Introduction Home Yellow is Number One Three components. One company. One-Stop Shopping Shareholders' Letter Management's Discussion and Analysis   Overview     Forward-Looking Statements   2002 Highlights     Equity Offering     Meridian IQ Acquisitions     Continued Consolidation Within...     Spin-Off of SCS Transportation, Inc.     Stronger Financial Position   Results of Operations     Consolidated Results     Yellow Transportation Results     Meridian IQ Results   Financial Condition     Liquidity     Capital Expenditures     Contractual Obligations and Other...     Market Risk Position   Critical Accounting Policies     Revenue Reserves     Claims and Insurance     Pension Cost     Property and Equipment   New Accounting Pronouncements     SFAS No. 143     SFAS No. 146     SFAS No. 148   Outlook     Economic Forecast     Labor Negotiations     Regulatory Changes Financial Summary Consolidated Balance Sheets Statements of Consolidated Operations Statements of Consolidated Cash Flows Statements of Shareholders' Equity Statements of Comprehensive Income Notes to Financial Statements Independent Auditors' Report Supplementary Information Glossary Officers Corporate Information Board of Directors Back Cover

Outlook

Management's Discussion and Analysis of Financial Condition and Results of Operations Outlook Economic Forecast 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. Labor Negotiations 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 in October 2002, with a goal to renegotiate the agreement prior to its expiration. Failure to reach an agreement prior to the expiration of the contract could have a significant impact on our financial condition and results of operations. The agreement covers approximately 80 percent of Yellow Transportation employees. Regulatory Changes 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.

Outlook