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, 1997
                                              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             (I.R.S. Employer Identification No.)
of 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  $99,881,340  as of October 31, 1997 (based upon the $22 1/4 per
share  closing  price on that  date as  reported  by  NASDAQ).  In  making  this
calculation the registrant has assumed,  without admitting for any purpose, that
all  executive  officers,  directors,  and holders of more than 5% of a class of
outstanding common stock, and no other persons, are affiliates.

As of October 31, 1997, the  registrant had 5,320,713  shares of Class A  Common
Stock and 962,661 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  1997  annual  meeting  of
stockholders that will be filed no later than January 28, 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 - 7 herein
Item 2      Properties                                                     Page 7 herein
Item 3      Legal Proceedings                                              Page 8 herein
Item 4      Submission of Matters to a Vote of Security Holders            Page 8 herein

                                        Part II
Item 5      Market for Registrant's Common Equity and
               Related Stockholder Matters                                 Page 9 herein
Item 6      Selected Financial and Operating Data                          Page 10 herein
Item 7      Management's Discussion and Analysis of Financial              Pages 11 - 16 herein
               Condition and Results of Operations
Item 8      Financial Statements and Supplementary Data                    Page 17 herein
Item 9      Changes in and Disagreements with Accountants on               Page 17 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 5, 6 and 7 of Proxy Statement
Item 12     Security Ownership of Certain Beneficial Owners and            Page 9 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 18 - 34 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  Nestle,  Kraft,  North  American  Logistics,   ConAgra,   Albertson's,
Pillsbury, Campbell's Soup, and Coca-Cola Foods. These customers seek nationwide
transportation  partners that understand the specialized  needs of food industry
shippers and offer the late-model  equipment,  experienced  personnel,  advanced
technology,   and  geographic  coverage  to  provide  "continuous  movement"  of
temperature-controlled  and dry loads from  processing  or  packaging  plants to
distribution  centers  and  other  destinations.  Management  believes  the food
industry  is an  attractive  niche  because it is  generally  less  affected  by
economic cycles and many shippers require time-sensitive and specialized service
that justifies a higher rate per mile.

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

         Dedicated  Fleets.  Simon  Transportation  emphasizes  dedicated  fleet
operations  in which it offers round trip or  continuous  movement  service to a
shipper (or a shipper and one or more of its  suppliers) by  dedicating  certain
tractors and trailers exclusively to that shipper's needs.  Dedicated service is
desirable  because  the  customers  typically  pay a  round-trip  rate  per mile
assuming that the truck will return empty and cover all loading,  unloading, and
pallet costs. The Company frequently is able to further enhance revenue per mile

________________________________________________
(*) May contain "forward-looking" statements.

<PAGE>

by locating a profitable load to cover unloaded segments.  In addition,  drivers
prefer the  predictable  runs and priority  treatment at shipping and  receiving
locations.   Management   intends  to  aggressively  grow  its  dedicated  fleet
operations  and  expects  this  service  niche to expand as  shippers  outsource
transportation needs presently served by private carriage.(*)

         Modern Fleet. Simon  Transportation  intends to maintain modern tractor
and trailer fleets. 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 Nestle,
Kraft, North American Logistics,  ConAgra,  Albertson's,  Pillsbury,  Campbell's

________________________________________________
(*) May contain "forward-looking" statements.
<PAGE>

Soup, Coca-Cola Foods, and other major customers. Management intends to continue
developing  business  with  existing  customers  and  attempting to add new core
carrier  relationships.  The Company's top 5, 10, and 25 customers accounted for
38.2%,  51.0%,  and 66.9% of revenue,  respectively,  during  fiscal 1997,  with
Nestle (including  Nestle's Stouffer's and Friskie's units) accounting for 11.6%
of revenue.  No other customer accounted for more than 10% of revenue during the
fiscal year.

         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.

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 Company's driver
turnover was 86% in fiscal  1997,  measuring  drivers  after they are assigned a
tractor.

         At September 30, 1997, Simon Transportation  employed approximately 500
non-driver  employees and approximately  1,500 drivers.  The Company's employees
have never been  represented by or attempted to organize a union, and management
believes it has a good relationship with the Company's employees.

Safety and Insurance

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

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

Competition

         The truckload  segment of the trucking  industry is highly  competitive
and   fragmented,   and  no  carrier  or  group  of   carriers   dominates   the
temperature-controlled  or dry van market. According to the September 1997 issue
of Refrigerated Transporter, the five largest temperature-controlled carriers by
revenue are Frozen Food Express  Industries,  KLLM  Transport  Services,  Prime,
Inc.,  C. R.  England & Sons,  and Rocor  International.  The  combined  revenue
<PAGE>

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 1997 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.

Item 2.           PROPERTIES

         Simon Transportation  operates terminals and driver recruitment offices
at five  locations.  The  Company's  new  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  except  the  Atlanta  office and the Katy  office  have  modern  fuel
facilities with environmental monitoring equipment.

         The  Company  completed  construction  of its new  headquarters,  shop,
terminal,  and driver center during fiscal year 1997. The available acreage will

<PAGE>

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, 1997,
no matters were submitted to a vote of security holders.


<PAGE>


                                     PART II

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

         Price Range of Common  Stock.  The  Company's  Class A common stock has
been traded on the NASDAQ  National  Market under the NASDAQ symbol SIMN,  since
November  17, 1995,  the date of the  Company's  initial  public  offering.  The
following table sets forth for the calendar periods  indicated the range of high
and low bid  quotations  for the  Company's  Class A common stock as reported by
NASDAQ from November 17, 1995 to September 30, 1997.

