<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 [NO FEE REQUIRED]

For the fiscal year ended December 31, 1999

                                       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.)

     10990 Roe Avenue, P.O. Box 7563, 
          Overland Park, Kansas                              66207  
 (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:     (913) 696-6100

           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 March 9, 2000 was $405,345,604.

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 March 9, 2000
Common Stock, $1 Par Value                             25,235,524 shares

                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference into the Form 10-K: 
          1) 1999 Annual Report to Shareholders - Parts I, II and IV 
          2) Proxy Statement dated March 3, 2000 - Part III


                                       1

<PAGE>   2

                               Yellow Corporation
                                    Form 10-K
                          Year Ended December 31, 1999


                                      Index

Item                                                                       Page


                                     PART I

    1.   Business                                                            3
    2.   Properties                                                          7
    3.   Legal Proceedings                                                   8
    4.   Submission of Matters to a Vote of Security Holders                 8
         Executive Officers of the Registrant (Unnumbered Item)              9

                                     PART II

    5.   Market for the Registrant's Common Stock and Related
          Stockholder Matters                                               10
    6.   Selected Financial Data                                            10
    7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                               10
    8.   Financial Statements and Supplementary Data                        10
    9.   Changes and Disagreements on Accounting and
          Financial Disclosure                                              10

                                    PART III

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

                                     PART IV

   14.   Exhibits, Financial Statement Schedule and Reports
          on Form 8-K                                                       12

Report of Independent Public Accountants on Financial
 Statement Schedule                                                         14

Financial Statement Schedule II                                             15

Signatures                                                                  16

Employment Agreement of William D. Zollars                         Exhibit (10)

1999 Annual Report to Shareholders                                 Exhibit (13)

Consent of Independent Public Accountants                          Exhibit (23)




                                        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 and, through partnership alliances, other international
        markets. In July 1999, the company acquired Jevic Transportation Inc. a
        fully integrated regional and inter-regional LTL and partial TL carrier.
        The company expanded their portfolio of transportation services with the
        introduction of Definite Delivery in 1999 and Exact Express in 1998. The
        company continues to make significant investments in technology. In
        April 1999 the company suspended its stock repurchase program as a
        result of the Jevic acquisition and internal investment opportunities.

(b)     The company provides interstate transportation of general commodity
        freight, primarily LTL, primarily by motor vehicle. The operation of the
        company is conducted among three primary business segments. Financial
        disclosures for these segments are presented in the Business Segments
        footnote on page 25 of the 1999 Annual Report to Shareholders which is
        incorporated herein by reference.

(c)     Yellow Corporation is a holding company providing freight transportation
        services through its subsidiaries, Yellow Freight System, Inc. (Yellow
        Freight), Saia Motor Freight Line, Inc. (Saia), Jevic Transportation,
        Inc. (Jevic), WestEx, Inc. (WestEx), Action Express, Inc. (Action), and
        YCS International, (YCS). Yellow Technologies, Inc. (Yellow
        Technologies) is a subsidiary that provides information technology
        services to the company and its subsidiaries. The company employed an
        average of 31,200 persons in 1999.

        Yellow Freight, the company's principal subsidiary based in Overland
        Park, Kansas, accounted for 81% of total company revenue from continuing
        operations in 1999, 86% in 1998 and 88% in 1997. It is one of the
        nation's largest providers of LTL transportation services. It provides
        comprehensive national LTL service as well as international service to
        Mexico, Canada and, via alliances, Europe, the Asia/Pacific region,
        South America and Central America.

        Saia is a regional LTL carrier headquartered in a suburb of Atlanta,
        Georgia provides overnight and second-day service in twelve Southern
        states and Puerto Rico. Saia accounted for 11% of total company revenue
        from continuing operations in 1999, 12% in 1998 and 11% in 1997.






                                        3


<PAGE>   4



I
tem 1. Business. (cont.)

        Jevic is a regional/inter-regional LTL and partial TL carrier
        headquartered in the Philadelphia metropolitan area that operates
        primarily in the Northeastern states. Jevic, which was acquired on July
        9, 1999 accounted for 4% of 1999 revenues.

        WestEx is a regional LTL carrier that provides overnight and second-day
        service in California and the Southwestern states. WestEx had operating
        revenue of $71 million in 1999 and is headquartered in Phoenix, Arizona.

        Action is a regional LTL carrier that provides overnight and second-day
        service to the Pacific Northwest and Rocky Mountain states. Action had
        operating revenue of $36 million in 1999 and is headquartered in Boise,
        Idaho.

        YCS is an international freight forwarder providing air and ocean/import
        and export, customs brokerage and distribution services. It has 24
        global partners and is headquartered in Overland Park, Kansas.

        Yellow Technologies supports the company's subsidiaries - primarily
        Yellow Freight - with information technology. Its headquarters is in
        Overland Park, Kansas.

        The operations of the freight transportation companies are partially
        regulated by the United States Department of Transportation and state
        regulatory bodies. The company's competition includes contract motor
        carriers, private fleets, railroads, other motor carriers and small
        shipment 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, effective asset utilization,
        and cost control major competitive factors. No single customer accounts
        for more than 10% of the company's total revenue. The company's revenue
        is subject to seasonal variations throughout the year. The first quarter
        is generally the weakest while the third is the strongest.

        Operating revenue for the company totaled $3.2 billion in 1999 an 11.2
        percent increase over 1998 revenue of $2.9 billion. Operating income for
        the year was $107.5 million, an increase of 28.9 percent over 1998
        operating income of $83.4 million. Income from continuing operations in
        1999 was $50.9 million or $2.02 per share (diluted) compared to income
        from continuing operations of $40.1 million or $1.49 per share (diluted)
        in 1998.





                                        4


<PAGE>   5


Item 1.  Business. (cont.)

         Yellow Freight's 1999 operating income was $85.4 million, a 27.7
         percent increase over 1998 operating income of $66.9 million. Operating
         revenue was $2.6 billion for 1999, up 4.8 percent from $2.5 billion in
         1998. The 1999 operating ratio was 96.7 compared to 97.3 in 1998.

         Saia had operating income of $16.8 million in 1999 compared to $24.7
         million in 1998. Saia's revenue grew 2.7 percent in 1999 to $349.3
         million compared to $340.1 million in 1998. Saia's 1999 performance was
         below 1998 levels due to softer revenue for the early part of 1999 in
         Texas and Gulf Coast regions with economies tied to the petroleum
         industry. Tonnage increased 1.7 percent and revenue per ton increased
         less than one percent. However, revenue and tonnage trends improved
         during the last quarter of 1999 due in part to company initiatives to
         significantly improve service levels.

         Jevic was acquired on July 9, 1999 and is operated as a separate
         subsidiary of the company. Jevic is a fully integrated regional and
         inter-regional LTL and partial TL carrier. Jevic's operating system
         combines the high revenue yield characteristics of LTL carriers with
         the operating flexibility and low fixed costs of TL carriers. Jevic is
         headquartered in the Philadelphia Metropolitan area. Jevic reported
         operating income of $10.1 million and revenue of $137.9 million
         resulting in an operating ratio of 92.7 for the partial year 1999.
         Operating results for 1999 reflect only contributions since the July 9
         acquisition date.

         WestEx reported improved operating income of $0.4 million in 1999
         compared to an operating loss of $1.2 million in 1998. WestEx had 1999
         revenue of $70.9 million, up 9.2 percent from 1998 revenue of $64.9
         million.

         Action Express was acquired on December 1, 1998. Action Express
         reported 1999 operating income of $0.1 million and revenue of $36.5
         million, which resulted in an operating ratio of 99.6.

         The company's operations are further described in Management's
         Discussion and Analysis in the 1999 Annual Report to Shareholders,
         which is incorporated herein by reference.











                                        5


<PAGE>   6


Item 1.  Business. (cont.)

         The company's liquidity needs arise primarily from capital investment
         in new equipment, land and structures and information technology, as
         well as funding working capital requirements. To ensure short-term and
         longer-term liquidity, the company maintains capacity under a bank
         credit agreement and an asset backed securitization (ABS) agreement
         involving Yellow Freight's accounts receivable. Working capital
         decreased from a negative $42 million at year-end 1998 to a negative
         $83 million at year-end 1999. Borrowings under the ABS facility were
         increased by $92 million in 1999. The company can operate with negative
         working capital because of the quick turnover of its accounts
         receivable and its ready access to sources of short-term liquidity.

         Future Outlook

         The company is positioned for achieving profitable revenue growth at
         Yellow Freight as well as the regional group of companies. All of the
         company's subsidiaries are focused on expanding their portfolio of
         transportation services. Yellow Freight's introduction of Definite
         Delivery, its mid-tier time-definite ground service in 1999 and Exact
         Express, its premium tier time-definite expedited air service in 1998
         are examples of the value added services our customers have demanded.
         All of the company's subsidiaries continue to improve their
         productivity levels through implementation of best practices and
         investments in technology.

         The company will continue to make significant investments in
         technology. Timely and accurate information is essential to improve
         service quality and meet increasing customer expectations for access to
         real-time information. The ability to deliver new transportation
         services and improve the quality of those services will be key to the
         successful transportation companies of the future.

         The 1999 acquisition of Jevic has brought the regional transportation
         group to a critical mass, creating a number of options to unlock
         shareholder value, which the company will be evaluating. We are
         creating a management structure for our regional transportation group
         to ensure the regional group is well-focused on long-term strategies as
         well as shorter-term revenue and profit improvement.

         In addition to the current subsidiaries and businesses, the company
         will also evaluate opportunities to grow earnings through e-commerce
         and the Internet as well as through future acquisitions. Management
         believes the company's balance sheet and access to capital provide it
         the flexibility to reinvest in businesses as well as new business
         opportunities with attractive growth prospects.





                                        6




<PAGE>   7

Item 1.  Business. (cont.)

         Statements contained herein, that are not purely historical, are
         forward looking statements within the meaning of the Private Securities
         Litigation Reform Act of 1995, including statements regarding the
         company's expectations, hopes, beliefs and intentions on strategies
         regarding the future. It is important to note that the company's actual
         future results could differ materially from those projected in such
         forward-looking statements because of a number of factors, including
         but not limited to inflation, labor relations, inclement weather,
         competitor pricing activity, expense volatility and a downturn in
         general economic activity.

(d)      Revenue from foreign sources is discussed in the Business
         Segments footnote on page 26 of the 1999 Annual Report to Shareholders,
         which is incorporated herein by reference. Foreign source revenue was
         not material to consolidated financial results in 1999, 1998 and 1997.



Item 2.  Properties.

The company's operating subsidiaries each provide their transportation services
through separate networks, principally consisting of a fleet of tractors and
trailers and real estate terminal facilities.

At December 31, 1999, the company operated a total of 508 freight terminals
located in 50 states, Puerto Rico, parts of Canada and Mexico. Of this total,
242 were owned terminals and 266 were leased, generally for terms of three years
or less. The number of vehicle back-in doors totaled 16,864, of which 12,557
were at owned terminals and 4,307 were at leased terminals. The freight
terminals vary in size ranging from one to three doors at small local terminals,
to over 300 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, 1999, the company's subsidiaries operated 5,347 line-haul
tractors and 7,116 city tractors and trucks. The company operated 46,319
trailers.

The company's facilities and equipment are adequate to meet current business
requirements. The company expects moderate growth in its regional subsidiaries
and lower growth in its Yellow Freight System subsidiary in 2000. The company
has projected only modest increases in its operational capacity. Projected net
capital expenditures for 2000 are $177 million, a decrease over 1999 net capital
expenditures of $314 million. 1999 capital expenditures include $165 million for
the acquisition of Jevic. Net capital for both periods pertain primarily to
replacement of revenue equipment at all subsidiaries, growth capital at Saia,
Jevic, WestEx and Action, and additional investments in information technology.

                                        7




<PAGE>   8


Item 3.  Legal Proceedings.

The information set forth under the caption "Commitments and Contingencies" in
the Notes to Consolidated Financial Statements of the registrant's Annual Report
to Shareholders for the year ended December 31, 1999, is incorporated by
reference under Item 14 herein.


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

None.









































                                        8


<PAGE>   9



Executive Officers of the Registrant

The names, ages and positions of the executive officers of the company as of
March 24, 2000 are listed below. Officers are appointed annually by the Board of
Directors at their meeting that immediately follows the annual meeting of
shareholders.



<TABLE>
<CAPTION>
               Name        Age                             Position(s) Held

<S>                         <C>       <C>                                                                                     
William D. Zollars          52        Chairman,  President  and Chief  Executive  Officer of the  company  (since  November
                                      1999);  President  of Yellow  Freight  System  (since  September  1996);  Senior Vice
                                      President Ryder Integrated Logistics, Inc. (1994 -1996)

William F. Martin, Jr.      52        Senior Vice  President -  Legal/Corporate  Secretary of the company  (since  December
                                      1993);  Vice  President and Secretary of the company (prior to December  1993);  Vice
                                      President and Secretary of Yellow Freight (prior to May 1992)

H. A. Trucksess, III        50        President of the Regional  Transportation  Group (since February  2000);  Senior Vice
                                      President - Finance and Chief Financial  Officer of the company (June 1994 - February
                                      2000), and Treasurer of the company  (December 1995 - February 2000);  Vice President
                                      and Chief Financial Officer of Preston Corporation (prior to June 1994)

Hiram A. Cox                43        Senior Vice  President - Finance and Chief  Financial  Officer of the company  (since
                                      February  2000);  Senior Vice  President - Finance of Yellow  Freight  System  (since
                                      July 1998); Corporate Controller of Delta Airlines (prior to July 1998).

</TABLE>


The terms of each officer of the company designated above are scheduled to
expire April 20, 2000. 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.







                                        9


<PAGE>   10



                                     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 28 of the
registrant's Annual Report to Shareholders for the year ended December 31, 1999,
is incorporated by reference under Item 14 herein.


Item 6.  Selected Financial Data.

The information set forth under the caption "Financial Summary" on pages 8 and 9
of the registrant's Annual Report to Shareholders for the year ended December
31, 1999, 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 1 through 7 of the registrant's Annual Report to
Shareholders for the year ended December 31, 1999, is incorporated by reference
under Item 14 herein.


Item 8.  Financial Statements and Supplementary Data.

The financial statements and supplementary information, appearing on pages 10
through 28 of the registrant's Annual Report to Shareholders for the year ended
December 31, 1999, are incorporated by reference under Item 14 herein.


Item 9.  Changes and Disagreements on Accounting and Financial Disclosure.

None.















                                       10


<PAGE>   11


                                    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. The Employment Agreement between William D. Zollars, Chairman,
President and Chief Executive Officer, and the company, is filed as Exhibit 10
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.






















                                       11


<PAGE>   12


                                     PART IV



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

(a)      (1)  Financial Statements

         The following information appearing in the 1999 Annual Report to
         Shareholders is incorporated by reference in this Form 10-K Annual
         Report as Exhibit (13):

                                                                  Page
         Management's Discussion and Analysis of
          Financial Condition and Results of Operations            1-7
         Financial Summary                                         8-9
         Consolidated Financial Statements                       10-27
         Report of Independent Public Accountants                   27
         Quarterly Financial Information                            28
         Common Stock                                               28


         With the exception of the aforementioned information, the 1999 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 1999 Annual Report to
         Shareholders.

(a)      (2)  Financial Statement Schedule
         
                                                                   Page

         Report of Independent Public Accountants on
          Financial Statement Schedule                              14

         For the years ended December 31, 1999, 1998 and 1997:
          Schedule II - Valuation and Qualifying Accounts           15

         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.

(a)      (3)  Exhibits

         (10) - Employment Agreement of William D. Zollars
         (13) - 1999 Annual Report to Shareholders.
         (23) - 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.

                                       12

<PAGE>   13

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

(b)      Reports on Form 8-K

         November 9, 1999 - Yellow Corporation announced the resignation of its
         Chairman, President and CEO A. Maurice Myers and the appointment of
         William D. Zollars as Chairman, President and CEO.













































                                       13


<PAGE>   14


                          Report of Independent Public
                   Accountants on Financial Statement Schedule





To the Shareholders of Yellow Corporation:

We have audited in accordance with auditing standards generally accepted in the
United States, 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
26, 2000. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedule of valuation and qualifying accounts
(Schedule II) is the responsibility of the company's management and is presented
for purposes 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 26, 2000















                                       14

<PAGE>   15


                                                                     Schedule II

                       Yellow Corporation and Subsidiaries
                        Valuation and Qualifying Accounts
              For the Years Ended December 31, 1999, 1998 and 1997



                                                                               

<TABLE>
<CAPTION>

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

<S>                               <C>         <C>        <C>         <C>          <C>
Year ended December 31, 1999:
Deducted from asset account -
 Allowance for uncollectible
 accounts                         $14,162     $15,878    $1,330 (2)  $15,709      $15,661
                                  =======     =======    ======      =======      =======




Year ended December 31, 1998:
Deducted from asset account -
 Allowance for uncollectible
 accounts                         $12,264     $14,779    $    -      $12,881      $14,162
                                  =======     =======    ======      =======      =======




Year ended December 31, 1997:
Deducted from asset account -
 Allowance for uncollectible
 accounts                         $10,610     $13,272    $    -      $11,618      $12,264
                                  =======     =======    ======      =======      =======

</TABLE>



(1) Primarily uncollectible accounts written off - net of recoveries.

(2) Estimated uncollectible accounts of Jevic at July 9, 1999 acquisition date.




                                       15



<PAGE>   16


                                   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/ William D. Zollars
                                       ---------------------------------
                                       William D. Zollars
                                       President, Chief Executive Officer and
March 24, 2000                         Chairman of the Board of Directors


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.



  /s/ Hiram A. Cox            Senior Vice President --     March 24, 2000
  ----------------------      Finance/Chief Financial
    Hiram A. Cox              Officer and Treasurer
                              


  /s/ Howard M. Dean          Director                     March 24, 2000
  ----------------------      
    Howard M. Dean


  /s/ Cassandra C. Carr       Director                     March 24, 2000
  ----------------------      
    Cassandra C. Carr


  /s/ Carl W. Vogt            Director                     March 24, 2000
  ----------------------      
    Carl W. Vogt


  /s/ Klaus E. Agthe          Director                     March 24, 2000
  ----------------------      
    Klaus E. Agthe


  /s/ Ronald T. LeMay         Director                     March 24, 2000
  ----------------------      
    Ronald T. LeMay


  /s/ John C. McKelvey        Director                     March 24, 2000
  ----------------------      
    John C. McKelvey


  /s/ William L. Trubeck      Director                     March 24, 2000
  ----------------------      
    William L. Trubeck

                                       16





<PAGE>   1
                                                                      Exhibit 10

                              EMPLOYMENT AGREEMENT


         AGREEMENT, made this 15th day of December, 1999, by and between Yellow
Corporation, a Delaware corporation ("Yellow"), and William D. Zollars (the
"Executive").

