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, 1998.    

                      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) 274-2521                          
           (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:  26,000,154 shares outstanding 
(which excludes 3,942,474 treasury shares) as of August 7, 1998.


PART I.  FINANCIAL INFORMATION 

Item 1.     Financial Statements.

Condensed Consolidated Balance Sheets     -      June 30, 1998 and
     (Unaudited)                                 December 31, 1997

Condensed Consolidated Statements of      -      June 30, 1998
     Income (Three and Six Month                 and 1997
     Periods - Unaudited)

Condensed Consolidated Statements of      -      June 30, 1998
     Cash Flows (Six Month                       and 1997
     Periods - Unaudited)


Notes to Condensed Consolidated Financial Statements

                    ARNOLD INDUSTRIES, INC.
              CONDENSED CONSOLIDATED BALANCE SHEETS
                           (Unaudited)
                                                    June 30,     December 31,
                                                     1998            1997    
ASSETS
  Current Assets
    Cash and Cash Equivalents                      38,047,711      26,504,782
    Marketable Securities                           8,043,299       9,786,175
    Accounts Receivable, Net                       45,160,416      40,426,025
    Deferred Income Taxes                           9,809,860      10,498,070

    Prepaid Expenses and Supplies                   4,907,916       4,462,413
    Refundable Income Taxes                               -0-         577,498
    
        Total Current Assets                      105,969,202      92,254,963

    Property and Equipment                        354,038,407     346,003,319
    Less:  Accumulated Depreciation               146,497,241     140,441,244
        Total Property and Equipment              207,541,166     205,562,075

    Other Assets
      Goodwill, Net                                 8,445,818       8,493,581
      Investments in Limited Partnerships           9,375,888       9,616,237
      Other                                         1,138,356       1,113,560
        Total Other Assets                         18,960,062      19,223,378

        TOTAL ASSETS                              332,470,430     317,040,416

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
    Notes Payable                                  15,863,399      16,280,126
    Accounts Payable                               12,180,555      10,155,475
    Income Taxes                                    2,352,974             -0-
    Estimated Liability for Claims                  6,150,314       6,452,754
    Accrued Expenses - Other                       17,093,310      13,445,250
        Total Current Liabilities                  53,640,552      46,333,605

    Long-Term Liabilities
    Estimated Liability for Claims                 13,733,000      13,733,000
    Deferred Income Taxes                          34,163,448      35,683,538
    Notes Payable                                   1,199,080       2,383,449
    Other                                           1,721,568       1,653,868
        Total Long-Term Liabilities                50,817,096      53,453,855

  Stockholders' Equity
    Common Stock                                   29,942,628      29,942,628
    Paid-In Capital                                   641,217         481,849
    Retained Earnings                             219,013,307     208,617,019
    Treasury Stock - At Cost                      (21,584,370)    (21,788,540)
        Total Stockholders' Equity                228,012,782     217,252,956
        TOTAL LIABILITIES AND 
          STOCKHOLDERS' EQUITY                    332,470,430     317,040,416

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


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


                              Six Months Ended            Three Months Ended
                                  June 30,                      June 30,
                          1998             1997          1998           1997

Operating Revenues     198,266,340   187,879,966     102,264,377   97,340,744

Operating Expenses     172,579,280   161,281,032      88,109,344   82,289,763
     
Operating Income        25,687,060    26,598,934      14,155,033   15,050,981
                         
Interest Expense          (546,659)     (651,199)       (263,120)    (319,941)

Other Income
 (Deductions)              219,223       544,328         105,927      329,007

Income Before
 Income Taxes           25,359,624    26,492,063      13,997,840   15,060,047

Income Taxes             9,244,798     9,660,658       5,109,411    5,549,798

Net Income              16,114,826    16,831,405       8,888,429    9,510,249

Other Comprehensive
  Income, Net of Tax   ___________    ___________     ___________  __________
     
Comprehensive Income    16,114,826    16,831,405       8,888,429    9,510,249  


Net Income per Common 
  Share:
    Basic                  .62          .64              .34          .37 
    Diluted                .62          .63              .34          .36  

Average Common Shares
  Outstanding:
    Basic               25,976,888    26,471,650     25,995,769    26,277,369
    Diluted             26,168,354    26,695,407     26,153,901    26,848,273

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


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


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

 
                                                        Six Months Ended
                                                            June 30,
                                                        1998        1997
Operating Activities
  Net Income                                          16,114,826   16,831,405
  Adjustments to Reconcile Net Income to Net
    Cash Provided by Operating Activities:
      Depreciation and Amortization                   15,385,910   15,030,499
      Provision for Deferred Taxes                      (831,830)    (401,240)
      Other                                             (863,234)    (511,188)
      Changes in Operating Assets and Liabilities:
        (Increase) in Accounts Receivable             (4,734,391)  (5,818,682)
        (Increase) Decrease in Prepaid Expenses
           and Supplies                                 (445,503)    (755,243)
        Increase in Accounts Payable and
           Accrued Expenses                            8,301,172    9,841,534
        Other                                             67,700       72,600
           Net Cash Provided by 
             Operating Activities                     32,994,650   34,289,685

