1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 1996
-----------------

[ ] 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 14, 1997 was $456,812,606.

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 14, 1997
----- -----------------------------
Common Stock, $1 Par Value 28,111,545 shares

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference into the Form 10-K:
1) 1996 Annual Report to Shareholders - Parts I, II and IV
2) Proxy Statement dated March 12, 1997 - Part III

2
Yellow Corporation
Form 10-K
Year Ended December 31, 1996

Index

Item Page
---- ----
PART I

1. Business 3
2. Properties 9
3. Legal Proceedings 9
4. Submission of Matters to a Vote of Security Holders 9
Executive Officers of the Registrant (Unnumbered Item) 10

PART II

5. Market for the Registrant's Common Stock and Related
Stockholder Matters 11
6. Selected Financial Data 11
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
8. Financial Statements and Supplementary Data 11
9. Disagreements on Accounting and Financial Disclosure 11

PART III

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

PART IV

14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K 13

Report of Independent Public Accountants on Financial
Statement Schedule 14

Financial Statement Schedule 15

Signatures 16

Amendment to Employment Agreement Exhibit (10.8)

1996 Annual Report to Shareholders Exhibit (13)

Consent of Independent Public Accountants Exhibit (24)

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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. During 1996, the company's subsidiaries concentrated on
improving profitability and debt reduction as described below.

(b) The company provides interstate transportation of general commodity
freight, primarily LTL, 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 33 of the 1996 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), Preston Trucking Company, Inc. (Preston
Trucking), Saia Motor Freight Line, Inc. (Saia), WestEx, Inc. (WestEx).
Yellow Technology Services, Inc. (Yellow Technology) is a subsidiary
which provides information technology services to the company and its
subsidiaries. The company employed an average of 34,100 persons in
1996.

Yellow Freight, the company's principal subsidiary, had operating revenue
of $2.36 billion in 1996 (77% of the company's total revenue) and is
based in Overland Park, Kansas. It is one of the nation's largest
provider of LTL transportation services. It provides comprehensive
national LTL service as well as international service to Mexico, Canada
and, via alliances, Europe and the Asia/Pacific region.

Preston Trucking is primarily a regional LTL carrier providing overnight
and two-day delivery in 21 northeastern and upper midwestern states,
Puerto Rico, Ontario and Quebec. Preston Trucking had operating revenue
of $418 million in 1996 (13% of the company's total revenue) and is
headquartered in Preston, Maryland.

Saia is a regional LTL carrier that provides overnight and second-day
service in eleven southeastern states and Puerto Rico. It had operating
revenue of $264 million in 1996 (9% of the company's total revenue) and
is headquartered in Atlanta, Georgia.

WestEx provides one and two-day service in California, Arizona, New
Mexico and parts of Texas and Nevada. WestEx had operating revenue of
$33 million in 1996 and is headquartered in Phoenix, Arizona.

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

Item 1. Business. (cont.)
- -------------------------

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 and cost control major competitive factors.
The motor carrier subsidiaries implemented general rate increases averaging
in excess of 5.8% in January 1996 to cover increases in operating costs.
The full impact of rate increases is not realized immediately as a result of
pricing that is on a contract basis and can only be increased when the
contract is renewed or renegotiated. During 1996, the company experienced
an improved pricing environment and better operating results after adjusting
for a special charge at Yellow Freight in the fourth quarter of 1996 as
described below.

Yellow Freight's revenue in 1996 was down 0.3 percent from 1995. In the
fourth quarter of 1996, Yellow Freight recorded a special charge of $46.1
million ($28.3 million after taxes). The operating ratio, before the special
charge impact, improved from 100.1 in 1995 to 98.5. Including the special
charge, the operating ratio was 100.4. The special charge included 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. Management and
organizational changes designed to sharpen customer focus and improve
profitability at Yellow Freight preceded the special charge. Over a four
month period nearly every facet of the organization was thoroughly examined.
In early December 1996 Yellow Freight announced it was restructuring into
five business units organized by geographic region.

Real estate write downs are part of an ongoing program to improve customer
service and reduce operating expenses which has reduced the number of full
terminals at Yellow Freight from 449 at the beginning of 1995 to 334 at the
end of 1996. The write off of computer software involved specific technology
developed in 1994 and the first half of 1995 which has not nor is intended to
be placed in use in the foreseeable future. It represents a small portion of
the company's investment in technology, the vast majority of which has
achieved the desired results. Early retirement was taken by 130 employees
while severance costs related to the layoff of 70 managerial and general
office employees. Normal attrition is expected to result in further
reductions of between 65 and 70 employees. Overall the organizational design
changes lay the foundation for additional service improvements and cost
reductions in all phases of Yellow Freight's future performance.