                                   WITNESSETH

         WHEREAS, the Board of Directors of Yellow has approved the employment
of the Executive on the terms and conditions set forth in this Agreement; and

         WHEREAS, the Executive is willing, for the consideration provided, to
enter into employment with Yellow on the terms and conditions set forth in this
Agreement;

         NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:

1.       Employment. Yellow hereby agrees to employ the Executive, and the
         Executive hereby accepts such employment, upon the terms and conditions
         set forth in this Agreement.

2.       Term. The term of this Agreement shall be for two (2) years from the
         date hereof (the "Effective Date"), with said term renewing daily, and
         ending on the date of termination of the Executive's employment
         determined pursuant to Section 5, 6 or 7, whichever shall be
         applicable.

3.       Position and Duties. The Executive shall serve as Chairman, President
         and CEO of Yellow, and shall have such responsibilities and authority
         as commensurate with such offices and as may from time to
 time be
         prescribed by or pursuant to Yellow's bylaws. The Executive shall
         devote


                                       1

<PAGE>   2


         substantially all of his working time and efforts to the business and
         affairs of Yellow.

4.       Compensation. During the period of the Executive's employment, Yellow
         shall provide the Executive with the following compensation and other
         benefits:

         (a)  Base Salary. Yellow shall pay to the Executive base salary at the
              initial rate of $550,000 per annum, retroactive to November 8,
              1999, which shall be payable in accordance with the standard
              payroll practices of Yellow. Such base salary rate shall be
              reviewed annually in accordance with Yellow's normal policies
              beginning in calendar year 2000; provided, however, that at no
              time during the term of this Agreement shall the Executive's base
              salary be decreased from the rate then in effect except (i) in
              connection with across-the-board reductions similarly affecting
              substantially all senior executives of Yellow or (ii) with the
              written consent of the Executive. 

         (b)  Annual Bonus.

              (1)  For Calendar Year 1999. Executive shall receive a Bonus for
                   calendar year 1999, calculated as follows:

                   (i)  For the period January 1, 1999 through November 7, 1999,
                        Executive's Bonus shall be calculated utilizing the
                        formula adopted for Senior Management Executive Bonuses



                                       2

<PAGE>   3
                        at Yellow's subsidiary, Yellow Freight System, Inc.,
                        based upon the salary received by Executive in his
                        position as President of that subsidiary for this
                        period.

                   (ii) For the period November 8, 1999 through December 31,
                        1999, Executive's Bonus shall be calculated utilizing
                        the formula previously adopted by the Compensation
                        Committee for the position of Chairman, President and
                        CEO of Yellow based upon the salary received by
                        Executive for these positions under this Agreement and
                        for this period.

              (2)  For Calendar Year 2000 and Beyond. The Executive shall
                   participate in a bonus program established and maintained by
                   Yellow pursuant to which a threshold award for each fiscal
                   year is 18.75% of the Executive's base salary; a target award
                   is 75% of base salary; and a maximum award is 150% of base
                   salary in respect of each fiscal year of Yellow commencing
                   with 2000, provided that any payment under such award shall
                   be conditioned upon satisfaction of the threshold. The
                   criteria for establishment of the threshold and target and
                   the parameters for payments





                                       3

<PAGE>   4
                   at, above or below the target shall be determined annually by
                   the Compensation Committee of the Board of Directors of
                   Yellow. At least 80% of the criteria established by the
                   Compensation Committee which would result in a payment of 75%
                   of base salary to the Executive shall be based on specific
                   measurements of financial performance of Yellow during the
                   applicable fiscal year and the remaining percentage may be
                   based on non-financial criteria.

              (c)  Stock Options. Yellow has granted to the Executive, effective
                   as of the Effective Date, an option to purchase 200,000
                   shares of Common Stock of Yellow, with an option term of ten
                   years and an option price per share equal to the closing
                   price of a share of Common Stock of Yellow as reported on the
                   NASDAQ National Market System on the Effective Date;
                   provided, however, that such option shall vest and become
                   exercisable at the rate of (i) 25% on the first anniversary
                   of the Effective Date; (ii) 25% on the second anniversary of
                   the Effective Date; (iii) 25% on the third anniversary of the
                   Effective Date; and (iv) 25% on the fourth anniversary of the
                   Effective Date. With respect to succeeding years, the
                   Compensation Committee of the Board of Directors of Yellow
                   shall determine the number of stock options, if any, to be
                   granted to the Executive and the terms and conditions of any
                   such options.




                                       4

<PAGE>   5
              (d)  Supplemental Retirement Benefits. Yellow shall provide
                   Executive with supplemental retirement benefits in accordance
                   with this subsection (d) and Appendix A pursuant to which the
                   Executive shall receive from Yellow upon his termination of
                   employment with Yellow (and subject to the vesting provision
                   hereinafter set forth), the difference between (i) the
                   monthly benefit that he would have received under Section 4.4
                   of the Yellow Freight Office, Clerical, Sales and Supervisory
                   Personnel Pension Plan (the "Pension Plan") (calculated as a
                   single life annuity payable commencing at his Normal
                   Retirement Date as defined under the Pension Plan with an
                   actuarial reduction if payment commences prior to his Normal
                   Retirement Date) using 20 years of Credit Service as defined
                   under the Pension Plan plus his actual Credited Service
                   credited under the Pension Plan after five (5) years from
                   September 6, 1996, the date of Executive's commencement of
                   employment with Yellow's subsidiary, Yellow Freight System,
                   Inc., and using Compensation as defined in Section 2.1(h) (2)
                   of the Pension Plan, including Compensation previously earned
                   during his employment with Yellow Freight System, Inc. from
                   September 6, 1996 through November 7, 1999, but without any
                   reduction under Section 401(a) (17) of the Internal Revenue
                   Code of 1986, as amended )the "Code") and (ii) the monthly
                   benefit actually payable to the Executive under Section





                                       5

<PAGE>   6
              4.4 of the Pension Plan, calculated at the time the Executive
              commences payment of a Vested Pension under the Pension Plan, if
              any. The Executive shall vest in the supplemental retirement
              benefit described in this subsection (d) at the rate of 20% per
              year commencing on September 6, 1997 (so that he would become 100%
              vested on September 6, 2001), provided, however, that the
              Executive shall forfeit any unvested portion in the event of the
              termination of his employment prior to becoming 100% vested.
              Notwithstanding the foregoing, the Executive shall immediately
              become 100% vested in the event of the termination of his
              employment under circumstances entitling the Executive to benefits
              pursuant to Section 8. The supplemental retirement benefit
              described in this subsection (d) and Appendix A shall be payable
              monthly commencing as of the last day of the month following the
              month of termination of the Executive's employment or, if
              Executive has not yet qualified for payment of a retirement
              benefit under the Pension Plan as of his date of termination, the
              supplemental retirement benefit shall be payable monthly
              commencing as of the earliest date of Executive's eligibility to
              retire under the Pension Plan subject to actuarial reduction for
              payments commencing prior to Executive's normal retirement date,
              and shall continue until the Executive's death. Upon the
              Executive's death, if at the time of his death he had already





                                       6

<PAGE>   7
              qualified for payment of a retirement benefit under the Pension
              Plan and if he is survived by and still married to the person who
              was his spouse on September 6, 1996, the monthly supplemental
              retirement benefit payable to the Executive during his life shall
              continue to said surviving spouse until her death. If at the time
              of his death, the Executive had not yet qualified for payment of a
              retirement benefit under the Pension Plan, if he is survived by
              and still married to the person who was his spouse on September 6,
              1996, said spouse shall qualify to receive the same monthly
              supplemental retirement benefit commencing on the last day of the
              month in which Executive would have reached his Normal Retirement
              Date. If the Executive at the time of his death is neither
              survived by or not married to the person who was his spouse on
              September 6, 1996, no further supplemental retirement benefits
              shall be payable under this subsection (d) following his death.
              The Executive acknowledges that these supplemental retirement
              benefits are an element of the compensation to be paid for his
              services and not an unfunded plan of deferred compensation within
              the meaning of Section 201 of the Employee Retirement Income
              Security Act, as amended.

         (e)  Other Benefits. In addition to the compensation and benefits
              otherwise specified in this Agreement, the Executive (and, if
              provided for under the applicable plan or program, his spouse)




                                       7

<PAGE>   8
              shall be entitled to participate in, and to receive benefits
              under, Yellow's employee benefit plans and programs that are or
              may be available to senior executives generally and on terms and
              conditions that are no less favorable than those generally
              applicable to other senior executives of Yellow. At no time during
              the term of this Agreement shall the Executive's participation in
              or benefits received under such plans and programs be decreased
              except (i) in connection with across-the-board reductions
              similarly affecting substantially all senior executives of Yellow
              or (ii) with the written consent of the Executive. The Executive
              shall be treated as having satisfied any otherwise applicable
              waiting period requirement for coverage under Yellow's disability
              insurance plan, effective as of the Effective Date.

         (f)  Expenses. The Executive shall be entitled to prompt reimbursement
              of all reasonable expenses incurred by him in performing services
              hereunder, provided he properly accounts therefore in accordance
              with Yellow's policies.

         (g)  Office and Services Furnished. Yellow shall furnish the Executive
              with office space, secretarial assistance and such other
              facilities and services as shall be suitable to the Executive's
              position and adequate for the performance of his duties hereunder.

5.       Termination of Employment by Yellow.



                                       8

<PAGE>   9
         (a)  Cause. Yellow may terminate the Executive's employment for Cause
              if the Executive willfully engages in conduct which is materially
              and demonstrably injurious to Yellow or if the Executive willfully
              engages in an act or acts of dishonesty resulting in material
              personal gain to the Executive at the expense of Yellow. Yellow
              shall exercise its right to terminate the Executive's employment
              for Cause by (i) giving him written notice of termination at least
              30 days before the date of such termination specifying in
              reasonable detail the circumstances constituting such Cause; and
              (ii) delivering to the Executive a copy of a resolution duly
              adopted by the affirmative vote of not less than a majority of the
              entire membership of the Board of Directors (except the
              Executive), after reasonable notice to the Executive and an
              opportunity for the Executive and his counsel to be heard before
              the Board of Directors, finding that the Executive has engaged in
              the conduct set forth in this subsection (a). In the event of such
              termination of the Executive's employment for Cause, the Executive
              shall be entitled to receive (i) his base salary pursuant to
              Section 4(a) and any other compensation and benefits to the extent
              actually earned pursuant to this Agreement or any benefit plan or
              program of Yellow as of the date of such termination at the normal
              time for payment of such salary, compensation or benefits and (ii)
              any amounts owing under Section 4 (f). In addition, in the event
              of




                                       9

<PAGE>   10
              such termination of the Executive's employment for Cause, all
              outstanding options held by the Executive at the effective date of
              such termination which had not already been exercised shall be
              forfeited. Except as provided in Section 9, the Executive shall
              receive no other compensation or benefits from Yellow.

         (b)  Disability. If the Executive incurs a Permanent and Total
              Disability, as defined below, Yellow may terminate the Executive's
              employment by giving him written notice of termination at least 30
              days before the date of such termination. In the event of such
              termination of the Executive's employment because of Permanent and
              Total Disability, (i) the Executive shall be entitled to receive
              his base salary pursuant to Section 4(a) and any other
              compensation and benefits to the extent actually earned by the
              Executive pursuant to this Agreement or any benefit plan or
              program of Yellow as of the date of such termination of employment
              at the normal time for payment of such salary, compensation or
              benefits, and any amounts owing under Section 4(f), and (ii) all
              outstanding stock options held by the Executive at the time of his
              termination of employment shall become immediately exercisable at
              that time, and the Executive shall have one year from the date of
              such termination of employment to exercise any or all of such
              outstanding options (but not beyond the term of such option). For
              purposes of this Agreement, the




                                       10

<PAGE>   11
              Executive shall be considered to have incurred a Permanent and
              Total Disability if he is unable to engage in any substantial
              gainful employment by reason of any materially determinable
              physical or mental impairment which can be expected to result in
              death or which has lasted or can be expected to last for a
              continuous period of not less than 12 months. The existence of
              such Permanent and Total Disability shall be evidenced by such
              medical certification as the Secretary of Yellow shall require and
              shall be subject to the approval of the Compensation Committee of
              the Board of Directors of Yellow.

         (c)  Without Cause. Yellow may terminate the Executive's employment at
              any time and for any reason, other than for Cause or because of
              Permanent and Total Disability, by giving him a written notice of
              termination to that effect at least 30 days before the date of
              termination. In the event of such termination of the Executive's
              employment without Cause, the Executive shall be entitled to the
              benefits described in Section 8.

6.       Termination of Employment by the Executive.

         a.   Good Reason. The Executive may terminate his employment for Good
              Reason by giving Yellow a written notice of termination at least
              30 days before the date of such termination specifying in
              reasonable detail the circumstances constituting such Good Reason.
              In the event of the Executive's termination of his




                                       11

<PAGE>   12
              employment for Good Reason, the Executive shall be entitled to the
              benefits described in Section 8. For purposes of this Agreement,
              Good Reason shall mean the failure of Yellow in any material way
              either (i) to pay or provide to the Executive the compensation and
              benefits that he is entitled to receive pursuant to this Agreement
              by the later of (A) 60 days after the applicable due date or (B)
              30 days after the Executive's written demand for payment, or (ii)
              to maintain the titles, positions and duties of the Executive
              commensurate with those titles and positions and as required by
              this Agreement except with the Executive's written consent, or
              (iii) Executive's receipt of notice from Yellow of the cut-off of
              the automatic renewal of the term of this Agreement as described
              in Section 2 above.

         b.   Following A Change of Control. The Executive may terminate his
              employment at any time within the three-month period which begins
              six months after a Change of Control of Yellow by giving Yellow a
              written notice of such termination at least 30 days before the
              date of termination. In the event of the Executive's termination
              of employment within such three-month period, the Executive shall
              be entitled to the benefits described in Section 8. For purposes
              of this Agreement, a Change of Control of Yellow shall be deemed
              to have taken place if: (i) a third person, including a "group" as
              defined in Section 13(d) (3) of the Securities Exchange




                                       12

<PAGE>   13
              Act of 1934, purchases or otherwise acquires shares of Yellow
              after the date hereof and as a result thereof becomes the
              beneficial owner of shares of Yellow having 20% or more of the
              total number of votes that may be cast for the election of
              directors of Yellow; or (ii) as the result of, or in connection
              with any cash tender or exchange offer, merger or other Business
              Combination, or contested election, or any combination of the
              foregoing transactions, the Continuing Directors shall cease to
              constitute a majority of the Board of Directors of Yellow or any
              successor to Yellow. For this purpose, (i) Business Combination
              means any transaction which is referred to in any one or more of
              clauses (a) through (e) of Section 1 of Subparagraph A of Article
              Seventh of the Certificate of Incorporation of Yellow, and (ii)
              Continuing Director means a director of Yellow who meets the
              definition of Continuing Director contained in Section 7 of
              Subparagraph C of Article Seventh of the Certificate of
              Incorporation of Yellow.

         c.   Other. The Executive may terminate his employment at any time and
              for any reason, other than pursuant to subsection (a) or (b)
              above, by giving Yellow a written notice of termination to that
              effect at least 30 days before the date of termination. In the
              event of the Executive's termination of his employment pursuant to
              this subsection (c), the Executive shall be entitled to receive
              (i) his base salary pursuant to Section 4(a) and any other
              compensation and




                                       13

<PAGE>   14
              benefits to the extent actually earned by the Executive pursuant
              to this Agreement or any benefit plan or program of Yellow as of
              the date of such termination at the normal time for payment of
              such salary, compensation or benefits, and (ii) any amounts owing
              under Section 4(f). In addition, in the event of the Executive's
              termination of his employment pursuant to this subsection (c), (i)
              all outstanding options held by the Executive at the time of such
              termination which had not already become exercisable shall be
              forfeited, and (ii) all outstanding options held by the Executive
              at the time of such termination which had already become
              exercisable shall expire 90 days after the date of such
              termination (or, if earlier, upon the expiration of the term of
              the option). Except as provided in Section 9, the Executive shall
              receive no other compensation or benefits from Yellow.

7.       Termination of Employment By Death. In the event of the death of the
         Executive during the course of his employment hereunder, (i) the
         Executive's estate shall be entitled to receive his base salary
         pursuant to Section 4(a) and any other compensation and benefits to the
         extent actually earned by the Executive pursuant to this Agreement or
         any other benefit plan or program of Yellow as of the date of such
         termination at the normal time for payment of such salary, compensation
         or benefits, and any amounts owing under Section 4(f), (ii) any death
         benefit due under the Pension Plan and any death benefit due under
         Section 4(d) shall be paid to


                                       14

<PAGE>   15
         the Executive's spouse as provided under Section 4(d) and (iii) all
         outstanding stock options held by the Executive at the time of his
         death shall become immediately exercisable upon his death, and the
         Executive's spouse or, if predeceased, the Executive's estate, shall
         have one year from the date of his death to exercise any or all of such
         outstanding options (but not beyond the term of such option).

8.       Benefits Upon Termination Without Cause, For Good Reason, or Following
         Change of Control. If the Executive's employment with Yellow shall
         terminate (i) because of termination by Yellow pursuant to Section 5(c)
         and not for Cause or because of Permanent and Total Disability, (ii)
         because of termination by the Executive for Good Reason pursuant to
         Section 6(a), or (iii) because of termination by the Executive within
         the three-month period which begins six months after a Change of
         Control of Yellow pursuant to Section 6(b), the Executive shall be
         entitled to the following:

         (a)  Yellow shall pay to the Executive his base salary pursuant to
              Section 4 (a) and, subject to the further provisions of this
              Section 8, any other compensation and benefits to the extent
              actually earned by the Executive under this Agreement or any
              benefit plan or program of Yellow as of the date of such
              termination at the normal time for payment of such salary,
              compensation or benefits.

         (b)  Yellow shall pay the Executive any amounts owing under Section
              4(f).



                                       15

<PAGE>   16
         (c)  Yellow shall pay to the Executive as a severance benefit an amount
              equal to twice the sum of (i) his annual rate of base salary
              immediately preceding his termination of employment, and (ii) the
              target bonus payable pursuant to subsection (d) below. Such
              severance benefit shall be paid in a lump sum within 30 days after
              the date of such termination of employment.

