SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to

For the Quarterly Period                                        Commission File
Ended March 31, 2000                                            Number 001-05083

                              KANEB SERVICES, INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                              74-1191271
(State or other jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)


                          2435 North Central Expressway
                             Richardson, Texas 75080
          (Address of principle executive offices, including zip code)

                                 (972) 699-4000
              (Registrant's telephone number, including area code)

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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Class of Common Stock                              Outstanding at April 30, 2000
     No par value                                        31,158,052 shares

<PAGE>
KANEB SERVICES, INC. AND SUBSIDIARIES

FORM 10-Q
QUARTER ENDED MARCH 31, 2000


                                EXPLANATORY NOTE

         On February 7, 2001,  Kaneb Services,  Inc. (the  "Company")  announced
that it is exchanging, in a non-cash transaction,  common stock for its Series C
and Series F  Preferred  Stocks  (the  "Preferred  Shares")  that were issued to
certain officers of the Company.  When the Preferred Shares were issued,  it was
determined  that the  appropriate  accounting  treatment  was to record  them as
equity securities and that treatment has been consistently applied and disclosed
in the consolidated financial statements.  It has now been determined that their
estimated  redemption  value  should  be  recognized  as  non-cash  general  and
administrative  charges  against  earnings.  The Company has  restated  its 1999
consolidated financial statements on Form 10-K/A, and in addition, the Company's
financial  statements  for the  three  months  ended  March  31,  2000 have been
restated to reflect a non-cash  charge  against  earnings  of  $126,000  for the
estimated  redemption  value of the Series F Preferred  Stock.  Since this is an
exchange for common stock,  these  cumulative  charges against  earnings will be
offset  on  the  effective  date  of  the  exchange  by  an  equal  increase  in
stockholder's  equity and, as a result, the ultimate net effect on stockholder's
equity will be the same under either  treatment.  See Note 1 to the consolidated
financial statements.

                                                                        Page No.
                           Part I. Financial Information

Item 1.  Financial Statements (Unaudited)

         Consolidated Statements of Income - Three Months Ended
            March 31, 2000 and 1999                                        1

         Condensed Consolidated Balance Sheets - March 31, 2000
            and December 31, 1999                                          2

         Condensed Consolidated Statements of Cash Flows - Three
            Months Ended March 31, 2000 and 1999                           3

         Notes to Consolidated Financial Statements                        4


                           Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K                                 11



<PAGE>
KANEB SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(In Thousands -- Except Per Share Amounts)
(Unaudited)

                                                           Three Months Ended
                                                                March 31,
                                                         ----------------------
                                                            2000         1999
                                                         ----------   ---------
                                                         (Restated)
Revenues:
     Services                                            $  63,686    $  63,238
     Products                                               84,677       36,118
                                                         ---------    ---------
           Total revenues                                  148,363       99,356
                                                         ---------    ---------
Costs and expenses:
     Operating costs                                        44,182       43,842
     Cost of sales                                          82,934       34,676
     Depreciation and amortization                           4,806        4,502
     General and administrative                              1,481        1,124
                                                         ---------    ---------
           Total costs and expenses                        133,403       84,144
                                                         ---------    ---------
Operating income                                            14,960       15,212

Other income                                                   196          284
Interest expense                                            (4,183)      (4,535)
Amortization of excess of cost over fair
     value of net assets of acquired businesses               (546)        (511)
                                                         ---------    ---------

Income before income taxes and interest of outside
     non-controlling partners in KPP's net income           10,427       10,450
Income tax expense                                          (1,668)        (777)
Interest of outside non-controlling partners in KPP's
     net income                                             (6,834)      (7,364)
                                                         ---------    ---------
Net income                                                   1,925        2,309
Dividends applicable to preferred stock                        130          114
                                                         ---------    ---------
Net income applicable to common stock                    $   1,795    $   2,195
                                                         =========    =========
Earnings per common share:
     Basic                                               $     .06    $     .07
                                                         =========    =========
     Diluted                                             $     .05    $     .07
                                                         =========    =========



                 See notes to consolidated financial statements.
                                        1