Item 1. Business. (cont.)
- -------------------------

Tonnage declined by 2.8 percent while revenue per ton increased by 2.4
percent. The tonnage decline was due to market forces and Yellow Freight's
efforts to improve pricing stability. In January 1996 Yellow Freight
implemented a general rate increase averaging 5.8 percent which applied to
its customers who do not have contracts. The 1996 revenue per ton
improvement would have been greater but the intense price discounting
experienced in the second half of 1995 resulted in the January 1996 rate
increase being calculated on a depressed rate base. Revenue at Yellow
Freight also increased from a fuel surcharge program implemented in September
1996 to offset higher fuel costs. Yellow Freight's LTL revenue per ton in
the fourth quarter of 1996 was 4.7 percent higher than the fourth quarter of
1995.

Benefiting from aggressive cost reduction programs, operating expenses for
Yellow Freight on a per ton basis were up only 0.6 percent in 1996. This was
in spite of higher fuel costs throughout the year, severe winter weather
experienced in the first quarter and a 3.8 percent increase on April 1 in
union wages and benefits. During 1996, price increases in fuel cost Yellow
Freight about $15 million. These additional costs were offset by a fuel
hedging program and the fuel surcharge. Higher productivity, including an
improvement in load average, helped moderate other increases in operating
costs. The improvement in load average was especially evident when compared
to the last half of 1995. Load average trended down significantly in that
period due to the transit time improvement program implemented in the third
quarter of 1995. As this program was adjusted, the down trend in load average
was reversed and by the end of the second quarter of 1996 had substantially
improved to levels being achieved prior to the program.

A series of focused cost reduction initiatives were begun at the end of 1995
which included employee reductions, general and administrative expense
cutbacks, the implementation of a "best practices" program and a variety of
other initiatives. The best practices program involves the use of those
procedures being practiced at the most successful terminals throughout the
network. During 1996 these programs achieved a targeted $75 million in cost
reductions and involve a running rate which should benefit future years by a
greater amount.

Preston Trucking's 1996 revenue increased 1.5 percent compared to 1995. The
operating ratio for Preston Trucking in 1996 was 101.4, the same as in the
prior year. Preston Trucking was adversely impacted by the severe winter
weather in the first quarter of 1996 because of the concentration of its
business in the Northeast and upper Midwest. In addition, first quarter
results suffered from shipper uncertainty regarding a union vote on a company
proposal to freeze wages which at that time were already 5.0 percent below
full contract rates. In February, union members approved the wage proposal
enabling Preston Trucking to avoid a 1.8 percent wage increase scheduled to
be effective April 1, 1996, thus increasing the discount from full rates to
6.8 percent. Health, welfare and pension costs for union employees were not
frozen and increased 9.0 percent on April 1, 1996.

Item 1. Business. (cont.)
- -------------------------

In the second quarter, a new management team took over at Preston Trucking.
As the year progressed Preston Trucking's results improved and were stronger
than comparable 1995 periods. Preston recorded an operating ratio of 99.4 in
the second half of the year, a 3.7 point improvement over the ratio in the
last half of 1995. Nonunion employee turnover, which had been a significant
problem, also improved dramatically to more reasonable levels.

Preston Trucking's revenue per ton improved 3.0 percent in 1996 over 1995.
The improvement largely occurred in the second half of the year due to
specific rate actions and programs to improve revenue quality. Preston
Trucking implemented a fuel surcharge in June and a general rate increase
that averaged 5.2 percent in late November. LTL revenue per ton was up 6.6
percent in the fourth quarter of 1996 compared to the fourth quarter of 1995.
Preston Trucking was also able to offset higher fuel costs through a
combination of a fuel hedging program and the fuel surcharge.

Saia's revenue grew 26.1 percent in 1996 compared to 1995. Total tonnage
increased by 17.4 percent with LTL tonnage up 24.6 percent and truckload
tonnage up 1.9 percent. The higher revenue and tonnage resulted from the
full year impact of Saia's significant growth in geographical coverage during
1994 and 1995 as well as an overall improvement in lane density. Saia also
benefited from a 7.4 percent improvement in revenue per ton partially due to
a 2.4 percent increase in LTL revenue per ton as well as a higher
concentration of LTL freight in the freight mix.

