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, 1998
                                   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             (I.R.S. Employer Identification No.)
 Incorporation or Organization)            

       5175 West 2100 South  West Valley City, Utah         84120
         (Address of Principal Executive Offices)        (Zip Code)

Registrant's telephone number, including area code:  801/924-7000

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  $24,892,065  as of October  30,  1998 (based upon the $5.50 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 30, 1998, the  registrant had 5,231,083  shares of Class A  Common
Stock and 913,751 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  1998  annual  meeting  of
stockholders that will be filed no later than November 30, 1998.

<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 - 8 herein
Item 2      Properties                                                     Page 9 herein
Item 3      Legal Proceedings                                              Page 9 herein
Item 4      Submission of Matters to a Vote of Security Holders            Page 9 herein

                                        Part II
Item 5      Market for Registrant's Common Equity and
               Related Stockholder Matters                                 Page 10 herein
Item 6      Selected Financial and Operating Data                          Page 11 herein
Item 7      Management's Discussion and Analysis of Financial              Pages 12 - 19 herein
               Condition and Results of Operations
Item 8      Financial Statements and Supplementary Data                    Page 20 herein
Item 9      Changes in and Disagreements with Accountants on               Page 20 herein
               Accounting and Financial Disclosure

                                       Part III
Item 10     Directors and Executive Officers of the Registrant             Pages 2, 3 and 4 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 4 of Proxy Statement

                                        Part IV
Item 14     Exhibits, Financial Statement Schedules and Reports on         Pages 22 - 36 herein
               Form 8-K
</TABLE>

This report contains  "forward-looking"  statements in paragraphs marked with an
asterisk.  These statements are subject to certain risks and uncertainties  that
could cause actual  results to differ  materially  from those  anticipated.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations  Cautionary  Statement  Regarding  Forward-Looking   Statements"  for
additional  information and factors to be considered concerning  forward-looking
statements.


<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 Albertson's, Campbell's Soup, Coca-Cola Foods,  ConAgra,  Kraft, Nestle,
North American Logistics,  Pillsbury, and Procter & Gamble. 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.(*)

_________________________________
(*) "Forward-looking" statements.
<PAGE>

         Modern Fleet. Simon  Transportation  intends to maintain modern tractor
and trailer fleets. 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 a 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 Albertson's,
Campbell's  Soup,  Coca-Cola  Foods,  ConAgra,  Kraft,  Nestle,  North  American
Logistics,  Pillsbury,  Procter & Gamble, 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 33%, 47%, and 64% of revenue,  respectively,  during fiscal 1998,
with Nestle (including  Nestle's  Stouffer's and Friskie's units) accounting for
11% of revenue.  No other customer accounted for more than 10% of revenue during
the fiscal year.

_________________________________
(*) "Forward-looking" statements.
<PAGE>

         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  does not  maintain  any foreign
currency positions and therefore does not engage in any hedging  transactions to
manage foreign currency exposure.  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  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.
<PAGE>

         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.

Year 2000 Compliance

         The  Company  has  completed  a review of each of its core  systems  to
determine year 2000 (Y2K)  compliance.  The Company's  billing,  dispatch,  EDI,
fueling,  payroll,  telephone,  vehicle  maintenance,  and  yard  and  equipment
inventory  systems and all other  critical  hardware and  software  systems were
designed to be Y2K compliant from inception.  The Company is currently reviewing
the Y2K compliance  status of its facilities and equipment.  The Company expects
to  complete  this review and have taken  actions  toward  making each  non-core
system Y2K compliant by June 1999.

         The Company relies on Qualcomm to provide the satellite tracking system
necessary to track the location of its  equipment,  and to provide  dispatch and
routing  information  to its  drivers.  The Company has been  informed  that the
software  utilized  by  Qualcomm  and the  Company is fully Y2K  compliant.  The
Company  utilizes  Comdata to transmit payroll funds to its drivers and to allow
drivers to  purchase  fuel  outside of the  Company's  terminal  locations.  The
Company has been informed that Comdata expects to be fully Y2K compliant by June
1999.  The Company also interacts  with many of its vendors  through  electronic
data  interchange  (EDI).  Although  the  Company  is Y2K  compliant  in its EDI
applications,  we cannot and do not guarantee the Y2K compliance of our business
partners' systems.

         The Company has incurred  internal staff costs  necessary to review and
further Y2K compliance of its core operating  systems.  Because the systems were
designed to be Y2K compliant since inception,  the costs have not had a material
effect on the Company's financial position or results of operations. The Company
will incur additional  internal staff time to complete its compliance  review of
non-core  systems  embedded in facilities and equipment.  These non-core systems
include  microcontrollers  contained  in tractor  engines and other  components,
refrigeration units, and terminal  facilities.  The costs of such review are not
expected to be  incremental  since they represent the  redeployment  of existing
information  technology  resources.  Because of the relatively  young age of its
facilities and equipment,  the Company does not expect to find non-core  systems
that need to be replaced to further Y2K compliance.

         The Company anticipates that the risks related to its core and non-core
systems will be mitigated by ongoing  assessment  and correction of the systems.
The primary risk to operations is service disruption from third-party  providers
that supply satellite communication,  telephone, fueling and financial services.
Any disruption of these critical  services would hinder the Company's ability to
receive,  process and track its freight or  communicate  with its  customers and
drivers.

         A failure of the satellite communication system could have a materially
adverse effect on the Company's business and results of operations.  The Company
is relying on the  contingency  plan  established  by  Qualcomm  to prevent  the
interruption of business.  As an additional backup, the Company plans to use its
existing  telephone systems to dispatch its equipment and provide support to its
drivers in the event of a complete satellite system failure. In the event of EDI
failures on the part of our  customers,  the Company  plans to use its telephone
and  facsimile  system to receive load tenders from its  customers.  The Company
would switch to paper invoices for its customers  unable to use EDI.  Management
believes  that the  Company's  current  state of  readiness,  the  nature of the
Company's business,  and the availability of the contingency plans minimizes Y2K
risks. Management does not foresee significant liability to third parties if the
Company's systems are not Y2K compliant.


<PAGE>

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. The industry-wide
driver shortage  adversely  affected  the Company's  operations  during the 1998
fiscal year  resulting in an  unusually high number of tractors without drivers.
The Company's driver turnover was 93% in fiscal  1998, measuring  drivers  after
they are assigned a tractor.

         At September 30, 1998, Simon Transportation  employed approximately 600
non-driver  employees and approximately  1,800 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
$50 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.  Effective
November 1, 1998, the Company's equipment and cargo loss is insured subject to a
"basket  deductible"  of $250,000  per  occurrence.  Management  believes  these
coverages are adequate to cover reasonably anticipated claims.


<PAGE>


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 1998 issue
of Refrigerated Transporter, the five largest temperature-controlled carriers by
revenue  are  Frozen  Food  Express  Industries,  C. R.  England  & Sons,  Rocor
International,  Prime, Inc., and  Ameritruck.  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 1998 fiscal year revenue constituted  approximately two percent of
the total  market for  temperature-controlled  services and  approximately  four
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 or fuel surcharges.

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.


<PAGE>

Item 2.           PROPERTIES

         Simon Transportation  operates terminals and driver recruitment offices
at five locations. The Company's headquarters and primary terminal is located on
fifty-five  acres near the  intersection  of  Interstates 15 and 80 in Salt Lake
City, Utah. This facility  includes a 60,000 square foot office building housing
all operations and  administrative  personnel and  maintenance  facilities and a
driver  center  covering   approximately   97,000  square  feet.  The  Company's
additional terminal and driver recruitment facilities include owned locations in
Phoenix,  Arizona;  Fontana,   California;  and  Atlanta,  Georgia;  and  leased
locations in Katy, Texas; and Portland,  Oregon. The Company leases trailer drop
yards at Tulare,  California and various customer locations.  All terminals have
modern fuel facilities with environmental monitoring equipment.

         The  Company  completed  construction  of its new  headquarters,  shop,
terminal,  and driver center during fiscal year 1998. 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, 1998,
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 for the fiscal years ended September 30, 1997 and 1998.