Investing Activities
  Proceeds from Sale of Investment Securities          2,267,413   15,688,938
  Purchase of Investment Securities                     (527,919)  (6,484,011)
  Proceeds from Disposition of 
    Property and Equipment                             4,062,922    2,348,872
  Purchase of Property and Equipment                 (20,278,595) (17,006,510)
  Capital Contributions to Limited Partnerships       (1,601,096)  (1,586,963)
  Other                                                  (19,446)      16,036
           Net Cash Used In Investing Activities     (16,096,721)  (7,023,638)

Financing Activities
  Cash Dividends Paid                                 (5,718,538)  (5,822,839)
  Purchase of Treasury Stock                                      (12,199,922)
  Other                                                  363,538       84,615
           Net Cash Used In Financing Activities      (5,355,000) (17,938,146)
     
Increase in Cash and Cash Equivalents                 11,542,929    9,327,901

Cash and Cash Equivalents at Beginning of Year        26,504,782   19,704,303

Cash and Cash Equivalents at End of Period            38,047,711   29,032,204


Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:
    Interest                                             546,660      647,933
    Income Taxes                                       7,136,156    9,411,125


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

                           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, 1998, and June 30, 1997, are not necessarily indicative of the results
to be expected for the full year.

Note II:  Pending Adoption of SFAS Amendments

     In June 1997, the Financial Accounting Standards Board issued SFAS 
No. 131, "Disclosures about Segments of an Enteprise and Related Information"
(SFAS 131), which is effective for fiscal years beginning after December 15,
1997.  This statement establishes standards for the disclosure of segment
results.  It requires that segments be determined using the "management
approach," which means the way management organizes the segments within the
enterprise for making operating decisions and assessing performance.  The
Company will adopt SFAS 131 in the fourth quarter of 1998, and is still
evaluating its impact on the Company's financial statement disclosures.

     In January 1998, the Financial Accounting Standards Board issued SFAS
No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits" (SFAS 132), which is effective for fiscal years beginning after
December 15, 1997.  This statement revises current footnote disclosure 
requirements for employers' pensions and other retiree benefits.  It does not
address recognition or measurement issues.  The adoption of SFAS 132 will not
have a material effect on the Company's financial condition or results of
operations.

     In June 1998, the Financial Accounting Standards Board also issued 
SFAS No. 133, "Accounting for Drivative Instruments and Hedging Activities"
(SFAS No. 133), which is effective for all fiscal quarters of all fiscal years 
beginning after June 15, 1999.  This statement requires that all derivative
instruments be recorded on the balance sheet at their fair value.  Changes in
the fair value of derivatives are recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is designated
as part of a hedge transaction and, if it is, the type of hedge transaction.
It is not anticipated that the adoption of SFAS 133 will have a significant
effect on the Company's results of operations or its financial position.



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

     Operating Revenues for the second quarter of 1998 were $102,264,377, an 
increase of $4,923,633 or 5% from Operating Revenues for 1997's second 
quarter.  For the same period, Operating Expenses increased $5,819,581 or 7%; 
Income Before Income Taxes decreased $1,062,207, a decrease of 7%; and Net 
Income decreased $621,820 or 6.5%.  Earnings Per Share-Basic decreased from 
$.37 to $.34 for the respective quarters.

     Operating Revenues for the six months ended June 30, 1998, were 
$198,266,340, an increase of $10,386,374 or 5.5% over the comparable period 
in 1997.  For the same period, Operating Expenses increased $11,298,248 or 7%; 
Income Before Taxes decreased $1,132,439, a decrease of 4.3%; and Net Income 
decreased $716,579 or 4.3%.  Earnings Per Share-Basic decreased from $.64 to 
$.62 for the respective six-month periods.

     The traffic of New Penn Motor Express, Inc. ("New Penn"), the Company's 
less-than-truckload carrier, decreased marginally during the second quarter of 
1998, and its operating revenues for the quarter were down by less than 1% in 
comparison to those of the second quarter of 1997.  Operating income for the 
second quarter was also down from 1997's operating income for the same 
period.  The 1998 second quarter had one less operating day than did the 
second quarter of 1997.  An additional operating day in the 1998 second 
quarter would have resulted in operating revenues for New Penn that exceeded 
operating revenue generated during the 1997 second quarter.

     Revenues of Arnold Transportation Services, Inc. ("ATS") continued to 
grow during the second quarter of 1998.  ATS is the Company's truckload carrier 
and its assembly, distribution and warehousing arm.  Operating Revenues 
generated by ATS during the quarter increased by roughly $5,430,000 over 
the comparable quarter of 1997.  The revenue increase resulted primarily 
from additional truckload freight as opposed to higher rates.  Michael S. 
Walters assumed the position of president of ATS on August 3, 1998, and 
will be located in Jacksonville, Florida.