Saia's operating ratio improved to 95.9 compared to 96.3 in 1995. The
improved yield was partially offset by higher salaries and wages which went
from 58.8 percent of revenue to 59.8 percent of revenue in 1996 due to wage
increases and a higher mix of LTL freight. Higher fuel cost and claims and
insurance expense increases were offset by lower purchased transportation
expense which declined due to the purchase of additional equipment and better
asset utilization.

WestEx continued its rapid growth, almost doubling its revenue in 1996 as
compared to 1995.

Debt reduction has been a priority at the company throughout 1996.
Management committed to reducing debt by at least $100 million by year-end.
Total debt declined from $354 million to $196 million at year-end 1996.
Almost $117 million of commercial paper was repaid, $9 million of unsecured
bank lines were paid off and medium term notes were reduced by over $23
million. Historically, the company has generated strong cash flows from
operating activities. The decreased capital spending described in Item 2 -
Properties provided the largest source of funding for debt paydown. A
portion of the reduction was also achieved through the sale of $45 million
under an accounts receivable sales agreement described below. Additionally,
the company received a federal income tax refund totaling $45 million and
repatriated approximately $23 million from a Canadian subsidiary.

Item 1. Business. (cont.)
- -------------------------

Early in 1996 a major rating agency lowered its rating on the company's
commercial paper. While the company continued to issue commercial paper
throughout 1996 it became a less cost effective way to finance short-term
working capital needs. In August 1996 the company entered into an $150
million, three year accounts receivable revolving sales agreement with a major
bank. This 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 the bank. Funds raised by this method are less
expensive to the company than issuing commercial paper.

Working capital declined from a positive $42 million at year-end 1995 to a
negative $34 million at year-end 1996. 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
Throughout 1996 the company has made many changes designed to improve future
performance, especially at Yellow Freight. The restructuring of Yellow Freight
into five business units is designed to decentralize responsibility for
critical business processes. Decisions that touch the customer will be made
more quickly in order to be more responsive to their shipping expectations.
The new alignment will also allow more efficient use of the leading edge
technology Yellow Freight has developed to react more quickly to customer
needs.

Cost reduction initiatives begun at Yellow Freight in late 1995 were
successfully pursued and achieved targeted savings of $75 million in 1996.
These programs will have a full year impact in 1997 and are expected to save in
excess of $90 million. A second phase of cost reduction initiatives, based on
recommendations of employee teams who studied various operational areas at
Yellow Freight, will be implemented in 1997 and should further reduce costs by
an additional increment. In connection with some of these recommendations,
Yellow Freight filed a change of operations with the Teamsters on January 31,
1997. The operations change is expected to be implemented in April 1997, and
is projected to increase the use of rail transportation from 18 percent to 27
percent of over the road miles thereby lowering costs. The increased use of
rail, improved productivity and continued terminal network enhancements seek to
improve the company's asset utilization and return on capital.

On April 1, 1997 Yellow Freight's wages and benefits will increase
approximately 3.8 percent as required by the terms of the industry collective
bargaining agreement with the Teamsters. This agreement extends through March
31, 1998.

Effective January 1997 Yellow Freight implemented a general rate increase of
5.2 percent and maintained a separate fuel surcharge program. These increases
seek to not only offset ongoing cost increases but also help improve
shareholder returns which continue to be inadequate. Similar rate increases
for the other operating subsidiaries were implemented in late 1996. The LTL
trucking industry remains highly competitive and the company intends to improve
its shareholder returns through aggressive cost management, improved asset
utilization and an increased focus on marketing and customer service.

Item 1. Business. (cont.)
- -------------------------

Preston Trucking seeks to continue its positive momentum in 1997. Plans to
further improve performance in 1997 focus on pricing discipline, improved
marketing, and improvements in labor productivity. The wage freeze plan
approved by its union employees in 1996 means it will not have to raise wages
on April 1. This will then leave Preston Trucking wages 8.9 percent below
full-scale pay levels. Health, welfare and pension benefit costs, however,
will increase by 8.2 percent on April 1, 1997. Preston's labor agreement
also extends until March 31, 1998.