         (d)  Yellow shall pay to the Executive his target bonus under Yellow's
              target bonus plan for the fiscal year in which his termination of
              employment occurs as if the target had been exactly met. Such
              payment shall be made in a lump sum within 30 days after the date
              of such termination of employment, and the Executive shall have no
              right to any further bonuses under said program.

         (e)  The Executive shall become 100% vested in all benefits accrued to
              the date of termination of his employment but not previously paid
              under the supplemental retirement benefits pursuant to Section
              4(d), and Yellow's nonqualified defined contribution plans.
              Payment of benefits under such plans, and under the Pension Plan
              and Yellow's qualified defined contribution plans, shall be made
              at the time and in the manner determined under the applicable
              plan.

         (f)  During the period of 24 months beginning on the date of the
              Executive's termination of employment, the Executive (and, if
              applicable under the applicable program, his spouse) shall remain
              covered by the employee benefit plans and programs that covered




                                       16

<PAGE>   17
              him immediately prior to his termination of employment as if he
              had remained in employment for such period, provided, however,
              that there shall be excluded for this purpose any plan or program
              providing payment for time not worked (including without
              limitation holiday, vacation, and long- and short-term
              disability). In the event that the Executive's participation in
              any such employee benefit plan or program is barred, Yellow shall
              arrange to provide the Executive with substantially similar
              benefits. Any medical insurance coverage for such two-year period
              pursuant to this subsection (f) shall become secondary upon the
              earlier of (i) the date on which the Executive begins to be
              covered by comparable medical coverage provided by a new employer,
              or (ii) the earliest date upon which the Executive becomes
              eligible for Medicare or a comparable Government insurance
              program.

         (g)  All outstanding stock options held by the Executive at the time of
              termination of his employment shall become fully exercisable upon
              such termination of employment and may be exercised for the
              balance of the term of such option.

         (h)  If any payment or benefit received by or in respect of the
              Executive under this Agreement or any other plan, arrangement or
              agreement with Yellow (determined without regard to any additional
              payments required under this subsection (h) and Appendix B of this
              Agreement) (a "Payment") would be subject to




                                       17

<PAGE>   18
         the excise tax imposed by Section 4999 of the Internal Revenue Code of
         1986, as amended (the "Code") (or any similar tax that may hereafter be
         imposed) or any interest or penalties are incurred by the Executive
         with respect to such excise tax (such excise tax, together with any
         such interest and penalties, being hereinafter collectively referred to
         as the "Excise Tax"), Yellow shall pay to the Executive with respect to
         such Payment at the time specified in Appendix B an additional amount
         (the "Gross-up Payment") such that the net amount retained by the
         Executive from the Payment and the Gross-up Payment, after reduction
         for any Excise Tax upon the payment and any federal, state and local
         income and employment tax and Excise Tax upon the Gross-up Payment,
         shall be equal to the Payment. The calculation and payment of the
         Gross-up Payment shall be subject to the provisions of Appendix B.

9.       Entitlement To Other Benefits. Except as provided in this Agreement,
         this Agreement shall not be construed as limiting in any way any rights
         to benefits that the Executive may have pursuant to any other plan or
         program of Yellow.

10.      Arbitration.

         (a)  Arbitration of Disputes. Any dispute between the parties hereto
              arising out of, in connection with, or relating to this Agreement
              or the breach thereof shall be settled by arbitration in Overland
              Park,




                                       18

<PAGE>   19
              Kansas, in accordance with the rules then in effect of the
              American Arbitration Association ("AAA"). Arbitration shall be the
              exclusive remedy for any such dispute except only as to failure to
              abide by an arbitration award rendered hereunder. Regardless of
              whether or not both parties hereto participate in the arbitration
              proceeding, any arbitration award rendered hereunder shall be
              final and binding on each party hereto and judgment upon the award
              rendered may be entered in any court having jurisdiction thereof.

              The party seeking arbitration shall notify the other party in
              writing and request the AAA to submit a list of 5 or 7 potential
              arbitrators. In the event the parties do not agree upon an
              arbitrator, each party shall, in turn, strike one arbitrator from
              the list, Yellow having the first strike, until only one
              arbitrator remains, who shall arbitrate the dispute. The parties
              shall have the opportunity to conduct reasonable discovery as
              determined by the arbitrator, and the arbitration hearing shall be
              conducted within 30 to 60 days of the selection of an arbitrator
              or at the earliest date thereafter that the arbitrator is
              available or as otherwise set by the arbitrator.

         b.   Indemnification. If arbitration occurs as provided for herein and
              the Executive is awarded more than Yellow has asserted is due him
              or otherwise substantially prevails therein, Yellow shall
              reimburse the Executive for his reasonable attorneys' fees, costs
              and





                                       19

<PAGE>   20
              disbursements incurred in such arbitration and hereby agrees to
              pay interest on any money award obtained by the Executive from the
              date payment should have been made until the date payment is made,
              calculated at the prime interest rate of Bank of America, Inc.,
              Kansas City, Missouri in effect from time to time from the date
              that payment(s) to him should have been made under this Agreement.
              If the Executive enforces the arbitration award in court, Yellow
              shall reimburse the Executive for his reasonable attorneys' fees,
              costs and disbursements incurred in such enforcement.

11.      Confidential Information. The Executive shall retain in confidence any
         confidential information known to him concerning Yellow and its
         subsidiaries, and their respective businesses until such information is
         publicly disclosed. This provision shall survive the termination of the
         Executive's employment for any reason under this Agreement.

12.      Indemnification under Bylaws. Yellow shall provide the Executive with
         rights to indemnification by Yellow that are no less favorable to the
         Executive than those set forth in Yellow's by-laws as in effect as of
         the Effective Date.

13.      Successors. This Agreement shall be binding upon and insure to the
         benefit of the Executive and his estate and Yellow and any successor of
         Yellow, but neither this Agreement nor any rights arising hereunder may
         be assigned or pledged by the Executive.




                                       20

<PAGE>   21
14.      Severability. Any provision in this Agreement which is prohibited or
         unenforceable in any jurisdiction shall, as to such jurisdiction, be
         ineffective only to the extent of such prohibition or unenforceability
         without invalidating or affecting the remaining provisions hereof, and
         any such prohibition or unenforceability in any jurisdiction shall not
         invalidate or render unenforceable such provision in any other
         jurisdiction.

15.      Notices. All notices required or permitted to be given under this
         Agreement shall be given in writing and shall be deemed sufficiently
         given if delivered by hand or mailed by registered mail, return receipt
         requested, to his residence in the case of the Executive and to its
         principal executive offices in the case of Yellow. Either party may by
         giving written notice to the other party in accordance with this
         Section 15 change the address at which it is to receive notices
         hereunder.

16.      Controlling Law. This Agreement shall in all respects by governed by
         and construed in accordance with the laws of the State of Kansas.

17.      Changes to Agreement. This Agreement may not be changed orally but only
         in a writing, signed by the party against whom enforcement is sought.

18.      Counterparts. This Agreement may be executed in any number of
         counterparts, each of which when so executed shall be deemed an
         original but all of which together shall constitute one and the same
         instrument.

19.      Prior Agreement. Except as regards the commencement date for
         Executive's Supplemental Retirement Benefits, as discussed in Section
         4(d) above, this Agreement in all respects supercedes and replaces the
         





                                       21

<PAGE>   22

         Employment Agreement entered into between Executive and Yellow Freight
         System, Inc. on September 6, 1996.

       IN WITNESS WHEREOF, the parties have executed this Agreement on the
21 of December, 1999.


EXECUTIVE:                                        YELLOW CORPORATION

/s/ William D. Zollers
----------------------------                 By:  /s/ William F. Martin
                                                --------------------------- 
                                                  ATTEST

                                             By:  /s/ Lawrence D. Berkowitz
                                                ---------------------------  




                                       22

<PAGE>   23



                                   Appendix A
                        Supplemental Retirement Benefits


         The following provisions shall be applicable with respect to the
supplemental retirement benefits described in Section 4(e) of this Agreement.

1.       Benefit Calculation

         For purposes of calculating the supplemental retirement benefits, the
         following assumptions shall be utilized.

         (a)  "Credited Service", shall be assumed to be twenty (20) years
              for periods of employment prior to five (5) years of employment
              measured from September 6, 1996, plus actual Credited Service, if
              any, for periods of employment after five (5) years of employment
              measured from September 6, 1996 and Executive's Compensation for
              the period September 6, 1996 through November 7, 1999 shall be the
              Compensation earned by Executive during his employment with Yellow
              Freight System, Inc.

         (b)  If the Executive is employed by Yellow for less than five (5)
              years from September 6, 1996, "Average Final Compensation" shall
              be calculated as the average "base wage" as so defined in Section
              2.1(h)(2) of the Plan for actual number of years of employment,
              with partial years annualized;

         (c)  Any vested accrued benefit which the Executive is paid under
              the Pension Plan, shall reduce any supplement retirement benefits
              payable under this Agreement; and

         (d)  The defined terms used in this Appendix A and in Section 4(e)
              of this Agreement shall have the meanings provided in the Yellow
              Freight Office, Clerical, Sales and Supervisory Personnel Pension
              Plan as restated as of January 1, 1989 and as amended by Amendment
              No. 1 dated July 15, 1992, by Amendment No. 2 dated December 28,
              1994, all as in existence as of the Effective Date of this
              Agreement (collectively the "Pension Plan") unless another meaning
              is expressly provided in this Agreement and Appendix or unless the
              Executive and Yellow agree in writing to apply any subsequent
              amendments, revisions, interpretations or restatements of the
              Pension Plan.



                                       23

<PAGE>   24



2.       Vesting

         Notwithstanding the vesting provisions of Section 4(d), the Executive
         shall become 100% vested in the supplemental retirement benefits
         provided under that subsection and this Appendix upon the termination
         of his employment for any of the following reasons:

         (a)  Termination by Yellow without "Cause",

         (b)  Termination by the Executive for "Good Reason", or

         (c)  The Executive's resignation within the three month period
              which begins six months after a "Change of Control" of Yellow,

              "Cause", "Good Reason", and "Change of Control" shall have the
              respective meanings as defined in Section 5, 6(a) and 6(b) of this
              Agreement.

3.       Taxability of Benefit

         The Executive and Yellow understand and agree that for federal tax
         purposes, all supplemental retirement benefits paid under this
         agreement to the Executive or his spouse shall be treated as ordinary
         income under the applicable provisions of the Internal Revenue Code of
         1986, as amended, and are subject to any taxes required to be withheld
         by federal, state or local law; provided that the Executive shall have
         the right to determine the timing of any withholding within the
         parameters permitted under the Code and under any Regulations or
         proposed Regulations under Code Section 3121(v) or any successor
         thereto.

4.       Nonassignability

         The supplemental retirement benefits payable under this Agreement, and
         any and all rights thereto, shall not be subject in any manner to
         anticipation, alienation, sale, transfer, assignment, pledge,
         encumbrance, charge, garnishment, execution, or levy of any kind,
         either voluntarily or involuntarily. Any attempt to anticipate,
         alienate, sell, transfer, assign, pledge, encumber, charge, or
         otherwise dispose of any rights to benefits payable hereunder shall be
         void.

                                       24



<PAGE>   1
YELLOW CORPORATION


1999 ANNUAL REPORT



<PAGE>   2


technology



<PAGE>   3


is



Our business is driven by relationships like never before. The relationship with
the customer increasingly depends on quality of information. They depend on it
to manage supply chains, to optimize inventory levels and to provide better
service to their customers. Today, quality of information is as important as
quality of service. The information economy is creating a remarkable window of
opportunity for Yellow. We are capturing that opportunity through technology.


[picture of driver in truck]

<PAGE>   4

technology is the future



<PAGE>   5


2000


"Our industry is going through revolutionary change, much of it driven by
technology. Technology is an enabler of people. Yellow has outstanding talent
who now have the technology tools to build the most innovative and
entrepreneurial company our industry has ever seen."

William D. Zollars
Chairman of the
Board, President
and Chief Executive
Officer of the
Company

[picture of William D. Zollars]




<PAGE>   6



technology is value



<PAGE>   7
Yellow has built a portfolio of companies serving all major segments of the
transportation services market. Saia, Jevic, WestEx and Action Express meet the
needs of the
 demanding high-growth regional markets. And Yellow Freight System
is a premier service provider offering global services to customers throughout
North America. From Standard Ground (TM), Definite Delivery(TM) and Exact
Express(TM), to international ocean and air-Yellow does it all.

                     [Bar Chart with EPS and Revenue Trend]

                   Historical EPS                  Revenue Growth
               (Continuing Operations)         (Continuing Operations)

1996                  $ (.83)                          $2,655
1997                  $ 1.84                           $2,898
1998                  $ 1.49                           $2,901
1999                  $ 2.02                           $3,227


Earnings (loss) per share in dollars

Revenue in millions of dollars

[operating subsidiary logo's]

YELLOW             SAIA           JEVIC              WestEx         ACTION
                           TRANSPORTATION INC.                      EXPRESS



<PAGE>   8



technology is service

<PAGE>   9
Profitability and growth are the final link in our service profit chain. It
begins with outstanding people. It builds with a comprehensive portfolio of
services. And it reaches critical mass with quality service performance. Our
service philosophy is built around a very simple, time-tested idea - never say
"no" to the customer. Every customer has different needs. We have developed
companies that provide an array of flexible, reliable and innovative solutions.



YES WE CAN.


                              Service-Profit Chain

      Build                Create                 Build External          Profit
Internal Customer      Service, Quality        Consumer Satisfaction        and
  Satisfaction            and Value                and Loyalty            Growth


Standard
Ground(tm)


Definite
Delivery(tm)


Exact
Express.
Expedited Air & Ground Delivery
Exactly when you need it.(tm)




<PAGE>   10


Technology is satisfaction



<PAGE>   11
Customers want peace of mind. They want to know that you will move their
valuable products reliably, promptly and safely. They want on-time, damage-free
delivery. Accurate and timely information is a must. And they want to know in
advance if there is a problem. Do all those things right and you have a
satisfied customer. They will do business with you again and again. Satisfied
customers are the key to our future. We have more of them today than ever
before.


Q:  How are we doing?

A:  Each year, Yellow surveys more than 20,000 customers to track improvement in
    17 priority performance areas.

                  [Bar Chart Depicting Customer Satisfaction]

                         Completely Satisfied Customers
             Who are likely to use Yellow and recommend to others.


                                    1st Half         2nd Half
                   1998                35%              46%
                   1999                62%              68%


                    [Woman's Face overlayed on Yellow logo]



<PAGE>   12


is PEOPLE



<PAGE>   13


An operations manager sets up a command center from her home when an ice storm
knocks out power to half of Quebec. A dock worker always arrives early to make
sure his terminal break room is clean. A city driver makes an extra trip back to
his customer's dock when he notices a discrepancy on a shipping document. Teams
of Yellow drivers volunteer to transport emergency supplies to Hurricane Floyd
disaster victims. The ordinary people who work at Yellow routinely do
extraordinary things. They always have.



YELLOW
CORPORATION


[Pictures of Yellow employees]

<PAGE>   14




Performance



<PAGE>   15






                                [YELLOW ARTWORK]

<PAGE>   16

[Yellow logo]

YELLOW
CORPORATION(R)
P.O. BOX 7563
Overland Park, KS 66207
www.yellowcorp.com

Printed in the U.S.A. #505

<PAGE>   17

                          [YELLOW CORPORATION(R) LOGO]
--------------------------------------------------------------------------------
                               William D. Zollars

                              Chairman of the Board
                      President and Chief Executive Officer

                         william.zollars@yellowcorp.com


Dear Shareholder,

We begin the next 75 years of our history with Yellow Corporation growing and
thriving. As a company, we have transformed ourselves from an internally
oriented organization to a market-driven team sharply focused on the customer.

We move our customers' products on trucks, trains, ships and planes using an
ever-expanding portfolio of transportation services. These services provide the
most flexible, responsive and precise transportation solutions available
anywhere. It is increasingly true that strong customer relationships depend on
the ability to say "yes we can, "whatever the need.

IN 1999, WE:

- Introduced new value-added services and improved service quality at each of
  our companies.

- Saw an astounding number of customer interactions move to our website -
  approaching 11 million hits per month by year-end.

- Moved forward with several internet and e-commerce-related business ventures 
  that hold great promise.

- Acquired Jevic Transportation, giving our regional group critical mass and
  creating a number of options to unlock shareholder value, which we are
  exploring.

- Demonstrated our management depth by delivering improved results during
  leadership transitions at WestEx, Saia and Yellow Corporation.



10990 Roe Avenue - Overland Park, KS 66211-1213 - 913.696.6101 913.696.6116 Fax




<PAGE>   18


TECHNOLOGY

Our industry is in the middle of an information explosion. To be successful in
this marketplace, timely accurate information must be an integral part of the
service you provide. That in turn requires a sophisticated technology
infrastructure. As a result, Yellow is making an unprecedented investment in
technology, primarily through our Yellow Technologies subsidiary. This
investment is both improving the quality of our services and the quality of the
information our customers receive.

Yellow's leadership in technology also is being recognized by the outside world.
In 1999, we were named to the CIO-100 by Chief Information Officer magazine for
our strategic approach in using technology to "get closer to our customers."
Other companies in the CIO-100 Class of 1999 were: 3M, Amazon.com, AT&T, Coca
Cola, DaimlerChrysler, FedEx, Hallmark, Home Depot, IBM, Johnson & Johnson,
Lucent, Microsoft, Southwest Airlines and Wal-Mart. We were particularly proud
to be recognized alongside Wal-Mart, our largest customer, who is using
technology to re-write the book on supply chain management. We were gratified to
be named by Wal-Mart as their 1999 Carrier of the Year and are proud to be
playing a role in helping them achieve their remarkable success.

THE NUMBERS

Our financial performance in 1999 was very good. We reported 1999 net income of
$50.9 million, up 27 percent over the previous year. Earnings per share were
$2.02, up 35.6 percent from 1998 earnings from continuing operations of $1.49.

Thanks mostly to a very solid year at Yellow Freight System and the acquisition
of Jevic Transportation at mid-year, we reported record revenue of $3.2 billion.

Our net capital investment in 1999 was $149.2 million, up significantly from the
$96 million we spent in 1998. The investment for 1999 excludes the $164.5
million we spent to acquire Jevic. We are optimistic about our future prospects
and planned net capital investment for 2000 is approximately $177 million.

The balance sheet remains strong, even with additional borrowings during 1999
due primarily to the Jevic purchase. Our total balance sheet debt at year-end
was $276 million, compared with $157 million at year-end 1998. Our balance sheet
debt as a percentage of total capital stood at 40 percent at year-end 1999.


