenue hauled by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity.

Purchased transportation was 77.2% and 76.7% of revenue in the 2014 and 2013 thirty-nine-week periods, respectively. The increase in purchased transportation as a percentage of revenue was primarily attributable to an increased rate of purchased transportation paid to Truck Brokerage Carriers as the availability of truck capacity tightened in 2014 and an increase in the percentage of revenue hauled by Truck Brokerage Carriers, which typically has a higher rate of purchased transportation than revenue hauled by BCO Independent Contractors. Commissions to agents were 7.8% and 7.9% of revenue in the 2014 and 2013 periods, respectively. The decrease in commissions to agents as a percentage of revenue was primarily attributable to a decreased net revenue margin on revenue hauled by Truck Brokerage Carriers caused by the increased rate of purchased transportation paid to Truck Brokerage Carriers.

Investment income at the insurance segment was $1,027,000 and $1,111,000 in the 2014 and 2013 thirty-nine-week periods, respectively.

Other operating costs increased $3,954,000 in the 2014 thirty-nine-week period compared to the 2013 thirty-nine-week period and represented 5.6% of gross profit in the 2014 period compared to 5.1% of gross profit in the 2013 period. The increase in other operating costs compared to prior year was primarily due to lower gains on sales of trailing equipment, increased trailing equipment costs and an increased provision for contractor bad debt. The increase in other operating costs as a percent of gross profit was caused by the increase in operating costs, but was somewhat reduced by the effect of increased gross profit.

Insurance and claims increased $825,000 in the 2014 thirty-nine-week period compared to the 2013 thirty-nine-week period and represented 10.8% of gross profit in the 2014 period compared to 12.2% of gross profit in the 2013 period. The increase in insurance and claims compared to prior year was due to increased frequency in the number of insurance claims. The decrease in insurance and claims as a percent of gross profit, however, was due to the effect of increased gross profit, which more than offset the effect of the increase in insurance and claims.

Selling, general and administrative costs increased $13,600,000 in the 2014 thirty-nine-week period compared to the 2013 thirty-nine-week period and represented 31.2% of gross profit in the 2014 period compared to 31.3% of gross profit in the 2013 period. The increase in selling, general and administrative costs compared to prior year was due to an $11,139,000 provision for incentive compensation in the 2014 period compared to a minimal provision in the 2013 period and an increased provision for customer bad debt in the 2014 period. The decrease in selling, general and administrative costs as a percent of gross profit, however, was primarily due to the effect of increased gross profit, which more than offset the effect of the increase in selling, general and administrative costs.

Depreciation and amortization decreased $324,000 in the 2014 thirty-nine-week period compared to the 2013 thirty-nine-week period and represented 5.9% of gross profit in the 2014 period compared to 6.8% of gross profit in the 2013 period. The decrease in depreciation and amortization as a percent of gross profit was primarily due to the effect of increased gross profit.

Interest and debt expense in the 2014 thirty-nine-week period was $107,000 lower than the 2013 thirty-nine-week period.

The provisions for income taxes for both the 2014 and 2013 thirty-nine-week periods were based on estimated annual effective income tax rates of approximately 38.2%, adjusted for discrete events, such as benefits resulting from disqualifying dispositions of the Company’s common stock by employees who obtained the stock through exercises of incentive stock options. The effective income tax rates on income from continuing operations for the 2014 and 2013 thirty-nine-week periods were each 37.7%, which were higher than the statutory federal income tax rate primarily as a result of state taxes, the meals and entertainment exclusion and non-deductible stock compensation expense.

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The effective income tax rates in the 2014 and 2013 thirty-nine-week periods were less than 38.2% estimated annual effective income tax rate primarily due to disqualifying dispositions of the Company’s common stock by employees who obtained the stock through exercises of incentive stock options in each year.

Net income was $100,318,000, or $2.23 per common share ($2.22 per diluted share), in the 2014 thirty-nine-week period. Income from continuing operations was $83,746,000, or $1.81 per common share ($1.81 per diluted share), in the 2013 thirty-nine-week period. Net income was $86,452,000, or $1.87 per common share ($1.87 per diluted share), in the 2013 thirty-nine-week period.

THIRTEEN WEEKS ENDED SEPTEMBER 27, 2014 COMPARED TO THIRTEEN WEEKS ENDED SEPTEMBER 28, 2013

Revenue for the 2014 thirteen-week period was $819,320,000, an increase of $143,785,000, or 21%, compared to the 2013 thirteen-week period. Transportation revenue increased $142,905,000, or 21%. The increase in transportation revenue was primarily attributable to approximately an 11% increase in the number of loads hauled and increased revenue per load of approximately 10%. Reinsurance premiums from third party insurance companies that provide insurance programs to BCO Independent Contractors where all or a portion of the risk of loss is ultimately borne by Signature, were $10,011,000 and $9,131,000 for the 2014 and 2013 thirteen-week periods, respectively.

Truck transportation revenue hauled by third party truck capacity providers for the thirteen-week period ended September 27, 2014, was $767,488,000, or 94% of total revenue, an increase of $139,939,000, or 22%, compared to the 2013 thirteen-week period. The number of loads hauled by third party truck capacity providers in the 2014 thirteen-week period increased approximately 11% compared to the 2013 thirteen-week period, and revenue per load increased approximately 11% compared to the 2013 thirteen-week period. The increase in the number of loads hauled via third party truck capacity providers was due to a broad-based increase in underlying demand for truck transportation services in the domestic marketplace and increased market share from new agents. The increase in revenue per load on loads hauled via truck was primarily attributable to increased demand and a tight truck capacity environment. Fuel surcharges on Truck Brokerage Carrier revenue identified separately in billings to customers and included as a component of Truck Brokerage Carrier revenue were $31,128,000 and $25,940,000 in the 2014 and 2013 periods, respectively. Fuel surcharges billed to customers on revenue hauled by BCO Independent Contractors are excluded from revenue.

Transportation revenue hauled by multimode capacity providers for the thirteen-week period ended September 27, 2014, was $41,667,000, or 5% of total revenue, an increase of $2,844,000, or 7%, compared to the 2013 thirteen-week period. The number of loads hauled by multimode capacity providers in the 2014 thirteen-week period increased approximately 5% compared to the 2013 thirteen-week period, and revenue per load on revenue hauled by multimode capacity providers increased approximately 2% over the same period. The increase in loads hauled by multimode capacity providers was primarily due to increased rail intermodal loads. The increase in revenue per load on revenue hauled by multimode capacity providers was primarily due to a small number of international air charters, as each such air charter is considered a single, extremely high value load. Also, revenue per load on revenue hauled by multimode capacity providers is influenced by many factors, including revenue mix among the various modes of transportation used, length of haul, complexity of freight, density of freight lanes, fuel costs and availability of capacity.

Purchased transportation was 77.3% and 76.7% of revenue in the 2014 and 2013 thirteen-week periods, respectively. The increase in purchased transportation as a percentage of revenue was primarily attributable to an increased rate of purchased transportation paid to Truck Brokerage Carriers as the availability of truck capacity tightened in the 2014 period and an increase in the percentage of revenue hauled by Truck Brokerage Carriers, which has a higher rate of purchased transportation. Commissions to agents were 7.9% of revenue in each of the 2014 and 2013 periods.

Investment income at the insurance segment was $332,000 and $366,000 in the 2014 and 2013 thirteen-week periods, respectively.

Other operating costs increased $510,000 in the 2014 thirteen-week period compared to the 2013 thirteen-week period and represented 5.4% of gross profit in the 2014 period compared to 5.8% of gross profit in the 2013 period. The increase in other operating costs compared to prior year was primarily due to increased trailing equipment costs and an increased provision for contractor bad debt, partially offset by increased gains on sales of trailing equipment. The decrease in other operating costs as a percent of gross profit was primarily caused by the effect of increased gross profit, which was somewhat offset by the effect of the increase in operating costs.

Insurance and claims decreased $1,309,000 in the 2014 thirteen-week period compared to the 2013 thirteen-week period and represented 9.9% and 12.9% of gross profit in the 2014 and 2013 periods, respectively. The decrease in insurance and claims compared to prior year was due to decreased net unfavorable development of prior years’ claims in the 2014 period as unfavorable development of prior

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year claims was $372,000 and $3,592,000 in the 2014 and 2013 thirteen-week periods, respectively, partially offset by increased severity, or cost per claim, of current year claims in the 2014 thirteen-week period. The decrease in insurance and claims as a percent of gross profit was primarily due to the effect of increased gross profit and the decrease in claims costs.

Selling, general and administrative costs increased $5,225,000 in the 2014 thirteen-week period compared to the 2013 thirteen-week period and represented 29.9% of gross profit in each of the 2014 and 2013 periods. The increase in selling, general and administrative costs compared to prior year was primarily due to a $4,560,000 provision for incentive compensation in the 2014 period compared to a minimal provision in the 2013 period. As it relates to selling, general and administrative costs as a percent of gross profit, the increase in selling, general and administrative costs was entirely offset by the effect of increased gross profit.

Depreciation and amortization decreased $94,000 in the 2014 thirteen-week period compared to the 2013 thirteen-week period and represented 5.9% of gross profit in the 2014 period compared to 6.9% of gross profit in the 2013 period. The decrease in depreciation and amortization as a percent of gross profit was due to the effect of increased gross profit.

Interest and debt expense in the 2014 thirteen-week period was $82,000 lower than the 2013 thirteen-week period.

