<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE, SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission file number 1-5083
A. Full title of the plan and the address of the plan, if
difference from that of the issuer named below:
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
B. Name of issuer of these securities held pursuant to the plan
and the address of its principal executive office:
KANEB SERVICES, INC.
2435 N. CENTRAL EXPRESSWAY
RICHARDSON, TEXAS 75080
===============================================================================
<PAGE> 2
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants F-2
FINANCIAL STATEMENTS:
Statement of Net Assets with Fund Information at December 31, 1996 F-3
Statement of Net Assets with Fund Information at December 31, 1995 F-4
Statement of Changes in Net Assets with Fund Information for the Year
Ended December 31, 1996 F-5
Statement of Changes in Net Assets with Fund Information for the Year
Ended December 31, 1995 F-7
Notes to Financial Statements F-8
SUPPLEMENTAL SCHEDULES*:
Item 27a - Schedule of Assets Held for Investment Purposes (Schedule I) F-13
Item 27d - Schedule of Reportable Transactions (Schedule II) F-14
</TABLE>
* - Other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 have been omitted because
they are not applicable.
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Administrator and Participants of The
Kaneb Services, Inc. Savings Investment Plan
In our opinion, the accompanying statements of net assets with fund information
and the related statements of changes in net assets with fund information
present fairly, in all material respects, the net assets of The Kaneb Services,
Inc. Savings Investment Plan at December 31, 1996 and 1995 and the changes in
its net assets for the years then ended, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information in Schedules
I and II is presented for purposes of additional analysis and is not a required
part of the basic financial statements but is additional information required
by the Employee Retirement Income Security Act of 1974. The Fund Information in
the statement of net assets available for benefits and changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for benefits and the changes in net
assets available for benefits of each fund. Schedules I and II and the Fund
Information have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
PRICE WATERHOUSE LLP
Dallas, Texas
June 20, 1997
F-2
<PAGE> 4
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
STATEMENT OF NET ASSETS WITH FUND INFORMATION
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Information
----------------------------------------------------------------------------
Retirement Emerging
Kaneb Money Equity Corporate Equity
Stock Fund Market Fund Growth Fund Bond Fund Growth Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investments:
Kaneb Services, Inc.
Common Stock,
at market $ 4,235,329 $ -- $ -- $ -- $ --
Schwab Retirement
Money Market Fund -- 2,828,659 -- -- --
Fidelity Mt. Vernon
Growth Company Fund,
at market -- -- 3,046,074 -- --
T. Rowe Price New
Income Fund, at market -- -- -- 779,370 --
Warburg Pincus Emerging
Growth Fund, at market -- -- -- -- 499,048
Vanguard Index 500
Portfolio, at market -- -- -- -- --
Janus Worldwide Fund,
at market -- -- -- -- --
Strong Government
Securities Fund, at market -- -- -- -- --
Participants' loans -- -- -- -- --
Accrued interest receivable 804 -- 110 -- 1,363
Contributions receivable 85,152 40,131 41,769 13,471 11,025
Distributions payable (27,585) (138,159) (24,646) (2,758) (18,825)
Other receivables 151 -- -- -- --
------------ ------------ ------------ ------------ ------------
Net assets $ 4,293,851 $ 2,730,631 $ 3,063,307 $ 790,083 $ 492,611
============ ============ ============ ============ ============
<CAPTION>
Fund Information
----------------------------------------------------------------------------
S&P Government
Equity Worldwide Securities
Index Fund Equity Fund Fund Loan Fund Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investments:
Kaneb Services, Inc.