<PAGE>
KANEB SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

                                                          March 31,
                                                            2000     December 31
                                                         (Unaudited)     1999
                                                         ----------- -----------
                                                          (Restated)
                   ASSETS
Current assets:
     Cash and cash equivalents                           $  23,668    $  20,766
     Accounts receivable, trade                             67,140       66,991
     Inventories                                            14,255       18,063
     Prepaid expenses and other current assets              13,402       14,957
                                                         ---------    ---------
        Total current assets                               118,465      120,777
                                                         ---------    ---------
Property and equipment                                     471,984      470,351
Less accumulated depreciation and amortization             145,744      142,207
                                                         ---------    ---------
     Net property and equipment                            326,240      328,144
                                                         ---------    ---------
Investment in affiliate                                     20,571       21,978

Excess of cost over fair value of net assets
     of acquired businesses                                 62,110       62,657

Deferred tax assets                                         21,418       22,754

Other assets                                                 3,940        4,005
                                                         ---------    ---------
                                                         $ 552,744    $ 560,315
                                                         =========    =========
     LIABILITIES AND EQUITY
Current liabilities:
     Current portion of long-term debt                   $   4,447    $   2,471
     Accounts payable                                       18,853       20,146
     Accrued expenses                                       40,598       41,170
                                                         ---------    ---------
         Total current liabilities                          63,898       63,787
                                                         ---------    ---------
Long-term debt, less current portion:
     Pipeline and terminaling services                     154,005      155,987
     Product marketing services                              7,688       11,041
     Industrial services                                    19,862       20,557
     Parent company                                         23,666       23,666
                                                         ---------    ---------
         Total long-term debt, less current portion        205,221      211,251
                                                         ---------    ---------

Deferred income taxes and other liabilities                 15,500       15,654

Interest of outside non-controlling partners in KPP        122,515      124,820

Commitments and contingencies

Stockholders' equity:
     Preferred stock, without par value                      5,792        5,792
     Common stock, without par value                         4,247        4,249
     Additional paid-in-capital                            197,242      197,454
     Treasury stock, at cost                               (31,017)     (30,278)
     Other                                                    (133)        (141)
     Accumulated deficit                                   (28,206)     (30,001)
     Accumulated other comprehensive income (loss) -
         foreign currency translation adjustment            (2,315)      (2,272)
                                                         ---------    ---------
         Total stockholders' equity                        145,610      144,803
                                                         ---------    ---------
                                                         $ 552,744    $ 560,315
                                                         =========    =========


                 See notes to consolidated financial statements.
                                        2


<PAGE>
KANEB SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                    March 31,
                                                              --------------------
                                                                2000        1999
                                                              --------    --------
                                                             (Restated)
<S>                                                           <C>         <C>
Operating activities:
   Net income                                                 $  1,925    $  2,309
   Adjustments to reconcile net income to net
       cash provided by operating activities:
        Depreciation and amortization                            4,806       4,502
        Interest of outside non-controlling partners in KPP      6,834       7,364
       Increase in estimated redemption value of
         Series F preferred stock                                  126        --
        Amortization of excess of cost over fair value
          of net assets of acquired businesses                     546         511
        Deferred income taxes                                    1,370         404
       Equity earnings of affiliate, net of distributions        1,175        --
        Changes in current assets and liabilities                3,349         169
                                                              --------    --------
         Net cash provided by operating activities              20,131      15,259
                                                              --------    --------
Investing activities:
   Capital expenditures                                         (2,990)     (2,651)
   Acquisitions, net of cash acquired                             --       (41,807)
   Change in other assets, net                                     148          68
                                                              --------    --------
       Net cash used in investing activities                    (2,842)    (44,390)
                                                              --------    --------

Financing activities:
   Issuance of debt                                              2,158      51,450
   Payments on debt and capital leases                          (6,212)       (953)
   Distributions to outside non-controlling partners in KPP     (9,250)     (7,675)
   Preferred stock dividends paid                                 (130)       (114)
   Common stock issued                                             139          39
   Purchase of treasury stock                                   (1,092)       --
                                                              --------    --------
       Net cash provided by (used in) financing activities     (14,387)     42,747
                                                              --------    --------

Increase in cash and cash equivalents                            2,902      13,616
Cash and cash equivalents at beginning of period                20,766       9,134
                                                              --------    --------
Cash and cash equivalents at end of period                    $ 23,668    $ 22,750
                                                              ========    ========