          Period                    High             Low
----------------------------    -------------    -------------
   4th Quarter                    $   17 1/4       $   13 3/4
Calendar Year 1997
   1st Quarter                    $   18 1/8       $   15
   2nd Quarter                    $   20 1/2       $   16 1/2
   3rd Quarter                    $   23 7/8       $   19
   4th Quarter                    $   24 3/4       $   21 3/4
Calendar Year 1998
   1st Quarter                    $   24           $   13 3/8
   2nd Quarter                    $   15 5/8       $    6 3/8
   3rd Quarter                    $    6 7/8       $    4 7/8

         The prices  reported  reflect  interdealer  quotations  without  retail
mark-ups,  mark-downs or commissions, and may not represent actual transactions.
As of October 31, 1998, the Company had 182 stockholders of record of its common
stock.  However, the Company believes that it has approximately 1,500 beneficial
holders of common  stock  including  shares 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.
<TABLE>
<CAPTION>
                                                                   Fiscal Years Ended September 30,
                                                     --------------------------------------------------------------
<S>                                                  <C>            <C>         <C>         <C>         <C> 
(In thousands, except per share amounts & operating          1998         1997        1996        1995        1994
 data)                                                       ----         ----        ----        ----        ----
Statement of Earnings Data:
  Operating revenue.................................     $193,507     $155,296    $101,090  $   75,218   $  71,691
                                                     --------------------------------------------------------------
  Operating expenses:
    Salaries, wages, and benefits...................       80,500       60,504      40,015      28,035      25,949
    Fuel and fuel taxes.............................       35,281       30,069      20,359      14,115      14,363
    Operating supplies and expenses.................       26,156       19,289      13,701      10,839       8,978
    Taxes and licenses..............................        6,557        5,197       3,288       2,756       2,558
    Insurance and claims............................        5,217        3,404       2,172       2,003       1,995
    Communications and utilities....................        3,946        2,550       1,680       1,245       1,274
    Depreciation and amortization...................        4,728        5,396       5,920       7,223       6,857
    Rent............................................       28,987       17,143       4,794       2,926       3,435
                                                     --------------------------------------------------------------
      Total operating expenses......................      191,372      143,552      91,929      69,142      65,409
                                                     --------------------------------------------------------------
      Operating earnings............................        2,135       11,744       9,161       6,076       6,282
  Gain on sale of real property.....................           --        1,896          --          --          --
  Interest expense and other, net...................       (1,500)      (1,134)     (2,758)     (3,527)     (3,136)
                                                     --------------------------------------------------------------
  Earnings before provision for income taxes........          635       12,506       6,403       2,549       3,146
  Provision for income taxes1.......................          297        4,727       5,454          --          --
                                                     --------------------------------------------------------------
  Net earnings......................................     $    338     $  7,779    $    949  $    2,549   $   3,146
                                                     ==============================================================
Pro Forma Statement of Earnings Data: 1
  Earnings before provision for income taxes........     $    635     $ 12,506    $  6,403  $    2,549   $   3,146
  Provision for income taxes........................          297        4,727       2,536       1,010       1,246
                                                     --------------------------------------------------------------
  Net earnings......................................     $    338     $  7,779    $  3,867  $    1,539   $   1,900
                                                     ==============================================================
  Diluted net earnings per common share.............     $   0.05     $   1.33    $   0.87  $     0.67   $    0.83
                                                     ==============================================================
  Diluted weighted average shares outstanding.......    6,270,734    5,864,043   4,464,837   2,300,000   2,300,000
Balance Sheet Data (at end of period):
  Net property and equipment........................      $64,618      $71,154     $56,714     $52,200     $49,039
  Total assets......................................       99,526      107,704      78,223      61,437      56,752
  Long-term debt and capitalized
    leases, including current portion...............       21,206       32,791      37,428      47,903      44,525
  Stockholders' equity..............................       59,699       59,849      29,103       9,033       7,443
Operating Data:
  Operating ratio2..................................        98.9%        92.4%       90.9%       91.9%       91.2%
  Average revenue per loaded mile...................        $1.25        $1.25       $1.24       $1.26       $1.23
  Average revenue per total mile....................        $1.11        $1.10       $1.10       $1.11       $1.10
  Average revenue per tractor per week..............       $2,510       $2,627      $2,526      $2,417      $2,489
  Empty miles percentage............................        11.8%        11.9%       11.7%       11.3%       10.7%
  Average length of haul in miles...................        1,026        1,001         984         949         725
  Weighted average tractors during period...........        1,494        1,142         774         598         554
  Tractors at end of period.........................        1,655        1,344         940         623         570
  Trailers at end of period.........................        2,455        1,998       1,430         877         873

<FN>

     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. The provision for income taxes for fiscal 1996 includes the
one-time,  non-cash  charge of $2,980,115.  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 Notes 1 and
3 to Consolidated Financial Statements.
     2   Operating expenses as a percentage of revenue.
</FN>
</TABLE>



<PAGE>

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

Overview

         Simon     Transportation     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 $193.5 million in revenue for its
fiscal year ended  September 30, 1998,  from $71.7 million in revenue for fiscal
1994, a compounded  annual growth rate of 28.2%. From fiscal 1994 through fiscal
1997, the Company's  pretax earnings grew to $12.5 million from $3.1 million,  a
compounded  annual  growth rate of 59.2%.  The  increase in pretax  earnings was
attributable  primarily to revenue growth, greater equipment  productivity,  and
the reduction in financing costs  attributable  to public  offerings in 1995 and
1997.

         During fiscal 1998, the Company  continued its strong  revenue  growth,
with  revenue   increasing   approximately   25%.  Pretax   earnings   decreased
substantially,  however,  as the Company  experienced  financial  and  operating
difficulties. For much of the year the industry-wide driver shortage contributed
to a  substantial  number of unseated  tractors.  To address this  problem,  the
Company  raised  driver  wages  by a total  of four  cents  per  mile.  Although
management  believes the higher wages have made the Company more  competitive in
attracting and retaining drivers, the combination of unproductive  equipment and
higher wages  adversely  affected the  Company's  profitability.  The  Company's
financial  results also were  affected by  unusually  high  accident  claims and
repair expense during the second fiscal quarter.  Since May of 1998, the Company
has raised its freight rates to partially  offset the increased  wages,  and the
insurance and repair expenses have returned to historical levels.(*)

         Going forward,  management  has deferred  deliveries of new tractors to
better match the anticipated availability of drivers. This is expected to reduce
revenue  growth  compared  with  historical  levels,  but improve  profitability
compared with fiscal 1998.(*)

         In comparing the Company's historical financial position and results of
operations,  readers  should be aware of changes in  financing  methods.  During
fiscal  years 1994 and 1995,  the  Company  financed  most of its  tractors  and
trailers with debt and  capitalized  leases.  During fiscal years 1996, 1997 and
1998, the Company has financed most of this revenue  equipment  under  operating
lease  arrangements.  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 as
interest  expense.  The use of operating leases also affects the presentation of
the Statement of Cash Flows.  However,  the method of financing  does not affect
net earnings or net cash flows. 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
effective rate of 46.8% for fiscal year 1998,  37.8% for fiscal year 1997, and a
combined effective rate of 39.6% for fiscal years 1994 through 1996. 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
during fiscal year 1996 in recognition of deferred income taxes.

_________________________________
(*) "Forward-looking" statements.
<PAGE>

Results of Operations

         The following  table sets forth the percentage  relationship of certain
items to operating revenue for the periods indicated:
<TABLE>
<CAPTION>
                                                                                       Fiscal Years Ended
                                                                                          September 30,
                                                                                ----------------------------------
<S>                                                                               <C>         <C>        <C> 
                                                                                  1998        1997       1996
                                                                                ---------------------------------
Operating revenue..............................................................     100.0%      100.0%     100.0%
Operating expenses:
  Salaries, wages, and benefits................................................      41.6        39.0       39.6
  Fuel and fuel taxes..........................................................      18.2        19.4       20.1
  Operating supplies and expenses..............................................      13.5        12.4       13.6
  Taxes and licenses...........................................................       3.4         3.3        3.3
  Insurance and claims.........................................................       2.7         2.2        2.1
  Communications and utilities.................................................       2.0         1.6        1.6
  Depreciation and amortization................................................       2.4         3.5        5.9
  Rent.........................................................................      15.0        11.0        4.7
                                                                                ---------------------------------
    Total operating expenses                                                         98.9        92.4       90.9
                                                                                ---------------------------------
Operating earnings.............................................................       1.1         7.6        9.1
Gain on sale of real property..................................................        --         1.2         --
Interest expense and other, net................................................      (0.8)       (0.7)      (2.8)
                                                                                ---------------------------------
Earnings before provision for income taxes.....................................       0.3         8.1        6.3
Pro forma provision for income taxes...........................................      (0.1)       (3.1)      (2.5)
                                                                                ---------------------------------
Pro forma net earnings.........................................................       0.2%        5.0%       3.8%
                                                                                =================================

</TABLE>

<PAGE>


Comparison  of fiscal  year ended  September  30,  1998,  with fiscal year ended
September 30, 1997.

         Operating  revenue  increased $38.2 million (24.6%),  to $193.5 million
during the 1998 fiscal year from $155.3 million during the 1997 fiscal year. The
increase  in revenue  was  primarily  attributable  to a 30.8%  increase  in the
weighted  average number of tractors,  to 1,494 during the 1998 fiscal year from
1,142  during the 1997 fiscal year.  This  increase  was  partially  offset by a
decrease in the average  revenue per tractor per week to $2,510  during the 1998
fiscal year from $2,627 during the 1997 fiscal year due to a substantial  number
of tractors without drivers  throughout most of the year. The Company's  average
revenue per loaded  mile,  net of fuel  surcharges,  remained  constant at $1.25
during both the 1998 and 1997 fiscal years.