The provisions for income taxes for both the 2014 and 2013 thirteen-week periods were based on estimated annual effective income tax rates of approximately 38.2%, adjusted for discrete events. The effective income tax rates on income from continuing operations for the 2014 and 2013 thirteen-week periods were 37.5% and 37.7%, respectively, which were higher than the statutory federal income tax rate primarily as a result of state taxes, the meals and entertainment exclusion and non-deductible stock compensation expense. The effective income tax rates in the 2014 and 2013 thirteen-week periods were less than 38.2% estimated annual effective income tax rate primarily due to disqualifying dispositions of the Company’s common stock by employees who obtained the stock through exercises of incentive stock options in each year.

Net income was $36,755,000, or $0.82 per common share ($0.82 per diluted share), in the 2014 thirteen-week period. Income from continuing operations was $28,503,000, or $0.62 per common share ($0.62 per diluted share), in the 2013 thirteen-week period. Net income was $29,246,000, or $0.64 per common share ($0.64 per diluted share), in the 2013 thirteen-week period.

CAPITAL RESOURCES AND LIQUIDITY

Working capital and the ratio of current assets to current liabilities were $320,083,000 and 1.9 to 1, respectively, at September 27, 2014, compared with $306,808,000 and 1.8 to 1, respectively, at December 28, 2013. Landstar has historically operated with current ratios within the range of 1.5 to 1 to 2.0 to 1. Cash provided by operating activities of continuing operations was $72,597,000 in the 2014 thirty-nine-week period compared with $125,293,000 in the 2013 thirty-nine-week period. The decrease in cash flow provided by operating activities of continuing operations was primarily attributable to the increase in trade receivables since the beginning of the fiscal year 2014 generally driven by the significant growth in revenue in 2014.

The Company declared and paid $0.19 per share, or $8,551,000, in cash dividends during the thirty-nine-week period ended September 27, 2014 and, during such period, also paid $15,921,000 of dividends payable, which were declared during fiscal year 2013 and included in other current liabilities in the consolidated balance sheet at December 28, 2013. The Company did not pay cash dividends during the thirty-nine-week period ended September 28, 2013. During the thirty-nine-week period ended September 27, 2014, the Company purchased 939,872 shares of its common stock at a total cost of $56,393,000. As of September 27, 2014, the Company may purchase up to an additional 1,827,782 shares of its common stock under its authorized stock purchase program. Long-term debt, including current maturities, was $115,126,000 at September 27, 2014, $13,621,000 higher than at December 28, 2013.

Shareholders’ equity was $495,672,000, or 81% of total capitalization (defined as long-term debt including current maturities plus equity), at September 27, 2014, compared to $454,481,000, or 82% of total capitalization, at December 28, 2013. The increase in equity was primarily a result of net income, partially offset by the purchases of shares of the Company’s common stock in the 2014 thirty-nine-week period.

On June 29, 2012, 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, which matures on June 29, 2017, provides $225,000,000 of borrowing capacity in the form of a revolving credit facility, $75,000,000 of which may be utilized in the form of letter of credit guarantees.

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The Credit Agreement contains a number of covenants that limit, among other things, the incurrence of additional indebtedness. The Company is required to, among other things, maintain a minimum Fixed Charge Coverage Ratio, as defined in the Credit Agreement, and maintain a Leverage Ratio, as defined in the Credit Agreement, below a specified maximum. The Credit Agreement provides for a restriction on cash dividends and other distributions to stockholders on the Company’s capital stock to the extent there is a default under the Credit Agreement. In addition, the Credit Agreement under certain circumstances limits the amount of such cash dividends and other distributions to stockholders to the extent that, after giving effect to any payment made to effect such cash dividend or other distribution, the Leverage Ratio would exceed 2.5 to 1 on a pro forma basis as of the end of the Company’s most recently completed fiscal quarter. The Credit Agreement provides for an event of default in the event that, among other things, a person or group acquires 25% or more of the outstanding capital stock of the Company or obtains power to elect a majority of the Company’s directors. None of these covenants are presently considered by management to be materially restrictive to the Company’s operations, capital resources or liquidity. The Company is currently in compliance with all of the debt covenants under the Credit Agreement.

At September 27, 2014, the Company had no borrowings outstanding and $33,045,000 of letters of credit outstanding under the Credit Agreement. At September 27, 2014, there was $191,955,000 available for future borrowings under the Credit Agreement. In addition, the Company has $66,182,000 in letters of credit outstanding as collateral for insurance claims that are secured by investments and cash equivalents totaling $72,982,000 at September 27, 2014. Investments, all of which are carried at fair value, include primarily investment-grade bonds and U.S. Treasury obligations having maturities of up to five years. Fair value of investments is based primarily on quoted market prices. See Notes to Consolidated Financial Statements for further discussion on measurement of fair value of investments.

Historically, the Company has generated sufficient operating cash flow to meet its debt service requirements, fund continued growth, both internal and through acquisitions, complete or execute share purchases of its common stock under authorized share purchase programs, pay dividends and meet working capital needs. As an asset-light provider of integrated transportation management solutions, the Company’s annual capital requirements for operating property are generally for trailing equipment and information technology hardware and software. In addition, a significant portion of the trailing equipment used by the Company is provided by third party capacity providers, thereby reducing the Company’s capital requirements. During the 2014 thirty-nine-week period, the Company purchased $9,131,000 of operating property and acquired $41,732,000 of trailing equipment by entering into capital leases. Landstar anticipates acquiring approximately $9,000,000 in operating property, primarily new trailing equipment to replace older trailing equipment and information technology equipment, during the remainder of fiscal year 2014 either by purchase or lease financing.

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

LEGAL MATTERS

As further described in periodic and current reports previously filed by the Company with the Securities and Exchange Commission (the “SEC”), in connection with an accident (the “Accident”) that occurred in February 2007 involving a BCO Independent Contractor leased to Landstar Ranger, Inc., a trial court in Cobb County, Georgia entered an amended judgment on May 28, 2013 against Landstar Ranger, Inc., Landstar System Holdings, Inc. and Landstar System, Inc. (the “Landstar Defendants”) awarding the plaintiffs an aggregate sum of approximately $55.2 million plus post-judgment interest at the rate of 6.25% per annum from and after September 23, 2011 (the “Damage Award”). As previously disclosed in the Company’s Quarterly Report on Form 10-Q for its 2014 second quarter, while an Appeal of the Damage Award was pending before the Court of Appeals of the State of Georgia, on July 9, 2014, the plaintiffs and the Landstar Defendants entered into an agreement in principle providing for the settlement of all claims of the plaintiffs against the Landstar Defendants. Pursuant to the settlement and release agreement executed by the parties on August 13, 2014, all sums payable to the plaintiffs under such agreement have been paid in full and the plaintiffs have released and discharged the Landstar Defendants from all liability arising out of the Accident.

Under the terms of the commercial trucking insurance program that Landstar had in place in 2007, Landstar retained liability for up to $5 million with respect to the Accident giving rise to the Damage Award. The Company recorded a $5 million charge representing its self-insured retention in respect of this Accident in the consolidated financial results of the Company in the 2007 first quarter. Third party insurance and/or reinsurance policies provided coverage to the Landstar Defendants for all amounts related to the Accident in excess of such retained liability, including all related out-of-pocket expenses, such as the costs of an appeal bond and interest. No assurances can be given regarding the impact of the Damage Award or the settlement thereof on the premiums charged by the Company’s third party insurers from time to time for commercial trucking insurance.

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The allowance for doubtful accounts for both trade and other receivables represents management’s estimate of the amount of outstanding receivables that will not be collected. Historically, management’s estimates for uncollectible receivables have been materially correct. Although management believes the amount of the allowance for both trade and other receivables at September 27, 2014 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.

Landstar provides for the estimated costs of self-insured claims primarily on an actuarial basis. The amount recorded for the estimated liability for claims incurred is based upon the facts and circumstances known on the applicable balance sheet date. The ultimate resolution of these claims may be for an amount greater or less than the amount estimated by management. The Company continually revises its existing claim estimates as new or revised information becomes available on the status of each claim. Historically, the Company has experienced both favorable and unfavorable development of prior years’ claims estimates. During the 2014 and 2013 thirty-nine-week periods, insurance and claims costs included $7,119,000 and $8,236,000 of net unfavorable adjustments to prior years’ claims estimates, respectively. It is reasonably likely that the ultimate outcome of settling all outstanding claims will be more or less than the estimated claims reserve at September 27, 2014.

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.

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

EFFECTS OF INFLATION

Management does not believe inflation has had a material impact on the results of operations or financial condition of Landstar in the past five years. However, inflation in excess of historic trends might have an adverse effect on the Company’s results of operations in the future.

SEASONALITY

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

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

On June 29, 2012, 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, which matures on June 29, 2017, provides $225,000,000 of borrowing capacity in the form of a revolving credit facility, $75,000,000 of which may be utilized in the form of letter of credit guarantees.

Depending upon the specific type of borrowing, borrowings under the Credit Agreement bear interest based on either (a) the prime rate, (b) the federal funds effective rate, (c) the rate at the time offered to JPMorgan Chase Bank, N.A. in the Eurodollar market or (d) the London Interbank Offered Rate, plus a margin that is determined based on the level of the Company’s Leverage Ratio, as defined in the Credit Agreement. During the third quarter of 2014, the Company had no borrowings under the Credit Agreement. At September 27, 2014, the Company had no borrowings outstanding under the Credit Agreement. As of December 28, 2013, the weighted average interest rate on borrowings outstanding was 1.42%. Any future amounts that may become outstanding under the Credit Agreement are payable on September 28, 2017, the maturity date of the Credit Agreement.

