YELLOW CORP - 10-K Annual Report

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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, 2002

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, Overland Park, Kansas 66211
(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 Per Share
(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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

The aggregate market value of the voting and non-voting common equity held by
nonaffiliates of the registrant at February 28, 2003 was $670,671,003.

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

Class Outstanding at February 28, 2003
Common Stock, $1 Par Value Per Share 29,584,076 shares

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference into the Form 10-K:

1) 2002 Annual Report to Shareholders - Parts I, II and IV

2) Proxy Statement dated March 6, 2003 - Part III

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Yellow Corporation
Form 10-K
Year Ended December 31, 2002

Index

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PART I

Item 1. Business

(a) General Development of the Business

Yellow Corporation (also referred to as "Yellow," "we" or "our") is a
holding company that through wholly owned operating subsidiaries offers its
customers a wide range of asset and non-asset-based transportation services
integrated by technology. Yellow Transportation, Inc. (Yellow
Transportation) offers a full range of regional, national and international
services for the movement of industrial, commercial and retail goods.
Meridian IQ, LLC (Meridian IQ) is a non-asset global transportation
management company that plans and coordinates the movement of goods
worldwide to provide customers a single source for transportation
management solutions. Yellow Technologies, Inc. (Yellow Technologies)
provides innovative technology solutions and services exclusively for
Yellow companies.

In September 2001, we completed the acquisition of the remaining ownership
in Tranportation.com from our venture capital partners. Prior to the
acquisition, we accounted for our investment in Transportation.com as an
unconsolidated joint venture under the equity method of accounting. As of
the acquisition date, we consolidated Transportation.com, as well as our
other non-asset-based services, under Meridian IQ.

In April 2002, we completed an equity offering of 3.9 million shares at a
price of $25.50 per share. We received $93.8 million of net proceeds from
the offering. The net proceeds were used to repay debt and provide capacity
for investments in our growth strategy.

In July 2002, Meridian IQ acquired selected assets, consisting primarily of
customer contracts, of Clicklogistics, Inc. (Clicklogistics) for nominal
cash consideration and the assumption of certain obligations.
Clicklogistics provides non-asset transportation and logistics management
services.

In August 2002, Meridian IQ completed the acquisition of MegaSys, Inc.
(MegaSys), a Greenwood, Indiana based provider of non-asset transportation
and logistics management services, for approximately $17 million. MegaSys
offers carrier procurement, routing and scheduling, audit and payment and
other shipment management capabilities. Meridian IQ employed key members of
the MegaSys management team as part of the transaction.

On September 3, 2002, the trend of consolidation within the
less-than-truckload (LTL) industry continued when Consolidated Freightways,
Inc. (CF) announced it was filing for Chapter 11 bankruptcy. CF was the
third largest national LTL carrier with 2001 annual revenue of
approximately $2 billion. Yellow Transportation followed a disciplined and
proactive approach regarding assumption of the former CF business by
evaluating each consumer relationship based on return on investment and
available capacity.

On September 30, 2002, we successfully completed the 100 percent
distribution (the spin-off) of all of the shares of SCS Transportation,
Inc. (SCST) to our shareholders. Shares were distributed on the basis of
one share of SCST common stock for every two shares of Yellow common stock.
As part of the spin-off agreement, SCST paid Yellow approximately $114
million in cash and assumed debt of $16 million for a total dividend of
$130 million. We used the proceeds to reduce debt and pay fees associated
with the spin-off.

We believe that each of the events above improved our financial strength
and position in the market place. We reduced our total debt, including
asset backed securitization borrowings, since December 31, 2001 by $237
million, resulting in a balance of $124 million at December 31, 2002. A
leading financial indicator in our industry, debt to capitalization net of
available cash, was 21.0 percent as of December 31, 2002, an improvement
over last year's 41.1 percent.