                                  - page two -


<PAGE>   19


A stock buy-back program that was launched in December 1997 was suspended in
April 1999 as a result of the then-pending Jevic acquisition and internal
capital investment opportunities. The program resulted in the purchase of 3.8
million shares since its inception, for a 13 percent reduction in shares
outstanding. Today, we have approximately 24.9 million shares outstanding.

NATIONAL OPERATIONS

Yellow Freight System is growing again after the 1998 speed bump associated with
customer anxiety over the Teamster contract renewal. It finished the year with
revenue of $2.6 billion, up from $2.5 billion in 1998. Operating income was
$85.4 million, an increase of 27.7 percent over 1998 and the best bottom line
performance since 1990. The 1999 operating ratio for Yellow Freight was 96.7,
versus 97.3 in 1998.

The business trends were strong and accelerated steadily throughout the year. By
the fourth quarter, our LTL tonnage was 6.3 percent greater than the fourth
quarter of 1998. Shipments in the same quarter were running nearly 4 percent
heavier than 12 months earlier. Our unit revenue expressed as revenue per
shipment was 5 percent higher. These were encouraging trends that we believe
bode well for the year 2000.

Yellow Freight is pursuing a vision of providing guaranteed, time-definite,
defect-free, hassle-free transportation and related global services to
businesses throughout North America. In 1999, Yellow Freight took a big step
toward making that vision a reality by completing the rollout of a three-tier
service portfolio that provides varying levels of precision and value, depending
on customer need. Those services - Standard Ground, Definite Delivery and Exact
Express - are proving to be just what customers want.

Standard Ground (TM) provides customers with the broadest coverage and most
competitive service standards of any of our competitors.

Definite Delivery (TM), our mid-tier ground service introduced in 1999, offers
customers the reassurance of 24-by-7 monitoring, proactive notification if there
are problems and a money back guarantee. It is positioned to meet demand for
movement of goods and materials that must arrive at destination on time.


                                 - page three -


<PAGE>   20


Exact Express (TM), our premium service introduced in mid-1998, features air and
ground movement for shipments that are typically high-value products or urgently
needed components. It features same-day, next-day or any-day service and a 100
percent customer satisfaction guarantee that is the strongest in the industry.
The guarantee has drawn attention from consumer groups and leading industry
publications. If a customer is dissatisfied with any aspect of our service, we
take any action necessary, including cancelling the shipping charges on the
spot. However, our customers are telling us that they would rather have excel-
lent service than a free shipment. And that's exactly what we're giving them.
Our on-time percentage was exceptional in 1999 and the revenue run rate was
slightly in excess of $80 million. Monthly shipping volume grew steadily
throughout the year and into the early part of 2000. It's a service that is
truly setting new standards in our industry.

If 1999 was the year of the service portfolio for Yellow Freight, the year 2000
will be the year of service quality. We will achieve new heights in all areas of
service performance during 2000. It's a formula that works. We saw strong gains
in revenue and profitability throughout 1999 in regions of the country where we
improved our service performance. When our customers see real value, they have
proven ready and willing to pay for it.

REGIONAL OPERATIONS

Our regional transportation group has reached critical mass. The combined group
reported revenue of $594.5 million during 1999 and combined operating income of
$27.4 million.

The major event for this business group in 1999 was our July acquisition of
Jevic for approximately $200 million, including assumption of debt. Jevic has
proven the worth of its unique operating model. It minimizes the use of large
distribution centers and emphasizes dynamic route planning utilizing a fleet of
trucks and drivers who are dispatched directly to one or a series of
destinations.

For the partial year, Jevic contributed revenue of $137.9 million and operating
income of $10.1 million for an operating ratio of 92.7.

Saia Motor Freight Line, our largest regional subsidiary, battled through weak
business levels early in the year in the Texas and Gulf Coast regions. The
business softness, coupled with increased wage and benefit expense and service
issues, led to difficult first half comparisons. Business and service levels
strengthened in the second half resulting in improved performance.


                                  - page four -


<PAGE>   21


Saia now has measures in place that will result in improved performance going
forward. Saia finished the year with revenue of $349.3 million, up from $340.1
million in 1998, and operating income of $16.8 million, down from $24.7 million
a year earlier.

WestEx and Action Express continued to make progress toward meaningful
profitability. Both of these regional carriers provide valuable services to
their customers and we're confident that we will see real improvement in margins
going forward. WestEx reported revenue of $70.9 million in 1999 and an operating
ratio of 99.4. Action Express reported revenue of $36.5 million and an operating
ratio of 99.6.

With its size and market potential, the time has come for full-time leadership
of our regional transportation group. We recently did just that with the
appointment of H.A. "Bert" Trucksess as President. Bert has served as Chief
Financial Officer for Yellow Corporation since 1994 and has the experience and
the talent to take this group to its next level of performance.

THE FUTURE

The pace of change in our industry continues to accelerate, pushed on by
technology. We are on the leading edge of that change because Yellow has
continued to reinvent itself.

The Yellow brand has always stood for quality service and quality people. That
combination, coupled with technology investment, has created our ability to
build sustained competitive advantage every day. And that is the key to our
current and future success.

Sincerely,

/s/ William D. Zollars

William D. Zollars
Chairman of the Board,
President and Chief Executive Officer
Yellow Corporation


                                  - page five -

<PAGE>   22
Yellow Corporation
family of operating companies

NATIONAL/INTERNATIONAL


<TABLE>
<CAPTION>

[YELLOW LOGO]

SERVICES:                               PROFILE:                                1999 PERFORMANCE:
<S>                                     <C>                                     <C>
-Standard Ground(TM)                    -23,400 Employees                       -Revenue: $2.6 billion
-Definite Delivery(TM)                  -381 Terminals                          -Operating Income: $85.4 million
-Exact Express(TM)                      -300,000 Customers                      -Operating Ratio: 96.7
-Nafta cross border                     -8,600 Tractors                         -Tonnage: 8.4 million
-Heavyload/Truckload                    -36,000 Trailers                        -Shipments: 14.3 million
-Chemical                               -Headquarters: Overland Park, KS        -Rev./cwt: $15.64
-Exhibit                                                                        -Capital Investment: $76.9 million
</TABLE>




<TABLE>
<CAPTION>

[YCS INTERNATIONAL LOGO]

SERVICES:                               PROFILE:                                1999 PERFORMANCE:
<S>                                     <C>                                     <C>
-Air & Ocean/Import & Export            -74 Employees                           -Revenue: $16.1 million
-Freight Forwarding                     -Branch offices: 9                      -Shipments: 22,100
-NVOCC - Globe.Com Lines                -Airports served: LAX, JFK, MIA,
-Customs Brokerage                        ORD, IAH
-Assembly                               -Locations Served: Global
-Distribution                           -Global Partners: 24
                                        -Global Offices: 175
                                        -Headquarters: Overland Park, KS
</TABLE>


--------------------------------------------------------------------------------
REGIONAL


<TABLE>
<CAPTION>

[SAIA LOGO]

SERVICES:                               PROFILE:                                1999 PERFORMANCE:
<S>                                     <C>                                     <C>
-Regional LTL in 12 southern states     -4,800 employees                        -Revenue: $349.3 million
-Overnight/2nd Day                      -76 Terminals                           -Operating Income: $16.8 million
-Saia Guaranteed Select(TM)             -98,000 Customers                       -Operating Ratio: 95.2
-Truckload                              -1,950 Tractors                         -Tonnage: 2.3 million
-Mexico                                 -5,950 Trailers                         -Shipments: 3.2 million
-Caribbean                              -Headquarters: Atlanta, GA              -Rev./cwt: $7.53
-Inter-regional with WestEx & Action                                            -Capital Investment: $31.1 million
</TABLE>




<TABLE>
<CAPTION>

[JEVIC TRANSPORTATION INC.]

SERVICES:                               PROFILE:                                1999 PERFORMANCE*:
<S>                                     <C>                                     <C>
-Multi-regional LTL/TL                  -2,600 employees                        -Revenue: $277.1 million
-Breakbulk Free LTL                     -9 Terminals                            -Operating Income: $20.6 million
-100% Guaranteed service                -10,000 Customers                       -Operating Ratio: 92.6
-Canadian cross border                  -1,300 Tractors                         -Tonnage: 2.4 million
-Heated trailer                         -2,400 Trailers                         -Shipments: 900,000
-Satellite tracing                      -Headquarters: Delanco, NJ              -Rev./cwt: $5.89
-Inter-regional with WestEx                                                     -Capital Investment: $40.0 million
                                                                                * Full year results. Jevic was acquired by Yellow
                                                                                on July 9, 1999.
</TABLE>




<TABLE>
<CAPTION>

[WESTEX LOGO]

SERVICES:                               PROFILE:                                1999 PERFORMANCE:
<S>                                     <C>                                     <C>
-Regional LTL in California &           -1,000 employees                        -Revenue: $70.9 million
 Southwest                              -27 Terminals                           -Operating Income: $400,000
-Overnight/2nd Day                      -8,000 Customers                        -Operating Ratio: 99.4
-Guaranteed Expedited                   -450 Tractors                           -Tonnage: 400,000
-Maquiladora service                    -1,450 Trailers                         -Shipments: 700,000
 Tijuana to Juarez                      -Headquarters: Phoenix, AZ              -Rev./cwt: $8.84
-LTL to Mexico interior                                                         -Capital Investment: $5.5 million
-Inter-regional with Saia, Action &
 Jevic 
</TABLE>




<TABLE>
<CAPTION>

[ACTION EXPRESS LOGO]

SERVICES:                               PROFILE:                                1999 PERFORMANCE:
<S>                                     <C>                                     <C>
-Regional LTL in Pacific NW &           -400 employees                          -Revenue: $36.5 million
 Rocky Mtns.                            -16 Terminals                           -Operating Income: $100,000
-Overnight/2nd Day                      -4,200 Customers                        -Operating Ratio: 99.6
-Inter-regional with WestEx & Saia      -200 Tractors                           -Tonnage: 200,000
                                        -500 Trailers                           -Shipments: 400,000
                                        -Headquarters: Boise, ID                -Rev./cwt: $7.81
                                                                                -Capital Investment: $2.4 million
</TABLE>




<PAGE>   23


                                 [MAP OF U.S.A.]


Action Express

WestEx

Yellow Freight System

Jevic Transportation, Inc.

SAIA





<PAGE>   24
                          [YELLOW CORPORATION (R) LOGO]

-------------------------------------------------------------------------------

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                of Financial Condition and Results of Operations

                             RESULTS OF OPERATIONS


1999 vs.  1998
 Operating revenue for Yellow Corporation (the company) totaled $3.2 billion in
1999 an 11.2 percent increase over 1998 revenue of $2.9 billion. Operating
income for the year was $107.5 million, an increase of 28.9 percent over 1998
operating income of $83.4 million. Income from continuing operations in 1999 was
$50.9 million or $2.02 per share (diluted) compared to income from continuing
operations of $40.1 million or $1.49 per share (diluted) in 1998.
 Yellow Freight's 1999 operating income was $85.4 million, a 27.7 percent
increase over 1998 operating income of $66.9 million. Operating revenue was $2.6
billion for 1999, up 4.8 percent from $2.5 billion in 1998. The 1999 operating
ratio was 96.7 compared to 97.3 in 1998.
 The increase in 1999 revenue was a net result of higher prices, mix changes and
volume increases. Yellow Freight had year over year increases in LTL tonnage of
2.4 percent and LTL shipments of 2.1 percent, as well as a 3.2 percent increase
in LTL revenue per ton. Yellow Freight benefited from a general rate increase
averaging 5.5 percent that went into effect on September 1, 1999 on
approximately half of the revenue base not covered by term contracts. A fuel
surcharge was also reactivated at mid-year 1999 in order to offset rising diesel
fuel prices. Performance in 1998 was adversely impacted by the loss of business
due to customer concerns over the possibility of a work stoppage in connection
with negotiations on a new National Master Freight Agreement with the
International Brotherhood of Teamsters. A contract was ratified on April 7,
1998.
 Yellow Freight's cost per ton increased 3.2 percent in 1999 due to cost
increases in salaries, wages and benefits, fuel costs and purchased
transportation that were partially offset by increased volume and decreased
maintenance related costs and depreciation expense. Yellow Freight's salary,
wages and employee benefits as a percentage of revenue increased due to
scheduled wage and benefit increases and higher levels of incentive compensation
for Yellow Freight employees. Yellow Freight's claims and insurance expense
decreased slightly from the prior year, despite the increase in shipments and an
increase in total miles of 1.4 percent. Yellow Freight maintained the use of
rail transportation at 27.3 percent in 1999 unchanged from 1998. However, rail
cost increases as well as other purchased transportation service contributed to
an overall increase in purchased transportation expense. Diesel fuel prices rose
in 1999, however Yellow Freight's fuel-hedging program substantially offset this
cost increase.
 Saia Motor Freight Line, Inc. (Saia) had operating income of $16.8 million in
1999 compared to $24.7 in 1998. Saia's revenue grew 2.7 percent in 1999 to
$349.3 million compared to $340.1 million in 1998. Saia's 1999 performance was
below 1998 levels due to softer revenue for the early part of 1999 in Texas and
Gulf Coast regions with economies tied to the petroleum industry. Tonnage
increased 1.7 percent and revenue per ton increased less than one percent.
However, revenue and tonnage trends improved during the last quarter of 1999 due
in part to company initiatives to significantly improve service levels. Saia
also experienced increased wage and benefit expense resulting in an operating
ratio of 95.2 in 1999 compared to 92.7 in 1998.
 Saia's cost per ton increased 3.5 percent due primarily to cost increases in
salaries, wages and benefits. Depreciation increased due to the addition of
revenue equipment in 1998 and 1999. Increased purchase transportation and
rentals during 1999 allowed Saia to manage temporary surges in business
levels. These increases were partially offset by favorable insurance claims
expense compared to the prior year. A fuel surcharge was also reactivated at
mid-year 1999 in order to offset rising diesel fuel prices. Saia initiated a 4.5
percent general rate increase on October 1, 1999 on its non-contract customers.
 Jevic Transportation, Inc. (Jevic) was acquired on July 9, 1999 and is operated
as a separate subsidiary of the company. Jevic is a fully integrated regional 
and inter-regional LTL and partial TL carrier. Jevic's operating system
combines the high revenue yield characteristics of LTL carriers with the
operating flexibility and low fixed costs of TL carriers. Jevic is headquartered
in the Philadelphia Metropolitan area. Jevic reported operating income of $10.1
million and revenue of $137.9 million resulting in an operating ratio of 92.7
for the partial year 1999. Operating results for 1999 reflect only
contributions since the July 9 acquisition date.
 On a full year-to-year basis, Jevic's revenue increased 22.6 percent in 1999 
and Jevic's tonnage increased 18.7 percent. Jevic's revenue per ton increased
3.1 percent in 1999 and cost per ton increased 3.2 percent. Jevic initiated
a price increase of 5.7 percent on November 15, 1999.
 WestEx, Inc. (WestEx) reported improved operating income of $0.4 million in 
1999 compared to an operating loss of $1.2 million in 1998. WestEx had 1999
revenue of $70.9 million, up 9.2 percent from 1998 revenue of $64.9 million.
Tonnage increased 5.6 percent, revenue per ton increased 3.7 percent and cost
per ton increased 1.0 percent. Salaries, wages and benefits decreased as a
percentage of revenue from 58.5 per-





-------------------------------------------------------------------------------
                                       1

<PAGE>   25
------------------------------------------------------------------------------


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                of Financial Condition and Results of Operations

                                    CONTINUED

cent of revenue in 1998 to 55.4 percent in 1999 due to mix changes and improved
efficiencies. WestEx had an operating ratio of 99.4 in 1999 compared to an
operating ratio of 101.8 in 1998. WestEx initiated a general price increase of
5.5 percent on September 13, 1999.
 Action Express, Inc. (Action Express) was acquired on December 1, 1998. Action
Express reported 1999 operating income of $0.1 million and revenue of $36.5
million, which resulted in an operating ratio of 99.6.
 Corporate and other business development expenses were $5.3 million in 1999
compared to $7.0 million in 1998. Non-operating expenses were $18.2 million in
1999 compared to $13.8 million in 1998. The increase in non-operating expenses
is primarily the result of increased financing costs associated with the Jevic
acquisition. The effective tax rate was 43.0 percent in 1999 compared to 42.4 in
1998. The increase in effective rate is attributable to increased nondeductible
expenses, including goodwill amortization associated with the Jevic
acquisition. The notes to the consolidated financial statements provide an
analysis of the income tax provision and the effective tax rate.

