<PAGE>   1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                                   FORM 10-K

(Mark One)

[X]              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1994

                                       OR

[ ]              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ____________________ to _______________________

Commission file number 0-12255

                               YELLOW CORPORATION
            (Exact name of registrant as specified in its charter)

              Delaware                                    48-0948788  
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                    Identification No.)

    10777 Barkley, P.O. Box 7563, Overland Park, Kansas           66207   
     (Address of principal executive offices)                   (Zip Code)

     Registrant's telephone number, including area code:  (913) 967-4300

          Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock, $1 Par Value
                        Preferred Stock Purchase Rights
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                               Yes  X      No ___

The aggregate market value of the voting stock held by nonaffiliates of the
registrant at February 28, 1995 was $593,736,208.

Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.

          Class                              Outstanding at February 28, 1995 
 Common Stock, $1 Par Value                          28,105,856 shares 
          

                      DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference into the Form 10-K:
        1)  1994 Annual Report to Shareholders - Parts II and IV
        2)  Proxy Statement dated March 10, 1995 - Part III

<PAGE>   2

                               Yellow Corporation
                                   Form 10-K
                          Year Ended December 31, 1994



                                     Index



<TABLE>
<CAPTION>

                                PART I
                                ------
Item                                                                       Page
- ----                                                                       ----
<S>     <C>                                                               <C>
   1.    Business                                                              3
   2.    Properties                                                            6
   3.    Legal Proceedings                                                     7
   4.    Submission of Matters to a Vote of Security Holders                   7
          Executive Officers of the Registrant (Unnumbered Item)               7

                                PART II
                                -------

   5.    Market for the Registrant's Common Stock and Related
          Stockholder Matters                                                  9
   6.    Selected Financial Data                                               9
   7.    Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                  9
   8.    Financial Statements and Supplementary Data                           9
   9.    Disagreements on Accounting and Financial Disclosure                  9

                                PART III
                                --------

  10.    Directors and Executive Officers of the Registrant                   10
  11.    Executive Compensation                                               10
  12.    Security Ownership of Certain Beneficial Owners and                  
          Management                                                          10
  13.    Certain Relationships and Related Transactions                       10

                                PART IV
                                -------

  14.    Exhibits, Financial Statement Schedule and Reports
          on Form 8-K                                                         11


Report of Independent Public Accountants on Financial
 Statement Schedule                                                           13

Financial Statement Schedule                                                  14

Signatures                                                                    15

1994 Annual Report to Shareholders                                        Exhibit (13)

Consent of Independent Public Accountants                                 Exhibit (24)
</TABLE>






                                       2

<PAGE>   3


                                     PART I


Item 1.       Business.

(a)    Yellow Corporation and its wholly-owned subsidiaries are collectively
       referred to as "the company".  The company provides transportation
       services primarily to the less-than-truckload (LTL) market throughout
       North America.  There were no material changes in the method of
       conducting business by the company in 1994.  However, in November 1994
       the company acquired Johnson's Freighlines (renamed WestEx), a Phoneix,
       AZ-based regional carrier with annual revenue of approximately $17
       million.  Additionally, the company's subsidiaries expanded
       geographically and improved their service offerings during the year as
       described below.

(b)    The operation of the company is conducted through one predominant
       industry segment, which is the interstate transportation of general
       commodity freight, primarily LTL, by motor vehicle.

(c)    Yellow Corporation is a holding company providing freight transportation
       services through its subsidiaries, Yellow Freight System, Inc.  (Yellow
       Freight), Preston Trucking Company, Inc. (Preston Trucking), Saia Motor
       Freight Line, Inc. (Saia), CSI/Reeves, Inc.  (CSI/Reeves), WestEx, Inc.
       (WestEx), Yellow Logistics Services, Inc. (Yellow Logistics) and Yellow
       Technology Services, Inc. (Yellow Technology).  The company employed an
       average of 33,400 persons in 1994.

       Yellow Freight, the company's principal subsidiary, had operating
       revenue of $2.221 billion in 1994 (77% of the company's total revenue)
       and is based in Overland Park, Kansas.  It is the nation's largest
       provider of LTL transportation services with direct service to over
       35,000 points in all 50 states, Puerto Rico, Canada and Mexico.  Yellow
       Freight services Europe via an alliance with The Royal Frans Maas Group
       based in the Netherlands.

       Preston Trucking is primarily a regional LTL carrier serving the
       Northeast and upper Midwest markets of the United States.  Preston
       Trucking had operating revenue of $417 million in 1994 (15% of the
       company's total revenue) and is headquartered in Preston, Maryland.

       Saia is a regional LTL carrier that provides overnight and second-day
       service in nine Southeastern states.  It had operating revenue of $138
       million in 1994 and is based in Houma, Louisiana.  Effective January 1,
       1995, Smalley Transportation Company (Smalley), an affiliated company,
       was merged into Saia.  Smalley was a regional carrier providing service
       to customers in Georgia and throughout Florida, with operating revenue
       of $40 million in 1994.

       CSI/Reeves is in the business of transporting, warehousing and
       distributing carpet and related products.  It had operating revenue of
       $36 million in 1994 and is based in Calhoun, Georgia.

       WestEx, formerly Johnson's Freightlines, was acquired in November 1994.
       This regional LTL carrier provides mostly overnight service to the
       states of Arizona, New Mexico and parts of Texas and Nevada and is based
       in Phoenix, Arizonia.

       Yellow Logistics offers integrated logistics management services
       including transportation management, warehousing, information systems,
       distribution, package design and testing.  Its headquarters are in
       Overland Park, Kansas.


                                       3

<PAGE>   4

I
tem 1.  Business. (cont.)

Yellow Technology supports the company's subsidiaries - primarily Yellow
Freight - with information technology.  It ensures that information systems
anticipate and meet customers' needs and that the systems are an integral part
of the transportation process.  Its headquarters are in Overland Park, Kansas.

The operations of the freight transportation companies are partially regulated
by the Interstate Commerce Commission and state regulatory bodies.  As a result
of the passage of the Trucking Industry Regulatory Reform Act of 1994, the
entry and rates for the intrastate operations of all transportation companies
became deregulated January 1, 1995.  Competition includes contract motor
carriers, private fleets, railroads and other motor carriers.  No single
carrier has a dominant share of the motor freight market.

The company operates in a highly price-sensitive and competitive industry,
making pricing, customer service and cost control major competitive factors.
Traditionally, rate increases have been implemented to offset increases in
labor and other operating costs.  The motor carrier subsidiaries have
implemented rate increases of between four and five percent during the first
quarter of 1994 to cover increases in operating costs.  The full impact of rate
increases is not realized immediately as a result of pricing that is on a
contract basis and can only be increased when the contract is renewed or
renegotiated.  A relatively stable pricing environment enabled the company to
retain most of the 1994 rate increases. The company's subsidiaries are
continuing to work toward improved account profitability and maintaining
pricing stability.  The motor carrier subsidiaries have implemented rate
increases of between four and five percent during the first quarter of 1995 to
cover increases in operating costs.

The company's strategy focuses on introducing new customer services, improving
existing services and providing service to new markets.  The company strives to
control operating costs by maintaining efficient operations, optimum capacity
utilization and strict budgetary controls.  Increased technology investments
are expected to reduce costs and increase productivity while providing improved
information benefits for customers.

Two events materially impacted Yellow Freight's operating results in 1994.  In
the first quarter, severe winter weather caused significant business
disruptions and higher operating expenses.  In April, Yellow Freight
experienced a 24-day national labor strike by the International Brotherhood of
Teamsters (Teamsters).  During this period, virtually no revenue was generated
to cover fixed and general/administrative costs.  This resulted in a six
percent decrease in revenue in 1994 compared to 1993.  The impact of decreased
tonnage and number of shipments handled was partially offset by price increases
and a stable pricing environment.  However, a new four-year labor contract was
reached which provides Yellow Freight greater operational flexibility while
giving Teamster employees increased wages, benefits and job security.  The
increased flexibility means that Yellow Freight has the ability to lower
operating costs by gaining the right to use more rail transportation and dock
casual workers whose rate of pay is fixed during the contract.  In return, the
carriers agreed to a 14% increase in wages and benefits over the four-year
contract term.

Yellow Freight's salaries, wages and employees' benefits expense as a
percentage of revenue was essentially the same in 1994 and 1993.  Slightly
lower employee levels were offset by wage and benefit increases of
approximately three percent effective



                                       4

<PAGE>   5

Item 1.  Business. (cont.)

April 1 under the new labor agreement.  In the third quarter, Yellow Freight
implemented a change of linehaul operations, which allows substantially more
freight to be transported via rail.  This change, which was made possible by
the new labor agreement, is expected to hold down operating costs, reduce
capital expenditures for revenue equipment and improve service for customers.
Purchased transportation costs were higher in 1994 as a result of this
increased rail usage in the third and fourth quarters.  With business near
pre-strike levels, a stable pricing environment, and a new four-year labor
agreement which will help reduce costs and improve efficiency, Yellow Freight
expects improved operating performance in 1995.

Preston Trucking had an annualized revenue increase of five percent in 1994
compared to 1993.  However, their operating margin deteriorated slightly during
the year as a result of severe winter weather in the Northeast during the first
quarter, the impact of the second quarter strike and shipper uncertainty
concerning approval of the wage reduction agreement described below. Preston
Trucking saw a dramatic increase in revenue during the second quarter of 1994
when employees returned to work under an interim agreement with the Teamsters
after only six days on strike.  The increased business adversely affected
service performance and costs, reducing profitability in the latter part of the
second quarter and into the third quarter.  In mid-1994, the Teamster employees
of Preston Trucking approved a plan to reduce wages in return for a share of
profits if certain operating results are achieved.  The plan lessens pay by
seven percent from standard wages under the new contract until April 1, 1995
and by five percent until April 1, 1996 when pay levels return to standard
contract wages.  This plan replaced a one year, nine percent wage reduction
approved in March 1993, shortly after Preston Trucking was acquired by the
company.

Preston Trucking achieved significant service improvements in the fourth
quarter through the implementation of a new regional concept featuring a
170-door distribution center near Cleveland, Ohio.  Called the SuperRegion, it
provides reduced transit times and superior service across an expanded
geographic area.  This service began attracting new revenue during the quarter.
Preston Trucking plans to continue to leverage its new SuperRegion concept and
expects improvement in both revenue growth and operating profit.  Revenue
growth, improved service and improved productivity are expected to produce
benefits in excess of the phase down of the wage reduction agreement.

In 1994 Saia maintained an operating margin similar to 1993 while expanding
geographically in Texas, Tennessee and Georgia.  Start up costs for these
expansions burdened 1994 operating expenses while the full revenue benefits
will not be realized until 1995 and subsequent years.  Saia achieved an
annualized revenue increase of 15% in 1994 compared to 1993 due to growth and
second quarter benefits from the labor strike.  Smalley experienced improvement
in controlling its operating costs in 1994, while achieving four percent
revenue growth and absorbing some merger-related costs.  Effective January 1,
1995, Smalley was merged into Saia to offer customers more comprehensive
regional coverage and to reduce costs.  Merger-related costs in 1994 are
estimated to have negatively impacted Saia and Smalley's operating expenses by
$1 million.  Saia, following the completion of its merger with Smalley
anticipates strong revenue growth by expanding both within and outside of their
present service area.  Expansion costs and pricing pressures related to the
deregulation of intrastate operations may have some negative impact on
operating performance in 1995.  However, benefits are expected from cost
savings as a result of the merger and revenue opportunities from the 1994 and
1995 expansions, including access to new intrastate markets.


                                       5

<PAGE>   6

Item 1.  Business. (cont.)

The operations of the company are generally funded by cash flows generated from
operating activities except in periods of accelerated capital spending.  The
company requires working capital to fund capital expenditures and pay
shareholder dividends.  The rapid turnover of accounts receivable, effective
cash management and ready access to credit provided by commercial paper,
medium-term notes and flexible banking agreements allows the company to
effectively manage its working capital.  Additionally, the company maintains
credit availability under a $100 million credit agreement to support the
commercial paper program and provide additional borrowing capacity.  Total debt
increased by $21 million in 1994, primarily due to a higher level of capital
expenditures and the impact on cash flow of lower earnings.  Commercial paper
borrowings and medium-term note issuances were used to meet these cash needs
and scheduled maturities of other debt.  It is anticipated that 1995 capital
expenditures and shareholder dividends will be primarily financed through
internally-generated funds and to a lesser extent external borrowings.




Item 2.       Properties.

At December 31, 1994, the company operated 671 freight terminals located in 50
states, Puerto Rico, parts of Canada and Mexico.  Of this total, 314 were owned
terminals and 357 were leased, generally for terms of three years or less.  The
number of vehicle back-in doors totaled 19,534, of which 14,846 were at owned
terminals and 4,688 were at leased terminals.  The freight terminals vary in
size ranging from one to three doors at small local terminals, up to 304 doors
at Yellow Freight's largest consolidation and distribution terminal.
Substantially all of the larger terminals, containing the greatest number of
doors, are owned.  In addition, the company and most of its subsidiaries own
and occupy general office buildings in their headquarters city.

