Recent Accounting Pronouncements

12 Months Ended

Dec. 29, 2018

Recent Accounting Pronouncements

(15) Recent Accounting Pronouncements  

Adoption of New Accounting Standards

In May 2014, the FASB issued 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. The standard requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 became effective for the Company as of December 31, 2017 and permits either a full retrospective or a modified retrospective transition approach. The Company adopted ASU 2014-09 for our transportation services using the modified retrospective method. The adoption of this standard has changed the timing of revenue recognition for most of our transportation business from at delivery to over the freight transit period as the performance obligation to the customer is completed. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company had no material contract assets, contract liabilities or deferred contract costs recorded on the consolidated balance sheets at December 30, 2017 or December 29, 2018. During the fiscal year ended December 29, 2018, revenue generated by BCO Independent Contractors, Truck Brokerage Carriers and railroads represented approximately 43%, 49% and 3%, respectively, of the Company’s consolidated revenue. Collectively, revenue generated by air and ocean cargo carriers represented approximately 3% of the Company’s consolidated revenue in the fiscal year ended December 29, 2018. Included in truck transportation revenue generated by BCO Independent Contractors and Truck Brokerage Carriers during the fiscal year ended December 29, 2018 was $2,791,494,000 hauled via van equipment, $1,386,387,000 hauled via unsided/platform equipment and $102,531,000 of less-than-truckload. As of December 29, 2018, the Company had no material remaining performance obligations. The Company does not expect the adoption of the new standard to have a material impact on its net income in future periods.

The cumulative effect of the changes made to our consolidated December 31, 2017 balance sheet for the adoption of ASU 2014-09 was as follows (in thousands):

	Balance at December 30, 2017		Adjustments Due to ASU 2014-09			Balance at December 31, 2017
Balance Sheet
Assets
Trade accounts receivable, net	$	631,164	$	9,879		$	641,043
Other current assets		14,394		(469	)		13,925
Liabilities
Accounts payable		285,132		8,637			293,769
Equity
Retained earnings		1,611,158		773			1,611,931

In accordance with the new revenue standard requirements, the impact of adoption on our consolidated income statement and balance sheet was as follows (in thousands):

	For the Fiscal Year ended December 29, 2018
	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Income statement
Revenues
Transportation	$	4,562,796	$	4,562,193	$	603
Insurance		52,348		52,348		—
Costs and expenses
Purchased transportation		3,569,961		3,569,371		590
Commissions to agents		378,002		378,011		(9	)
Income taxes		73,168		73,163		5
Net income attributable to Landstar System, Inc. and subsidiary		255,281		255,264		17

	December 29, 2018
	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change Higher/(Lower)
Balance Sheet
Assets
Trade accounts receivable, net	$	691,604	$	681,122	$	10,482
Other current assets		16,287		16,761		(474	)
Liabilities
Accounts payable		314,134		304,916		9,218
Equity
Retained earnings		1,841,279		1,840,489		790

Accounting Standards Issued But Not Yet Adopted

In February 2016, the FASB issued Accounting Standards Update 2016-02 – Leases (“ASU 2016-02”). ASU 2016-02 requires a company to recognize a right-of-use asset and lease liability for the obligation to make lease payments measured at the present value of the lease payments for all leases with terms greater than twelve months. Companies are required to use a modified retrospective transition approach to recognize leases at the beginning of the earliest period presented. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods therein, and early adoption is permitted. ASU 2016-02 is not expected to have a material impact on the Company’s financial statements, as the Company expects to recognize less than $1,000,000 in right-of-use assets and corresponding lease obligations upon adoption.

In June 2016, the FASB issued Accounting Standards Update 2016-13– Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected versus incurred credit losses for financial assets held. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods therein. The Company is currently evaluating the impact of ASU 2016-13 on its financial statements.