Common Stock,
at market $ -- $ -- $ -- $ -- $ 4,235,329
Schwab Retirement
Money Market Fund -- -- -- -- 2,828,659
Fidelity Mt. Vernon
Growth Company Fund,
at market -- -- -- -- 3,046,074
T. Rowe Price New
Income Fund, at market -- -- -- -- 779,370
Warburg Pincus Emerging
Growth Fund, at market -- -- -- -- 499,048
Vanguard Index 500
Portfolio, at market 410,358 -- -- -- 410,358
Janus Worldwide Fund,
at market -- 557,167 -- -- 557,167
Strong Government
Securities Fund, at market -- -- 142,082 -- 142,082
Participants' loans -- -- -- 532,311 532,311
Accrued interest receivable 19 54 -- -- 2,350
Contributions receivable 7,430 10,168 2,552 -- 211,698
Distributions payable (15,964) (14,856) -- -- (242,793)
Other receivables -- -- -- 18,268 18,419
------------ ------------ ------------ ------------ ------------
Net assets $ 401,843 $ 552,533 $ 144,634 $ 550,579 $ 13,020,072
============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
F-3
<PAGE> 5
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
STATEMENT OF NET ASSETS WITH FUND INFORMATION
DECEMBER 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------------------------------------------------------
Government
Kaneb Securities Fixed
Stock Fund Fund Equity Fund Income Fund Loan Fund Total
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investments:
Kaneb Services, Inc. Common
Stock, at market $ 2,328,476 $ -- $ -- $ -- $ -- $ 2,328,476
TCB-Federal Money Market
Fund 78,462 3,583,366 87,606 101,979 40,835 3,892,248
TCB-Equity Growth Group
Fund at market -- -- 2,567,581 -- -- 2,567,581
TCB-Managed Bond Group
Fund at market -- -- -- 1,014,842 -- 1,014,842
Participants' loans -- -- -- -- 331,242 331,242
Accrued interest receivable 279 17,575 122 197 120 18,293
Contributions receivable 74,570 15,095 31,576 22,312 -- 143,553
Receivables from (payable
to) other funds 7,177 14,770 16,318 6,366 (44,631) --
Other receivables (payables) (8,562) 27,081 (554) (21,876) 3,678 (233)
------------ ------------ ------------ ------------ ------------ ------------
Net assets $ 2,480,402 $ 3,657,887 $ 2,702,649 $ 1,123,820 $ 331,244 $ 10,296,002
============ ============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
F-4
<PAGE> 6
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS WITH FUND INFORMATION
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Information
--------------------------------------------------------------------------------------
U.S.
Government Retirement
Kaneb Securities Fixed Money Equity
Stock Fund Fund Equity Fund Income Fund Market Fund Growth Fund
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Sponsor $ 490,757 $ 80,726 $ 37,646 $ 16,812 $ 165,877 $ 99,003
Participants 530,918 74,133 129,079 47,652 182,377 345,959
----------- ----------- ----------- ----------- ----------- -----------
Total contributions 1,021,675 154,859 166,725 64,464 348,254 444,962
Investment income:
Net appreciation in fair value
of assets 1,131,466 -- -- -- -- 116,332
Investment income (loss) 3,807 65,275 143,444 (25,566) 111,717 113,798
----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) 1,135,273 65,275 143,444 (25,566) 111,717 230,130
----------- ----------- ----------- ----------- ----------- -----------
Total additions 2,156,948 220,134 310,169 38,898 459,971 675,092
----------- ----------- ----------- ----------- ----------- -----------
Distributions and withdrawals (256,899) (381,226) (159,493) (119,981) (445,841) (160,309)
----------- ----------- ----------- ----------- ----------- -----------
Transfers between funds (86,600) (3,496,795) (2,853,325) (1,042,737) 2,716,501 2,548,524
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) 1,813,449 (3,657,887) (2,702,649) (1,123,820) 2,730,631 3,063,307
Net assets, beginning of year 2,480,402 3,657,887 2,702,649 1,123,820 -- --
----------- ----------- ----------- ----------- ----------- -----------
Net assets, end of year $ 4,293,851 $ 0 $ 0 $ 0 $ 2,730,631 $ 3,063,307
=========== =========== =========== =========== =========== ===========
</TABLE>
Continued on next page.
See notes to financial statements.