         Salaries,  wages and benefits increased $20.0 million (33.1%), to $80.5
million in the 1998 fiscal year from $60.5 million in the 1997 fiscal year. As a
percentage of revenue,  salaries,  wages,  and benefits  increased  to  41.6% of
revenue  during the 1998 fiscal  year from 39.0% during  the 1997  fiscal  year.
The  increase  is primarily  attributable to driver wage increases.  In order to
remain  competitive,  the  Company  raised  driver  base  pay two cents per mile
effective  January  1,  1998  and  an  additional  two  cents per mile effective
April 15, 1998.

         Fuel and fuel taxes  increased $5.2 million  (17.3%),  to $35.3 million
in  the  1998  fiscal  year  from  $30.1  million in the 1997 fiscal year.  As a
percentage of revenue, fuel and fuel taxes  decreased to 18.2% of revenue during
the  1998  fiscal  year  from  19.4%  during  the 1997 fiscal year. The decrease
resulted  principally  from lower fuel  prices in  the  1998 fiscal  year and an
overall increase in the fuel efficiency of the Company's fleet.

         Operating  supplies  and  expenses  increased  $6.9 million (35.8%), to
$26.2 million  in the  1998 fiscal year from  $19.3  million in the 1997  fiscal
year.  As a  percentage  of  revenue, operating  supplies and expenses increased
to 13.5% of revenue  during  the  1998  fiscal year,  from 12.4% during the 1997
fiscal year.  The increase  was attributable primarily to costs incurred  during
the second fiscal quarter for accident  repairs,  preparing equipment for trade,
and completing work on and opening the Atlanta terminal.

         Taxes and  licenses  increased  $1.4  million (26.9%),  to $6.6 million
in  the  1998  fiscal  year  from  $5.2  million  in  the 1997 fiscal year. As a
percentage of revenue, taxes and licenses remained essentially  constant at 3.4%
of revenue  during  the 1998  fiscal year compared to 3.3% of revenue during the
1997 fiscal year.

         Insurance and claims increased  $1.8 million  (52.9%),  to $5.2 million
in  the  1998  fiscal  year from  $3.4  million  in  the 1997 fiscal year.  As a
percentage  of revenue,  insurance  and claims  increased to 2.7% of revenue for
the 1998 fiscal year  compared to 2.2% during the 1997 fiscal year.  Most of the
increase was  attributable  to  an  unusually  high number  of severe  accidents
suffered  during the second  fiscal  quarter.  Insurance and claims  returned to
2.2% of revenue during the fourth quarter.(*)

         Communications  and  utilities increased  $1.3 million (50.0%), to $3.9
million in the 1998 fiscal year from $2.6 million in the 1997 fiscal year.  As a
percentage of revenue, communications and utilities increased to 2.0% of revenue
during  the  1998 fiscal year from  1.6% of revenue  during the 1997 fiscal year
primarily as a result of an access  fee charged to the  Company by the owners of
pay telephones based on calls to toll free numbers. In addition, the fixed costs
of utilities for the Company's terminals and costs  associated with the usage of
the Company's satellite tracking system did not  remain  proportionate  with the
decreased revenue per tractor.

         Depreciation  and  amortization  decreased  $700,000  (13.0%),  to $4.7
million in the 1998 fiscal year from $5.4 million in the 1997 fiscal year.  As a
percentage of revenue,  depreciation and amortization (adjusted for the net gain
on sale of equipment)  decreased to 2.4% of revenue  during the 1998 fiscal year
from 3.5%  during the 1997 fiscal  year  primarily  because of a decrease in the
percentage of the Company's  revenue  equipment that was owned or acquired under
capitalized leases.  Depreciation and amortization  (unadjusted for the net gain
on sale of  equipment)  decreased to 3.6% of revenue ($7.0  million)  during the
1998  fiscal  year from 4.5% of revenue  ($7.0  million)  during the 1997 fiscal
year.  Depreciation  was  adjusted  for a $2.3  million  net gain on the sale of
revenue  equipment  during the 1998 fiscal year compared with a $1.6 million net
gain during the 1997 fiscal year.

_________________________________
(*) "Forward-looking" statements.
<PAGE>

         Rent increased $11.9 million  (69.6%),  to $29.0  million  in  the 1998
fiscal  year  from $17.1 million in  the 1997 fiscal  year.  As a percentage  of
revenue,  rent  increased  to 15.0% of revenue  during the 1998 fiscal year from
11.0% during the 1997 fiscal  year  as  the  Company  added  new  equipment  and
replaced  equipment  that had  been financed  under  capital lease  arrangements
with  equipment  financed  under  operating  leases.  The  Company  has utilized
operating  leases in the most recent  year because of more favorable  terms.  If
the Company  continues to use  operating  lease  financing, its  operating ratio
may be  affected  in future  periods because the implied financing costs of such
equipment are included as operating expenses instead of as interest expense.

         As a result of the foregoing, the Company's operating  ratio  increased
to 98.9% during the 1998 fiscal year from 92.4% during the 1997 fiscal year.

         The Company  realized  a $1.9  million  gain  on the sale of its former
headquarters  facilities  during  the  1997  fiscal  year.   This  non-recurring
transaction  increased  earnings  before  provision for income  taxes by 1.2% of
revenue during the 1997 period.

         Interest  expense  and other, net increased  $400,000 (36.4%),  to $1.5
million in the 1998 fiscal year from $1.1  million in the 1997 fiscal  year.  As
a  percentage  of revenue,  interest expense and other, net remained essentially
constant  at 0.8% of  revenue  during the 1998 fiscal  year  compared  with 0.7%
during the 1997 fiscal year.

         The  Company's effective combined federal and state income tax rate for
the 1998 fiscal  year was 46.8%  compared to 37.8% for the 1997 fiscal year as a
result of adjusting  the tax  provision  for  non-deductible  expenses in fiscal
1998. These expenses remained essentially constant during both the 1998 and 1997
fiscal  years;  however,  the effect of these items on the tax rate is magnified
because of the lower earnings experienced in the 1998 fiscal year.

         As a result of the factors described above, net earnings decreased $7.5
million  (96.2%) to $338,000 during the 1998 fiscal year from $7.8 million ($6.6
million  excluding  the gain on the sale of the Company's  former  headquarters)
during the 1997 fiscal year. As a percentage of revenue,  net earnings decreased
to 0.2% of revenue in the 1998 fiscal year from 5.0% (4.2% of revenue  excluding
the gain on the sale of the Company's  former  headquarters)  in the 1997 fiscal
year.


Comparison  of fiscal  year ended  September  30,  1997,  with fiscal year ended
September 30, 1996.

         Operating  revenue  increased $54.2 million (53.6%),  to $155.3 million
during the 1997 fiscal year from $101.1 million during the 1996 fiscal year. The
increase  in revenue  was  primarily  attributable  to a 47.5%  increase  in the
weighted  average number of tractors,  to 1,142 during the 1997 fiscal year from
774 during the 1996 fiscal year, an increase in the average  revenue per tractor
per week to $2,627  during  the 1997  fiscal  year from  $2,526  during the 1996
fiscal year, and an increase in the Company's average revenue per loaded mile to
$1.25 during the 1997 fiscal year from $1.24 during the 1996 fiscal year.  These
increases  were  partially  offset by an increase in empty miles  percentage  to
11.9% during the 1997 fiscal year from 11.7% during the 1996 fiscal year.

         Salaries,  wages and benefits increased $20.5 million (51.3%), to $60.5
million in the 1997 fiscal year from $40.0 million in the 1996 fiscal year. As a
percentage  of  revenue,  salaries,  wages,  and  benefits decreased to 39.0% of
revenue  during  the 1997 fiscal  year from 39.6%  during the 1996 fiscal  year.
The   change  is  primarily  attributable  to   a  decrease   in  the  ratio  of
administrative  personnel to driving personnel and reduced workers' compensation
premiums.

         Fuel and fuel taxes  increased $9.7 million  (47.5%),  to $30.1 million
in  the  1997  fiscal  year  from  $20.4  million in the 1996 fiscal year.  As a
percentage  of revenue, fuel and fuel taxes decreased to 19.4% of revenue during
the 1997  fiscal year from 20.1%  during  the 1996  fiscal year as a result of a
decrease in fuel prices. The decrease in fuel expense as a percentage of revenue
also was aided by an overall  increase in the  fuel  efficiency of the Company's
fleet.


<PAGE>

         Operating supplies and  expenses  increased  $5.6  million  (40.9%), to
$19.3 million  in  the 1997 fiscal year from  $13.7  million in the 1996  fiscal
year.  As a  percentage  of  revenue,  operating supplies and expenses decreased
to 12.4% of  revenue  during  the  1997 fiscal year,  from 13.6% during the 1996
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.   Most  tractors  are  now  covered  by three-year,
500,000-mile warranties.

         Taxes and  licenses increased  $1.9  million  (57.6%),  to $5.2 million
in  the  1997  fiscal year  from  $3.3 million  in  the 1996 fiscal  year.  As a
percentage of revenue, taxes and licenses  remained  constant at 3.3% of revenue
during the 1997 and 1996 fiscal years.