(b) Financial Information about Segments

We have two reportable segments (Yellow Transportation and Meridian IQ)
that are strategic operating units requiring different operating and
technology strategies. The "Business Segments" note on pages 78 and 79 of
our 2002 Annual Report to Shareholders, which we incorporate into this
report by reference, presents financial disclosures for these segments.

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(c) Narrative Description of the Business

Yellow Corporation is a holding company that through wholly owned operating
subsidiaries offers its customers a wide range of asset and non-asset-based
transportation services integrated by technology. We employed an average of
23,000 persons in 2002.

Yellow Transportation

Our largest operating unit, Yellow Transportation offers a full range of
services for the movement of industrial, commercial, and retail goods.
Yellow Transportation provides transportation services by moving shipments
through its regional, national and international networks of terminals,
utilizing primarily ground transportation equipment that we own or lease.
The Yellow Transportation mission is to be the leading provider of
guaranteed, time-definite, defect-free, hassle-free transportation services
for business customers worldwide. Yellow Transportation addresses the
increasingly complex transportation needs of its customers through service
offerings such as:

o Exact Express(R)- a premium expedited and time-definite ground
service with an industry-leading 100% satisfaction guarantee;

o Definite Delivery(R)- a guaranteed on-time service with constant
shipment monitoring and proactive notification;

o Standard Ground(TM)- a ground service with complete coverage of North
America;

o Standard Ground(TM) Regional Advantage- a high-speed service for
shipments moving between 500 and 1,500 miles; and

o MyYellow(R).com - a leading edge e-commerce web site offering secure
and customized online resources to manage transportation activity.

Yellow Transportation, founded in 1924, serves more than 400,000
manufacturing, wholesale, retail and government customers throughout North
America. No single customer accounts for more than 6% of Yellow
Transportation revenue. Operating from 345 strategically located
facilities, Yellow Transportation provides service throughout North
America, including within Puerto Rico and Hawaii. Shipments range from 100
to 40,000 pounds, with an average shipment size of 1,000 pounds traveling
an average distance of more than 1,200 miles. Yellow Transportation has
over 700 employees with sales responsibilities.

Yellow Technologies has developed and supports proprietary technology that
drives the Yellow Transportation network. Approximately 22,000 Yellow
Transportation employees are dedicated to operating the system that
supports 265,000 shipments in transit at any time. An operations research
and engineering team is responsible for the equipment, routing, sequencing
and timing of nearly 56 million miles per month. At December 31, 2002,
Yellow Transportation had 7,395 owned tractors, 491 leased tractors, 34,633
owned trailers and 61 leased trailers.

Yellow Transportation operates in a highly competitive environment against
a wide range of transportation service providers. These competitors include
a small number of national transportation services providers similar in
size and scope to Yellow Transportation, a moderate number of regional or
inter-regional providers and a large number of relatively small,
shorter-haul transportation companies. Yellow Transportation also competes
in and against several modes of transportation, including LTL, truckload,
air cargo, rail, consolidators and private fleets.

Truck-based transportation includes private fleets and two "for-hire"
carrier groups. The private carrier segment consists of fleets that
shippers who move their own goods own and operate. The two "for-hire"
groups are based on the typical shipment sizes handled by transportation
service companies. Truckload refers to providers transporting shipments
that generally fill a trailer, and LTL or shared load refers to providers
transporting shipments from multiple shippers that alone would not fill a
trailer.

Shared load transportation providers consolidate numerous orders generally
ranging from 100 to 10,000 pounds from businesses in different locations.
Orders are consolidated at individual locations within a certain radius
from service centers. As a result, shared load carriers require expansive
networks of pickup and delivery operations around local service centers
and, with respect to national carriers, shipments are moved between origin
and destination through a series of regional distribution centers.
Depending on the distance shipped, shared load providers are often
classified into three sub-groups:

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o Regional -- Average distance is typically less than 500 miles
with a focus on one- and two-day delivery times. Regional transportation
companies can move shipments directly to their respective destination
centers, which increases service reliability and avoids costs associated
with intermediate handling.

o Interregional -- Average distance is usually between 500 and
1,000 miles with a focus on two- and three-day delivery times. There is a
blurring of lines between regional and national providers, as each sees the
interregional segment as a growth opportunity, and there are no providers
who focus exclusively on this sector.

o National -- Average distance is typically in excess of 1,000
miles with focus on two- to five-day delivery times. National providers
rely on interim shipment handling through hub and spoke networks, which
require numerous satellite service centers, multiple distribution centers
and a relay network. To gain service and cost advantages, they often ship
directly between service centers, minimizing intermediate handling.