Long-term investments, all of which are available-for-sale and are carried at fair value, include primarily investment-grade bonds and U.S. Treasury obligations having maturities of up to five years. Assuming that the long-term portion of investments remains at $70,805,000, the balance at September 27, 2014, a hypothetical increase or decrease in interest rates of 100 basis points would not have a material impact on future earnings on an annualized basis. Short-term investments consist of short-term investment-grade instruments and the current maturities of investment-grade corporate bonds and U.S. Treasury obligations. Accordingly, any future interest rate risk on these short-term investments would not be material.

Assets and liabilities of the Company’s Canadian operations are translated from their functional currency to U.S. dollars using exchange rates in effect at the balance sheet date and revenue and expense accounts are translated at average monthly exchange rates during the period. Adjustments resulting from the translation process are included in accumulated other comprehensive income. Transactional gains and losses arising from receivable and payable balances, including intercompany balances, in the normal course of business that are denominated in a currency other than the functional currency of the operation are recorded in the statements of income when they occur. The assets held at the Company’s Canadian subsidiary at September 27, 2014 were, as translated to U.S. dollars, approximately 1.4% of total consolidated assets. Accordingly, any translation gain or loss related to the Canadian operation would not be material.

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report on Form 10-Q, an evaluation was carried out, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of September 27, 2014 to provide reasonable assurance that information required to be disclosed by the Company in reports that it filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There were no significant changes in the Company’s internal control over financial reporting during the Company’s fiscal quarter ended September 27, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

As further described in periodic and current reports previously filed by the Company with the Securities and Exchange Commission (the “SEC”), in connection with an accident (the “Accident”) that occurred in February 2007 involving a BCO Independent Contractor leased to Landstar Ranger, Inc., a trial court in Cobb County, Georgia entered an amended judgment on May 28, 2013 against Landstar Ranger, Inc., Landstar System Holdings, Inc. and Landstar System, Inc. (the “Landstar Defendants”) awarding the plaintiffs an aggregate sum of approximately $55.2 million plus post-judgment interest at the rate of 6.25% per annum from and after September 23, 2011 (the “Damage Award”). As previously disclosed in the Company’s Quarterly Report on Form 10-Q for its 2014 second quarter, while an Appeal of the Damage Award was pending before the Court of Appeals of the State of Georgia, on July 9, 2014, the plaintiffs and the Landstar Defendants entered into an agreement in principle providing for the settlement of all claims of the plaintiffs against the Landstar Defendants. Pursuant to the settlement and release agreement executed by the parties on August 13, 2014, all sums payable to the plaintiffs under such agreement have been paid in full and the plaintiffs have released and discharged the Landstar Defendants from all liability arising out of the Accident.

Under the terms of the commercial trucking insurance program that Landstar had in place in 2007, Landstar retained liability for up to $5 million with respect to the Accident giving rise to the Damage Award. The Company recorded a $5 million charge representing its self-insured retention in respect of this Accident in the consolidated financial results of the Company in the 2007 first quarter. Third party insurance and/or reinsurance policies provided coverage to the Landstar Defendants for all amounts related to the Accident in excess of such retained liability, including all related out-of-pocket expenses, such as the costs of an appeal bond and interest. No assurances can be given regarding the impact of the Damage Award or the settlement thereof on the premiums charged by the Company’s third party insurers from time to time for commercial trucking insurance.

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

Item 1A. Risk Factors

For a discussion identifying additional risk factors and other important factors that could cause actual results to differ materially from those anticipated, see the discussions under Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2013, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements” in this Quarterly Report on Form 10-Q.

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

Purchases of Equity Securities by the Company

The Company did not purchase any shares of its common stock during the period from June 29, 2014 to September 27, 2014, the Company’s third fiscal quarter. On December 11, 2013, Landstar System, Inc. announced that it had been authorized by its Board of Directors 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. As of September 27, 2014, the Company has authorization to purchase 1,827,782 shares of its common stock under this program. No specific expiration date has been assigned to the December 11, 2013 authorization.

During the thirty-nine-week period ended September 27, 2014, Landstar paid dividends as follows:

Dividend Amount per Share		Declaration Date		Record Date		Payment Date
$	0.35		December 10, 2013		December 27, 2013		January 16, 2014
$	0.06		January 29, 2014		February 18, 2014		March 14, 2014
$	0.06		April 23, 2014		May 8, 2014		May 30, 2014
$	0.07		July 22, 2014		August 11, 2014		August 29, 2014

27

Dividends payable of $0.35 per share, or $15,921,000, was included in other current liabilities in the consolidated balance sheet at December 28, 2013.

On June 29, 2012, 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.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

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

28

EXHIBIT INDEX

Registrant’s Commission File No.: 0-21238

Exhibit No.	Description
(31)	Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002:
31.1*	Chief Executive Officer certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Chief Financial Officer certification, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)	Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1**	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Schema Document
101.CAL*	XBRL Calculation Linkbase Document
101.LAB*	XBRL Labels Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document

* Filed herewith

** Furnished herewith

29

SIGNATURES

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

	LANDSTAR SYSTEM, INC.
Date: October 31, 2014	/s/ Henry H. Gerkens
	Henry H. Gerkens
	Chairman and Chief Executive Officer
Date: October 31, 2014	/s/ James B. Gattoni
	James B. Gattoni
	President and Chief Financial Officer

30

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Henry H. Gerkens, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: October 31, 2014

/s/ Henry H. Gerkens

Henry H. Gerkens

Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, James B. Gattoni, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: October 31, 2014

/s/ James B. Gattoni

James B. Gattoni

President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landstar System, Inc. (the “Company”) on Form 10-Q for the period ending September 27, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Henry H. Gerkens, Chairman and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: October 31, 2014

/s/ Henry H. Gerkens

Henry H. Gerkens

Chairman and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landstar System, Inc. (the “Company”) on Form 10-Q for the period ending September 27, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James B. Gattoni, President and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

Date: October 31, 2014

/s/ James B. Gattoni

James B. Gattoni

President and Chief Financial Officer

XML

Additional Cash Flow Information - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013
Supplemental Cash Flow Information [Abstract]
Income taxes paid	$ 76,834,000	$ 44,966,000
Interest paid	2,303,000	2,347,000
Acquired operating property by capital leases	$ 41,732,000	$ 47,917,000

XML

Commitments and Contingencies - Additional Information (Detail) (USD $)	0 Months Ended	3 Months Ended		9 Months Ended			0 Months Ended	12 Months Ended
	May 28, 2013	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014 Revolving Credit Facility	May 28, 2013 Post-judgment Interest	Dec. 31, 2007 Damage Award	Mar. 31, 2007 Damage Award	Sep. 27, 2014 Guarantee Payment Of Insurance Claims	Sep. 27, 2014 Current Investments	Sep. 27, 2014 Non-Current Investments
Commitments and Contingencies Disclosure [Line Items]
Investments providing collateral for letters of credit to guarantee insurance claims											$ 32,685,000	$ 35,318,000
Cash equivalents providing collateral for letters of credit to guarantee insurance claims											4,979,000
Total non-current investments												70,805,000
Letters of credit outstanding						33,045,000				66,182,000
Aggregate damage awarded	55,200,000
Post-judgment interest rate							6.25%
Retained liability of self-insurance program									5,000,000
Operating insurance and claims costs, production		$ 12,026,000	$ 13,335,000	$ 37,732,000	$ 36,907,000			$ 5,000,000

XML

Summary of Information Regarding Stock Options (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 27, 2014
Number of Options
Beginning Balance, number of options	1,454,816
Granted, number of options	1,000
Exercised, number of options	(462,545)
Forfeited, number of options	(65,800)
Ending Balance, number of options	927,471
Options exercisable at the ending, Number of Options	531,221
Weighted Average Exercise Price per Share
Beginning Balance, Weighted Average Exercise Price per Share	$ 44.55
Granted, Weighted Average Exercise Price per Share	$ 58.06
Exercised, Weighted Average Exercise Price per Share	$ 41.18
Forfeited, Weighted Average Exercise Price per Share	$ 47.47
Ending Balance, Weighted Average Exercise Price per Share	$ 46.04
Options exercisable at September 27, 2014	$ 43.72
Weighted Average Remaining Contractual Term (years)
Options outstanding at September 27, 2014	5 years 7 months 6 days
Options exercisable at September 27, 2014	4 years 4 months 24 days
Aggregate Intrinsic Value
Options outstanding at September 27, 2014	$ 24,162
Options exercisable at September 27, 2014	$ 15,072

XML

Other Comprehensive Income (Tables)

9 Months Ended

Sep. 27, 2014

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

The following table presents the components of and changes in accumulated other comprehensive income, net of related income taxes, as of and for the thirty-nine-week period ended September 27, 2014 (in thousands):

	Unrealized Gains on Available-for- Sale Securities		Foreign Currency Translation			Total
Balance as of December 28, 2013	$	244	$	(256	)	$	(12	)
Other comprehensive income (loss)		35		(318	)		(283	)
Balance as of September 27, 2014	$	279	$	(574	)	$	(295	)

XML

Components of and Changes in Accumulated Other Comprehensive Income, Net of Related Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			$ (12)
Other comprehensive income (loss)	(255)	305	(283)	(1,004)
Ending Balance	(295)		(295)
Unrealized Gains on Available-for-Sale Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			244
Other comprehensive income (loss)			35
Ending Balance	279		279
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(256)
Other comprehensive income (loss)			(318)
Ending Balance	$ (574)		$ (574)