         Insurance and claims  increased  $1.2 million  (54.5%), to $3.4 million
in  the  1997  fiscal  year  from  $2.2  million  in  the 1996 fiscal year. As a
percentage of revenue,  insurance and claims remained  essentially  unchanged at
2.2%  of revenue  during  the 1997  fiscal year compared to 2.1% during the 1996
fiscal year.

         Communications  and  utilities  increased  $870,000  (51.8%),  to  $2.6
million in the 1997 fiscal year from $1.7 million in the 1996  fiscal  year.  As
a  percentage  of  revenue, communications  and  utilities  remained essentially
unchanged at 1.6% of revenue during the 1997 and 1996 fiscal years.

         Depreciation  and  amortization  decreased  $523,000  (8.8%),  to  $5.4
million in the 1997 fiscal year from $5.9 million in the 1996 fiscal year.  As a
percentage of revenue,  depreciation and amortization (adjusted for the net gain
on sale of equipment)  decreased to 3.5% of revenue  during the 1997 fiscal year
from 5.9% during the 1996 fiscal year. Depreciation and amortization (unadjusted
for the  net  gain on sale of  equipment)  decreased  to 4.5% of  revenue  ($7.0
million)  during the 1997 fiscal year from 8.3% of revenue ($8.4 million) during
the  1996  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 $1.6 million net gain on the
sale of revenue  equipment  during the 1997  fiscal  year  compared  with a $2.4
million net gain during the 1996 fiscal year.

         Rent increased  $12.3  million  (256.3%),  to $17.1 million in the 1997
fiscal  year  from  $4.8  million in the 1996 fiscal  year.  As a percentage  of
revenue,  rent  increased  to 11.0% of revenue  during the 1997 fiscal year from
4.7% during the 1996 fiscal year as the Company added new equipment and replaced
equipment that had been financed under capital lease arrangements with equipment
financed under operating  leases.  The Company utilized  operating leases during
fiscal year 1997 because of more favorable terms.

         As a result of the  foregoing, the Company's operating ratio  increased
to 92.4% during the 1997 fiscal year from 90.9% during the 1996 fiscal year.

         The  Company  realized  a gain  of $1,896,025 on the sale of its former
headquarters  facilities  during  the  1997  fiscal  year.  This   non-recurring
transaction  increased  earnings  before  provision  for income taxes by 1.2% of
revenue during the period.

         Interest expense and other, net decreased $1.7 million (60.7%), to $1.1
million in the 1997 fiscal year from $2.8 million in the 1996 fiscal year.  As a
percentage  of revenue,  interest  expense and other,  net  decreased to 0.7% of
revenue during the 1997 fiscal year from 2.8% during the 1996 fiscal year.  This
resulted  from  application  of $13.3 million in net proceeds from the Company's
secondary  public  offering to  purchase  revenue  equipment,  a decrease in the
Company's  average  interest rate in the 1997 fiscal year compared with the 1996
fiscal year,  and an increase in the  percentage  of the  Company's  tractor and
trailer fleets being obtained through operating leases.

         The  Company's effective combined federal and state income tax rate for
the 1997 fiscal year was 37.8%,  compared with an estimated combined federal and
state income tax rate of 39.6% used for fiscal year 1996.


<PAGE>

         As  a result of the factors  described  above,  pro forma net  earnings
increased $3.9 million (100.0%) to $7.8 million ($6.6 million excluding the gain
on the sale of the Company's  former  headquarters)  during the 1997 fiscal year
from $3.9 million  during the 1996 fiscal year. As a percentage of revenue,  pro
forma net earnings  increased to 5.0% (4.2% of revenue excluding the gain on the
sale of the Company's  former  headquarters)  of revenue in the 1997 fiscal year
from 3.8% in the 1996 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. During the 1998, 1997 and 1996 fiscal years, the Company financed
most of its tractors with operating leases.

         Net  cash  provided  by operating  activities  was $4.2  million,  $7.9
million,  and  $7.0  million,  for  the fiscal years ended  September  30, 1998,
1997,  and 1996,  respectively.   The  Company's  principal  use  of  cash  from
operations is to service debt and  capitalized  leases  incurred to purchase new
revenue  equipment and  internally finance accounts receivable  associated  with
growth in the business.  Accounts  receivable  increased  $627,000,  $6,362,000,
and $5,930,000, for the fiscal years ended  September 30, 1998,  1997, and 1996,
respectively.  The average age of the  Company's  accounts  receivable  was  35,
41,  and 39  days  for  the  fiscal  years  ended September  30, 1998, 1997, and
1996, respectively.

         Net cash provided by (used  in) investing activities was $1.8  million,
($19.0  million),  and ($4.6 million), for the fiscal years ended  September 30,
1998, 1997, and 1996, respectively,  and  consisted of net purchases of property
and equipment.  The Company expects capital expenditures  (primarily for revenue
equipment,  and  satellite  communications  units),  net  of  revenue  equipment
trade-ins, to be approximately $61.0 million in aggregate  for fiscal years 1999
and 2000.  The  Company's projected capital  expenditures  will be funded mostly
with operating leases, borrowings and cash flows from operations.(*)

         Net  cash  (used  in)  provided  by  financing  activities  was  ($11.0
million),  $18.3 million, and $2.9 million, for the fiscal years ended September
30,  1998,  1997,  and  1996,   respectively.   Primary  sources  of  cash  were
approximately  $23.0 million in net proceeds  from the  Company's  February 1997
secondary public offering,  and $19.7 million in net proceeds from the Company's
November 1995 initial public offering. Primary uses of cash were net payments on
borrowings of $11.6 million,  $4.6 million, and $12.0 million of principal under
the Company's  long-term debt and capitalized  lease agreements and net payments
of $0, $0, and $4.3 million,  under the Company's  line of credit for the fiscal
years ended September 30, 1998,  1997, and 1996,  respectively.  During the 1998
fiscal year, the Company repurchased 81,100 shares of Common Stock at an average
market  price of $6.55  per  share  for a total  cash  outlay  of  $530,000.  In
addition,  the Company  paid S  corporation  dividends  to its  stockholders  of
$605,000 for the fiscal year ended September 30, 1996.

         The maximum amount  committed  under  the  Company's  line of credit at
September 30, 1998  was  $10  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, 1998,  the Company had outstanding  long-term debt and capitalized
lease obligations  (including  current portions) of approximately $21.2 million,
most of which comprised obligations  for the purchase of revenue  equipment.  As
of September 30, 1998, the  Company's  future  commitments  under  noncancelable
operating  leases amounted to $71.4  million.  See Notes 4 and 5 to Consolidated
Financial Statements.

         The Company's working capital at September 30, 1998, 1997, and 1996 was
$15.6 million, $15.9 million and $6.7 million, 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
1999.(*)

_________________________________
(*) "Forward-looking" statements.
<PAGE>

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 and fuel surcharges.

Year 2000 Compliance

         The Company  has  completed a  review  of each  of its  core systems to
determine  year 2000 (Y2K)  compliance.  The  Company's billing,  dispatch, EDI,
fueling,   payroll,   telephone,   vehicle  maintenance,  and yard and equipment
inventory  systems and all  other  critical  hardware and software  systems were
designed to be Y2K compliant from inception.  The Company is currently reviewing
the Y2K compliance status of its facilities and equipment.  The Company  expects
to  complete  this review  and  have  taken actions  toward making each non-core
system Y2K compliant by June 1999.

         The Company relies on Qualcomm to provide the satellite tracking system
necessary to track the location of its  equipment,  and to provide  dispatch and
routing  information  to  its drivers.  The  Company  has been informed that the
software  utilized by  Qualcomm  and the  Company is  fully Y2K  compliant.  The
Company utilizes Comdata to transmit  payroll  funds to its drivers and to allow
drivers  to  purchase  fuel outside  of the  Company's  terminal locations.  The
Company  has been informed  that Comdata  expects to be fully Y2K  compliant  by
June  1999.  The  Company  also  interacts  with  many  of  its  vendors through
electronic data  interchange  (EDI).  Although the Company is Y2K  compliant  in
its EDI  applications,  we cannot and do not  guarantee  the Y2K  compliance  of
our business partners' systems.

         The Company has incurred  internal staff costs  necessary to review and
further Y2K compliance of its core operating  systems.  Because the systems were
designed to be Y2K compliant since inception,  the costs have not had a material
effect on the Company's financial position or results of operations. The Company
will incur additional internal staff time to complete its  compliance  review of
non-core  systems  embedded in facilities and equipment. These  non-core systems
include  microcontrollers  contained  in  tractor  engines and other components,
refrigeration units, and terminal  facilities.  The costs of such review are not
expected to be incremental  since they represent the  redeployment  of  existing
information  technology  resources.  Because of the relatively  young age of its
facilities and equipment, the Company does not expect to find  non-core  systems
that need to be  replaced to further Y2K compliance.


<PAGE>

         The Company anticipates that the risks related to its core and non-core
systems will be mitigated by ongoing assessment and  correction  of the systems.
The primary risk to operations is service disruption from third-party  providers
that  supply  satellite   communication,   telephone,  fueling   and   financial
services.   Any  disruption   of  these  critical  services  would   hinder  the
Company's  ability to receive, process and track its freight or communicate with
its customers and drivers.