1998 vs. 1997
 Operating revenue for the company totaled $2.9 billion in 1998, relatively
unchanged from 1997. Operating income for the year was $83.4 million, down from
$98.7 million in 1997. Income from continuing operations was $40.1 million or
$1.49 per share (diluted) in 1998,compared to $52.7 million or $1.84 per share
(diluted) in 1997.
 Yellow Freight's 1998 operating income of $66.9 million was lower than 1997
operating income of $82.7 million. Operating revenue was $2.49 billion for 1998,
down 1.8 percent from $2.54 billion for 1997. The 1998 operating ratio  was
97.3 compared with 96.7 in 1997. Performance during 1998 was adversely impacted
by the loss of business in late 1997 and early 1998 due to customer concerns
over the possibility of a work stoppage in connection with negotiations on a new
National Master Freight Agreement (NMFA) with the International Brotherhood of
Teamsters (IBT). The NMFA negotiation resulted in a tentative contract with the
IBT in February which was then ratified on April 7, 1998. The new five-year
agreement greatly minimized customer concerns over job actions and provides the
company reasonable economic terms over this period.
  The decrease in revenue resulted from tonnage declines of 3.6 percent
partially offset by a 1.7 percent increase in revenue per ton The tonnage
decline resulted from the freight diversion associated with the IBT labor
negotiations. Following the first quarter declines and adjusted for individual
customer mix issues, tonnage generally improved in the second through fourth
quarters. The increase in revenue per ton was the net result of higher prices,
mix changes and partially offset by a decline in fuel surcharge revenue. On
October 1, 1998 Yellow Freight implemented increases averaging 5.5 percent for
those customers that did not have annual contracts. In addition, price
increases were negotiated during the year with contractual customers. Fuel
surcharge revenue was immaterial in 1998 as fuel prices decreased below the
surcharge index levels.
  Yellow Freight's cost per ton increased 2.7 percent due to cost increases and
unfavorable economies of scale resulting from the tonnage declines. Given the
volume declines, management believes costs per ton would have increased by an
even greater percentage but for cost efficiency and productivity improvements
from both new initiatives as well as run rate benefits from prior year programs.
  Yellow Freight salary, wages and employee benefits as a percentage of revenue
declined slightly in 1998 due to volume declines and wage and benefit increases.
Increased use of rail transportation from 26.9 percent to 27.3 percent 
contributed to an increase in purchased transportation expense as well as       
decreases in depreciation and other expenses between years. Despite an
improvement in overall accident frequency, 1998 insurance and claim expenses
increased due to a higher number of severe losses in the third quarter. While
fuel prices were lower for most of 1998 compared to the prior year, Yellow
Freight's fuel-hedging program partially offset the product cost savings as
fuel prices reached unprecedented lows.
  Saia continued its growth with 1998 operating income of $24.7 million, up from
$19.6 million in 1997. This was accomplished with a combination of strong
revenue growth and progress on cost control. Saia's 1998 operating ratio was
92.7 compared to 93.7 in 1997. Tonnage increased 5.7 percent and revenue per ton
increased 3.3 percent, while cost per ton was up only 2.3 percent. Revenue for
1998 was $340.1 million up 9.3 percent from $311.2 million in 1997. Business
levels were up as Saia was successful in building density in the 11-state
coverage area provided to its customers.
  Throughout 1998, Saia focused on yield improvement and the continued shift to
higher yielding less than truckload (LTL) business. Saia initiated a 5.7 percent
general rate increase in September 1998 and also raised prices on contractual
customers in varying amounts during the year. Fuel surcharge revenue declined
in 1998. Salary, wages and benefits were up over 1997 due to an increase of
approximately 350 employees resulting from higher tonnage and approximately 3.5
percent increase in wage rates. Operating expense increases were consistent
with tonnage increases in 1998. While fuel prices






-------------------------------------------------------------------------------
                                       2

<PAGE>   26
-------------------------------------------------------------------------------


decreased in 1998, Saia's fuel-hedge program partially offset these favorable
prices in 1998. Depreciation increased due to the addition of revenue equipment
placed in service in late 1997 and approximately 340 tractors and 900 trailers
placed in service in 1998. Increased purchased transportation and rentals during
1998 allowed Saia to manage temporary surges in business.
 WestEx continued its rapid growth in 1998, reporting revenue of $64.9 million, 
up 32.4 percent from $49.0 million in 1997. WestEx reported an operating loss of
$1.2 million for 1998 compared to $0.8 million operating loss in 1997. Tonnage
increased 25.2 percent and revenue per ton increased 5.3 percent in 1998. A
general rate increase of 5.2 percent and a yield improvement program
significantly impacted revenues. Salaries, wages and employee benefit increases
in excess of tonnage increases burdened operating expenses in 1998. Purchased
transportation increases in 1998 were offset by reductions in other operating
expenses. WestEx reported positive operating income for the second half of 1998.
 Action Express operates as a separate Pacific Northwest and Rocky Mountain
subsidiary. The company's consolidated financial statements include Action's
results after its December 1, 1998 acquisition date, which were not material.
 Corporate expenses included a $2.3 million fourth quarter non-recurring expense
for an acquisition evaluation that was terminated. Corporate earnings benefited
from a 13.7 percent reduction in interest expense to $11.7 million in 1998, down
from $13.5 million in 1997. Other non-operating expense increased in 1998 versus
1997 due primarily to gains on the sale of real estate recorded in 1997.
Earnings per share from continuing operations benefited from the company's stock
buy back programs which reduced total shares outstanding at December 31, 1998 by
approximately 10 percent or 2.9 million shares.

DISCONTINUED OPERATIONS
 In the second quarter 1998, the company sold Preston Trucking Company, Inc.
(Preston Trucking) its northeast regional LTL segment to a management group of
three senior officers of Preston Trucking. The sale resulted in a charge of
$63.6 million net of anticipated tax benefits of approximately $28.0 million,
which has been disclosed as discontinued operations in the consolidated
statement of operations. The divestiture of Preston Trucking did not have any
significant impact on consolidated operating results or liquidity. No interest
charges have been allocated to discontinued operations and the company does
not anticipate any material change in the loss on disposal of the discontinued
operations. The loss from operation of Preston Trucking in 1997 was $.3
million, net of tax expense of $.6 million.
 After giving effect to discontinued operations, the company recorded a net loss
for 1998 of $28.7 million or $1.06 per share (diluted), versus net income of
$52.4 million, or $1.83 per share (diluted) in 1997.

1997 vs. 1996
 Operating revenue for the company totaled $2.9 billion in 1997, up 9.0 percent
from $2.65 billion in 1996. Income from continuing operations for the year was
$52.7 million in 1997, compared to 1996 income from continuing operation of $5.1
million excluding a special charge. The fourth quarter 1996 special charge
pertained to restructuring of the company's Yellow Freight subsidiary and was
$46.1 million before income taxes ($28.3 million after income taxes). Net income
for 1997 was $52.4 million, or $1.83 earnings per share (diluted), versus 1996
net loss of $27.2 million or $.97 per share (diluted).
 Improved profitability resulted primarily from improved pricing, stronger
volumes and aggressive cost reduction and productivity strategies, primarily at
Yellow Freight. Yellow Freight achieved $145 million in cost savings in 1997
from programs implemented in 1996 and 1997.
 Yellow Freight's 1997 operating income rose to $82.7 million, more than double
the 1996 operating income of $36.1 million, before the special charge. Revenue
for 1997 was $2.54 billion, up 7.7 percent from $2.36 billion in 1996. The 1997
operating ratio for Yellow Freight was 96.7 compared with 98.5 in 1996,
excluding the special charge.
 Yellow Freight tonnage and shipments per day during 1997 were up 4.3 percent
and 9.7 percent respectively. During the third quarter revenue benefited from a
two week Teamsters strike against UPS which caused a surge in high cost, smaller
shipments. During the fourth quarter, revenue weakened somewhat, due in large
part to freight diversion resulting from concerns of some shippers over Yellow
Freight's ongoing contract talks with the Teamsters, and the possibility of a
strike when the contract was scheduled to expire, March 31, 1998. The Teamsters
ratified a five-year contract in April 1998.
 During 1997, Yellow Freight revenue per ton was up 4.2 percent due to an
improved pricing environment. Cost per ton was up only 2.1 percent as cost
reduction, productivity and asset utilization strategies were material factors
in offsetting a 3.8 percent (approximately $44 million) increase in Teamster
wages and benefits effective April 1, 1997.
 The 4.2 percent increase in revenue per ton from individually negotiated price
increases with contractual customers as well as by general rate increases, which
apply to customers without contracts, averaging 5.2 percent in January 1997 and





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                                       3

<PAGE>   27
--------------------------------------------------------------------------------
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                of Financial Condition and Results of Operations

                                    CONTINUED


4.9 percent in October 1997. In addition Yellow Freight maintained a separate
fuel surcharge program. 

 Yellow Freight achieved $145 million in net savings in 1997 from programs
implemented in 1996 and 1997, compared to reductions of $75 million achieved in
1996. These reductions resulted from continuation of programs implemented in
1996 that included productivity and efficiency gains through best practices and
increased use of technology, lower personnel complement, centralized purchasing
benefits and other programs. In addition Yellow Freight implemented a change of
operations in April 1997, which enabled an increase in the use of rail
transportation from 18 percent to 27 percent of over-the-road-miles. The
increased use of rail lowered operating expenses and improved the company's
asset utilization and return on capital. The company is now able to operate with
fewer linehaul tractors. Operating results in 1997 include $5.6 million of costs
to implement the change in operations. 
 Yellow Freight salary, wages and employee benefits improved as a percentage of
revenue, despite the scheduled union wage increase, as a result of cost
reduction initiatives and increased use of rail transportation. Increased use of
rail drove the increase in purchased transportation and contributed to the
decline in depreciation and other expenses between years. The average age of
owned linehaul units slightly decreased but the average age of city units
slightly increased. Favorable accident experience contributed to the decline in
claims and insurance. A rise in cargo loss and damage somewhat offset the
favorable impact. Fuel prices generally declined as did fuel surcharge revenue.
 Saia continued its strong growth with 1997 operating income of $19.6 million,
up from $10.8 million in 1996. Saia continued to build lane density in 1997.
Revenue for 1997 was $311.2 million, up 17.7 percent from $264.3 million in
1996. Total tonnage increased 10.6 percent while revenue per ton improved 6.5
percent.
 Saia's operating ratio for 1997 was 93.7, compared with 95.9 in 1996. Tonnage
increased 10.6 percent and cost per ton increased 4.0 percent. Saia achieved a 9
percent improvement in pick-up and delivery productivity that helped offset
higher wage rates. An improved safety program, better accident record and cargo
claims prevention program held claims and insurance costs down. Purchased
transportation and rentals provided additional capacity to manage business
volume surges. 
 WestEx continued its rapid growth during 1997, reporting revenue of $49.0
million, up 48.6 percent from $33.0 million in 1996. WestEx reported a $0.8
million operating loss for the year. 
 Corporate earnings also benefited from lower non-operating expenses. Long-term
debt at year-end 1997 was $163.1 million, a reduction from $192.5 million at
year-end 1996 and $341.6 million at year-end 1995. Debt reduction programs since
year-end 1995 resulted in a reduction in interest expense of $7.5 million
between 1996 and 1997. Additionally, other non-operating items, primarily gains
on sales of real estate, contributed to favorable variances of $3.0 million in
the fourth quarter and $3.7 million year-to-date.

DISCONTINUED OPERATIONS
 Preston Trucking reported 1997 operating income of $0.1 million, compared with
a $5.8 million operating loss in 1996. Net loss from discontinued operations was
$0.3 million or $.01 loss per share (diluted) in 1997 compared to a net loss
from discontinued operations of $3.9 million or $.14 loss per share (diluted) in
1996.

FINANCIAL CONDITION
 The company's liquidity needs arise primarily from capital investment in new
equipment, land and structures and information technology, as well as funding
working capital requirements.
 To ensure short-term and longer-term liquidity, the company maintains capacity
under a bank credit agreement and an asset backed securitization (ABS) agreement
involving Yellow Freight's accounts receivable. At December 31, 1999, the
company had borrowings of $100 million against the $300 million bank credit
agreement, which expires in September 2001. This facility is also used to
provide letters of credit. Approximately $120.5 million remained available
under this agreement at year-end 1999 versus $251 million available at year-end
1998. The decrease in availability is a result of the Jevic acquisition
discussed below.
 Capacity of $40 million remained available under the ABS agreement at year-end
1999 versus $107 million available at year-end 1998. Access to the ABS facility,
however, is dependent on the company having adequate eligible receivables, as
defined under the agreement, available for sale subject to a maximum facility
limit of $175 million. The agreement permits the sale of accounts receivable to
a wholly owned special purpose corporation which in turn sells an undivided
interest to a third party affiliate of a bank. Funds raised by this method are
less expensive to the company than issuing commercial paper. Finally, the
company also expects to continue to have access to the commercial paper market
and to short-term unsecured bank credit lines.
 Working capital decreased from a negative $42 million at year-end 1998 to a
negative $83 million at year-end 1999. Borrowings under the ABS facility were
increased by $92 million in 1999. The company can operate with negative working
capital because of the quick turnover of its accounts receivable and its ready
access to sources of short-term liquidity.

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                                       4

<PAGE>   28

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 Projected net capital expenditures for 2000 are $177 million, a decrease over
1999 capital expenditures of $314 million. 1999 capital expenditures include
$165 million for the acquisition of Jevic. Net capital for both periods pertains
primarily to replacement of revenue equipment at all subsidiaries, growth
capital at Jevic, Saia, WestEx and Action Express and additional investments in
information technology. In 2000, additional capital expenditures are planned for
land and structures. Net capital expenditures in 1998 totaled $96 million an
increase from $80 million in 1997. Actual and projected net capital expenditures
are summarized below (in millions):

                                                           Actual
                         Projected          -----------------------------------
                              2000           1999           1998           1997
===============================================================================
Land and structures:
 Additions                   $  34          $  16          $  10          $  11
 Sales                         (33)            (6)            (9)           (25)
Revenue equipment              126             97             60             75
Technology and other            50             42             35             19
Jevic acquisition               --            165             --             --
-------------------------------------------------------------------------------
Total                        $ 177          $ 314          $  96          $  80
-------------------------------------------------------------------------------


 On July 9, 1999 the company completed a cash tender offer for all of the common
stock of Jevic Transportation, Inc. at $14 share. The aggregate purchase price
of the stock, including vested stock options and transaction costs, was
approximately $160.8 million, net of anticipated tax benefits relating to the
cost of the stock options. Including the assumption of debt, the total
transaction cost was approximately $200 million. The acquisition was financed
under the company's existing $300 million credit facility and the company's ABS
agreement.
 In December 1998, the company acquired Action Express, a regional LTL company
that operates primarily in the Northwest. The consolidated financial statements
include the results of operations of Jevic and Action Express from their
acquisition dates. The Action acquisition was not material to the consolidated
financial statements.
 At year-end 1999 total debt was $276 million compared to $157 million at
year-end 1998. This increase of $119 million was primarily the result of the
Jevic acquisition.
 These facilities provide adequate capacity to fund working capital and capital
expenditures requirements.
 Management believes its current financial condition and access to capital is
adequate for current operations including anticipated expenditures as well as
future growth opportunities.

OTHER
 The company provides a "pay for performance" incentive compensation plan that
rewards employees based on financial goals of operating income and return on
capital goals as well as personal goals. Consolidated results include pay for
performance accruals for nonunion employees of $33.1 million, $8.8 million and
$25.9 million, in 1999, 1998 and 1997 respectively.
 Another component of pay for performance is the company's stock option programs
which are discussed on page 20 of the notes to the consolidated financial
statements.
 Yellow Corporation Board of Directors have authorized three programs to
repurchase shares of the Company's outstanding common stock with an aggregate
purchase price of up to $25 million for each program resulting in total
purchases of $70.3 million through December 31, 1999. During 1999 the company
purchased 855,500 additional treasury shares. Through December 31, 1999,
approximately 3.8 million shares had been repurchased at an average price of
$18.60 per share. The company suspended its stock repurchase program in April
1999 as a result of the Jevic acquisition and internal investment opportunities.

YEAR 2000 
 The company began its Year 2000 project in 1995 with original estimates for
remediation costs of approximately $17.5 million. The final cost of remediation
was approximately $15.8 million, which represents approximately 6 percent of its
information technology budget over the project period. The company was able to
implement process modifications that provided greater efficiency and flexibility
in remediating code while working around the system needs of the business.
 The early start coupled with the efficient process allowed the company to keep
pace with demand for new IT development. There were no significant projects
deferred as a result of the Year 2000 remediation effort.






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                                       5

<PAGE>   29

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                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                of Financial Condition and Results of Operations

                                    CONTINUED


 As a result of these efforts, the transition from 1999 to 2000 proved to be
uneventful. The company has not identified any unusual business trends relative
to the transition to Year 2000.
 The company expensed modification costs of $1.9 million for the year ended
December 31, 1999 compared to $5.9 million for the year ended December 31, 1998.

MARKET RISK
 The company is exposed to a variety of market risks, including the effects of
interest rates, fuel prices and foreign currency exchange rates. To ensure
adequate funding through seasonal business cycles and minimize overall borrowing
costs, the company utilizes a variety of both fixed rate and variable rate
financial instruments with varying maturities. At December 31, 1999,
approximately 64 percent of the company's long-term financing including ABS is
at variable rates with the balance at fixed rates. The company acquired interest
rate swaps on a portion of debt assumed in the Jevic acquisition. The company
has not entered into any additional interest rate swaps subsequent to this
transaction. The interest rate swaps hedge a portion of the company's exposure
to variable interest rates. The detail of the company's debt structure,
including off balance sheet financial instruments is more fully described on
page 17 of the notes to financial statements.
 The company uses swaps and options as hedges in order to manage a portion of
its exposure to variable diesel prices. These agreements provide protection from
rising fuel prices, but limit the ability to benefit from price decreases below
the purchase price of the agreement. The swap transactions are generally based
on the price of heating oil. Based on historical information, the company
believes the correlation between the market prices of diesel fuel and heating
oil is highly effective. The company's fuel hedges are discussed in more detail
on page 15 of the notes to the financial statements.
 The company's revenues and operating expenses, assets and liabilities of its
Canadian and Mexican subsidiaries are denominated in foreign currencies, thereby
creating exposures to changes in exchange rates, however the risks related to
foreign currency exchange rates are not material to the company's consolidated
financial position or results of operations.
 The table below provides information about the company's fixed rate financial
instruments as of December 31, 1999 and 1998. The table presents principal cash
flows (in millions) and related weighted average interest rates by contractual
maturity dates. Medium-term notes included in fixed rate debt maturing within
one year, and intended to be refinanced are classified as long-term in the
consolidated balance sheet. For interest rate swaps the table presents notional
amounts and weighted average interest rates by contractual maturity. Weighted
average variable rates are based on LIBOR rate as of December 31, 1999.



<TABLE>
<CAPTION>
                                                                                                        December 31
                                                                                             -----------------------------------
                                                    Expected Maturity Date                       1999                1998
                                     ------------------------------------------------------------------------  -----------------
                                      2000     2001      2002     2003     2004  Thereafter  Total Fair Value  Total  Fair Value
================================================================================================================================
<S>                                 <C>       <C>       <C>      <C>      <C>      <C>      <C>      <C>       <C>      <C>   
Fixed Rate Debt                       $ 28.9   $  7.4    $22.3   $19.5    $16.2    $53.1     $147.4   $147.5    $141.7   $151.6
Average Interest Rate                   6.75%    8.24%    7.35%   6.29%    6.62%    6.97%
Variable Rate Debt                    $  1.4   $101.5    $ 5.8   $ 5.1    $ 0.2    $15.0     $129.0   $129.0    $ 15.4   $ 15.4
Average Interest Rate                   6.54%    6.66%    6.48%   4.32%    7.60%    5.90%
Off Balance Sheet -
 Asset Backed Securitization          $135.0                                                 $135.0   $135.0    $ 43.0   $ 43.0
 Effective Interest Rate                6.22%
Interest Rate Derivatives:
Variable To Fixed:
Notional Amount                       $  1.4   $  1.5    $ 5.8   $ 0.1    $ 0.2    $ 4.7     $ 13.7   $ 13.6    $   --   $   --
Average Pay Rate (Fixed)                5.81%    5.81%    5.70%   7.65%    7.65%    7.65%
Average Receive Rate (Variable)         6.54%    6.54%    6.48%   7.60%    7.60%    7.60%

</TABLE>





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                                       6

<PAGE>   30

-------------------------------------------------------------------------------




 The following table provides information about the company's diesel fuel
hedging instruments that are sensitive to changes in commodity prices. The table
presents notional amounts in gallons and the weighted average contract price by
contractual maturity date as of December 31, 1999 and comparative totals as of
December 31,1998. The company maintained fuel inventories for use in normal
operations at December 31, 1999 and 1998, which were not material to the
company's financial position and represented no significant market exposure.