XML

Reconciliation of Average Number of Common Shares and Common Share Equivalents Outstanding (Detail)	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
Average number of common shares outstanding	44,713,000	45,708,000	45,018,000	46,156,000
Incremental shares from assumed exercises of stock options	224,000	148,000	204,000	167,000
Average number of common shares and common share equivalents outstanding	44,937,000	45,856,000	45,222,000	46,323,000

XML

Effect of Increase in Cost of Insurance and Claims (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Change in Accounting Estimate [Line Items]
Operating income	$ 59,577	$ 46,614	$ 163,163	$ 136,849
Income from continuing operations	36,755	28,503	100,318	83,746
Earnings per share from continuing operations	$ 0.82	$ 0.62	$ 2.23	$ 1.81
Diluted earnings per share from continuing operations	$ 0.82	$ 0.62	$ 2.22	$ 1.81
Development of Prior Year Self Insured Claims Estimates
Change in Accounting Estimate [Line Items]
Operating income	372	3,592	7,119	8,236
Income from continuing operations	$ 230	$ 2,220	$ 4,400	$ 5,090
Earnings per share from continuing operations	$ 0.01	$ 0.05	$ 0.10	$ 0.11
Diluted earnings per share from continuing operations	$ 0.01	$ 0.05	$ 0.10	$ 0.11

XML

Consolidated Statement of Changes in Shareholders Equity (Parenthetical) (USD $)	3 Months Ended	9 Months Ended
	Sep. 27, 2014	Sep. 27, 2014
Dividends, per share	$ 0.07	$ 0.19

XML

Investments - Additional Information (Detail) (USD $)	9 Months Ended	12 Months Ended
	Sep. 27, 2014	Dec. 28, 2013
Schedule of Available-for-sale Securities [Line Items]
Investments maximum maturity period	5 years	5 years
Unrealized gains, net of unrealized losses, on the investments in the bond portfolio	$ 432,000	$ 378,000

XML

Summary of Specific Financial Components of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 28, 2013	Sep. 28, 2013
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue	$ 4,986	$ 15,377
Income from discontinued operations before income taxes	1,166	4,330
Income taxes on income from discontinued operations	(423)	(1,624)
Income from discontinued operations, net of income taxes	$ 743	$ 2,706

XML

Discontinued Operations - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 28, 2013
Discontinued Operations [Line Items]
Proceeds from sale of discontinued operations	$ 87,000,000
Value of net assets sold	32,500,000
Direct transaction costs	2,400,000
Gain on the sale of discontinued operations, income taxes	19,100,000
Gain on sale of discontinued operations, net of income taxes	33,000,000
Gain on sale of discontinued operations, per diluted share	$ 0.71
Interest costs allocated in gain calculation	0
Corporate overhead expenses allocated in gain calculation	$ 0

XML

Amortized Cost and Fair Value of Available for Sale Investments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 28, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 103,058	$ 102,159
Gross Unrealized Gains	716	833
Gross Unrealized Losses	284	455
Fair Value	103,490	102,537
Money market investments
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,168	2,499
Fair Value	1,168	2,499
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,450	4,350
Gross Unrealized Gains	3	19
Gross Unrealized Losses	55	72
Fair Value	5,398	4,297
Corporate bonds and direct obligations of government agencies
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	76,924	76,786
Gross Unrealized Gains	689	783
Gross Unrealized Losses	221	370
Fair Value	77,392	77,199
U.S. Treasury Obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	19,516	18,524
Gross Unrealized Gains	24	31
Gross Unrealized Losses	8	13
Fair Value	$ 19,532	$ 18,542

XML

Share Based Payment Arrangements - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended		0 Months Ended	9 Months Ended	0 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014 EquityPlan CompensationPlan	Sep. 28, 2013	Sep. 27, 2014 2013 Directors Stock Compensation Plan	Sep. 27, 2014 Restricted Stock Units (RSUs)	Sep. 28, 2013 Restricted Stock Units (RSUs)	Jan. 23, 2013 Restricted Stock Units (RSUs) Chairman and Chief Executive Officer	Sep. 27, 2014 Restricted Stock Units (RSUs) Maximum	Jan. 23, 2013 Restricted Stock Units (RSUs) Maximum Chairman and Chief Executive Officer	Sep. 27, 2014 Other Stock Compensation Plans	Sep. 27, 2014 Employee Stock Option	Sep. 28, 2013 Employee Stock Option	Sep. 27, 2014 Non-vested Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of employee equity incentive plans			2
Number of board of director stock compensation plans			2
Common stock authorized for issuance					115,000
Income tax benefit realized on disqualifying dispositions of stock acquired by exercise of incentive stock options	$ 119,000	$ 61,000	$ 583,000	$ 478,000
Common stock reserved for issuance					95,531						6,078,033
The weighted average grant date fair value of stock options granted												$ 12.70	$ 14.21
Total intrinsic value of stock options exercised during periods												9,421,000	6,021,000
Unrecognized compensation cost												3,384,000
Unrecognized compensation cost expected to be recognized over period, years						3 years 1 month 6 days						2 years 4 months 24 days		2 years 1 month 6 days
Unrecognized compensation cost									19,200,000					943,000
Discount rate on stock awards						7.00%	7.00%
RSU awards vesting period									5 years	3 years
Percentage used in calculation to determine vesting						5.00%
Awards issued						146,000		100,000						7,124
Recognized share-based compensation expense						$ 2,434,000	$ 1,332,000

XML

Amounts Recognized in Financial Statements with Respect to Plans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total cost of the Plans during the period	$ 1,419	$ 1,141	$ 4,218	$ 4,133
Amount of related income tax benefit recognized during the period	(953)	(315)	(2,230)	(1,294)
Net cost of the Plans during the period	$ 466	$ 826	$ 1,988	$ 2,839

XML

Consolidated Statement of Changes in Shareholders Equity (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock at Cost	Accumulated Other Comprehensive Loss
Beginning Balance at Dec. 28, 2013	$ 454,481	$ 670	$ 179,807	$ 1,173,044	$ (899,028)	$ (12)
Beginning Balance (in shares) at Dec. 28, 2013		67,017,858			21,528,693
Net income	100,318			100,318
Dividends	(8,551)			(8,551)
Purchases of common stock (in shares)					939,872
Purchases of common stock	(56,393)				(56,393)
Issuance of stock related to stock-based compensation plans, including excess tax effect (in shares)		193,768			5,766
Issuance of stock related to stock-based compensation plans, including excess tax effect	1,882	2	2,072		(192)
Stock-based compensation	4,218		4,218
Other comprehensive loss	(283)					(283)
Ending Balance at Sep. 27, 2014	$ 495,672	$ 672	$ 186,097	$ 1,264,811	$ (955,613)	$ (295)
Ending Balance (in shares) at Sep. 27, 2014		67,211,626			22,474,331

XML

Weighted Average Assumptions for Option Grants (Detail)	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	26.00%	32.00%
Expected dividend yield	0.43%	0.41%
Risk-free interest rate	1.50%	0.75%
Expected lives (in years)	4 years	4 years

XML

Information Regarding Reportable Business Segments (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013	Dec. 28, 2013
Segment Reporting Information [Line Items]
External revenue from continuing operations	$ 819,320,000	$ 675,535,000	$ 2,321,960,000	$ 1,972,805,000
Investment income	332,000	366,000	1,027,000	1,111,000
Internal revenue	5,791,000	5,999,000	22,373,000	22,808,000
Operating income from continuing operations	59,577,000	46,614,000	163,163,000	136,849,000
Expenditures on long-lived assets from continuing operations	7,777,000	2,056,000	9,131,000	4,800,000
Goodwill	31,134,000	57,470,000	31,134,000	57,470,000	31,134,000
Transportation Logistics
Segment Reporting Information [Line Items]
External revenue from continuing operations	809,309,000	666,404,000	2,292,982,000	1,945,572,000
Operating income from continuing operations	51,626,000	41,040,000	143,828,000	116,861,000
Expenditures on long-lived assets from continuing operations	7,777,000	2,056,000	9,131,000	4,800,000
Goodwill	31,134,000	57,470,000	31,134,000	57,470,000
Insurance
Segment Reporting Information [Line Items]
External revenue from continuing operations	10,011,000	9,131,000	28,978,000	27,233,000
Investment income	332,000	366,000	1,027,000	1,111,000
Internal revenue	5,791,000	5,999,000	22,373,000	22,808,000
Operating income from continuing operations	$ 7,951,000	$ 5,574,000	$ 19,335,000	$ 19,988,000

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 28, 2013
Current Assets
Cash and cash equivalents	$ 140,591	$ 180,302
Short-term investments	37,664	34,939
Trade accounts receivable, less allowance of $4,687 and $3,773	455,478	378,732
Other receivables, including advances to independent contractors, less allowance of $3,449 and $4,253	12,355	73,903
Deferred income taxes and other current assets	16,322	14,592
Total current assets	662,410	682,468
Operating property, less accumulated depreciation and amortization of $157,379 and $157,985	203,568	177,329
Goodwill	31,134	31,134
Other assets	83,113	79,765
Total assets	980,225	970,696
Current Liabilities
Cash overdraft	32,232	27,780
Accounts payable	203,203	157,796
Current maturities of long-term debt	34,619	27,567
Insurance claims	29,153	92,280
Other current liabilities	43,120	70,237
Total current liabilities	342,327	375,660
Long-term debt, excluding current maturities	80,507	73,938
Insurance claims	23,293	24,171
Deferred income taxes and other noncurrent liabilities	38,426	42,446
Shareholders' Equity
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,211,626 and 67,017,858 shares	672	670
Additional paid-in capital	186,097	179,807
Retained earnings	1,264,811	1,173,044
Cost of 22,474,331 and 21,528,693 shares of common stock in treasury	(955,613)	(899,028)
Accumulated other comprehensive loss	(295)	(12)
Total shareholders' equity	495,672	454,481
Total liabilities and shareholders' equity	$ 980,225	$ 970,696