Yellow Transportation provides service to all three sub-groups. Entry into
the LTL trucking industry on a small scale with a limited service area is
relatively easy. The larger the service area the greater the barriers to
entry, due to the need for broader geographic coverage and additional
equipment and facility requirements associated with this coverage. The
level of technology applications required and the ability to generate
shipment densities that provide adequate labor and equipment utilization
also make larger-scale entry into the market difficult.

Based in Overland Park, Kansas, Yellow Transportation accounted for 97
percent of total company operating revenue (excluding SCST) in 2002, 99
percent in 2001 and 99 percent in 2000.

Meridian IQ

Our other primary business unit, Meridian IQ, is a non-asset global
transportation management company that plans and coordinates the movement
of goods worldwide to provide customers a single source for transportation
management solutions. Non-asset-based service providers, such as logistics
companies, arrange for and expedite the movement of goods and materials
through the supply chain. The typical logistics provider neither owns nor
operates the physical assets necessary to move goods, eliminating the
significant capital requirements normally experienced by a typical
transportation company. This lower asset requirement allows the
non-asset-based firms to reduce variable costs in economic downturns.

Meridian IQ delivers a wide range of global transportation management
services, with the ability to provide customers improved
return-on-investment results through flexible, fast and easy-to-implement
transportation services and technology management solutions. Meridian IQ
has approximately 9,000 transactional and 200 contractual customers.

Meridian IQ offers the following services:

o International Forwarding and Customs Brokerage -- arranging for the
administration, transportation and delivery of goods to over 88
countries;

o Multi-modal Brokerage Services -- providing companies with daily
shipment needs with access to volume capacity and specialized
equipment at competitive rates;

o Domestic Forwarding and Expedited Services -- arranging guaranteed,
time-definite transportation for companies within North America
requiring time-sensitive delivery options and guaranteed reliability;
and

o Transportation Solutions and Technology Management -- web-native
Transportation Management Systems enabling customers to manage their
transportation network centrally with increased efficiency and
visibility. When combined with network consulting and operations
management, any organization, regardless of size, can outsource
transportation functions partially or even entirely with Meridian IQ.

Meridian IQ and Yellow Transportation create complementary service
offerings with the ability for each to generate revenue for the other.
Through its strong relationships, Yellow Transportation has introduced its
customers to Meridian IQ for value-added

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transportation technology and management services. This gives Meridian IQ
immediate market credibility from established relationships, and a large
pool of existing Yellow Transportation customers to target. In addition,
Meridian IQ has attracted new transportation and technology management
customers who utilize the Yellow Transportation service portfolio.

The competition of Meridian IQ includes transportation management systems
providers, domestic and international freight forwarders, freight brokers,
and third party logistic companies. Meridian IQ has approximately 340
employees, including a sales force of 29 employees. Additionally, the over
700 members of the Yellow Transportation sales force assist Meridian IQ in
developing sales leads. Meridian IQ is headquartered in Overland Park,
Kansas.

Yellow Technologies

Yellow Technologies, a captive corporate resource, aims at creating
competitive advantages for Yellow businesses by delivering innovative
information solutions and technology services. Yellow Technologies has 320
employees. In addition to delivering and supporting highly integrated
applications and solutions, Yellow Technologies provides value-added
technical, network, secure data, and enterprise system management services
to our operating subsidiaries. Yellow Technologies and Meridian IQ together
provide hosting, infrastructure services and managed transportation
business systems development. Yellow Technologies is headquartered in
Overland Park, Kansas.

