UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT


     Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):                  June 29, 2001



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



      Delaware                        001-05083                 74-1191271
(State of Organization)          (Commission File No.)        (I.R.S. Employer
                                                             Identification No.)



2435 North Central Expressway
Richardson, Texas                                                   75080
(Address of Principal Executive Offices)                          (Zip Code)


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

<PAGE>
Item 2.  Acquisition or Disposition of Assets.

     On June 29, 2001 (the  "Distribution  Date"),  Kaneb  Services,  Inc.  (the
"Company")  completed the distribution of its pipeline,  terminaling and product
marketing  businesses to its shareholders in the form of a new limited liability
company, Kaneb Services LLC. On the Distribution Date, the shareholders of Kaneb
Services,  Inc.  received  one common  share Kaneb  Services  LLC for each three
shares of the Company's  common stock held on June 20, 2001, the record date for
the distribution.

     The common shares of Kaneb Services LLC (ticker symbol "KSL") began trading
on the New York Stock  Exchange  on July 2, 2001.  The  Company's  common  stock
continues  trading as Kaneb Services,  Inc. d/b/a Xanser  Corporation on the New
York  Stock   Exchange   under  the  ticker  symbol  "XNR".   Upon   shareholder
ratification,  at the annual  meeting,  the Company's name will change to Xanser
Corporation (pronounced zan' ser).


Item 7.   Financial Statements and Exhibits.

       (b)    Pro Forma Financial Information.


                                   SIGNATURES

                                               KANEB SERVICES, INC.



Date:       July 13, 2001                      By:  MICHAEL R. BAKKE
         -----------------------------              ----------------------------
                                                    Michael R. Bakke, Controller


<PAGE>
            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET


     The following unaudited pro forma condensed consolidated balance sheet (the
"Pro Forma Balance  Sheet") for Kaneb  Services,  Inc. (the  "Company") has been
derived from the unaudited  historical financial statements of the Company as of
March 31, 2001 and assumes that the  distribution  of Kaneb  Services LLC shares
(the "Distribution") was consummated on March 31, 2001.

     The Pro  Forma  Balance  Sheet is based on the  available  information  and
contains certain  assumptions that the Company deems appropriate.  The Pro Forma
Balance Sheet does not purport to be indicative of the financial position of the
Company had the  Distribution  occurred on March 31, 2001,  nor is the Pro Forma
Balance Sheet necessarily  indicative of the future financial  position of Kaneb
Services,  Inc. The Pro Forma Balance Sheet should be read in  conjunction  with
the consolidated  financial statements of Kaneb Services,  Inc., included in our
report on Form 10-Q/A, dated June 15, 2001.



<PAGE>


                              KANEB SERVICES, INC.
                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 March 31, 2001
                                 (In Thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                      Pro Forma
                                                                    Historical       Adjustments        Pro Forma
                                                                  --------------    --------------   --------------
    ASSETS
<S>                                                               <C>               <C>              <C>
Current assets:
     Cash and cash equivalents                                    $       15,886    $         -      $       15,886
     Accounts receivable                                                  32,408            7,500 (a)        54,908
                                                                                           15,000 (b)
     Inventories                                                           7,560              -               7,560
     Prepaid expenses and other current assets                             6,675              -               6,675
     Current deferred taxes                                               36,070          (36,070)(b)           -
                                                                  --------------    -------------    --------------
        Total current assets                                              98,599          (13,570)           85,029
                                                                  --------------    -------------    --------------

Property and equipment                                                    30,061              -              30,061
Less accumulated depreciation and amortization                            19,673              -              19,673
                                                                  --------------    -------------    --------------
     Net property and equipment                                           10,388              -              10,388
                                                                  --------------    -------------    --------------

Excess of cost over fair value of net assets
  of acquired businesses                                                  61,943              -              61,943

Deferred income taxes and other assets                                    11,044           (3,511)(b)         7,533

Net assets of discontinued operations - businesses to
  be distributed to common shareholders                                   44,947          (44,947)(c)           -
                                                                  --------------    -------------    --------------
                                                                  $      226,921    $     (62,028)   $      164,893
                                                                  ==============    =============    ==============
     LIABILITIES AND EQUITY
Current liabilities:
     Current portion of long-term debt                            $          567    $         -      $          567
     Accounts payable                                                      7,426              -               7,426
     Accrued expenses                                                     11,210           15,000 (b)        26,210
                                                                --------------    --------------   --------------
        Total current liabilities                                         19,203           15,000            34,203
                                                                  --------------    -------------    --------------

