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Commitments and Contingencies

Short-term investments include $37,174,000 in current maturities of investments held by the Company’s insurance segment at March 28, 2015. The non-current portion of the bond portfolio of $66,954,000 is included in other assets. The short-term investments, together with $27,059,000 of non-current investments, provide collateral for the $57,810,000 of letters of credit issued to guarantee payment of insurance claims. As of March 28, 2015, Landstar also had $33,033,000 of additional letters of credit outstanding under the Company’s Credit Agreement.

On March 13, 2015, a jury in state court in Maricopa County, Arizona, rendered a verdict (the “Verdict”) of $19,250,000 against Landstar Ranger, Inc. in the matter of Bruno v. Landstar Ranger, Inc., in connection with a tragic vehicular accident that occurred on July 19, 2011, on US-93 north of Kingman, Arizona. The accident involved a tractor-trailer leased to Landstar Ranger, Inc., by a truck owner-operator. The truck had pulled off the highway due to mechanical issues and parked in a designated pull-off area. A pick-up truck driven by the decedent lost control while driving on the highway following a tire tread delamination while the decedent may have been engaged with his cell phone. The pick-up truck hit the right rear portion of the trailer of the tractor-trailer approximately 20 to 25 feet from the fog line of the highway. The accident occurred at approximately 2 p.m. on a clear, dry day. The decedent’s wife, one of his daughters and two friends of the family were in the car at the time of the accident. As a result of the accident, the decedent’s wife, his daughter and one of the friends sustained non-life threatening injuries. In connection with the Verdict, the jury determined that Landstar Ranger, Inc. was responsible for 100% of the liability associated with the accident.

During the trial and prior to the Verdict, the parties entered into an agreement that, among other things, limited the Company’s financial exposure from the possibility of an adverse verdict to $4,500,000 and all parties waived all appellate rights following the trial. As a result of the Verdict and the agreement with the plaintiffs, the Verdict resulted in a pre-tax charge of $4,500,000, or approximately $0.06 per share, to the Company’s financial results from operations for the 2015 first quarter.

The Company is involved in certain claims and pending litigation, including those described herein, arising from the normal conduct of business. Many of these claims are covered in whole or in part by insurance. Based on knowledge of the facts and, in certain cases, opinions of outside counsel, management believes that adequate provisions have been made for probable losses with respect to the resolution of all such claims and pending litigation and that the ultimate outcome, after provisions therefor, will not have a material adverse effect on the financial condition of the Company, but could have a material effect on the results of operations in a given quarter or year.