Competition

Customers have a wide range of choices. We believe that service quality,
performance, service variety, responsiveness, and flexibility are the
important competitive differentiators.

Few U.S.-based competitors offer comparably broad service capabilities. By
integrating traditional ground, expedited, air cargo, and managed
transportation solutions, we can provide consumers with a single source
answer to shipping challenges with a foundation of service excellence and
quality as its basis. Our market studies show a continued preference among
customers for transportation providers based on quality and value, and we
believe that we are positioned to grow given our strategic focus. By
increasing the depth of the services we offer, we believe that we can
successfully compete against the largest transportation competitors from a
value perspective.

Regulation

Yellow Transportation and other interstate carriers were substantially
deregulated following the enactment of the Motor Carrier Act of 1980, the
Trucking Industry Regulatory Reform Act of 1994, the Federal Aviation
Administration Authorization of 1994 and the ICC Termination Act of 1995.
Prices and services are now largely free of regulatory controls, although
the states retained the right to require compliance with safety and
insurance requirements, and interstate motor carriers remain subject to
regulatory controls imposed by agencies within the U.S. Department of
Transportation.

Yellow Transportation is subject to regulatory and legislative changes,
which can affect our economics and those of our competitors. Various state
agencies regulate us, and our operations are also subject to various
federal, state and local environmental laws and regulations dealing with
transportation, storage, presence, use, disposal and handling of hazardous
materials, discharge of storm-water and underground fuel storage tanks.

In October 2002, the Environmental Protection Agency issued new engine
emission standards that apply to heavy-duty vehicles. Yellow Transportation
is testing several units for fuel economy, reliability and performance
standards. As Yellow Transportation uses tractors an average of seven years
over the road and then converts them to city use for another seven to eight
years, the emission standards are not expected to have a material impact on
our capital expenditures or operating expenses in 2003.

We believe that our operations are in substantial compliance with current
laws and regulations, and we do not know of any existing conditions that
would cause compliance with applicable regulations to have a material
adverse effect on our business or operating results.

We further describe our operations in Management's Discussion and Analysis
of Financial Condition and Results of Operations in the 2002 Annual Report
to Shareholders, which we incorporate into this report by reference.

7

Economic Factors and Seasonality

Our business is subject to a number of general economic factors that may
have a materially adverse effect on the results of our operations, many of
which are largely out of our control. These include recessionary economic
cycles and downturns in customers' business cycles, particularly in market
segments and industries, such as retail and manufacturing, where we have a
significant concentration of customers. Economic conditions may adversely
affect our customers' business levels, the amount of transportation
services they need and their ability to pay for our services. We cannot
predict the long-term effects of the September 11, 2001 terrorists attacks
and subsequent events on the economy or on customer confidence in the
United States, or the impact, if any, on our future results of operations.
We operate 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 6% of
our total revenue. Yellow Transportation revenues are subject to seasonal
variations. Customers tend to reduce shipments after the winter holiday
season, and operating expenses tend to be higher in the winter months
primarily due to colder weather, which causes higher fuel consumption from
increased idle time. Generally, the first quarter is the weakest while the
third quarter is the strongest. The availability and cost of labor can
significantly impact our cost structure and earnings.

Future Outlook

Economists estimate that the economy is moving toward firmer ground but
expect it to remain flat for most of 2003. Management expects our pricing
environment to remain competitive, yet stable, during 2003. We will
continue to focus on cost control, productivity improvements and
value-added services. By leveraging the additional business volumes
resulting from the CF closure, premium services and Meridian IQ, we are
well positioned to take advantage of improved economic conditions when they
occur.

The National Master Freight Agreement covering Yellow Transportation
collective-bargaining employees expires on March 31, 2003. Yellow
Transportation began formal labor negotiations with the International
Brotherhood of Teamsters (IBT) in October 2002. On February 6, 2003,
members of the Motor Freight Carrier Association, including Yellow
Transportation, and the IBT announced a tentative agreement, which is
subject to the approval of the affected IBT membership. The agreement
covers approximately 80 percent of Yellow Transportation employees.