         A failure of the satellite communication system could have a materially
adverse effect on the Company's business and results of operations.  The Company
is  relying  on the  contingency  plan  established  by  Qualcomm to prevent the
interruption of business.  As an  additional  backup,  the  Company plans to use
its existing  telephone systems to dispatch its equipment and provide support to
its drivers in the event of a complete  satellite  system failure.  In the event
of EDI  failures  on the  part of our  customers,  the Company  plans to use its
telephone and facsimile system to receive load tenders from its  customers.  The
Company would  switch  to paper  invoices for  its customers  unable to use EDI.
Management  believes that the Company's  current state of readiness,  the nature
of  the  Company's  business,  and  the  availability  of the contingency  plans
minimizes Y2K risks.  Management does not foresee significant liability to third
parties if the Company's systems are not Y2K compliant.

Cautionary Statement Regarding Forward Looking Statements

         The    Company   may   from   time-to-time   make   written   or   oral
forward-looking   statements.   Written forward-looking statements may appear in
documents filed with the Securities and Exchange Commission,  in press releases,
and in reports to stockholders.  The Private  Securities  Litigation  Reform Act
of  1995  contains a  safe harbor for  forward-looking  statements.  The Company
relies on this safe harbor in making such disclosures.  In connection  with this
"safe  harbor"  provision,  the Company is hereby identifying important  factors
that could cause actual  results to differ  materially  from those  contained in
any forward-looking statement made by or on behalf of the Company.  Factors that
 might cause such a difference include, but are not limited to the following:

         Economic  Factors;  Fuel  Prices.  Negative  economic  factors  such as
recessions,  downturns  in  customers'  business  cycles,  surplus  inventories,
inflation,  and  higher  interest  rates  could  impair the  Company's operating
results by decreasing  equipment  utilization or increasing costs of operations.
Increases in fuel prices usually are not fully  recoverable.  Accordingly,  high
fuel  prices  can  have  a  negative  impact  on  the  Company's  profitability.

         Recruitment,  Retention,  and   Compensation  of   Qualified   Drivers.
Competition  for  drivers is  intense in  the trucking  industry.  There is, and
historically  has been,  an  industry-wide  shortage of qualified  drivers. This
shortage  could force the Company to  significantly  increase  the  compensation
it pays to drivers or curtail the Company's growth.


<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 24 to 36
of this report.  The supplementary quarterly financial data follow:

<TABLE>
Quarterly Financial Data:

<S>                                         <C>                <C>              <C>                 <C>
                                                 Fourth             Third             Second             First
                                                 Quarter           Quarter            Quarter           Quarter
                                                  1998              1998               1998              1998
                                            ------------------ ---------------- ------------------- ----------------
Revenue                                               $50,296          $50,055             $46,149         $ 47,006
Operating earnings (loss)                                 945              (90)             (2,105)           3,386
Earnings (loss) before income taxes                       608             (435)             (2,536)           2,997
Provision (benefit) for income taxes                      286             (165)               (959)           1,132
Net earnings (loss)                                       322             (270)             (1,577)           1,864
Diluted net earnings (loss) per share                 $  0.05          $ (0.04)            $ (0.25)        $   0.29

                                                 Fourth             Third             Second             First
                                                 Quarter           Quarter            Quarter           Quarter
                                                  1997              1997               1997              1997
                                            ------------------ ---------------- ------------------- ----------------
Revenue                                               $44,175          $41,191             $35,765         $ 34,166
Operating earnings                                      3,571            3,278               2,462            2,433
Earnings before income taxes                            3,375            4,919               2,225            1,987
Provision for income taxes                              1,276            1,859                 841              751
Net earnings                                            2,099            3,060               1,384            1,236
Diluted net earnings per share                        $  0.33          $  0.48             $  0.25         $   0.26

</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, 1998,  involving a change of accountants or disagreements
on accounting and financial disclosure.



                                 PART III

Item 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information  respecting  executive officers and directors set forth
under the captions "Election of Directors - Information Concerning Directors and
Executive   Officers"  and  "Section  16(a)   Beneficial   Ownership   Reporting
Compliance" on pages 2, 3, and 6 of  Registrant's  Proxy  Statement for the 1998
annual  meeting of  stockholders,  which will be filed with the  Securities  and
Exchange  Commission  in  accordance  with  Rule  14a-6  promulgated  under  the
Securities  Exchange  Act of  1934,  as  amended  (the  "Proxy  Statement"),  is
incorporated by reference.


<PAGE>


Item 11. EXECUTIVE COMPENSATION

         The information  respecting executive  compensation set forth under the
caption  "Executive  Compensation" on pages 4, 5 and 6 of the Proxy Statement is
incorporated  herein by reference;  provided,  that the "Compensation  Committee
Report  on  Executive  Compensation"  contained  in the Proxy  Statement  is not
incorporated by reference.


Item 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information  respecting  security  ownership of certain  beneficial
owners  and  management  set forth  under the  caption  "Security  Ownership  of
Principal  Stockholders  and  Management"  on page 8 of the Proxy  Statement  is
incorporated herein by reference.


Item 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information  respecting  certain  relationships and transactions of
management set forth under the captions  "Compensation  Committee Interlocks and
Insider  Participation" and "Certain Transactions" on pages 3 and 4 of the Proxy
Statement is incorporated herein by reference.


                            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.......................................  24
Consolidated Statement of Financial Position.............................  25
Consolidated Statement of Stockholders' Equity...........................  26
Consolidated Statement of Cash Flows.....................................  27
Notes to Consolidated Financial Statements...............................  28
Report of Independent Public Accountants.................................  37

         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, 1998.


<PAGE>


(c)......Exhibits

NumberDescription 1 + Form of Underwriting Agreement.
3.1 + Articles of Incorporation.
3.2 + Bylaws.
4.1 + Articles of Incorporation.
4.2 + Bylaws.
10.2+ Outside Director Stock Option Plan.
10.3+ Incentive Stock Plan.
10.4+ 401(k) Plan.
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
      Transportation 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.
 27   Financial Data Schedule



         + 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 12, 1998       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                       Chairman of the Board, President, and Chief       November 12, 1998
--------------------------------------     Executive Officer (principal executive officer)
Richard D. Simon                           

/s/ Alban B. Lang                          Treasurer and Chief Financial Officer             November 12, 1998
--------------------------------------     (principal financial and accounting officer);
Alban B. Lang                              Director
                                           
/s/ Kelle A. Simon                         Vice President of Maintenance;  Director          November 12, 1998
--------------------------------------
Kelle A. Simon

/s/ A. Lyn Simon                           Vice President of Sales and Operations; Director  November 12, 1998
--------------------------------------
A. Lyn Simon

/s/ Richard D. Simon, Jr.                  Vice President of Driver Relations; Director      November 12, 1998
--------------------------------------
Richard D. Simon, Jr.

/s/ Sherry L. Bokovoy                      Assistant Secretary/Treasurer; Director           November 12, 1998
--------------------------------------
Sherry L. Bokovoy

/s/ Irene Warr                             Director                                          November 12, 1998
--------------------------------------
Irene Warr

/s/ H.J. Frazier                           Director                                          November 12, 1998
--------------------------------------
H.J. Frazier

</TABLE>



<PAGE>



<TABLE>
<CAPTION>

                                         SIMON TRANSPORTATION SERVICES INC.
                                         CONSOLIDATED STATEMENT OF EARNINGS


                                                                     For the Years Ended September 30,
                                                       ----------------------------------------------------------
<S>                                                    <C>                      <C>                 <C> 
                                                                 1998               1997                1996
                                                       ----------------------------------------------------------

Operating Revenue                                            $193,506,902       $155,296,354        $101,089,530
                                                       ----------------------------------------------------------

Operating Expenses:
  Salaries, wages, and benefits                                80,499,985         60,504,236          40,014,702
  Fuel and fuel taxes                                          35,280,815         30,068,552          20,359,375
  Operating supplies and expenses                              26,155,797         19,288,560          13,701,428
  Taxes and licenses                                            6,557,109          5,197,086           3,287,833
  Insurance and claims                                          5,216,804          3,404,550           2,172,308
  Communications and utilities                                  3,945,707          2,550,301           1,679,967
  Depreciation and amortization                                 4,728,477          5,396,198           5,919,494
  Rent                                                         28,987,072         17,142,835           4,793,804
                                                       ----------------------------------------------------------
    Total operating expenses                                  191,371,766        143,552,318          91,928,911
                                                       ----------------------------------------------------------
    Operating earnings                                          2,135,136         11,744,036           9,160,619
Other (Expense) Earnings:
  Gain on sale of real property                                        --          1,896,025                  --
  Interest expense                                             (1,818,100)        (1,761,939)         (2,849,549)
  Other, net                                                      317,644            627,769              92,025
                                                       ----------------------------------------------------------
Earnings before provision for income taxes                        634,680         12,505,891           6,403,095
Provision for income taxes (Note 3)                               296,536          4,727,227           5,454,170
                                                       ----------------------------------------------------------
Net Earnings                                                 $    338,144       $  7,778,664        $    948,925
                                                       ==========================================================
Unaudited Pro Forma Information: (Note 9)
  Earnings before provision for income taxes                 $    634,680       $ 12,505,891        $  6,403,095
  Provision for income taxes                                      296,536          4,727,227           2,535,626
                                                       ==========================================================
  Net earnings                                               $    338,144       $  7,778,664        $  3,867,469
                                                       ==========================================================
  Net earnings per common share
         Basic                                               $       0.05       $       1.36        $       0.88
         Diluted                                             $       0.05       $       1.33        $       0.87
                                                       ==========================================================
  Weighted average common shares outstanding
         Basic                                                  6,270,734          5,707,642           4,417,643
         Diluted                                                6,270,734          5,864,043           4,464,837
                                                       ==========================================================