Long-term debt, less current portion:
     Technical services                                                   18,529              -              18,529
     Parent company                                                       21,396              -              21,396
                                                                  --------------    -------------    --------------
        Total long-term debt, less current portion                        39,925              -              39,925
                                                                  --------------    -------------    --------------

Other liabilities                                                          1,711              -               1,711

Stockholders' equity:
     Preferred stock, without par value                                     -                 -                -
     Common stock, without par value                                       4,250              -               4,250
     Additional paid-in-capital                                          210,147          (77,564)(d)       132,583
     Treasury stock, at cost                                             (31,428)             -             (31,428)
     Accumulated deficit                                                 (12,775)             -             (12,775)
     Accumulated other comprehensive income (loss) -
      foreign currency translation adjustment                             (4,112)             536 (e)        (3,576)
                                                                  --------------    -------------    --------------
        Total stockholders' equity                                       166,082          (77,028)           89,054
                                                                  --------------    -------------    --------------
                                                                  $      226,921    $     (62,028)   $      164,893
                                                                  ==============    =============    ==============
</TABLE>

<PAGE>
                              KANEB SERVICES, INC.
             NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 March 31, 2001
                                   (Unaudited)




     The following pro forma entries have been applied to the preparation of the
Pro Forma Balance Sheet:

(a)  Represents  adjustments to accounts receivable to reflect estimated amounts
     due from Kaneb Services LLC to Kaneb Services,  Inc. for expenses  incurred
     by Kaneb Services,  Inc. in connection with the  Distribution.  Pursuant to
     the  Distribution,  Kaneb Services LLC entered into an agreement with Kaneb
     Services,  Inc. to pay Kaneb Services, Inc. an amount equal to the expenses
     incurred by Kaneb Services, Inc. in connection with the Distribution. These
     expenses  include   approximately  $6.1  million  in  expenses  that  Kaneb
     Services, Inc. incurred in connection with its redemption of its Adjustable
     Rate  Cumulative  Class A Preferred  Stock and an estimated $1.4 million in
     legal,  professional and other expenses incurred by Kaneb Services, Inc. in
     connection with the Distribution.

(b)  Represents  adjustments to deferred income taxes to reflect  utilization of
     Kaneb Services,  Inc.'s net operating loss carryforwards ($39.6 million) in
     connection  with the  Distribution  and estimated  federal income taxes due
     ($15  million)  in excess of such net  operating  loss  carryforwards.  The
     distribution of Kaneb Services LLC common shares resulted in a taxable gain
     to the extent of the excess of the fair market value of the Kaneb  Services
     LLC common shares  distributed over the tax basis of the distributed assets
     in the hands of Kaneb  Services,  Inc. To the extent that the taxable  gain
     exceeds  available  net  operating  loss  carryforwards,  the  distribution
     agreement obligates Kaneb Services LLC to pay Kaneb Services,  Inc. amounts
     calculated  based on the taxes  due on the net  amount of gain in excess of
     such net operating  loss  carryforwards.  Although the amount of income tax
     liability  incurred could vary dramatically  based on the fair market value
     of the Kaneb Services LLC shares or if the Internal  Revenue Service was to
     successfully disallow any of the offsetting losses, a $15 million estimated
     federal  income  tax  liability  and  corresponding  receivable  from Kaneb
     Services LLC has been reflected in the Pro Forma Balance Sheet.

(c)  Represents  adjustments  to  eliminate  the net  assets of the  distributed
     businesses which were classified as  "Discontinued  operations - businesses
     to be distributed to common shareholders" at March 31, 2001.

(d)  Represents adjustments to additional paid-in capital to reflect the payment
     by Kaneb  Services LLC to Kaneb  Services,  Inc.  for expenses  incurred by
     Kaneb Services,  Inc. in connection with the Distribution (see note a), the
     reduction of deferred tax assets from  utilization  of net  operating  loss
     carryforwards  in  connection  with the  Distribution  (see note b) and the
     elimination of the net assets of the distributed businesses (see note c).

