SECURITIES AND EXCHANGE COMMISSION
                                               WASHINGTON, DC 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 September 30, 1996
                                                         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 0-27208

                          SIMON TRANSPORTATION SERVICES INC.
                (Exact name of registrant as specified in its charter)

          Nevada                                        87-0545608
(State or Other Jurisdiction of
 Incorporation or Organization)           (I.R.S. Employer Identification No.)
             
          4646 South 500 West
         Salt Lake City, Utah                              84123
 (Address of Principal Executive Offices)                (Zip Code)

Registrant's telephone number, including area code:  801/268-9100

Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities Registered Pursuant to Section 12(g) of the Act:  $0.01 Par Value
                                                            Class A Common Stock


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  amendments  to
this Form 10-K. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  was  $36,480,012  as of October 31, 1996 (based upon the $16 3/8 per
share  closing  price on that  date as  reported  by  NASDAQ).  In  making  this
calculation the registrant has assumed,  without admitting for any purpose, that
all  executive  officers,  directors,  and holders of more than 5% of a class of
outstanding common stock, and no other persons, are affiliates.

As of October 31, 1996,  the  registrant  had  2,870,597  shares of Class A  
Common Stock and  1,872,161  shares of Class B Common Stock outstanding.

DOCUMENTS  INCORPORATED BY REFERENCE:  The information set forth under Part III,
Items 10, 11, 12, and 13 of this Report is  incorporated  by reference  from the
registrant's   definitive  proxy  statement  for  the  1996  annual  meeting  of
stockholders that will be filed no later than January 28, 1997.


<PAGE>


                              Cross Reference Index

The following  cross  reference index indicates the document and location of the
information contained herein and incorporated by reference into the Form 10-K.
<TABLE>
<S>         <C>                                                            <C>

                                                                           Document and Location

                                        Part I
Item 1      Business                                                       Pages 3 - 7 herein
Item 2      Properties                                                     Page 7 herein
Item 3      Legal Proceedings                                              Page 8 herein
Item 4      Submission of Matters to a Vote of Security Holders            Page 8 herein


                                        Part II
Item 5      Market for the Registrant's Common Equity and
               Related Stockholder Matters                                 Page 9 herein
Item 6      Selected Financial Data                                        Page 10 herein
Item 7      Management's Discussion and Analysis of Financial              Pages 11 - 15 herein
               Condition and Results of Operations
Item 8      Financial Statements and Supplementary Data                    Page 16 herein
Item 9      Changes in and Disagreements with Accountants on               Page 16 herein
               Accounting and Financial Disclosure


                                       Part III
Item 10     Directors and Executive Officers of the Registrant             Pages 2 and 3 of Proxy Statement
Item 11     Executive Compensation                                         Pages 4, 5 and 6 of Proxy Statement
Item 12     Security Ownership of Certain Beneficial Owners and            Page 8 of Proxy Statement
               Management
Item 13     Certain Relationships and Related Transactions                 Page 9 of Proxy Statement


                                        Part IV
Item 14     Exhibits, Financial Statement Schedules, and Reports on        Pages 17 - 33 herein
               Form 8-K

</TABLE>

<PAGE>


                                                      PART I

Item 1:           BUSINESS

The Company

         Simon  Transportation  is  a  rapidly-growing  truckload  carrier  that
specializes in temperature-controlled transportation services for major shippers
in the food  industry.  Richard D. Simon  founded the Company  with one truck in
1955.  Today Simon  Transportation  operates  nationwide  and in eight  Canadian
provinces from its strategically  located  headquarters in Salt Lake City, Utah,
and terminals in Phoenix, Arizona; Fontana, California;  Atlanta, Georgia; Katy,
Texas; and Portland, Oregon.

         Simon Transportation Services Inc., a Nevada corporation,  is a holding
company  organized  in 1995,  the sole  business  of which is to own 100% of the
capital  stock of Dick Simon  Trucking,  Inc.,  a Utah  corporation.  Dick Simon
Trucking,   Inc.  was   incorporated   in  1972  and  had  operated  as  a  sole
proprietorship  since 1955.  Simon  Transportation  acquired  all of the capital
stock of Dick Simon Trucking, Inc.  contemporaneously with the November 17, 1995
effective  date of the Company's  initial public  offering.  Prior to such time,
Dick  Simon  Trucking,  Inc.  had  elected  to be  taxed  as  an S  corporation.
References to the "Company" herein refer to the consolidated operations of Simon
Transportation  Services and Dick Simon  Trucking.  See "Selected  Financial and
Operating Data",  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations", and Consolidated Financial Statements.

Strategy

         The  Company  has  grown  rapidly  in recent  years by  adding  revenue
equipment  to meet  the  service  demands  of new  and  existing  customers  and
expanding core carrier partnerships.  Management plans to continue the Company's
growth by capitalizing  on the trend among shippers to place increased  reliance
on a smaller number of financially stable,  service-oriented truckload carriers.
The key elements of the Company's strategy are:

         Food  Industry  Focus.  Simon   Transportation   focuses  on  providing
specialized service to sophisticated, high-volume customers in the food industry
such  as  Nestle,  Kraft,  North  American  Logistics,   ConAgra,   Albertson's,
Pillsbury, Campbell's Soup, and Coca-Cola Foods. These customers seek nationwide
transportation  partners that understand the specialized  needs of food industry
shippers and offer the late-model  equipment,  experienced  personnel,  advanced
technology,   and  geographic  coverage  to  provide  "continuous  movement"  of
temperature-controlled  and dry loads from  processing  or  packaging  plants to
distribution  centers  and  other  destinations.  Management  believes  the food
industry  is an  attractive  niche  because it is  generally  less  affected  by
economic cycles and many shippers require time-sensitive and specialized service
that justifies a higher rate per mile.

         Core  Carrier   Partnerships.   Simon   Transportation   has  grown  by
establishing  core carrier  partnerships  with  high-volume,  service  sensitive
shippers. Core carriers provide customers with consistent equipment availability
and  premium  service  such  as  time-definite  pick-up  and  delivery,  express
time-in-transit,   multiple   delivery  stops,  and  real-time  access  to  load
information through  satellite-based  tracking and communication systems and EDI
capability.  The Company also meets specialized  customer requests for access to
terminal facilities,  stationing employees at customer locations, and dedicating
equipment to specific  traffic lanes.  Management  believes major shippers favor
their  core  carrier  "partners"  during  periods  of  reduced  demand for truck
service,  and that the  trend  among  major  shippers  to reduce  the  number of
carriers used in favor of core carriers will continue.

         Dedicated  Fleets.  Simon  Transportation  emphasizes  dedicated  fleet
operations  in which it offers round trip or  continuous  movement  service to a
shipper (or a shipper and one or more of its  suppliers) by  dedicating  certain
tractors and trailers exclusively to that shipper's needs.  Dedicated service is
desirable  because  the  customers  typically  pay a  round-trip  rate  per mile
assuming that the truck will return empty and cover all loading,  unloading, and
pallet costs. The Company frequently is able to further enhance revenue per mile
by locating a profitable load to cover unloaded segments.  In addition,  drivers
prefer the  predictable  runs and priority  treatment at shipping and  receiving
locations.   Management   intends  to  aggressively  grow  its  dedicated  fleet
operations  and  expects  this  service  niche to expand as  shippers  outsource
transportation needs presently served by private carriage.

         Modern Fleet. Simon  Transportation  intends to maintain modern tractor
and  trailer  fleets  after  its fleet  upgrade  in 1996.  Reliable,  late-model
equipment  promotes  customer  service and driver  recruitment  and retention by
minimizing  the  delays  caused by  breakdowns  and  excessive  maintenance.  In
addition,  management believes that a practice of replacing tractors while under
warranty  will  reduce  expenses  and permit the  Company to take  advantage  of
improvements in fuel economy and equipment technology.

         Technology.  Simon  Transportation  is an industry leader in technology
and was the  thirteenth  carrier  to offer  fleetwide  Qualcomm  satellite-based
tracking  and  communication  system.  This  system and EDI  capability  improve
customer service and operating  efficiency by offering the Company and customers
real time access to load  locations  and advance  warning of potential  delivery
delays.  The Company's  document  imaging system allows prompt and  simultaneous
processing of payroll and billing in a paperless work environment. The Company's
load  optimization  software has been  implemented and is constantly  updated to
enhance service and profitability. Management believes shippers will continue to
demand  advanced  technology of their core carriers and plans to respond to such
requirements.

Operations

         The  Company  conducts a  centralized  dispatch  and  customer  service
operation at its Salt Lake City  headquarters to offer the precision  scheduling
required by its customers.  The operations  center features a  fully-integrated,
computerized   network  of  dispatch,   customer  service,  and  driver  liaison
personnel.  Customer service  representatives  solicit and accept freight, quote
rates, and serve as the primary contact with customers.  After accepting a load,
customer service  representatives  transfer the pick-up and delivery information
to the computer screen of the appropriate load planner,  who assigns the load to
an available  driver based upon the  proximity  of the trucks,  scheduled  "home
time,"  and  available  hours-in-service.  Dispatchers  then  use  the  Qualcomm
satellite-based  tracking  and  communication  system to locate the position and
availability  status of equipment  and notify the driver of pick-up and delivery
requirements,  route and fueling instructions,  and other information.  Upon the
assignment  of  a  load,  the  Company's  proprietary  software  calculates  the
projected  travel time from origin to destination  and uses  satellite  position
updates  and  driver   communications   to  provide  load  progress  reports  at
thirty-minute  intervals.  The  system  automatically  advises  the  appropriate
dispatcher and customer service representative if a load is behind schedule, and
customers are able to use EDI to access  information about load locations at any
time.  Management believes that these satellite and computer systems are crucial
to satisfying the stringent  service  standards,  such as 30-minute  pick-up and
delivery windows, demanded by shippers of their core carriers.

         Management measures the Company's efficiency through miles per tractor,
empty miles  percentage,  revenue  per mile,  and  revenue  per  tractor.  Fleet
productivity  is tracked daily in the operations  center,  with actual  progress
matched  against a monthly goal. All  operations  personnel have access to these
statistics on a real time basis, and all participate in a cash bonus program for
achieving  certain  fleetwide  levels of miles per  tractor  per  month,  driver
turnover, and revenue per mile.

Customers and Marketing

         The Company's sales and marketing  function is led by senior management
and other sales  professionals based in its Salt Lake City headquarters and near
key customers. These sales personnel aggressively market Simon Transportation to
food industry shippers as a  customer-oriented  provider of dependable,  on-time
service.  The Company targets customers that seek financially stable,  long-term
transportation  partners  offering  dependable  equipment,   satellite  and  EDI
technologies,   and  premium  service.  This  customer  service  philosophy  has
contributed  to  continuing  demands for added  equipment to expand  service for
existing  shippers  and  establishing  core carrier  relationships  with Nestle,
Kraft, North American Logistics,  ConAgra,  Albertson's,  Pillsbury,  Campbell's
Soup, Coca-Cola Foods, and other major customers. Management intends to continue
developing  business  with  existing  customers  and  attempting to add new core
carrier  relationships.  The Company's top 5, 10, and 25 customers accounted for
45.4%,  59.9%,  and 71.4% of revenue,  respectively,  during  fiscal 1996,  with
Nestle (including  Nestle's Stouffer's and Friskie's units) accounting for 18.3%
of revenue.

         Simon  Transportation  is a North  American  truck  line that  provides
service to and from customer locations  throughout the United States, in several
Canadian  provinces and Mexico.  The Company's  operations  are strongest in the
western  United States and between  points in the West to and from points in the
East and Southeast.  In addition to  traditional  for-hire  service,  management
emphasizes the marketing of dedicated fleet and regional distribution  services.
Dedicated  fleets  generally  receive  compensation  for all miles, and regional
operations  provide  a  stronger  presence  for  driver  recruiting.  Management
believes  that  these  services  offer  consistent  equipment   utilization  and
predictable home-time for drivers.

