What changed in this filing

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Item 1A. Risk Factors

2020-07-31 compared with 2020-05-01 · 38 added, 49 removed, 38 unchanged (70% of the section changed)

2 unchanged sentences

for the fiscal year ended December 28, 2019 as filed with the SEC.

The coronavirus (“COVID-19”) pandemic has had a significant adverse impact on our business.

The coronavirus (“COVID-19”)

pandemic has had a significant adverse impact on our business.

was first identified in Wuhan, China in December 2019.

outbreak was subsequently declared a pandemic by the World Health Organization on March 11, 2020.

pandemic has caused significant disruptions in the global economy, which significantly intensified in the United States in late March and early April 2020, and has fueled concerns that it will lead to a global recession.

These conditions are expected to continue and worsen in the near term.

This could have a material adverse impact on the demand for our services and our ability to obtain financing on favorable terms or at all.

The situation continues to evolve rapidly and its effects, both short and long-term, remain unknown.

pandemic has caused significant disruptions in the global economy, which significantly intensified in the United States in late March and continued into the summer months.

The situation with respect to the COVID-19 pandemic continues to evolve rapidly and its effects, both short and long-term, remain unknown.

Economic disruptions and other effects on the global or domestic economies caused by the COVID-19 pandemic

could have a material adverse impact on the demand for our services and our ability to obtain financing on favorable terms or at all.

In connection with the impact of the COVID-19

pandemic, the Company experienced a significant decline in truckload volumes during the last week of its fiscal quarter ended March 28, 2020.

The Company believes the COVID-19

pandemic is likely to have a significant adverse impact on truckload volumes in its 2020 second fiscal quarter.

Although it does not appear the impact of the COVID-19

pandemic had a significant impact on truckload pricing in the 2020 first quarter, no assurance can be given regarding the potential impact of the pandemic on truckload pricing in future periods, including the 2020 second quarter.

pandemic, the Company experienced a significant decline in truckload volumes during its fiscal quarter ended June 27, 2020.

The number of loads hauled via truck was below the prior year comparable period by 21 %

for April, May and June, respectively.

The extent to which the COVID-19

pandemic impacts the Company’s results in the 2020 second quarter as well as in future quarters will depend on future developments that are highly uncertain and cannot be predicted, including the duration of the pandemic, new information that may emerge concerning the severity of the pandemic, the actions taken to contain its impact and the role of federal, state and local governments in lifting stay-at-home

orders and taking other measures that will be needed to help the economy transition back to more normal operating conditions.

pandemic impacts the Company’s results in future quarters will depend on future developments that are highly uncertain and cannot be predicted, including the duration of the pandemic, new information that may emerge concerning the severity of the pandemic, the actions taken to contain its impact and the role of federal, state and local governments that will be needed to help the economy transition back to more normal operating conditions.

These and other factors could have a material adverse impact on our business, financial position, results of operations and cash flows.

In an effort to support BCO Independent Contractors and independent commission sales agents in the Landstar network, the Company announced that for each load delivered by a BCO Independent Contractor with a confirmed delivery date from April 1, 2020 through April 30, 2020, the Company will pay an extra $50 to both the BCO hauling the load and the Landstar agent dispatching the load.

The Company subsequently announced the extension of this program through May 15, 2020.

The Company estimates that Landstar BCOs will deliver between 60,000 and 70,000 loads in April 2020 and 30,000 to 35,000 from May 1, 2020 through May 15, 2020.

In addition, if a Landstar BCO tests positive for COVID-19

or is placed under a mandatory quarantine by a public health authority, the Company will provide up to $2,000 to the affected BCO.

Further, in the event that current market conditions persist, it is possible that Landstar will provide additional financial support to its independent agents and/or BCO Independent Contractors during the 2020 second quarter as part of the Company’s pandemic relief efforts.

These pandemic relief efforts will have an impact on the Company’s financial results for the 2020 second quarter.

Moreover, the COVID-19

6 unchanged sentences

In addition, the COVID-19

pandemic along with other factors such as issues in the international oil and gas sector have caused significant disruptions in the Mexican economy.

These conditions also are expected to continue and worsen in the near term.

During the Company’s 2020 fiscal first quarter, the value of the Mexican peso to the U.S.

pandemic has caused significant disruptions in the Mexican economy.

During the first half of the Company’s 2020 fiscal year, the value of the Mexican peso to the U.S.

dollar significantly depreciated and may continue to depreciate further.

1 unchanged sentence

pandemic and other factors on the Mexican economy and the value of the Mexican peso relative to the U.S.

dollar and could have a significant adverse impact on the financial condition and results of operations of our Mexican subsidiaries as well as the value of the tangible and intangible assets associated with their operations.

Moreover, we annually perform impairment tests of the carrying values of our goodwill, other indefinite-lived intangible assets and other long-lived assets.

We may also perform an evaluation whenever events may indicate an impairment has occurred.

In assessing whether an impairment has occurred, we consider whether the performance of our reporting units may be below projections, negative macroeconomic trends or negative industry and company-specific trends.

If we conclude that the carrying values of assets associated with our Mexican operations exceed their fair value, we may be required to record an impairment.

Disruptions or failures in the Company’s computer systems;

cyber and other information security incidents.

The Company’s information technology systems used in connection with its operations are located in Jacksonville, Florida and to a lesser extent in Rockford, Illinois.

In addition, the Company utilizes several third party data centers throughout the U.S.