At December 31, 1994, the company's subsidiaries operated the following number
of linehaul units:  tractors - 5,367, 45' and 48' trailers - 6,465, and 27' and
28' trailers - 33,873.  The number of city units operated were:  trucks and
tractors - 8,362 and trailers - 5,775.

The above facilities and equipment are used in the company's predominant
industry, the interstate transportation of general commodity freight.  The
company expects moderate growth in 1995 and has projected no significant
changes to its operational capacity.  Projected net capital expenditures for
1995 are $175 million.  Facility expenditures of $25 million will target
maintenance and expansion of existing locations and the construction or
purchase of new locations to improve efficiency and enter new markets in
selected areas.  Revenue equipment expenditures of $85 million are estimated to
consist mostly of replacement units, similar to 1994.  The anticipated increase
in rail use by Yellow Freight for 1995 resulted in lower projected revenue
equipment expenditures.  There is expected to be an even split in revenue
equipment expenditures between Yellow Freight and the regional companies as a
group for 1995.  Other operating property expenditures of $65 million are
primarily for improving efficiency through technological enhancements and
advanced information systems.





                                       6

<PAGE>   7


Item 3.       Legal Proceedings.

The information set forth under the caption "Commitments and Contingencies" in
the Notes to Consolidated Financial Statements on page 31 of the registrant's
Annual Report to Shareholders for the year ended December 31, 1994, is
incorporated by reference under Item 14 herein.



Item 4.       Submission of Matters to a Vote of Security Holders.

None.



Executive Officers of the Registrant

The names, ages and positions of the executive officers of the company as of
March 20, 1995 are listed below.  Officers are appointed annually by the Board
of Directors at their meeting which immediately follows the annual meeting of
shareholders.



<TABLE>
<CAPTION>
          Name                        Age                        Position(s) Held
          ----                        ---                        ----------------
<S>                                   <C>       <C>
George E. Powell III                  46        Chief Executive Officer of the company (since
                                                July 1990); President of the company (since
                                                October 1987); President of Yellow Freight
                                                System, Inc. (Yellow Freight), a subsidiary
                                                of the company (prior to May 1992)

M. Reid Armstrong                     57        President of Yellow Freight (since May 1992);
                                                Executive Vice President of the company and of
                                                Yellow Freight (December 1991 - May 1992);
                                                Senior Vice President (prior to December 1991)

Robert L. Bostick                     54        Senior Vice President - Operations for Yellow
                                                Freight (since October 1992); Vice President -
                                                Operations (May 1992 - October 1992); Vice
                                                President - Transportation and Safety (April
                                                1991 - May 1992); Vice President - Linehaul
                                                Operations (prior to April 1992)

Robert W. Burdick                     52        Senior Vice President - Corporate Development/
                                                Public Affairs of the company (since April 1993);
                                                Senior Vice President - Marketing of Yellow
                                                Freight (prior to April 1993)

J. Michael Golden                     47        Vice President - Taxation of the company (since   
                                                January 1986); Vice President - Taxation of Yellow                                
                                                Freight (prior to May 1992)

J. Kevin Grimsley                     47        Senior Vice President - Marketing/Sales of Yellow 
                                                Freight (since January 1994); Vice President -
                                                Marketing of Yellow Freight (April 1993 -
                                                January 1994); Division Vice President of Yellow 
                                                Freight (prior to April 1993)
</TABLE>



                                       7

<PAGE>   8

Executive Officers of the Registrant (cont.)



<TABLE>
<CAPTION>
          Name                        Age                        Position(s) Held
          ----                        ---                        ----------------
<S>                                 <C>        <C>
William F. Martin, Jr.                47        Senior Vice President - Legal/Corporate Secretary
                                                of the company (since December 1993); Vice
                                                President and Secretary of the company
                                                (October 1991 - December 1993); Vice President
                                                and Secretary of Yellow Freight (October 1991 -
                                                May 1992); Vice President and Assistant
                                                Secretary of the company and Yellow Freight
                                                (prior to October 1991)

Gail A. Parris                        43        Senior Vice President - Administration of Yellow
                                                Freight (since April 1993); Vice President -
                                                Controller of Yellow Freight (prior to April 1993)

Phillip A. Spangler                   54        Vice President and Treasurer of the company
                                                (since 1984); Vice President and Treasurer of
                                                Yellow Freight (prior to May 1992)

Leo H. Suggs                          55        President of Preston Corporation, a subsidiary of 
                                                the company (since February 1993); Senior
                                                Vice President - Corporate Development of the
                                                company (November 1992 - February 1993); Senior 
                                                Vice President - Operations Administration of
                                                Yellow Freight (December 1991 - November 1992); Vice
                                                President - Operations Administration (June 1991 -                                
                                                December 1991); Vice President - Quality and
                                                Labor Relations (prior to June 1991)

H. A. Trucksess, III                  45        Senior Vice President - Finance and Chief Financial 
                                                Officer of the company (since June 1994); Vice                                    
                                                President and Chief Financial Officer of Preston                                  
                                                Corporation (June 1992 - June 1994); Senior Vice                                  
                                                President, Chief Operating Officer and Chief
                                                Financial Officer of JTL Holding Company (prior to                                
                                                July 1991)
</TABLE>



The terms of each officer of the company designated above are scheduled to
expire April 19, 1995.  The terms of each officer of the subsidiary companies
are scheduled to expire on the date of the next annual meeting of shareholders
of that company.  No family relationships exist between any of the executive
officers named above.





                                       8

<PAGE>   9


                                    PART II



Item 5.       Market for the Registrant's Common Stock and Related Stockholder
              Matters.

The information set forth under the caption "Common Stock" on page 33 of the
registrant's Annual Report to Shareholders for the year ended December 31,
1994, is incorporated by reference under Item 14 herein.



Item 6.       Selected Financial Data.

The information set forth under the caption "Financial Summary" on pages 18 and
19 of the registrant's Annual Report to Shareholders for the year ended
December 31, 1994, is incorporated by reference under Item 14 herein.



Item 7.       Management's Discussion and Analysis of Financial Condition and
              Results of Operations.

"Management's Discussion and Analysis of Financial Condition and Results of
Operations," appearing on pages 14 through 17 of the registrant's Annual Report
to Shareholders for the year ended December 31, 1994, is incorporated by
reference under Item 14 herein.



Item 8.       Financial Statements and Supplementary Data.

The financial statements and supplementary information, appearing on pages 20
through 33 of the registrant's Annual Report to Shareholders for the year ended
December 31, 1994, are incorporated by reference under Item 14 herein.



Item 9.       Disagreements on Accounting and Financial Disclosure.

None.





                                       9

<PAGE>   10


                                    PART III



Item 10.      Directors and Executive Officers of the Registrant.

The information regarding Directors of the registrant has previously been
reported in the registrant's definitive proxy statement, filed pursuant to
Regulation 14A, and is incorporated by reference.  For information with respect
to the executive officers of the registrant, see "Executive Officers of the
Registrant" at the end of Part I of this report.



Item 11.      Executive Compensation.

This information has previously been reported in the registrant's definitive
proxy statement, filed pursuant to Regulation 14A, and is incorporated by
reference.



Item 12.      Security Ownership of Certain Beneficial Owners and Management.

This information has previously been reported in the registrant's definitive
proxy statement, filed pursuant to Regulation 14A, and is incorporated by
reference.



Item 13.      Certain Relationships and Related Transactions.

This information has previously been reported in the registrant's definitive
proxy statement, filed pursuant to Regulation 14A, and is incorporated by
reference.





                                       10

<PAGE>   11


                                    PART IV



Item 14.      Exhibits, Financial Statement Schedule, and Reports on Form 8-K.


(a)    (1)  Financial Statements

       The following information appearing in the 1994 Annual Report to
       Shareholders is incorporated by reference in this Form 10-K Annual
       Report as Exhibit (13):


<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
       <S>                                                                                     <C>
       Management's Discussion and Analysis of
        Financial Condition and Results of Operations                                          14-17
       Financial Summary                                                                       18-19
       Consolidated Financial Statements                                                       20-32
       Report of Independent Public Accountants                                                  32
       Quarterly Financial Information                                                           33
       Common Stock                                                                              33
</TABLE>



       With the exception of the aforementioned information, the 1994 Annual
       Report to Shareholders is not deemed filed as part of this report.
       Financial statements other than those listed are omitted for the reason
       that they are not required or are not applicable.  The following
       additional financial data should be read in conjunction with the
       consolidated financial statements in such 1994 Annual Report to
       Shareholders.


(a)    (2)  Financial Statement Schedule


<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               ----
       <S>                                                                                        <C>

       Report of Independent Public Accountants on
        Financial Statement Schedule                                                              13

       For the years ended December 31, 1994, 1993 and 1992:


       Schedule II                Valuation and Qualifying Accounts                               14
</TABLE>



       Schedules other than those listed are omitted for the reason that they
       are not required or are not applicable, or the required information is
       shown in the financial statements or notes thereto.





                                       11

<PAGE>   12

(a)    (3)  Exhibits

       (13) - 1994 Annual Report to Shareholders.
       (24) - Consent of Independent Public Accountants.
       (27) - Financial Data Schedule (for SEC use only).

       The remaining exhibits required by Item 7 of Regulation S-K are omitted
       for the reason that they are not applicable or have previously been
       filed.

(b)    Reports on Form 8-K

       On October 5, 1994, a Form 8-K was filed under Item 5, Other Events,
       which reported that the company announced on September 29, 1994, that it
       will record a charge to earnings in the third quarter of $6.7 million,
       $4.1 million after taxes, or $.14 per share.  This charge, recorded as
       an extraordinary item, is to write-off the book value of its intrastate
       operating rights.  The non-cash charge resulted from the recent passage
       of the Trucking Industry Regulatory Reform Act of 1994 which deregulates
       the entry and rates for the intrastate operations of all transportation
       companies.


       On March 14, 1995, a Form 8-K was filed under Item 5, Other Events,
       which reported that the company announced on March 9, 1995, that based
       on business activity in January and February, it expects to report near
       break-even results for the first quarter ended March 31, 1995.
       Comparatively, the company had a net loss for the first quarter of 1994
       of $6.4 million, or $.23 per share.

       Yellow Freight System, the company's largest subsidiary, is expected to
       report an improvement in profitability over the prior year's quarter due
       to the benefits of improved weather.  However, this gain will be
       partially offset by some softening in seasonally adjusted business
       levels relative to fourth quarter trends.  Yellow Freight also incurrd
       additional costs in the current quarter related to achieving new highs
       in on-time service performance.

       Preston Trucking Company expects to show significant improvement
       year-to-year with break-even operating results for the current quarter
       compared to an operating loss of $5.8 million in 1994's first quarter.
       Improved weather and benefits from its SuperRegion offering contributed
       to Preston Trucking's recovery.


       On March 21, 1995, a Form 8-K was filed under Item 5, Other Events,
       which reported that the company announced on March 14, 1995, that its
       Board of Directors voted not to renew the company's Share Purchase
       Rights Plan upon the Plan's scheduled expiration in 1996.  The Plan is
       commonly known as a "Poison Pill" and was intended to deter abusive
       takeover tactics.  The decision was made in response to general
       criticism of such plans from large institutional shareholders.
       Additionally, the takeover environment has changed significantly since
       the Plan was implemented in 1986 and the risk that the company could be
       the target of abusive takeover tactics is substantially reduced.





                                       12

<PAGE>   13





                          Report of Independent Public
                  Accountants on Financial Statement Schedule





To the Shareholders of Yellow Corporation:

       We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in Yellow Corporation
and Subsidiaries' annual report to shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated January 31, 1995.  Our
audit was made for the purpose of forming an opinion on those statements taken
as a whole.  The schedule listed in Item 14(a)(2) is the responsibility of the
company's management and is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements.  This schedule has been subjected to the
auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.