         The  Company  has  written  contracts  with  substantially  all  of its
customers.  These  contracts  generally  specify  service  standards  and rates,
eliminating the need for negotiating the rate for individual shipments. Although
a  contract  typically  runs for a  specified  term of at  least  one  year,  it
generally may be terminated by either party upon 30 days' notice.

Technology

         The  Company  uses  computer  and   satellite   technology  to  enhance
efficiency and customer service in all aspects of its operations, and management
believes  the  Company  is among  the  industry  leaders  in  applying  advanced
technology  to  improve   transportation   service.   The  Qualcomm  OmniTRACSTM
satellite-based tracking and communication system provides hourly updates of the
position of each tractor and permits real time communication  between operations
personnel and every driver. As a result,  dispatchers relay pick-up and delivery
times,  weather and road information,  route and fueling  directions,  and other
instructions  without  waiting  for a driver to stop and call the  Company.  The
Company's  entire fleet has been equipped with the Qualcomm  systems since 1992,
making it the  thirteenth  carrier in the nation to install the units in 100% of
its  tractors.  The Company's  proprietary  software also monitors load progress
against  projected  delivery  time  every  half-hour  and warns the  appropriate
dispatcher and customer  service  representative  if a load is behind  schedule.
This software also  facilitates  early routing toward each driver's home base by
signaling  dispatchers  several days in advance of drivers' requested  home-time
dates.

         The Company's EDI capability permits customers to communicate  directly
via computer link to tender loads, receive load confirmation, check load status,
and receive billing  information.  The Company's  largest  customers require EDI
service from their core carriers,  and more than 50% of the Company's revenue is
generated by customers  that  actively use EDI. EDI not only  improves  customer
service and  communication,  but also benefits the  Company's  cash flow through
accelerated receivable  collection.  The Company further enhances its operations
through its recently  installed  document  imaging  technology,  which  provides
customer  service   representatives  and  other  personnel  (all  of  whom  have
computers)  real-time  access to freight  bills,  supplier  invoices,  and other
information. Management believes that advanced technology will be required by an
increasing  number of large  shippers as they reduce the number of carriers they
use in favor of core carriers.

         The Company has  designed a load  optimization  software  program  that
allows  customer  service   representatives  to  quote  rates  by  automatically
computing the range of acceptable  rates between any two points,  based upon the
rates for all Simon  Transportation  loads in and out of the  applicable  region
during  the past  year  and the need for  pallets,  multiple  stops,  and  other
additional  charges.  The system then  prioritizes  the loads and identifies the
optimal  tractor to accept a load,  based upon location,  empty miles  required,
revenue per mile,  remaining driver  hours-in-service,  maintenance  scheduling,
driver home time, and other factors.

         The Company's  maintenance shops are fully  computerized and paperless,
and all  maintenance,  repair,  and  inspection  records  for each  vehicle  are
instantly  accessible.  Drivers  are able to  monitor  maintenance  progress  on
computer screens located in the driver lounge.

Revenue Equipment

         Simon Transportation's equipment strategy is to operate modern tractors
and trailers that help reduce parts,  maintenance,  and fuel costs,  promote the
reliable  service  customers  demand from core carriers,  and attract and retain
drivers. The Company operates  conventional tractors  (engine-forward)  equipped
with  electronic  engines  and Eaton  transmissions.  All  Simon  Transportation
tractors  are  equipped  with  electronic  engines,  and  most  are  covered  by
three-year, 500,000-mile engine warranties and lifetime transmission warranties.
Most of the tractors also are equipped with the "condo"  sleeper cabs  preferred
by drivers.  The  Company's  practice  is to trade or replace its  tractors on a
three-year cycle, and to trade or replace its trailers on a five-year cycle.

Drivers and Other Personnel

         Driver hiring and retention are critical to the success of all trucking
companies.  Simon  Transportation  emphasizes  driver  satisfaction and has made
significant  investments to improve its drivers' employment experience.  Drivers
are selected in accordance  with specific  Company quality  guidelines  relating
primarily to safety history,  driving  experience,  road test  evaluations,  and
other personnel evaluations,  including physical examinations and mandatory drug
testing. The Company offers competitive compensation, including mileage pay, and
full participation in all employee benefit and profit-sharing plans. The Company
uses proprietary software to warn dispatchers in advance of a driver's requested
home time.  Management  believes it has  promoted  driver  loyalty by  assigning
drivers  to  a  single  dispatcher,  regardless  of  geographic  area,  awarding
dedicated routes and regional distribution  positions to senior,  top-performing
drivers,  and  educating  customers  concerning  the need to treat  drivers with
respect.

         The truckload industry has experienced a shortage of qualified drivers.
Strict DOT  enforcement  of  hours-in-service  limitations,  mandatory  drug and
alcohol  testing,  and other safety  measures have shrunk the available  pool of
drivers and increased the cost of recruiting and retention.  Despite this driver
shortage and vigorous competition for drivers during the past several years, the
Company's  driver  turnover  has  decreased  from 134% in fiscal  1990 to 76% in
fiscal 1996, measuring drivers after they are assigned a tractor.

         At September 30, 1996, Simon Transportation  employed approximately 385
non-driver  employees and approximately  1,070 drivers.  The Company's employees
have never been  represented by or attempted to organize a union, and management
believes it has a good relationship with the Company's employees.

Safety and Insurance

         Simon   Transportation   emphasizes   safety  in  all  aspects  of  its
operations.  Its  safety  program  includes:  (i)  initial  orientation;  (ii) a
four-week  to  eight-week,   on-the-road   training  program;   (iii)  100%  log
monitoring;  and (iv) progressive penalties for excessive speed. The Company has
earned the highest DOT safety and fitness rating of  "satisfactory,"  which most
recently was extended on June 7, 1995.

         The Company carries primary and excess liability  insurance coverage of
$30 million, with a $100,000 deductible for personal injury and property damage.
The Company's workers' compensation coverage also carries a $100,000 deductible,
with no  coverage  limit.  The  Company's  equipment  is insured for fair market
value,  subject to deductibles of $25,000 for tractors and $10,000 for trailers,
and cargo loss is  covered to  $200,000  with a $10,000  deductible.  Management
believes these coverages are adequate to cover reasonably anticipated claims.

Competition

         The truckload  segment of the trucking  industry is highly  competitive
and   fragmented,   and  no  carrier  or  group  of   carriers   dominates   the
temperature-controlled  or dry van market. According to the September 1996 issue
of Refrigerated Transporter, the five largest temperature-controlled carriers by
revenue are Frozen Food Express  Industries,  KLLM  Transport  Services,  Prime,
Inc.,  C. R.  England & Sons,  and Rocor  International.  The  combined  revenue
reported for these five carriers comprises approximately 25% of the estimated $4
billion for-hire,  temperature-controlled  market. The proprietary fleet portion
of the  temperature-controlled  market has been  estimated at an  additional  $3
billion.  The Company's 1996 fiscal year revenue  constituted  approximately one
percent  of  the  total   market   for   temperature-controlled   services   and
approximately  two percent of the for-hire  market.  The Company competes with a
number of other  trucking  companies,  as well as private  truck  fleets used by
shippers to  transport  their own  products.  The Company  competes to a limited
extent with rail and rail-truck  intermodal service,  but attempts to limit this
competition  by  seeking  service-sensitive  freight.  There are other  trucking
companies,  including  diversified  carriers  with large  temperature-controlled
fleets,  possessing substantially greater financial resources and operating more
equipment than the Company.

Fuel Availability and Cost

         The Company  actively  manages its fuel costs by  requiring  drivers to
fuel at Company  terminals or,  whenever  possible en route,  at service centers
with which the Company  has  established  volume  purchasing  arrangements.  The
Company  controls fuel purchases by using its proprietary  software and Qualcomm
communications  ability to schedule  fueling stops and amounts  purchased  based
upon fuel prices at locations on drivers' routes.  The Company  historically has
been able to pass through  most  increases in fuel prices and taxes to customers
in the form of higher  rates.  During the fiscal year ended  September 30, 1996,
the Company entered into fuel surcharge agreements with approximately 51% of its
customers. These customers represent approximately 82% of the Company's revenue.
The fuel  surcharges  are adjusted  weekly based on the national  weekly average
price of diesel fuel published by the Department of Energy.

Regulation

         The  Company  is  a  common  and  contract  motor  carrier  of  general
commodities.  Historically,  the Interstate  Commerce Commission (the "ICC") and
various state agencies  regulated motor carriers'  operating rights,  accounting
systems,  mergers and  acquisitions,  periodic  financial  reporting,  and other
matters.  In 1995,  federal  legislation  preempted state  regulation of prices,
routes,  and services of motor  carriers  and  eliminated  the ICC.  Several ICC
functions  were  transferred to the  Department of  Transportation  (the "DOT").
Management does not believe that regulation by the DOT or by the states in their
remaining  areas of  authority  will have a  material  effect  on the  Company's
operations.  The Company's employee and independent contractor drivers also must
comply with the safety and fitness regulations promulgated by the DOT, including
those relating to drug and alcohol testing and hours of service.

         The Company's  operations are subject to various  federal,  state,  and
local environmental laws and regulations, implemented principally by the EPA and
similar state regulatory agencies, governing the management of hazardous wastes,
other discharge of pollutants  into the air and surface and underground  waters,
and the disposal of certain  substances.  These regulations  extend to the above
ground and  underground  fuel  storage  tanks  located at each of the  Company's
terminal facilities.  All of the Company's tanks are of double hull construction
in accordance with EPA requirements  and equipped with monitoring  devices which
constantly  monitor for leakage.  Management  is not aware of any fuel spills or
hazardous  substance  contamination  on its  properties  and  believes  that its
operations are in material compliance with current laws and regulations.

Item 2.           PROPERTIES

         Simon Transportation  operates terminals and driver recruitment offices
at five locations.  The Company's  headquarters is located on ten acres near the
intersection  of Interstates  15 and 80 in Salt Lake City,  Utah, and includes a
17,000 square foot office  building  housing all operations  and  administrative
personnel, a 23,000 square foot maintenance shop, and a 3,600 square foot driver
recruitment and  orientation  center.  The Company owns additional  terminal and
driver recruitment  facilities in Phoenix,  Arizona;  Fontana,  California;  and
Atlanta,  Georgia;  leases terminal space in Katy, Texas; and Portland,  Oregon;
and leases  trailer  drop  yards at  Tulare,  California  and  various  customer
locations.  All  locations  except the  Atlanta  office and the Katy office have
modern fuel facilities with environmental monitoring equipment.

         The Company is constructing a new  headquarters,  shop,  terminal,  and
driver  recruitment  and  orientation   center.   Management   anticipates  that
construction  of the new facility will be completed in the Spring of 1997.  Upon
completion,  the Company  intends to sell its existing  facility.  The available
acreage will accommodate future expansion, and the facility has been designed so
that  additions can be  constructed  to serve the Company's  foreseeable  future
needs.  See  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations -- Liquidity."


Item 3.           LEGAL PROCEEDINGS

         The Company from time to time is a party to  litigation  arising in the
ordinary course of its business,  substantially all of which involves claims for
personal injury and property damage incurred in the  transportation  of freight.
The  Company  presently  is not a  party  to any  legal  proceeding  other  than
litigation  arising from vehicle  accidents,  and management is not aware of any
claims  or  threatened  claims  that  reasonably  would be  expected  to  exceed
insurance  limits  or  have a  materially  adverse  effect  upon  the  Company's
operations or financial position.


Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth  quarter of the fiscal  year  ended  September  30,  1996,  no
matters were submitted to a vote of security holders.


<PAGE>


                                                      PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Price Range of Common  Stock.  The  Company's  Class A common stock has
been traded on the Nasdaq  National  Market under the NASDAQ symbol SIMN,  since
November  17, 1995,  the date of the  Company's  initial  public  offering.  The
following table sets forth for the calendar periods  indicated the range of high
and low bid  quotations  for the  Company's  Class A common stock as reported by
NASDAQ from November 17, 1995, to September 30, 1996.