XML

Schedule of Unrealized Loss on Available for Sale Investments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 28, 2013
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale investments with unrealized losses, Less than 12 months, Fair Value	$ 15,916	$ 26,355
Available-for-sale investments with unrealized losses, Less than 12 months, Unrealized Loss	72	455
Available-for-sale investments with unrealized losses, 12 months or longer, Fair Value	14,590
Available-for-sale investments with unrealized losses, 12 months or longer, Unrealized Loss	212
Available-for-sale investments with unrealized losses, Fair Value, Total	30,506	26,355
Available-for-sale investments with unrealized losses, Unrealized Loss, Total	284	455
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale investments with unrealized losses, Less than 12 months, Fair Value	2,652	3,429
Available-for-sale investments with unrealized losses, Less than 12 months, Unrealized Loss	13	72
Available-for-sale investments with unrealized losses, 12 months or longer, Fair Value	2,445
Available-for-sale investments with unrealized losses, 12 months or longer, Unrealized Loss	42
Available-for-sale investments with unrealized losses, Fair Value, Total	5,097	3,429
Available-for-sale investments with unrealized losses, Unrealized Loss, Total	55	72
Corporate bonds and direct obligations of government agencies
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale investments with unrealized losses, Less than 12 months, Fair Value	13,264	22,169
Available-for-sale investments with unrealized losses, Less than 12 months, Unrealized Loss	59	370
Available-for-sale investments with unrealized losses, 12 months or longer, Fair Value	11,385
Available-for-sale investments with unrealized losses, 12 months or longer, Unrealized Loss	162
Available-for-sale investments with unrealized losses, Fair Value, Total	24,649	22,169
Available-for-sale investments with unrealized losses, Unrealized Loss, Total	221	370
U.S. Treasury Obligations
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale investments with unrealized losses, Less than 12 months, Fair Value		757
Available-for-sale investments with unrealized losses, Less than 12 months, Unrealized Loss		13
Available-for-sale investments with unrealized losses, 12 months or longer, Fair Value	760
Available-for-sale investments with unrealized losses, 12 months or longer, Unrealized Loss	8
Available-for-sale investments with unrealized losses, Fair Value, Total	760	757
Available-for-sale investments with unrealized losses, Unrealized Loss, Total	$ 8	$ 13

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Unrealized holding gains (losses) on available-for-sale investments, tax benefit (expense)	$ 106	$ (98)	$ (19)	$ 341

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Schedule of Information on Restricted Stock Units (Detail) (Restricted Stock Units (RSUs), USD $)	9 Months Ended
	Sep. 27, 2014
Restricted Stock Units (RSUs)
Number of Shares
Beginning Balance	308,007
Granted	146,000
Vested	(24,641)
Forfeited	(3,736)
Ending Balance	425,630
Weighted Average Grant Date Fair Value
Beginning Balance	$ 49.63
Granted	$ 53.11
Vested	$ 51.47
Forfeited	$ 49.53
Ending Balance	$ 50.72

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Share-based Payment Arrangements (Tables)

9 Months Ended

Sep. 27, 2014

Amounts Recognized in Financial Statements with Respect to Plans

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

	Thirty Nine Weeks Ended						Thirteen Weeks Ended
	September 27, 2014			September 28, 2013			September 27, 2014			September 28, 2013
Total cost of the Plans during the period	$	4,218		$	4,133		$	1,419		$	1,141
Amount of related income tax benefit recognized during the period		(2,230	)		(1,294	)		(953	)		(315	)
Net cost of the Plans during the period	$	1,988		$	2,839		$	466		$	826

Weighted Average Assumptions for Option Grants

The fair value of each option grant on its grant date was calculated using the Black-Scholes option pricing model with the following weighted average assumptions for grants made in the 2014 and 2013 thirty-nine-week periods:

	2014			2013
Expected volatility		26.0	%		32.0	%
Expected dividend yield		0.43	%		0.41	%
Risk-free interest rate		1.50	%		0.75	%
Expected lives (in years)		4.0			4.0

Summary of Information Regarding Stock Options

The following table summarizes information regarding the Company’s outstanding stock options under the Plans:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (000s)
Options outstanding at December 28, 2013		1,454,816		$	44.55
Granted		1,000		$	58.06
Exercised		(462,545	)	$	41.18
Forfeited		(65,800	)	$	47.47
Options outstanding at September 27, 2014		927,471		$	46.04		5.6	$	24,162
Options exercisable at September 27, 2014		531,221		$	43.72		4.4	$	15,072

Non-vested Restricted Stock

Schedule of Information on Non-Vested Restricted Stock

The following table summarizes information regarding the Company’s outstanding non-vested restricted stock under the Plans:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 28, 2013		38,193		$	46.75
Granted		7,124		$	63.17
Vested		(19,196	)	$	41.85
Forfeited		(2,768	)	$	54.20
Outstanding at September 27, 2014		23,353		$	54.90

Restricted Stock Units (RSUs)

Schedule of Information on Restricted Stock Units

The following table summarizes information regarding the Company’s outstanding RSU awards under the Plans:

	Number of Units			Weighted Average Grant Date Fair Value
Outstanding at December 28, 2013		308,007		$	49.63
Granted		146,000		$	53.11
Vested		(24,641	)	$	51.47
Forfeited		(3,736	)	$	49.53
Outstanding at September 27, 2014		425,630		$	50.72

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Income Taxes - Additional Information (Detail)	9 Months Ended		12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Dec. 27, 2014 Scenario, Forecast
Income Taxes [Line Items]
Effective income tax rate	37.70%	37.70%	38.20%

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Segment Information (Tables)

9 Months Ended

Sep. 27, 2014

Information Regarding Reportable Business Segments

The following table summarizes information about the Company’s reportable business segments as of and for the thirty-nine-week and thirteen-week periods ended September 27, 2014 and September 28, 2013 (in thousands):

	Thirty Nine Weeks Ended
	September 27, 2014						September 28, 2013
	Transportation Logistics		Insurance		Total		Transportation Logistics		Insurance		Total
External revenue from continuing operations	$	2,292,982	$	28,978	$	2,321,960	$	1,945,572	$	27,233	$	1,972,805
Investment income				1,027		1,027				1,111		1,111
Internal revenue				22,373		22,373				22,808		22,808
Operating income from continuing operations		143,828		19,335		163,163		116,861		19,988		136,849
Expenditures on long-lived assets from continuing operations		9,131				9,131		4,800				4,800
Goodwill		31,134				31,134		57,470				57,470

	Thirteen Weeks Ended
	September 27, 2014						September 28, 2013
	Transportation Logistics		Insurance		Total		Transportation Logistics		Insurance		Total
External revenue from continuing operations	$	809,309	$	10,011	$	819,320	$	666,404	$	9,131	$	675,535
Investment income				332		332				366		366
Internal revenue				5,791		5,791				5,999		5,999
Operating income from continuing operations		51,626		7,951		59,577		41,040		5,574		46,614
Expenditures on long-lived assets from continuing operations		7,777				7,777		2,056				2,056

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013
OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net income	$ 100,318	$ 86,452
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Discontinued operations		(2,706)
Depreciation and amortization of operating property	20,419	20,743
Non-cash interest charges	164	164
Provisions for losses on trade and other accounts receivable	3,823	2,445
Gains on sales/disposals of operating property	(1,955)	(2,933)
Deferred income taxes, net	(3,346)	4,730
Stock-based compensation	4,218	4,133
Changes in operating assets and liabilities, net of discontinued operations:
Increase in trade and other accounts receivable	(19,021)	(16,293)
Increase in other assets	(2,427)	(2,032)
Increase in accounts payable	45,407	8,246
Decrease in other liabilities	(10,998)	(4,231)
Increase (decrease) in insurance claims	(64,005)	26,575
NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS	72,597	125,293
INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Net change in other short-term investments	(4,979)	(4,091)
Sales and maturities of investments	25,027	33,265
Purchases of investments	(26,425)	(44,596)
Purchases of operating property	(9,131)	(4,800)
Proceeds from sales of operating property	6,160	8,662
NET CASH USED BY INVESTING ACTIVITIES OF CONTINUING OPERATIONS	(9,348)	(11,560)
FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Increase (decrease) in cash overdraft	4,452	(3,144)
Dividends paid	(24,472)
Proceeds from exercises of stock options	2,974	2,253
Taxes paid in lieu of shares issued related to stock-based compensation plans	(2,419)	(1,767)
Excess tax effect on stock option exercises	1,327	343
Purchases of common stock	(56,393)	(46,603)
Principal payments on long-term debt and capital lease obligations	(28,111)	(44,002)
NET CASH USED BY FINANCING ACTIVITIES OF CONTINUING OPERATIONS	(102,642)	(92,920)
Cash flows from discontinued operations:
Operating activities of discontinued operations		6,514
Investing activities of discontinued operations		(66)
Financing activities of discontinued operations		(3,609)
Net cash provided by discontinued operations		2,839
Effect of exchange rate changes on cash and cash equivalents	(318)	(384)
Increase (decrease) in cash and cash equivalents	(39,711)	23,268
Cash and cash equivalents at beginning of period	180,302	74,284
Cash and cash equivalents at end of period	$ 140,591	$ 97,552