Supplemental cash flow information:
   Cash paid for interest                                     $  3,716    $  2,934
                                                              ========    ========
   Cash paid for income taxes                                 $    393    $    204
                                                              ========    ========
</TABLE>


                 See notes to consolidated financial statements.
                                        3


<PAGE>
KANEB SERVICES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)


1.   RESTATEMENT OF FINANCIAL STATEMENTS

     On February 7, 2001, Kaneb Services, Inc. (the "Company") announced that it
     is exchanging, in a non-cash transaction, common stock for its Series C and
     Series F Preferred  Stocks  (the  "Preferred  Shares")  that were issued to
     certain officers of the Company.  When the Preferred Shares were issued, it
     was determined that the appropriate accounting treatment was to record them
     as equity securities and that treatment has been  consistently  applied and
     disclosed  in  the  consolidated  financial  statements.  It has  now  been
     determined  that their estimated  redemption  value should be recognized as
     non-cash general and adminstrative  charge against earnings.  The Company's
     results of  operations  for the three months ended March 31, 2000 have been
     restated to reflect a non-cash charge against  earnings of $126,000 for the
     estimated  redemption value of the Series F Preferred Stock, as follows (in
     thousands):

                                                      Three Months Ended
                                                            March 31,
                                                   ----------------------------
                                                        As             As
                                                     Reported       Restated
                                                   ------------   -------------
     Deferred income taxes and other liabilities   $     10,511   $      15,500
     Accumulated deficit                           $    (23,217)  $     (28,206)
     Total stockholders' equity                    $    150,599   $     145,610
     Operating income                              $     15,086   $      14,960
     Net income                                    $      2,051   $       1,925
     Earnings per common share:
       Basic                                       $       0.06   $        0.06
       Diluted                                     $       0.06   $        0.05


2.   SIGNIFICANT ACCOUNTING POLICIES

     The unaudited condensed  consolidated  financial  statements of the Company
     and its  subsidiaries  for the three month periods ended March 31, 2000 and
     1999, have been prepared in accordance with generally  accepted  accounting
     principles applied on a consistent basis.  Significant  accounting policies
     followed by the Company and its  subsidiaries are disclosed in the notes to
     the  consolidated  financial  statements  included in the Company's  Annual
     Report on Form 10-K/A for the year ended  December 31, 1999. In the opinion
     of  the  Company's  management,  the  accompanying  condensed  consolidated
     financial   statements  contain  the  adjustments,   consisting  of  normal
     recurring accruals,  necessary to present fairly the consolidated financial
     position of the Company and its consolidated subsidiaries at March 31, 2000
     and the  consolidated  results of their  operations  and cash flows for the
     periods  ended  March 31,  2000 and 1999.  Operating  results for the three
     months ended March 31, 2000 are not  necessarily  indicative of the results
     that may be expected for the year ending December 31, 2000.


3.   ACQUISITION BY KPP

     On February 1, 1999,  Kaneb Pipe Line Partners,  L.P.  ("KPP") acquired six
     terminals in the United Kingdom from GATX Terminals Limited for (pound)22.6
     million  (approximately  $37.2  million)  plus  transaction  costs  and the
     assumption of certain  liabilities.  The  acquisition,  which was initially
     financed  by term  loans  from a bank,  has been  accounted  for  using the
     purchase method of accounting.  $13.3 million of the term loans were repaid
     in July 1999 with the  proceeds  from a public  offering  of KPP units (see
     Note 4). The remaining portion ($25.9 million) is due in January 2002.

4.    PUBLIC OFFERING OF KPP UNITS

     In July 1999, KPP issued 2.25 million limited partnership units in a public
     offering at $30.75 per unit, generating  approximately $65.6 million in net
     proceeds.  A portion of the  proceeds was used to repay in full KPP's $15.0
     million  promissory note, KPP's $25.0 million revolving credit facility and
     $18.3  million of KPP's term loans  (including  $13.3 million in term loans
     resulting from the United Kingdom terminal  acquisition referred to in Note
     3). As a result of KPP issuing additional units to unrelated  parties,  the
     Company's  pro-rata  share  of the net  assets  of KPP  increased  by $16.8
     million.  Accordingly, in the third quarter of 1999, the Company recognized
     a $16.8  million gain before  deferred  income taxes of $6.4  million.  The
     transaction  reduced the Company's limited partner interest in KPP from 31%
     to 28%.