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

         The prices  reported  reflect  interdealer  quotations  without  retail
mark-ups,  mark-downs or commissions, and may not represent actual transactions.
As of October 31, 1997, the Company had 76  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          1997         1996        1995        1994        1993
data)                                                        ----         ----        ----        ----        ----
Statement of Earnings Data:
  Operating revenue.................................     $155,296     $101,090  $   75,218   $  71,691   $  57,694
                                                     --------------------------------------------------------------
  Operating expenses:
    Salaries, wages, and benefits...................       60,504       40,015      28,035      25,949      21,990
    Fuel and fuel taxes.............................       30,069       20,359      14,115      14,363      11,629
    Operating supplies and expenses.................       19,289       13,701      10,839       8,978       6,111
    Taxes and licenses..............................        5,197        3,288       2,756       2,558       2,291
    Insurance and claims............................        3,404        2,172       2,003       1,995       1,600
    Communications and utilities....................        2,550        1,680       1,245       1,274         927
    Depreciation and amortization...................        5,396        5,920       7,223       6,857       4,781
    Rent............................................       17,143        4,794       2,926       3,435       3,422
                                                     --------------------------------------------------------------
      Total operating expenses......................      143,552       91,929      69,142      65,409      52,751
                                                     --------------------------------------------------------------
      Operating earnings............................       11,744        9,161       6,076       6,282       4,943
  Gain on sale of real property...............              1,896           --          --          --          --
  Interest expense and other, net...................       (1,134)      (2,758)     (3,527)     (3,136)     (2,559)
                                                     --------------------------------------------------------------
  Earnings before provision for income                     12,506        6,403       2,549       3,146       2,384
taxes..........
  Provision for income taxes1.......................        4,727        5,454          --          --          --
                                                     --------------------------------------------------------------
  Net earnings......................................     $  7,779     $    949  $    2.549   $    3,146  $   2,384  
                                                     ==============================================================
Pro Forma Statement of Earnings Data: (1)
  Earnings before provision for income                   $ 12,506     $  6,403  $    2.549   $    3,146  $   2,384
taxes..........                                                                      
  Provision for income taxes........................        4,727        2,536       1,010        1,246        944
                                                     --------------------------------------------------------------
  Net earnings......................................     $  7,779     $  3,867  $    1,539   $    1,900  $   1,440
                                                     ==============================================================
  Net earnings per common share.....................     $   1.36     $   0.88  $     0.67   $     0.83  $    0.63
                                                     ==============================================================
  Weighted average shares outstanding...............    5,707,642    4,417,643   2,300,000   2,300,000   2,300,000
Balance Sheet Data (at end of period):
  Net property and equipment........................      $71,154      $56,714     $52,200     $49,039     $45,409
  Total assets......................................      107,704       78,223      61,437      56,752      52,601
  Long-term debt and capitalized
    leases, including current                              32,791       37,428      47,903      44,525      43,181
    portion.........................................
  Stockholders' equity..............................       59,849       29,103       9,033       7,443       5,736
Operating Data:
  Operating ratio(2)................................        92.4%        90.9%       91.9%       91.2%       91.4%
  Average revenue per loaded mile...................        $1.25        $1.24       $1.26       $1.23       $1.23
  Average revenue per total mile....................        $1.10        $1.10       $1.11       $1.10       $1.07
  Average revenue per tractor per week..............       $2,627       $2,526      $2,417      $2,489      $2,471
  Empty miles percentage............................        11.9%        11.7%       11.3%       10.7%       12.6%
  Average length of haul in miles...................        1,001          984         949         725         677
  Weighted average tractors during period...........        1,142          774         598         554         449
  Tractors at end of period.........................        1,344          940         623         570         523
  Trailers at end of period.........................        1,998        1,430         877         873         745
<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 Note 1 and
Note 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

         Founded  by  Richard  D.  Simon  in 1955  with a  single  truck,  Simon
Transportation today provides nationwide,  predominantly  temperature-controlled
truckload  transportation for numerous major shippers.  In recent years, much of
the Company's  growth has resulted  from earning core carrier  status with major
shippers and meeting the demands of these shippers for additional equipment. The
Company  has grown to $155.3  million  in  revenue  for its  fiscal  year  ended
September 30, 1997,  from $57.7 million in revenue for fiscal 1993, a compounded
annual  growth  rate of  28.1%.  During  the  same  period,  operating  earnings
increased to $11.7 million from $4.9 million, a compounded annual growth rate of
24.2%.

         During  fiscal years 1994 and 1995,  the Company  financed  most of its
tractors and trailers  with debt and  capitalized  leases.  In the 1996 and 1997
fiscal years, the Company financed most of this revenue equipment with operating
leases  rather  than  borrowing.   Financing  equipment  with  operating  leases
increases the Company's  operating ratio because the implied interest  component
of the lease  payments is reflected  as an  "above-the-line"  operating  expense
rather  than  interest  expense.  The  method of  financing  does not affect net
income. The Company's operating ratio may fluctuate from time-to-time based upon
the method of equipment financing.

         The  Company  operated  as an S  Corporation  from  October  1, 1990 to
November 16, 1995. As a result,  the  Company's net taxable  earnings were taxed
directly to the Company's existing  stockholders rather than to the Company. The
pro forma  statement of earnings data  included in the  "Selected  Financial and
Operating  Data" set forth the Company's net earnings for such periods as if the
Company had been subject to federal and state income taxes at a combined rate of
37.8% for fiscal  year 1997 and a combined  rate of 39.6% for fiscal  years 1993
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.

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>    
                                                                                ---------------------------------
                                                                                  1997        1996       1995
                                                                                ---------- ----------------------
Operating revenue..............................................................     100.0%      100.0%     100.0%
Operating expenses:
  Salaries, wages, and benefits................................................      39.0        39.6       37.3
  Fuel and fuel taxes..........................................................      19.4        20.1       18.8
  Operating supplies and expenses..............................................      12.4        13.6       14.4
  Taxes and licenses...........................................................       3.3         3.3        3.6
  Insurance and claims.........................................................       2.2         2.1        2.7
  Communications and utilities.................................................       1.6         1.6        1.6
  Depreciation and amortization................................................       3.5         5.9        9.6
  Rent.........................................................................      11.0         4.7        3.9
                                                                                ---------- ----------------------
    Total operating expenses                                                         92.4        90.9       91.9
                                                                                ---------- ----------------------
Operating earnings.............................................................       7.6         9.1        8.1
Gain on sale of real property...................................................      1.2          --         --
Interest expense and other, net................................................      (0.7)       (2.8)      (4.7)
                                                                                ---------- ----------------------
Earnings before provision for income taxes.....................................       8.1         6.3        3.4
Pro forma provision for income taxes...........................................      (3.1)       (2.5)      (1.4)
                                                                                ---------- ----------------------
Pro forma net earnings.........................................................       5.0%        3.8%       2.0%
                                                                                ========== ======================
</TABLE>


<PAGE>


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.