The pricing and availability of most forms of insurance, including surety
bonds, have been impacted by the events of September 11, 2001 and by
several bankruptcies of large companies. We expect continued access to
appropriate insurance coverage; however, the premiums paid for this
coverage have increased significantly. Given our size and financial
strength, we do not expect that the additional premium expenses will have a
material adverse impact on our financial position or results of operations.
In 2002, the lack of availability of surety bonds required us to issue
additional letters of credit, which reduced available capacity under the
revolving credit facility.

Statements contained in this document that are not purely historical are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21 of the Securities
Exchange Act of 1934, as amended (each a "forward-looking statement").
Forward-looking statements include those preceded by, followed by or
include the words "should," "expects," "believes," "anticipates,"
"estimates" or similar expressions. Our actual results could differ
materially from those projected by these forward-looking statements due to
a number of factors, including without limitation, inflation, labor
relations, inclement weather, price and availability of fuel, competitor
pricing activity, expense volatility, changes in and customer acceptance of
new technology, changes in equity and debt markets and a downturn in
general or regional economic activity.

(d) Financial Information About Geographic Areas

Our revenue from foreign sources is largely derived from Canada and Mexico.
We discuss revenue from foreign sources in the "Business Segments" note on
pages 78 and 79 of our Annual Report to Shareholders for the year ended
December 31, 2002, which is incorporated in this report by reference.
Foreign source revenue was not material to consolidated financial results
in 2002, 2001 and 2000.

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Item 2. Properties

At December 31, 2002, we operated a total of 345 freight terminals located
in 50 states, Puerto Rico, Canada and Mexico. Of this total, 199 were owned
terminals and 146 were leased, generally for terms of three years or less.
The number of vehicle back-in doors totaled 12,646, of which 10,605 were at
owned terminals and 2,041 were at leased terminals. The freight terminals
vary in size ranging from one to three doors at small local terminals, to
over 380 doors at the largest consolidation and distribution terminal.
Substantially all of the larger terminals, containing the greatest number
of doors, are owned. In addition, the company and its subsidiaries own and
occupy general office buildings in Overland Park, Kansas.

Our facilities and equipment are adequate to meet current business
requirements in 2003. Refer to Item 7, Management's Discussion and Analysis
of Financial Condition and Results of Operations, for a more detailed
discussion of expectations regarding capital spending in 2003.

Item 3. Legal Proceedings.

We incorporate the information set forth under the "Commitments,
Contingencies, and Uncertainties" note on page 77 in the Notes to
Consolidated Financial Statements in our Annual Report to Shareholders for
the year ended December 31, 2002, by reference to Item 15 of this report.

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

None.

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Executive Officers of the Registrant

The names, ages and positions of the executive officers of Yellow Corporation as
of March 6, 2003 are listed below. Officers are appointed annually by the Board
of Directors at their meeting that immediately follows the annual meeting of
shareholders.

The terms of each officer of the company designated above are scheduled to
expire April 17, 2003. 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 among any of the executive officers
named above.

10

PART II

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

We incorporate the information set forth under the caption "Common Stock"
and "Quarterly Financial Information" on page 82 of our Annual Report to
Shareholders for the year ended December 31, 2002, by reference to Item 15
of this report.

Item 6. Selected Financial Data

We incorporate the information set forth under the caption "Financial
Summary" on pages 48 and 49 of our Annual Report to Shareholders for the
year ended December 31, 2002, by reference to Item 15 of this report.

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

We incorporate the information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing on pages 28 through 47 of our Annual Report to Shareholders for
the year ended December 31, 2002, by reference to Item 15 of this report.

Item 8. Financial Statements and Supplementary Data

We incorporate the financial statements and supplementary information
appearing on pages 50 through 81 of our Annual Report to Shareholders for
the year ended December 31, 2002, by reference to Item 15 of this report.