F-5
<PAGE> 7
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS WITH FUND INFORMATION
DECEMBER 31, 1996
CONTINUED FROM PREVIOUS PAGE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Information
--------------------------------------------------------------------------------------------------------
Emerging S&P Government
Corporate Equity Equity Worldwide Securities
Bond Fund Growth Fund Index Fund Equity Fund Fund Loan Fund Total
---------- ----------- ---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Sponsor $ 42,763 $ 16,774 $ 8,952 $ 12,110 $ 3,951 $ -- $ 975,371
Participants 112,409 57,795 33,600 46,876 12,258 -- 1,573,056
---------- ---------- ------------ ------------ ------------ ------------ ------------
Total contributions 155,172 74,569 42,552 58,986 16,209 -- 2,548,427
Investment income:
Net appreciation
in fair value of assets 675 44,505 44,864 5,195 2,895 -- 1,345,932
Investment income
(loss) 36,882 22,608 8,338 40,037 3,540 20,893 545,043
---------- ---------- ------------ ------------ ------------ ------------ ------------
Net investment
income (loss) 37,557 67,113 53,202 45,502 6,435 20,893 1,890,975
---------- ---------- ------------ ------------ ------------ ------------ ------------
Total additions 192,729 141,682 95,754 104,488 22,644 20,893 4,439,402
---------- ---------- ------------ ------------ ------------ ------------ ------------
Distributions and
withdrawals (34,738) (87,958) (28,948) (27,096) (769) (12,074) (1,715,332)
---------- ---------- ------------ ------------ ------------ ------------ ------------
Transfers between
funds 632,092 438,887 335,037 475,141 122,759 210,516 --
---------- ---------- ------------ ------------ ------------ ------------ ------------
Net increase
(decrease) 790,083 492,611 401,843 552,533 144,634 219,335 2,724,070
Net assets, beginning
of year -- -- -- -- -- 331,244 10,296,002
---------- ---------- ------------ ------------ ------------ ------------ ------------
Net assets, end
of year $ 790,083 $ 492,611 $ 401,843 $ 552,533 $ 144,634 $ 550,579 $ 13,020,072
========== ========== ============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
F-6
<PAGE> 8
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS WITH FUND INFORMATION
DECEMBER 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Information
--------------------------------------------------------------------------------------------
Government
Kaneb Securities Fixed
Stock Fund Fund Equity Fund Income Fund Loan Fund Total
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Sponsor $ 454,253 $ 264,143 $ 108,437 $ 62,148 $ -- $ 888,981
Participants 530,736 289,525 419,817 170,082 -- 1,410,160
------------ ------------ ------------ ------------ ------------ ------------
Total contributions 984,989 553,668 528,254 232,230 -- 2,299,141
------------ ------------ ------------ ------------ ------------ ------------
Investment income:
Net appreciation (depreciation)
in fair value of assets 150,601 -- -- -- -- 150,601
Investment income 3,311 205,413 515,329 149,020 24,419 897,492
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss) 153,912 205,413 515,329 149,020 24,419 1,048,093
------------ ------------ ------------ ------------ ------------ ------------
Transfers from other qualified
plans 1,691 9,344 6,345 2,038 -- 19,418
------------ ------------ ------------ ------------ ------------ ------------
Total additions 1,140,592 768,425 1,049,928 383,288 24,419 3,366,652
------------ ------------ ------------ ------------ ------------ ------------
Distributions and withdrawals (146,175) (357,200) (223,743) (43,928) (16,119) (787,165)
------------ ------------ ------------ ------------ ------------ ------------
Transfers between funds (19,483) (157,193) 60,210 76,949 39,517 --
------------ ------------ ------------ ------------ ------------ ------------
Net increase 974,934 254,032 886,395 416,309 47,817 2,579,487
Net assets, beginning of year 1,505,468 3,403,855 1,816,254 707,511 283,427 7,716,515
------------ ------------ ------------ ------------ ------------ ------------
Net assets, end of year $ 2,480,402 $ 3,657,887 $ 2,702,649 $ 1,123,820 $ 331,244 $ 10,296,002
============ ============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
F-7
<PAGE> 9
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
1. PLAN DESCRIPTION
The Kaneb Services, Inc. Savings Investment Plan (the "Plan") is a defined
contribution plan for employees of Kaneb Services, Inc. ("Kaneb") and its
wholly-owned subsidiaries: Fields Financial Services, Inc.; Furmanite
America, Inc.; and Kaneb Pipe Line Company, (the "Companies"). The Plan is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA"). A copy of the Plan document and amendments is available
from the Plan Administrator. Participants should refer to the Plan
document and amendments for more detailed information regarding provisions
of the Plan.