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 27, 2014	Dec. 28, 2013
Allowance on trade accounts receivable	$ 4,687	$ 3,773
Allowance on other receivables	3,449	4,253
Accumulated depreciation and amortization on operating property	$ 157,379	$ 157,985
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized shares	160,000,000	160,000,000
Common stock, issued shares	67,211,626	67,017,858
Treasury stock, shares	22,474,331	21,528,693

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Investments

9 Months Ended

Sep. 27, 2014

Investments

(8) Investments

Investments include primarily investment-grade corporate bonds and U.S. Treasury obligations having maturities of up to five years (the “bond portfolio”). Investments in the bond portfolio are reported as available-for-sale and are carried at fair value. Investments maturing less than one year from the balance sheet date are included in short-term investments and investments maturing more than one year from the balance sheet date are included in other assets in the consolidated balance sheets. Management performs an analysis of the nature of the unrealized losses on available-for-sale investments to determine whether such losses are other-than-temporary. Unrealized losses, representing the excess of the purchase price of an investment over its fair value as of the end of a period, considered to be other-than-temporary, are to be included as a charge in the statement of income, while unrealized losses considered to be temporary are to be included as a component of shareholders’ equity. Investments whose values are based on quoted market prices in active markets are classified within Level 1. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, are classified within Level 2. As Level 2 investments include positions that are not traded in active markets, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. Any transfers between levels are recognized as of the beginning of any reporting period. Fair value of the bond portfolio was determined using Level 1 inputs related to U.S. Treasury obligations and money market investments and Level 2 inputs related to investment-grade corporate bonds, asset-backed securities and direct obligations of government agencies. Unrealized gains, net of unrealized losses, on the investments in the bond portfolio were $432,000 and $378,000 at September 27, 2014 and December 28, 2013, respectively.

The amortized cost and fair values of available-for-sale investments are as follows at September 27, 2014 and December 28, 2013 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 27, 2014
Money market investments	$	1,168	$	—	$	—	$	1,168
Asset-backed securities		5,450		3		55		5,398
Corporate bonds and direct obligations of government agencies		76,924		689		221		77,392
U.S. Treasury obligations		19,516		24		8		19,532
Total	$	103,058	$	716	$	284	$	103,490
December 28, 2013
Money market investments	$	2,499	$	—	$	—	$	2,499
Asset-backed securities		4,350		19		72		4,297
Corporate bonds and direct obligations of government agencies		76,786		783		370		77,199
U.S. Treasury obligations		18,524		31		13		18,542
Total	$	102,159	$	833	$	455	$	102,537

For those available-for-sale investments with unrealized losses at September 27, 2014 and December 28, 2013, the following table summarizes the duration of the unrealized loss (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 27, 2014
Asset-backed securities	$	2,652	$	13	$	2,445	$	42	$	5,097	$	55
Corporate bonds and direct obligations of government agencies		13,264		59		11,385		162		24,649		221
U.S. Treasury obligations		—		—		760		8		760		8
Total	$	15,916		72	$	14,590	$	212	$	30,506	$	284
December 28, 2013
Asset -backed securities	$	3,429	$	72	$	—	$	—	$	3,429	$	72
Corporate bonds and direct obligations of government agencies		22,169		370		—		—		22,169		370
U.S. Treasury obligations		757		13		—		—		757		13
Total	$	26,355	$	455	$	—	$	—	$	26,355	$	455

The Company believes that unrealized losses on investments were primarily caused by rising interest rates rather than changes in credit quality. The Company expects to recover the amortized cost basis of these securities as it does not intend to sell, and does not anticipate being required to sell, these securities before recovery of the cost basis. For these reasons, the Company does not consider the unrealized losses on these securities to be other-than-temporary at September 27, 2014.

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Document and Entity Information	9 Months Ended
	Sep. 27, 2014	Oct. 20, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 27, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Trading Symbol	LSTR
Entity Registrant Name	LANDSTAR SYSTEM INC
Entity Central Index Key	0000853816
Current Fiscal Year End Date	--12-27
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		44,737,295

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Commitments and Contingencies

9 Months Ended

Sep. 27, 2014

Commitments and Contingencies

(9) Commitments and Contingencies

Short-term investments include $32,685,000 in current maturities of investments and $4,979,000 of cash equivalents held by the Company’s insurance segment at September 27, 2014. The non-current portion of the bond portfolio of $70,805,000 is included in other assets. The short-term investments, together with $35,318,000 of non-current investments, provide collateral for the $66,182,000 of letters of credit issued to guarantee payment of insurance claims. As of September 27, 2014, Landstar also had $33,045,000 of additional letters of credit outstanding under the Company’s Credit Agreement.

As further described in periodic and current reports previously filed by the Company with the Securities and Exchange Commission (the “SEC”), in connection with an accident (the “Accident”) that occurred in February 2007 involving a BCO Independent Contractor leased to Landstar Ranger, Inc., a trial court in Cobb County, Georgia entered an amended judgment on May 28, 2013 against Landstar Ranger, Inc., Landstar System Holdings, Inc. and Landstar System, Inc. (the “Landstar Defendants”) awarding the plaintiffs an aggregate sum of approximately $55.2 million plus post-judgment interest at the rate of 6.25% per annum from and after September 23, 2011 (the “Damage Award”). As previously disclosed in the Company’s Quarterly Report on Form 10-Q for its 2014 second quarter, while an Appeal of the Damage Award was pending before the Court of Appeals of the State of Georgia, on July 9, 2014, the plaintiffs and the Landstar Defendants entered into an agreement in principle providing for the settlement of all claims of the plaintiffs against the Landstar Defendants. Pursuant to the settlement and release agreement executed by the parties on August 13, 2014, all sums payable to the plaintiffs under such agreement have been paid in full and the plaintiffs have released and discharged the Landstar Defendants from all liability arising out of the Accident.

Under the terms of the commercial trucking insurance program that Landstar had in place in 2007, Landstar retained liability for up to $5 million with respect to the Accident giving rise to the Damage Award. The Company recorded a $5 million charge representing its self-insured retention in respect of this Accident in the consolidated financial results of the Company in the 2007 first quarter. Third party insurance and/or reinsurance policies provided coverage to the Landstar Defendants for all amounts related to the Accident in excess of such retained liability, including all related out-of-pocket expenses, such as the costs of an appeal bond and interest. No assurances can be given regarding the impact of the Damage Award or the settlement thereof on the premiums charged by the Company’s third party insurers from time to time for commercial trucking insurance.

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

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Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Revenue	$ 819,320	$ 675,535	$ 2,321,960	$ 1,972,805
Investment income	332	366	1,027	1,111
Costs and expenses:
Purchased transportation	633,596	518,141	1,792,560	1,512,677
Commissions to agents	64,631	53,630	181,196	156,377
Other operating costs, net of gains on asset dispositions	6,521	6,011	19,350	15,396
Insurance and claims	12,026	13,335	37,732	36,907
Selling, general and administrative	36,215	30,990	108,567	94,967
Depreciation and amortization	7,086	7,180	20,419	20,743
Total costs and expenses	760,075	629,287	2,159,824	1,837,067
Operating income	59,577	46,614	163,163	136,849
Interest and debt expense	774	856	2,260	2,367
Income from continuing operations before income taxes	58,803	45,758	160,903	134,482
Income taxes	22,048	17,255	60,585	50,736
Income from continuing operations	36,755	28,503	100,318	83,746
Income from discontinued operations, net of income taxes		743		2,706
Net income	$ 36,755	$ 29,246	$ 100,318	$ 86,452
Earnings per common share:
Income from continuing operations	$ 0.82	$ 0.62	$ 2.23	$ 1.81
Income from discontinued operations		$ 0.02		$ 0.06
Earnings per common share	$ 0.82	$ 0.64	$ 2.23	$ 1.87
Diluted earnings per share:
Income from continuing operations	$ 0.82	$ 0.62	$ 2.22	$ 1.81
Income from discontinued operations		$ 0.02		$ 0.06
Diluted earnings per share	$ 0.82	$ 0.64	$ 2.22	$ 1.87
Average number of shares outstanding:
Earnings per common share	44,713,000	45,708,000	45,018,000	46,156,000
Diluted earnings per share	44,937,000	45,856,000	45,222,000	46,323,000
Dividends per common share	$ 0.07		$ 0.19

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Income Taxes

9 Months Ended

Sep. 27, 2014

Income Taxes

(3) Income Taxes

The provisions for income taxes for both the 2014 and 2013 thirty-nine-week periods were based on estimated annual effective income tax rates of 38.2%, adjusted for discrete events, such as benefits resulting from disqualifying dispositions of the Company’s common stock by employees who obtained the stock through exercises of incentive stock options. The effective income tax rates on income from continuing operations for the 2014 and 2013 thirty-nine-week periods were each 37.7%, which were higher than the statutory federal income tax rate primarily as a result of state taxes, the meals and entertainment exclusion and non-deductible stock-based compensation.