Item 9. Changes in and Disagreements with Independent Auditors on Accounting and
Financial Disclosure

Effective May 17, 2002, our Audit Committee, approved dismissal of Arthur
Andersen LLP as our independent auditors and the appointment of KPMG LLP to
serve as our independent auditors for the year ending December 31, 2002.

The reports by Arthur Andersen LLP on our consolidated financial statements
for each of the years ended December 31, 2001 and 2000 did not contain an
adverse opinion or disclaimer of opinion, nor were such reports qualified
or modified as to uncertainty, audit scope or accounting principles.

During the years ended December 31, 2001 and 2000 and through May 17, 2002,
there were no disagreements with Arthur Andersen LLP on any matter of
accounting principle or practice, financial statement disclosure, or
auditing scope or procedure which, if not resolved to the satisfaction of
Arthur Andersen LLP, would have caused them to make reference to the
subject matter of the disagreement in connection with the audit reports on
our consolidated financial statements for such years; and there were no
reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

We provided Arthur Andersen LLP with a copy of the foregoing disclosures.
Incorporated by reference as Exhibit 16.1 is a copy of the Arthur Andersen
LLP letter, dated May 17, 2002, stating its agreement with such statements.

During the years ended December 31, 2001 and 2000 and through May 17, 2002,
we did not consult KPMG LLP with respect to the application of accounting
principles to a specified transaction, either completed or proposed, or the
type of audit opinion that might be rendered on our consolidated financial
statements, or any other matters or reportable events as set forth in Items
304(a)(2)(i) and (ii) of Regulation S-K.

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PART III

Item 10. Directors and Executive Officers of the Registrant

Information regarding our directors is incorporated by reference from our
2003 definitive proxy statement. For information with respect to our
executive officers, see "Executive Officers of the Registrant" at the end
of Part I of this report.

Item 11. Executive Compensation

Information regarding executive compensation is incorporated by reference
from our 2003 definitive proxy statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information regarding Security Ownership of Certain Beneficial Owners and
Management is incorporated by reference from our 2003 definitive proxy
statement.

Item 13. Certain Relationships and Related Transactions

Information regarding Certain Relationships and Related Transactions is
incorporated by reference from our 2003 definitive proxy statement.

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PART IV

Item 14. Controls and Procedures

We maintain a rigorous set of disclosure controls and procedures and
internal controls designed to ensure that information required to be
disclosed in our filings under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms. Our principal executive and financial officers have evaluated our
disclosure controls and procedures within 90 days prior to the filing of
this annual report on Form 10-K and have determined that such disclosure
controls and procedures are effective.

Subsequent to the evaluation by our principal executive and financial
officers, there were no significant changes in internal controls or other
factors that could significantly affect internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Item 15. Exhibits, Financial Statement Schedule, and Reports on Form 8-K

(a) (1) Financial Statements

The following information appearing in the 2002 Annual Report to
Shareholders is incorporated by reference in this Form 10-K Annual Report
as Exhibit 13.1:

With the exception of the information specifically referred to above, the
2002 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.

(a) (2) Financial Statement Schedule

Schedules other than those listed are omitted for the reason that they are
not required or are not applicable. The above additional financial data
should be read in conjunction with the consolidated financial statements in
the 2002 Annual Report to Shareholders.

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(a) (3) Exhibits

3.1 Certificate of Incorporation of the company

3.2 Bylaws

4.1 Certificate of Incorporation of the company (incorporated by
reference to Exhibit 3.1 to this Annual Report on Form 10-K)

4.2 Bylaws (incorporated by reference to Exhibit 3.1 to this Annual
Report on Form 10-K)

4.3 Form of Medium-Term Note

4.4 Paying Agency Agreement dated April 26, 1993 between Yellow
Corporation and Citibank, N.A.

10.1 Form of Executive Severance Agreement between Yellow Corporation
and its executive officers

10.2 Executive Performance Plan (incorporated by reference to Exhibit
B to the company's Proxy Statement for its Annual Meeting of
Shareholders held on April 18, 2002)