          Period                    High             Low
----------------------------    -------------    -------------
Calendar Year 1995
   4th Quarter                    $    9 1/2       $    8 1/2
Calendar Year 1996
   1st Quarter                    $   11 1/4       $    9
   2nd Quarter                    $   14           $   10 1/2
   3rd Quarter                    $   15           $   12 3/4
                                          


         The prices  reported  reflect  interdealer  quotations  without  retail
mark-ups,  mark-downs or commissions, and may not represent actual transactions.
As of October 31, 1996, the Company had 688 stockholders of record of its common
stock.  However,  the Company  believes that many  additional  holders of common
stock are unidentified  because a substantial number of the Company's shares are
held of record by brokers or dealers for their customers in street names.

         Dividend  Policy.  The  Company  has  never  declared  and  paid a cash
dividend on its common stock. It is the current intention of the Company's Board
of  Directors  to  continue  to retain  earnings  to  finance  the growth of the
Company's  business  rather  than  to pay  dividends.  Future  payments  of cash
dividends  will depend upon the financial  condition,  results of operations and
capital commitments of the Company, restrictions under then-existing agreements,
and other factors deemed relevant by the Board of Directors.



<PAGE>


Item 6.           SELECTED FINANCIAL AND OPERATING DATA

         The selected  consolidated  financial data presented  below reflect the
consolidated   financial   position   and   results  of   operations   of  Simon
Transportation  Services  Inc. and its  subsidiary.  The  selected  consolidated
financial data are derived from the Company's  consolidated financial statements
and should be read in conjunction with "Management's  Discussion and Analysis of
Financial  Condition and Results of Operations"  and the Company's  consolidated
financial statements and notes thereto included elsewhere herein.

(In thousands, except per share amounts and
operating data)
<TABLE>
<S>                                                    <C>           <C>         <C>         <C>         <C>
                                                                   Years Ended September 30,
                                                     --------------------------------------------------------------
                                                           1996        1995         1994        1993        1992
                                                           ----        ----         ----        ----        ----
Statement of Earnings Data:
  Operating revenue.................................     $101,090      $75,218     $71,691     $57,694     $40,823
                                                     --------------------------------------------------------------
  Operating expenses:
    Salaries, wages, and benefits...................       40,015       28,035      25,949      21,990      14,990
    Fuel and fuel taxes.............................       20,359       14,115      14,363      11,629       8,014
    Operating supplies and expenses.................       13,701       10,839       8,978       6,111       4,245
    Taxes and licenses..............................        3,288        2,756       2,558       2,291       1,625
    Insurance and claims............................        2,172        2,003       1,995       1,600       1,320
    Communications and utilities....................        1,680        1,245       1,274         927         579
    Depreciation and amortization...................        5,920        7,223       6,857       4,781       1,898
    Rent............................................        4,794        2,926       3,435       3,422       3,632
                                                     --------------------------------------------------------------
      Total operating expenses......................       91,929       69,142      65,409      52,751      36,303
                                                     --------------------------------------------------------------
      Operating earnings............................        9,161        6,076       6,282       4,943       4,520
  Interest expense and other, net...................        2,758        3,527       3,136       2,559       1,276
                                                     --------------------------------------------------------------
  Earnings before provision for income                      6,403        2,549       3,146       2,384       3,244
taxes..........
  Provision for Income taxes........................        5,454           --          --          --          --
                                                     --------------------------------------------------------------
  Net earnings......................................          949        2,549       3,146       2,384       3,244
                                                     ==============================================================

Pro Forma Statement of Earnings Data:1
  Earnings before provision for income                      6,403        2,549       3,146       2,384       3,244
taxes..........
  Provision (benefit) for income taxes..............        2,536        1,010       1,246         944       1,285
                                                     --------------------------------------------------------------
  Net earnings......................................       $3,867       $1,539      $1,900      $1,440      $1,959
                                                     ==============================================================
  Net earnings per common share.....................        $0.88        $0.67       $0.83       $0.63       $0.85
                                                     ==============================================================
  Weighted average shares outstanding...............    4,417,643    2,300,000   2,300,000   2,300,000   2,300,000
Operating Data:
  Operating ratio2..................................        90.9%        91.9%       91.2%       91.4%       88.9%
  Average revenue per loaded mile...................        $1.24        $1.26       $1.23       $1.23       $1.23
  Average revenue per total mile....................        $1.10        $1.11       $1.10       $1.07       $1.07
  Average revenue per tractor per week..............       $2,526       $2,417      $2,489      $2,471      $2,582
  Empty miles percentage............................        11.7%        11.3%       10.7%       12.6%       13.2%
  Average length of haul in miles...................          984          949         725         677         596
  Weighted average tractors during period...........          774          598         554         449         304
  Tractors at end of period.........................          940          623         570         523         389
  Trailers at end of period.........................        1,430          877         873         745         589
Balance Sheet Data (at end of period):
  Net property and equipment........................      $56,714      $52,200     $49,039     $45,409     $29,665
  Total assets......................................       78,223       61,437      56,752      52,601      34,863
  Long-term debt and capitalized
    leases, including current                              37,428       47,903      44,525      43,181      27,217
    portion.........................................
  Stockholders' equity..............................       29,103        9,033       7,443       5,736       4,871
</TABLE>

---------------------------------------------
     1   The  Company  was  treated as an S  Corporation  for  federal and state
income tax purposes from October 1, 1990 to November 16, 1995. As a result,  the
Company's  taxable  earnings  for such  period  were taxed for federal and state
income tax purposes directly to the Company's  then-existing  stockholders.  The
pro forma  statement  of  earnings  data  give  effect  to an  adjustment  for a
provision  for federal and state income taxes as if the Company had been treated
as a C Corporation during such periods. The pro forma statement of earnings data
do not give effect to the one-time, non-cash charge of $2,980,115 in recognition
of deferred  income taxes that resulted from the  termination of the Company's S
Corporation  status.  Pro forma net  earnings  per share and pro forma  weighted
average  shares  outstanding  give effect to the  Company's  August 1995 reverse
stock split and all share issuances and contributions during 1995 as if they had
been  outstanding  for  all  periods  presented.  See  Note  1  and  Note  3  to
Consolidated Financial Statements.
     2   Operating expenses as a percentage of revenue.

<PAGE>

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


Overview

         Founded  by  Richard  D.  Simon  in 1955  with a  single  truck,  Simon
Transportation today provides nationwide,  predominantly  temperature-controlled
truckload  transportation for numerous major shippers.  In recent years, much of
the Company's  growth has resulted  from earning core carrier  status with major
shippers and meeting the demands of these shippers for additional equipment. The
Company  has grown to $101.1  million  in  revenue  for its  fiscal  year  ended
September 30, 1996,  from $31.0 million in revenue for fiscal 1991, a compounded
annual  growth  rate of  26.7%.  During  the  same  period,  operating  earnings
increased to $9.2 million from $2.0 million,  a compounded annual growth rate of
35.7%.

         During  fiscal years 1994 and 1995,  the Company  financed  most of its
tractors and trailers with debt and capitalized leases. In the 1996 fiscal year,
the Company financed most of this revenue equipment with operating leases rather
than  borrowing.   Financing  equipment  with  operating  leases  increases  the
Company's  operating ratio because the implied  interest  component of the lease
payments is  reflected  as an  "above-the-line"  operating  expense  rather than
interest  expense.  The method of  financing  does not affect  net  income.  The
Company's  operating ratio may fluctuate from time-to-time based upon the method
of equipment financing.

         The  Company  operated  as an S  Corporation  from  October  1, 1990 to
November 16, 1995. As a result,  the  Company's net taxable  earnings were taxed
directly to the Company's existing  stockholders rather than to the Company. The
pro forma  statement of earnings data  included in the  "Selected  Financial and
Operating  Data" set forth the Company's net earnings for such periods as if the
Company had been subject to federal and state income taxes at a combined rate of
39.6%.  In addition to the ongoing  income tax effect,  the  termination  of the
Company's  S  Corporation  status  resulted in a  one-time,  non-cash  charge of
approximately $3.0 million in recognition of deferred income taxes.

Results of Operations

         The following  table sets forth the percentage  relationship of certain
items to operating revenue for the periods indicated:
<TABLE>
<S>                                                         <C>         <C>         <C>
                                                                   Fiscal Years Ended
                                                                      September 30,
                                                         ----------------------------------
                                                            1996        1995        1994
                                                         ---------- ----------- -----------
Operating revenue.......................................    100.0%      100.0%      100.0%
Operating expenses:
  Salaries, wages, and benefits........................      39.6        37.3        36.2
  Fuel and fuel taxes..................................      20.1        18.8        20.0
  Operating supplies and expenses......................      13.6        14.4        12.4
  Taxes and licenses...................................       3.3         3.6         3.6
  Insurance and claims.................................       2.1         2.7         2.8
  Communications and utilities.........................       1.6         1.6         1.8
  Depreciation and amortization........................       5.9         9.6         9.6
  Rent.................................................       4.7         3.9         4.8
                                                         ---------- -----------------------
    Total operating expenses                                 90.9        91.9        91.2
                                                         ---------- -----------------------
Operating earnings.....................................       9.1         8.1         8.8
Interest expense and other, net.........................     (2.8)       (4.7)       (4.4)
                                                         ---------- -----------------------
Earnings before provision for income taxes.............       6.3         3.4         4.4
Pro forma provision for income taxes....................     (2.5)       (1.4)       (1.7)
                                                         ---------- -----------------------
Pro forma net earnings..................................      3.8%        2.0%        2.7%
                                                         ========== =======================

</TABLE>



<PAGE>


Comparison  of fiscal  year ended  September  30,  1996,  with fiscal year ended
September 30, 1995.

         Operating  revenue  increased  34.4%, to $101.1 million during the 1996
fiscal year from $75.2  million  during the 1995 fiscal  year.  The  increase in
revenue was primarily  attributable to a 29.4% increase in the weighted  average
number of tractors,  to 774 during the 1996 fiscal year from 598 during the 1995
fiscal  year and an  increase  in the  average  revenue  per tractor per week to
$2,526  during the 1996  fiscal year from  $2,417  during the 1995 fiscal  year.
These  increases  were partially  offset by a decrease in the Company's  average
revenue per loaded mile to $1.24  during the 1996 fiscal year from $1.26  during
the 1995 fiscal year, and an increase in empty miles  percentage to 11.7% during
the 1996 fiscal year from 11.3% during the 1995 fiscal year.

         Salaries,  wages,  and  benefits  increased  to 39.6% of revenue
during the 1996  fiscal  year from 37.3% during the 1995  fiscal  year.  The
change was  attributable  to the full  effect of an increase in driver base pay
implemented  during the 1995  fiscal  year;  the  improvement  of health  
insurance  coverage to attract and retain qualified  drivers and other  
personnel;  an increase in the number of active  participants in the 401(k) 
plan; and an increase in  administrative  personnel.  The  additional  cost of 
these  items was  partially  offset by reduced workers' compensation premiums 
and a reduction in workers' compensation claims.

         Fuel and fuel taxes  increased to 20.1% of revenue  during the 1996 
fiscal year from 18.8% during the 1995 fiscal year as a result of an increase  
in fuel  prices.  The  increase in fuel prices was  partially  offset by an
overall  increase in the fuel efficiency of the Company's  fleet.  During the 
fiscal year ended September 30, 1996, the Company  entered into fuel  surcharge
agreements  with  approximately  51% of its customers.  These  customers
represent  approximately  82% of the  Company's  revenue.  The fuel  surcharges
are  adjusted  weekly based on the national weekly average price of diesel fuel 
published by the Department of Energy.