         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
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  has utilized
operating  leases in the most recent  year because of more favorable  terms.  If

<PAGE>

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 interest expense.

         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
headquarter  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.

         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.


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

         Operating  revenue  increased $25.9 million (34.4%),  to $101.1 million
during the 1996 fiscal year from $75.2 million  during the 1995 fiscal year. The
increase  in revenue  was  primarily  attributable  to a 29.4%  increase  in the
weighted average number of tractors, to 774 during the 1996 fiscal year from 598
during the 1995 fiscal  year and an increase in the average  revenue per tractor
per week to $2,526  during  the 1996  fiscal  year from  $2,417  during the 1995
fiscal  year.  These  increases  were  partially  offset  by a  decrease  in the
Company's  average  revenue per loaded mile to $1.24 during the 1996 fiscal year
from  $1.26  during  the 1995  fiscal  year,  and an  increase  in  empty  miles
percentage  to 11.7%  during the 1996  fiscal  year from  11.3%  during the 1995
fiscal year.

         Salaries, wages and benefits increased $12.0 million (42.9%),  to $40.0
million in the 1996 fiscal year from $28.0 million in the 1995 fiscal year. As a
percentage of  revenue,  salaries,  wages,  and  benefits  increased to 39.6% of
revenue  during the 1996 fiscal year from 37.3%  during  the 1995  fiscal  year.
The  change  was attributable  to the full effect of an  increase in driver base
pay implemented during the 1995 fiscal year; the improvement of health insurance
coverage  to  attract  and  retain  qualified  drivers  and other personnel;  an
increase in  the  number of active  participants  in  the  401(k)  plan;  and an
increase  in  administrative  personnel.  The additional cost of these items was
partially  offset by reduced workers'  compensation  premiums and a reduction in
workers' compensation claims.

         Fuel and fuel taxes  increased $6.3 million  (44.7%),  to $20.4 million
in  the  1996  fiscal  year  from  $14.1  million in the 1995 fiscal year.  As a
percentage  of revenue, fuel and fuel taxes increased to 20.1% of revenue during
the 1996  fiscal year from 18.8% during the 1995  fiscal  year as a result of an
increase in fuel  prices.  The increase in fuel prices was  partially  offset by
an overall  increase in the fuel  efficiency of the Company's fleet.
<PAGE>

         Operating  supplies  and  expenses  increased  $2.9 million (26.9%), to
$13.7 million  in  the 1996 fiscal year from  $10.8  million in the 1995  fiscal
year.  As a  percentage of revenue, operating  supplies  and  expenses decreased
to  13.6%  of revenue  during  the 1996 fiscal year,  from 14.4% during the 1995
fiscal year,  primarily as a result of decreased  parts costs, outside  repairs,
and  maintenance  expense  associated  with a decrease in the average age of the
Company's  tractor  fleet.  These  savings  were  partially  offset by retaining
certain  older tractors  that had been  scheduled  for trade or sale in order to
meet  customer  demand  for more  equipment.  The Company  upgraded  its tractor
fleet  in  fiscal  year  1996  and  reduced  the  average  age of its  fleet  at
September 30, 1996,  to  approximately  8 months from 30 months at September 30,
1995. All tractors are now covered by three-year, 500,000-mile warranties.

         Taxes and licenses increased  $531,000 (19.3%),  to $3.3 million in the
1996 fiscal year from $2.8 million in  the 1995 fiscal year. As a percentage  of
revenue, taxes and licenses decreased to 3.3% of revenue  during the 1996 fiscal
year from 3.6%  during  the  1995 fiscal year  primarily  as a result of greater
efficiency  in licensing new tractors being added to the fleet.

         Insurance and claims increased $169,000 (8.4%), to $2.2  million in the
1996  fiscal year from $2.0 million in the 1995 fiscal year.  As a percentage of
revenue,  insurance  and  claims  decreased  to  2.1% of revenue during the 1996
fiscal  year from 2.7% during the 1995 fiscal year because of reduced  insurance
premiums  and claims.

         Communications and utilities increased $435,000 (34.9%), to $1.7 in the
1996  fiscal  year from $1.2 million in the 1995 fiscal year. As a percentage of
revenue,  communications  and  utilities  remained  constant at 1.6%  of revenue
during the 1996 and 1995 fiscal years.

         Depreciation  and amortization  decreased $1.3 million (18.0%), to $5.9
million in the 1996 fiscal year from $7.2 million in the 1995 fiscal year.  As a
percentage of revenue,  depreciation and amortization (adjusted for the net gain
on sale of equipment)  decreased to 5.9% of revenue  during the 1996 fiscal year
from 9.6% during the 1995 fiscal year. Depreciation and amortization (unadjusted
for the  net  gain on sale of  equipment)  decreased  to 8.3% of  revenue  ($8.4
million) during the 1996 fiscal year from 10.8% of revenue ($8.1 million) during
the  1995  fiscal  year as a  result  of a  decrease  in the  percentage  of the
Company's revenue equipment that was owned or acquired under capitalized leases.
This  decrease in  depreciation  was adjusted for a $2.4 million net gain on the
sale of revenue  equipment during the 1996 fiscal year compared with an $885,000
net gain during the 1995 fiscal year.

         Rent increased $1.9 million (65.5%), to $4.8 million in the 1996 fiscal
year  from  $2.9  million  in  the  1995 fiscal year.  Rent increased to 4.7% of
revenue during the 1996 fiscal year from 3.9% during the 1995 fiscal year as the
Company increased its percentage of revenue equipment under operating leases.

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

         Interest  expense and other, net decreased  $769,000  (21.8%),  to $2.8
million in the 1996 fiscal year from $3.5 million in the 1995 fiscal year.  As a
percentage  of revenue,  interest  expense and other,  net  decreased to 2.8% of
revenue during the 1996 fiscal year from 4.7% during the 1995 fiscal year.  This
resulted  from  application  of $17.2 million in net proceeds from the Company's
initial  public  offering to decrease debt and  capitalized  lease  balances,  a
decrease in the Company's average interest rate in the 1996 fiscal year compared
with the 1995 fiscal year,  and an increase in the  percentage  of the Company's
tractor and trailer fleets being obtained through operating leases.

