Change in Accounting Estimate for Self-Insured Claims

9 Months Ended

Sep. 26, 2015

Change in Accounting Estimate for Self-Insured Claims

(9) Change in Accounting Estimate for Self-Insured Claims

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

The following table summarizes the effect of the increase in the cost of insurance claims resulting from unfavorable development of prior year self-insured claims estimates on operating income, net income and earnings per share amounts in the consolidated statements of income for the thirty-nine-week and thirteen-week periods ended September 26, 2015 and September 27, 2014 (in thousands, except per share amounts):

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 26, 2015		September 27, 2014		September 26, 2015		September 27, 2014
Operating income	$	5,521	$	7,119	$	47	$	372
Net income		3,412		4,400		29		230
Earnings per share	$	0.08	$	0.10	$	0.00	$	0.01
Diluted earnings per share	$	0.08	$	0.10	$	0.00	$	0.01

The unfavorable development of prior years’ claims in the thirty-nine-week period ended September 26, 2015 primarily related to the impact of the March 13, 2015 verdict further described in reports previously filed by the Company with the Securities and Exchange Commission.