<PAGE>
5.   COMPREHENSIVE INCOME

     Comprehensive  income for the three months ended March 31, 2000 and 1999 is
     as follows (in thousands):

                                                        Three Months Ended
                                                             March 31,
                                                        -------------------
                                                          2000       1999
                                                        --------   --------
                                                       (Restated)

          Net income                                    $ 1,925    $ 2,309
          Other comprehensive income (loss) - foreign
             currency translation adjustment                (43)      (560)
                                                        -------    -------
          Comprehensive income                          $ 1,882    $ 1,749
                                                        =======    =======


6.   EARNINGS PER SHARE

     The following is a  reconciliation  of Basic and Diluted earnings per share
     (in thousands, except for per share amounts):

<TABLE>
<CAPTION>
                                                                                    Weighted
                                                                                     Average
                                                                    Net              Common            Per-Share
                                                                  Income             Shares             Amount
                                                              --------------     --------------       ----------
       <S>                                                    <C>                <C>                  <C>
       Three Months Ended March 31, 2000
           Net income, as restated                            $        1,925
           Dividends applicable to preferred stock                      (130)
                                                              --------------
           Basic earnings per share -
              Net income applicable to common stock                    1,795             31,261       $     .06
                                                                                                      =========
           Effect of dilutive securities -
              Common stock options, Series F
                Preferred Stock and DSUs                                -                 1,723
                                                              --------------     --------------
           Diluted earnings per share -
              Net income applicable to common stock,
                Series F Preferred Stock, DSUs and
                assumed options exercised                     $        1,795             32,984       $      .05
                                                              ==============     ==============       ==========

       Three Months Ended March 31, 1999
           Net income                                         $        2,309
           Dividends applicable to preferred stock                      (114)
                                                              --------------
           Basic earnings per share -
              Net income applicable to common stock                    2,195             31,414       $      .07
                                                                                                      ==========
           Effect of dilutive securities -
              Common stock options and DSUs                             -                 1,011
                                                              --------------     --------------
           Diluted earnings per share -
              Net income applicable to common stock,
              DSUs and assumed options exercised              $        2,195             32,425       $      .07
                                                              ==============      =============       ==========
</TABLE>

     Options to purchase  158,897 and 106,232 shares of common stock at weighted
     average prices of $5.43 and $4.26,  were  outstanding at March 31, 2000 and
     1999,  respectively,  but were not included in the  computation  of diluted
     earnings per share because the options' exercise price was greater than the
     average market price of the common stock. Additionally, the Company's 8.75%
     convertible  subordinated  debentures were excluded from the computation of
     diluted  earnings  per share  because the effect of assumed  conversion  is
     anti-dilutive.

<PAGE>
7.   CONTINGENCIES

     The operations of the Company are subject to Federal,  state and local laws
     and  regulations  relating to protection of the  environment.  Although the
     Company  believes  that  its  operations  are in  general  compliance  with
     applicable  environmental  regulations,   risks  of  additional  costs  and
     liabilities are inherent in its  operations,  and there can be no assurance
     that significant costs and liabilities will not be incurred by the Company.
     Moreover,  it is possible  that other  developments,  such as  increasingly
     stringent environmental laws, regulations, enforcement policies thereunder,
     and claims for damages to property or persons resulting from the operations
     of the Company,  could result in substantial  costs and  liabilities to the
     Company.


     Certain  subsidiaries  of KPP are  defendants in a lawsuit filed in a Texas
     state court in 1997 by Grace Energy Corporation ("Grace"),  the entity from
     which KPP acquired ST Services in 1993. The lawsuit involves  environmental
     response and  remediation  allegedly  resulting  from jet fuel leaks in the
     early 1970's from a pipeline. The pipeline,  which connected a former Grace
     terminal  with  Otis  Air  Force  Base,  was  abandoned  in  1973,  and the
     connecting  terminal was sold to an unrelated entity in 1976. Grace alleges
     that it has incurred  since 1996 expenses of  approximately  $3 million for
     response and remediation required by the State of Massachusetts and that it
     expects to incur  additional  expenses in the future.  On January 20, 2000,
     the  Massachusetts  Department of Environmental  Protection  notified KPP's
     subsidiary  that it had reason to believe  that the  subsidiary  was also a
     Potentially  Responsible  Party.  The  subsidiary  replied  to that  letter
     denying  any   responsibility   for  the   Massachusetts   response  and/or
     remediation. Future expenses could potentially include claims by the United
     States  Government,  as described below. Grace alleges that subsidiaries of
     KPP acquired  the  abandoned  pipeline,  as part of the  acquisition  of ST
     Services in 1993,  and assumed  responsibility  for  environmental  damages
     caused by the jet fuel leaks from the  pipeline.  Grace is seeking a ruling
     that  these  subsidiaries  are  responsible  for  all  present  and  future
     remediation  expenses for these leaks and that Grace has no  obligation  to
     indemnify these subsidiaries for these expenses.  The case is set for trial
     in May 2000.