         As a  result  of  the  factors  described above, pro forma net earnings
increased $2.4 million  (160.0%),  to $3.9 million  during the 1996 fiscal  year
from  $1.5 million  during the 1995  fiscal  year.  As a  percentage of revenue,
pro  forma  net  earnings  increased  to 3.8% of revenue in the 1996 fiscal year
from 2.0% in the 1995 fiscal year.

<PAGE>

Liquidity and Capital Resources

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

         Net cash  provided by  operating  activities  was  $7.9  million,  $7.0
million, and $8.3 million, for the fiscal years ended September 30, 1997,  1996,
and 1995, 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  $6,362,000,  $5,930,000,  and
$478,000  for  the  fiscal  years  ended  September  30, 1997,  1996,  and 1995,
respectively.  The average  age  of  the Company's accounts receivable  was  41,
39,  and 36  days  for  the  fiscal  years  ended  September 30, 1997, 1996, and
1995, respectively.

         Net  cash  (used  in)  provided  by  investing  activities  was  ($19.0
million), ($4.6 million), and $1.3 million for the fiscal years ended  September
30, 1997,  1996,  and  1995,  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  $104 million in 1998 and 1999. The
Company's  projected capital  expenditures  will be funded mostly with operating
leases,  borrowings and cash flows from operations.

         Net cash provided by (used in) financing  activities was $18.3 million,
$2.9 million,  and ($9.2 million) for the fiscal years ended September 30, 1997,
1996, and 1995,  respectively,  and consisted  primarily of approximately  $23.0
million in net  proceeds  from the  Company's  February  1997  secondary  public
offering, $19.7 million in net proceeds from the Company's November 1995 initial
public offering,  net payments on borrowings of $4.6 million, $12.0 million, and
$10.2 million of principal  under the Company's  long-term debt and  capitalized
lease  agreements and net payments  (borrowings) of $0, $4.3 million,  and ($2.6
million)  under the Company's  line of credit.  In addition,  the Company paid S
Corporation  dividends to its  stockholders of $605,000 and $1.6 million for the
fiscal years ended September 30, 1996, and 1995, respectively.

         The maximum  amount  committed  under  the  Company's line of credit at
September 30, 1997  was $5 million  and  no  borrowings  were  outstanding.  The
interest  rate on the line of credit is one-half  percent (.5%) above the 30-day
London  Interbank  Offered  Rate  ("LIBOR")  in  effect  from  time-to-time.  At
September 30, 1997,  the Company had outstanding  long-term debt and capitalized
lease  obligations (including  current portions) of approximately $32.8 million,
most of which comprised obligations for the purchase of revenue  equipment.  See
Notes 4,  5 and 6 to Consolidated Financial Statements.

         Although the Company  historically  has  experienced a working  capital
deficit  common  to  many  truckload  carriers  that  have expanded by financing
revenue equipment purchases, management  believes  its working  capital deficits
have had little impact upon liquidity.  When the purchase  of revenue  equipment
is financed  through  borrowing or capitalized lease  obligations,  a portion of
the indebtedness is categorized  as a  current  liability, although  the revenue
equipment  is  classified  as a long-term  asset.  Consequently,  each  purchase
of financed revenue equipment decreases working capital.  The Company's  working
capital  surplus  at  September 30, 1997  and  1996 was $15.9  million  and $6.7
million,  respectively.  The  Company's  working  capital  deficit  amounted  to
$16.7   million  at  September 30, 1995.   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 1998.

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.
<PAGE>

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.

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.

         Delay in  Delivery  of Revenue  Equipment.  The Company  has  scheduled
delivery  of  approximately  1,400  tractors  during  the  next two  years.  The
inability  of  revenue  equipment manufacturers  to make  delivery  as scheduled
could  impede  the  Company's  ability  to  meet  customer  demands  for revenue
equipment and force the Company to retain its present fleet of revenue equipment
for a longer period of time with  potential higher operating expenses associated
with an older fleet.


<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 21 to 34
of this report.  The supplementary  quarterly financial data (unadjusted for the
pro forma  effects  of  income  taxes as  if  the  Company  had  always been a C
corporation) follow:

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

                                             Fourth Quarter     Third Quarter     Second Quarter     First 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 taxes                                   3,375            4,919               2,225            1,987
Income taxes                                            1,276            1,859                 841              751
Net earnings                                            2,099            3,060               1,384            1,236
Net earnings per share                                $  0.33          $  0.49             $  0.25          $  0.26

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

</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, 1997,  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 3, 4, and 7 of  Registrant's  Proxy  Statement for the 1997
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.


Item 11.          EXECUTIVE COMPENSATION

         The information  respecting executive  compensation set forth under the
caption  "Executive  Compensation"  on pages 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.



<PAGE>

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 9 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  page 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.........................................  21
Consolidated Statement of Financial Position...............................  22
Consolidated Statements of Stockholders' Equity............................  23
Consolidated Statements of Cash Flows......................................  24
Notes to Consolidated Financial Statements.................................  25
Report of Independent Public Accountants...................................  34

         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, 1997.


<PAGE>


(c)      Exhibits

Number Description
 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 18, 1997            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>

<CAPTION>
                Signature                                      Position                               Date
                ---------                                      --------                               ----
<S>                                        <C>                                               <C>
/s/ Richard D. Simon                       Chairman of the Board, President, and Chief       November 18, 1997
--------------------------------------     Executive Officer (principal executive officer)
Richard D. Simon                           

/s/ Alban B. Lang                          Treasurer and Chief Financial Officer             November 18, 1997
--------------------------------------     (principal financial and accounting officer);
Alban B. Lang                              Director
                                           
/s/ Kelle A. Simon                         Vice President of Maintenance;  Director          November 18, 1997
--------------------------------------
Kelle A. Simon

/s/ A. Lyn Simon                           Vice President of Sales; Director                 November 18, 1997
--------------------------------------
A. Lyn Simon

/s/ Richard D. Simon, Jr.                  Vice President of Operations; Director            November 18, 1997
--------------------------------------
Richard D. Simon, Jr.

/s/ Sherry L. Bokovoy                      Assistant Secretary/Treasurer; Director           November 18, 1997
--------------------------------------
Sherry L. Bokovoy

/s/ Irene Warr                             Director                                          November 18, 1997
--------------------------------------
Irene Warr

/s/ H.J. Frazier                           Director                                          November 18, 1997
--------------------------------------
H.J. Frazier
</TABLE>

<PAGE>
                         SIMON TRANSPORTATION SERVICES INC.