                                                             ARTHUR ANDERSEN LLP




Kansas City, Missouri,
January 31, 1995






                                       13

<PAGE>   14

                                                                     Schedule II

                      Yellow Corporation and Subsidiaries
                       Valuation and Qualifying Accounts
              For the Years Ended December 31, 1994, 1993 and 1992



<TABLE>
<CAPTION>

- ---------------------------------------------------------------------------------------------------------------------  
|               COL. A            |    COL. B    |             COL. C               |     COL. D   |     COL. E     |
|                                 |              |                                  |              |                |
- ---------------------------------------------------------------------------------------------------------------------  
|                                 |              |                                  |              |                |
|                                 |              |            Additions             |              |                |
|                                 |              |     ---------------------        |              |                |        
|                                 |   Balance,   |                                  |              |    Balance,    |
|                                 |              |      -1-      |       -2-        |  Deductions- |                |   
|               Description       |  Beginning   |               |                  |              |     End Of     |
|                                 |              |  Charged To   |   Charged To     |    Describe  |                |
|                                 |  Of Period   |               |                  |              |     Period     |
|                                 |              |   Costs And   | Other Accounts-  |       (2)    |                |
|                                 |              |               |                  |              |                |
|                                 |              |   Expenses    |   Describe       |              |                |
|                                 |              |               |                  |              |                |
- ---------------------------------------------------------------------------------------------------------------------

                                                                    (In Thousands)
<S>                                   <C>              <C>              <C>           <C>             <C>
Year ended December 31, 1994:
- ---------------------------- 
Deducted from asset account -
 Allowance for uncollectible
 accounts                             $10,674          $9,375           $    -        $6,967          $13,082
                                      =======          ======           ======        ======          =======




Year ended December 31, 1993:
- ---------------------------- 
Deducted from asset account-
 Allowance for uncollectible
 accounts                             $ 8,558          $8,521           $2,504 (1)    $8,909          $10,674
                                      =======          ======           ======        ======          =======




Year ended December 31, 1992:
- ---------------------------- 
Deducted from asset account-
 Allowance for uncollectible
 accounts                             $ 8,299          $6,149           $    -         $5,890         $ 8,558
                                      =======          ======           ======         ======         =======
</TABLE>






(1)  Addition from Preston Corporation and subsidiaries acquired in February
     1993.
(2)  Primarily uncollectible accounts written off - net of recoveries.





                                       14

<PAGE>   15


                                   Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                              Yellow Corporation


                                        BY:      /s/ George E. Powell III      
                                              George E. Powell III
March 24, 1995                                President, Chief Executive Officer
                                              and Director


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.




<TABLE>
   <S>                                <C>                                                   <C>
   /s/ H. A. Trucksess, III           Senior Vice President -                               March 24, 1995
- -----------------------------         Finance and Chief Financial        
       H. A. Trucksess, III           Officer


   /s/ Phillip A. Spangler            Vice President and Treasurer                          March 24, 1995
- ----------------------------                                                                              
       Phillip A. Spangler



   /s/ George E. Powell, Jr.          Chairman of the Board                                 March 24, 1995
- ----------------------------          of Directors
       George E. Powell, Jr.          



   /s/ M. Reid Armstrong              Director                                              March 24, 1995
- ----------------------------                                     
       M. Reid Armstrong



   /s/ David H. Hughes                Director                                              March 24, 1995
- ---------------------------                                      
     David H. Hughes



   /s/ John C. McKelvey               Director                                              March 24, 1995
- ----------------------------                                     
       John C. McKelvey
</TABLE>






                                       15





<PAGE>   1

                                                                    Exhibit (13)





                               Yellow Corporation


                               1994 Annual Report


                                to Shareholders

<PAGE>   2
                             NARRATIVE DESCRIPTION
                          OF PICTURES AND CHARTS FROM
                     YELLOW CORPORATION 1994 ANNUAL REPORT


Front Cover --          Picture of steering wheel with Yellow Corporation logo
                        in the middle.

Inside Front Cover --   Photograph of stretch of highway.

Page 3 --               Small inset picture of Yellow Freight System trailer on
                        rail flatcar.

Page 4 --               Inset picture of a portion of a steering wheel.

Page 5 --               Inset picture of George E. Powell III, President and 
                        Chief Executive Officer of the Company

Page 6 --               Entire page is a picture of a Yellow Freight System
                        driver adjusting a rear-view mirror

Page 7 --               Small inset picture of a Yellow Freight System tractor
                        and trailer

Page 8 --               Small inset picture of a Preston Trucking Company
                        tractor and trailer

Page 9 --               Entire page is a picture of a driver entering his
                        tractor

Page 10 --              Entire page is a picture of a driver shifting gears

Page 11 --              Small inset picture of a Saia Motor Freight Line
                        tractor and trailer

Page 12 --              Small inset picture of an interstate highway cloverleaf
                        intersection

Page 13 --              Entire page is a picture of a driver polishing his
                        tractor's radiator grill

Page 14-15 --           Small inset picture running on both pages of a tractor
                        steering
 wheel

Page 35 --              Small inset pictures of each of the Company's Directors
                        and the Secretary to the Board

Inside Back Cover --    Picture of a Yellow Freight System tractor and dual
                        trailers






<PAGE>   3
YELLOW CORPORATION 1994 ANNUAL REPORT TEXT


CONTENTS

This is Yellow Corporation
and Financial Highlights

Letter To Shareholders

Serving Our Customers

Management's Discussion
and Analysis

Financial Summary

Consolidated Financial
Statements

Notes To Consolidated
Financial Statements

Report Of Independent
Public Accountants

Supplementary Information

Senior Officers

Directors





<PAGE>   4

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Yellow Corporation and Subsidiaries
(Amounts in thousands except per share data)
                                                            1994            1993(a)             1992
<S>                                                      <C>              <C>                <C>
Operating revenue                                        $ 2,867,492      $ 2,856,505        $ 2,262,676
Income from operations                                        11,011           53,893             82,814
         Income (loss) before extraordinary item and 
         cumulative effect of accounting change               (3,848)          18,801             41,040
Net income (loss)                                             (7,906)          18,801             29,540

Per share data:
         Income (loss) before extraordinary item and
          cumulative effect of accounting change                (.14)             .67               1.46
         Net income (loss)                                      (.28)             .67               1.05
         Cash dividends                                          .94              .94                .94
Total debt                                                   247,760          226,503            134,077
Shareholders' equity                                         460,843          486,453            485,496
</TABLE>


(a) -    1993 amounts include the operating results of Preston Corporation
effective March 1, 1993. The 1993 results also include a network development
charge of $11.2 million after taxes ($.40 per share) and a charge of $1.6
million ($.06 per share) to reflect the impact of a higher tax rate on the
company's deferred tax liabilities.


YELLOW CORPORATION
is a holding company whose subsidiaries offer customers an array of
high-service, value-added transportation products that competitively position
each subsidiary for growth.

YELLOW FREIGHT SYSTEM, INC.
Yellow Freight System, headquartered in Overland Park, KS is the corporation's
largest subsidiary with 1994 operating revenue of $2.2 billion.  As the largest
provider of less-than-truckload services in the nation, Yellow Freight System
employs 25,400 people throughout a network of 509 facilities. Direct service is
available to more than 35,000 points in the United States and Canada. The
company also provides service to Mexico, the Caribbean, and, via an alliance,
to Europe.

PRESTON TRUCKING COMPANY, INC.
Preston Trucking Company, headquartered in Preston, MD provides regional
less-than-truckload services in the upper Midwest and Northeast. A network of
71 facilities throughout this geographic region is operated by 5,900 employees
who focus on one and two-day service. The company recorded operating revenue of
$417 million in 1994.

SAIA MOTOR FREIGHT LINE, INC.
Saia Motor Freight Line, headquartered in Houma, LA also provides regional
less-than-truckload services. Its market consists of nine states in the South.
Providing premier regional service, Saia's 2,300 employees operate a network of
58 facilities. This year, Saia absorbed the operations of its sister company,
Smalley Transportation Company, adding full coverage for the state of Florida
and parts of Georgia. Combined revenue in 1994 was $178 million.





<PAGE>   5
CSI/REEVES, INC.

CSI/Reeves, headquartered in Calhoun, GA is a specialty carrier providing
transportation, warehousing and distribution services to the carpet and floor
covering industry. Almost 400 people are employed by CSI/Reeves with 1994
revenue of $36 million.

WESTEX,
WestEx, formerly Johnson's Freightlines, headquartered in Phoenix, AZ is a
recent acquisition. This regional less-than-truckload carrier provides mostly
overnight service to the states of Arizona, New Mexico and parts of Texas and
Nevada. Over 300 people are employed at WestEx with 1994 operating revenue of
$17 million.* The company plans to expand into California and adjoining Western
states.

YELLOW LOGISTICS SERVICES, INC.
Yellow Logistics Services, headquartered in Overland Park, KS offers a full
range of integrated logistics management services including transportation
management, warehousing, information systems, distribution, package design and
testing.

YELLOW TECHNOLOGY SERVICES, INC.
Yellow Technology Services, headquartered in Overland Park, KS employs 300
people and ensures that the operating companies--primarily Yellow Freight
System--have access to advanced information systems that are now required to
meet the ever-increasing information demands of transportation customers.

*This acquisition was completed in November 1994, resulting in only two months
of revenue reflected in the consolidated results.

LETTER TO SHAREHOLDERS

One dominant event had a material impact on Yellow Corporation in 1994. The
24-day national labor strike against our largest subsidiary, Yellow Freight
System, cast a shadow over our perfor-mance in the first half of the year.
During the second half, however, we regained momentum with an improved
performance allowing us to resume progress on our long-term strategy.
         That strategy is straightforward: maximize profitability at our core
operations while lever-aging our management experience and reputation to
selectively acquire and build new transportation businesses. Having transformed
in the last two years from the owner of a single motor carrier to a
transportation holding company, we are confident about 1995 and beyond.

1994 PERFORMANCE
         Yellow Corporation lost $7.9 million, or $.28 per share in 1994,
compared to a profit of $18.8 million, or $.67 per share, in 1993. The loss was
due directly to the national strike by the International Brotherhood of
Teamsters in April. The work stoppage at Yellow Freight had a negative earnings
impact of an estimated $1.24 per share. Harsh winter weather in the first
quarter and a one-time, after tax charge of $4.1 million, or $.14 per share, in
the third quarter to write-off the value of intrastate operating rights also
contributed to lower corporate earnings. Yellow Freight and Preston Trucking
Company were




<PAGE>   6
adversely affected by the strike. Yellow Freight, however, regained more than
98 percent of pre-strike revenue by year's end. Cost control, continued
diversification of its product offering and marketplace pricing stability also
contributed to a positive second half performance by Yellow Freight.
         Preston Trucking, fortunate to endure only six idle days during the
national strike, saw revenue increase dramatically during April as shippers
turned to the carrier as one of few alternatives to move their goods. Preston
Trucking was, however, adversely affected by the event when the heavy volumes
strained its system. Service performance and profitability suffered in the
remainder of the second quarter and the third quarter. Preston Trucking's
fourth quarter showed improvement with revenue gains and further cost control.
         Saia Motor Freight enjoyed significant revenue growth throughout the
year as it acquired new business through geographic expansion. In addition, the
company received modest benefit from the labor strike as shippers sought
alternative transportation capacity. Revenue increased 15 percent year over
year. Saia will also grow as a result of its recent merger with sister company
Smalley Transportation Company. The merger, completed in January 1995, created
a $180 million company.
         Yellow Logistics Services successfully expanded logistics activity for
existing customers and attracted new customers. Through this subsidiary, we are
offering services such as transportation management, warehousing, special
integrated services, package testing and optimization, and transportation and
distribution process reengineering. CSI/Reeves, our specialty-carpet logistics
carrier, benefited from yield improvement and market expansion and penetration.
CSI had revenue growth of 28 percent and posted its first operating profit
since 1988.

THE PLAN
         Yellow Freight provides 80 percent of our corporate revenue. As the
greatest contributor to revenue and earnings, it is essential that we maximize
the earning power of this core business. Strategically, Yellow Freight will
reduce costs by fully implementing provisions of its new labor agreement,
continuing to reconfigure its terminal network and investing in technology to
improve productivity. Revenue will be enhanced with improved yield management
and continued new product introduction. Profitability will also benefit from
Yellow's continued commitment to pricing stability.
         Terminal network changes are streamlining operations. While over 100
facilities have been consolidated, geographic coverage remains unchanged and
service has improved at reduced costs. Annual cost savings are currently
running in excess of $10 million.
         Yellow Freight is taking full advantage of the flexibility available
in its new labor agreement. In October, the company conducted operational
changes to implement new intermodal provisions available in the contract. When
the benefits of the provisions are fully realized, annual savings are expected
to approach $30 million. Add the elimination of forced overtime for dockworkers
and a lower new-hire compensation scale, and total savings are expected to
exceed $40 million annually by the fourth and final year of the pact,
offsetting annual increases in wages and benefits agreed to in the contract.
         Earning power will also be enhanced over the next three years at
Yellow Freight with a $100 million investment in technology to further automate
information flows, capture information at its source and streamline freight
movement. Because our business is intensely transactional, the reengineering of
these processes presents significant opportunities to reduce administrative
costs and improve productivity through enhanced freight flow planning. As well,
the centralization of customer service




<PAGE>   7
functions will provide more timely and more valuable customer information.
Partial benefits of this investment are already evident and we expect to
realize full benefits in two to three years.
         In addition to removing costs and improving processes, Yellow Freight
continues to create new revenue streams to maintain its market leadership
position. For example, Yellow Integrated Services(TM) provides shippers with
customized solutions such as warehousing, special pick up and delivery or
return goods coordination. Yellow Express Services(TM) includes a guaranteed
service and an expansion of reduced transit time services. Yellow Information
Technology(TM) offers customers technology products ranging from electronic
data interchange to imaging, to PC-based tracing and rating. Additionally,
Yellow Freight will continue to pursue target markets such as the exhibit and
chemical markets.  Yellow International Services(TM) will expand in 1995 with
plans to launch service to the Pacific Rim and add an air product to its
existing transatlantic European service.
         Evidenced by its emphasis on cost control, technology investment and
attention to revenue opportunities, Yellow Freight is a company determined to
maintain its position as a leader in the transportation marketplace.
         Preston Trucking continues its financial turnaround. In 1994,
employees gave the company overwhelming support by voting to continue a wage
reduction at 7 percent below the national union standard. The percentage will
be reduced to 5 percent in April 1995. Full wages will be restored in April
1996. The wage reduction will save an estimated $25 million and provides the
necessary time for new productivity programs and a new service offering to take
hold.
         Investment at Preston Trucking is directed toward activities that
provide dramatic service improvements. A $5 million, 170-door distribution
center near Cleveland, Ohio is the centerpiece of the new SuperRegion service
which offers reduced transit times in an expanded geographic region. To date,
competitors have been unable to match the service on a comprehensive basis and
customers are enthusiastic about the superior product. As a result, Preston
Trucking's revenue and profitability are expected to improve throughout 1995.
         Saia responded to market demands for high quality regional service in
the South by opening 20 new facilities during the year. Saia also recently
absorbed the business of Smalley Transportation. The combined operation,
marketed as Saia, now has 58 facilities stretching from Texas to Florida. Saia
will leverage the merger and recent intrastate deregulation to offer customers
full-state and overnight coverage in nine states, as well as a comprehensive
regional service across the South.
         Consistent with our corporate strategy to expand our regional
less-than-truckload business, Yellow Corporation acquired a regional carrier
based in Phoenix, AZ. Johnson's Freightlines serves Arizona, New Mexico and
parts of Texas and Nevada. The company was renamed WestEx and will expand its
presence in the Western United States. Plans for expansion into California and
adjoining states are underway.