         Operating  supplies and expenses  decreased to 13.6% of revenue  during
the 1996 fiscal year,  from 14.4%  during the 1995 fiscal  year,  primarily as a
result of decreased  parts  costs,  outside  repairs,  and  maintenance  expense
associated  with a decrease in the average age of the Company's  tractor  fleet.
These savings were partially offset by retaining certain older tractors that had
been  scheduled  for  trade or sale in order to meet  customer  demand  for more
equipment.  The  Company  upgraded  its  tractor  fleet in fiscal  year 1996 and
reduced the average age of its fleet at September 30, 1996, to  approximately  8
months from 30 months at September 30, 1995.
All tractors are now covered by three-year, 500,000-mile warranties.

         Taxes and  licenses  decreased  to 3.3% of revenue  during the 1996  
fiscal year from 3.6% during the 1995 fiscal year primarily as a result of 
greater efficiency in licensing new tractors being added to the fleet.

         Insurance  and claims  decreased to 2.1% of revenue  during the 1996 
fiscal year from 2.7% during the 1995 fiscal year because of reduced insurance 
premiums and claims.

         Communications and utilities remained constant at 1.6% of revenue 
during the 1996 and 1995 fiscal years.

         Depreciation  and  amortization  (adjusted  for the net gain on sale of
equipment)  decreased  to 5.9% of revenue  during the 1996 fiscal year from 9.6%
during the 1995 fiscal year.  Depreciation and amortization  (unadjusted for the
net gain on sale of  equipment)  decreased  to 8.3% of  revenue  ($8.4  million)
during the 1996 fiscal year from 10.8% of revenue ($8.1 million) during the 1995
fiscal year as a result of a decrease in the percentage of the Company's revenue
equipment that was owned or acquired under capitalized  leases. This decrease in
depreciation  was  adjusted  for a $2.4  million net gain on the sale of revenue
equipment  during the 1996 fiscal year compared with an $885,000 net gain during
the 1995 fiscal year.  Rent  increased to 4.7% of revenue during the 1996 fiscal
year  from  3.9%  during  the 1995  fiscal  year as the  Company  increased  its
percentage of revenue equipment under operating leases.

         As a result of the  foregoing,  the Company's  operating  ratio  
decreased to 90.9% during the 1996 fiscal year from 91.9% during the 1995 fiscal
year.

         Interest expense and other, net decreased to 2.8% of revenue during the
1996  fiscal  year from 4.7% during the 1995 fiscal  year.  This  resulted  from
application  of $17.2 million in net proceeds from the Company's  initial public
offering to decrease  debt and  capitalized  lease  balances,  a decrease in the
Company's  average  interest rate in the 1996 fiscal year compared with the 1995
fiscal year,  and an increase in the  percentage  of the  Company's  tractor and
trailer fleets being obtained through operating leases.

         As a result of the factors  described  above,  pro forma net earnings  
increased to $3.9 million  (3.8% of revenue) during the 1996 fiscal year from 
$1.5 million (2.0% of revenue) during the 1995 fiscal year.


Comparison  of fiscal  year ended  September  30,  1995,  with fiscal year ended
September 30, 1994

         Operating  revenue  increased  4.9%, to $75.2  million  during the 1995
fiscal year from $71.7 million during the 1994 fiscal year, as management slowed
the addition of new revenue equipment to avoid increasing the Company's level of
long-term debt and lease  obligations.  The weighted  average number of tractors
increased  7.9% to 598  during  the 1995  fiscal  year from 554  during the 1994
fiscal year.  The Company's  average  revenue per loaded mile increased to $1.26
during the 1995 fiscal year from $1.23 during the 1994 fiscal year, but this was
partially  offset by an increase in empty miles  percentage  to 11.3% during the
1995 fiscal year from 10.7%  during the 1994 fiscal  year.  Average  revenue per
tractor  per week  declined  to $2,417  during the 1995  fiscal year from $2,489
during the 1994 fiscal year.

         Salaries,  wages, and benefits increased to 37.3% of revenue during the
1995  fiscal  year from  36.2%  during  the 1994  fiscal  year.  The  change was
attributable to an increase in driver base pay; the  implementation  of a driver
bonus  program;  the  improvement  of health  insurance  coverage to attract and
retain  qualified  drivers  and other  personnel;  an  increase in the number of
active  participants  in the 401(k)  plan;  and an  increase  in  administrative
personnel. The additional cost of these items was partially offset by a one-time
rebate  from  the  previous  workers'  compensation  insurer,  reduced  workers'
compensation premiums, and a reduction in workers' compensation claims.

         Fuel  and fuel  taxes  decreased  to 18.8% of  revenue  during the 1995
fiscal year from 20.0%  during the 1994 fiscal year as a result of a decrease in
fuel prices under a fuel management  program  implemented in January 1995 and an
overall increase in the fuel efficiency of the Company's fleet.

         Operating  supplies and expenses  increased to 14.4% of revenue  during
the 1995 fiscal year,  from 12.4%  during the 1994 fiscal  year,  primarily as a
result of increased  parts and tire  replacement  costs,  outside  repairs,  and
maintenance  expense associated with the delay in trading and adding new revenue
equipment. The average age of the Company's tractor fleet at September 30, 1995,
was 30 months,  and most  repairs  of such  tractors  were no longer  covered by
manufacturers'  warranties.  The Company also experienced an increase in loading
and  unloading,  pallet,  and toll  costs  associated  with  additional  shipper
requirements.

         Taxes and licenses and insurance and claims both remained  essentially
constant  during the 1995 and 1994 fiscal years.

         Communications  and  utilities  decreased to 1.6% of revenue  during 
the 1995 fiscal year from 1.8% during the 1994 fiscal year as a result of a 
one-time,  negotiated  credit with the Company's  long distance  provider for
expenses  incurred  during the 1995 fiscal year. The Company also  negotiated a 
reduction of  approximately  35% in monthly in long-distance rates effective 
October 1995.

         Depreciation  and  amortization  (adjusted  for the net gain on sale of
equipment) remained unchanged at 9.6% of revenue during the 1995 and 1994 fiscal
years.  Depreciation  and  amortization  (unadjusted for the net gain on sale of
equipment)  increased to $8.1 million (10.8% of revenue)  during the 1995 fiscal
year from $7.1 million (9.9% of revenue) during the 1994 fiscal year as a result
of an increase in the  percentage of the Company's  revenue  equipment  that was
owned or acquired under  capitalized  leases.  This increase in depreciation was
adjusted  for an $885,000 net gain on the sale of revenue  equipment  during the
1995 fiscal year  compared with a $229,000 net gain during the 1994 fiscal year.
Rent  decreased to 3.9% of revenue  during the 1995 fiscal year from 4.8% during
the 1994 fiscal year as the Company reduced its percentage of revenue  equipment
under operating leases.

         As a result of the  foregoing,  the Company's  operating  ratio  
increased to 91.9% during the 1995 fiscal year from 91.2% during the 1994 fiscal
year.

         Interest  expense  and other,  net  increased  to 4.7% of revenue  
during the 1995  fiscal  year from 4.4% during the 1994 fiscal year as a result 
of higher  average  interest rates and an increase in the percentage of the
Company's revenue equipment that was owned or acquired under capitalized leases.

         As a result of the factors  described  above,  pro forma net earnings  
decreased to $1.5 million  (2.0% of revenue) during the 1995 fiscal year from 
$1.9 million (2.7% of revenue) during the 1994 fiscal year.

Liquidity and Capital Resources

         The   growth  of  the  Company's  business  has  required   significant
investment in new revenue  equipment that the Company  historically has financed
with  borrowings  under   installment   notes  payable  to  commercial   lending
institutions  and equipment  manufacturers,  equipment  leases from  third-party
lessors, borrowings under its line of credit, and cash flow from operations. The
Company's  primary  sources  of  liquidity   currently  are  funds  provided  by
operations and borrowings and leases with financial  institutions  and equipment
manufacturers.

         Net cash  provided by operating  activities  was $7.0 million,  $8.3 
million,  and  $10.4 million  for the fiscal years ended  September 30, 1996,  
1995,  and 1994,  respectively.  The Company's  principal use of cash from
operations  is to service  debt  incurred to  purchase  new  revenue  equipment
and  internally  finance  accounts receivable  associated with growth in the 
business.  Customer accounts receivable increased  $5,930,000,  $478,000,
and $753,000 for the fiscal years ended  September 30, 1996,  1995, and 1994, 
respectively.  The average age of the Company's  accounts  receivable  was 39, 
36, and 36 days for the fiscal years ended  September 30, 1996,  1995, and
1994, respectively.

         Net cash (used in) provided by investing activities was ($4.6 million),
$1.3 million,  and ($6.1 million) for the  fiscal  years  ended  September 30, 
1996,  1995,  and 1994,  respectively.  The  Company  expects  capital
expenditures (primarily for revenue equipment,  satellite  communications units,
and the construction of a new main terminal and  headquarters  facility),  net 
of revenue  equipment  trade-ins,  to be  approximately  $21,000,000 in
1997.  The Company's  projected  capital  expenditures  will be funded with  
borrowings or capitalized or operating leases,  and cash  flows  from  
operations.  The total  cost of the  headquarters  is  estimated  at  
approximately $15 million,  the majority of which is expected to be incurred 
during calendar 1996 and the first calendar  quarter of  1997.  Following  
completion  of the new  facility,  the  Company  intends  to sell its  existing
headquarters facility, which had an appraised value of $3,385,000 in May 1995.

         Net  cash provided by (used in) financing  activities was $2.9 million,
($9.2  million),  and ($4.5  million) for the fiscal years ended  September  30,
1996, 1995, and 1994,  respectively,  consisted primarily of approximately $19.7
million  in net  proceeds  from  the  Company's  November  1995  initial  public
offering,  net payments on borrowings of $11.9 million,  $10.2 million, and $3.0
million of principal under the Company's  long-term debt and  capitalized  lease
agreements and net payments  (borrowings) of $4.3 million,  ($2.6 million),  and
($9,000)  under the Company's  line of credit.  In addition,  the Company paid S
Corporation  dividends to its stockholders of $605,000,  $1.6 million,  and $1.4
million  for the  fiscal  years  ended  September  30,  1996,  1995,  and  1994,
respectively.

         The maximum  amount  committed  under the Company's line of credit at  
September 30, 1996,  was $5 million and no borrowings  were  outstanding.  The 
interest rate on the line of credit is one-half  percent (.5%) above the
30-day London Interbank  Offered Rate ("LIBOR") in effect from  time-to-time.  
At  September 30, 1996,  the Company had outstanding  long-term debt and 
capitalized  lease  obligations  (including  current portions) of approximately
$37.4 million,  most of which  comprised  obligations for the purchase of 
revenue  equipment.  See Notes 4 and 5 to Consolidated Financial Statements.

         Although the Company  historically  has  experienced a working  capital
deficit  common to many truckload carriers that have expanded by financing  
revenue  equipment  purchases,  management  believes its working  capital
deficits  have had little  impact upon  liquidity.  When the  purchase  of 
revenue  equipment  is financed  through borrowing or capitalized lease  
obligations,  a portion of the indebtedness is categorized as a current  
liability, although  the revenue  equipment  is  classified  as a long-term  
asset.  Consequently,  each  purchase of financed revenue  equipment  decreases
working  capital.  The Company's  working  capital surplus at September 30, 1996
was $6.7 million.  The Company's  working capital  deficits  amounted to  $16.7 
million  and $7.0 million at the fiscal years ended  September 30, 1995  and 
1994,  respectively.  Management believes that available  borrowings under the
line of credit,  future  borrowings under installment  notes payable or lease
arrangements for revenue  equipment, and cash  flow  generated  from  
operations,  will  allow the  Company  to  continue  to meet its  working  
capital requirements,  anticipated  capital  expenditures,  and obligations 
under debt and capitalized and operating leases at least through fiscal year 
1997.