                         CONSOLIDATED STATEMENT OF EARNINGS

<TABLE>

                                                                   For the Years Ended September 30,
                                                       ----------------------------------------------------------
<S>                                                          <C>                <C>                <C> 
                                                              1997               1996               1995
                                                       ----------------------------------------------------------

Operating Revenue                                            $155,296,354       $101,089,530        $ 75,218,184
                                                       ----------------------------------------------------------

Operating Expenses:
  Salaries, wages, and benefits                                60,504,236         40,014,702          28,035,318
  Fuel and fuel taxes                                          30,068,552         20,359,375          14,115,283
  Operating supplies and expenses                              19,288,560         13,701,428          10,839,485
  Taxes and licenses                                            5,197,086          3,287,833           2,756,587
  Insurance and claims                                          3,404,550          2,172,308           2,002,505
  Communications and utilities                                  2,550,301          1,679,967           1,244,650
  Depreciation and amortization                                 5,396,198          5,919,494           7,222,887
  Rent                                                         17,142,835          4,793,804           2,925,541
                                                       ----------------------------------------------------------
    Total operating expenses                                  143,552,318         91,928,911          69,142,256
                                                       ----------------------------------------------------------
    Operating earnings                                         11,744,036          9,160,619           6,075,928
Other (Expense) Earnings:
  Gain on sale of real property                                 1,896,025                 --                  --
  Interest expense                                             (1,761,939)        (2,849,549)         (3,558,932)
  Other, net                                                      627,769             92,025              31,751
                                                       ----------------------------------------------------------
Earnings before provision for income taxes                     12,505,891          6,403,095           2,548,747
Provision for income taxes (Note 11)                            4,727,227          5,454,170                  --
                                                       ----------------------------------------------------------

Net Earnings                                                 $  7,778,664       $    948,925        $  2,548,747
                                                       ==========================================================

Unaudited Pro Forma Information: (Note 11)
  Earnings before provision for income taxes                 $ 12,505,891       $  6,403,095        $  2,548,747
  Provision for income taxes                                    4,727,227          2,535,626           1,009,304
                                                       ----------------------------------------------------------

  Net earnings                                               $  7,778,664       $  3,867,469        $  1,539,443
                                                       ==========================================================

  Net earnings per common share                             $        1.36       $       0.88        $       0.67    
                                                       ==========================================================

  Weighted average common shares outstanding                    5,707,642          4,417,643           2,300,000
                                                       ==========================================================

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

<PAGE>


                                        SIMON TRANSPORTATION SERVICES INC.

                                   CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                       ASSETS
<TABLE>
                                                                                            September 30,
                                                                                  ----------------------------------
<S>                                                                                  <C>               <C> 
                                                                                        1997             1996
                                                                                  ----------------------------------
Current Assets:
  Cash                                                                               $  12,766,001     $  5,571,431
  Receivables, net of allowance for doubtful accounts
        of $62,000 and $66,000, respectively                                            20,712,286       13,261,974

  Operating supplies                                                                       752,213          428,123
  Prepaid expenses and other                                                             1,558,923        1,302,492
  Deferred tax asset                                                                       635,027          627,883
                                                                                  ----------------------------------
        Total current assets                                                            36,424,450       21,191,903
                                                                                  ----------------------------------
Property and Equipment, at cost:
  Land                                                                                   7,632,711        2,918,804
  Revenue equipment                                                                     59,392,072       58,779,032
  Buildings and improvements                                                            14,321,869        8,639,875
  Office furniture and equipment                                                         5,974,291        2,766,218
                                                                                  ----------------------------------
                                                                                        87,320,943       73,103,929
  Less accumulated depreciation and amortization                                       (16,166,473)     (16,390,209)
                                                                                  ----------------------------------
                                                                                        71,154,470       56,713,720
                                                                                  ----------------------------------
Other Assets                                                                               125,450          317,645
                                                                                  ----------------------------------

                                                                                     $ 107,704,370     $ 78,223,268
                                                                                  ==================================

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current portion of long-term debt                                                  $   6,382,697     $  2,892,300
  Current portion of capitalized lease obligations                                       5,346,645        3,760,250
  Accounts payable                                                                       3,593,420        1,691,900
  Income taxes payable                                                                     631,776        2,191,984
  Accrued liabilities                                                                    3,325,279        2,324,918
  Accrued claims payable                                                                 1,259,674        1,602,344
                                                                                  ----------------------------------
        Total current liabilities                                                       20,539,491       14,463,696
                                                                                  ----------------------------------

Long-Term Debt, net of current portion                                                  14,638,389       15,433,145
                                                                                  ----------------------------------
Capitalized Lease Obligations, net of current portion                                    6,423,385       15,342,293
                                                                                  ----------------------------------
Deferred Income Taxes                                                                    6,254,445        3,880,653
                                                                                  ----------------------------------

Commitments (Note 7)

Stockholders' Equity:
  Preferred stock, $.01 par value,  5,000,000 shares authorized,  none issued                   --               --
  Class A  Common  Stock,  $.01  par  value,  20,000,000  shares  authorized,
     5,320,313 and  2,870,507 shares issued, respectively                                   53,203           28,705
  Class B Common Stock, $.01 par value, 5,000,000 shares authorized, 962,661 and
     1,872,161 shares issued, respectively                                                   9,627           18,722
  Additional paid-in capital                                                            48,233,608       25,282,496
  Retained earnings                                                                     11,552,222        3,773,558
                                                                                  ----------------------------------
        Total stockholders' equity                                                      59,848,660       29,103,481
                                                                                  ----------------------------------

                                                                                     $ 107,704,370     $ 78,223,268
                                                                                  ==================================

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

<PAGE>


                                        SIMON TRANSPORTATION SERVICES INC.

                                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>

   <S>                         <C>        <C>      <C>       <C>           <C>         <C>       <C>           
                                          Class A   Class B   Additional                            Total
                                 Common   Common    Common     Paid-in      Retained   Treasury  Stockholders'
                                  Stock    Stock     Stock     Capital      Earnings     Stock      Equity
                                ------------------------------------------------------------------------------
   Balance, September 30, 1994  $ 149,852 $     --  $     --  $        --  $ 7,319,150 $(25,764)  $ 7,443,238
                                          
     Distributions to                                                       (1,593,611)            (1,593,611)
      stockholders of S
      corporation
     Acquisition of Freight       160,000                                                             160,000
      Sales, Inc.  through
      issuance of 22,308
      shares of common stock
      (Note 1)
     Payment of notes payable     474,204                                                             474,204
      to stockholders through
      issuance of 66,225
      shares of common stock
      (Note 9)
     Recapitalization of         (784,056)   7,000    28,500      722,792                 25,764           --
      capital stock, 700,000
      Class A shares  and
      2,850,000  Class B
      shares of  Common  Stock
      issued for 3,550,000
      shares of common stock
      (Note 1)
     Pro rata contribution of               (2,722)   (9,778)      12,500                                  --
      272,161 shares of
      Class A Common Stock and
      977,839 shares of
      Class B Common Stock by
      stockholders (Note 1)
     Net earnings                                                            2,548,747              2,548,747
                                ------------------------------------------------------------------------------
   Balance, September 30, 1995         --    4,278    18,722      735,292    8,274,286        --    9,032,578
     
     Distributions to                                                         (605,060)              (605,060)
      stockholders of S
      corporation
     Sale of Common Stock in                24,420             19,696,318                          19,720,738
      initial public offering,
      net of issuance costs
     Change in tax status                                       4,844,593   (4,844,593)                    --
     Exercise of stock options                   7                  6,293                               6,300
     Net earnings                                                              948,925                948,925
                                ------------------------------------------------------------------------------
   Balance, September 30, 1996         --   28,705    18,722   25,282,496    3,773,558        --   29,103,481
                                
     Sale of common stock in                24,445    (9,095)  22,903,411                          22,918,761
      secondary public
      offering, net of
      issuance costs
     Exercise of stock options                  53                 47,701                              47,754
     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
                                ==============================================================================
</TABLE>

      The accompanying notes to consolidated financial statements are
         an integral part of this consolidated financial statement.

<PAGE>


                       SIMON TRANSPORTATION SERVICES INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>

                                                                                 For the Years Ended September 30,
                                                                       -------------------------------------------------------
<S>                                                                         <C>                <C>               <C> 
                                                                             1997               1996              1995
                                                                       -------------------------------------------------------
Cash Flows From Operating Activities:
  Net earnings                                                              $  7,778,664       $    948,925       $ 2,548,747
  Adjustments to reconcile net earnings to net cash
    provided by operating activities:
    Depreciation and amortization                                              5,396,198          5,919,494         7,222,887
    Gain on sale of real property                                             (1,896,025)                --                --
    Changes in operating assets and liabilities:
      Increase in receivables, net                                            (6,361,812)        (5,930,273)         (477,913)
      (Increase) decrease in operating supplies                                 (324,090)           211,792          (166,726)
      Increase in prepaid expenses and other                                    (256,431)          (885,547)         (117,628)
      Increase in deferred tax asset                                              (7,144)          (627,883)               --
      Decrease (increase) in other assets                                        192,195            180,828          (464,990)
      Increase (decrease) in accounts payable                                  1,901,521            322,648          (577,613)
      (Decrease) increase in income taxes payable                             (1,560,208)         2,191,984                --
      Increase in accrued liabilities                                          1,000,361            489,298            17,700
      (Decrease) increase in accrued claims payable                            (342,670)            305,769           277,903
      Increase in deferred income taxes                                        2,373,792          3,880,653                --
                                                                       -------------------------------------------------------
        Net cash provided by operating activities                              7,894,351          7,007,688         8,262,367
                                                                       -------------------------------------------------------
Cash Flows From Investing Activities:
  Purchase of property and equipment                                         (31,815,000)       (23,149,090)       (6,338,014)
  Proceeds from the sale of property and equipment                            12,785,576         18,499,863         7,594,684
                                                                       -------------------------------------------------------
        Net cash (used in) provided by investing activities                  (19,029,424)        (4,649,227)        1,256,670
                                                                       -------------------------------------------------------
Cash Flows From Financing Activities:
  Proceeds from issuance of long-term debt                                    15,894,391         19,666,814         3,764,916
  Principal payments on long-term debt                                       (13,198,750)       (12,775,333)       (4,653,591)
  Net (payments) borrowings under line-of-credit agreement                            --         (4,279,741)        2,570,529
  Principal payments under capitalized lease obligations                      (7,332,513)       (18,871,127)       (9,309,717)
  Net proceeds from issuance of common stock                                  22,966,515         19,727,037                --
  Distributions to S corporation stockholders                                         --           (605,060)       (1,593,611)
                                                                       -------------------------------------------------------
        Net cash provided by (used in) financing activities                   18,329,643          2,862,590        (9,221,474)
                                                                       -------------------------------------------------------
Net Increase In Cash                                                           7,194,570          5,221,051           297,563
Cash at Beginning of Year                                                      5,571,431            350,380            52,817
                                                                       -------------------------------------------------------
Cash at End of Year                                                         $ 12,766,001       $  5,571,431       $   350,380
                                                                       =======================================================
Supplemental Disclosure of Cash Flow Information:
    Cash paid during the year for interest                                  $  1,761,939       $  2,847,583       $ 3,440,685
    Cash paid during the year for income taxes                                 4,631,593                 --                --
Supplemental Schedule of Noncash Investing and
  Financing Activities:
    Equipment acquired through capitalized lease obligations                $         --       $  5,784,405       $11,479,970
</TABLE>
      The accompanying notes to consolidated financial statements are
         an integral part of this consolidated financial statement.

<PAGE>


                      SIMON TRANSPORTATION SERVICES INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

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

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

R. D. Simon Trucking

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

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

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

Freight Sales, Inc.

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

         The Company has  accounted for the  acquisition  of Freight Sales under
the purchase method of accounting and, accordingly, the acquired asset values of
$160,000 are presented in these financial  statements as of the acquisition date
at their respective fair values in relation to the purchase price. No intangible
assets were recorded in this  acquisition.  As part of the transaction,  Freight
Sales was merged into the Company and ceased to exist as a legal entity.

Recapitalization

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

         The  post-recapitalization  authorized  capital  stock for the  Company
consists of  20,000,000  shares of $.01 par value Class A Common  Stock with one
vote per share voting rights;  5,000,000 shares of $.01 par value Class B Common
Stock with two votes per share  voting  rights;  and  5,000,000  shares $.01 par
value preferred  stock. In connection  with this  recapitalization,  the Company
issued 700,000 shares of Class A and 2,850,000 shares of Class B Common Stock in

<PAGE>

exchange for all of the previously  outstanding  shares of common stock.  All of
the  Class B and  39,641  shares  of Class A Common  Stock  were  issued  to the
majority stockholder of the Company.

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

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

         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 expense during the reporting
period. Actual results could differ from these estimates.

Revenue Recognition and Significant Customers

         Freight  charges and related direct freight  expenses are recognized as
revenue and operating expense when freight is delivered at a destination  point.
One customer  accounted  for  approximately  12, 18, and 19 percent of operating
revenue in fiscal years 1997,  1996,  and 1995,  respectively.  At September 30,
1997,  the  Company  had  accounts  receivable  outstanding  with this  customer
totaling  $956,464.  Another customer  accounted for approximately 12 percent of
operating revenue in fiscal year 1995. No other customer accounted for more than
10% of revenue during fiscal years 1997, 1996 and 1995.

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.
<PAGE>

         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 $1,563,524,  $2,447,765,  and $885,439 for the fiscal years ended
September  30,  1997,  1996,  and  1995,  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  statements  of
financial  position  for  cash,  accounts   receivable,   and  accounts  payable
approximate  fair values  because of the immediate or  short-term  maturities of
these financial  instruments.  The carrying  amounts of the Company's  long-term
debt also approximate fair values based on current rates for similar debt.

Insurance Coverage and Accrued Claims Payable

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

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

         The  Company had  outstanding  letters of credit  related to  insurance
coverage totaling $950,000 at September 30, 1997. These letters of credit mature
at various times through  November 1997 and renew annually unless  terminated by
either party.

Recent Accounting Pronouncements

         In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards ("SFAS") No. 121,  "Accounting for
the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed
Of".  SFAS No.  121  establishes  accounting  standards  for the  impairment  of
long-lived  assets,  certain  identifiable  intangibles and goodwill  related to
those  assets  to be  held  and  used  and for  long-lived  assets  and  certain
identifiable intangibles to be disposed of. The Company adopted SFAS No. 121 for
fiscal year 1997,  which had no impact on the  Company's  financial  position or
results of operations.

         In February  1997, the FASB released SFAS No. 128 "Earnings per Share".
SFAS  No.  128   specifies  the   computation,   presentation,  and   disclosure
requirements  for earnings  per share ("EPS") for  financial  statements  issued
for all periods  ending after  December 15, 1997.  SFAS No. 128  simplifies  the
standards for computing EPS previously  found in APB Opinion No. 15 and replaces
the  presentation  for primary EPS and fully  diluted EPS. The adoption of  SFAS

<PAGE>

No. 128  is  not  expected  to  have  a  significant  impact  on  the  Company's
calculation  of its net earnings per common share.


(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, 1997 and 1996:
<TABLE>


         <S>                                                                    <C>                <C> 
                                                                                      1997               1996
                                                                                ------------------ ------------------
         Current tax provision:
                  Federal                                                           $   1,993,941      $   1,758,933
                  State                                                                   366,638            442,467
                                                                                ------------------ ------------------
                                                                                        2,360,579          2,201,400
                                                                                ------------------ ------------------

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

         Provision for income taxes                                                 $   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, 1997 and 1996:
<TABLE>

         <S>                                                                    <C>                <C> 
                                                                                      1997               1996
                                                                                ------------------ ------------------
         Computed "expected" provision for income
              taxes at the statutory rate                                           $   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                                                         479,466            303,950
                  Other, net                                                               (4,242)            (6,948)
                                                                                ------------------ ------------------

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

</TABLE>

<PAGE>


         The   significant  components  of  the  net  deferred  tax  assets  and
liabilities as of September 30, 1997, and 1996 are as follows:
<TABLE>
         <S>                                                        <C>                <C>
                                                                          1997               1996
                                                                    ------------------ ------------------
         Deferred tax assets:
              Claims reserve                                           $      278,834     $      423,768
              Other reserves and accruals                                     356,193            204,115
                                                                    ------------------ ------------------

         Total deferred tax assets                                            635,027            627,883

         Deferred tax liability:
              Difference between book and tax basis
                  of property and equipment                                (6,254,445)        (3,880,653)
                                                                    ------------------ ------------------

         Net deferred tax liability                                    $   (5,619,418)    $   (3,252,770)
                                                                    ================== ==================
</TABLE>

(4)      LONG-TERM DEBT

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

                                                                                             September 30,
                                                                              --------------------------------------
<S>                                                                                 <C>                <C> 
                                                                                         1997               1996
                                                                              --------------------------------------
Notes payable to a bank, interest ranging from 6.24 percent to 7.20 percent,        $  9,871,320        $12,331,568
       payable in monthly installments through April 2001, secured by revenue
       equipment
Note payable to a bank, interest at Eurodollar rate (6.69 percent at                   9,722,222                 --
       September 30, 1997), payable in monthly installments through August                    
       2000, unsecured
Note payable to a bank for headquarters loan, interest at LIBOR plus 1.1               1,427,544          1,816,874
       percent (6.73 percent at September 30, 1997), payable in monthly
       installments through May 2001, secured by revenue equipment
Other                                                                                         --              7,126
                                                                              --------------------------------------
                                                                                      21,021,086         14,155,568
Less current portion                                                                  (6,382,697)        (2,892,300)
                                                                              --------------------------------------
                                                                                    $ 14,638,389        $11,263,268
                                                                              ======================================
</TABLE>

         Scheduled principal payments of long-term debt as of September 30, 1997
are as follows:

             Years Ending September 30,                           Amount
------------------------------------------------------      -------------------
                        1998                                    $    6,382,697
                        1999                                         6,502,407
                        2000                                         6,417,402
                        2001                                         1,718,580
                        2002                                                --
                                                            -------------------
                                                                 $  21,021,086
                                                            ===================


<PAGE>


(5)      CONSTRUCTION LOAN AND LINE OF CREDIT

         The Company  entered into a construction  loan agreement with a bank to
finance the construction of the Company's new headquarters,  shop,  terminal and
driver recruitment and orientation  center. The agreement provided a $10 million
credit  facility  that  would  convert  to a term  loan upon  completion  of the
facility.  Until construction was complete, no payments were due and all accrued
interest was added to the loan balance.  As of September  30, 1996,  the Company
had  borrowed  $4,169,877  under the  agreement.  During  fiscal year 1997,  the
Company  refinanced  this  construction  loan with a term loan from another bank
(see Note 4).