THE FUTURE
         What used to be exceptional service is becoming the norm. It is no
longer acceptable to simply keep pace. Our companies must set the pace by
redefining exceptional service. To do so, our management and employees have
discarded old ways of doing business in favor of unprecedented approaches to
problem solving. In the following pages of this report, you'll read examples of
these new approaches and how they will lead to improved profitability.
         As we mark the halfway point of the decade, history continues to
record rapid change




<PAGE>   8
in the transportation industry. Global competitive pressures are pushing
customers toward optimization of their total logistics costs, requiring faster
and more reliable transit times. In many instances, customers are completely
re-configuring their distribution patterns to meet these demands, resulting in
the need for transportation suppliers to change. This, combined with the
effects of intrastate deregulation, means that we must be prepared for
increased competition.
         Yellow Corporation companies have anticipated these challenges and are
continuing to implement changes that strengthen their position as
transportation suppliers of choice. We are equipped with the assets,
technology, management experience and employee commitment to successfully
execute our plans. Our companies will make their customers more competitive.
The result will be enhanced shareholder value.

GEORGE E. POWELL III
President and Chief Executive Officer

YELLOW FREIGHT'S VISION IS CLEAR
In early 1994, Yellow Freight System assembled a plan called Blueprint for
Change that would positively alter its activities for years to come.  The
"blueprint" outlines dramatic changes in the company's processes, management
approach and employee skills.

PHOTO COPY:  Yellow Freight's vision is clear: to be the fastest, most
convenient and reliable transportation partner of the 21st century.

         Supported by a $100 million investment in technology, Yellow Freight
is reconstructing the way it does business. Centralized customer service
facilities are being established. Billing and stating will move onto the
information highway available to customers in various electronic formats, and
rating will be automated. Dispatch will be computer-assisted with pick up and
delivery needs recorded electronically or by fax. Integrated information
systems will make routine requests for shipment tracing, rating or proof of
deliveries an automated reality. The automation and systemization of these
activities will improve service, reduce costs, increase labor productivity and
give customers better information, quicker.
         But the true test of superior customer service lies in how efficiently
Yellow Freight can move both freight and freight information.  The process is
called freight flow and dramatic improvements are scheduled. The improvements
are based on the guiding principle that shipment information must stay ahead of
the physical flow of freight at all times. Receiving information ahead of time
can accelerate freight flow because information will work as a catalyst to
"pull" freight through the system rather than slow the movement as shipments
wait on information.
         Again, technology is key. Computer Assisted Dispatch (CAD) equipment
will electronically communicate with drivers for customer pick up and
deliveries. Drivers receive messages on Mobile Data Terminals (MDTs) for pick
ups and respond with data about the shipments that begin the process of
"pulling" freight with information. Employees plan movements using real-time
information available from the computerized Shipment Transfer and Tracking
System (STATS). Dockworkers use a computer-




<PAGE>   9
aided Dock Operations Control System (DOCS) to manage the movement of trailers
to and from dock doors. Finally, bar code scanners are used to update shipment
information--eliminating the need to wait on paper to move freight.
         Technology advancements are a business requirement, but the
performance of people will be the distinguishing factor in our future success.
The contractual employees of our companies stepped up to the changing
marketplace by overwhelmingly ratifying a new labor agreement that incorporates
unprecedented flexibilities--flexibilities that will result in better service
to customers.


YELLOW FREIGHT EMBRACES CHANGE
         The new four-year agreement with the International Brotherhood of
Teamsters allows use of more intermodal rail transportation when it makes sense
for the company and customers. Operational efficiencies are gained and customer
service is enhanced. The contract also includes a combination of flexible
overtime rules, greater options for adding staff in peak periods and lower
new-hire rates. Now, our companies can extend pick up and delivery times and
move freight faster while better managing costs.
         Most importantly though, the new agreement creates a true partnership
between contractual employees and our companies. A provision in the contract
referred to as Article 20 recognizes that it is the customer not the company
nor the union that creates jobs and job security. It states "...the union and
the companies agree to work together to provide the kind of quality service and
products that the ultimate employer, the customer, demands."


PHOTO COPY: Preston Trucking has established itself as a leader in high-service
regional transportation with the advent of the SuperRegion.

PRESTON: DIRECT TO DESTINATION
         Increased global competition is causing businesses to change
distribution patterns and further reduce the time it takes to make and
distribute products. The result is the need for more regional transportation
services. Preston Trucking Company has established itself as a leader in
high-service regional transportation with the advent of SuperRegion, a
geographically comprehensive one and two-day service in the Northeast and upper
Midwest.
         This expansive, faster service was created when Preston Trucking
replaced its hub and spoke system with a single-hub regional concept.  The
strategic location of a consol-idation center near Cleveland allows Preston
Trucking to load more freight direct to destination rather than pushing
shipments through a multi-sort configuration. Less freight handling removes
costly time and reduces the opportunity for damage.
         Over 1,200 lanes in Preston Trucking's service area experienced
improvements in transit time standards to one and two days when the SuperRegion
service was launched in October. Shipment activity for the system is
computerized and tightly scheduled. This data combined with information on
daily pick ups tells individual coordinators working in Cleveland the precise
characteristics of the freight and when it will arrive. Stacking and loading
plans are made accordingly, utilizing the specially designed narrow dock that
eliminates space and saves time.




<PAGE>   10
         Next, teams rapidly and systematically consolidate shipments for their
final destination. Transfer time is recorded at four to six hours, dramatically
below industry levels. Transfer time is the amount of time it takes to unload,
sort and reload freight at a consolidation site. On-time service performance is
running at record highs. Internal measures verify that freight is also more
likely to be damage-free.

PHOTO COPY:  Saia is a key provider of transportation services in an explosive
market and well-positioned for growth over the next several years.


GROWING SAIA
         The Southeast quadrant of the United States is one of the largest
markets in the world. Saia Motor Freight is a key provider of transportation
services in this explosive market and well-positioned for growth over the next
several years.
         Saia's competitive advantage lies in its quality heritage and flexible
workforce. In 1994, Saia employees opened 20 facilities in Texas, Georgia and
Tennessee. Simultaneously, it merged its $140 million operation with the $40
million Smalley Transportation operation, a sister company. Information systems
were successfully integrated, processes were blended and personnel reassigned.
No small task for the 2,300 Saia employees, but all the more impressive when
records confirm continued high on-time service and remarkably low
freight-damage claims.
         In 1995, Saia is scheduled to complete an expansion plan that will add
North Carolina and South Carolina to its present nine-state service area.
         As Saia expands, the company will focus on continual reduction in
transit times, direct service to all points within its region and enhancement
of information systems. This focus is highly compatible with its customers'
focus on reduced cycle time, lower costs and more accessible information.
Customers now have a premier option for their regional transportation needs in
the South as Saia becomes larger.
         Saia gives Yellow Corporation a significant regional presence in the
South. Preston Trucking provides such a presence across the Northeast and upper
Midwest. WestEx, a regional carrier based in Phoenix, AZ will expand to give
the corporation the same presence in the extensive Western regional market.
While growth will be managed to assure high quality customer service, WestEx
will soon expand services beyond Arizona, New Mexico, Texas and Nevada into
California.


MEETING CUSTOMERS' UNIQUE NEEDS
         Businesses continued to recognize a need for logistics support in
1994. In an effort to strategically locate its expertise closer to the
marketplace, Yellow Logistics Services opened regional sales offices in major
metropolitan areas. Business Development staff members are located in Chicago,
Kansas City, Philadelphia and Pittsburgh. As well, the company created special
niche units that deliver a unique combination of transportation, warehousing
and information systems above and beyond the core logistics management
services.




<PAGE>   11
         These units include Return Product Management which provides an
organized system for the return of goods that are outdated or in need of
refurbishment or repair. Yellow Logistics manages the packaging, pick up,
transportation, shipment tracking, inspection, repair or disposal of the
merchandise.
         Yellow Logistics also offers customized logistics modeling, which is a
planning tool that is offered to companies so they may determine strategic
facility locations and transportation strategies based on cost and service
parameters. The modeling tools use actual company data to analyze needs and
project future growth.


PHOTO COPY:  Technology advancements are a business requirement, but the
performance of people will be the distinguishing factor in our future success.


DEVELOPING TOMORROW'S TECHNOLOGY
         The collection, organization and dissemination of information is a
critical component of success for all Yellow Corporation companies.  Advanced,
innovative information systems will drive our success. That's why a
reengineering effort at Yellow Technology Services is underway that will
dramatically enhance customer satisfaction and improve the application of
technology in the next few years. Specifically, Yellow Technology is moving
from an environment that was dependent on mainframe com-puters to a more
flexible environment which will make information more accessible to employees
and customers.
         This renaissance of Yellow Technology will enable it to ensure that
Yellow Corporation companies have the information technology necessary to
anticipate and meet the information needs of customers.




MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


RESULTS OF OPERATIONS
1994 VS. 1993
         Operating revenue for Yellow Corporation (the company) totaled $2.87
billion in 1994, an increase of $11.0 million from 1993. The flat revenue was
due to a 24-day national labor strike in April by the International Brotherhood
of Teamsters (Teamsters) against the company's largest subsidiary, Yellow
Freight System, Inc.  (Yellow Freight), which essentially offset other revenue
increases. The strike also impacted most of Yellow Freight's major unionized
competitors. The company realized $85 million more revenue from the inclusion
of Preston Corporation (Preston) for twelve months in 1994 versus ten months in
1993. An additional $105 million of increased revenue was generated by full
year growth at the subsidiaries, exclusive of the labor strike impact. This
revenue growth came from rate increases and geographic expansion and was split
evenly between Yellow Freight and the other subsidiaries as a group.
         The company had a net loss of $7.9 million, or $.28 per share, in 1994
compared to net income of $18.8 million, or $.67 per share in 1993. The 1994
net loss resulted primarily from