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Share-based Payment Arrangements

9 Months Ended

Sep. 27, 2014

Share-based Payment Arrangements

(2) Share-based Payment Arrangements

As of September 27, 2014, the Company had two employee equity incentive plans, the 2002 employee stock option and stock incentive plan (the “ESOSIP”) and the 2011 equity incentive plan (the “2011 EIP”). No further grants can be made under the ESOSIP. The Company also has two stock compensation plans for members of its Board of Directors, the 2003 Directors Stock Compensation Plan (the “2003 DSCP”) and the 2013 Directors Stock Compensation Plan (the “2013 DSCP”). The provisions of the 2013 DSCP are substantially similar to the provisions of the 2003 DSCP. 115,000 shares of the Company’s common stock were authorized for issuance under the 2013 DSCP. The ESOSIP, 2011 EIP, 2003 DSCP and 2013 DSCP are each referred to herein as a “Plan,” and, collectively, as the “Plans.” Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):

	Thirty Nine Weeks Ended						Thirteen Weeks Ended
	September 27, 2014			September 28, 2013			September 27, 2014			September 28, 2013
Total cost of the Plans during the period	$	4,218		$	4,133		$	1,419		$	1,141
Amount of related income tax benefit recognized during the period		(2,230	)		(1,294	)		(953	)		(315	)
Net cost of the Plans during the period	$	1,988		$	2,839		$	466		$	826

Included in income tax benefits recognized in the thirty-nine-week periods ended September 27, 2014 and September 28, 2013 were income tax benefits of $583,000 and $478,000, respectively, recognized on disqualifying dispositions of the Company’s common stock by employees who obtained shares of common stock through exercises of incentive stock options. Included in income tax benefits recognized in the thirteen-week periods ended September 27, 2014 and September 28, 2013 were income tax benefits of $119,000 and $61,000, respectively, recognized on disqualifying dispositions of the Company’s common stock by employees who obtained shares of common stock through exercises of incentive stock options.

As of September 27, 2014, there were 95,531 shares of the Company’s common stock reserved for issuance under the 2013 DSCP and 6,078,033 shares of the Company’s common stock reserved for issuance in the aggregate under the ESOSIP and 2011 EIP.

Stock Options

The fair value of each option grant on its grant date was calculated using the Black-Scholes option pricing model with the following weighted average assumptions for grants made in the 2014 and 2013 thirty-nine-week periods:

	2014			2013
Expected volatility		26.0	%		32.0	%
Expected dividend yield		0.43	%		0.41	%
Risk-free interest rate		1.50	%		0.75	%
Expected lives (in years)		4.0			4.0

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 weighted average grant date fair value of stock options granted during the thirty-nine-week periods ended September 27, 2014 and September 28, 2013 was $12.70 per share and $14.21 per share, respectively.

The following table summarizes information regarding the Company’s outstanding stock options under the Plans:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (000s)
Options outstanding at December 28, 2013		1,454,816		$	44.55
Granted		1,000		$	58.06
Exercised		(462,545	)	$	41.18
Forfeited		(65,800	)	$	47.47
Options outstanding at September 27, 2014		927,471		$	46.04		5.6	$	24,162
Options exercisable at September 27, 2014		531,221		$	43.72		4.4	$	15,072

The total intrinsic value of stock options exercised during the thirty-nine-week periods ended September 27, 2014 and September 28, 2013 was $9,421,000 and $6,021,000, respectively.

As of September 27, 2014, there was $3,384,000 of total unrecognized compensation cost related to non-vested stock options granted under the Plans. The unrecognized compensation cost related to these non-vested options is expected to be recognized over a weighted average period of 2.4 years.

Non-vested Restricted Stock

The fair value of each share of non-vested restricted stock issued under the Plans is based on the fair value of a share of the Company’s common stock on the date of grant.

The following table summarizes information regarding the Company’s outstanding non-vested restricted stock under the Plans:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 28, 2013		38,193		$	46.75
Granted		7,124		$	63.17
Vested		(19,196	)	$	41.85
Forfeited		(2,768	)	$	54.20
Outstanding at September 27, 2014		23,353		$	54.90

As of September 27, 2014, there was $943,000 of total unrecognized compensation cost related to non-vested shares of restricted stock granted under the Plans. The unrecognized compensation cost related to these non-vested shares of restricted stock is expected to be recognized over a weighted average period of 2.1 years.

Restricted Stock Units

The fair value of a restricted stock unit (“RSU”) is determined based on the market value of the Company’s common stock on the date of grant, discounted for lack of marketability for a minimum post-vesting holding requirement. The discount rate due to lack of marketability used for RSU award grants during both thirty-nine-week periods ended September 27, 2014 and September 28, 2013 was 7%.

The following table summarizes information regarding the Company’s outstanding RSU awards under the Plans:

	Number of Units			Weighted Average Grant Date Fair Value
Outstanding at December 28, 2013		308,007		$	49.63
Granted		146,000		$	53.11
Vested		(24,641	)	$	51.47
Forfeited		(3,736	)	$	49.53
Outstanding at September 27, 2014		425,630		$	50.72

RSU awards have contractual lives of three or five years from the date of grant. In general, for RSUs with five-year contractual lives, the number of RSUs that vest is determined annually, for each year in the five-year period from date of grant, by multiplying the number of RSUs granted by the sum of (a) the average of the percentage change (positive or negative) in operating income and diluted earnings per share in each of the five years as compared to operating income and diluted earnings per share reported in the base year (base year being the year immediately preceding the year in which the RSUs were granted), plus (b) 5%, rounded to the nearest whole number, less (c) the number of RSUs from that grant that have previously vested. For RSUs granted in 2014, the number of RSUs that vest will be determined annually, for each year in the five-year period from date of grant, by multiplying the number of RSUs granted by the sum of (a) the average of the percentage change (positive or negative) in operating income and diluted earnings per share in each of the five years as compared to the results from continuing operations in the 2013 fiscal year (that is the average of the change in operating income and diluted earnings per share for the year ended as compared to the 2013 fiscal year results from continuing operations, which reflects the treatment of Landstar Supply Chain Solutions, Inc. and its wholly owned subsidiary, Landstar Supply Chain Solutions LLC as a discontinued operation effective December 28, 2013) plus (b) 5%, rounded to the nearest whole number, less (c) the number of RSUs from that grant that have previously vested. On January 23, 2013, the Company granted 100,000 RSUs to the Company’s Chairman and Chief Executive Officer. These 100,000 RSUs have three-year contractual lives with vesting dates of January 31 of 2014, 2015, and 2016, with the number of RSUs that vest on each vesting date determined by multiplying 100,000 by the sum of (1) the percentage increase in operating income in the most recently completed fiscal year as compared to the results from the immediately preceding fiscal year, plus (2) the percentage increase in diluted earnings per share in the most recently completed fiscal year as compared to the results from the preceding fiscal year. The Company reports compensation expense over the life of the award based on an estimated number of shares that will vest over the life of the award, multiplied by the fair value of a RSU. The Company recognized approximately $2,434,000 and $1,332,000 of share-based compensation expense related to RSU awards in the thirty-nine-week periods ended September 27, 2014 and September 28, 2013, respectively. As of September 27, 2014, there was a maximum of $19.2 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.1 years. The amount of future compensation expense to be recognized will be determined based on future operating results.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 27, 2014

Reconciliation of Average Number of Common Shares Outstanding to Average Number of Diluted Shares Outstanding

The following table provides a reconciliation of the average number of common shares outstanding used to calculate earnings per common share to the average number of common shares and common share equivalents outstanding used to calculate diluted earnings per share (in thousands):

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Average number of common shares outstanding		45,018		46,156		44,713		45,708
Incremental shares from assumed exercises of stock options		204		167		224		148
Average number of common shares and common share equivalents outstanding		45,222		46,323		44,937		45,856

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Change in Accounting Estimate

9 Months Ended

Sep. 27, 2014

Change in Accounting Estimate

(10) Change in Accounting Estimate

Landstar provides for the estimated costs of self-insured claims primarily on an actuarial basis. The amount recorded for the estimated liability for claims incurred is based upon the facts and circumstances known on the applicable balance sheet date. The ultimate resolution of these claims may be for an amount greater or less than the amount estimated by management. The Company continually revises its existing claim estimates as new or revised information becomes available on the status of each claim. Historically, the Company has experienced both favorable and unfavorable development of prior years’ claims estimates.

The following table summarizes the effect of the increase in the cost of insurance claims resulting from unfavorable development of prior year self-insured claims estimates on operating income, income from continuing operations and earnings per share from continuing operations amounts in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 27, 2014 and September 28, 2013 (in thousands, except per share amounts):

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Operating income	$	7,119	$	8,236	$	372	$	3,592
Income from continuing operations		4,400		5,090		230		2,220
Earnings per share from continuing operations	$	0.10	$	0.11	$	0.01	$	0.05
Diluted earnings per share from continuing operations	$	0.10	$	0.11	$	0.01	$	0.05

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Segment Information

9 Months Ended

Sep. 27, 2014

Segment Information

(6) Segment Information

The following table summarizes information about the Company’s reportable business segments as of and for the thirty-nine-week and thirteen-week periods ended September 27, 2014 and September 28, 2013 (in thousands):

	Thirty Nine Weeks Ended
	September 27, 2014						September 28, 2013
	Transportation Logistics		Insurance		Total		Transportation Logistics		Insurance		Total
External revenue from continuing operations	$	2,292,982	$	28,978	$	2,321,960	$	1,945,572	$	27,233	$	1,972,805
Investment income				1,027		1,027				1,111		1,111
Internal revenue				22,373		22,373				22,808		22,808
Operating income from continuing operations		143,828		19,335		163,163		116,861		19,988		136,849
Expenditures on long-lived assets from continuing operations		9,131				9,131		4,800				4,800
Goodwill		31,134				31,134		57,470				57,470

	Thirteen Weeks Ended
	September 27, 2014						September 28, 2013
	Transportation Logistics		Insurance		Total		Transportation Logistics		Insurance		Total
External revenue from continuing operations	$	809,309	$	10,011	$	819,320	$	666,404	$	9,131	$	675,535
Investment income				332		332				366		366
Internal revenue				5,791		5,791				5,999		5,999
Operating income from continuing operations		51,626		7,951		59,577		41,040		5,574		46,614
Expenditures on long-lived assets from continuing operations		7,777				7,777		2,056				2,056

Included in goodwill in the Transportation Logistics segment at September 28, 2013 is goodwill of $26,336,000 relating to the LSCS discontinued operations.