Saia plans to improve its margins and leverage the benefits of recent year
expansions and tonnage increases. Productivity improvements are an important
priority as well as better pricing, improved marketing and further tonnage
growth. This growth, however, is expected to come more from building
business density in existing service areas rather than from geographical
expansion. WestEx expects to continue to grow rapidly through increased
business density. A small operating profit is planned for WestEx in 1997.

Management anticipates that the company's liquidity will be adequate and that
its financial condition will continue to improve in 1997. Operating results
should improve in 1997 and capital expenditures, while higher than in 1996,
will still be below the expected depreciation for the year, thus allowing
some additional debt reduction. To ensure short-term liquidity, the company
has a $200 million bank credit agreement that expires in June 2000. While
this facility is also used to provide letters of credit, approximately $145
million remained available at year-end 1996. In addition, $105 million of
capacity remained available under the accounts receivable sales agreement at
year-end 1996. Access to this facility, however, is dependent on the company
having adequate eligible receivables, as defined under the agreement,
available for sale. Finally, the company also expects to continue to have
access to the commercial paper market and to short-term unsecured bank credit
lines.

The foregoing information contains forward-looking statements that are based
on current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from current
expectations due to a number of factors. The strength of the national
economy, the actions of competitors especially as they affect pricing
stability, the impact of weather on company operations, union relations,
actual future costs of operating expenses such as fuel and related taxes,
self-insurance claims and employee wages and benefits, actual costs of
continuing investments in revenue equipment and technology, availability and
cost of capital and the ability of the company to implement the cost
reduction programs discussed are all significant variables affecting future
performance.

8
9

Item 2. Properties.
- ------- -----------

The freight transportation companies each operate a network of freight terminal
facilities. At December 31, 1996, the company operated a total of 577 freight
terminals located in 50 states, Puerto Rico, parts of Canada and Mexico. Of
this total, 283 were owned terminals and 294 were leased, generally for terms
of three years or less. The number of vehicle back-in doors totaled 18,638, of
which 14,214 were at owned terminals and 4,424 were at leased terminals. The
freight terminals vary in size ranging from one to three doors at small local
terminals, up to 304 doors at Yellow Freight's largest consolidation and
distribution terminal. Substantially all of the larger terminals, containing
the greatest number of doors, are owned. In addition, the company and most of
its subsidiaries own and occupy general office buildings in their headquarters
city.

At December 31, 1996, the company's subsidiaries operated the following number
of linehaul units: tractors - 5,364, 27' and 28' trailers - 33,313 and 45' and
48' trailers - 6,341. The number of city units operated were: trucks and
tractors - 7,799 and trailers - 5,394.

The above facilities and equipment are used in the interstate transportation of
general commodity freight. The company's facilities and equipment are
adequate to meet current business requirements. Net capital expenditures in
1996 totaled $46 million and were split between revenue equipment and other
equipment (primarily information technology to support Yellow Freight's
improvements in customer service and freight management). About half of the
net capital spending was for Saia with the remaining portion being primarily
Yellow Freight. Revenue equipment expenditures were primarily for additional
and replacement equipment to support the growth in business at Saia and to
replace some revenue equipment at Yellow Freight.

The company expects moderate growth in 1997 and has projected no significant
changes to its operational capacity. Projected net capital expenditures for
1997 are $109 million. Net revenue equipment expenditures of $89 million for
1997 are primarily for replacement units at Yellow Freight and Saia. The other
capital expenditures of $27 million will be primarily for additional
investments in information technology.

Item 3. Legal Proceedings.
- ------- ------------------
The information set forth under the caption "Commitments and Contingencies" in
the Notes to Consolidated Financial Statements on page 30 of the registrant's
Annual Report to Shareholders for the year ended December 31, 1996, is
incorporated by reference under Item 14 herein.

Item 4. Submission of Matters to a Vote of Security Holders.
- ------- ----------------------------------------------------
None.

Executive Officers of the Registrant
- ------------------------------------

The names, ages and positions of the executive officers of the company as of
March 14, 1997 are listed below. Officers are appointed annually by the Board
of Directors at their meeting which immediately follows the annual meeting of
shareholders.