The Plan was established on April 1, 1991 and permits all full-time
employees of the Companies as of that date, or who become employees
thereafter and have completed one year of service, to contribute 2% to 12%
of base compensation on a pretax basis into participant accounts. In
addition to a mandatory contribution equal to 2% of base compensation per
year for each Plan participant, the Companies make matching contributions
of 25% or 50% of the amount contributed by a Plan participant up to 6% of
base compensation. Employee contributions, together with earnings thereon,
are not subject to forfeiture. That portion of a participant's account
balance attributable to the Companies' contributions, together with
earnings thereon, will be vested over a five-year period at 20% per year.
Participants were credited with their prior years of service for vesting
purposes, however, no amounts were accrued for the accounts of
participants, including the Companies' executive officers, for years of
service previous to the Plan commencement date. Participants may borrow
from the Plan an amount not to exceed the lesser of 50% of such
participant's vested account balance or $50,000 reduced by the highest
loan balance in the preceding 12 months. Contributions to the Plan are
held in a trust and invested by the Plan's trustee in the investment funds
described in Note 3. Effective April 1, 1996, the Plan was amended for
additional investment fund choices and to change the Plan's asset
valuation period from quarterly to daily. In connection with these
changes, The Charles Schwab Trust Company replaced Texas Commerce Bank as
trustee and Leggette & Company replaced The Wyatt Company as the Plan's
record keeper. The Vice President of Human Resources of Kaneb Services,
Inc. serves as the Plan Administrator. All administrative and trust
expenses of the Plan are paid by Kaneb.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Plan maintains its accounts on the accrual basis of accounting.
INVESTMENTS
Investments are recorded in the Plan accounts at market value based on
quoted market prices at year-end. The appreciation or depreciation of
those investments is recorded as an unrealized increase or decrease in the
Plan's net assets.
FEDERAL INCOME TAXES
The Internal Revenue Service ("IRS") has ruled the Plan meets the
requirements of Sections 401(a) and 401(k) of the Internal Revenue Code
("Code") and the Trust is exempt from federal income taxes under Section
501(a) of the code. The IRS granted a favorable letter of determination to
the Plan in February 1997. The Plan Administrator and the Plan's tax
counsel believe the Plan is currently designed and being operated in
compliance with the applicable requirements of the Code. Under present
federal income tax laws and regulations, a participant will not be subject
to federal income taxes on the contributions made
F-8
<PAGE> 10
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
by his employer or withheld from his compensation under the Plan, or on
the interest, dividends or profits on the sale of securities received by
the Plan Trustee, until the participant's account is distributed or
unqualifiedly made available to him.
The code limits contributions to the Plan in several respects. The total
amount deferred by each participant cannot exceed a specified dollar limit
which, for calendar year 1996 was $9,500. Participant compensation in
excess of $150,000 is excluded in calculating participant deferrals and
employer matching contributions. Total contributions during any Plan year,
including both participants' deferrals and employer matching
contributions, may not exceed the maximum amount the Company may deduct
for federal income tax purposes for the year. Additional rules apply to
prevent discrimination in favor of highly compensated employees.
3. INVESTMENT PROGRAMS
As of April 1, 1996, the Plan was amended to allow for additional
investment fund options and, in connection with this amendment, The
Charles Schwab Trust Company replaced Texas Commerce Bank as trustee of
the Plan, see Note 1 - Plan Description. The investment programs for
periods ended December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------
Number
of Shares Fair Value
------------- -------------
<S> <C> <C>
Investments at fair value as determined by quoted market price:
Kaneb Services, Inc. Common Stock 1,303,178.000 $ 4,235,329
------------- -------------
Investments at fair value:
Schwab Retirement Money Market Fund 2,828,658.980 $ 2,828,659
Fidelity Mt. Vernon Growth Company Fund 75,286.066 3,046,074
T. Rowe Price New Income Fund 87,668.184 779,370
Warburg Pincus Emerging Growth Fund 15,022.510 499,048
Vanguard Index 500 Portfolio 5,933.454 410,358
Janus Worldwide Fund 16,538.057 557,167
Strong Government Securities Fund 13,557.454 142,082
Participants' Loans -- 532,311
------------- -------------
3,042,664.705 8,795,069
------------- -------------
Total investment at fair value 4,345,842.705 $ 13,030,398
============= =============
</TABLE>
F-9
<PAGE> 11
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1995
-----------------------------
Number
of Shares Fair Value
------------- -------------
<S> <C> <C>
Investments at fair value as determined by quoted market price:
Kaneb common stock 1,034,878.000 $ 2,328,476
------------- -------------
Investments at fair value:
TCB - Federal Money Marked Fund -- $ 3,892,248
TCB - Equity Growth Group Fund 219,977.806 2,567,581
TCB - Managed Bond Group Fund 90,618.931 1,014,842
Participants' Loans -- 331,242
------------- -------------
310,596.737 7,805,913
------------- -------------
Total investment at fair value 1,345,474.737 $ 10,134,389
============= =============
</TABLE>
Each participant has the option to specify the investment of contributions
made through payroll deductions and 2% employer mandatory contributions
into any one of, or divided among, each of the available investment funds
mentioned above for the period ended December 31, 1996. Employer matching
contributions are invested in the Kaneb Stock Fund.