<PAGE>   12
the labor strike which reduced earnings by an estimated $1.24 per share. A
special charge of $4.1 million after taxes, or $.14 per share, to write-off the
value of intrastate operating rights also negatively impacted 1994 results.
This write-off was necessitated by federal legislation that deregulated the
entry and rates for intrastate operations of all transportation companies. Net
income in 1993 included an $11.2 million, or $.40 per share, charge for network
development at Yellow Freight as well as a reduction of $1.6 million, or $.06
per share, from the impact of the statutory increase in the U.S. federal tax
rate on the company's deferred tax liabilities.
         As a result of the labor strike, Yellow Freight experienced a 6%
decrease in revenue for 1994 ($2.22 billion) versus 1993 ($2.36 billion). Rate
increases in January 1994 were offset by a 7% decrease in tonnage levels and a
12% decline in the number of shipments handled from 1993. However, the new
four-year labor contract provides Yellow Freight greater operational
flexibility while giving Teamster employees increased wages, benefits and job
security. The increased flexibility means that Yellow Freight has the ability
to lower operating costs by gaining the right to use more rail transportation
and dock casual workers whose rate of pay is fixed during the contract. In
return, the carriers agreed to a 14% increase in wages and benefits over the
four-year contract term.
         Yellow Freight's earnings were also negatively impacted by severe
winter weather experienced in the first quarter of 1994 which caused
significant business disruptions and higher operating expenses. Salaries, wages
and employees' benefits expense as a percentage of revenue was essentially the
same in 1994 and 1993. Slightly lower employee levels were offset by wage and
benefit increases of approximately 3% effective April 1 under the new labor
agreement.     Operating expenses and supplies increased as a percent of
revenue, primarily due to the fixed component of certain of these costs and
increases in equipment maintenance and general expenses. In the third quarter,
Yellow Freight implemented a change of linehaul operations, which allows
substantially more freight to be transported via rail. This change, which was
made possible by the new labor agreement, will hold down operating costs,
reduce capital expenditures for revenue equipment and improve service for
customers. Purchased transportation costs were higher in 1994 as a result of
this increased rail usage in the third and fourth quarters. Other nonoperating
expenses decreased $4.1 million due primarily to gains on revenue equipment
sales and less expense related to nonoperating facilities.
         Preston Trucking Company, Inc. (Preston Trucking) had revenue of
$416.8 million in 1994, an annualized revenue increase of 5% compared to 1993.
However, their operating margin deteriorated slightly during the year as a
result of severe winter weather in the Northeast during the first quarter, the
impact of the second quarter strike and shipper uncertainty concerning approval
of the wage reduction agreement described below. Preston Trucking saw a
dramatic increase in revenue during the second quarter of 1994 as they returned
to work under an interim agreement with the Teamsters after only six days on
strike. The increased business adversely affected service performance and
costs, reducing profitability in the latter part of the second quarter and into
the third quarter. In mid-1994, the Teamster employees of Preston Trucking
approved a plan to reduce wages in return for a share of profits if certain
operating results are achieved. The plan lessens pay by seven percent from
standard wages under the new contract for the period April 1, 1994 to March 31,
1995 and by five percent for the period April 1, 1995 to March 31, 1996. Pay
levels return to standard contract wages on April 1, 1996. This plan replaced a
one year, nine percent wage reduction approved in March 1993, shortly after
Preston Trucking was acquired by the company. Significant service improvements
were achieved in the fourth quarter through the implementation of a new
regional concept featuring a 170-door distribution center near Cleveland, Ohio.
Called the SuperRegion, it provides reduced transit times and superior service
across an expanded geographic area. This service began attracting new revenue
during the quarter.




<PAGE>   13
         Saia Motor Freight Line, Inc. (Saia) maintained an operating ratio of
92.0 in 1994 as it expanded geographically in Texas, Tennessee and Georgia.
Start up costs for these expansions burdened 1994 operating expenses while the
full revenue benefits will not be realized until 1995 and subsequent years.
Saia, with revenue of $137.8 million in 1994, achieved a 15% increase in
revenue compared to 1993 due to growth and second quarter benefits from the
labor strike. Smalley Transportation Company (Smalley) continued to improve its
operating ratio, 98.8 for 1994, while maintaining 4% revenue growth to $40.3
million. Effective January 1, 1995, Smalley was merged into Saia to offer
customers more comprehensive regional coverage and to reduce costs.
Merger-related costs in 1994 are estimated to have negatively impacted Saia and
Smalley's operating expenses by $1 million.


1993 VS. 1992
         Operating revenue for the company totaled $2.86 billion in 1993 versus
$2.26 billion in 1992, an increase of 26.2%. A significant portion of the
increase in 1993 revenue ($500 million) is attributable to the March 1, 1993
acquisition of Preston. The remaining revenue growth came from increases in
rates and the number of shipments handled as well as contributions from new
services started in 1992. Yellow Freight had revenue of $2.36 billion in 1993,
up 4.2% from 1992, with a 4.9% increase in total tonnage. Tonnage levels in
1993 were essentially the same as 1990 due to the growth in the economy during
that period, offset by Yellow Freight's commitment to improving account
profitability and resisting discounting.
         Net income for 1993 was $18.8 million, or $.67 per share, compared to
1992 net income of $29.5 million, or $1.05 per share. Earnings for 1993 reflect
an $11.2 million, or $.40 per share, charge for network development at Yellow
Freight as well as a reduction of $1.6 million, or $.06 per share, from the
impact of the statutory increase in the U.S. federal tax rate on the company's
deferred tax liabilities. Net income for 1992 was reduced $11.5 million, or
$.41 per share, due to a change in the company's revenue recognition policy.
         Earnings declined in 1993 largely because of competitive pricing
pressures, especially in the first half of the year, and severe winter weather
across the nation in the first quarter. The operations of the Preston
subsidiaries had a small negative impact on earnings in 1993, although they
showed steady improvement during the year and contributed $.02 per share to
fourth quarter earnings.
         The company's operating ratio was 98.1 in 1993 compared to 96.3 in
1992. Purchased transportation increased as a percentage of revenue due to
increased use of rail transportation and the Preston subsidiaries' heavier
usage of purchased transportation. Salaries, wages and employees' benefits
decreased as a percent of revenue despite wage and benefit increases of
approximately 3% effective April 1 for Teamster employees.  This is due to a
wage reduction of 9% effective April 1 for employees of Preston Trucking, a
small decrease in the total number of employees and a reduction in workers'
compensation expense. Due to moderate capital expenditures during the last
three years and more efficient use of equipment, depreciation expense also
decreased as a percent of revenue. This resulted in higher equipment
maintenance costs which negated a portion of the depreciation expense savings.
         During 1993, Yellow Freight instituted an extensive network
development process by consolidating and realigning terminals to improve
customer service and reduce costs. A charge of $11.2 million after taxes was
recorded for the costs to close certain facilities and dispose of excess
property. This network development will result in better use of assets, reduced
overhead, improved transit times and lower freight handling costs without
reducing customer service.




<PAGE>   14
         Interest expense increased $5.5 million primarily due to increased
debt levels related to the Preston acquisition. Other nonoperating expenses
decreased $4.3 million due to gains on facility sales, lower levels of losses
related to equipment sales and less expense related to nonoperating facilities.


1992 VS. 1991
         Operating revenue for the company totaled $2.26 billion in 1992, down
3.5% from $2.34 billion in 1991. Rate increases of approximately 5% were offset
by a decrease in total tonnage of 5.5% in 1992 compared to 1991, reflecting a
commitment to improving account profitability and resisting discounting.
         Net income for 1992, before a charge for the cumulative effect of a
change in revenue recognition policy, was $41.0 million, or $1.46 per share,
compared to 1991 net income of $26.7 million, or $.95 per share. The
nonoperating charge of $11.5 million after taxes, or $.41 per share, reduced
full year net income to $1.05 per share and had no impact on cash flow. Yellow
Freight was able to retain most of its January 1, 1992 rate increase, a key
ingredient in improving profitability during 1992. The company's operating
ratio for 1992 improved to 96.3 from 97.6 in 1991 despite decreased revenue and
tonnage. The improvement in costs came primarily in the area of operating
expenses and supplies. Fuel expense decreased as a result of declining prices
and fewer miles operated. General operating expenses also decreased
significantly in a number of key areas as a result of continued cost control
efforts and decreased operating volume. Increased efficiencies and decreased
operating volume resulted in lower employee levels. Additionally, workers'
compensation costs were reduced in 1992. These reductions allowed total
salaries, wages and employees' benefits expense to remain constant as a
percentage of revenue from 1991 to 1992 despite a 3.5% increase in labor costs
on April 1 under the Teamsters' agreement.


FUTURE OUTLOOK
         With business near pre-strike levels, a stable pricing environment,
and a new four-year labor agreement which will help reduce costs and improve
efficiency, the company expects improved operating performance in 1995. Revenue
growth is expected to come from rate increases, continued development of
existing services, introduction of new services and expansion of the regional
carrier's service area. Rate increases of between 4% and 5% were implemented by
the motor carrier subsidiaries on January 1, 1995. Yellow Freight expects that
rate increases and tonnage growth coupled with cost savings from the labor
agreement, investments in technology and other programs will result in improved
operating performance in 1995. Preston Trucking plans to continue to leverage
its new SuperRegion concept and expects improvement in both revenue growth and
operating profit. Revenue growth, improved service and improved productivity
are expected to produce benefits in excess of the phase down of the wage
reduction agreement. Saia, following the completion of its merger with Smalley,
anticipates strong revenue growth by expanding both within and outside of their
present service area. Expansion costs and pricing pressures related to the
deregulation of intrastate operations may have some negative impact on
operating performance in 1995. However, benefits are expected from cost savings
as a result of the merger and revenue opportunities from the 1994 and 1995
expansions, including access to new intrastate markets.





<PAGE>   15
OTHER

         In November 1994 the company acquired Johnson's Freightlines, a
Phoenix, AZ-based regional less-than-truckload carrier. Renamed WestEx, this
acquisition gives the company an established base as it plans to expand into
California and adjoining states.
         The company uses heating oil swap and fixed price diesel fuel
agreements to reduce a portion of the exposure to fluctuating diesel prices.
The heating oil swap agreements provide for payments to be made or received
based on the difference between fixed prices and variable prices. Gains and
losses on the agreements are recognized as a component of fuel expense when the
corresponding fuel is purchased.
         The effective income tax rate was 14.0% in 1994, 46.8% in 1993 and
37.2% in 1992. The decrease in 1994 primarily resulted from a pre-tax loss and
a higher relative impact from the statutory change in deductibility of certain
business expenses. The increase in 1993 was due primarily to the impact of a
higher U.S. federal tax rate on the company's deferred tax liabilities. The
notes to consolidated financial statements contain an analysis of the income

tax provision and the effective income tax rate.


FINANCIAL CONDITION
         Working capital decreased $9.5 million during 1994, resulting in a
$27.4 million positive working capital position at December 31, 1994. The
company's total debt level at December 31, 1994 increased $21.3 million
compared to that of December 31, 1993, primarily due to a higher level of
capital expenditures in 1994 and the impact on cash flow of lower earnings.
Commercial paper borrowings and medium-term note issuances were used to meet
these cash needs and scheduled maturities of other debt. The company maintains
credit availability under a $100 million credit agreement to support the
commercial paper program and provide additional borrowing capacity.
         Capital expenditures are financed primarily with internally-generated
funds. It is anticipated that 1995 capital expenditures will be similarly
financed. Actual and projected net capital expenditures are summarized below
(in millions):



<TABLE>
<CAPTION>
                                  Projected        Actual
                                  1995     1994    1993     1992
<S>                               <C>      <C>       <C>      <C>
Land and structures               $ 25     $  3      $12      $16
Revenue equipment                   85       98       34       49
Other operating property            65       50       21       14
                          Total   $175     $151      $67      $79
</TABLE>


         Projected facility expenditures will target maintenance and expansion
of existing locations and the construction or purchase of new locations to
improve efficiency and enter new markets in selected areas. Facility
expenditures in 1994 were offset by the sale of a number of facilities at
Yellow Freight and Preston Trucking, resulting in lower net expenditures than
projected. Revenue equipment expenditures are estimated to consist mostly of
replacement units, similar to 1994. The anticipated increase in rail use by
Yellow Freight for 1995 resulted in lower projected revenue equipment
expenditures. There is expected to be an even split in revenue equipment
expenditures between Yellow Freight and the regional companies as a group for
1995. Other property expenditures




<PAGE>   16
are primarily for improving efficiency through technological enhancements and
advanced information systems.
         The company's cash dividends paid to shareholders have been $.94 per
share ($26 million) in each of the last three years.

FINANCIAL SUMMARY

Yellow Corporation and Subsidiaries
(Amounts in thousands except per share data)


<TABLE>
<CAPTION>
                                                
FOR THE YEAR:                                        1994              1993(a)               1992            1991
<S>                                                <C>                 <C>                <C>              <C>
Operating revenue                                  $2,867,492          $2,856,505         $2,262,676       $2,344,143
Income from operations                                 11,011              53,893             82,814           56,907
Depreciation                                          133,970             132,371            118,419          124,687
Interest expense                                       18,433              17,668             12,150           14,159
Income (loss) before income taxes                      (3,375)             35,358             65,393           40,348
Income (loss) before extraordinary items and                                                            
   cumulative effect of accounting changes             (3,848)             18,801             41,040           26,654
Net income (loss)                                      (7,906)             18,801             29,540           26,654
Net cash from operating activities                    157,448             138,802            139,438          146,954
Net operating property additions                      150,940              66,786             78,651          104,668
                                                                                                        
AT YEAR-END:                                                                                            
Net operating property                                877,284             855,870            775,080          816,174
Total assets                                        1,307,221           1,265,654          1,061,012        1,097,771
Long-term debt                                        240,019             214,176            123,027          145,584
Total debt                                            247,760             226,503            134,077          156,707
Shareholders' equity                                  460,843             486,453            485,496          475,869
                                                                                                       
MEASUREMENTS:                                                                                           
Per share data:                                                                                         
   Income (loss) before extraordinary items and                                                   
    cumulative effect of accounting changes              (.14)                .67               1.46              .95
   Net income (loss)                                     (.28)                .67               1.05              .95
   Cash dividends                                         .94                 .94                .94              .94
   Shareholders' equity                                 16.40               17.31              17.28            16.94
Total debt as a % of total capitalization                35.0%               31.8%              21.6%            24.8%
Return on average shareholders'                                                                         
  equity                                                 (1.7)%               3.9%               6.1%             5.6%
Market price range:                                                                                     
         High                                            30-1/4             29-7/8             32-3/8           33-1/2
         Low                                             16-3/4             16-7/8             21-3/4           23-3/4
Average number of employees                              33,400             35,000             26,800           28,700
</TABLE>



(a) -    1993 amounts include the operating results of Preston Corporation
effective March 1, 1993. The 1993 results also include a network development
charge of $11.2 million after taxes ($.40 per share) and a charge of $1.6 
million ($.06 per share) to reflect the impact of a higher tax rate on the 
company's deferred tax liabilities.