Name Age Position(s) Held
---- --- ----------------

A. Maurice Myers 56 President and Chief Executive Officer of the
company (since March 1996); President and Chief
Operating Officer of America West Airlines, Inc.
(January 1994 - December 1995); President and
Chief Executive Officer of Aloha Air Group, Inc.
(prior to January 1994)

William F. Martin, Jr. 49 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 47 Treasurer of the company (since December 1995);
Senior Vice President - Finance and Chief
Financial Officer of the company (since June
1994); Vice President and Chief Financial Officer
of Preston Corporation (prior to June 1994)

Samuel A. Woodward 47 Senior Vice President - Operations and Planning of
the company (since July 1996); Senior Vice
President and Managing Officer of SH&E (management
consulting)(prior to July 1996)

The terms of each officer of the company designated above are scheduled to
expire April 24, 1997. 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.

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 34 of the
registrant's Annual Report to Shareholders for the year ended December 31,
1996, is incorporated by reference under Item 14 herein.

Item 6. Selected Financial Data.
- ------- ------------------------

The information set forth under the caption "Financial Summary" on pages 18 and
19 of the registrant's Annual Report to Shareholders for the year ended
December 31, 1996, 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 10 through 16 of the registrant's Annual Report
to Shareholders for the year ended December 31, 1996, is incorporated by
reference under Item 14 herein.

Item 8. Financial Statements and Supplementary Data.
- ------- --------------------------------------------

The financial statements and supplementary information, appearing on pages 20
through 34 of the registrant's Annual Report to Shareholders for the year ended
December 31, 1996, are incorporated by reference under Item 14 herein.

Item 9. Disagreements on Accounting and Financial Disclosure.
- ------- -----------------------------------------------------
None.

12
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 A. Maurice Myers, President and
Chief Executive Officer, and the company, has previously been filed and is
incorporated by reference. On March 3, 1997, Paragraph 4(b) of the Employment
Agreement was amended as described in Exhibit 10.8.

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.

PART IV

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

(a) (1) Financial Statements
-------------------------

The following information appearing in the 1996
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 10-16
Financial Summary 18-19
Consolidated Financial Statements 20-33
Report of Independent Public Accountants 33
Quarterly Financial Information 34
Common Stock 34

With the exception of the aforementioned information, the 1996 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 1996 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, 1996, 1995 and 1994:
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
-------------

(10.8) - Amendment to Employment Agreement.
(13) - 1996 Annual Report to Shareholders.
(24) - Consent of Independent Public Accountants.
(27) - Financial Data Schedule (for SEC use only).

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

(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed for the three months ended December 31,
1996.

Report of Independent Public
----------------------------
Accountants on Financial Statement Schedule
-------------------------------------------

To the Shareholders of Yellow Corporation:

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Yellow Corporation and
Subsidiaries' annual report to shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated January 31, 1997. Our
audit was made for the purpose of forming an opinion on those statements taken
as a whole. The schedule listed in the index above (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 31, 1997

Schedule II

Yellow Corporation and Subsidiaries
Valuation and Qualifying Accounts
For the Years Ended December 31, 1996, 1995 and 1994

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)

Year ended December 31, 1996:
- -----------------------------
Deducted from asset account -
Allowance for uncollectible
accounts $16,781 $19,287 $- $22,249 $13,819
======= ======= ========= ======= =======

Year ended December 31, 1995:
- -----------------------------
Deducted from asset account -
Allowance for uncollectible
accounts $13,082 $13,855 $- $10,156 $16,781
======= ======= ========== ======= =======

Year ended December 31, 1994:
- -----------------------------
Deducted from asset account-
Allowance for uncollectible
accounts $10,674 $ 9,375 $- $ 6,967 $13,082
======= ======= ========== ======= =======

(1) Primarily uncollectible accounts written off - net of recoveries. 1996
also includes $3.5 million for receivables sold under the accounts
receivable sales agreement.

15
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/ A. Maurice Myers
---------------------
A. Maurice Myers
President, Chief Executive Officer and
March 25, 1997 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/ H. A. Trucksess, III Senior Vice President - March 25, 1997
- ------------------------ Finance/Chief Financial
H. A. Trucksess, III Officer and Treasurer

/s/ Howard M. Dean Director March 25, 1997
- -----------------------
Howard M. Dean

/s/ David H. Hughes Director March 25, 1997
- -----------------------
David H. Hughes

/s/ William L. Trubeck Director March 25, 1997
- -----------------------
William L. Trubeck

/s/ Carl W. Vogt Director March 25, 1997
- -----------------------
Carl W. Vogt