Welcome to Landstar’s 1999 annual report, Transporting Business into the New Millennium. 1999 was a stellar year for us as we ended the fourth quarter with revenue 14 percent above the 1998 fourth quarter, exceeding Wall Street’s expectations. We continue to build on our unique business model, utilizing technology to deliver outstanding results to all our business owners. Our significant improvement two years in a row creates a momentum we plan to foster into the new century.

The core of our business model continues to strengthen and grow. Landstar’s carrier group finished the year with 233 more tractors than at the start of the year. Average Landstar revenue per truck increased 4 percent to more than $123,000 per truck. Landstar’s 1999 truck turnover ratio was 53 percent, continuing the strong performance of 1998. Our agent base continued to develop as more than 360 agents generated revenue in excess of $1 million and average revenue per million dollar agent increased to $3,256,000 per agent.

Last November, we moved our Jacksonville-based companies into one location, permitting us to take better advantage of shared information technology. We also continued our intense, year-after-year commitment to safety. Our U.S. Department of Transportation recordable accident frequency of 57 accidents per hundred million miles driven remains among the lowest in the industry. Our commitment to safety is unyielding and continues to be the most important issue throughout the Company.

We are always searching for new applications to expand our offerings to both customers and capacity providers throughout the transportation industry. I hope you come away with a better understanding of how we use technology to transport business into the new millennium. Please enjoy the enclosed CD and visit our website at www.landstar.com.

The success of our business model is demonstrated by our 1999 financial results:

• Record revenue of $1.4 billion compared to $1.3 billion in 1998.
• Record operating income of $81.7 million, an increase of 33 percent from $61.5 million in 1998. This is the second consecutive year we have increased operating income by 33 percent over the prior year.
• Our operating margin was 5.9 percent in 1999 compared with an operating margin of 4.8 percent in 1998.
• Insurance and claims expense as a percent of revenue was 2.5 percent in 1999 compared with 3.1 percent in 1998, as we continue to benefit financially from our long-term commitment to safety.
• Net income in 1999 was $45.9 million, or $4.55 per diluted share, compared with income from continuing operations of $34.5 million, or $3.10 per diluted share, in 1998. Diluted earnings per share in 1999 was 47 percent higher than in 1998.
• Common stock outstanding at December 25, 1999 was 9,154,933 shares compared with 10,423,533 shares at December 26, 1998. The large decrease was due to the repurchase of 1,291,000 shares in 1999 at an aggregate cost of $51 million.
• Cash flow, defined as earnings before interest expense, income tax, depreciation and amortization, was $93.4 million in 1999 compared with $71.6 million in 1998, an increase of 30 percent.
• Shareholders' equity at December 25, 1999 was $107 million and represented 61 percent of total capitalization despite the repurchase of more than $50 million of our common stock for the second consecutive year.

Landstar enters the new millennium with confidence and excitement. Our 1999 financial results, expanded business model combined with our creative development and application of technology, and on-going commitment to safety, point to unlimited opportunity ahead.

I'd like to thank our customers, business capacity owners, independent sales agents, employees and shareholders for making 1999 a prosperous year for us all. Together with our business partners, Landstar is providing a robust array of innovative services in a new age, where technology and creativity merge to provide the transportation solutions of the 21st century.