<TABLE>
<CAPTION>
                                        Contractual
                                          Maturity    December 31, 1999        December 31, 1998
                                       ---------------------------------   ------------------------
                                           2000      Total    Fair Value      Total      Fair Value 
===================================================================================================
<S>                                      <C>       <C>        <C>          <C>           <C>    
Heating Oil Swaps:
Gallons (in thousands)                     38,600    38,600   $  6,286        158,800    $ (13,505)
Weighted Average Price per Gallon        $  .4578  $  .4578                $    .4649

Diesel Fuel Fixed Purchase Contracts:
Gallons (in thousands)                      2,126     2,126   $    448          5,040    $    (558)
Weighted Average Price per Gallon        $  .4820  $  .4820                $    .5170
</TABLE>


OUTLOOK
 The company is positioned for achieving profitable revenue growth at Yellow
Freight as well as the regional group of companies. All of the company's
subsidiaries are focused on expanding their portfolio of transportation
services. Yellow Freight's introduction of Definite Delivery, its mid-tier
time-definite ground service in 1999 and Exact Express, its premium tier
time-definite expedited air service in 1998 are examples of the value added
services our customers have demanded. All of the company's subsidiaries continue
to improve their productivity levels through implementation of best practices
and investments in technology.
 The company will continue to make significant investments in technology. Timely
and accurate information is essential to improve service quality and meet
increasing customer expectations for access to real-time information. The
ability to deliver new transportation services and improve the quality of those
services will be key to the successful transportation companies of the future.
 The 1999 acquisition of Jevic has brought the regional transportation group to
a critical mass, creating a number of options to unlock shareholder value, which
the company will be evaluating. We are creating a management structure for our
regional transportation group to ensure the regional group is well-focused on
long-term strategies as well as shorter-term revenue and profit improvement.
 In addition to the current subsidiaries and businesses, the company will also
evaluate opportunities to grow earnings through e-commerce and the Internet as
well as through future acquisitions. Management believes the company's balance
sheet and access to capital provide it the flexibility to reinvest in businesses
as well as new business opportunities with attractive growth prospects.

FORWARD LOOKING STATEMENTS 
 Statements contained in, and preceding management's discussion and analysis
that are not purely historical are forward looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including statements
regarding the company's expectations, hopes, beliefs and intentions on
strategies regarding the future. It is important to note that the company's
actual future results could differ materially from those projected in such
forward-looking statements because of a number of factors, including but not
limited to inflation, labor relations, inclement weather, competitor pricing
activity, expense volatility and a downturn in general economic activity.






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                                       7

<PAGE>   31
--------------------------------------------------------------------------------

                               FINANCIAL SUMMARY

                      Yellow Corporation and Subsidiaries

                   AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA



<TABLE>
<CAPTION>
                                                1999            1998            1997            1996            1995 
====================================================================================================================================
<S>                                        <C>             <C>             <C>             <C>             <C>        
FOR THE YEAR:                                      (a)             (b)                             (c)
Operating revenue                          $ 3,226,847     $ 2,900,577     $ 2,898,414     $ 2,654,991     $ 2,645,184
Income (loss) from operations                  107,506          83,396          98,677          (7,749)        (15,710)
Depreciation and amortization                  110,310         103,856         108,225         118,749         123,636
Interest expense                                15,303          11,685          13,546          21,036          23,395
Income (loss) from continuing operations        50,915          40,077          52,740         (23,240)        (26,538)
Net income (loss) including
 discontinued operations                        50,915         (28,669)         52,435         (27,180)        (30,122)
Net cash from operating activities             250,036         154,575         119,984         190,652          41,771
Capital expenditures, net                      313,692          95,633          79,566          43,165         120,609

AT YEAR END:
Net property and equipment                     866,772         702,802         692,159         715,769         815,617
Total assets                                 1,325,583       1,105,685       1,270,812       1,227,807       1,434,897
Total debt                                     276,407         157,065         165,705         196,153         353,573
Treasury stock                                 (87,975)        (73,151)        (27,006)        (17,620)        (17,620)
Shareholders' equity                           409,380         371,252         445,851         395,700         422,677

MEASUREMENTS:
Diluted per share data:
Income (loss) from continuing operations          2.02            1.49            1.84            (.83)           (.94)
Net income (loss) including
 discontinued operations                          2.02           (1.06)           1.83            (.97)          (1.07)

Cash dividends per share                          --              --              --              --               .47

Shareholders' equity per share                   16.37           13.90           15.77           14.08           15.04

Debt to capital ratio                               40%             30%             27%             33%             46%

Return on average shareholders' equity -
 continuing operations                            13.0%            9.8%           12.5%           (5.7)%          (6.0)%

Market price range:
High                                            19 5/8          29 7/8          34 1/8          16 3/8          24 3/8
Low                                             14 3/8         9 11/16          14 1/8          10 1/4          11 7/8

Average number of employees                     31,200          29,700          29,000          29,000          28,900

</TABLE>



(a) In July 1999, the company acquired Jevic Transportation, Inc. The results of
    operations include Jevic from the acquisition date.

(b) In 1998, the company sold Preston Trucking Company, Inc. All selected
    financial data have been restated to disclose Preston Trucking as
    discontinued operations.

(c) 1996 results include a special charge of $28.3 million after taxes resulting
    from the write down of certain nonoperating real estate and computer
    software assets, an early retirement program, the reduction of a company car
    program and other organizational design impacts, primarily severance.


--------------------------------------------------------------------------------

                                       8

<PAGE>   32
--------------------------------------------------------------------------------

                           CONSOLIDATED BALANCE SHEETS

         Yellow Corporation and Subsidiaries December 31, 1999 and 1998

                   AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA



<TABLE>
<CAPTION>
                                                 1999            1998 
================================================================================
<S>                                         <C>            <C>        
ASSETS

CURRENT ASSETS:
Cash                                        $    22,581    $    25,522
Accounts receivable, less allowances
 of $15,661 and $14,162                         265,302        272,436
Fuel and operating supplies                      16,563          8,966
Prepaid expenses                                 47,446         67,691
--------------------------------------------------------------------------------
Total current assets                            351,892        374,615
--------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT:
Land                                            111,859        103,720
Structures                                      574,755        541,777
Revenue equipment                             1,078,517        949,695
Technology equipment and software               184,385        171,142
Other                                           143,954        130,695
--------------------------------------------------------------------------------
                                              2,093,470      1,897,029
Less - Accumulated depreciation               1,226,698      1,194,227
--------------------------------------------------------------------------------
Net property and equipment                      866,772        702,802
--------------------------------------------------------------------------------

Goodwill                                         96,383         19,229
Other assets                                     10,536          9,039
--------------------------------------------------------------------------------
Total assets                                $ 1,325,583    $ 1,105,685
--------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Checks outstanding                          $    67,912    $    79,603
Accounts payable                                 67,265         68,041
Wages, vacations, and employees' benefits       172,471        119,347
Deferred income taxes                             2,703         36,759
Claims and insurance accruals                    69,651         69,016
Other current and accrued liabilities            52,415         43,352
Current maturities of long-term debt              2,392             77
--------------------------------------------------------------------------------
Total current liabilities                       434,809        416,195
--------------------------------------------------------------------------------

OTHER LIABILITIES:
Long-term debt                                  274,015        156,988
Deferred income taxes                            79,005         18,433
Claims, insurance and other                     128,374        142,817
--------------------------------------------------------------------------------
Total other liabilities                         481,394        318,238
--------------------------------------------------------------------------------

Commitments and contingencies

SHAREHOLDERS' EQUITY:
Series A $10 Preferred stock,
 $1 par value-authorized 750 shares                --             --
Preferred stock, $1 par
 value-authorized 4,250 shares                     --             --
Common stock, $1 par
 value-authorized 120,000 shares,
 issued 29,437 and 29,356 shares                 29,437         29,356
Capital surplus                                  16,063         14,948
Retained earnings                               454,177        403,262
Accumulated other comprehensive income           (2,322)        (3,163)
Treasury stock, at cost
 (4,533 and 3,678 shares)                       (87,975)       (73,151)
--------------------------------------------------------------------------------
Total shareholders' equity                      409,380        371,252
--------------------------------------------------------------------------------
Total liabilities and shareholders' equity  $ 1,325,583    $ 1,105,685
--------------------------------------------------------------------------------
</TABLE>


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

--------------------------------------------------------------------------------
                                       10

<PAGE>   33
--------------------------------------------------------------------------------

                     STATEMENTS OF CONSOLIDATED OPERATIONS

      Yellow Corporation and Subsidiaries for the years ended December 31

                   AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA



<TABLE>
<CAPTION>
                                                1999            1998          1997
=======================================================================================
<S>                                         <C>            <C>            <C>        
OPERATING REVENUE                           $ 3,226,847    $ 2,900,577    $ 2,898,414
---------------------------------------------------------------------------------------
OPERATING EXPENSES:
Salaries, wages and employees'
 benefits                                     2,041,590      1,848,548      1,844,664
Operating expenses and supplies                 490,772        446,872        459,404
Operating taxes and licenses                    100,602         94,082         96,097
Claims and insurance                             70,227         71,964         64,241
Depreciation and amortization                   110,310        103,856        108,225
Purchased transportation                        305,840        251,859        227,106
---------------------------------------------------------------------------------------
Total operating expenses                      3,119,341      2,817,181      2,799,737
---------------------------------------------------------------------------------------

INCOME FROM OPERATIONS                          107,506         83,396         98,677
---------------------------------------------------------------------------------------

NONOPERATING (INCOME) EXPENSES:
Interest expense                                 15,303         11,685         13,546
Interest income                                  (1,207)        (1,123)        (1,057)
Other, net                                        4,131          3,285         (2,694)
---------------------------------------------------------------------------------------
Nonoperating expenses, net                       18,227         13,847          9,795
---------------------------------------------------------------------------------------

INCOME FROM CONTINUING OPERATIONS
 BEFORE INCOME TAXES                             89,279         69,549         88,882
INCOME TAX PROVISION                             38,364         29,472         36,142
---------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS                50,915         40,077         52,740
---------------------------------------------------------------------------------------

Loss from discontinued operations, net             --          (68,746)          (305)
---------------------------------------------------------------------------------------
NET INCOME (LOSS)                           $    50,915    $   (28,669)   $    52,435
---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING-BASIC          25,003         26,709         28,267
---------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING-DILUTED        25,168         26,920         28,695
---------------------------------------------------------------------------------------

BASIC EARNINGS (LOSS) PER SHARE:
Income from continuing operations           $      2.04    $      1.50    $      1.87
Loss from discontinued operations                  --            (2.57)          (.01)
---------------------------------------------------------------------------------------
Net income (loss)                           $      2.04    $     (1.07)   $      1.86
---------------------------------------------------------------------------------------

DILUTED EARNINGS (LOSS) PER SHARE:
Income from continuing operations           $      2.02    $      1.49    $      1.84
Loss from discontinued operations                  --            (2.55)          (.01)
---------------------------------------------------------------------------------------
Net income (loss)                           $      2.02    $     (1.06)   $      1.83
---------------------------------------------------------------------------------------
</TABLE>



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

--------------------------------------------------------------------------------

                                       12

<PAGE>   34
--------------------------------------------------------------------------------
                                        
                     STATEMENTS OF CONSOLIDATED CASH FLOWS
                                        
      Yellow Corporation and Subsidiaries for the years ended December 31
                                        
                              AMOUNTS IN THOUSANDS
                                        

<TABLE>
<CAPTION>
                                                         1999         1998         1997
==========================================================================================
<S>                                                   <C>          <C>          <C>      
OPERATING ACTIVITIES:
Net income (loss)                                     $  50,915    $ (28,669)   $  52,435
Noncash items included in net income (loss):
 Depreciation and amortization                          110,310      103,856      108,225
 Loss on discontinued operations                           --         68,746          305
 Deferred income tax provision                           11,106        5,638        5,496
Changes in assets and liabilities, net:
 Accounts receivable                                    (54,915)      (1,669)     (30,981)
 Accounts receivable securitizations, net                92,000       25,000      (27,000)
 Accounts payable and checks outstanding                (18,366)      (1,803)      13,478
 Other working capital items                             54,510      (22,112)      34,429
 Claims, insurance and other                              3,419        4,014      (31,737)
 Other, net                                               1,057        1,574       (4,666)
------------------------------------------------------------------------------------------
Net cash from operating activities                      250,036      154,575      119,984
------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
Acquisition of property and equipment                  (159,275)    (111,466)    (109,027)
Proceeds from disposal of property and equipment         10,090       15,833       29,461
Purchase of Jevic Transportation, Inc.                 (164,507)        --           --
Net capital expenditures of discontinued operations        --          2,203      (11,426)
------------------------------------------------------------------------------------------
Net cash used in investing activities                  (313,692)     (93,430)     (90,992)
------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
Unsecured bank credit lines, net                        100,000         --           --
Commercial paper, net                                      --           --        (11,832)
Repayment of long-term debt                             (25,564)      (7,575)     (18,644)
Proceeds from exercise of stock options, net              1,103        1,085        4,983
Treasury stock purchases                                (14,824)     (46,836)      (8,695)
------------------------------------------------------------------------------------------
Net cash from financing activities                       60,715      (53,326)     (34,188)
------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH                          (2,941)       7,819       (5,196)
CASH, BEGINNING OF YEAR                                  25,522       17,703       22,899
------------------------------------------------------------------------------------------
CASH, END OF YEAR                                     $  22,581    $  25,522    $  17,703
------------------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (received), net                     $  16,447    $ (11,337)   $  30,299
------------------------------------------------------------------------------------------
Interest paid                                         $  14,569    $  11,410    $  12,274
------------------------------------------------------------------------------------------
</TABLE>


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

--------------------------------------------------------------------------------

                                       13

<PAGE>   35
--------------------------------------------------------------------------------

                STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY

                       Yellow Corporation and Subsidiaries

                              AMOUNTS IN THOUSANDS



<TABLE>
<CAPTION>
                                                                                                     Accumulated
                                                                                                           Other
                                                                   Common     Capital    Retained  Comprehensive     Treasury
                                                       Total        Stock     Surplus    Earnings         Income        Stock
=============================================================================================================================
<S>                                                <C>          <C>         <C>         <C>          <C>          <C>       
BALANCE, DECEMBER 31, 1996                         $ 395,700    $  28,863   $   6,745   $ 379,496    $  (1,784)   $ (17,620)

Net income                                            52,435         --          --        52,435         --           --    
Foreign currency translation adjustments                (447)        --          --          --           (447)        --   
                                                     ------- 
Total comprehensive income                            51,988

Exercise of stock options, including tax benefits      7,452          421       7,031        --           --           --
Treasury stock purchases                              (9,386)        --          --          --           --         (9,386)
Other                                                     97            5          92        --           --           --
-----------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997                           445,851       29,289      13,868     431,931       (2,231)     (27,006)

Net loss                                             (28,669)        --          --       (28,669)        --           --
Foreign currency translation adjustments                (932)        --          --          --           (932)        --
                                                     ------- 
Total comprehensive loss                             (29,601)

Exercise of stock options, including tax benefits      1,005           60         945        --           --           --
Treasury stock purchases                             (46,145)        --          --          --           --        (46,145)
Other                                                    142            7         135        --           --           --
-----------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                           371,252       29,356      14,948     403,262       (3,163)     (73,151)

Net income                                            50,915         --          --        50,915         --           --
Foreign currency translation adjustments                 841         --          --          --            841         --
                                                     ------- 
Total comprehensive income                            51,756

Exercise of stock options, including tax benefits      1,103           75       1,028        --           --           --
Treasury stock purchases                             (14,824)        --          --          --           --        (14,824)
Other                                                     93            6          87        --           --           --
-----------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                         $ 409,380    $  29,437   $  16,063   $ 454,177    $  (2,322)   $ (87,975)
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>



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

--------------------------------------------------------------------------------

                                       14

<PAGE>   36
-------------------------------------------------------------------------------


                   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. Management makes estimates and assumptions which affect the
amounts reported in the financial statements and footnotes. Actual results could
differ from those estimates.
  The company provides transportation services primarily to the
less-than-truckload (LTL) market throughout North America. Principal operating
subsidiaries are Yellow Freight System, Inc. (Yellow Freight), Saia Motor 
Freight Line, Inc. (Saia), Jevic Transportation, Inc. (Jevic), WestEx, Inc. 
(WestEx), and Action Express, Inc. (Action Express).
  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.

- Fuel is carried at average cost. The company primarily uses heating oil
financial instruments to manage a portion of its exposure to fluctuating diesel
prices. Under the agreements the company receives or makes payments based on the
difference between a fixed and a variable price for heating oil. These
agreements provide protection from rising fuel prices, but limit the ability to
benefit from price decreases below the purchase price of the agreements. At
December 31, 1999, the company had agreements for 40.7 million gallons at a cost
averaging $.46 per gallon over the next 7 months, representing 44 percent of
total anticipated fuel usage over the contract period. At December 31, 1998, the
company had agreements on 163.8 million gallons at a cost averaging $.47 per
gallon representing 75 percent of total anticipated fuel usage over the contract
period. Based on quoted market prices, the fair value of the swaps and fixed
purchase contracts was $6.7 million above and $14.1 million below its purchase
price at December 31, 1999 and 1998. Gains and losses on the agreements are
recognized as a component of fuel expense when the corresponding fuel is
purchased. Hedge instruments are recorded at cost in fuel and operating
supplies. This accounting is used for instruments designated as a hedge of
anticipated fuel transactions. The effectiveness of the hedge is periodically
evaluated. If the hedge is not highly effective or if the anticipated 
transaction is subsequently determined unlikely to occur, the unrealized gains 
and or losses accumulated are recognized immediately in earnings.

- The company has interest rate contracts with notional amounts totaling $13.7
million at December 31, 1999 to hedge a portion of its exposure to variable rate
debt. There were no material unrealized gains or losses at December 31, 1999.
These interest rate contracts were acquired in connection with the Jevic
acquisition. The company had no interest rate contracts at December 31, 1998.
The differentials to be received or paid under contracts designated as hedges 
are recognized as adjustments to interest expense over the life of the contract.