Inflation

         Inflation  has had a  minimal  effect  upon the  Company's  
profitability  in  recent  years.  Most of the Company's  operating  expenses 
are  inflation-sensitive,  with inflation  generally  producing  increased  
costs of operation.  The  Company  expects  that  inflation  will  affect its 
costs no more than it  affects  those of other truckload carriers.

Seasonality

         The Company  experiences  some seasonal  fluctuations  in freight 
volume,  as shipments have  historically decreased during the first calendar  
quarter.  In addition,  the Company's  operating  expenses  historically  have
been higher in the winter  months due to  decreased  fuel  efficiency  and  
increased  maintenance  costs in colder weather.

Fuel Availability and Cost

         The  Company  actively  manages  its fuel costs by  requiring  drivers 
to fuel at  Company  terminals  or, whenever  possible  en route,  at  service
centers  with  which the  Company  has  established  volume  purchasing
arrangements.  The Company  controls fuel purchases by using its proprietary  
software and Qualcomm  communications ability to schedule  fueling stops and 
amounts  purchased  based upon fuel prices at locations on drivers'  routes.
The Company  historically  has been able to pass  through  most  increases in 
fuel prices and taxes to customers in the form of higher  rates.  During  the 
fiscal  year ended  September  30,  1996,  the  Company  entered  into fuel
surcharge  agreements with  approximately  51% of its customers.  These 
customers  represent  approximately  82% of the Company's  revenue.  The fuel  
surcharges  are adjusted  weekly based on the national  weekly  average price of
diesel fuel published by the Department of Energy.


Forward Looking Statements

         This  annual report and statements by the Company in press releases and
public filings, as well as oral public statements by Company representatives may
contain  certain  forward  looking  information  that is  subject  to risks  and
uncertainties  that could cause actual results to differ  materially  from those
projected.  Without limitation,  these risks and uncertainties  include economic
recessions or downturns in customers'  business cycles,  excessive  increases in
capacity in truckload  markets,  decreased  demand for  transportation  services
offered by the Company,  rapid  inflation,  fuel price  increases,  increases in
interest  rates,  delays in the delivery of new tractors and  trailers,  and the
availability  and compensation of qualified  drivers.  Readers should review and
consider  the  various  disclosures  made  herein  and in other  reports,  press
releases, and statements by the Company.


<PAGE>



Item 8. .         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       The Company's audited  financial  statements,  including its consolidated
balance sheets and consolidated statements of earnings,  cash flows, and 
stockholders'  equity, and notes related thereto, are included at pages 20
to 33 of this report.  The supplementary  quarterly  financial data (unadjusted 
for the pro forma effects of tax as if the Company had always been a C 
corporation) follow:

Quarterly Financial Data:
<TABLE>
<S>                                                   <C>              <C>                 <C>

                                             Fourth Quarter     Third Quarter     Second Quarter     First Quarter
                                                  1996              1996               1996              1996
                                            ------------------ ---------------- ------------------- ----------------
Revenue                                               $31,068          $27,225             $22,208          $20,588
Operating earnings                                      2,697            2,568               2,235            1,661
Earnings before taxes                                   2,140            1,812               1,596              855
Income taxes                                              848              718                 632            3,257
Net earnings                                            1,292            1,095                 964          (2,402)
Net earnings per share                                  $0.27            $0.23               $0.20          ($0.70)

                                             Fourth Quarter     Third Quarter     Second Quarter     First Quarter
                                                  1995              1995               1995              1995
                                            ------------------ ---------------- ------------------- ----------------
Revenue                                               $19,540          $19,288             $18,539           17,851
Operating earnings                                      1,684            1,460               1,440            1,491
Earnings before taxes                                     828              545                 529              647
Income taxes                                               --               --                  --               --
Net earnings                                              828              545                 529              647
Net earnings per share                                  $0.36            $0.24               $0.23            $0.28

</TABLE>

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

         No reports on Form 8-K have been filed  within the  twenty-four  months
prior to September 30, 1996,  involving a change of accountants or disagreements
on accounting and financial disclosure.



                                                     PART III

Item 10.          DIRECTORS AND OFFICERS OF THE REGISTRANT

         The Company  incorporates by reference the information  contained under
the heading  "Election of Directors"  from its definitive  Proxy Statement to be
delivered  to  stockholders  of the Company in  connection  with the 1996 Annual
Meeting of Stockholders to be held December 18, 1996.


Item 11.          EXECUTIVE COMPENSATION

         The Company  incorporates by reference the information  contained under
the heading  "Executive  Compensation" from its definitive Proxy Statement to be
delivered  to  stockholders  of the Company in  connection  with the 1996 Annual
Meeting of Stockholders to be held December 18, 1996.


Item 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The Company  incorporates by reference the information  contained under
the heading  "Security  Ownership of Certain  Beneficial  Owners and Management"
from its  definitive  Proxy  Statement to be delivered  to  stockholders  of the
Company in connection  with the 1996 Annual Meeting of  Stockholders  to be held
December 18, 1996.


Item 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company  incorporates by reference the information  contained under
the heading "Certain Relationships and Related Transactions" from its definitive
Proxy  Statement to be delivered to  stockholders  of the Company in  connection
with the 1996 Annual Meeting of Stockholders to be held December 18, 1996.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)      1.       Financial Statements.
The Company's audited financial  statements are set forth at the following pages
of this report:

                                                                    Page
Consolidated Statement of Earnings.................................  20
Consolidated Statement of Financial Position.......................  21
Consolidated Statements of Stockholders' Equity....................  22
Consolidated Statements of Cash Flows..............................  23
Notes to Consolidated Financial Statements.........................  24
Report of Independent Public Accountants...........................  33

         2.  Financial Statement Schedules.
Financial statement schedules are not required because all required  information
is included in the financial statements.

(b)      Reports on Form 8-K
There  were no  reports  on Form 8-K  filed  during  the  fourth  quarter  ended
September 30, 1996.


<PAGE>


(c)      Exhibits

NumberDescription 1 + Form of Underwriting Agreement.
2.1 + Exchange  Agreement dated as of April 19, 1995,  among Richard D. Simon,
      Trustee of the Richard D. Simon Revocable Trust, UTAD 2/12/93, and Richard
      D. Simon as a sole  proprietorship  d/b/a R. D. Simon  Trucking,  Kelle A.
      Simon, A. Lyn Simon, Sherry L. Simon Bokovoy, Richard D. Simon, Jr., Alban
      B. Lang, and Dick Simon Trucking, Inc., a
      Utah corporation.
2.2 + Formation Agreement dated May 31, 1995, among Richard D. Simon,  Trustee
      of the Richard D. Simon Trust,  UTAD  2/12/93,  Kelle Allen Simon,  Arthur
      Lynn Simon (also known as Lyn Simon), Sherry Lee Simon Bokovoy, Richard D.
      Simon,  Jr. (also known as Richard Dick Simon,  or "King" Simon) and Alban
      Lang.
3.1 + Articles of Incorporation.
3.2 + Bylaws.
4.1 + Articles of Incorporation.
4.2 + Bylaws.
4.3   + Formation Agreement dated May 31, 1995, among Richard D. Simon,  Trustee
      of the Richard D. Simon Trust,  UTAD  2/12/93,  Kelle Allen Simon,  Arthur
      Lynn Simon (also known as Lyn Simon), Sherry Lee Simon Bokovoy, Richard D.
      Simon, Jr. and Alban Lang.
10.1+ OmniTRACSTM Contract dated May 6, 1992, between Qualcomm, Incorporated and
      Dick  Simon  Trucking,  Inc.,  a  Utah  corporation,   for  communications
      equipment and services, and most recent amendment dated May 13, 1994.
10.2+ Outside Director Stock Option Plan.
10.3+ Incentive Stock Plan.
10.4+ 401(k) Plan.
10.5+ Exchange  Agreement dated April 19, 1995, among Richard D. Simon,  Trustee
      of the Richard D. Simon  Revocable  Trust,  UTAD  2/12/93,  and Richard D.
      Simon as a sole proprietorship d/b/a R. D. Simon Trucking, Kelle A. Simon,
      A. Lyn Simon,  Sherry L. Simon  Bokovoy,  Richard D. Simon,  Jr., Alban B.
      Lang, and Dick Simon Trucking, Inc., a
      Utah corporation.
10.6+ Formation Agreement dated May 31, 1995, among Richard D. Simon, Trustee of
      the Richard D. Simon Trust, UTAD 2/12/93,  Kelle Allen Simon,  Arthur Lynn
      Simon  (also  known as Lyn Simon),  Sherry Lee Simon  Bokovoy,  Richard D.
      Simon, Jr. and Alban Lang.
10.7+ License  Agreement  dated  October  12,  1993,   between  Dick Simon   
      Trucking, Inc.,   a  Utah  corporation  and Rand McNally - TDM, Inc.
10.8+ Line of Credit and  Security  Agreement,  Inclusive  Loan  Agreement,  and
      Promissory Note, all dated February 28, 1994 between First Interstate Bank
      of Utah,  N.A.,  and Dick Simon  Trucking,  Inc., a Utah  corporation,  as
      amended June 21, 1994.
10.9+ Firm Fixed Price  Agreement  Contract for Sale of Petroleum  Product dated
      July 9, 1993  between  MG Refining and Marketing, Inc. and Dick Simon 
      Trucking, Inc., a Utah corporation
10.1+ Plan of Merger  dated April 19, 1995  between the Richard D. Simon  Trust,
      UTAD 2/12/93,  Kelle A. Simon,  Lyn Simon,  Richard D. Simon,  Jr., Sherry
      Simon Bokovoy, and Alban Lang as officers,  directors, and/or shareholders
      of Dick Simon Trucking, Inc., a Utah corporation.
10.1# Loan  Agreement  (Line of Credit)  dated  April 29,  1996  (replaced  loan
      agreement  dated  December 1, 1995)  between  U.S.  Bank of Utah and Simon
      Transporation Services Inc.
10.1# Loan Agreement (Headquarter's Loan) dated May 23, 1996 between U.S. Bank 
      of Utah and Dick Simon Trucking, Inc.
 21 + List of subsidiaries.
 23   Consent of Arthur Andersen LLP, independent public accountants.



       + Filed as an exhibit to the  registrant's  Registration  Statement  on
         Form S-1,  Registration No. 33-96876,  effective November 17, 1995, and
         incorporated herein by reference.

       # Filed as an exhibit to the  registrant's  Quarterly  Report on Form 
         10-Q for the period ended June 30, 1996, Commission File No.   0-27208,
         dated August 9, 1996, and incorporated herein by reference.


<PAGE>



                                                     SIGNATURES


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

                                              SIMON TRANSPORATION SERVICES, INC.



Date:   November 5, 1996          By:      /s/ Alban B. Lang
        ----------------                   -----------------
                                           Alban B. Lang
                                           Treasurer and Chief Financial Officer

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

<TABLE>
<S>                                        <C>                                               <C>
                Signature                                      Position                               Date
                ---------                                      --------                               ----
/s/ Richard D. Simon                                                                         November 5, 1996
--------------------------------------     Chairman of the Board, President, and Chief
Richard D. Simon                           Executive Officer (principal executive officer)

/s/ Alban B. Lang                                                                            November 5, 1996
--------------------------------------     Treasurer and Chief Financial Officer 
Alban B. Lang                              (principal financial and accounting officer);
                                           Director
/s/ Irene Warr                                                                               November 5, 1996
--------------------------------------
Irene Warr                                 Director

/s/ H.J. Frazier                                                                             November 5, 1996
--------------------------------------
H.J. Frazier                               Director 

</TABLE>



<PAGE>


                                         SIMON TRANSPORTATION SERVICES INC.