10.3 2002 Stock Option and Share Award Plan (incorporated by reference
to Exhibit 4 to the Registration Statement on Form S-8, SEC File
No. 333-88268)

10.4 1999 Stock Option Plan (incorporated by reference to Exhibit 4 to
the Registration Statement on Form S-8, SEC File No. 333-49620)

10.5 1997 Stock Option Plan (incorporated by reference to Exhibit 4 to
the Registration Statement on Form S-8, SEC File No. 333-59255)

10.6 1996 Stock Option Plan

10.7 1992 Stock Option Plan

10.8 Form of Stock Option Agreement

10.9 Form of Restricted Stock Award Agreement pursuant to 1992 Stock
Option Plan with Non-Compete Covenant between Yellow Corporation
and each of William D. Zollars, Donald G. Barger, Jr., Gregory A.
Reid, James D. Ritchie and James L. Welch

10.10 Supplemental Retirement Income Agreement dated July 20, 2001,
between Yellow Corporation and Donald G. Barger, Jr.
(incorporated by reference to Exhibit 10 to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 2001)

10.11 Executive Deferred Compensation Plan

10.12 Employment Agreement dated December 15, 1999 between Yellow
Corporation and William D. Zollars (incorporated by reference to
Exhibit 10 to the Annual Report on Form 10-K for the year ended
December 31, 1999)

10.13 Amendment Number One to Employment Agreement dated December 15,
1999 between Yellow Corporation and William D. Zollars
(incorporated by reference to Exhibit 10(a) to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000)

10.14 Amended Directors' Stock Compensation Plan (incorporated by
reference to Exhibit 4.1 to the Registration Statement on Form
S-8, SEC File No. 333-49618)

10.15 Form of Option Agreement pursuant to Directors' Stock
Compensation Plan for January 2003 grants

10.16 Form of Option Agreement pursuant to Directors' Stock
Compensation Plan for grants prior to January 2003

10.17 Master Separation and Distribution Agreement dated as of
September 30, 2002, between Yellow Corporation and SCS
Transportation, Inc. (incorporated by reference to Exhibit 10.2
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002)

10.18 Tax Indemnification and Allocation Agreement dated as of
September 30, 2002, between Yellow Corporation and SCS
Transportation, Inc. (incorporated by reference to Exhibit 10.3
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002)

10.19 Amendment and Restatement dated July 30, 1999 of the Receivables
Purchase Agreement Dated as of August 2, 1996, among Yellow
Receivables Corporation, Falcon Asset Securitization Corporation,
the financial institutions named therein and The First National
Bank of Chicago, as Agent (incorporated by reference to Exhibit
10 to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999)

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10.20 Omnibus Amendment dated as of December 31, 2002, among Yellow
Transportation, Inc., Yellow Receivables Corporation, Falcon
Asset Securitization Corporation, and Bank One, N.A., as Agent
and Investor

10.21 Revolving Credit Agreement dated as of April 5, 2001, among
Yellow Corporation, the Lenders named therein, Wachovia Bank,
N.A., as Syndication Agent, FirstStar Bank, N.A., as a
Documentation Agent, Fleet National Bank, as a Documentation
Agent, Suntrust Bank, as a Documentation Agent, Bank One, N.A.,
as Administrative Agent, and Banc One Capital Markets, Inc., as
Arranger and Sole Book Runner (incorporated by reference to
Exhibit 10 to the Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001)

10.22 Amendment No. 1 to Revolving Credit Agreement dated as of
September 30, 2002, among Yellow Corporation, Bank One, N.A., as
Lender and Agent, and the other Lenders named therein
(incorporated by reference to Exhibit 10.4 to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 2002)

13.1 2002 Annual Report to Shareholders

16.1 Letter from Arthur Andersen LLP dated May 17, 2002, regarding
change in certifying accountant (incorporated by reference to
Exhibit 16 to the Current Report on Form 8-K for the event dated
as of May 17, 2002)