- The Financial Accounting Standards Board (FASB) issued Statement No.133,
Accounting For Derivative Instruments and Hedging Activities subsequently
amended by FASB Statement No.137 that will be effective for the company's fiscal
year ended December 31, 2001. This statement establishes accounting and 
reporting standards requiring all derivative instruments to be recorded in the
balance sheet at their fair value. The statement requires changes in a 
derivatives fair value to be recognized currently in earnings, except for
special qualifying hedges for which gains and losses may offset the hedged
item in the income statement. The company does not believe the impact of
adoption of statement No.133 will be material to results of operations or
financial position.

- Property and equipment are carried at cost less accumulated
depreciation. Depreciation is computed using the straight-line method based on
the following service lives:

                                              Years
====================================================
Structures                                   10 - 40
Revenue equipment                             3 - 14
Technology equipment and software             3 -  5
Other                                         3 - 10









-------------------------------------------------------------------------------
                                       15

<PAGE>   37
-------------------------------------------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Yellow Corporation and Subsidiaries

                                    CONTINUED

- Maintenance and repairs are charged to operations currently; replacements and
improvements are capitalized. The gain or loss on dispositions is reflected in
operating expenses and supplies. Net gains (losses) from operating property
dispositions totaled ($0.3) million in 1999, $5.0 million in 1998 and $1.1
million in 1997.

- Goodwill at December 31, 1999 and 1998, net of accumulated amortization of
$6.7 million and $4.5 million is being amortized over 20-40 years.

- The company's investment in technology equipment and software consists
primarily of advanced customer service and freight management communications
equipment and related software.

- Effective January 1, 1998, the company prospectively adopted Statement of
Position 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use (the SOP). The statement requires capitalization of
certain costs associated with developing or obtaining internal-use software,
once the capitalization criteria of the SOP has been met.
  Capitalizable costs include external direct costs of materials and services
utilized in developing or obtaining the software and, payroll and 
payroll-related costs for employees directly associated with the project. Prior
to adoption of the standard, the company had capitalized only the external 
direct costs associated with internal-use software. For the years ended 
December 31, 1999 and 1998, the company capitalized $6.7 million and $5.1
million, respectively, primarily payroll-related costs incurred since 
January 1, 1998, on eligible projects.

- 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 primarily 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 costs is implicitly considered in the actuarial
analyses. Adjustments to previously established reserves are included in
operating results.
  At December 31, 1999 and 1998, estimated future payments for workers' 
compensation claims aggregated $112.9 million and $116.5 million. The
present value of these estimated future payments was $96.1 million at December
31, 1999, and $99.7 million at December 31, 1998.

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

- The exercise of stock options under the company's various stock option plans
gives rise to compensation included in the taxable income of the stock recipient
and deducted by the company for federal and state income tax purposes. The
compensation results from increases in the fair value of the company's common
stock after the date of grant. The compensation is not recognized in expense in
the accompanying financial statements. The related tax benefits increase
capital surplus.

- Comprehensive income for the three years ended December 31, 1999 includes
foreign currency translation adjustments which are net of tax expense (benefit)
of $0.2 million in 1999, ($0.3) million in 1998 and ($0.2) million in 1997.

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






-------------------------------------------------------------------------------
                                       16

<PAGE>   38
-------------------------------------------------------------------------------




DEBT AND FINANCING

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


<TABLE>
<CAPTION>

                                                                                                 1999         1998
====================================================================================================================
<S>                                                                                           <C>          <C>      
Unsecured bank revolver                                                                       $ 100,000    $      --
Medium term notes                                                                               113,000      114,000
Industrial development bonds                                                                     20,550       20,550
Subordinated debentures, interest rate of 7%, installment payments due from 2005 to 2011         16,111       21,700
Fixed rate mortgage notes, monthly principal and interest payments, final payment of $9,707
  due November 2009, interest rates ranging from 7.0% to 7.7%, collateralized by facilities      11,978           --
Variable rate term notes, monthly principal and interest payments, due through November
  2002 collateralized by revenue equipment                                                        8,603           --
Variable rate mortgage note, monthly principal and interest payments, final payment
  of $4,497 due November 2005, collateralized by facilities                                       5,283           --
Capital leases and other                                                                            882          815
--------------------------------------------------------------------------------------------------------------------
Total debt                                                                                      276,407      157,065
Current maturities                                                                                2,392           77
--------------------------------------------------------------------------------------------------------------------
Long-term debt                                                                                $ 274,015    $ 156,988
--------------------------------------------------------------------------------------------------------------------
</TABLE>



  The company has a $300 million unsecured credit agreement with a group of
banks which expires September 24, 2001. At December 31, 1999, $100 million in
borrowings were outstanding, and $79 million of letters of credit had been
issued under the agreement. There were no borrowings at December 31, 1998, but
$49 million of letters of credit had been issued under the agreement. The
agreement may be used for additional short-term borrowings and for the issuance
of standby letters of credit. Interest on borrowings is based, at the company's 
option, at a fixed increment over the London interbank offered rate or the 
agent bank's base rate. Under the terms of the agreement among other 
restrictions, the company must maintain a minimum consolidated net worth and
total debt must be no greater than a specified ratio of earnings before
interest, income taxes, depreciation and amortization, as defined. At December
31, 1999 and 1998, the company was in compliance with all terms of this credit
agreement.
  In 1999, the company renewed a $175 million, three year accounts receivable
sales agreement with a bank, an increase from $150 million under the old
agreement. The agreement involves the sale of accounts receivable to the
company's wholly owned, special purpose corporation (SPC). The SPC in turn sells
an undivided interest in a revolving pool of eligible receivables as funding is
required. Under terms of the agreement, the SPC's assets are available to
satisfy its obligations prior to any distribution to its shareholders. The      
company maintains responsibility for processing and collecting all receivables.
Accounts receivable at December 31, 1999 and 1998, are net of $135 million and 
$43 million of receivables sold. Other, net non-operating expense includes costs
in lieu of interest of $6.1 million, $2.9 million and $2.5 million associated
with this agreement in 1999, 1998 and 1997.
  The company maintains financing flexibility under the credit agreement and the
accounts receivable sales agreement. Medium term notes maturing within one year,
and intended to be refinanced, are classified as long-term. Medium term notes
have scheduled maturities through 2008 with interest rates ranging from 5.7
percent to 8.8 percent.
  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. Rates on
these bonds and other debt currently range from 3.9 percent to 7.7 percent, with
principal payments due through 2020.
  The company has interest rate swap agreements with two separate banks for the
variable rate term notes and the variable rate mortgage note presented in the
above table. The swaps coincide with the principle payment schedules on these
obligations and are designed to hedge against future changes in interest rates.
  The principal maturities of long-term debt for the next five years (in
thousands) are as follows: 2000 - $2,392,2001 - $136,800,2002 - $28,051,2003 -
$24,626,2004 - $16,406, thereafter $68,132.
  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, 1999 and 1998, was approximately $277 million and $167 million.









-------------------------------------------------------------------------------
                                       17

<PAGE>   39
-------------------------------------------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Yellow Corporation and Subsidiaries

                                    CONTINUED

EMPLOYEE BENEFITS
  Certain subsidiaries provide defined benefit pension plans for employees not
covered by collective bargaining agreements (approximately 14 percent of total
employees). 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 while taking into
consideration any variable Pension Benefit Guarantee Corporation premium.
Approximately 40 percent of the plans' assets consist of fixed income securities
and 50 percent are invested in U.S. equities. Approximately 10 percent is
invested in international equities.
  Effective January 1, 2000, the Board of Directors adopted an amendment to the
pension plan that provides for the payment of unreduced benefits, at early
retirement, for a participant whose combination of age and vested service equals
85 years or greater.
  The company adopted Financial Accounting Standards Board Statement No. 132
Employer's Disclosure About Pensions and Other Post Retirement Benefits in
1998. The statement standardizes the disclosure requirements for pensions and
other post retirement benefits.
  The following tables set forth the plans' funded status and components of net
pension cost (in thousands):


                                                      1999           1998
===============================================================================
Change in benefit obligation:
Benefit obligation at beginning of year            $ 253,443      $ 221,360
Service cost                                           9,782          8,100
Interest cost                                         17,981         16,357
Plan amendment                                        13,480           --
Actuarial (gain) loss                                (26,335)        16,874
Benefits paid                                         (9,484)        (9,248)
-------------------------------------------------------------------------------
Benefit obligation at end of year                  $ 258,867      $ 253,443
-------------------------------------------------------------------------------

Change in plan assets:
Fair value of plan assets at beginning of year     $ 224,744      $ 189,677
Actual return on plan assets                          39,418         29,396
Employer contributions                                 3,042         14,919
Benefits paid                                         (9,484)        (9,248)
-------------------------------------------------------------------------------
Fair value of plan assets at end of year           $ 257,720      $ 224,744
-------------------------------------------------------------------------------

Funded status                                      $  (1,147)     $ (28,699)
Unrecognized transition asset                         (8,507)       (10,895)
Unrecognized net actuarial gain                      (62,400)       (17,275)
Unrecognized prior service cost                       14,199            779
-------------------------------------------------------------------------------
Prepaid (accrued) benefit cost                     $ (57,855)     $ (56,090)
-------------------------------------------------------------------------------








-------------------------------------------------------------------------------
                                       18

<PAGE>   40
-------------------------------------------------------------------------------




<TABLE>
<CAPTION>
                                                        1999          1998           1997
===========================================================================================
<S>                                                  <C>            <C>            <C>     
Net pension cost:
Service cost - benefits earned during the period     $  9,782       $  8,100       $  7,415
Interest cost on projected benefit obligation          17,981         16,357         15,171
Actual return on plan assets                          (31,720)       (29,396)       (32,338)
Amortization of unrecognized net assets                (1,799)        (2,367)        (2,372)
Net deferral                                           15,409         15,541         19,930
-------------------------------------------------------------------------------------------
Net pension cost                                     $  9,653       $  8,235       $  7,806
-------------------------------------------------------------------------------------------
Weighted average assumptions at December 31:
Discount rate                                             7.8%           6.8%           7.3%
Rate of increase in compensation levels                   4.5%           3.5%           4.0%
Expected rate of return on assets                         9.0%           9.0%           9.0%

</TABLE>



  The company contributes to multi-employer health, welfare and pension plans
for employees covered by collective bargaining agreements (approximately two
thirds of total employees). 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):

                          1999            1998            1997
================================================================
Health and welfare      $ 141,884      $ 141,448       $ 141,817
Pension                   151,964        142,733         143,529
----------------------------------------------------------------
Total                   $ 293,848      $ 284,181       $ 285,346
----------------------------------------------------------------

  Under current legislation regarding multi-employer pension plans, a
termination, withdrawal or partial withdrawal from any multi-employer plan that
is in an under-funded status would render the company liable for a proportionate
share of such multi-employer plans' unfunded vested liabilities. This potential
unfunded pension liability also applies to the company's unionized competitors
who contribute to multi-employer plans. Based on the limited information
available from plan administrators, which the company cannot independently
validate, the company believes that its portion of the contingent liability
would be material to its financial position and results of operations. The
company's unionized subsidiary has no intention of taking any action that would
subject the company to obligations under the legislation.
  The company's employees covered under collective bargaining agreements can
also participate in a contributory 401(k) plan. There are no employer
contributions to this plan.
  Certain subsidiaries also sponsor defined contribution plans, primarily for
employees not covered by collective bargaining agreements. The plans principally
consist of contributory 401(k) savings plans and noncontributory profit sharing
plans. Company contributions to the 401(k) savings plans consist of both a fixed
matching percentage and a discretionary amount. The nondiscretionary company
match is equal to 25 percent of the first six percent of an eligible employees
contributions. The company's discretionary contributions for both the 401(k)
savings plan and profit sharing plans 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, 1999, were not material to the operations
of the company.
  The company and its operating subsidiaries each provide annual performance
incentive awards to nonunion employees which are based primarily on actual
operating results achieved compared to targeted operating results. Operating
results in 1999, 1998 and 1997 include performance incentive accruals for
nonunion employees of $33.1 million, $8.8 million and $25.9 million. Performance
incentive awards for a year are primarily paid in the first quarter of the
following year.







-------------------------------------------------------------------------------
                                       19

<PAGE>   41
-------------------------------------------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Yellow Corporation and Subsidiaries

                                    CONTINUED

STOCK OPTIONS
  The company has reserved 4.2 million shares of its common stock for issuance
to key management personnel of the company and its operating subsidiaries under
four stock option plans. The plans permit two types of awards: grants of
nonqualified stock options and grants of stock options coupled with a grant of
stock appreciation rights. The 1992 plan also permits grants of restricted stock
awards.
  Under the plans, the exercise price of each option equals the market price of
the company's common stock on the date of grant and the options expire ten years
from the date of grant. The options vest ratably, generally over a period of
four years.
  In addition, the company has reserved 100,000 shares of its common stock for
issuance to its Board of Directors.
  The company applies Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, in accounting for its plans. No significant
compensation cost was recognized in any of the three years ended December 31,
1999. The table below presents unaudited pro forma net income (loss) and 
earnings (loss) per share, had compensation costs been recognized in accordance
with Financial Accounting Standards Board Statement No. 123, Accounting for 
Stock-Based Compensation. The unaudited pro forma calculations, were estimated 
using the Black-Scholes option-pricing model with the following weighted average
assumptions.

                                                      1999      1998       1997
================================================================================
Dividend yield                                            -%        -%        -%
Expected volatility                                    40.4%     34.8%     36.6%
Risk-free interest rate                                 5.9%      5.5%      6.1%
Expected option life (years)                              3         3         3
Fair value per option                                $ 5.42   $  5.59    $ 6.98

--------------------------------------------------------------------------------

(In millions except per share data)

Net income (loss)                                    $ 50.9   $ (28.7)   $ 52.4
Pro forma compensation expense, net of tax benefit      2.1       2.7       2.0
--------------------------------------------------------------------------------
Pro forma net income (loss)                          $ 48.8   $ (31.4)   $ 50.4
--------------------------------------------------------------------------------
Pro forma earnings (loss) per share - diluted        $ 1.94   $ (1.17)   $ 1.76
--------------------------------------------------------------------------------








--------------------------------------------------------------------------------
                                       20

<PAGE>   42
--------------------------------------------------------------------------------






  At December 31, 1999, 1998, and 1997 options on approximately 1,283,000
shares, 675,000 shares and 50,000 shares, respectively were exercisable at
weighted average exercise prices of $17.18, $17.12, and $14.88, respectively.
The weighted average remaining contract life on outstanding options at December
31, 1999, 1998 and 1997 was 5.7 years, 8.4 years and 9.0 years. A summary of
activity in the company's stock option plans is presented below.

                                                        Exercise Price
                                               -----------------------------
                                    Shares     Weighted
                                (thousands)     Average                Range
============================================================================
Outstanding at December 31, 1996     1,510     $  12.24     $  11.63 - 14.00
Granted                              1,386        21.73        14.38 - 27.00
Exercised                             (421)       12.10        11.63 - 20.63
Cancelled                             (100)       13.56        12.25 - 24.05
----------------------------------------------------------------------------
Outstanding at December 31, 1997     2,375        17.75        11.63 - 27.00
Granted                                873        18.57        11.50 - 21.06
Exercised                              (60)       14.11        12.25 - 17.00
Cancelled                             (135)       16.84        12.25 - 27.00
----------------------------------------------------------------------------
Outstanding at December 31, 1998     3,053        18.10        11.50 - 27.00
Granted                                751        15.97        15.00 - 18.13
Exercised                             (595)       13.28        12.25 - 17.13
Cancelled                              (75)       19.71        12.25 - 27.00
----------------------------------------------------------------------------
Outstanding at December 31, 1999     3,134     $  17.44     $  11.50 - 27.00
----------------------------------------------------------------------------

ACQUISITION
  On July 9, 1999 the company completed a cash tender offer for all of the 
common stock of Jevic Transportation, Inc. at $14 per share. The transaction was
accounted for as a purchase. The aggregate purchase price of the stock,
including vested stock options and transaction costs was approximately $160.8
million, net of an anticipated $4.3 million tax benefit relating to the cost of
the stock options. Transaction costs relate primarily to legal and professional
fees (in millions).

Purchase Price:
Common Stock purchased                                              $  149.9
Stock options, net of tax benefit                                        7.0
Transaction fees                                                         3.9
----------------------------------------------------------------------------
Total                                                               $  160.8
----------------------------------------------------------------------------









----------------------------------------------------------------------------
                                       21

<PAGE>   43
----------------------------------------------------------------------------


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Yellow Corporation and Subsidiaries

                                    CONTINUED


  Including assumption of debt of approximately $45 million, the total
transaction cost was approximately $200 million. The transaction was accounted
for under purchase accounting and the excess of purchase price over fair value
of assets acquired was allocated to goodwill and is being amortized over 40
years. Accordingly, the results of Jevic's operations have been included in the
company's financial statements for the period from July 10, 1999 through 
December 31, 1999. The acquisition was financed under the company's existing 
credit facilities.
  The following unaudited pro forma financial information for the company gives
effect to the Jevic acquisition as if it had occurred on January 1, 1998. These
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which actually would have
resulted had the acquisitions occurred on the date indicated, or which may
result in the future. (Pro forma financial information is in millions except per
share data.)

                                                       For the Years Ended
                                                               December 31
                                                  ------------------------
                                                       1999           1998
==========================================================================
                                                        (unaudited)

Revenue                                           $ 3,366.1      $ 3,126.7
Income from continuing operations                 $    52.2      $    41.4
Net income (loss)                                 $    52.2      $   (27.3)
--------------------------------------------------------------------------


Per Share Data:
Income from continuing operations                 $    2.08      $    1.54
Net income (loss)                                 $    2.08      $   (1.02)



DISCONTINUED OPERATIONS
  On June 1, 1998 the company reached agreement in principal to sell Preston
Trucking Company, Inc. (Preston Trucking) a regional LTL segment to a management
group of three senior officers of Preston Trucking. Preston Trucking was a
regional carrier serving the Northeast, Mid Atlantic, and Central States.
Substantially all assets of Preston Trucking were sold and substantially all
liabilities were assumed by the management group. Total assets and liabilities
of Preston Trucking at July 15, 1998 (the closing date of the sale) were
approximately $149.0 million and $62.1 million respectively. The equity
consideration received by the company for Preston's net assets was $100 and
Preston retained approximately $4 million of industrial revenue bond debt. The
sale resulted in a noncash charge of $63.6 million net of anticipated tax
benefits of approximately $28.0 million which has been reflected as discontinued
operations in the consolidated statements of operation in 1998. No interest
charges have been allocated to discontinued operations and the company does not
anticipate any material change in the loss from disposition of the discontinued
operations.
  In July 1999, Preston Trucking ceased operations and has commenced a
liquidation of its assets under federal bankruptcy regulations.
  The results of Preston Trucking have been classified as discontinued
operations in the consolidated financial statements. Revenue of Preston Trucking
for fiscal 1998 through the sale date was $211.5 million. Preston Trucking had
revenue of $450.5 million in fiscal 1997. Loss from operation of discontinued
operations was $5.1 million, and $0.3 million, for fiscal 1998 and 1997 and is
net of income tax expense (benefit) of $(2.8) million, and $0.6 million for
fiscal 1998 and 1997. Basic and diluted loss per share from operation of
discontinued operations was $.19 in 1998. Basic loss per share from disposal of
discontinued operations was $2.38 in 1998 and diluted loss per share was $2.36.