<FN>

                          The accompanying notes to consolidated financial statements are
                            an integral part of this consolidated financial statement.
</FN>
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                        SIMON TRANSPORTATION SERVICES INC.
                                   CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                       ASSETS
                                                                                            September 30,
                                                                                  ----------------------------------
<S>                                                                               <C>                 <C> 
                                                                                        1998             1997
                                                                                  ----------------------------------
Current Assets:
  Cash                                                                               $   7,826,365    $  12,766,001
  Receivables, net of allowance for doubtful accounts
        of $189,000 and $62,000, respectively                                           20,250,931       20,712,286
  Operating supplies                                                                     1,069,095          752,213
  Income taxes receivable                                                                2,593,105               --
  Prepaid expenses and other                                                             2,181,980        1,558,923
  Current deferred income tax asset                                                        762,463          635,027
                                                                                  ----------------------------------
        Total current assets                                                            34,683,939       36,424,450
                                                                                  ----------------------------------
Property and Equipment, at cost:
  Land                                                                                   8,589,422        7,632,711
  Revenue equipment                                                                     47,702,977       59,392,072
  Buildings and improvements                                                            18,350,370       14,321,869
  Office furniture and equipment                                                         8,573,389        5,974,291
                                                                                  ----------------------------------
                                                                                        83,216,158       87,320,943
  Less accumulated depreciation and amortization                                       (18,598,221)     (16,166,473)
                                                                                  ----------------------------------
                                                                                        64,617,937       71,154,470
                                                                                  ----------------------------------
Other Assets                                                                               223,823          125,450
                                                                                  ----------------------------------
                                                                                     $  99,525,699    $ 107,704,370
                                                                                  ==================================

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current portion of long-term debt                                                  $   7,627,142    $   6,382,697
  Current portion of capitalized lease obligations                                       2,030,988        5,346,645
  Accounts payable                                                                       5,015,049        3,593,420
  Accrued liabilities                                                                    3,188,405        3,325,279
  Accrued claims payable                                                                 1,260,827        1,259,674
  Income taxes payable                                                                          --          631,776
                                                                                  ----------------------------------
        Total current liabilities                                                       19,122,411       20,539,491
                                                                                  ----------------------------------
Long-Term Debt, net of current portion                                                   9,102,649       14,638,389
                                                                                  ----------------------------------
Capitalized Lease Obligations, net of current portion                                    2,444,856        6,423,385
                                                                                  ----------------------------------
Deferred Income Taxes Payable                                                            9,156,843        6,254,445
                                                                                  ----------------------------------
Commitments (Note 6)

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,
     5,372,683  and 5,320,313 shares issued, respectively                                   53,727           53,203
  Class B Common Stock, $.01 par value, 5,000,000 shares authorized, 913,751 and
     962,661 shares issued, respectively                                                     9,138            9,627
  Additional paid-in capital                                                            48,277,256       48,233,608
  Treasury stock, 81,100 shares at cost                                                   (531,547)              --
  Retained earnings                                                                     11,890,366       11,552,222
                                                                                  ----------------------------------
        Total stockholders' equity                                                      59,698,940       59,848,660
                                                                                  ----------------------------------
                                                                                     $  99,525,699    $ 107,704,370
                                                                                  ==================================
<FN>

                          The accompanying notes to consolidated financial statements are
                            an integral part of this consolidated financial statement.
</FN>
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                        SIMON TRANSPORTATION SERVICES INC.
                                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<S>                             <C>       <C>       <C>          <C>         <C>         <C>
                                 Class A  Class B   Additional                              Total
                                Common    Common      Paid-in    Treasury    Retained    Stockholders'
                                  Stock    Stock      Capital      Stock     Earnings       Equity
                                ----------------------------------------------------------------------
   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 2,441,968 shares      24,420             19,696,318                           19,720,738
      of Class A Common Stock
      in initial public
      offering, net of
      issuance costs
     Change in tax status                              4,844,593              (4,844,593)          --
     Sale of 700 shares of              7                  6,293                                6,300
      Class A Common Stock
      upon exercise of stock
      options
     Net earnings                                                                948,925      948,925
                                ----------------------------------------------------------------------
   Balance, September 30, 1996     28,705   18,722    25,282,496        --     3,773,558   29,103,481
                                                                
     Sale of 1,535,000 shares      24,445   (9,095)   22,903,411                           22,918,761
      of Class A Common Stock
      in secondary public
      offering, net of
      issuance costs
     Sale of 5,306 shares of           53                 47,701                               47,754
      Class A Common Stock
      upon exercise of stock
      options
     Net earnings                                                              7,778,664
                                                                                            7,778,664
                                ----------------------------------------------------------------------
   Balance, September 30, 1997     53,203    9,627    48,233,608        --    11,552,222   59,848,660

     Sale of 48,910 shares of         489     (489)                                                --
      Class B Common Stock by                                                                      
      major shareholder
     Sale of 3,460 shares of           35                 43,648                               43,683
      Class A Common Stock
      upon exercise of stock
      options
     Purchase of 81,100 shares                                    (531,547)                  (531,547)
      of Class A Common Stock
     Net earnings                                                                338,144      338,144
                                ---------------------------------------------------------------------- 
   Balance, September 30, 1998  $  53,727 $  9,138  $ 48,277,256 $(531,547)  $11,890,366 $ 59,698,940
                                ======================================================================

<FN>

                          The accompanying notes to consolidated financial statements are
                            an integral part of this consolidated financial statement.
</FN>
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                       SIMON TRANSPORTATION SERVICES INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                   For the Years Ended September 30,
                                                                       -------------------------------------------------------
<S>                                                                    <C>                     <C>                <C> 
                                                                                1998               1997              1996
                                                                       -------------------------------------------------------
Cash Flows From Operating Activities:
  Net earnings                                                           $       338,144       $  7,778,664       $   948,925
  Adjustments to reconcile net earnings to net cash
    provided by operating activities:
    Depreciation and amortization                                              4,728,477          5,396,198         5,919,494
    Gain on sale of real property                                                     --         (1,896,025)               --
    Changes in operating assets and liabilities:
      Increase in receivables, net                                              (627,145)        (6,361,812)       (5,930,273)
      (Increase) decrease in operating supplies                                 (316,882)          (324,090)          211,792
      Increase in prepaid expenses and other                                    (623,057)          (256,431)         (885,547)
      Increase in current deferred income tax asset                             (127,436)            (7,144)         (627,883)
      (Increase) decrease in other assets                                        (98,373)           192,195           180,828
      Increase in accounts payable                                             1,421,629          1,901,521           322,648
      (Decrease) increase in accrued liabilities                                (136,874)         1,000,361           489,298
      Increase (decrease) in accrued claims payable                                1,153           (342,670)          305,769
      (Decrease) increase in income taxes payable                             (3,224,881)        (1,560,208)        2,191,984
      Increase in deferred income taxes payable                                2,902,398          2,373,792         3,880,653
                                                                       -------------------------------------------------------
        Net cash provided by operating activities                              4,237,153          7,894,351         7,007,688
                                                                       -------------------------------------------------------
Cash Flows From Investing Activities:
  Purchase of property and equipment                                         (12,936,744)       (31,815,000)      (23,149,090)
  Proceeds from the sale of property and equipment                            15,833,300         12,785,576        18,499,863
                                                                       -------------------------------------------------------
        Net cash provided by (used in) investing activities                    2,896,556        (19,029,424)       (4,649,227)
                                                                       -------------------------------------------------------
Cash Flows From Financing Activities:
  Proceeds from issuance of long-term debt                                     2,900,000         15,894,391        19,666,814
  Principal payments on long-term debt                                        (7,191,295)       (13,198,750)      (12,775,333)
  Net payments under line-of-credit agreement                                         --                 --        (4,279,741)
  Principal payments under capitalized lease obligations                      (7,294,186)        (7,332,513)      (18,871,127)
  Net proceeds from issuance of common stock                                      43,683         22,966,515        19,727,037
  Purchase of treasury stock                                                    (531,547)                --                --
  Distributions to S corporation stockholders                                         --                 --          (605,060)
                                                                       -------------------------------------------------------
        Net cash (used in) provided by financing activities                  (12,073,345)        18,329,643         2,862,590
                                                                       -------------------------------------------------------
Net (Decrease) Increase In Cash                                               (4,939,636)         7,194,570         5,221,051
Cash at Beginning of Year                                                     12,766,001          5,571,431           350,380
                                                                       -------------------------------------------------------
Cash at End of Year                                                      $     7,826,365       $ 12,766,001       $ 5,571,431
                                                                       =======================================================
Supplemental Disclosure of Cash Flow Information:
    Cash paid during the year for interest                               $     1,818,100       $  1,761,939       $ 2,847,583
    Cash paid during the year for income taxes                                   153,461          4,631,593                --
Supplemental Schedule of Noncash Investing and
  Financing Activities:
    Equipment acquired through capitalized lease obligations             $            --       $         --       $ 5,784,405

<FN>

                          The accompanying notes to consolidated financial statements are
                            an integral part of this consolidated financial statement.
</FN>
</TABLE>

<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.  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.