     The consistent  position of KPP's subsidiaries is that they did not acquire
     the  abandoned  pipeline  as part of the  1993 ST  transaction  and did not
     assume  any  responsibility  for  the  environmental  damage.  In an  order
     granting  partial  summary  judgment,  the trial  judge has ruled  that the
     pipeline  was an asset  of the  company  acquired  by the  subsidiary.  The
     subsidiaries  are continuing  with their defense that the pipeline had been
     abandoned  prior to the  acquisition of ST Services and could not have been
     included  in  the  assets  they   acquired.   The   defendants   have  also
     counter-claimed  against  Grace for fraud and mutual  mistake,  among other
     defenses.  If they are  successful  at trial  with  their  defenses  and/or
     counterclaims, the judge's partial summary judgment order will be moot. The
     defendants  also believe they have certain rights to  indemnification  from
     Grace under the  acquisition  agreement  with Grace.  These rights  include
     claims  against  Grace for  breaches  of  numerous  representations  in the
     agreement  including the  environmental  representations.  The  acquisition
     agreement includes Grace's agreement to indemnify the subsidiaries  against
     60% of post-closing  environmental  remediation costs, subject to a maximum
     indemnity payment of $10 million.

     The Otis Air Force Base is a part of the Massachusetts Military Reservation
     ("MMR"),  which  has  been  declared  a  Superfund  Site  pursuant  to  the
     Comprehensive  Environmental Response,  Compensation and Liability Act. The
     MMR Site contains nine groundwater  contamination  plumes, two of which are
     allegedly associated with the pipeline,  and various other waste management
     areas of  concern,  such as  landfills.  The United  States  Department  of
     Defense and the United States Coast Guard, pursuant to a Federal Facilities
     Agreement,  has been  responding to the Government  remediation  demand for
     most of the  contamination  problems at the MMR Site. Grace and others have
     also  received and  responded to formal  inquiries  from the United  States
     Government in connection with the environmental damages allegedly resulting
     from the jet fuel leaks. KPP's  subsidiaries have voluntarily  responded to
     an invitation  from the Government to provide  information  indicating that
     they do not own the pipeline. In connection with a court-ordered  mediation
     between Grace and the subsidiaries,  the Government  advised the parties in
     April 1999 that it has  identified  the two spill areas that it believes to
     be related to the  pipeline  that is the  subject  of the Grace  suit.  The
     Government  advised the parties that it believes it has  incurred  costs of
     approximately  $34  million,  and  expects in the future to incur  costs of
     approximately $55 million,  for remediation of one of the spill areas. This
     amount was not intended to be a final accounting of costs or to include all
     categories of costs.  The Government also advised the parties that it could
     not at that time allocate its costs  attributable to the second spill area.
     KPP believes that the ultimate cost of the remediation,  while substantial,
     will be  considerably  less than the  Government  has  indicated.  KPP also
     believes that,  even if the lawsuit  determines  that the subsidiary is the
     owner of the  pipeline,  the  defendants  have defenses to any claim of the
     Government.  Any claims by the Government  could be material in amount and,
     if  made  and  ultimately  sustained  against  KPP's  subsidiaries,   could
     adversely   affect  KPP's  ability  to  pay  cash   distributions   to  its
     unitholders, including the Company.

     The Company has other  contingent  liabilities  resulting from  litigation,
     claims  and  commitments  incident  to the  ordinary  course  of  business.
     Management  believes,  based on the advice of  counsel,  that the  ultimate
     resolution of such  contingencies will not have a materially adverse effect
     on the financial position or results of operations of the Company.