<PAGE>   17


<TABLE>
<CAPTION>
1990             1989     (b)         1988             1987             1986             1985             1984
<S>             <C>               <C>              <C>              <C>             <C>               <C>               
$2,302,421       $2,219,755       $2,016,466       $1,759,992       $1,713,731       $1,530,313       $1,380,042
   119,774           48,041          117,786           78,089          135,619          106,424           77,274
   128,134          123,268          108,353           98,982           86,850           75,771           59,125
    15,763           15,452           12,254            9,172            7,441           10,290            6,160
   101,905           26,533          104,997           64,360          123,259           95,493           72,907

    65,319           18,585           68,962           41,284           67,084           55,536           44,103
    65,319           47,785           68,962           41,284           69,719           55,536           44,103
   219,463          179,481          204,943          140,163          169,745          156,153          120,430
   162,316          182,232          180,587          152,684          176,622          143,842          193,599

                                                                      
   836,599          803,402          748,613          676,869          623,019          533,703          466,210
 1,116,005        1,081,665        1,020,724          923,867          862,359          747,904          666,380
   163,703          186,680          168,902          126,241           75,390           66,581           64,341
   174,169          192,067          174,223          144,189          112,253           82,961           82,600
   468,944          438,588          408,986          392,923          376,370          321,871          280,070

  
      2.31              .65             2.40             1.44             2.35             1.95             1.55
      2.31             1.66             2.40             1.44             2.44             1.95             1.55
       .82              .73              .66              .62              .58              .52              .48
     16.70            15.24            14.21            13.82            13.14            11.27             9.84
      27.1%            30.5%            29.9%            26.8%            23.0%            20.5%            22.8%
      14.4%            11.3%            17.2%            10.7%            20.0%            18.5%            16.7%

    31-1/4           32-7/8           34               42-1/2           41-1/8           29-1/2           22-5/8
    18-3/4           23-7/8           23-7/8           20-7/8           27-1/2           15-7/8           11-3/4
    28,900           29,200           27,200           25,500           23,400           20,750           19,550
                                                                                                            
</TABLE>


(b) - 1989 results include an increase in reserves for workers' compensation
and other reserves of $27.7 million after taxes ($.96 per share).



<PAGE>   18

CONSOLIDATED BALANCE SHEETS

Yellow Corporation and Subsidiaries
December 31, 1994 and 1993
(Amounts in thousands except share data)


<TABLE>
<CAPTION>
ASSETS                                                                         1994                   1993

CURRENT ASSETS:
<S>                                                                        <C>                  <C>
         Cash                                                                 $17,613               $13,937
         Short-term investments                                                 7,305                 6,777
         Accounts receivable, less allowances of $13,082 and $10,674          295,332               276,223
         Tires on equipment                                                    40,817                36,730
         Fuel and operating supplies                                           21,381                19,183
         Deferred income taxes                                                  1,586                 9,024
         Other current assets                                                  19,323                17,519
                          Total current assets                                403,357               379,393

OPERATING PROPERTY:                                                                                
         Land                                                                 141,134               154,264
         Structures                                                           613,530               604,759
         Revenue equipment                                                    897,426               838,171
         Other operating property                                             214,475               168,798
                                                                            1,866,565             1,765,992
         Less - Accumulated depreciation                                      989,281               910,122
                          Net operating property                              877,284               855,870

OTHER ASSETS                                                                   26,580                30,391
                                                                           $1,307,221            $1,265,654
                                                                                                        
</TABLE>



The notes to consolidated financial statements are an integral part of these
balance sheets.



<PAGE>   19




<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY                                1994                      1993
<S>                                                               <C>                       <C>
CURRENT LIABILITIES:                                                

         Accounts payable                                           $118,412                  $71,580
         Wages, vacations and employees' benefits                    118,364                  117,723
         Accrued income taxes                                             --                    6,044
         Claims and insurance accruals                                84,823                   86,804
         Other current and accrued liabilities                        46,651                   48,006
         Current maturities of long-term debt                          7,741                   12,327
                          Total current liabilities                  375,991                  342,484
  
OTHER LIABILITIES:
         Long-term debt                                              240,019                  214,176
         Deferred income taxes                                        54,481                   58,911
         Claims, insurance and other                                 175,887                  163,630
                          Total other liabilities                    470,387                  436,717

SHAREHOLDERS' EQUITY:
         Series A $10 Preferred stock, $1 par value -
             authorized 750,000 shares, none issued                       --                       --
         Preferred stock, $1 par value - authorized
             4,250,000 shares, none issued                                --                       --
         Common stock, $1 par value - authorized 120,000,000 
             shares, issued 28,857,537 and 28,849,837 shares          28,858                   28,850
         Capital surplus                                               6,678                    6,469
         Retained earnings                                           447,887                  483,586
         Shares held by Stock Sharing Plan                            (4,961)                 (14,880)
         Treasury stock, at cost (751,674 and 749,489 shares)        (17,619)                 (17,572)
                          Total shareholders' equity                 460,843                  486,453
                                                                  $1,307,221               $1,265,654
</TABLE>






<PAGE>   20
STATEMENTS OF CONSOLIDATED INCOME

Yellow Corporation and Subsidiaries
For the Years Ended December 31
(Amounts in thousands except per share data)



<TABLE>
<CAPTION>
                                                                            1994                 1993               1992
<S>                                                                      <C>                  <C>                <C>
OPERATING REVENUE                                                        $2,867,492           $2,856,505         $2,262,676

OPERATING EXPENSES:
         Salaries, wages and employees' benefits                          1,918,406            1,919,197          1,540,175
         Operating expenses and supplies                                    433,789              410,679            314,202
         Operating taxes and licenses                                       110,004              104,588             83,903
         Claims and insurance                                                76,953               70,206             52,051
         Communications and utilities                                        41,064               38,643             30,994
         Depreciation                                                       133,970              132,371            118,419
         Purchased transportation                                           142,295              108,928             40,118
         Network development                                                     --               18,000                 --
                 Total operating expenses                                 2,856,481            2,802,612          2,179,862

INCOME FROM OPERATIONS                                                       11,011               53,893             82,814

NONOPERATING (INCOME) EXPENSES:
         Interest expense                                                    18,433               17,668             12,150
         Interest income                                                     (2,202)              (1,446)            (1,310)
         Other, net                                                          (1,845)               2,313              6,581
                 Nonoperating expenses, net                                  14,386               18,535             17,421

INCOME (LOSS) BEFORE INCOME TAXES                                            (3,375)              35,358             65,393
PROVISION FOR INCOME TAXES                                                      473               16,557             24,353
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
         CUMULATIVE EFFECT OF ACCOUNTING CHANGE                              (3,848)              18,801             41,040
EXTRAORDINARY ITEM - WRITE-OFF OPERATING RIGHTS                              (4,058)                  --                 --
CUMULATIVE EFFECT OF CHANGE IN REVENUE RECOGNITION                               --                   --            (11,500)
NET INCOME (LOSS)                                                          $ (7,906)             $18,801           $ 29,540

AVERAGE COMMON SHARES OUTSTANDING                                            28,107               28,105             28,093

EARNINGS (LOSS) PER SHARE:
         Income (loss) before extraordinary item and                                                                 
                 cumulative effect of accounting change                       $(.14)                $.67              $1.46
         Extraordinary item - write-off operating rights                       (.14)                  --                 --
         Cumulative effect of change in revenue recognition                      --                   --               (.41)
         Net income (loss)                                                    $(.28)                $.67              $1.05
</TABLE>


The notes to consolidated financial statements are an integral part of these
statements.




<PAGE>   21
STATEMENTS OF CONSOLIDATED CASH FLOWS

Yellow Corporation and Subsidiaries
For the Years Ended December 31
(Amounts in thousands)



<TABLE>
<CAPTION>
                                                                  1994                    1993                   1992
<S>                                                            <C>                     <C>                    <C>
OPERATING ACTIVITIES:
  Net income (loss)                                            $ (7,906)               $ 18,801               $ 29,540
  Noncash items included in income (loss):
    Depreciation                                                133,970                 132,371                118,419
    Network development                                              --                  18,000                     --
    Write-off operating rights                                    4,058                      --                     --
    Deferred income tax provision (benefit)                       4,147                 (10,819)               (14,345)
  Changes in assets and liabilities, net of acquisitions:
    Accounts receivable                                         (17,263)                (27,095)                12,137
    Accounts payable                                             46,060                   1,113                 (3,859) 
    Other working capital items                                 (17,564)                  9,139                (10,630)
    Claims, insurance and other                                  12,007                    (277)                19,055
    Other, net                                                      (61)                 (2,431)               (10,879)
  Net cash from operating activities                            157,448                 138,802                139,438

INVESTING ACTIVITIES:
  Acquisition of operating property                            (182,885)                (76,886)               (86,248)
  Proceeds from disposal of operating property                   31,945                  10,100                  7,597
  Purchases of short-term investments                            (8,957)                 (8,086)               (16,740)
  Proceeds from maturities of short-term investments              8,429                  14,693                 11,341
  Acquisitions, net of cash acquired                             (6,244)                (23,898)                    --
    Net cash used in investing activities                      (157,712)                (84,077)               (84,050)

FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt                       14,000                  37,250                     --
  Repayment of long-term debt                                   (17,701)                (95,553)                (3,241)
  Commercial paper borrowings, net                               33,981                  24,968                (11,498)
  Cash dividends paid to shareholders                           (26,416)                (26,405)               (26,380)
  Other, net                                                         76                     (64)                   (88)
    Net cash from (used in) financing activities                  3,940                 (59,804)               (41,207)

NET INCREASE (DECREASE) IN CASH                                   3,676                  (5,079)                14,181

CASH, BEGINNING OF YEAR                                          13,937                  19,016                  4,835
CASH, END OF YEAR                                               $17,613                 $13,937                $19,016

SUPPLEMENTAL CASH FLOW INFORMATION:
         Income taxes paid                                      $ 1,245                 $25,354                $45,523
         Interest paid                                          $18,103                 $17,715                $12,301
</TABLE>


The notes to consolidated financial statements are an integral part of these
statements.





<PAGE>   22

STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
Yellow Corporation and Subsidiaries
(Amounts in thousands except share data)


<TABLE>
<CAPTION>
                                                                                                    Shares Held     
                                                     Common         Capital        Retained          by Stock         Treasury  
                                                     Stock          Surplus        Earnings         Sharing Plan       Stock    
<S>                                                <C>              <C>            <C>               <C>              <C>       
BALANCE, DECEMBER 31, 1991                         $ 28,816         $5,691         $490,627          $(32,241)        $(17,024) 
  Net income                                             --             --           29,540                --               --  
  Cash dividends, $.94 per share                         --             --          (26,380)               --               --  
  Exercise of stock options, 21,300 shares               21            311               --                --               --  
  Restricted stock awards, 8,886 shares                   9             (9)              --                --               --  
  Amortization of unearned compensation                  --            255               --                --               --  
  Reduction of Stock Sharing Plan debt guarantee         --             --               --             7,891               --  
  Purchase of treasury stock                             --             --               --                --             (420) 
  Foreign equity translation adjustment                  --             --           (1,591)               --               --  
                                                                                                                                
BALANCE,  DECEMBER 31, 1992                          28,846          6,248          492,196           (24,350)         (17,444) 
  Net income                                             --             --           18,801                --               --  
  Cash dividends, $.94 per share                         --             --          (26,405)               --               --  
  Exercise of stock options, 3,820 shares                 4             60               --                --               --  
  Amortization of unearned compensation                  --            161               --                --               --  
  Reduction of Stock Sharing Plan debt guarantee         --             --               --             9,470               --  
  Purchase of treasury stock                             --             --               --                --             (128) 
  Foreign equity translation adjustment                  --             --           (1,006)               --               --  
                                                                                                                                
BALANCE, DECEMBER 31, 1993                           28,850          6,469          483,586           (14,880)         (17,572) 
  Net loss                                               --             --           (7,906)               --               --  
  Cash dividends, $.94 per share                         --             --          (26,416)               --               --
  Exercise of stock options, 7,700 shares                 8            117               --                --               --
  Amortization of unearned compensation                  --             92               --                --               --
  Reduction of Stock Sharing Plan debt guarantee         --             --               --             9,919               --
  Purchase of treasury stock                             --             --               --                --              (47)
  Foreign equity translation adjustment                  --             --           (1,377)               --               --

BALANCE, DECEMBER 31, 1994                          $28,858         $6,678         $447,887           $(4,961)        $(17,619)
</TABLE>


The notes to consolidated financial statements are an integral part of these
statements.