     Although both of the Company's operating subsidiaries continue to 
experience fierce price competition from other carriers in the trucking 
industry, 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 and TL companies for the second 
quarters of 1998 and 1997 and for the six (6) month periods ended June 30, 
1998, and June 30, 1997:

                                       (Dollars in Thousands)
                                    Second Quarter Ended June 30,
                                     1998                    1997

                                   Amount      %       Amount      %  
NEW PENN MOTOR EXPRESS
AND RELATED COMPANIES (LTL)
     Operating Revenues           51,328     100.0      51,834     100.0
     Operating Expenses           40,818      79.5      40,248      77.6
       Operating Income           10,510      20.5      11,586      22.4

                                      (Dollars in Thousands)
                                   Second Quarter Ended June 30,
                                    1998                    1997

                                  Amount      %       Amount      %  

ARNOLD TRANSPORTATION 
SERVICES (TL)
     Operating Revenues           50,937     100.0      45,507     100.0
     Operating Expenses           47,292      92.8      42,042      92.4
       Operating Income            3,645       7.2       3,465       7.6


                                       (Dollars in Thousands)
                                    Six Month Period Ended June 30,
                                     1998                    1997

                                   Amount      %       Amount      %  
NEW PENN MOTOR EXPRESS
AND RELATED COMPANIES (LTL)
     Operating Revenues          100,590     100.0     100,309     100.0
     Operating Expenses           79,924      79.5      79,222      79.0
       Operating Income           20,666      20.5      21,087      21.0

                                       (Dollars in Thousands)
                                    Six Month Period Ended June 30,
                                     1998                    1997

                                   Amount      %       Amount      %  

ARNOLD TRANSPORTATION 
SERVICES (TL)
     Operating Revenues           97,676     100.0      87,571     100.0
     Operating Expenses           92,655      94.9      82,059      93.7
       Operating Income            5,021       5.1       5,512       6.3


     The Company's working capital at the end of the second quarter of 1998 
was $52,328,650, which is an increase of $2,855,952 or 5.8% from the end of 
the first quarter of 1998.

     The Company's investment in Property and Equipment (Less Accumulated 
Depreciation) as of the end of the second quarter of 1998 stood at 
$207,541,166.  This figure represents an increase from March 31, 1998, of 
$2,414,850 or 1.2%.  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.

     The Company maintains an on-going program to monitor and assess the 
Company's readiness with respect to Year 2000 issues.  Year 2000 issues 
involve not only assuring proper date recognition by the Company's internal 
computer software systems, but also assessing Year 2000 readiness of 
significant vendors, suppliers and customers.  The Company has completed its 
assessment of internal Year 2000 compliance issues.  The Company continues to 
monitor and assess the progress of outside vendors upon whom the Company 
relies for such items as fuel, parts, etc. and the progress of significant 
customers upon whose continued business the Company relies for revenues.

     Pursuant to its internal Year 2000 assessment, the Company embarked upon 
a program to correct and/or replace software used by the Company that does not 
recognize the year 2000.  This internal program is approximately 90% completed 
as of August 13, 1998, and is likely to be 100% complete by December 1998.  
The Company has incurred approximately $1,390,000 in Year 2000 remediation 
costs to date.  The cost to complete the internal program is currently 
estimated to be $250,000.  The cost of completion could be higher or lower 
depending upon availability of programming personnel, as well as such other 
factors as the ability to complete the work within the targeted time frame.  
The cost of monitoring and assessing the compliance programs of third parties 
is expected to be minimal, in that it will be accomplished by the Company's 
internal MIS personnel.

     The Company faces the risk of disruptions to service if either it or its 
significant suppliers do not become Year 2000 compliant in a timely manner.  
Although the Company fully anticipates becoming Year 2000 compliant in a 
timely manner, failure to become compliant would result in the loss of systems 
controlling dispatch, billing and payroll, among other essential functions of 
the Company.  The Company does not believe that these risks will come to 
fruition because of the efforts to date to become Year 2000 compliant.

     The Company is developing contingency plans to purchase electricity, fuel 
and essential parts from other vendors in the event of a Year 2000 malfunction 
by a prime supplier.  The Company has no contingency plans for loss of revenue 
from shippers who are not Year 2000 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 uncertain-
ties.  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 solici-
tation 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.


PART II.  OTHER INFORMATION 

Item 4.     Submission of Matters to a Vote of Security Holders.

     On May 6, 1998, the Company held its Annual Meeting of Stockholders.  The 
following individuals were elected to serve as Directors for a new two-year 
term:

     Name                         For                 Withheld

     Edward H. Arnold             21,799,881          605,311
     Ronald E. Walborn            21,800,350          604,842
     Arthur L. Peterson           21,918,997          486,195

     Kenneth F. Leedy, Heath L. Allen and Carlton E. Hughes continue in their
present two-year terms as Directors.


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

          (a)     Exhibit 27 - Financial Data Schedule

          (b)     NONE


                                 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 13, 1998           By /s/ Heath L. Allen             
                                 Heath L. Allen, Secretary



Date:  August 13, 1998           By /s/ Ronald E. Walborn          
                                 Ronald E. Walborn, Treasurer