         The refinanced loan contains various  restrictive  covenants  including
maximum debt to tangible net worth and minimum tangible net worth  requirements.
As of September 30, 1997, the Company was in compliance with all covenants under
the loan agreement.

         The  Company  has an  unsecured  line of credit for  $5,000,000.  As of
September 30, 1997, the Company had not drawn on this line of credit.


(6)      CAPITALIZED LEASE OBLIGATIONS

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

                                                    September 30,
                                  ----------------------------------------------
                                            1997                   1996
                                  ----------------------------------------------

Revenue equipment                       $ 20,098,048           $ 28,823,541
Less accumulated amortization             (6,276,894)            (7,313,862)
                                  ----------------------------------------------
                                        $ 13,821,154           $ 21,509,679
                                  ==============================================


         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, 1997:

            Years Ending September 30,                       Amount
---------------------------------------------------    --------------------
                       1998                                  $   5,930,430
                       1999                                      1,841,768
                       2000                                      3,452,808
                       2001                                      1,805,394
                       2002                                             --
                                                       --------------------
Total minimum lease payments                                    13,030,400
Less amount representing interest                               (1,260,370)
                                                       --------------------
Present value of minimum lease payments                         11,770,030
Less current portion                                            (5,346,645)
                                                       --------------------
                                                             $   6,423,385
                                                       ====================


(7)      COMMITMENTS

Operating Leases

         The Company is committed under noncancelable operating leases involving
certain revenue equipment.  Rent expense for noncancelable  operating leases was
$15,595,123,  $3,997,352,  and $2,562,440 for fiscal years 1997, 1996, and 1995,
respectively.  Aggregate future lease commitments are $20,827,654,  $17,789,670,
$9,219,164,  $5,004,686, and $2,078,659 for the years ending September 30, 1998,
1999, 2000, 2001 and 2002, respectively.


<PAGE>


Orders for Revenue Equipment

         As of  September  30,  1997,  the Company had placed  orders for fiscal
years 1998 and 1999 to purchase revenue equipment at an estimated total purchase
price of  $168,700,000.  The revenue  equipment is to be delivered during fiscal
years 1998 and 1999. Approximately $64,700,000 of the new revenue equipment will
be  used  to  replace  older  revenue  equipment  and  the  balance   represents
incremental  additions to the Company's  fleet.  These orders may be canceled by
the Company without penalty upon written  notification any time prior to 85 days
before the revenue equipment's scheduled delivery.

(8)      STOCK PLANS

Incentive Stock Plan

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

Outside Director Stock Plan

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

         The following  table  summarizes the combined stock option activity for
both plans from  inception  of the plans  through the year ended  September  30,
1997:

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

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

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

Outstanding at September 30, 1996        227,700             9.00
         Granted                         141,000       13.70  -  16.00
         Exercised                        (5,306)            9.00
         Forfeited                       (14,160)       9.00  -  16.00
                                  -------------------- -------------------------

Outstanding at September 30, 1997        349,234       $9.00  - $16.00
                                  ==================== =========================


As of September 30, 1997, approximately 81,800 options are exercisable.





<PAGE>

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 income 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 6.15%
and 5.07% in 1997 and 1996,  respectively,  a dividend yield of 0%, a volatility
factor of the  expected  common  stock  price of 25.4%,  and a weighted  average
expected life of approximately 9.7 years for the stock options.  For purposes of
pro  forma  disclosures,  the  estimated  fair  value of the  stock  options  is
amortized over the estimated life of the respective stock options. Following are
the pro forma  disclosures  and the  related  impact on net income for the years
ended September 30, 1997 and 1996:

                                                 September 30,
                                   ---------------------------------------------
                                           1997                   1996
                                   ---------------------------------------------
Net earnings:
    As reported                       $   7,778,664          $   3,867,469
    Pro forma                             7,683,084              3,865,720

Net earnings per share:
    As reported                       $        1.36          $        0.88
    Pro forma                                  1.35                   0.88


(9)      RELATED PARTY TRANSACTIONS

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

         During  fiscal year 1995 the Company paid lease  payments of $30,000 to
Freight Sales.

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


(10)     EMPLOYEE BENEFIT PLAN

         The  Company has adopted a defined  contribution  plan,  the Dick Simon
Trucking, Inc. 401(k) Profit Sharing Plan (the "401(k) Plan"). All employees who
have  completed  one year of service  and have  reached  age 21 are  eligible to
participate  in the  401(k)  Plan.  Newly  eligible  employees  may first  begin
participating  in the  401(k)  Plan on the  earlier of January 1 or July 1 after
meeting the  eligibility  requirements.  Under the 401(k)  Plan,  employees  are
allowed to make contributions of up to 15 percent of their annual  compensation;
the Company may make matching contributions equal to a discretionary percentage,
to be  determined  by the Company,  of the  employee's  salary  reductions.  The
Company may also make additional discretionary contributions to the 401(k) Plan.
All amounts  contributed  by a  participant  are fully vested at all times.  The
participant   becomes  20  percent  vested  in  any  matching  or  discretionary
contributions after two years of service.  This vesting percentage  increases to
100 percent  after six years of service.  During  fiscal years 1997,  1996,  and
1995, the Company contributed $301,078, $192,389, and $141,240, respectively, to
the 401(k) Plan.

<PAGE>

(11)     PRO FORMA INFORMATION (UNAUDITED)

Pro Forma Provision for Income Taxes

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

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

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


<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, 1997 and 1996,  and the  related  consolidated
statements  of earnings,  stockholders'  equity,  and cash flows for each of the
three years in the period ended September 30, 1997.  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, 1997 and 1996, and the results
of their  operations  and their  cash  flows for each of the three  years in the
period ended September 30, 1997 in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen LLP

Salt Lake City, Utah
October 15, 1997