----------------------------------------------------------------------------
                                       22

<PAGE>   44
-----------------------------------------------------------------------------



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):

                                       1999           1998
==========================================================
Depreciation                      $ 122,947      $  93,146
Prepaids                             13,864         13,340
Employee benefits                    34,375         34,965
Revenue                              23,141         22,078
Other                                   964          1,977
----------------------------------------------------------
Gross tax liabilities               195,291        165,506
----------------------------------------------------------
Claims and insurance                (67,311)       (64,570)
Bad debts                            (5,606)        (3,668)
Employee benefits                   (18,912)       (18,540)
Revenue                             (14,730)       (16,019)
Other                                (7,024)        (7,517)
----------------------------------------------------------
Gross tax assets                   (113,583)      (110,314)
----------------------------------------------------------
Net tax liability                 $  81,708      $  55,192
----------------------------------------------------------

  A reconciliation between income taxes at the federal statutory rate (35%) and
the consolidated provision from continuing operations follows (in thousands):



                                           1999           1998           1997
==============================================================================
Provision at federal statutory rate    $ 31,248       $ 24,342       $ 31,109
State income taxes, net                   2,989          2,510          2,641
Nondeductible goodwill                      669            297            297
Nondeductible business expenses           2,883          2,130          2,152
Foreign tax rate differential               631            332            599
Repatriation of Canadian earnings, net       --             --            400
Other, net                                  (56)          (139)        (1,056)
-----------------------------------------------------------------------------
Income tax provision                   $ 38,364       $ 29,472       $ 36,142
-----------------------------------------------------------------------------
Effective tax rate                         43.0%          42.4%          40.7%
-----------------------------------------------------------------------------








-------------------------------------------------------------------------------
                                       23


<PAGE>   45

-------------------------------------------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Yellow Corporation and Subsidiaries

                                    CONTINUED

  The income tax provision from continuing operations consists of the following
(in thousands):

                                              1999          1998          1997
===============================================================================
Current:
  U.S. federal                            $ 23,554      $ 18,539      $ 23,257
  State                                      4,158         4,180         5,039
  Foreign                                     (454)        1,115         2,350
-------------------------------------------------------------------------------
Current income tax provision                27,258        23,834        30,646
-------------------------------------------------------------------------------
Deferred:
  U.S. federal                               9,182         5,990         6,472
  State                                        822          (426)         (976)
  Foreign                                    1,102            74            --
-------------------------------------------------------------------------------
Deferred income tax provision               11,106         5,638         5,496
-------------------------------------------------------------------------------
Income tax provision                      $ 38,364      $ 29,472      $ 36,142
-------------------------------------------------------------------------------
Based on the income before income taxes:
  Domestic                                $ 89,269      $ 67,100      $ 83,879
  Foreign                                       10         2,449         5,003
-------------------------------------------------------------------------------
Income before income taxes                $ 89,279      $ 69,549      $ 88,882
-------------------------------------------------------------------------------

EARNINGS PER COMMON SHARE
  The following reconciles basic to diluted earnings per share (amounts in
thousands except per share data):

                                   Continuing Operations Discontinued Operations
--------------------------------------------------------------------------------
                             Average
                         Incremental             Earnings                  Loss
                              Shares  Earnings  Per Share        Loss Per Share
================================================================================
1997
Basic                         28,267  $ 52,740     $ 1.87   $    (305)  $  (.01)
Effect of dilutive options       428        --       (.03)         --        --
--------------------------------------------------------------------------------
Diluted                       28,695  $ 52,740     $ 1.84   $    (305)  $  (.01)
--------------------------------------------------------------------------------

1998
Basic                         26,709  $ 40,077     $ 1.50   $ (68,746)  $ (2.57)
Effect of dilutive options       211        --       (.01)         --       .02
--------------------------------------------------------------------------------
Diluted                       26,920  $ 40,077     $ 1.49   $ (68,746)  $ (2.55)
--------------------------------------------------------------------------------

1999
Basic                         25,003  $ 50,915     $ 2.04   $      --   $    --
Effect of dilutive options       165        --       (.02)         --        --
--------------------------------------------------------------------------------
Diluted                       25,168  $ 50,915     $ 2.02   $      --   $    --
--------------------------------------------------------------------------------






-------------------------------------------------------------------------------
                                       24

<PAGE>   46

  The impacts of certain options were excluded from the calculation of diluted
earnings per share because average exercise prices were greater than the average
market price of common shares. Data regarding those options is summarized below:

                                                        1999      1998      1997
--------------------------------------------------------------------------------
Weighted average shares outstanding (in thousands)     1,666     1,204       331
Weighted average exercise price                    $ 21 7/16   $    23  $ 24 1/4

BUSINESS SEGMENTS
  The company adopted FASB Statement No.131,Disclosures about Segments of an
Enterprise and Related Information, in first quarter 1998.This statement
requires the company report financial and descriptive information about its
reportable operating segments, on a basis consistent with that used internally
for evaluating segment performance and allocating resources to segments.
  The company has three reportable segments that are strategic business units
offering different products and services. Yellow Freight, a national carrier is
a reportable segment that provides comprehensive national LTL service as well as
international service to Mexico, Canada and, via alliances, Europe, the
Asia/Pacific region, South America and Central America. Saia, a regional LTL
carrier is a reportable segment that provides overnight and second-day service
in twelve southeastern states and Puerto Rico. Jevic, a reportable segment
operating primarily in the Northeast, is a hybrid LTL/TL carrier that provides
overnight and second-day service.
  The segments are managed separately because each requires different operating,
technology and marketing strategies. The company evaluates performance primarily
on operating income and return on capital.
  The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The company also charges a tradename
fee to Yellow Freight (1% of revenue) for use of the company's trademark.
Interest and intersegment transactions are recorded at current market rates.
Management fees and other corporate services are charged to segments based on
direct benefit received or allocated based on revenues. Income taxes are
allocated in accordance with a tax sharing agreement in proportion to each
segment's contribution to the parent's consolidated tax status.










-------------------------------------------------------------------------------
                                       25

<PAGE>   47

-------------------------------------------------------------------------------


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       Yellow Corporation and Subsidiaries

                                    CONTINUED

  The following table summarizes the company's continuing operations by business
segment (in thousands):



<TABLE>
<CAPTION>
                                                                   Corporate
                              Yellow Freight      Saia      Jevic  and Other  Consolidated
==========================================================================================
<S>                               <C>         <C>        <C>        <C>         <C>       
1999
Operating revenue                 $2,611,580  $349,259   $137,875   $128,133    $3,226,847
Income (loss) from operations         85,412    16,824     10,074     (4,804)      107,506
Identifiable assets                  743,681   228,653    257,099     96,150     1,325,583
Capital expenditures, net             76,882    31,062     14,032    191,716(*)    313,692
Depreciation and amortization         67,806    17,874     10,898     13,732       110,310
------------------------------------------------------------------------------------------

1998
Operating revenue                 $2,492,617  $340,078   $    N/A   $ 67,882    $2,900,577
Income (loss) from operations         66,883    24,724        N/A     (8,211)       83,396
Identifiable assets                  817,239   210,612        N/A     77,834     1,105,685
Capital expenditures, net             36,431    42,089        N/A     17,113        95,633
Depreciation and amortization         74,659    17,259        N/A     11,938       103,856
------------------------------------------------------------------------------------------

1997
Operating revenue                 $2,538,219  $311,167   $    N/A   $ 49,028    $2,898,414
Income (loss) from operations         82,728    19,600        N/A     (3,651)       98,677
Identifiable assets                  959,034   180,994        N/A    130,784     1,270,812
Capital expenditures, net             38,942    26,742        N/A     13,882        79,566
Depreciation and amortization         81,842    14,980        N/A     11,403       108,225
</TABLE>


(*) Includes capital expenditures of $164.5 million for the acquisition 
    of Jevic.

  Total revenue from foreign sources totaled $21.4 million, $20.3 million, and
$23.7 million in 1999,1998 and 1997 respectively and are largely derived from
Canada and Mexico.









-------------------------------------------------------------------------------
                                       26

<PAGE>   48

COMMITMENTS, CONTINGENCIES AND UNCERTAINTIES


  The company leases certain terminals and equipment. At December 31,1999,the
company was committed under non-cancelable lease agreements requiring minimum
annual rentals payable as follows: 2000 - $29.6 million, 2001 - $21.7 million,
2002 - $15.0 million, 2003 - $7.6 million, 2004 - $4.8 million and thereafter,
$10.9 million.
  Projected 2000 net capital expenditures are $177 million, of which $53 million
was committed at December 31,1999.
  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 position or results of operations of the company.
  The company's Board of Directors authorized the repurchase of shares of the
company's outstanding common stock with an aggregate purchase price of up to $25
million, the third $25 million share repurchase authorized since December
1997. As of December 31,1999 the company repurchased 3.8 million shares under
these programs and had $4.6 million remaining in stock buy back authorization.
Due to the acquisition of Jevic and other internal investment opportunities, the
company has suspended this program.

 
                   REPORT 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 31,1999 and
1998,and the related consolidated statements of operations, cash flows and
shareholders' equity for each of the three years in the period ended December
31,1999. 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, 1999 and 1998,and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP
Kansas City, Missouri - January 26, 2000






-------------------------------------------------------------------------------
                                       27

<PAGE>   49
-------------------------------------------------------------------------------

                           SUPPLEMENTARY INFORMATION

                       Yellow Corporation and Subsidiaries

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(Amounts in thousands except per share data)



<TABLE>
<CAPTION>

                                        First       Second        Third       Fourth
                                      Quarter      Quarter      Quarter      Quarter
====================================================================================
<S>                                  <C>          <C>         <C>          <C>      
1999                                       (b)          (b)        (a,b)       (a,b)
Operating revenue                    $ 727,498    $ 756,056   $  860,983   $ 882,310
Income from operations                  11,752       24,278       33,892      37,583
Net income                               4,775       12,958       15,911      17,271
Diluted earnings per share                 .19          .52          .64         .69

1998
Operating revenue                    $ 692,460    $ 727,419   $  744,873   $ 735,825
Income from operations                   8,909       25,184       26,440      22,863
Income from continuing operations        3,763       12,279       13,545      10,490
Loss from discontinued operations       (4,410)     (62,336)          --      (2,000)
Net income (loss)                         (647)     (50,057)      13,545       8,490
Diluted earnings (loss) per share:
  From continuing operations               .13          .45          .52         .41
  From discontinued operations            (.15)       (2.27)         .00        (.08)
</TABLE>


(a) In July 1999,the company acquired Jevic Transportation, Inc. The results
    of operations include Jevic from the acquisition date.

(b) In 1998,the company sold Preston Trucking Company, Inc. All selected
    financial data have been restated to disclose Preston Trucking as 
    discontinued operations.

COMMON STOCK

  Yellow Corporation's stock is held by approximately 2,600 shareholders of
record. The company's only class of stock outstanding is common stock, traded
in over-the-counter markets. Trading activity averaged 114,473 shares per day
during the year, down from 320,263 shares per day in 1998. Prices are quoted by
the National Association of Securities Dealers Automatic Quotation National
Market System (NASDAQ-NMS) under the symbol YELL.
  The high and low prices at which Yellow Corporation common stock traded for
each calendar quarter in 1999 and 1998 follow:

                               High             Low
======================================================
1999
------------------------------------------------------
March 31                      19   5/8        16   1/2
June 30                       18  3/16        15
September 30                  18 11/16        14   3/8
December 31                   18   1/8        14  7/16

1998
------------------------------------------------------
March 31                      29   7/8        17  7/16
June 30                       20   5/8        17   1/8
September 30                  18 13/16        11   1/4
December 31                   19   5/8         9 11/16








-------------------------------------------------------------------------------
                                       28

<PAGE>   50
                             YELLOW CORPORATION (R)

-------------------------------------------------------------------------------

                                SENIOR OFFICERS

YELLOW  CORPORATION

WILLIAM D. ZOLLARS
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER

WILLIAM F. MARTIN, JR.
SENIOR VICE PRESIDENT
LEGAL/CORPORATE SECRETARY

H.A. TRUCKSESS, III
PRESIDENT REGIONAL TRANSPORTATION GROUP

HIRAM A. COX
SENIOR VICE PRESIDENT
FINANCE/CHIEF FINANCIAL OFFICER AND TREASURER



NATIONAL TRANSPORTATION GROUP:


YELLOW FREIGHT SYSTEM, INC.

WILLIAM D. ZOLLARS
PRESIDENT



YELLOW  TECHNOLOGIES, INC.

LYNN M. CADDELL
PRESIDENT


YCS INTERNATIONAL, INC.

PETER BROWN
PRESIDENT



REGIONAL TRANSPORTATION GROUP:


SAIA MOTOR FREIGHT LINE, INC.

RICHARD D. O'DELL
PRESIDENT


JEVIC TRANSPORTATION, INC.

PAUL J. KARVOIS
PRESIDENT


WESTEX, INC.

J. KEVIN GRIMSLEY
PRESIDENT


ACTION  EXPRESS, INC.

DANIEL C. FULKERSON
PRESIDENT





-------------------------------------------------------------------------------
                                       29

<PAGE>   51

                             YELLOW CORPORATION [logo](R)

-------------------------------------------------------------------------------

                               BOARD OF DIRECTORS

                                    [PHOTO]

WILLIAM D. ZOLLARS
DIRECTOR SINCE 1999
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER OF THE COMPANY

KLAUS E. AGTHE (3.)
DIRECTOR SINCE 1984
RETIRED DIRECTOR AND
NORTH AMERICAN LIAISON,
THE VIAG GROUP

CASSANDRA C. CARR (2.(*))
DIRECTOR SINCE 1997
SENIOR EXECUTIVE VICE PRESIDENT
EXTERNAL AFFAIRS,
SBC COMMUNICATIONS,INC.

HOWARD M. DEAN (2.,3.)
DIRECTOR SINCE 1987
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER,
DEAN FOODS COMPANY

RONALD T. LEMAY (1.(*))
DIRECTOR SINCE 1994
PRESIDENT, DIRECTOR AND
CHIEF OPERATING OFFICER,
SPRINT CORPORATION

JOHN C. MCKELVEY (1.)
DIRECTOR SINCE 1977
RETIRED PRESIDENT AND
CHIEF EXECUTIVE OFFICER,
MIDWEST RESEARCH INSTITUTE

WILLIAM L. TRUBECK (2.)
DIRECTOR SINCE 1994
SENIOR VICE PRESIDENT-FINANCE
AND CHIEF FINANCIAL OFFICER,
INTERNATIONAL MULTIFOODS,INC.

CARL W. VOGT (1.,3.(*))
DIRECTOR SINCE 1996
PRESIDENT (INTERIM) WILLIAMS
COLLEGE AND SENIOR PARTNER,
FULBRIGHT & JAWORSKI, L.L.P.

WILLIAM F. MARTIN, JR.
SECRETARY TO THE BOARD

LEFT TO RIGHT: RONALD T. LEMAY,
KLAUS E.AGTHE, JOHN C. MCKELVEY,
CARL W. VOGT, CASSANDRA C. CARR,
WILLIAM L. TRUBECK, HOWARD M.
DEAN, WILLIAM D. ZOLLARS
 
1.  AUDIT COMMITTEE

2.  COMPENSATION COMMITTEE

3.  GOVERNANCE COMMITTEE

(*) COMMITTEE CHAIRMAN








-------------------------------------------------------------------------------
                                       30

<PAGE>   52

                             YELLOW CORPORATION [logo](R)

-------------------------------------------------------------------------------

                                  INFORMATION


YELLOW  CORPORATION
P.O. BOX 7563
OVERLAND PARK, KS  66207
913-696-6100
HTTP://WWW.YELLOWCORP.COM

INDEPENDENT  PUBLIC  ACCOUNTANTS
ARTHUR ANDERSEN LLP
KANSAS CITY, MO

TRANSFER  AGENT  AND  REGISTRAR
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
P.O. BOX 3315
SO. HACKENSACK, NJ  07606
800-851-9677
HTTP://WWW.CHASEMELLON.COM

ANNUAL  MEETING
APRIL 20TH AT 9:30 A.M.
YELLOW CORPORATION
10990 ROE AVENUE
OVERLAND PARK, KS  66211

10-K REPORT
PLEASE WRITE TO: TREASURER, YELLOW CORPORATION
OR SEE OUR WEB SITE








-------------------------------------------------------------------------------
                                       31



<PAGE>   1
                                                                    Exhibit (23)











                    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 Statements, File No. 33-47946
and 333-16697.





                                                       ARTHUR ANDERSEN LLP




Kansas City, Missouri,
March 24, 2000






<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                          22,581
<SECURITIES>                                         0
<RECEIVABLES>                                  265,302
<ALLOWANCES>                                    15,661
<INVENTORY>                                          0
<CURRENT-ASSETS>                               351,892
<PP&E>                                       2,093,470
<DEPRECIATION>                               1,226,698
<TOTAL-ASSETS>                               1,325,583
<CURRENT-LIABILITIES>                          434,809
<BONDS>                                        274,015
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        29,437
<OTHER-SE>                                     379,943
<TOTAL-LIABILITY-AND-EQUITY>                 1,325,583
<SALES>                                              0
<TOTAL-REVENUES>                             3,226,847
<CGS>                                                0
<TOTAL-COSTS>                                3,119,341
<OTHER-EXPENSES>                                 2,924
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              15,303
<INCOME-PRETAX>                                 89,279
<INCOME-TAX>                                    38,364
<INCOME-CONTINUING>                             50,915
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    50,915
<EPS-BASIC>                                       2.04
<EPS-DILUTED>                                     2.02
        

</TABLE>