Recapitalization

         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.

         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.

         On  February  13,  1997,  the Company  completed  a public  offering of
2,530,000  shares of Class A Common  Stock.  Selling  stockholders  offered  and
received  net proceeds  for 995,000 of these  shares  (85,500  shares of Class A
Common Stock and 909,500 shares of Class B Common Stock  reclassified as Class A
Common Stock upon completion of the offering).  The sale of the 1,535,000 shares
of Class A Common  Stock  offered  by the  Company  generated  net  proceeds  of
$22,918,761  after deducting  underwriting  commissions  and other  expenses.  A
majority of the proceeds were used to purchase new revenue equipment.

(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  expenses  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  11, 12, and 18 percent of operating
revenue in fiscal years 1998,  1997,  and 1996,  respectively.  At September 30,
1998,  the  Company  had  accounts  receivable  outstanding  with this  customer
totaling  $1,485,400.  No other customer  accounted for more than 10% of revenue
during fiscal years 1998, 1997 and 1996.


<PAGE>


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  $2,290,074,  $1,563,524,  and  $2,447,765 for fiscal years 1998,
1997,  and  1996,   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 - 10 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   consolidated
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. Effective November 1, 1998, the Company's equipment and cargo
loss is insured  subject to a "basket  deductible"  of $250,000 per  occurrence.
Liability in excess of these amounts is assumed by the insurance  underwriter up
to applicable policy limits of $1,000,000 per occurrence.  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, 1998. These letters of credit mature
at various times through  November 1998 and renew annually unless  terminated by
either party.


<PAGE>

Income Taxes

         The  Company  recognizes  a  liability  or asset for the  deferred  tax
consequences  of all temporary  differences  between the tax bases of assets and
liabilities and their reported amounts in the consolidated  financial statements
that will  result in taxable  or  deductible  amounts  in future  years when the
reported amounts of the assets and liabilities are recovered or settled.

Net Earnings Per Common Share

         Basic net earnings per common share (Basic EPS)  excludes  dilution and
is computed by dividing net earnings by the  weighted  average  number of common
shares outstanding during the fiscal year. Diluted net earnings per common share
(Diluted EPS) reflects the potential  dilution that could occur if stock options
or other contracts to issue common stock were exercised or converted into common
stock.  The computation of Diluted EPS does not assume exercise or conversion of
securities  that would have an  antidilutive  effect on net  earnings per common
share.  Net earnings per common share  amounts and share data have been restated
for all periods presented to reflect Basic and Diluted EPS.

         Following is a reconciliation of the numerator and denominator of Basic
EPS to the numerator and  denominator of Diluted EPS for fiscal years 1998, 1997
and 1996:


<TABLE>
<S>                                                             <C>             <C>               <C> 
                                                                     1998            1997           1996
                                                                =============== ==============================
Numerator:
   Pro forma net earnings                                         $    338,144     $ 7,778,664    $ 3,867,469
                                                                =============== ==============================
Denominator:
         Weighted average common shares outstanding                  6,270,734       5,707,642      4,417,643
         Effect of options                                                  --         156,401         47,194
                                                                =============== ==============================
                                                                     6,270,734       5,864,043      4,464,837
                                                                =============== ==============================

Basic EPS                                                         $       0.05     $      1.36    $      0.88
Diluted EPS                                                       $       0.05     $      1.33    $      0.87
</TABLE>


         Options  to  purchase  717,130  shares  of common  stock at a  weighted
average  exercise  price of $18.05 as of September 30, 1998 were not included in
the  computation  of Diluted  EPS for fiscal  year 1998.  The  inclusion  of the
options would have been antidilutive, thereby increasing net earnings per common
share.

Recent Accounting Pronouncements

         In June 1997, the Financial  Accounting  Standards  Board (FASB) issued
Statement  of  Financial   Accounting   Standards  (SFAS)  No.  130,  "Reporting
Comprehensive  Income" and No. 131, "Disclosures about Segments of an Enterprise
and Related  Information".  SFAS No. 130 establishes standards for reporting and
display of comprehensive  income and its components and SFAS No. 131 establishes
new standards for public companies to report  information  about their operating
segments,  products and services,  geographic  areas and major  customers.  Both
statements are effective for financial  statements  issued for periods beginning
after  December 15, 1997.  Accordingly,  the Company will adopt SFAS No. 130 and
SFAS  No.  131  in its  fiscal  year  1999  consolidated  financial  statements.
Management  believes  the  adoption  of SFAS  Nos.  130 and 131  will not have a
material impact on the consolidated financial statements.

         In June 1998, the FASB issued SFAS No. 133,  "Accounting for Derivative
Instruments and Hedging Activities".  The statement  establishes  accounting and
reporting  standards  requiring  that  every  derivative  instrument  (including
certain derivative  instruments  embedded in other contracts) be recorded in the
balance  sheet as either an asset or  liability  measured at fair value and that
changes in the  derivative's  fair value be  recognized  currently  in  earnings
unless specific hedge accounting criteria are met. SFAS No. 133 is effective for
fiscal years beginning after June 15, 1999. Accordingly,  the Company will adopt
SFAS  No.  133  in its  fiscal  year  2000  consolidated  financial  statements.
Management believes the adoption of SFAS No. 133 will not have a material impact
on the consolidated financial statements.



<PAGE>

(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 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 years ended September 30, 1998, 1997 and 1996:

<TABLE>
<S>                                                           <C>                  <C>               <C> 
                                                                     1998               1997               1996
                                                              -------------------------------------- ------------------
         Current income tax (benefit) provision:
                  Federal                                         $   (2,100,924)     $   1,993,941      $   1,758,933
                  State                                                 (377,502)           366,638            442,467
                                                              -------------------------------------- ------------------
                                                                      (2,478,426)         2,360,579          2,201,400
                                                              -------------------------------------- ------------------

         Deferred income tax provision:
                  Federal                                              2,352,293          2,062,976            254,592
                  State                                                  422,669            303,672             18,063
                  Net deferred tax liability upon
                    termination of S corporation status                       --                 --          2,980,115
                                                              -------------------------------------- ------------------
                                                                       2,774,962          2,366,648          3,252,770
                                                              -------------------------------------- ------------------

         Provision for income taxes                               $      296,536      $   4,727,227      $   5,454,170
                                                              ====================================== ==================
</TABLE>

         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 for the
years ended September 30, 1998, 1997 and 1996:

<TABLE>
<S>                                                           <C>                 <C>                <C> 
                                                                     1998               1997               1996
                                                              -------------------------------------- ------------------
         Computed "expected" provision for income
              taxes at the statutory rate                         $      215,791      $   4,252,003      $   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                                         24,118            479,466            303,950
                  Other, net                                              56,627             (4,242)            (6,948)
                                                              -------------------------------------- ------------------

         Provision for income taxes                               $      296,536      $   4,727,227      $   5,454,170
                                                              ====================================== ==================

</TABLE>

<PAGE>


         The  significant  components of the net deferred  income tax assets and
liabilities as of September 30, 1998 and 1997 are as follows:

<TABLE>
<S>                                                                 <C>                <C> 
                                                                           1998              1997
                                                                    ------------------ ------------------
         Deferred income tax assets:
              Accrued claims payable                                  $       279,270    $       278,834
              Other reserves and accruals                                     483,193            356,193
                                                                    ------------------ ------------------

         Total deferred income tax assets                                     762,463            635,027

         Deferred income tax liability:
              Difference between book and tax basis
                  of property and equipment                                (9,156,843)        (6,254,445)
                                                                    ------------------ ------------------

         Net deferred income tax liability                            $    (8,394,380)   $    (5,619,418)
                                                                    ================== ==================
</TABLE>

(4)      LONG-TERM DEBT

Long-term debt consists of the following as of September 30, 1998 and 1997:

<TABLE>
<S>                                                                           <C>                  <C> 
                                                                                     1998               1997
                                                                              --------------------------------------
Notes payable to a bank, interest ranging from 6.24 percent to 7.20 percent,        $  7,281,476       $  9,871,320
       payable in monthly installments through April 2001, secured by revenue
       equipment
Note payable to a bank, interest at Eurodollar rate (6.63 percent at                   8,410,101          9,722,222
       September 30, 1998), payable in monthly installments through August                      
       2000, unsecured
Note payable to a bank, interest at LIBOR plus 1.1 percent (6.75 percent at            1,038,214          1,427,544
       September 30, 1998), payable in monthly installments through May 2001,
       secured by revenue equipment
                                                                              --------------------------------------
                                                                                      16,729,791         21,021,086
         Less current portion                                                         (7,627,142)        (6,382,697)
                                                                              --------------------------------------
                                                                                    $  9,102,649       $ 14,638,389
                                                                              ======================================
</TABLE>

         Scheduled principal payments of long-term debt as of September 30, 1998
are as follows:

             Years Ending September 30,                           Amount
------------------------------------------------------      -------------------
                        1999                                     $   7,627,142
                        2000                                         7,384 069
                        2001                                         1,718,580
                                                            -------------------
                                                                 $  16,729,791
                                                            ===================


         The Company's  unsecured  long-term  debt  agreement  contains  various
restrictive  covenants  including maximum debt to tangible net worth and minimum
tangible net worth  requirements.  As of September 30, 1998,  the Company was in
compliance with all covenants under the loan agreement.