Contributions designated to the Kaneb Stock Fund are invested in Kaneb
Services, Inc. Common Stock. The Plan either purchases shares in the open
market at the prevailing market price or shares are contributed directly
by the Company based upon the closing trade price on the last day of each
month.
For the period ended December 31, 1995, contributions designated to the
U.S. Government Securities Fund were invested in the Federal Money Market
Fund. In April 1996, investments in the U.S. Government Securities Fund
were transferred to the Schwab Retirement Money Market Fund. Contributions
designated to the Schwab Retirement Money Market Fund are invested
primarily in a short-term portfolio of commercial paper, certificates of
deposit, corporate debt obligations and other bank issues.
For the period ended December 31, 1995, contributions designated to the
Equity Fund had been invested in the TCB-Equity Growth Fund. This Fund
invested primarily in income-producing equity securities considered to
have the potential for capital appreciation. In April 1996, investments in
the Equity Fund were transferred to the Fidelity Mt. Vernon Growth Company
Fund. Contributions designated to the Equity Growth Fund are invested in
the common stock and convertible securities of companies which have
above-average growth potential, such as lesser known companies in new and
emerging areas of the economy or larger or revitalized companies that hold
a strong position in the market.
For the period ended December 31, 1995, contributions designated to the
Fixed Income Fund had been invested in the TCB-Managed Bond Fund. This
Fund invested primarily in intermediate term U.S. Government and Corporate
Bonds. In April 1996, investments in the Fixed Income Fund were
transferred to the T. Rowe Price New Income Fund. Contributions designated
to the Corporate Bond Fund are invested in income-producing
investment-grade debt securities.
F-10
<PAGE> 12
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
In July 1996, the Plan was enhanced by adding additional investment fund
options: Warburg Pincus Emerging Growth Fund, Vanguard Index 500
Portfolio, Janus Worldwide Fund and Strong Government Securities Fund.
Contributions designated to the Warburg Pincus Emerging Growth Fund are
invested in the common stock of smaller companies which have passed their
start-up phase and show positive earnings and prospects of achieving
significant profit and gain in a relatively short period of time.
Contributions designated to the Vanguard Index 500 Portfolio are invested
in all 500 stocks in the S&P 500 Index in approximately the same
proportions as they are represented in the S&P 500. This Fund seeks to
match the S&P 500 Index.
Contributions designated to the Janus Worldwide Fund are invested in
common stocks of foreign and domestic issuers. This Fund has the
flexibility to invest on a worldwide basis in companies of any size and
seeks long-term growth of capital in a manner consistent with the
preservation of capital.
Contributions designated to the Strong Government Securities Fund are
primarily invested in U.S. government securities. The Fund's net assets
may also be invested in other investment-grade debt obligations.
4. CONTRIBUTIONS
Sponsor contributions to the Kaneb Stock Fund may be made in the form of
Kaneb Common Stock purchased by the Sponsor or cash with which the Trustee
subsequently purchases Kaneb Common Stock on the open market. During 1996,
Sponsor contributions of $490,757 and participant contributions of
$530,918 were used by the Trustee to purchase 389,434 shares of Kaneb
Common Stock on the open market. During 1995, Sponsor contributions of
$454,253 and participant contributions of $530,736 were used by the
Sponsor and Trustee to purchase 430,181 shares of Kaneb Common Stock.
Contributions receivable at December 31, 1996 and 1995 included $84,668
and $31,532 of employer contributions and $127,030 and $112,021 of
contributions withheld from participants' compensation, respectively.