                                         CONSOLIDATED STATEMENT OF EARNINGS


<TABLE>
<S>                                                        <C>                 <C>                <C>
                                                                 For the Years Ended September 30,
                                                     ----------------------------------------------------------
                                                            1996               1995                1994
                                                     ----------------------------------------------------------

Operating Revenue                                          $101,089,530        $ 75,218,184       $ 71,690,734
                                                     ----------------------------------------------------------

Operating Expenses:
  Salaries, wages, and benefits                              40,014,702          28,035,318         25,948,755
  Fuel and fuel taxes                                        20,359,375          14,115,283         14,362,789
  Operating supplies and expenses                            13,701,428          10,839,485          8,978,394
  Taxes and licenses                                          3,287,833           2,756,587          2,557,612
  Insurance and claims                                        2,172,308           2,002,505          1,995,244
  Communications and utilities                                1,679,967           1,244,650          1,274,074
  Depreciation and amortization                               5,919,494           7,222,887          6,856,673
  Rent                                                        4,793,804           2,925,541          3,435,117
                                                     ----------------------------------------------------------
    Total operating expenses                                 91,928,911          69,142,256         65,408,658
                                                     ----------------------------------------------------------
    Operating earnings                                        9,160,619           6,075,928          6,282,076
Other (Expense) Earnings:
  Interest expense                                          (2,849,549)         (3,558,932)        (3,191,708)
  Other, net                                                     92,025              31,751             55,876
                                                     ----------------------------------------------------------
Earnings before provision for income taxes                    6,403,095           2,548,747          3,146,244
Provision for income taxes (Note 11)                          5,454,170                   -                  -
                                                     ----------------------------------------------------------
Net Earnings                                              $     948,925        $  2,548,747       $  3,146,244
                                                     ==========================================================

Unaudited Pro Forma Information: (Note 11)
  Earnings before provision for income taxes               $  6,403,095        $  2,548,747       $  3,146,244
  Provision for income taxes                                  2,535,626           1,009,304          1,245,913
                                                     ----------------------------------------------------------
  Net earnings                                             $  3,867,469        $  1,539,443       $  1,900,331
                                                     ==========================================================
  Net earnings per common share                        $           0.88    $           0.67   $           0.83
                                                     ==========================================================
  Weighted average common shares outstanding                  4,417,643           2,300,000          2,300,000
                                                     ==========================================================

</TABLE>

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

<PAGE>


                                        SIMON TRANSPORTATION SERVICES INC.

                                   CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                       ASSETS
<TABLE>
<S>                                                                                   <C>              <C>
                                                                                            September 30,
                                                                                  ----------------------------------
                                                                                        1996             1995
                                                                                  ----------------------------------
Current Assets:
  Cash                                                                                $  5,571,431     $    350,380
  Receivables, net of allowance for doubtful accounts of $66,000 and $115,000,
     respectively                                                                       13,261,974        7,331,701

  Operating supplies                                                                       428,123          639,915
  Prepaid expenses and other                                                             1,302,492          416,945
  Deferred tax asset                                                                       627,883               --
                                                                                  ----------------------------------
        Total current assets                                                            21,191,903        8,738,941
                                                                                  ----------------------------------
Property and Equipment, at cost:
  Land                                                                                   2,918,804        2,710,071
  Revenue equipment                                                                     58,779,032       63,591,169
  Buildings and improvements                                                             8,639,875        4,796,379
  Office furniture and equipment                                                         2,766,218        2,116,518
                                                                                  ----------------------------------
                                                                                        73,103,929       73,214,137
  Less accumulated depreciation and amortization                                      (16,390,209)     (21,014,556)
                                                                                  ----------------------------------
                                                                                        56,713,720       52,199,581
                                                                                  ----------------------------------
Other Assets                                                                               317,645          498,473
                                                                                  ----------------------------------

                                                                                       $78,223,268      $61,436,995
                                                                                  ==================================

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current portion of long-term debt                                                    $ 2,892,300      $ 8,577,770
  Current portion of capitalized lease obligations                                       3,760,250       12,389,442
  Accounts payable                                                                       1,691,900        1,369,252
  Income taxes payable                                                                   2,191,984               --
  Accrued liabilities                                                                    2,324,918        1,835,620
  Accrued claims payable                                                                 1,602,344        1,296,575
                                                                                  ----------------------------------
        Total current liabilities                                                       14,463,696       25,468,659
                                                                                  ----------------------------------

Long-Term Debt, net of current portion                                                  15,433,145        7,135,935
                                                                                  ----------------------------------
Capitalized Lease Obligations, net of current portion                                   15,342,293       19,799,823
                                                                                  ----------------------------------
Deferred Income Taxes                                                                    3,880,653                --
                                                                                  ----------------------------------

Commitments (Note 7)

Stockholders' Equity:
  Preferred stock, $.01 par value,  5,000,000 shares authorized,  none issued 
  Class A  Common  Stock,  $.01  par  value,  20,000,000  shares  authorized,
     2,870,507 and 427,839 shares issued, respectively                                      28,705            4,278
  Class B Common Stock, $.01 par value, 5,000,000 shares authorized, 1,872,161
     shares issued                                                                          18,722           18,722
  Additional paid-in capital                                                            25,282,496          735,292
  Retained earnings                                                                      3,773,558        8,274,286
                                                                                  ----------------------------------
        Total stockholders' equity                                                      29,103,481        9,032,578
                                                                                  ----------------------------------

                                                                                       $78,223,268      $61,436,995
                                                                                  ==================================
</TABLE>

The accompanyning notes to consolidated financial statements are
an integral part of these consolidated financial statements.
<PAGE>


                                        SIMON TRANSPORTATION SERVICES INC.

                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<S>                              <C>      <C>      <C>         <C>          <C>        <C>       <C>        

                                          Class A  Class B   Additional                            Total
                                 Common   Common   Common      Paid-in      Retained   Treasury  Stockholders'
                                  Stock    Stock     Stock     Capital      Earnings     Stock      Equity
                                ------------------------------------------------------------------------------
   Balance, September 30, 1993   $149,852 $     -- $      --   $    --      $5,611,880 $(25,764) $  5,735,968
                                          
     Distributions to                  --       --        --                (1,438,974)       --   (1,438,974)
      stockholders of S
      corporation

     Net Earnings                      --       --        --                 3,146,244        --    3,146,244
                                ------------------------------------------------------------------------------
   Balance, September 30, 1994    149,852       --        --        --       7,319,150  (25,764)    7,443,238
                                          
     Distributions to                           --        --                (1,593,611)            (1,593,611)
      stockholders of S
      corporation

     Acquisition of Freight       160,000       --        --                                          160,000
      Sales, Inc.  through
      issuance of 22,308
      shares of common stock
      (Note 1)
     Payment of notes payable     474,204       --        --                                          474,204
      to stockholders through
      issuance of 66,225
      shares of common stock
      (Note 9)

     Recapitalization of         (784,056)    7,000    28,500      722,792                 25,764          --
      capital stock, 700,000
      Class A shares  and  
      2,850,000  Class B shares
      of  Common  Stock issued
      for 3,550,000 shares of 
      common stock (Note 1)

     Pro rata contribution of                (2,722)   (9,778)      12,500                     --          --
      272,161 shares of
      Class A Common Stock and
      977,839 shares of
      Class B Common Stock by
      stockholders (Note 1)

     Net Earnings                                --        --                 2,548,747             2,548,747
                                ------------------------------------------------------------------------------
   Balance, September 30, 1995         --     4,278    18,722      735,292    8,274,286        --   9,032,578

     Distributions to                                                          (605,060)             (605,060)
      stockholders of S
      corporation

     Sale of Common Stock in                 24,420             19,696,318                         19,720,738
      initial public offering,
      net of issuance costs

     Change in tax status                                        4,844,593   (4,844,593)                   --

     Exercise of stock options                    7                  6,293                              6,300

     Net Earnings                                                               948,925               948,925
                                ------------------------------------------------------------------------------
   Balance, September 30, 1996  $      --   $28,705    $18,722 $25,282,496   $3,773,558 $      -- $29,103,481
                                ==============================================================================
</TABLE>

The accompanying notes to consolidated financial statements are
an integral part of these consolidated financial statements.
<PAGE>


                       SIMON TRANSPORTATION SERVICES INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<S>                                                                       <C>                <C>                <C>
                                                                              For the Years Ended September 30,
                                                                   --------------------------------------------------------
                                                                          1996              1995               1994
                                                                   --------------------------------------------------------
 Cash Flows From Operating Activities:
  Net earnings                                                            $   948,925        $2,548,747         $3,146,244
  Adjustments to reconcile net earnings to net cash
    provided by operating activities:
    Depreciation and amortization                                           5,919,494         7,222,887          6,856,673
    Changes in assets and liabilities:
      Increase in receivables, net                                         (5,930,273)         (477,913)          (752,748)
      Decrease (increase) in operating supplies                               211,792          (166,726)           (71,633)
      Increase in prepaid expenses and other                                 (885,547)         (117,628)           (22,397)
      Increase in deferred tax asset                                         (627,883)               --                 --
      Decrease (increase) in other assets                                     180,828          (464,990)            99,225
      Increase (decrease) in accounts payable                                 322,648          (577,613)           274,652
      Increase in income taxes payable                                      2,191,984                --                 --
      Increase in accrued liabilities                                         489,298            17,700            326,248
      Increase in accrued claims payable                                      305,769           277,903            498,654
      Increase in deferred income taxes                                     3,880,653                --                 --
                                                                   --------------------------------------------------------
        Net cash provided by operating activities                           7,007,688         8,262,367         10,354,918
                                                                   --------------------------------------------------------
Cash Flows From Investing Activities:
  Purchase of property and equipment                                      (23,149,090)       (6,338,014)        (8,332,284)
  Proceeds from the sale of property and equipment                         18,499,863         7,594,684          2,224,519
                                                                   --------------------------------------------------------
        Net cash (used in) provided by investing
          activities                                                       (4,649,227)        1,256,670         (6,107,765)
                                                                   --------------------------------------------------------
Cash Flows From Financing Activities:
  Proceeds from issuance of long-term debt                                 19,666,814         3,764,916         13,553,287
  Principal payments on long-term debt                                    (12,775,333)       (4,653,591)       (10,818,948)
  Net (payments) borrowings under line-of-credit agreement                 (4,279,741)        2,570,529              9,313
  Principal payments under capitalized lease
   obligations                                                            (18,871,127)       (9,309,717)        (5,779,042)
  Net proceeds from issuance of Class A Common Stock                       19,727,037                --                 --
  Distributions to stockholders                                              (605,060)       (1,593,611)        (1,438,973)
                                                                   --------------------------------------------------------
        Net cash provided by (used in) financing activities                 2,862,590        (9,221,474)        (4,474,363)
                                                                   --------------------------------------------------------
Net Increase (Decrease) In Cash                                             5,221,051           297,563           (227,210)
Cash at Beginning of Year                                                     350,380            52,817            280,027
                                                                   --------------------------------------------------------
Cash at End of Year                                                        $5,571,431       $   350,380       $     52,817
                                                                   ========================================================

Supplemental Disclosure of Cash Flow Information:
    Cash paid during the year for interest                                 $2,847,583        $3,440,685         $3,150,503

Supplemental Schedule of Noncash Investing and
  Financing Activities:
    Equipment acquired through capitalized lease
      obligations                                                          $5,784,405       $11,479,970         $4,379,060
</TABLE>

The accompanying notes to consolidated financial statements are
an integral part of these consolidated financial statements.
<PAGE>


                                         SIMON TRANSPORTATION SERVICES INC.

                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)      DESCRIPTION OF THE COMPANY, ACQUISITIONS, AND RECAPITALIZATION

         Simon Transportation Services Inc. was incorporated in Nevada on August
15, 1995 to acquire all of the outstanding capital stock of Dick Simon Trucking,
Inc.,  a Utah  corporation,  through a  transaction  intended  to  qualify  as a
transfer to a controlled  corporation.  The accompanying  consolidated financial
statements present the consolidated financial position and results of operations
of Simon Transportation Services Inc. and Dick Simon Trucking,  Inc., its wholly
owned subsidiary  (collectively,  the "Company").  All intercompany accounts and
transactions have been eliminated in consolidation.