8.   BUSINESS SEGMENT DATA

     The Pipeline and Terminaling  Segment includes the pipeline and terminaling
     operations of KPP which consist of the  transportation of refined petroleum
     products in the  Midwestern  states as a common  carrier and the storage of
     petroleum products,  specialty  chemicals and other liquids.  The Company's
     Product Marketing Segment provides  wholesale motor fuel marketing services
     throughout the Midwest and Rocky Mountain  regions,  as well as California.
     The Company's  Information  Technology Services Segment provides consulting
     services,  hardware  sales and other  related  information  management  and
     processing services to governmental,  insurance and financial institutions.
     Additionally,  the Company provides Industrial Services to an international
     client base that includes refineries,  chemical plants, pipelines, offshore
     drilling and production  platforms,  steel mills, food and drink processing
     facilities,  power  generation,  and  other  process  industries.   General
     Corporate includes compensation and benefits paid to officers and employees
     of the Parent  Company,  insurance  premiums,  general  and  administrative
     costs,  tax and  financial  reporting  costs,  legal  and  audit  fees  not
     reasonably allocable to specific business segments.

     The Company measures segment profit as operating  income.  Total assets are
     those controlled by each reportable segment (in thousands).
<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                             --------------------------------------
                                                                                    2000                 1999
                                                                             ----------------      ----------------
     <S>                                                                     <C>                   <C>
     Business segment revenues:
        Pipeline and terminaling services                                    $         36,680      $         36,845
        Product marketing services                                                     80,389                31,367
        Information technology services                                                 8,335                 7,028
        Industrial services                                                            22,959                24,116
                                                                             ----------------      ----------------
                                                                             $        148,363      $         99,356
                                                                             ================      ================
     Pipeline and terminaling services segment revenues:
        Pipeline operations                                                  $         15,248      $         15,164
        Terminaling operations                                                         21,432                21,681
                                                                             ----------------      ----------------
                                                                             $         36,680      $         36,845
                                                                             ================      ================
     Industrial services segment revenues:
        Underpressure services                                               $          9,374      $          9,725
        Turnaround services                                                            10,868                10,616
        Other services                                                                  2,717                 3,775
                                                                             ----------------      ----------------
                                                                             $         22,959      $         24,116
                                                                             ================      ================

<PAGE>
                                                                                       Three Months Ended
                                                                                            March 31,
                                                                             --------------------------------------
                                                                                    2000                 1999
                                                                             ----------------      ----------------
                                                                                 (Restated)
     Business segment profit:
        Pipeline and terminaling services                                    $         12,900      $         14,924
        Product marketing services                                                        968                   365
        Information technology services                                                 1,154                   924
        Industrial services                                                             1,419                   123
        General corporate                                                              (1,481)               (1,124)
                                                                             ----------------      ----------------
           Operating income                                                            14,960                15,212
        Other income                                                                      196                   284
        Interest expense                                                               (4,183)               (4,535)
        Amortization of excess of cost over fair value
           of net assets of acquired businesses                                          (546)                 (511)
                                                                             ----------------      ----------------
        Income before income taxes and
           interest of outside non-controlling
           partners of KPP's net income                                      $         10,427      $         10,450
                                                                             ================      ================

                                                                                 March 31,            December 31,
                                                                                   2000                  1999
                                                                             ----------------      ----------------
     Total assets:
        Pipeline and terminaling services                                    $        366,030      $        366,935
        Product marketing services                                                     26,789                28,101
        Information technology services                                                17,621                17,911
        Industrial services                                                           103,892               108,094
        General corporate                                                              38,412                39,274
                                                                             ----------------      ----------------
                                                                             $        552,744      $        560,315
                                                                             ================      ================
</TABLE>

<PAGE>

                           PART II - Other Information

     Item 6.     Exhibits and Reports on Form 8-K

          (a)    Exhibits.

                 27.  Financial Data Schedule


          (b)    Reports on Form 8-K

                 [None.]




                                    Signature


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.



                                         KANEB SERVICES, INC.
                                         (Registrant)


Date:  February 9, 2001                       //s//
                                        ---------------------------------------
                                        Michael R. Bakke
                                        Controller