All Plan contributions are participant directed with the exception of
employer matching contributions which are automatically invested in the
Kaneb Stock Fund.
5. DISTRIBUTIONS AND WITHDRAWALS
Distributions and withdrawals represent distributions to Plan participants
who have retired, terminated employment or applied and qualified for a
hardship distribution.
Distributions payable as of December 31, 1996 and 1995 were $242,793 and
$247,788, respectively. Distributions payable are recorded on Form 5500
for benefit claims that have been processed and approved for payment prior
to December 31, but not yet paid as of that date.
F-11
<PAGE> 13
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
6. FORFEITURES
Employer matching contributions forfeited by participants upon withdrawing
from the Plan may be credited to their account upon returning to the Plan
if certain requirements are met. During 1996 and 1995, approximately
$45,378 and $36,953 of forfeitures were used to offset employer
contributions, respectively.
F-12
<PAGE> 14
KANEB SERVICES INC. SAVINGS INVESTMENT PLAN SCHEDULE I
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number Market
Number of Issuer and Title of Issue of Shares Cost Value (a)
- --------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
KANEB STOCK FUND
- ----------------
Kaneb Services, Inc. Common Stock 1,303,178.000 $ 3,696,788 $ 4,235,329
============= =============
RETIREMENT MONEY MARKET FUND
- ----------------------------
Schwab Retirement Money Market Fund 2,828,658.980 $ 2,828,659 $ 2,828,659
============= =============
EQUITY GROWTH FUND
- ------------------
Fidelity Mt. Vernon Growth Company Fund 75,286.066 $ 2,929,742 $ 3,046,074
============= =============
CORPORATE BOND FUND
- -------------------
T. Rowe Price New Income Fund 87,668.184 $ 778,695 $ 779,370
============= =============
EMERGING EQUITY GROWTH FUND
- ---------------------------
Warburg Pincus Emerging Growth Fund 15,022.510 $ 454,543 $ 499,048
============= =============
S&P EQUITY INDEX FUND
- ---------------------
Vanguard Index 500 Portfolio 5,933.454 $ 365,494 $ 410,358
============= =============
WORLDWIDE EQUITY FUND
- ---------------------
Janus Worldwide Fund 16,538.057 $ 551,972 $ 557,167
============= =============
GOVERNMENT SECURITIES FUND
- --------------------------
Strong Government Securities Fund 13,557.454 $ 139,187 $ 142,082
============= =============
LOAN FUND
- ---------
Participants' Loans (b) -- $ 532,311 $ 532,311
============= =============
</TABLE>
(a) Market value represents closing prices or estimated fair value at December
31, 1996.
(b) Interest rates ranging from 7% to 10% and maturities of one to
seven years.
F-13
<PAGE> 15
KANEB SERVICES INC. SAVINGS INVESTMENT PLAN SCHEDULE II
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Purchase Selling Cost of Net Gain # of
Identify of Party Involved of Assets Price Price Assets or (Loss) Transactions
- -------------------------- --------- ----- ----- ------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Equity Growth Fund 23,867 Units $ -- $ 918,662 $ 971,499 $ (52,837) 51
Equity Growth Fund 99,206 Units 3,853,882 -- 3,853,882 -- 73
Worldwide Equity Fund 19,315 Units 642,329 -- 642,329 -- 53
Kaneb Services, Inc. 389,434 shares 1,158,755 -- 1,158,755 -- 30
of KSI Common Stock
Retirement Money Market
Fund 4,204,947 Units 4,204,947 -- 4,204,947 -- 51
Retirement Money Market
Fund 1,376,288 Units -- 1,376,288 1,376,288 -- 77
Corporate Bond Fund 69,406 Units -- 604,507 613,226 (8,719) 55
Corporate Bond Fund 157,073 Units 1,399,477 -- 1,399,477 -- 42
Emerging Equity Growth
Fund 27,964 Units 682,457 -- 682,457 -- 50
</TABLE>
F-14
<PAGE> 16
SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrator has duly caused this annual report to be signed on its behalf
by the undersigned thereunto duly authorized.
THE KANEB SERVICES, INC.
SAVINGS INVESTMENT PLAN
Date: June 20, 1997 By: /s/ WILLIAM H. KETTLER
----------------------------------
William H. Kettler, Vice President
Human Resources
(Plan Administrator)