         The Company is a truckload carrier that specializes in premium service,
primarily through temperature-controlled  transportation predominantly for major
shippers in the U.S. food industry.

R. D. Simon Trucking

         Historically,   the  accompanying  financial  statements  included  the
combined  accounts of Dick Simon  Trucking,  Inc. and R. D. Simon  Trucking (the
"Affiliate"). The Affiliate was a sole proprietorship owned by Richard D. Simon,
the majority stockholder of the Company. The Affiliate leased tractors, trailers
and terminal and shop facilities to the Company.

         On April 19, 1995, the Company entered into an exchange  agreement with
its majority  stockholder  to acquire all of the assets and  liabilities  of the
Affiliate  in exchange for 753,135  shares of Common  Stock of the  Company.  In
exchange for the issuance of the common stock, the Company assumed  ownership of
assets with an estimated fair value of approximately  $8,500,000 and liabilities
of approximately $3,100,000.

         The Company has  accounted  for the  acquisition  of the Affiliate as a
reorganization of entities under common control and, accordingly,  the financial
statements  for  all  periods  presented  have  been  adjusted  to  reflect  the
combination of the entities at their historical bases.

Freight Sales, Inc.

         In connection with the above mentioned exchange agreement,  the Company
also acquired  Freight Sales,  Inc.  ("Freight  Sales"),  a company owned by the
adult children of the majority  stockholder  of the Company,  which children are
also minority  stockholders of the Company.  The Company issued 22,308 shares of
common stock in exchange for all of the outstanding stock of Freight Sales.

         The Company has  accounted for the  acquisition  of Freight Sales under
the purchase method of accounting and, accordingly, the acquired asset values of
$160,000 are presented in these financial  statements as of the acquisition date
at their respective fair values in relation to the purchase price. No intangible
assets were recorded in this  acquisition.  As part of the transaction,  Freight
Sales was merged  into the Company  and ceased to exist as a legal  entity.  The
Company has omitted the pro forma results of  operations  required by Accounting
Principles  Board Opinion No. 16 because the  transaction  was immaterial to the
Company's consolidated financial statements.

Recapitalization

         In August 1995,  the Board of Directors  approved a reverse stock split
of one-for-3.37  shares of common stock, and a recapitalization  of the Company.
All references in the consolidated  financial statements to the number of shares
of common stock have been restated to reflect this reverse stock split.

         The  post-recapitalization  authorized  capital  stock for the  Company
consists of  20,000,000  shares of $.01 par value Class A Common  Stock with one
vote per share voting rights;  5,000,000 shares of $.01 par value Class B Common
Stock with two votes per share  voting  rights;  and  5,000,000  shares $.01 par
value preferred  stock. In connection  with this  recapitalization,  the Company
issued 700,000 shares of Class A and 2,850,000 shares of Class B Common Stock in
exchange for all of the previously  outstanding  shares of common stock.  All of
the  Class B and  39,641  shares  of Class A Common  Stock  were  issued  to the
majority stockholder of the Company.

         On September 30, 1995, the Company's stockholders  contributed on a pro
rata basis 272,161  shares of Class A and 977,839 shares of Class B Common Stock
to the Company. This contribution was made to reduce the number of shares of the
Company's  common stock prior to its initial public  offering.  All  contributed
shares were retired by the Company.

         Immediately prior to the effective date of the Company's initial public
offering,  the Company issued 427,839 shares of Class A and 1,872,161  shares of
Class B common  stock of Simon  Transportation  Services  Inc.  to the  existing
shareholders of Dick Simon Trucking, Inc. in exchange for all of the outstanding
capital stock of Dick Simon Trucking,  Inc. in a transaction intended to qualify
as a transfer to a  controlled  corporation  under  Section 351 of the  Internal
Revenue  Code.  This  transaction  was  consummated  on November 17,  1995,  and
resulted  in a  capital  stock  structure  identical  to that  reflected  in the
accompanying September 30, 1995 consolidated balance sheet.

         On November 17, 1995, the Company completed its initial public offering
of  2,441,968  shares of Class A Common  Stock which  generated  net proceeds of
$19,720,738  after deducting  underwriting  commissions  and other  expenses.  A
majority of the proceeds were used to pay off certain  long-term  debt (see Note
4).

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in the Preparation of Financial Statements

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amounts of revenues and expense during the reporting
period. Actual results could differ from these estimates.

Revenue Recognition and Significant Customers

         Freight  charges and related direct freight  expenses are recognized as
revenue and operating expense when freight is delivered at a destination  point.
One customer  accounted  for  approximately  18, 19, and 15 percent of operating
revenue in fiscal years 1996,  1995,  and 1994,  respectively.  At September 30,
1996,  the  Company  had  accounts  receivable  outstanding  with this  customer
totaling  $1,793,808.  Another  customer  accounted for  approximately 12 and 17
percent of operating revenue in fiscal years 1995 and 1994, respectively.

Operating Supplies

         Operating  supplies  consist  primarily of tires,  fuel and maintenance
parts for revenue equipment which are stated at the lower of first-in, first-out
(FIFO) cost or market value.

Property and Equipment

         Property and  equipment are recorded at cost and  depreciated  based on
the  straight-line  method  over  their  estimated  useful  lives,  taking  into
consideration  salvage  values for  purchased  property and residual  values for
equipment held under capitalized  leases.  Leasehold  improvements are amortized
over the terms of the respective lease or the lives of the assets,  whichever is
shorter.

         Expenditures  for  routine  maintenance  and  repairs  are  charged  to
operating  expense as incurred.  Major renewals and  betterments are capitalized
and  depreciated  over their  estimated  useful lives.  Upon retirement or other
disposition of property and equipment, the cost and accumulated depreciation are
removed from the accounts,  and any gain or loss is recorded as an adjustment to
depreciation  and  amortization.  Net gains from the disposition of equipment in
the amounts of  $2,447,765,  $885,439,  and  $229,386 for the fiscal years ended
September  30,  1996,  1995,  and  1994,  respectively,  have been  included  in
depreciation  and  amortization in the  accompanying  statements of earnings and
cash flows.

         The estimated useful lives of property and equipment are as follows:

Revenue equipment                                                   3 - 7 years
Buildings and improvements                                             30 years
Office furniture and equipment                                      5 - 8 years

         Tires purchased as part of revenue  equipment are capitalized as a cost
of the equipment. Replacement tires are expensed when placed in service.

Fair Value of Financial Instruments

         The  carrying  amounts  reported  in  the  accompanying  statements  of
financial  position  for  cash,  accounts   receivable,   and  accounts  payable
approximate  fair values  because of the immediate or  short-term  maturities of
these financial  instruments.  The carrying  amounts of the Company's  long-term
debt also approximate fair values based on current rates for similar debt.

Insurance Coverage and Accrued Claims Payable

         The  Company  acts  as a  self-insurer  for  auto  liability,  workers'
compensation, tractor physical damage, trailer physical damage, and cargo damage
claims up to $100,000, $100,000, $25,000, $10,000 and $10,000, respectively, per
single  occurrence.  Liability  in excess of these  amounts  is  assumed  by the
insurance underwriter up to applicable policy limits. The Company maintains loss
prevention programs in an effort to minimize this risk.

         The Company estimates and accrues a liability for its share of ultimate
settlements  using  all  available  information  including  the  services  of  a
third-party  insurance  risk  claims  administrator  to assist  in  establishing
reserve levels for each occurrence  based on the facts and  circumstances of the
occurrence  coupled with the Company's past history of such claims.  The Company
accrues for workers'  compensation  and  automobile  liabilities  when reported,
typically the same day as the occurrence.  Additionally,  the Company accrues an
estimated  liability for incurred but not reported claims.  Expense depends upon
actual loss  experience and changes in estimates of settlement  amounts for open
claims which have not been fully resolved. The Company provides for adverse loss
developments in the period when new information so dictates.

         The  Company had  outstanding  letters of credit  related to  insurance
coverage totaling $950,000 at September 30, 1996. These letters of credit mature
at various times through  November 1996 and renew annually unless  terminated by
either party.

Recent Accounting Pronouncement

         In March 1995,  the  Financial  Accounting  Standards  Board  issued  
Statement  of  Financial  Accounting Standards No. 121,  "Accounting  for the 
Impairment of Long-Lived  Assets and for Long-Lived  Assets to be Disposed
Of" ("SFAS No. 121").  SFAS No. 121 is required to be adopted for fiscal years  
beginning  after December 15, 1995, with early  adoption  permitted.  The effect
of  implementing  SFAS No. 121 is not  expected  to be material to the
Company's financial position and results of operations when adopted.

(3)      INCOME TAXES

         Effective  October  1, 1990,  Dick Simon  Trucking,  Inc.  elected  for
federal and state income tax purposes to include its taxable  earnings with that
of its stockholders (an S corporation election).  Accordingly, from that date to
November  16,  1995,  the  Company  made no  provision  for income  taxes in its
financial  statements.  The Company's  policy was to make  distributions  to its
stockholders  in amounts at least equal to the  stockholders'  income taxes that
were attributable to the net earnings of the Company.  The Company recorded such
distributions when they were declared to the stockholders.

         Concurrently  with the  acquisition of all of the capital stock of Dick
Simon Trucking,  Inc. by Simon Transportation  Services Inc. (see Note 1), the S
corporation  status of the Company  terminated and the Company became subject to
federal and state income taxes.  Upon termination of the Company's S corporation
status,  the Company  recognized  deferred  income tax assets and liabilities in
accordance with Statement of Financial  Accounting  Standards No. 109 ("SFAS No.
109"),  "Accounting for Income Taxes." The Company recorded,  in accordance with
SFAS No. 109, a net  deferred  income tax  liability  and the  related  deferred
income tax expense in the quarter in which the change occurred. Additionally, in
connection  with the  termination  of the S  corporation  election,  the Company
reclassified its retained earnings to additional paid-in capital.

         The provision for income taxes  includes the following  components  for
the year ended September 30, 1996:


        Current tax provision:
                  Federal                                          $1,758,933
                  State                                               442,467
                                                               -----------------
                                                                    2,201,400
                                                               -----------------

         Deferred tax provision:
                  Federal                                             254,592
                  State                                                18,063
                  Net deferred tax liability upon
                      termination of S corporation status           2,980,115
                                                               -----------------
                                                                    3,252,770
                                                               -----------------

         Provision for income taxes                                $5,454,170
                                                               =================

         The following is a reconciliation  between the statutory Federal income
tax rate of 34 percent and the  effective  rate which is derived by dividing the
provision for income taxes by earnings before provision for income taxes:

         Computed "expected" provision for income
              taxes at the statutory rate                          $2,177,053
         Increase (decrease) in income taxes
              resulting from:
                  Net deferred tax liability upon
                      termination of S corporation status           2,980,115
                  State income taxes, net of federal income
                      tax benefit                                     303,950
                  Other, net                                           (6,948)
                                                               -----------------

         Provision for income taxes                                $5,454,170
                                                               =================


<PAGE>


         The components of the net deferred income tax liability as of September
30, 1996, and November 17, 1995 (the date the S corporation  status  terminated)
are as follows:

<TABLE>
<S>                                                                  <C>                <C>
                                                                      September 30,        November 17,
                                                                          1996                1995
                                                                    ------------------ ------------------
         Deferred income tax assets:
              Claims reserve                                         $      423,768            292,435
              Other reserves and accruals                                   204,115             78,877
                                                                    ------------------ ------------------

         Total deferred income tax assets                                   627,883            371,312

         Deferred income tax liability:
              Difference between book and tax basis
                  of property and equipment                              (3,880,653)        (3,351,427)
                                                                    ------------------ ------------------

         Net deferred income tax liability                           $   (3,252,770)    $   (2,980,115)
                                                                    ================== ==================
</TABLE>

(4)      LONG-TERM DEBT

Long-term debt consists of the following and the construction  loan discussed in
Note 5:

<TABLE>
<S>                                                                                  <C>                <C>    
                                                                                          September 30,
                                                                              --------------------------------------
                                                                                     1996               1995
                                                                              --------------------------------------
Notes payable to a bank, interest ranging from 6.24 percent to 7.20 percent,         $12,331,568                  $
       payable in monthly installments through April 2001, secured by revenue                                    --
       equipment
Note payable to a bank, interest at LIBOR plus 1.1 percent (6.48 percent at            1,816,874                 --
       September 30, 1996), payable in monthly installments through May 2001,
       secured by revenue equipment
Notes payable to a finance company, interest ranging from LIBOR plus 1.75 to                  --          4,310,763
       2.75 percent (7.53 to 8.53 percent at September 30, 1995), secured by
       revenue equipment and land, paid in full during fiscal year 1996
Notes payable to a finance company, interest at a variable rate based on the                  --          2,571,969
       30-day commercial paper rate plus 2.75 percent (8.7 percent at
       September 30, 1995), secured by revenue equipment, paid in full during
       fiscal year 1996
Notes payable to a bank, interest ranging from prime plus .75 to 1 percent                    --          1,395,846
       (9.50 to 9.75 percent at September 30, 1995), secured by land and
       buildings, paid in full during fiscal year 1996
Notes payable to a finance company, interest at prime plus .35 percent (9.10                  --          1,039,181
       percent at September 30, 1995), secured by revenue equipment, paid in
       full during fiscal year 1996
Notes payable to a bank, interest ranging from prime plus .25 to .75 percent                  --          1,037,671
       (9 to 9.5 percent at September 30, 1995), secured by revenue equipment
       , office equipment and land, paid in full during fiscal year 1996
Notes payable to a bank, interest rates ranging from 7.20 to 8.25 percent,                 7,126            416,258
       payable in monthly installments through October 1996, secured by
       revenue equipment
Line-of-credit totaling  $7,500,000 at September 30, 1995, interest at LIBOR                  --          4,279,470
       plus 2 percent (7.78 percent at September 30, 1995) secured by
       accounts receivable, paid in full during fiscal year 1996
Other                                                                                         --            662,547
                                                                              --------------------------------------
                                                                                      14,155,568         15,713,705
Less current portion                                                                  (2,892,300)        (8,577,770)
                                                                              --------------------------------------
                                                                                     $11,263,268        $ 7,135,935
                                                                              ======================================
</TABLE>

         Scheduled principal payments of long-term debt are as follows:

             Years Ending September 30,                           Amount
------------------------------------------------------      -------------------
                        1997                                    $    2,892,300
                        1998                                         2,997,601
                        1999                                         3,178,059
                        2000                                         3,371,044
                        2001                                         1,716,564
                                                            -------------------
                                                                $   14,155,568
                                                            ===================


<PAGE>


(5)      CONSTRUCTION LOAN AND LINE OF CREDIT

         The Company has entered into a construction  loan agreement with a bank
to finance the  construction of a new  headquarters,  shop,  terminal and driver
recruitment and orientation  center. The agreement provides a $10 million credit
facility that will convert to a term loan upon completion of the facility. Until
construction is completed, no payments are due and all accrued interest is added
to the loan  balance.  As of  September  30,  1996,  the  Company  had  borrowed
$4,169,877 under the agreement.

         The construction loan contains various restrictive  covenants including
maximum debt to tangible net worth and minimum tangible net worth  requirements.
As of September 30, 1996, the Company was in compliance with all covenants under
the construction loan agreement.

         The  Company  has an  unsecured  line of credit for  $5,000,000.  As of
September 30, 1996, the Company had not drawn on this line of credit.


(6)      CAPITALIZED LEASE OBLIGATIONS

         Certain   revenue   equipment   is  leased  under   capitalized   lease
obligations.  The  following  is a summary of assets  held under  capital  lease
agreements:

                                                   September 30,
                                  ----------------------------------------------
                                            1996                   1995
                                  ----------------------------------------------

Revenue equipment                         $ 28,823,541           $ 48,678,031
Less accumulated amortization               (7,313,862)           (14,433,957)
                                  ----------------------------------------------
                                          $ 21,509,679           $ 34,244,074
                                  ==============================================


         The following is a schedule by year of future  minimum  lease  payments
under  capitalized  leases  together with the present value of the minimum lease
payments at September 30, 1996:

            Years Ending September 30,                       Amount
---------------------------------------------------    --------------------
                       1997                                 $    4,869,050
                       1998                                      8,195,453
                       1999                                      3,340,570
                       2000                                      3,463,770
                       2001                                      1,843,795
                                                       --------------------
Total minimum lease payments                                    21,712,638
Less amount representing interest                               (2,610,094)
                                                       --------------------
Present value of minimum lease payments                         19,102,544
Less current portion                                            (3,760,251)
                                                       --------------------
                                                             $  15,342,293
                                                       ====================


(7)      COMMITMENTS

Operating Leases

         The Company is committed under noncancelable operating leases involving
certain revenue equipment.  Rent expense for noncancelable  operating leases was
$3,997,352,  $2,562,440,  and $3,153,238 for fiscal years 1996,  1995, and 1994,
respectively.  Aggregate future lease commitments are $11,483,479,  $11,406,441,
$8,359,297,  $2,548,065 and $2,153,511 for the years ending  September 30, 1997,
1998, 1999, 2000 and 2001, respectively.


<PAGE>


Orders for Revenue Equipment

         As of  September  30,  1996,  the Company had placed  orders for fiscal
years 1997 and 1998 to purchase revenue equipment at an estimated total purchase
price of  $77,000,000.  The revenue  equipment is to be delivered  during fiscal
years 1997 and 1998. Approximately $21,000,000 of the new revenue equipment will
be  used  to  replace  older  revenue  equipment  and  the  balance   represents
incremental  additions to the Company's  fleet.  These orders may be canceled by
the Company without penalty upon written  notification any time prior to 85 days
before the revenue equipment's scheduled delivery.

(8)      STOCK PLANS

Incentive Stock Plan

         On May 31, 1995, the Board of Directors and  stockholders  approved and
adopted the Dick Simon Trucking,  Inc.  Incentive  Stock Plan (the "Plan").  The
Plan reserves  400,000  shares of Class A Common Stock for issuance  thereunder.
The Board of Directors or its designated committee  administers the Plan and has
the discretion to determine the employees and officers who will receive  awards,
the type of  awards  (incentive  stock  options,  non-statutory  stock  options,
restricted  stock awards,  reload options,  other stock based awards,  and other
benefits) to be granted and the term, vesting provisions and exercise prices.

Outside Director Stock Plan

         On August 16, 1995, the Company adopted an Outside Director Stock Plan,
under which each  director who is not an employee of the Company will receive an
annual option to purchase 1,000 shares of the Company's  Class A Common Stock at
85% of the  market  price at the end of the month  immediately  the grant  date,
except for 1995, in which the exercise price was $9.00. The Company has reserved
25,000  shares of Class A Common Stock for issuance  under the Outside  Director
Stock Plan.

         The following  table  summarizes the combined stock option activity for
both plans from  inception  of the plans  through the year ended  September  30,
1996:

                                              Number of     Price Per Share
                                               Options
                                           ---------------- -----------------

Outstanding at September 30, 1994                     --
         Granted                                 230,900       $ 9.00
                                           ---------------- -----------------

Outstanding at September 30, 1995                230,900       $ 9.00
         Granted                                   3,000       $ 9.00
         Exercised                                  (700)      $ 9.00
         Forfeited                                (5,500)      $ 9.00
                                           ---------------- -----------------

Outstanding at September 30, 1996                227,700       $ 9.00
                                           ================ =================


As of September 30, 1996, approximately 44,700 options are exercisable.


Executive Bonuses

         On May 3, 1996,  the Board of  Directors  approved an  executive  bonus
program whereby 5 percent of earnings before  provision for income taxes will be
distributed to executive  officers as bonuses.  The executive bonus program will
be effective beginning in fiscal year 1997.


<PAGE>


(9)      RELATED PARTY TRANSACTIONS

         Historically the Company  maintained life insurance policies on certain
officers (other than Richard D. Simon) and an employee. The Company was named as
the  beneficiary  under each of the policies.  The cash surrender value for each
policy  accrued to the insured  officer or employee.  During  February 1995, the
Company canceled the policies and issued notes payable totaling  $475,000 to the
insured  individuals for the amount of the cash surrender value of the policies.
During April 1995,  the Company  issued  66,225  shares of common stock to these
individuals as satisfaction of the notes payable.

         During  fiscal years 1995 and 1994 the Company paid lease  payments of 
$30,000 and $90,000,  respectively, to Freight Sales.

         Prior to the  reorganization  described  in Note 1, the Company  leased
certain real estate and revenue  equipment  from the  Affiliate.  During  fiscal
years  1995 and 1994,  the  Company  paid  rent of  approximately  $532,000  and
$912,000  to the  Affiliate.  All  such  amounts  have  been  eliminated  in the
accompanying  consolidated financial statements because of related ownership and
the single purpose of the entities.


(10)     EMPLOYEE BENEFIT PLAN

         The  Company has adopted a defined  contribution  plan,  the Dick Simon
Trucking, Inc. 401(k) Profit Sharing Plan (the "401(k) Plan"). All employees who
have  completed  one year of service  and have  reached  age 21 are  eligible to
participate  in the  401(k)  Plan.  Newly  eligible  employees  may first  begin
participating  in the  401(k)  Plan on the  earlier of January 1 or July 1 after
meeting the  eligibility  requirements.  Under the 401(k)  Plan,  employees  are
allowed to make contributions of up to 15 percent of their annual  compensation;
the Company may make matching contributions equal to a discretionary percentage,
to be  determined  by the Company,  of the  employee's  salary  reductions.  The
Company may also make additional discretionary contributions to the 401(k) Plan.
All amounts  contributed  by a  participant  are fully vested at all times.  The
participant   becomes  20  percent  vested  in  any  matching  or  discretionary
contributions after two years of service.  This vesting percentage  increases to
100 percent  after six years of service.  During  fiscal years 1996,  1995,  and
1994, the Company contributed $192,389, $141,240, and $94,500,  respectively, to
the 401(k) Plan.


(11)     PRO FORMA INFORMATION (UNAUDITED)

Pro Forma Provision for Income Taxes

         Contemporaneously  with the  November  17, 1995  effective  date of the
Company's  initial public offering,  the S corporation  stockholders  terminated
their S corporation  election.  Accordingly,  the pro forma provision for income
taxes has been determined in accordance with SFAS No. 109,  assuming the Company
had been taxed as a C  corporation  for  federal and state  income tax  purposes
using an effective income tax rate of 39.6 percent.  The pro forma provision for
income  taxes does not reflect the  $2,980,115  charge to earnings  for deferred
taxes the Company recorded upon termination of its S corporation status.

Pro Forma Net Earnings Per Common Share and Weighted Average Common Shares 
Outstanding

         As discussed in Note 1, in 1995, the Company  recapitalized its capital
stock. Accordingly, the historical presentation of net earnings per common share
would not present a meaningful comparison due to the recapitalization.  However,
pro forma  net  earnings  per  common  share is  reflected  in the  accompanying
consolidated  financial  statements  in order to present net earnings per common
share as if the  recapitalization,  contribution of Common Stock, and all Common
Stock  issuances  through  September 30, 1995 had been effective for all periods
presented.


<PAGE>



                                      REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors of
  Simon Transportation Services Inc.:

         We have audited the accompanying  consolidated  statements of financial
position  of Simon  Transportation  Services  Inc.  (a Nevada  corporation)  and
subsidiary  as of  September  30,  1996 and 1995  and the  related  consolidated
statements  of earnings,  stockholders'  equity,  and cash flows for each of the
three years in the period ended September 30, 1996.  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 Simon Transportation
Services Inc. and  subsidiary as of September 30, 1996 and 1995, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period ended September 30, 1996 in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen LLP

Salt Lake City, Utah
October 11, 1996