<PAGE>   23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Yellow Corporation and Subsidiaries

PRINCIPLES OF CONSOLIDATION AND SUMMARY OF ACCOUNTING POLICIES

         The accompanying consolidated financial statements include the
accounts of Yellow Corporation and its wholly-owned subsidiaries (the company).
All significant intercompany accounts and transactions have been eliminated in
consolidation. The company provides transportation services primarily to the
less-than-truckload (LTL) market throughout North America.
         Major accounting policies and practices used in the preparation of the
accompanying financial statements not covered in other notes to consolidated
financial statements are as follows:

         Cash includes demand deposits and highly liquid investments purchased
with original maturities of three months or less. All other investments, with
maturities less than one year, are classified as short-term investments and are
stated at cost which approximates market.

         The cost of tires on equipment is amortized over the estimated tire
lives.

         Fuel is carried at cost. The company uses heating oil swap and fixed
price diesel fuel agreements to reduce a portion of the exposure to fluctuating
diesel prices. The heating oil swap agreements provide for payments to be made
or received based on the difference between fixed prices and variable prices.
Gains and losses on the agreements are recognized as a component of fuel
expense when the corresponding fuel is purchased.

         Operating property is carried at cost less accumulated depreciation.
Depreciation is computed using the straight-line method based on the following
service lives:


<TABLE>
<CAPTION>
                                                            Years
                                                            -----
             <S>                                            <C>
             Structures                                     10-40
             Revenue equipment                               5-10
             Other operating property                        2-10
            

</TABLE>



<PAGE>   24
         Maintenance and repairs are charged to operations currently;
replacements and improvements are capitalized. When revenue equipment is
traded, the basis of the new equipment is reduced when the trade-in allowance
exceeds the basis of the old equipment. The gain or loss for all other
dispositions is reflected in other nonoperating (income) expense.

         Acquisitions have been accounted for by the purchase method. Earnings
of the acquired companies are included in the accompanying consolidated
financial statements since the date of acquisition. The excess of the purchase
price over net assets acquired is included with other long-term assets and is
being amortized over 20 years using the straight-line method.

         Claims and insurance accruals, both current and long-term, reflect the
estimated cost of claims for workers' compensation, cargo loss and damage, and
bodily injury and property damage not covered by insurance. These costs are
included in claims and insurance expense except for workers' compensation which
is included in employees' benefits expense.
         Reserves for workers' compensation are based upon actuarial analyses
prepared by independent actuaries and are discounted to present value using a
risk-free rate. The risk-free rate is the U.S. Treasury rate for maturities
that match the expected pay-out of workers' compensation liabilities. The
process of determining reserve requirements utilizes historical trends and
involves an evaluation of claim frequency, severity and other factors. The
effect of future inflation for both medical costs and lost wages is implicitly
considered in the actuarial analyses. Adjustments to previously established
reserves, if required, are included in operating results.
         At December 31, 1994 and 1993, estimated future payments for workers'
compensation claims aggregated $162.0 million and $162.1 million.  The present
value of these estimated future payments was $139.8 million at December 31,
1994 and $142.3 million at December 31, 1993.

         Revenue is recognized on a percentage completion basis while expenses
are recognized as incurred.

         Certain reclassifications have been made to the prior year
consolidated financial statements to conform with current presentation.

ACQUISITIONS

         In November 1994 the company acquired Johnson's Freightlines (renamed
WestEx), a Phoenix, AZ-based regional LTL carrier with annual revenue of
approximately $17.0 million.
         In February 1993 the company acquired the stock of Preston Corporation
(Preston) for $25.3 million, including related expenses. Preston is the holding
company for principally three regional LTL carriers serving the Northeast,
upper Midwest and Southeast United States. Preston's total debt at the date of
acquisition was $135.0 million, of which $78.1 million was repaid with funds
advanced to Preston by the company. The company recorded fair values at the
date of acquisition of $246.3 million for assets acquired and $232.4 million
for liabilities assumed, resulting in an excess of the purchase price over net
assets acquired of $11.4 million. The accompanying consolidated financial 
statements include the results of Preston effective March 1, 1993. Assuming 
the acquisition of Preston


<PAGE>   25
had occurred on January 1, 1992, the company's unaudited results of operations
are as follows (in thousands, except per share data) for the twelve months
ended December 31:


<TABLE>
<CAPTION>
                                                                    1993                      1992
<S>                                                         <C>                         <C>      
Operating revenue                                                $2,943,613                $2,843,768
Income before cumulative effect of accounting change                 12,739                    31,047
Net income                                                           11,634                    18,710

Earnings per share:
Income before cumulative effect of accounting change             $      .45                $     1.11
Net income                                                              .41                       .67
</TABLE>


         The unaudited pro forma results are not necessarily indicative of what
would have occurred if the Preston acquisition had been consummated at the
beginning of each year, nor are they necessarily indicative of future results.

SPECIAL CHARGES

         In the third quarter of 1994, the company recorded a charge to
earnings of $6.7 million, $4.1 million after taxes, or $.14 per share.  This
charge, recorded as an extraordinary item, was to write-off the book value of
its intrastate operating rights. The non-cash charge resulted from the passage
of the Trucking Industry Regulatory Reform Act of 1994 which deregulated the
entry and rates for intrastate operations of all transportation companies.
         In the second quarter of 1993, the company's primary subsidiary,
Yellow Freight System, Inc., began an extensive multi-year network development
process by consolidating and realigning terminals to improve customer service
and reduce costs. A charge of $18.0 million, $11.2 million after taxes, or $.40
per share, was recorded for the costs to close certain facilities and dispose
of excess property.
         In the first quarter of 1992, the company recorded a nonoperating
charge of $18.4 million, $11.5 million after taxes, or $.41 per share. This
charge, which had no impact on cash flow, is the cumulative effect of a change
in revenue recognition policy. Since January 1, 1992, revenue has been
recognized on a percentage completion basis. Prior to that time, revenue was
recognized when a shipment was picked up.






<PAGE>   26
DEBT

         At December 31, long-term debt consisted of the following (in
thousands):


<TABLE>
<CAPTION>
                                                            1994              1993
<S>                                                      <C>              <C>
Commercial paper                                           $58,949          $24,968
Medium-term notes                                          114,250          111,250
Stock Sharing Plan debt guarantee                            4,961           14,880
Industrial development bonds                                32,100           32,883
Capital leases and other                                    12,334           17,583
Subordinated debentures                                     25,166           24,939
         Total debt                                        247,760          226,503
Less - current maturities                                    7,741           12,327
         Total long-term debt                             $240,019         $214,176
</TABLE>


         The company has a five year $100 million credit agreement with a
group of banks which expires May 31, 1997. Interest is based, at the company's
option, on competitive bidding among the banks, at a fixed increment over the
London interbank offered rate, or at the agent bank's base rate. There are no
compensating balances required but a facility fee is charged. There were no
borrowings under this agreement in 1994 or 1993.
         The company maintains credit availability under the credit agreement
to support the commercial paper program and provide additional borrowing
capacity. Accordingly, commercial paper and medium-term notes maturing within
one year, and intended to be refinanced, are classified as long-term. The
weighted average interest rates on commercial paper outstanding at December 31,
1994 and 1993 were 6.4% and 3.5%. Medium-term notes have scheduled maturities
through 2008 with interest rates ranging from 5.7% to 9.7% per annum.
         The company has guaranteed the debt of the Stock Sharing Plan (see
Employee Benefits). This debt bears interest at a rate of 7.9% and is payable
by the Stock Sharing Plan in 1995.
         The company has loan guarantees, mortgages and lease contracts in
connection with the issuance of industrial development bonds used to acquire,
construct or expand terminal facilities. Interest rates on some issues are
variable and rates currently range from 5.0% to 6.1% per annum, with principal
payments due through 2016.
         Certain subsidiaries lease operating equipment under capital leases
with scheduled maturities through 1998 and interest rates ranging from 9.0% to
9.9% per annum.
         The subordinated debentures have an interest rate of 7.0% and are due
in installments from 1997 to 2011.  
        The aggregate amounts of principal maturities of long-term debt
(excluding commercial paper and medium-term notes  due within one year) for the
next five years are as follows: 1995 - $7,741,000, 1996 - $26,640,000, 1997 -
$14,636,000, 1998 - $4,031,000, 1999 - $2,816,000. 
        The company has short-term unsecured credit lines with domestic and
foreign  banks totaling $135 million. There are no compensating balance
requirements or fees associated with these credit lines and the lines can be
cancelled by either the banks or the company at any time.  There were no
borrowings outstanding under these lines at December 31, 1994 or 1993. 
        Based on the borrowing rates currently available to the company for debt
with similar terms and remaining maturities, the fair value of total debt at
December 31, 1994 and 1993 was approximately $242 million and $234 million.




<PAGE>   27
INCOME TAXES

         The company accounts for income taxes in accordance with the liability
method. Deferred income taxes are determined based upon the difference between
the book and the tax basis of the company's assets and liabilities. Deferred
taxes are provided at the enacted tax rates expected to be in effect when these
differences reverse.

         Deferred tax liabilities (assets) are comprised of the following at
December 31 (in thousands):


<TABLE>
<CAPTION>
                                                     1994                      1993
<S>                                                <C>                       <C>
Depreciation                                       $118,469                  $123,787
Prepaids                                             19,555                    17,345
Revenue                                               8,783                     8,806
Other                                                11,486                     6,067
         Gross liabilities                          158,293                   156,005

Claims and insurance                                (84,425)                  (81,577)
NOL and AMT credit carryovers                        (3,582)                   (5,856)
Bad debts                                            (5,466)                   (4,797)
Other                                               (11,925)                  (13,888)
         Gross assets                              (105,398)                 (106,118)
         Net liability                              $52,895                   $49,887
</TABLE>


         The provision for income taxes is computed based on the following
amounts of income (loss) before income taxes (in thousands):


<TABLE>
<CAPTION>
                                                            1994             1993             1992
<S>                                                         <C>              <C>              <C>
Domestic                                                    $(7,276)         $31,175          $62,553
Foreign                                                       3,901            4,183            2,840
  Total income (loss) before income taxes                   $(3,375)         $35,358          $65,393
</TABLE>



<PAGE>   28
         The provision for income taxes consists of the following (in
thousands):


<TABLE>
<CAPTION>
                                           1994             1993            1992
<S>                                       <C>              <C>             <C>
Current:
         U.S. federal                     $(4,158)         $21,407         $32,701
         State                             (1,870)           4,814           4,768
         Foreign                            2,354            2,216           2,211
         Total current                     (3,674)          28,437          39,680
Deferred:
         U.S. federal                       4,235           (9,214)        (11,408)
         State                                768           (3,244)         (2,131)
         Foreign                             (856)              --            (806)
         Change in U.S. federal tax rate       --            1,639              --
                 Total deferred             4,147          (10,819)        (14,345)
Investment tax credit amortization             --           (1,061)           (982)
Total provision                              $473          $16,557         $24,353
</TABLE>


         A reconciliation between income taxes at the federal statutory rate
(35% in 1994 and 1993, 34% in 1992) and the consolidated provision follows:


<TABLE>
<CAPTION>
                                                            1994             1993             1992
<S>                                                       <C>              <C>              <C>
Provision (benefit) at federal statutory rate              $(1,181)         $12,375         $22,234
State income taxes, net                                       (716)           1,021           1,740
Change in U.S. federal tax rate                                 --            1,639              --
Foreign tax rate differential                                  133              752             439
Nondeductible business expenses                              2,571            1,331             909
Amortization of investment tax credits                          --           (1,061)           (982)
Other, net                                                    (334)             500              13
         Total provision                                   $   473          $16,557         $24,353

         Effective tax rate                                   14.0%            46.8%           37.2%
</TABLE>



<PAGE>   29
EMPLOYEE BENEFITS

         Certain subsidiaries provide defined benefit pension plans for
employees not covered by collective bargaining agreements. The benefits are
based on years of service and the employees' final average earnings. The
company's funding policy is to contribute the minimum required tax-deductible
contribution for the year. The plans' assets consist primarily of U.S.
Government and equity securities.
         The following tables set forth the plans' funded status and components
of net pension cost (in thousands):


