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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 attributable to Landstar System, Inc. and subsidiary and earnings per share attributable to Landstar System, Inc. and subsidiary amounts in the consolidated statements of income for the twenty-six-week and thirteen-week periods ended June 30, 2018 and July 1, 2017 (in thousands, except per share amounts):


	Twenty Six Weeks Ended				Thirteen Weeks Ended
	June 30, 2018		July 1, 2017		June 30, 2018		July 1, 2017
Operating income	$	8,244	$	203	$	5,686	$	307
Net income attributable to Landstar System, Inc. and subsidiary		6,224		125		4,293		189
Earnings per share attributable to Landstar System, Inc. and subsidiary	$	0.15		—	$	0.10		—
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary	$	0.15		—	$	0.10		—

The unfavorable development of prior years’ claims in the thirteen-week period ended June 30, 2018 was primarily attributable to three claims.