Change in Accounting Estimate for Self-Insured Claims

12 Months Ended

Dec. 31, 2022

Change in Accounting Estimate for Self-Insured Claims

(14) 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 adverse 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 set forth in the consolidated statements of income for the fiscal years ended December 31, 2022, December 25, 2021 and December 26, 2020 (in thousands, except per share amounts):

	Fiscal Years Ended
	December 31, 2022		December 25, 2021		December 26, 2020
Operating income	$	11,331	$	9,708	$	9,196
Net income	$	8,570	$	7,359	$	6,989
Diluted earnings per share	$	0.23	$	0.19	$	0.18

The unfavorable development of prior years’ claims in the fiscal year ended December 31, 2022 was primarily attributable to several specific claims. The unfavorable development of prior years’ claims in the fiscal year ended December 25, 2021 was primarily attributable to five claims. The unfavorable development of prior years’ claims in the fiscal year ended December 26, 2020 was attributable to several specific claims as well as actuarially determined adjustments to prior year commercial trucking loss estimates.