21.1 Subsidiaries of the company

23.1 Consent of KMPG LLP

99.1 Certification of William D. Zollars

99.2 Certification of Donald G. Barger, Jr.

(b) Reports on Form 8-K

On October 22, 2002, a Form 8-K was filed under Item 7, Financial
Statements and Exhibits, and Item 9, Regulation FD Disclosure. The company
made available the unaudited historical consolidated balance sheets as of
March 31, 2001, June 30, 2001, September 30, 2001, December 31, 2001, March
31, 2002, June 30, 2002 and September 30, 2002, statements of consolidated
operations and statements of consolidated cash flows for the three months
ended March 31, 2001, June 30, 2001, September 30, 2001, December 31, 2001,
March 31, 2002, June 30, 2002, September 30, 2002, the twelve months ended
December 31, 2001, and the nine months ended September 30, 2002. These
historical financial statements were presented to reflect the operations of
SCST as a discontinued operation as required by the spin-off of SCST to
shareholders on September 30, 2002.

On January 7, 2003, a Form 8-K was filed under Item 5, Other Events,
reporting the amendment of the company's asset backed securitization (ABS)
facility. As a result of the amendment, the ABS facility was reflected on
the Consolidated Balance Sheet of Yellow Corporation as of December 31,
2002.

15

Report of Independent Auditors on Financial Statement Schedule

To the Shareholders of Yellow Corporation:

Under date of January 23, 2003, we reported on the consolidated balance sheets
of Yellow Corporation and subsidiaries as of December 31, 2002 and 2001, and the
related consolidated statements of operations, cash flows, shareholders' equity,
and comprehensive income for each of the years in the three-year period ended
December 31, 2002, as contained in the 2002 annual report to shareholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the annual report on Form 10-K for the year 2002. In connection
with our audits of the aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedule of valuation and
qualifying accounts (Schedule II). This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

KPMG LLP

Kansas City, Missouri
January 23, 2003

16

Schedule II

Yellow Corporation and Subsidiaries
Valuation and Qualifying Accounts
For the Years Ended December 31, 2002, 2001 and 2000

(1) All balances shown have been reclassified to reflect valuation and
qualifying accounts of continuing operations due to the spin-off of SCST on
September 30, 2002.

(2) Estimated uncollectible accounts transferred to Transportation.com.

(3) Regarding the allowance for uncollectible accounts, amounts primarily
relate to uncollectible accounts written off, net of recoveries. For the
claims and insurance accruals, amounts primarily relate to payments of
claims and insurance.

17

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
Chairman of the Board, President
and Chief Executive Officer

March 6, 2003

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/ Donald G. Barger, Jr. Senior Vice President March 6, 2003
---------------------------- and Chief Financial Officer
Donald G. Barger, Jr.

/s/ Howard M. Dean Director March 6, 2003
----------------------------
Howard M. Dean

/s/ Cassandra C. Carr Director March 6, 2003
----------------------------
Cassandra C. Carr

/s/ Carl W. Vogt Director March 6, 2003
----------------------------
Carl W. Vogt

Director
----------------------------
Richard C. Green, Jr.

/s/ Dennis E. Foster Director March 6, 2003
----------------------------
Dennis E. Foster

/s/ John C. McKelvey Director March 6, 2003
----------------------------
John C. McKelvey

/s/ William L. Trubeck Director March 6, 2003
----------------------------
William L. Trubeck

18

CERTIFICATIONS

I, William D. Zollars, certify that:

1. I have reviewed this annual report on Form 10-K of Yellow
Corporation;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

(c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:

(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 6, 2003

/s/ William D. Zollars
-------------------------------------
William D. Zollars
Chairman of the Board, President and
Chief Executive Officer

19

CERTIFICATIONS

I, Donald G. Barger, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Yellow
Corporation;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

(c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:

(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 6, 2003

/s/ Donald G. Barger, Jr.
-------------------------------------
Donald G. Barger, Jr.
Senior Vice President and
Chief Financial Officer

20