Landstar relies, in the regular course of its business, on the proper operation of its information technology systems to link its extensive network of customers, employees, agents and third party capacity providers, including its BCO Independent Contractors.

Moreover, in connection with the COVID-19

pandemic, the Company has temporarily transitioned the vast majority of its office-based employees to work-at-home

arrangements.

Although the Company has redundant systems for its critical operations, any significant disruption or failure of its technology systems or those of third party data centers on which it relies could significantly disrupt the Company’s operations and impose significant costs on the Company.

Moreover, it is critical that the data processed by or stored in the Company’s information technology systems or otherwise in the

Company’s possession remain confidential, as it often includes confidential, proprietary and/or competitively sensitive information regarding our customers, employees, agents and third party capacity providers, key financial and operational results and statistics, and our strategic plans, including technology innovations, developments and enhancements.

Cyber incidents that impact the security, availability, reliability, speed, accuracy or other proper functioning of these systems and data, including outages, computer viruses, break-ins

and similar disruptions, could have a significant impact on our operations.

Accordingly, information security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us.

Although we believe that we have robust security procedures and other safeguards in place, as threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any security vulnerabilities.

For example, in the first quarter of 2016, we were subject to “spear-phishing” attacks through which third parties were able to obtain personal employee data.

We have undertaken a number of remedial measures in response, including enhancing our security systems and additional training for our employees.

Additional incidents may occur in the future and may have a material adverse effect on our business and operations.

A significant incident, including system failure, security breach, disruption by malware, or other damage, could interrupt or delay our operations, damage our reputation, cause a loss of customers, agents and/or third party capacity providers, expose us to a risk of loss or litigation, and/or cause us to incur significant time and expense to remedy such an event, any of which could have a material adverse impact on our results of operations and financial condition.

dollar and could have a significant adverse impact on the financial condition and results of operations of our Mexican subsidiaries.

Increased severity or frequency of accidents and other claims or a material unfavorable development of existing claims.

12 unchanged sentences

amount of additional premium, Landstar would retain liability of up to $10,000,000 per occurrence, inclusive of its self-insured retention for commercial trucking claims during the remainder of the applicable policy year(s).

In addition, as a result of the Company’s aggregate loss experience since it entered into the Initial Excess Policy, it believes it is probable it will be required to pay additional premium under the Initial Excess Policy, which amount of additional premium was included in insurance and claims costs for the Company’s 2020 fiscal first quarter.

The Company continues to maintain third party insurance arrangements providing excess coverage on a per occurrence basis for commercial trucking liabilities in excess of $10,000,000.

The Company also retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim.

In addition, as a result of the Company’s aggregate loss experience since it entered into the Initial Excess Policy, it believes it is probable it will be required to pay additional premium under the Initial Excess Policy, which amount of additional premium was provided for and included in insurance and claims costs for the Company’s 2020 fiscal first quarter.

The Company also maintains third party insurance arrangements providing excess coverage for commercial trucking liabilities in excess of $10,000,000.

These third party arrangements provide coverage on a per occurrence or aggregated basis.

Due to the increasing cost of commercial auto liability claims throughout the United States in recent years, the availability of such excess coverage has significantly worsened and the pricing associated with such excess coverage, to the extent available, has significantly increased.

Effective May 1, 2020 with respect to the annual policy year ending April 30, 2021, the Company experienced an increase of approximately $14 million, or over 170%, in the premiums charged by third party insurance companies to the Company for excess coverage for commercial trucking liabilities in excess of $10,000,000.

No assurances can be given that the availability of excess coverage for commercial trucking claims will not continue to deteriorate, that the pricing associated with such excess coverage, to the extent available, will not continue to increase, nor that insurance coverage from third party insurers for excess coverage of commercial trucking claims will even be available on commercially reasonable terms at certain levels.

Further, the Company also retains liability of up to $1,000,000 for each general liability claim, up to $250,000 for each workers’ compensation claim and up to $250,000 for each cargo claim.

In addition, under reinsurance arrangements by Signature of certain risks of the Company’s BCO Independent Contractors, the Company retains liability of up to $500,000, $1,000,000 or $2,000,000 with respect to certain occupational accident claims and up to $750,000 with respect to certain workers’ compensation claims.

3 unchanged sentences

for the fiscal year ended December 28, 2019 and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements” in this Quarterly Report on Form 10-Q.

Disruptions or failures in the Company’s computer systems;

cyber and other information security incidents.

The Company’s information technology systems used in connection with its operations are located in Jacksonville, Florida and to a lesser extent in Rockford, Illinois.

In addition, the Company utilizes several third party data centers throughout the U.S.

Moreover, in connection with the COVID-19

pandemic, the Company has temporarily transitioned the vast majority of its office-based employees to work-at-home

arrangements.

Moreover, it is critical that the data processed by or stored in the Company’s information technology systems or otherwise in the Company’s possession remain confidential, as it often includes confidential, proprietary and/or competitively sensitive information regarding our customers, employees, agents and third party capacity providers, key financial and operational results and statistics, and our strategic plans, including technology innovations, developments and enhancements.

Cyber incidents that impact the security, availability, reliability, speed, accuracy or other proper functioning of these systems and data, including outages, computer viruses, break-ins

and similar disruptions, could have a significant impact on our operations.

For example, in the first quarter of 2016, we were subject to “spear-phishing” attacks through which third parties were able to obtain personal employee data.

have undertaken a number of remedial measures in response, including enhancing our security systems and additional training for our employees.

Additional incidents may occur in the future and may have a material adverse effect on our business and operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors