FORM 10-Q

                   SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C.  20549


[X]     Quarterly Report Pursuant to Section 13 or 15(d) of the
        Securities Exchange Act of 1934

For the quarterly period ended June 30, 1999.

OR

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934

For the transition period from                to

                  Commission File No. 0-10894

                    ARNOLD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

         Pennsylvania                           23-2200465
(State or other jurisdiction of               (IRS Employer
incorporation or organization)             Identification No.)

            625 South Fifth Avenue, Lebanon, Pennsylvania
             (Address of principal executive offices)

                              17042
                           (Zip Code)

                         (717) 273-9058
        (Registrant's telephone number, including area code)


                           No Change
     (Former name, former address and former fiscal year,
               if changed since last report)

     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

     Common Stock, par value $1.00 per share:  24,867,326 shares outstanding
(which excludes 5,075,302 treasury shares) as of August 9, 1999.

<PAGE>

                         PART I.  FINANCIAL INFORMATION

Item 1.     Financial Statements.

Condensed Consolidated Balance Sheets     -      June 30, 1999 and
     (Unaudited)                                 December 31, 1998

Condensed Consolidated Statements of      -      June 30, 1999
     Income (Three and Six Month                 and 1998
     Periods - Unaudited)

Condensed Consolidated Statements of      -      June 30, 1999
     Cash Flows (Six Month                       and 1998
     Periods - Unaudited)

Notes to Condensed Consolidated Financial Statements

<PAGE>

                           ARNOLD INDUSTRIES, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)
                                                   June 30,     December 31,
                                                     1999            1998
ASSETS
 Current Assets
   Cash and Cash Equivalents                        25,213,522      19,432,802
   Marketable Securities                             4,644,956       4,848,974
   Accounts Receivable, Net                         43,224,792      40,159,047
   Notes Receivable, Current                           875,000         873,709
   Deferred Income Taxes                             2,833,813       6,262,784
   Prepaid Expenses and Supplies                     4,960,431       7,458,315
   Refundable Income Taxes                                  -0-        707,157

      Total Current Assets                          81,752,514      79,742,788

 Property and Equipment, at Cost                   383,699,131     370,157,592
 Less:  Accumulated Depreciation                   151,989,347     149,458,462
      Total Property and Equipment                 231,709,784     220,699,130

 Other Assets
   Goodwill, Net                                     8,160,421       8,303,117
   Investments in Limited Partnerships               8,851,639       9,119,574
   Notes Receivable, Long-term                       1,631,635       1,090,734
   Other                                             1,183,839       1,155,368
      Total Other Assets                            19,827,534      19,668,793

      TOTAL ASSETS                                 333,289,832     320,110,711

LIABILITIES AND STOCKHOLDERS' EQUITY
 Current Liabilities
   Notes Payable                                    20,908,251      15,863,399
   Accounts Payable                                 12,809,352      10,352,289
   Income Taxes                                      2,019,231              -0-
   Estimated Liability for Claims                    2,550,589       5,078,913
   Accrued Expenses - Other                         16,271,485      13,317,352
      Total Current Liabilities                     54,558,908      44,611,953

 Long-term Liabilities
   Estimated Liability for Claims                    3,381,000      10,714,000
   Deferred Income Taxes                            34,645,790      35,307,204
   Notes Payable                                       123,670       1,309,929
   Other                                             1,815,413       1,768,113
      Total Long-term Liabilities                   39,965,873      49,099,246

 Stockholders' Equity
   Common Stock                                     29,942,628      29,942,628
   Paid-in Capital                                   1,410,250         658,065
   Retained Earnings                               244,154,620     232,417,298
   Treasury Stock - At Cost                        (36,742,447)    (36,618,479)
      Total Stockholders' Equity                   238,765,051     226,399,512

      TOTAL LIABILITIES AND STOCKHOLDERS'
        EQUITY                                     333,289,832     320,110,711


THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                           ARNOLD INDUSTRIES, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                              (Unaudited)


                            Six Months Ended            Three Months Ended
                                June 30,                     June 30,
                        1999             1998           1999          1998

Operating Revenues     205,498,683    198,266,340    105,193,036    102,264,377

Operating Expenses     177,855,193    172,579,280     90,649,205     88,109,344

Operating Income        27,643,490     25,687,060     14,543,831     14,155,033

Interest Expense          (665,546)      (546,659)      (416,139)      (263,120)

Other Income
 (Deductions)              286,375        219,223        180,561        105,927

Income Before
 Income Taxes           27,264,319     25,359,624     14,308,253     13,997,840

Income Taxes            10,060,482      9,244,798      5,297,316      5,109,411

Net Income              17,203,837     16,114,826      9,010,937      8,888,429


Net Income per Common
  Share:
    Basic                 .69             .62             .36            .34
    Diluted               .69             .62             .36            .34

Average Common Shares
  Outstanding:
    Basic              24,846,392     25,976,888     24,859,653     25,995,769
      Effect of
      dilutive
      securities -
      stock options       266,211        191,466        282,720        158,132
    Diluted            25,112,603     26,168,354     25,142,373     26,153,901

Dividends per
  Common Share            .22             .22             .11            .11



THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                                ARNOLD INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                          Six Months Ended
                                                              June 30,
                                                         1999        1998
Operating Activities
  Net Income                                        17,203,837      16,114,826
  Adjustments to Reconcile Net Income to Net
    Cash Provided by Operating Activities:
      Depreciation and Amortization                 15,909,672      15,385,910
      Provision for Deferred Taxes                   2,767,557        (831,830)
      Other                                           (711,717)       (863,234)
      Changes in Operating Assets and Liabilities:
        (Increase) in Accounts Receivable           (3,065,745)     (4,734,391)
        (Increase) Decrease in Prepaid Expenses
          and Supplies                               2,497,884        (445,503)
        Increase in Accounts Payable                 2,457,063       2,025,080
        (Decrease) in Estimated Liability
          for Claims                                (9,861,324)       (302,440)
        Increase in Other Accrued Expenses           5,680,521       6,578,532
        Other                                           47,300          67,700
          Net Cash Provided by
          Operating Activities                      32,925,048      32,994,650

Investing Activities
  Proceeds from Sale of Investment Securities          726,036       2,267,413
  Purchase of Investment Securities                   (523,286)       (527,919)
  Proceeds from Disposition of
    Property and Equipment                           5,427,340       4,062,922
  Purchase of Property and Equipment               (32,534,984)     (20,278,595)
  Capital Contributions to Limited Partnerships     (1,141,407)      (1,601,096)
  Other                                                740,271          (19,446)
          Net Cash Used In Investing Activities    (27,306,030)     (16,096,721)

Financing Activities
  Cash Dividends Paid                               (5,466,514)      (5,718,538)
  Purchase of Treasury Stock                          (314,550)              -0-
  Proceeds from Short-term Debt                      5,000,000               -0-
  Other                                                942,766          363,538
          Net Cash Provided by (Used in)
          Financing Activities                         161,702       (5,355,000)

Increase (Decrease)in Cash and Cash Equivalents      5,780,720       11,542,929

Cash and Cash Equivalents at Beginning of Year      19,432,802       26,504,782

Cash and Cash Equivalents at End of Period          25,213,522       38,047,711


Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:
    Interest                                           665,907          546,660
    Income Taxes                                     4,570,519        7,136,156


THE ACCOMPANYING NOTES, HERE AND FOLLOWING, ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                             ARNOLD INDUSTRIES, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)


Note I:     Basis of Presentation

     The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal adjustments)
which are, in the opinion of management, necessary for a fair statement of
results for the interim period.  This financial information should be read in
conjunction with the Financial Statements and Notes thereto included in the
Company's latest annual report on Form 10-K and any intervening reports.

     The results of operations for the three and six-month periods ending
June 30, 1999, and June 30, 1998, are not necessarily indicative of the results
to be expected for the full year.

<PAGE>

Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations.

     Operating Revenues for the second quarter of 1999 were $105,193,036, an
increase of $2,928,659 or 3% from Operating Revenues for 1998's second
quarter.  For the same period, Operating Expenses increased $2,539,861 or 3%;
Income Before Income Taxes increased $310,413, an increase of 2%; and Net
Income increased $122,508 or 1%.  Earnings Per Share-Basic increased from $.34
to $.36 for the respective quarters.

     Operating Revenues for the six months ended June 30, 1999, were
$205,498,683, an increase of $7,232,343 or 3.6% over the comparable period in
1998.  For the same period, Operating Expenses increased $5,275,913 or 3.1%;
Income Before Taxes increased $1,904,695, an increase of 7.5%; and Net Income
increased $1,089,011 or 6.8%.  Earnings Per Share-Basic increased from $.62 to
$.69 for the respective six-month periods.

     New Penn Motor Express, Inc. ("New Penn"), the Company's
less-than-truckload carrier, increased revenues by 3.5% over the revenues
generated during the second quarter of 1998.  Operating Income increased 8%,
as the operating ratio improved from 79.8 to 78.9.  During the second quarter
of 1999, completion of projects to renovate and expand facilities in
Cinnaminson, NJ, and Billerica, MA, increased New Penn's capacity in the
Philadelphia and Boston markets.  The Company also expanded its use of
on-board computers through installations at the Southington, CT, and
Providence, RI, facilities.  On-board computers improve operational
efficiencies and customer service.

     Arnold Transportation Services, Inc. ("ATS"), the Company's truckload
carrier, experienced nearly flat revenue growth during the second quarter of
1999.  Operating Expenses as a percentage of Operating Revenue deteriorated
from 94.8 for the second quarter of 1998 to 96.1 for the second quarter of
1999.  During the period, ATS completed the transition with one of its major
customers and with Raven Transport.  The transition involved eliminating
reliance on Raven Transport as a referral source of business and entering into
direct contracts with the customer on lanes previously serviced.  Although
terminating the Raven relationship had an impact on revenues and expenses,
much of the business that was lost to Raven early in the quarter was either
regained or replaced with new business by the end of the quarter, and June
revenues exceeded those of June 1998.  ATS will be adding new tractors and
trailers during the third and fourth quarters of 1999 in anticipation of
increased customer demand and revenues.

     Arnold Logistics ("ARLO"), a division of ATS which operates warehousing
and related trucking, experienced a 27% increase in revenues during the second
quarter of 1999 over the second quarter of 1998.  Significant project start-up
costs temporarily reduced margins during the quarter.  ARLO's operating ratio

<PAGE>

increased from 78.9 for the second quarter of 1998 to 81.1 for the second
quarter of 1999, principally due to the temporary start-up costs.  ARLO's new
562,000 square foot warehouse in Lancaster, PA, is due to be fully occupied by
the end of September, 1999.  The facility provides the tenant, a leading
entertainment software developer and distributor, with turnkey distribution
services.

     Although all of the Company's operating units continue to experience
fierce price competition in the trucking and warehousing industries, Company
management remains focused on improving operating efficiencies.  At the same
time, management continues to seek growth opportunities by offering expanded
trucking and warehousing related services to meet the needs of existing and
prospective customers.  Company management will continue to seek opportunities
for profitable expansion of the Company through acquisitions and value-added
services.

     Set forth below is a schedule of the Unaudited Operating Revenues,
Expenses and Operating Income of the LTL, TL and Warehousing/Logistics
companies for the second quarters of 1999 and 1998 and for the six (6) month
periods ended June 30, 1999, and June 30, 1998:

                                        (Dollars in Thousands)
                                     Second Quarter Ended June 30,
                                         1999                 1998
                                   Amount      %        Amount     %
LESS-THAN-TRUCKLOAD
     Operating Revenues           53,137     100.0       51,327     100.0
     Operating Expenses           41,936      78.9       40,953      79.8
       Operating Income           11,201      21.1       10,374      20.2

TRUCKLOAD
     Operating Revenues           43,189     100.0       43,978     100.0
     Operating Expenses           41,520      96.1       41,672      94.8
       Operating Income            1,669       3.9        2,306       5.2

WAREHOUSING/LOGISTICS
     Operating Revenues            8,867     100.0        6,959     100.0
     Operating Expenses            7,190      81.1        5,490      78.9
       Operating Income            1,677      18.9        1,469      21.1

Unallocated corporate
  operating income (loss)            (3)                      6

Consolidated operating
  income                         14,544                  14,155


<PAGE>
                                        (Dollars in Thousands)
                                     Six-Month Period Ended June 30,
                                        1999                  1998
                                   Amount      %       Amount      %
LESS-THAN-TRUCKLOAD
     Operating Revenues          102,721     100.0     100,590     100.0
     Operating Expenses           80,822      78.7      80,351      79.9
       Operating Income           21,899      21.3      20,239      20.1

TRUCKLOAD
     Operating Revenues           85,950     100.0      84,060     100.0
     Operating Expenses           83,002      96.6      81,329      96.8
       Operating Income            2,948       3.4       2,731       3.2

WAREHOUSING/LOGISTICS
     Operating Revenues           16,828     100.0      13,616     100.0
     Operating Expenses           13,751      81.7      11,066      81.3
       Operating Income            3,077      18.3       2,550      18.7

Unallocated corporate
  operating income (loss)           (281)                  167

Consolidated operating
  income                          27,643                25,687


     The Company's working capital at the end of the second quarter of 1999
was $27,193,606, which is a small decrease of $196,318 or .7% from the end of
the first quarter of 1999.  For the first six months of 1999, working capital
decreased by a total of $7,937,229, or 22.6%, from working capital at the end
of 1998.  The principal factors contributing to the decrease in working
capital during the six-month period were use of funds for purchase of new
equipment, construction of new facilities and payment of approximately
$11,000,000 during the first quarter to an outside insurance carrier for the
carrier's assumption of liability for certain accrued, self-insured claims
that arose during 12-month periods ending June 30, 1998, 1997 and 1996.
Accrued short and long-term contingent liabilities of approximately $3,667,000
and $7,333,000, respectively, that previously appeared on the Company's
financial statements were in effect liquidated and paid by this transfer.

     The Company's investment in Property and Equipment (Less Accumulated
Depreciation) as of the end of the second quarter of 1999 stood at
$231,709,784.  This figure represents an increase from March 31, 1999, of
$6,566,188 or 3%.  The increase reflects the Company's ongoing capital
expansion program.  Funding for the Company's continuing capital expansion
program will be accomplished through the use of cash generated from current
operating and investment activities, supplemented, when necessary, by short or
long-term debt financing.

<PAGE>

Y2K Readiness Program

     The Company continues its on-going project to assure Year 2000 ("Y2K")
readiness.  Y2K readiness involves assuring that all essential functions of
the Company, including activities that are not directly computer dependant,
will remain operative upon arrival of the Year 2000.  The Company's project to
correct and/or replace internal information technology ("IT") software is 100%
complete.  Internal IT software is software that the Company produces
internally, using its own technicians and programmers, to perform such carrier
and warehousing functions as billing, accounts receivable aging, payables,
payroll, inventory control, dispatch, etc.  The Company's internal IT software
operates on an IBM AS 400 mainframe computer, and all such software, including
software servicing the Company's three principal business units, New Penn
Motor Express, Arnold Transportation Services and Arnold Logistics, has been
assessed, corrected and/or replaced and tested successfully for Y2K
compliance.

     The cost of the Company's program to correct and/or replace non-compliant
internal IT software was $1,675,000.  Those costs have already been incurred
and paid from operating revenues of the Company's three principal business
units.  No other projects or capital expenditures were deferred or canceled
due to the diversion of resources to Y2K compliance.  Approximately 70% of the
cost of the Company's internal program was incurred for services of
third-party consultants and replacement of software.  The remaining 30% of the
cost was incurred for services of employees of the Company or its subsidiaries
who devoted time to assuring Y2K readiness.