         The  Company has an  unsecured  line of credit for  $10,000,000.  As of
September 30, 1998, the Company had no outstanding draws on this line of credit.



<PAGE>

(5)      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,
                                  ----------------------------------------------
                                           1998                   1997
                                  ----------------------------------------------

Revenue equipment                       $  9,114,812           $ 20,098,048
Less accumulated amortization             (3,884,564)            (6,276,894)
                                  ----------------------------------------------
                                        $  5,230,248           $ 13,821,154
                                  ==============================================


         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, 1998:

            Years Ending September 30,                       Amount
---------------------------------------------------    --------------------
                       1999                                   $  2,208,242
                       2000                                      1,999,424
                       2001                                        596,850
                                                       --------------------
Total minimum lease payments                                     4,804,516
Less amount representing interest                                 (328,672)
                                                       --------------------
Present value of minimum lease payments                          4,475,844
Less current portion                                            (2,030,988)
                                                       --------------------
                                                              $  2,444,856
                                                       ====================


(6)      COMMITMENTS

Operating Leases

         The Company is committed under noncancelable operating leases involving
certain revenue equipment.  Rent expense for noncancelable  operating leases was
$25,343,111,  $15,595,123, and $3,997,352 for fiscal years 1998, 1997, and 1996,
respectively.  Aggregate future lease commitments are $28,364,459,  $20,452,949,
$13,581,485, $6,811,800, and $1,883,456 for the years ending September 30, 1999,
2000, 2001, 2002, and 2003, respectively.


<PAGE>


Orders for Revenue Equipment

         As of  September  30,  1998,  the Company had placed  orders for fiscal
years 1999 and 2000 to purchase revenue equipment at an estimated total purchase
price of $109.3 million.  The revenue equipment is to be delivered during fiscal
years 1999 and 2000.  Approximately  $77.9 million 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.

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.


(7)      CAPITAL TRANSACTIONS AND STOCK PLANS

Preferred Stock

         The Company is authorized to issue 5,000,000  shares of preferred stock
from time to time in one or more series without stockholder  approval. No shares
of  preferred  stock  are  presently  outstanding.  The  Board of  Directors  is
authorized,  without any further action by the  stockholders of the Company,  to
(a) divide the preferred stock into series,  (b) designate each such series, (c)
fix and determine dividend rights, (d) determine the price, terms and conditions
on which shares of preferred  stock may be redeemed,  (e)  determine  the amount
payable to holders of preferred  stock in the event of voluntary or  involuntary
liquidation,  (f) determine any sinking fund  provisions,  and (g) establish any
conversion privileges.

Treasury Stock

         The  Company's  Board of Directors  has  authorized a stock  repurchase
program  under  which  management  may  reacquire  up to  500,000  shares of the
Company's Class A Common Stock. During fiscal year 1998, the Company repurchased
81,100  shares of Class A Common  Stock at an average  price of $6.55 per share,
for a total cash outlay of $531,547.

Incentive Stock Plan

         On May 31, 1995,  the  Company's  Board of Directors  and  stockholders
approved and adopted the Dick Simon  Trucking,  Inc.  Incentive  Stock Plan (the
"Plan"). The Plan reserves 1,000,000 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 grant  date.  The Company  has  reserved  25,000
shares of Class A Common Stock for  issuance  under the Outside  Director  Stock
Plan.


<PAGE>



         The following  table  summarizes the combined stock option activity for
both plans for fiscal years 1996, 1997 and 1998:

<TABLE>
<S>                                                                      <C>                   <C> 
                                                                                                   Weighted Average
                                                                          Number of Options    Exercise Price Per Share
                                                                         --------------------- -------------------------

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
         Granted                                                                      141,000                     15.97
         Exercised                                                                     (5,306)                     9.00
         Forfeited                                                                    (14,160)                     9.00
                                                                         --------------------- -------------------------

Outstanding at September 30, 1997                                                     349,234                     11.79
         Granted                                                                      386,500                     23.26
         Exercised                                                                     (3,460)                     9.00
         Forfeited                                                                    (15,144)                     9.18
                                                                         --------------------- -------------------------

Outstanding at September 30, 1998                                                     717,130                    $18.05
                                                                         ===================== =========================
</TABLE>


         The  outstanding  options range in exercise price from $9.00 to $23.50,
and have a weighted average  remaining  contractual  life of  approximately  8.3
years. As of September 30, 1998, approximately 142,970 options are exercisable.

Stock-Based Compensation

         The Company has  elected to  continue  to apply  Accounting  Principles
Board  Opinion  No.  25  and  related  interpretations  in  accounting  for  its
stock-based  compensation plans as they relate to employees and directors.  SFAS
No.  123,  "Accounting  for  Stock-Based   Compensation,"   requires  pro  forma
information regarding net earnings as if the Company had accounted for its stock
options  granted to employees  and  directors  subsequent  to September 30, 1995
under the fair  value  method of SFAS No.  123.  The fair  value of these  stock
options was estimated at the grant date using the  Black-Scholes  option pricing
model with the following assumptions: average risk-free interest rates of 5.77%,
6.15% and 5.07% in fiscal years 1998,  1997 and 1996,  respectively,  a dividend
yield of 0%, weighted  average  volatility  factors of the expected common stock
price of 24.6% for fiscal  year 1998 and 25.4% for  fiscal  years 1997 and 1996,
and weighted average  expected lives for the stock options of approximately  7.4
years for  fiscal  year 1998 and 9.7 years for fiscal  years 1997 and 1996.  For
purposes of pro forma disclosures, the estimated fair value of the stock options
is amortized over the vesting period of the respective stock options.  Under the
fair value method of SFAS No. 123, pro forma net (loss) earnings would have been
($170,195),  $7,679,248,  and  $3,859,555,  and pro  forma  diluted  net  (loss)
earnings  per share  would have been  ($0.03),  $1.31,  and $0.86 for the fiscal
years ended September 30, 1998, 1997, and 1996, respectively.


<PAGE>

 (8)     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. 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  1998,  1997,  and 1996,  the  Company
contributed $351,829, $301,078, and $192,389, respectively, to the 401(k) Plan.


(9)      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 for fiscal year 1996 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 for  fiscal  year  1996 does not  reflect a
$2,980,115 one-time,  non-cash charge to earnings for deferred taxes the Company
recorded upon termination of its S corporation status.


(10)     QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<S>                                         <C>                <C>              <C>                 <C>  
                                                 Fourth             Third             Second             First
                                                 Quarter           Quarter            Quarter           Quarter
                                                  1998              1998               1998              1998
                                            ------------------ ---------------- ------------------- ----------------
Revenue                                               $50,296          $50,055             $46,149          $47,006
Operating earnings (loss)                                 945              (90)             (2,105)           3,386
Earnings (loss) before income taxes                       608             (435)             (2,536)           2,997
Provision (benefit) for income taxes                      286             (165)               (959)           1,132
Net earnings (loss)                                       322             (270)             (1,577)           1,864
Diluted net earnings (loss) per share                 $  0.05          $ (0.04)            $ (0.25)         $  0.29

                                                 Fourth             Third             Second             First
                                                 Quarter           Quarter            Quarter           Quarter
                                                  1997              1997               1997              1997
                                            ------------------ ---------------- ------------------- ----------------
Revenue                                               $44,175          $41,191             $35,765          $34,166
Operating earnings                                      3,571            3,278               2,462            2,433
Earnings before income taxes                            3,375            4,919               2,225            1,987
Provision for income taxes                              1,276            1,859                 841              751
Net earnings                                            2,099            3,060               1,384            1,236
Diluted net earnings per share                        $  0.33          $  0.48             $  0.25          $  0.26

</TABLE>



<PAGE>



                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To 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, 1998 and 1997,  and the  related  consolidated
statements  of earnings,  stockholders'  equity,  and cash flows for each of the
three years in the period ended September 30, 1998.  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, 1998 and 1997, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period ended September 30, 1998 in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen LLP

Salt Lake City, Utah
October 15, 1998