<TABLE>
<CAPTION>
Funded status at December 31:                                 1994             1993
<S>                                                         <C>              <C>
Actuarial present value of benefits at current 
 salary levels and service rendered to date:
         Vested benefits                                    $114,788         $120,843
         Non-vested benefits                                   1,624            2,422
                 Accumulated benefit obligation              116,412          123,265
Effect of anticipated future salary increases                 22,165           23,449
                 Projected benefit obligation                138,577          146,714
Plan assets at fair value                                    118,080          122,092
Plan assets less than projected benefit obligation           (20,497)         (24,622)
Unrecognized net loss                                          4,153           17,188
Unrecognized initial net asset being amortized 
 over 17 years                                               (20,445)         (22,833)         
 Pension cost accrued, not funded                           $(36,789)        $(30,267)

<CAPTION>
Net pension cost:                                           1994             1993             1992
<S>                                                       <C>              <C>              <C>
Service cost - benefits earned during the period           $8,313           $6,919           $8,072
Interest cost on projected benefit obligation              11,109            9,954           10,018
Actual return on plan assets                                  393           (8,177)          (8,333)
Amortization of unrecognized net assets                    (2,197)          (2,393)          (2,251)
Net deferral                                              (10,818)          (1,683)            (800)
                 Net pension cost                          $6,800           $4,620           $6,706


<CAPTION>

Assumptions used in the accounting at December 31:                  1994    1993     1992
<S>                                                                 <C>      <C>     <C>
Discount rate                                                       8.5%     7.5%    8.5%
Rate of increase in compensation levels                             4.0%     5.5%    7.8%
Expected rate of return on assets                                   9.0%     9.0%    9.0%
</TABLE>




<PAGE>   30
         The company contributes to multi-employer health, welfare and pension
plans for employees covered by collective bargaining agreements.  The health
and welfare plans provide health care and disability benefits to active
employees and retirees. The pension plans provide defined benefits to retired
participants. The company charged to expense and contributed the following
amounts to these plans (in thousands):


<TABLE>
<CAPTION>
                                             1994             1993             1992
<S>                                        <C>              <C>              <C>
Health and welfare                         $142,695         $138,448         $112,370
Pension                                     129,321          126,449          104,560
         Total                             $272,016         $264,897         $216,930
</TABLE>


         The company has a Stock Sharing Plan for employees of participating
domestic affiliates not covered by collective bargaining agreements. The Stock
Sharing Plan used proceeds of a bank loan to purchase shares of the company's
common stock. The loan is guaranteed by the company and the outstanding balance
is reflected in the financial statements as long-term debt (see Debt) and as a
reduction in shareholders' equity. The company's contribution to the Stock
Sharing Plan is determined annually by the Board of Directors. These
contributions combined with plan earnings must be sufficient to meet the plan's
debt service requirements. Expense is recorded as funds are contributed or
committed to be contributed. Shares are allocated in accordance with the
principal and interest method as defined by the Internal Revenue Code. Expenses
and dividends related to the Stock Sharing Plan were (in thousands):


<TABLE>
<CAPTION>
                                           1994             1993             1992
<S>                                        <C>              <C>              <C>
Employees' benefits expense                $6,735           $   --           $7,185
Interest expense                              979            1,746            2,417
         Total expense                     $7,714           $1,746           $9,602
Dividends                                  $1,456           $1,532           $1,591
</TABLE>


         Certain subsidiaries also sponsor defined contribution plans,
primarily for employees not covered by collective bargaining agreements.  The
plans principally consist of noncontributory profit sharing plans and
contributory 401(k) savings plans. Company contributions to the profit sharing
plans are discretionary and are determined annually by the Board of Directors
of each participating company. Contributions for each of the three years in the
period ended December 31, 1994 were not material to the operations of the
company.
         The company has reserved 800,000 shares of its common stock for
issuance to key employees under a stock option incentive plan. This plan
permits three types of awards: grants of stock options, both qualified and
nonqualified, grants of stock options coupled with a grant of stock
appreciation rights, and grants of restricted stock awards. At December 31,
1994 there were 791,114 shares available for future grants and no options were
outstanding.

COMMITMENTS AND CONTINGENCIES

         The company leases certain terminals and equipment. At December 31,
1994, the company was committed under noncancellable lease agreements requiring
minimum annual rentals aggregating $90,279,000 payable as follows: 1995 -
$32,800,000, 1996 - $22,916,000, 1997 - $12,991,000, 1998 - $7,354,000, 1999 -
$3,126,000 and thereafter, $11,092,000.
         Projected 1995 net capital expenditures are $175 million, of which $66
million was committed at December 31, 1994.
         Various claims and legal actions are pending against the company. It
is the opinion of management that these matters will have no significant impact
upon the financial condition or results of operations of the company.

SERIES A $10 PREFERRED STOCK AND RIGHTS

         Each share of the company's common stock carries with it one preferred
stock purchase right. Under certain circumstances, each right may be exercised
to purchase 1/100th of a share of Series A $10 Preferred stock at an exercise
price of $120, subject to adjustment. The rights, which are nonvoting, expire
on December 8, 1996 and may be redeemed by the company at a price of $.05 per
right at any time prior to ten days after public announcement of the
acquisition of 20% or more of the outstanding common stock.
         If a person acquires 20% of the company's voting stock or if certain
other transactions occur, each right not owned by a 20% shareholder will
entitle the holder to purchase at the exercise price a number of shares of the
common stock of the company or, depending on the nature of the transaction, the
stock of an acquiring company, having a market value equal to twice the
exercise price of such right.
         Dividends and voting rights on each 1/100th share of the Series A $10
Preferred stock will be equal to that of one share of common stock.



<PAGE>   31

R
EPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Shareholders of Yellow Corporation:

         We have audited the accompanying consolidated balance sheets of Yellow
Corporation (a Delaware corporation) and Subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of income, cash flows and
shareholders' equity for each of the three years in the period ended December
31, 1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Yellow Corporation
and Subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Kansas City, Missouri
January 31, 1995



<PAGE>   32
SUPPLEMENTARY INFORMATION

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)



<TABLE>
<CAPTION>
              (Amounts in thousands except per share data)
                                                  First            Second           Third            Fourth
1994                                             Quarter           Quarter         Quarter           Quarter
<S>                                             <C>              <C>              <C>              <C>
Operating revenue                               $748,159         $592,211         $769,259         $757,863
Income (loss) from operations                     (4,418)         (30,049)          27,176           18,302
Income (loss) before extraordinary item           (6,384)         (21,876)          13,204           11,208
Net income (loss)                                 (6,384)         (21,876)           9,146(a)        11,208
Earnings per share:
         Income (loss) before extraordinary item    (.23)            (.78)             .47              .40
         Net income (loss)                          (.23)            (.78)             .33(a)           .40

1993(b)                                                                                               
Operating revenue                               $602,220         $732,901         $761,706         $759,678
Income from operations                             1,757            2,887 (c)       25,634           23,615
Net income (loss)                                 (1,749)          (1,886)(c)       10,468(d)        11,968
Earnings (loss) per share                           (.06)            (.07)(c)          .37(d)           .43
</TABLE>


(a) - Includes an extraordinary item of $4.1 million after taxes ($.14 per
share) to write-off intrastate operating rights.
(b) - 1993 amounts include the operating results of Preston Corporation
effective March 1, 1993.
(c) - Includes network development charge of $18.0 million, $11.2 million after
taxes ($.40 per share).
(d) - Includes charge for the tax rate change of $1.6 million after taxes ($.06
per share).

COMMON STOCK

         Yellow Corporation's stock is held by approximately 3,400 shareholders
of record. The company's only class of stock outstanding is common stock,
traded in over-the-counter markets. Trading activity averaged about 218,000
shares per day during the year, up from 168,000 shares per day in 1993. Prices
are quoted by the National Association of Securities Dealers Automatic
Quotation System National Market (NASDAQ-NMS) under the symbol YELL.


<TABLE>
<CAPTION>
Quarter Ended
                                     Dividends                                               Dividends
1994             High        Low     Per Share     1993            High             Low      Per Share
<S>              <C>        <C>      <C>        <C>             <C>                <C>       <C>
March 31         30-1/4     23-1/2   $  .235     March 31          29-7/8           22-1/4     $.235
June 30          24-1/8     16-3/4      .235     June 30           24-1/4           16-7/8      .235
September 30     21-5/8     17          .235     September 30      24-7/8           17-1/8      .235
December 31      24-1/4     18-1/4      .235     December 31       25-7/8           22-3/8      .235
                                     $  .940                                                   $.940
</TABLE>






<PAGE>   33
SENIOR OFFICERS

YELLOW CORPORATION

       George E. Powell III
       President and Chief Executive Officer
       Robert W. Burdick
       Senior Vice President - Corporate Development and Public
Affairs
       William F. Martin, Jr.
       Senior Vice President - Legal/Corporate Secretary
       H. A. Trucksess, III
       Senior Vice President - Finance and Chief Financial Officer

YELLOW FREIGHT SYSTEM, INC.

       M. Reid Armstrong
       President
       Robert L. Bostick
       Senior Vice President - Operations
       J. Kevin Grimsley
       Senior Vice President - Marketing and Sales
       Gail A. Parris
       Senior Vice President - Administration

PRESTON TRUCKING COMPANY, INC.

       Leo H. Suggs
       President
       J. Sean Callahan
       Senior Vice President - Finance and Administration
       Gordon S. MacKenzie
       Senior Vice President - Operations and Sales

SAIA MOTOR FREIGHT LINE, INC.

       Jimmy D. Crisp
       President

CSI/REEVES, INC.

       Thor N. Edman, Jr.
       President

WESTEX, INC.

       Frank E. Myers
       President

YELLOW LOGISTICS SERVICES, INC.

       Robert G. Olterman
       General Manager

YELLOW TECHNOLOGY SERVICES, INC.

       William F. Martin, Jr.
       President




<PAGE>   34

BOARD OF DIRECTORS / YELLOW CORPORATION

       GEORGE E. POWELL, JR.
           Director since 1952
           Chairman of the Board of the Company

       KLAUS E. AGTHE
           Director since 1984
           Director, VIAG North America

       M. REID ARMSTRONG
           Director since 1992
           President of Yellow Freight System, Inc.

       HOWARD M. DEAN
           Director since 1987
           Chairman and Chief Executive Officer of Dean Foods Company

+      DAVID H. HUGHES
           Director since 1973
           Retired Vice Chairman of Hallmark Cards, Inc.

       RONALD T. LEMAY
           Director since 1994
           President and Chief Operating Officer of Sprint Corporation
           Long Distance Division

+      JOHN C. McKELVEY
           Director since 1977
           President and Chief Executive Officer of Midwest Research
           Institute

       GEORGE E. POWELL III
           Director since 1984
           President and Chief Executive Officer of the Company

+      WILLIAM L. TRUBECK
           Director since 1994
           Senior Vice President and Chief Financial Officer of SPX
             Corporation

       WILLIAM F. MARTIN, JR.
           Secretary to the Board


+      Member, Audit Committee




<PAGE>   35

CORPORATE  INFORMATION

YELLOW CORPORATION
10777 Barkley, P.O. Box 7563
Overland Park, Kansas 66207
(913) 967-4300

INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
Kansas City, Missouri

TRANSFER AGENT AND REGISTRAR
Mellon Securities Trust Company
Shareholder Relations Department
P.O. Box 305
Pittsburgh, Pennsylvania 15230
(800) 526-0801

ANNUAL MEETING
April 19, 1995, at 9:30 a.m.
Overland Park Marriott
10800 Metcalf Avenue
Overland Park, Kansas 66210

10-K REPORT
Please write to:
Treasurer

Yellow Corporation
P.O. Box 7563
Overland Park, Kansas 66207





<PAGE>   1

                                                                    Exhibit (24)





                   Consent of Independent Public Accountants



        As independent public accountants, we hereby consent to the
incorporation of our reports included and incorporated by reference in this
Form 10-K, into the company's previously filed Form S-8 Registration Statement
File No. 33-47946.





                                                             ARTHUR ANDERSEN LLP




Kansas City, Missouri,
March 24, 1995





<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1994
<PERIOD-START>                             JAN-01-1994
<PERIOD-END>                               DEC-31-1994
<CASH>                                          17,613
<SECURITIES>                                         0
<RECEIVABLES>                                  295,332
<ALLOWANCES>                                    13,082
<INVENTORY>                                          0
<CURRENT-ASSETS>                               403,357
<PP&E>                                       1,866,565
<DEPRECIATION>                                 989,281
<TOTAL-ASSETS>                               1,307,221
<CURRENT-LIABILITIES>                          375,991
<BONDS>                                        240,019
<COMMON>                                        28,858
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<OTHER-SE>                                     431,985
<TOTAL-LIABILITY-AND-EQUITY>                 1,307,221
<SALES>                                              0
<TOTAL-REVENUES>                             2,867,492
<CGS>                                                0
<TOTAL-COSTS>                                2,856,481
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              18,433
<INCOME-PRETAX>                                (3,375)
<INCOME-TAX>                                       473
<INCOME-CONTINUING>                            (3,848)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                (4,058)
<CHANGES>                                            0
<NET-INCOME>                                   (7,906)
<EPS-PRIMARY>                                    (.28)
<EPS-DILUTED>                                    (.28)
        

</TABLE>