In the thirty-nine-week and thirteen-week periods ended September 27, 2014 and September 28, 2013, no single customer accounted for more than 10% of the Company’s consolidated revenue.

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Earnings Per Share

9 Months Ended

Sep. 27, 2014

Earnings Per Share

(4) Earnings Per Share

Earnings per common share are based on the weighted average number of shares outstanding, including outstanding non-vested restricted stock. Diluted earnings per share are based on the weighted average number of common shares outstanding plus the incremental shares that would have been outstanding upon the assumed exercise of all dilutive stock options.

The following table provides a reconciliation of the average number of common shares outstanding used to calculate earnings per common share to the average number of common shares and common share equivalents outstanding used to calculate diluted earnings per share (in thousands):

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Average number of common shares outstanding		45,018		46,156		44,713		45,708
Incremental shares from assumed exercises of stock options		204		167		224		148
Average number of common shares and common share equivalents outstanding		45,222		46,323		44,937		45,856

For each of the thirty-nine-week and thirteen-week periods ended September 27, 2014, no options outstanding to purchase shares of common stock were antidilutive. For each of the thirty-nine-week and thirteen-week periods ended September 28, 2013, there were 149,000 options outstanding to purchase shares of common stock excluded from the calculation of diluted earnings per share because they were antidilutive. Outstanding RSUs were excluded from the calculation of diluted earnings per share for all periods because the performance metric requirements for vesting had not been satisfied.

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Additional Cash Flow Information

9 Months Ended

Sep. 27, 2014

Additional Cash Flow Information

(5) Additional Cash Flow Information

During the 2014 thirty-nine-week period, Landstar paid income taxes and interest of $76,834,000 and $2,303,000, respectively. During the 2013 thirty-nine-week period, Landstar paid income taxes and interest of $44,966,000 and $2,347,000, respectively. Landstar acquired operating property by entering into capital leases in the amount of $41,732,000 and $47,917,000 in the 2014 and 2013 thirty-nine-week periods, respectively.

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Other Comprehensive Income

9 Months Ended

Sep. 27, 2014

Other Comprehensive Income

(7) Other Comprehensive Income

The following table presents the components of and changes in accumulated other comprehensive income, net of related income taxes, as of and for the thirty-nine-week period ended September 27, 2014 (in thousands):

	Unrealized Gains on Available-for- Sale Securities		Foreign Currency Translation			Total
Balance as of December 28, 2013	$	244	$	(256	)	$	(12	)
Other comprehensive income (loss)		35		(318	)		(283	)
Balance as of September 27, 2014	$	279	$	(574	)	$	(295	)

Amounts reclassified from accumulated other comprehensive income to investment income due to the realization of previously unrealized gains and losses in the accompanying consolidated statements of income were not significant for the thirty-nine-week period ended September 27, 2014.

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Schedule of Information on Non-Vested Restricted Stock (Detail) (Non-vested Restricted Stock, USD $)	9 Months Ended
	Sep. 27, 2014
Non-vested Restricted Stock
Number of Shares
Beginning Balance	38,193
Granted	7,124
Vested	(19,196)
Forfeited	(2,768)
Ending Balance	23,353
Weighted Average Grant Date Fair Value
Beginning Balance	$ 46.75
Granted	$ 63.17
Vested	$ 41.85
Forfeited	$ 54.20
Ending Balance	$ 54.90

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Discontinued Operations (Tables)

9 Months Ended

Sep. 27, 2014

Summary of Specific Financial Components of Discontinued Operations

The following table summarizes specific financial components of discontinued operations presented in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 28, 2013 (in thousands):

	Thirty Nine Weeks Ended			Thirteen Weeks Ended
Revenue	$	15,377		$	4,986
Income from discontinued operations before income taxes		4,330			1,166
Income taxes on income from discontinued operations		(1,624	)		(423	)
Income from discontinued operations, net of income taxes	$	2,706		$	743

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Investments (Tables)

9 Months Ended

Sep. 27, 2014

Amortized Cost and Fair Value of Available for Sale Investments

The amortized cost and fair values of available-for-sale investments are as follows at September 27, 2014 and December 28, 2013 (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 27, 2014
Money market investments	$	1,168	$	—	$	—	$	1,168
Asset-backed securities		5,450		3		55		5,398
Corporate bonds and direct obligations of government agencies		76,924		689		221		77,392
U.S. Treasury obligations		19,516		24		8		19,532
Total	$	103,058	$	716	$	284	$	103,490
December 28, 2013
Money market investments	$	2,499	$	—	$	—	$	2,499
Asset-backed securities		4,350		19		72		4,297
Corporate bonds and direct obligations of government agencies		76,786		783		370		77,199
U.S. Treasury obligations		18,524		31		13		18,542
Total	$	102,159	$	833	$	455	$	102,537

Schedule of Unrealized Loss on Available for Sale Investments

For those available-for-sale investments with unrealized losses at September 27, 2014 and December 28, 2013, the following table summarizes the duration of the unrealized loss (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 27, 2014
Asset-backed securities	$	2,652	$	13	$	2,445	$	42	$	5,097	$	55
Corporate bonds and direct obligations of government agencies		13,264		59		11,385		162		24,649		221
U.S. Treasury obligations		—		—		760		8		760		8
Total	$	15,916		72	$	14,590	$	212	$	30,506	$	284
December 28, 2013
Asset -backed securities	$	3,429	$	72	$	—	$	—	$	3,429	$	72
Corporate bonds and direct obligations of government agencies		22,169		370		—		—		22,169		370
U.S. Treasury obligations		757		13		—		—		757		13
Total	$	26,355	$	455	$	—	$	—	$	26,355	$	455

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Segment Information - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 27, 2014 Customer	Sep. 28, 2013 Customer	Sep. 27, 2014 Customer	Sep. 28, 2013 Customer	Dec. 28, 2013
Segment Reporting Information [Line Items]
Goodwill	$ 31,134,000	$ 57,470,000	$ 31,134,000	$ 57,470,000	$ 31,134,000
Disclosure of major customers			No single customer accounted for more than 10% of the Company's consolidated revenue
Number of customers accounting for 10 percent or more of total revenue	0	0	0	0
No single customer accounted for benchmark percentage to be considered major customer	10.00%	10.00%	10.00%	10.00%
Transportation Logistics
Segment Reporting Information [Line Items]
Goodwill	31,134,000	57,470,000	31,134,000	57,470,000
Transportation Logistics | Discontinued Operations
Segment Reporting Information [Line Items]
Goodwill		$ 26,336,000		$ 26,336,000

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Net income	$ 36,755	$ 29,246	$ 100,318	$ 86,452
Other comprehensive income (loss):
Unrealized holding gains (losses) on available-for-sale investments, net of tax benefit (expense) of ($19), $341, $106 and $(98)	(194)	179	35	(620)
Foreign currency translation (losses) gains	(61)	126	(318)	(384)
Other comprehensive (loss) income	(255)	305	(283)	(1,004)
Comprehensive income	$ 36,500	$ 29,551	$ 100,035	$ 85,448

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Discontinued Operations

9 Months Ended

Sep. 27, 2014

Discontinued Operations

(1) Discontinued Operations

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”), which was part of the Company’s Transportation Logistics segment, to XPO Logistics, Inc. (“XPO”). XPO paid a purchase price of $87.0 million in cash as consideration for LSCS. The net assets of LSCS acquired by XPO were $32.5 million. Direct transaction costs related to the transaction, primarily legal and other professional fees and payments made to certain executives of LSCS in connection with the transaction, were approximately $2.4 million. Net of income taxes of $19.1 million, the sale resulted in a gain on the sale of discontinued operations of $33.0 million, or $0.71 per diluted share in fiscal year 2013. There were no interest costs or corporate overhead expenses allocated in the gain calculation. Prior year operating results of LSCS have been reclassified in the consolidated financial statements to discontinued operations.

The following table summarizes specific financial components of discontinued operations presented in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 28, 2013 (in thousands):

	Thirty Nine Weeks Ended			Thirteen Weeks Ended
Revenue	$	15,377		$	4,986
Income from discontinued operations before income taxes		4,330			1,166
Income taxes on income from discontinued operations		(1,624	)		(423	)
Income from discontinued operations, net of income taxes	$	2,706		$	743

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Change in Accounting Estimate (Tables)

9 Months Ended

Sep. 27, 2014

Effect of Increase in Cost of Insurance and Claims

The following table summarizes the effect of the increase in the cost of insurance claims resulting from unfavorable development of prior year self-insured claims estimates on operating income, income from continuing operations and earnings per share from continuing operations amounts in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 27, 2014 and September 28, 2013 (in thousands, except per share amounts):

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Operating income	$	7,119	$	8,236	$	372	$	3,592
Income from continuing operations		4,400		5,090		230		2,220
Earnings per share from continuing operations	$	0.10	$	0.11	$	0.01	$	0.05
Diluted earnings per share from continuing operations	$	0.10	$	0.11	$	0.01	$	0.05

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Earnings Per Share - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options excluded from calculation of diluted earnings per share, antidilutive	0	149,000	0	149,000

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Recent Accounting Pronouncements

9 Months Ended

Sep. 27, 2014

Recent Accounting Pronouncements

(11) Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09 - Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 is a comprehensive revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. ASU 2014-09 is not expected to have a material impact on the Company’s financial statements.