Segment Information

12 Months Ended

Dec. 26, 2020

Segment Information

(13) Segment Information

Landstar markets its integrated transportation management solutions primarily through independent commission sales agents and exclusively utilizes third party capacity providers to transport 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 and railroads. Through this network of agents and capacity providers linked together by Landstar’s series of digital technologies, Landstar operates an integrated transportation management solutions business primarily throughout North America with revenue of $4.1 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, intra-Mexico, intra-Canada, project cargo and customs brokerage. Examples of the industries serviced by the transportation logistics segment include automotive parts and assemblies, consumer durables, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics and military equipment. In addition, the transportation logistics segment provides transportation services to other transportation companies, including third party logistics and less-than-truckload service providers. Each of the independent commission sales agents has the opportunity to market all of the services provided by the transportation logistics segment. 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. The results of operations from Landstar Blue, Landstar Metro and Landstar Servicios are presented as part of the Company’s transportation logistics segment.

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

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

No single customer accounted for more than 10% of the Company’s consolidated revenue in fiscal years 2020, 2019 and 2018. Substantially all of the Company’s revenue is generated in North America, primarily through customers located in the United States.

The following tables summarize information about the Company’s reportable business segments as of and for the fiscal years ending December 26, 2020, December 28, 2019 and December 29, 2018 (in thousands):

	Transportation
	Logistics		Insurance		Total
2020
External revenue	$	4,076,519	$	56,462	$	4,132,981
Internal revenue				54,003		54,003
Investment income				3,399		3,399
Interest and debt expense		3,953				3,953
Depreciation and amortization		45,855				45,855
Operating income		221,210		31,740		252,950
Expenditures on long-lived assets		30,626				30,626
Goodwill		40,949				40,949
Finance lease additions		31,633				31,633
Total assets		1,301,991		351,808		1,653,799
2019
External revenue	$	4,028,336	$	56,241	$	4,084,577
Internal revenue				46,587		46,587
Investment income				5,041		5,041
Interest and debt expense		3,141				3,141
Depreciation and amortization		44,468				44,468
Operating income		258,742		40,162		298,904
Expenditures on long-lived assets		19,416				19,416
Goodwill		38,508				38,508
Finance lease additions		29,054				29,054
Total assets		1,168,944		258,767		1,427,711
2018
External revenue	$	4,562,796	$	52,348	$	4,615,144
Internal revenue				37,872		37,872
Investment income				3,816		3,816
Interest and debt expense		3,354				3,354
Depreciation and amortization		43,570				43,570
Operating income		303,426		28,309		331,735
Expenditures on long-lived assets		9,747				9,747
Goodwill		38,232				38,232
Finance lease additions		46,595				46,595
Total assets		1,175,040		205,524		1,380,564