(e)  Represents  adjustments  to  eliminate  the  accumulated  foreign  currency
     translation adjustment relating to the distributed businesses.
[{"type": "8-K", "sequence": "1", "filename": "ksi8kdist.txt", "description": "KSI DISTRIBUTION PRO FORMA", "secsgml_size_bytes": 12916}]
{"company-data": {"conformed-name": "KANEB SERVICES INC", "cik": "0000054441", "assigned-sic": "1700", "irs-number": "741191271", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-05083", "film-number": "1681600"}, "business-address": {"street1": "2435 N. CENTRAL EXPRESSWAY", "street2": "SUITE 700", "city": "RICHARDSON", "state": "TX", "zip": "75080", "phone": "9726994000"}, "mail-address": {"street1": "P O BOX 650283", "city": "DALLAS", "state": "TX", "zip": "75265-0283"}, "former-company": {"former-conformed-name": "KANEB PIPE LINE CO", "date-changed": "19710610"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):                  June 29, 2001

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

      Delaware                        001-05083                 74-1191271
(State of Organization)          (Commission File No.)        (I.R.S. Employer
                                                             Identification No.)

2435 North Central Expressway
Richardson, Texas                                                   75080
(Address of Principal Executive Offices)                          (Zip Code)

Registrant's telephone number, including area code:  (972) 699-4000
Item 2.  Acquisition or Disposition of Assets.

     On June 29, 2001 (the  "Distribution  Date"),  Kaneb  Services,  Inc.  (the
"Company")  completed the distribution of its pipeline,  terminaling and product
marketing  businesses to its shareholders in the form of a new limited liability
company, Kaneb Services LLC. On the Distribution Date, the shareholders of Kaneb
Services,  Inc.  received  one common  share Kaneb  Services  LLC for each three
shares of the Company's  common stock held on June 20, 2001, the record date for
the distribution.

     The common shares of Kaneb Services LLC (ticker symbol "KSL") began trading
on the New York Stock  Exchange  on July 2, 2001.  The  Company's  common  stock
continues  trading as Kaneb Services,  Inc. d/b/a Xanser  Corporation on the New
York  Stock   Exchange   under  the  ticker  symbol  "XNR".   Upon   shareholder
ratification,  at the annual  meeting,  the Company's name will change to Xanser
Corporation (pronounced zan' ser).

Item 7.   Financial Statements and Exhibits.

       (b)    Pro Forma Financial Information.

                                   SIGNATURES

                                               KANEB SERVICES, INC.

Date:       July 13, 2001                      By:  MICHAEL R. BAKKE
         -----------------------------              ----------------------------
                                                    Michael R. Bakke, Controller
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

     The following unaudited pro forma condensed consolidated balance sheet (the
"Pro Forma Balance  Sheet") for Kaneb  Services,  Inc. (the  "Company") has been
derived from the unaudited  historical financial statements of the Company as of
March 31, 2001 and assumes that the  distribution  of Kaneb  Services LLC shares
(the "Distribution") was consummated on March 31, 2001.

     The Pro  Forma  Balance  Sheet is based on the  available  information  and
contains certain  assumptions that the Company deems appropriate.  The Pro Forma
Balance Sheet does not purport to be indicative of the financial position of the
Company had the  Distribution  occurred on March 31, 2001,  nor is the Pro Forma
Balance Sheet necessarily  indicative of the future financial  position of Kaneb
Services,  Inc. The Pro Forma Balance Sheet should be read in  conjunction  with
the consolidated  financial statements of Kaneb Services,  Inc., included in our
report on Form 10-Q/A, dated June 15, 2001.
KANEB SERVICES, INC.
                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 March 31, 2001
                                 (In Thousands)
                                   (Unaudited)
Pro Forma
                                                                    Historical       Adjustments        Pro Forma
                                                                  --------------    --------------   --------------
    ASSETS
Current assets:
     Cash and cash equivalents                                    $       15,886    $         -      $       15,886
     Accounts receivable                                                  32,408            7,500 (a)        54,908
                                                                                           15,000 (b)
     Inventories                                                           7,560              -               7,560
     Prepaid expenses and other current assets                             6,675              -               6,675
     Current deferred taxes                                               36,070          (36,070)(b)           -
                                                                  --------------    -------------    --------------
        Total current assets                                              98,599          (13,570)           85,029
                                                                  --------------    -------------    --------------

Property and equipment                                                    30,061              -              30,061
Less accumulated depreciation and amortization                            19,673              -              19,673
                                                                  --------------    -------------    --------------
     Net property and equipment                                           10,388              -              10,388
                                                                  --------------    -------------    --------------

Excess of cost over fair value of net assets
  of acquired businesses                                                  61,943              -              61,943

Deferred income taxes and other assets                                    11,044           (3,511)(b)         7,533

Net assets of discontinued operations - businesses to
  be distributed to common shareholders                                   44,947          (44,947)(c)           -
                                                                  --------------    -------------    --------------
                                                                  $      226,921    $     (62,028)   $      164,893
                                                                  ==============    =============    ==============
     LIABILITIES AND EQUITY
Current liabilities:
     Current portion of long-term debt                            $          567    $         -      $          567
     Accounts payable                                                      7,426              -               7,426
     Accrued expenses                                                     11,210           15,000 (b)        26,210
                                                                --------------    --------------   --------------
        Total current liabilities                                         19,203           15,000            34,203
                                                                  --------------    -------------    --------------

Long-term debt, less current portion:
     Technical services                                                   18,529              -              18,529
     Parent company                                                       21,396              -              21,396
                                                                  --------------    -------------    --------------
        Total long-term debt, less current portion                        39,925              -              39,925
                                                                  --------------    -------------    --------------

Other liabilities                                                          1,711              -               1,711

Stockholders' equity:
     Preferred stock, without par value                                     -                 -                -
     Common stock, without par value                                       4,250              -               4,250
     Additional paid-in-capital                                          210,147          (77,564)(d)       132,583
     Treasury stock, at cost                                             (31,428)             -             (31,428)
     Accumulated deficit                                                 (12,775)             -             (12,775)
     Accumulated other comprehensive income (loss) -
      foreign currency translation adjustment                             (4,112)             536 (e)        (3,576)
                                                                  --------------    -------------    --------------
        Total stockholders' equity                                       166,082          (77,028)           89,054
                                                                  --------------    -------------    --------------
                                                                  $      226,921    $     (62,028)   $      164,893
                                                                  ==============    =============    ==============
KANEB SERVICES, INC.
             NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 March 31, 2001
                                   (Unaudited)

     The following pro forma entries have been applied to the preparation of the
Pro Forma Balance Sheet:

(a)  Represents  adjustments to accounts receivable to reflect estimated amounts
     due from Kaneb Services LLC to Kaneb Services,  Inc. for expenses  incurred
     by Kaneb Services,  Inc. in connection with the  Distribution.  Pursuant to
     the  Distribution,  Kaneb Services LLC entered into an agreement with Kaneb
     Services,  Inc. to pay Kaneb Services, Inc. an amount equal to the expenses
     incurred by Kaneb Services, Inc. in connection with the Distribution. These
     expenses  include   approximately  $6.1  million  in  expenses  that  Kaneb
     Services, Inc. incurred in connection with its redemption of its Adjustable
     Rate  Cumulative  Class A Preferred  Stock and an estimated $1.4 million in
     legal,  professional and other expenses incurred by Kaneb Services, Inc. in
     connection with the Distribution.

(b)  Represents  adjustments to deferred income taxes to reflect  utilization of
     Kaneb Services,  Inc.'s net operating loss carryforwards ($39.6 million) in
     connection  with the  Distribution  and estimated  federal income taxes due
     ($15  million)  in excess of such net  operating  loss  carryforwards.  The
     distribution of Kaneb Services LLC common shares resulted in a taxable gain
     to the extent of the excess of the fair market value of the Kaneb  Services
     LLC common shares  distributed over the tax basis of the distributed assets
     in the hands of Kaneb  Services,  Inc. To the extent that the taxable  gain
     exceeds  available  net  operating  loss  carryforwards,  the  distribution
     agreement obligates Kaneb Services LLC to pay Kaneb Services,  Inc. amounts
     calculated  based on the taxes  due on the net  amount of gain in excess of
     such net operating  loss  carryforwards.  Although the amount of income tax
     liability  incurred could vary dramatically  based on the fair market value
     of the Kaneb Services LLC shares or if the Internal  Revenue Service was to
     successfully disallow any of the offsetting losses, a $15 million estimated
     federal  income  tax  liability  and  corresponding  receivable  from Kaneb
     Services LLC has been reflected in the Pro Forma Balance Sheet.

(c)  Represents  adjustments  to  eliminate  the net  assets of the  distributed
     businesses which were classified as  "Discontinued  operations - businesses
     to be distributed to common shareholders" at March 31, 2001.

(d)  Represents adjustments to additional paid-in capital to reflect the payment
     by Kaneb  Services LLC to Kaneb  Services,  Inc.  for expenses  incurred by
     Kaneb Services,  Inc. in connection with the Distribution (see note a), the
     reduction of deferred tax assets from  utilization  of net  operating  loss
     carryforwards  in  connection  with the  Distribution  (see note b) and the
     elimination of the net assets of the distributed businesses (see note c).

(e)  Represents  adjustments  to  eliminate  the  accumulated  foreign  currency
     translation adjustment relating to the distributed businesses.