     The Company continues to monitor and assess the progress of third parties
upon whom the Company relies in performing carrier and warehousing services.
The Company purchases various externally produced, date-dependant software,
including, but not limited to, communications software, fueling cards,
satellite-based on-board computers,  diagnostic repair programs used at
Company repair facilities, microfilm indexing, etc.  Many such externally
produced software programs are non-IT systems and impact the actual carriage
of freight or storage of goods by the Company's operating units.  The Company
also monitors the progress of suppliers of basic materials such as fuel,
parts, tires, etc., as well as that of significant customers upon whose
continued business the Company relies for revenues.  These monitoring efforts
have revealed areas of concern with respect to Y2K readiness of the Company's
vendors, suppliers and customers.  To the extent reasonably practicable, the
Company is taking steps to assure timely compliance or the availability of
alternate software, services and supplies.  The cost of maintaining and
completing the external Y2K project, including correction and/or replacement
costs and testing, is anticipated to be $125,000.  The additional cost will be
funded entirely from operating
revenues of the Company.

<PAGE>

     The Company faces the risk of disruptions to service if significant
vendors, suppliers and/or customers do not become Y2K compliant in a timely
manner.  Failure by vendors and suppliers to become compliant would result in
the loss of systems controlling dispatch, billing and payroll, among other
essential functions of the Company.  The Company believes that disruptions to
service, if any, will be minimal as a result of the Company's efforts to
assure Y2K compliance, but the risk nevertheless exists that major disruptions
to the national power grid, telephone systems, fuel delivery systems, etc.,
would impact the Company's ability to operate.

     The Company is developing contingency plans to acquire electricity, fuel
and essential parts from other vendors in the event of a Y2K malfunction by a
prime supplier.  Plans include purchase and retention of higher levels of
inventory for items such as tires and spare parts.  As necessary, electricity
will be available at most Company facilities, at least temporarily, through
the use of generators that the Company routinely maintains for power outages.
The Company has no contingency plans for loss of revenues from shippers who do
not become Y2K compliant.

Cautionary Remarks as to Forward-Looking Statements:

     The nature of the Company's operations subject it to changing economic,
competitive, regulatory and technological conditions, risks and
uncertainties.  In accordance with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions that there are
important factors which, among others, could cause future results to differ
materially from the forward-looking statements about our management confidence
and strategies for performance; expectations for new and existing technologies
and opportunities; and expectations for market segment and industry growth.
These factors include, but are not limited to:  (1) changes in the business
environment in which the Company operates, including licensing restrictions,
interest rates and capital costs; (2) changes in governmental law and
regulations, including taxes; (3) market and competitive changes, including
market demand and acceptance for new services and technologies; and (5) other
risk factors specifically identified from time to time in Company releases and
disclosure documents, including SEC reports and the annual proxy solicitation
and report to stockholders.  The Company will update forward-looking
statements as required by law, such as the obligation to provide quarterly
up-dates as to progress toward Year 2000 readiness.


Item 3.   Quantitative and Qualitative Disclosures About
          Market Risk.


     Neither the Company nor any of its subsidiaries, including Maris, Inc.,
own derivative financial instruments.  Accordingly, the Company has no

<PAGE>

exposure to sudden changes in the financial and commodities markets and the
impact that those changes may have on the value of market risk sensitive
derivative securities.  Maris, Inc., however, does own certain market risk
sensitive instruments, including money market funds, time deposits, tax-free
bonds and other like instruments.  The Company believes that the risk inherent
in owning these types of investments is no greater than the market risk of
owning any security traded on various exchanges in the United States and
elsewhere.


Item 4.   Matters Brought to a Vote of Shareholders.

     At the Annual Meeting, held May 5, 1999, stockholders re-elected
Kenneth F. Leedy, Heath L. Allen, and Carlton E. Hughes to serve as members
of the Board of Directors, each for a two-year term, and approved a
restatement and amendment of the Company's Bylaws.

<PAGE>

PART II.  OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K.

          (a)     Exhibit 27 - Financial Data Schedule

          (b)     NONE
<PAGE>

                                 SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                ARNOLD INDUSTRIES, INC.
                                     (Registrant)


Date:  August 12, 1999           By /s/ Heath L. Allen
                                Heath L. Allen, Secretary



Date:  August 12, 1999           By /s/ Ronald E. Walborn
                                Ronald E. Walborn, Treasurer