Hi, CathyP! What squats using weight do is strengthen the quadriceps, hamstrings and gluteals, and build shaping mass in those areas. Squats normally do not recruit the abductors (the muscles that are found along the outside of the hip and thigh) except as stabilizers.
In order to strengthen the abductors, you can do standing or side-lying long-leg raises out to the side, making sure you don't let the leg turn out or up, and working so that you feel the tension in the side of the buttock and outside of the thigh rather than the back of the buttock, hamstring or quad.
It is a common misconception that one can spot-reduce fat stores in a given body area, which is what I believe your question truly is. In order to "reduce saddle bags and trim outer thighs", what you will want to do is maintain a progressively intense cardio program and progressively intense strengthening program, and maintain a good nutritious "clean" diet.
It's helpful to remember the following: THAT we store fat is a combination of genetics and lifestyle; WHERE we store fat in entirely genetically predetermined.
Hope this helps -
Annette