UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q


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


                For The Quarterly Period Ended November 28, 1999


                           Commission File No. 0-3362



                            SI HANDLING SYSTEMS, INC.
--------------------------------------------------------------------------------
             (Exact Name Of Registrant As Specified In Its Charter)




             Pennsylvania                                        22-1643428
----------------------------------------                     -------------------
   (State Or Other Jurisdiction Of                            (I.R.S. Employer
     Incorporation Or Organization)                          Identification No.)



     600 Kuebler Road, Easton, PA                                   18040
----------------------------------------                     -------------------
(Address Of Principal Executive Offices)                          (Zip Code)



Registrant's Telephone Number, Including Area Code:              610-252-7321
                                                             -------------------






Indicate by checkmark  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
                                                              -----        -----

Number of shares of common stock, par value $1.00 per share, outstanding as of
November 28, 1999:  4,184,878.
                    ---------



<PAGE>




                         PART I - FINANCIAL INFORMATION
                         ------------------------------


Item 1.  Financial Statements
------   --------------------
SI Handling Systems, Inc. and Subsidiary
Consolidated Balance Sheets (Unaudited)
     (In Thousands, Except Share Data)
<TABLE>
<CAPTION>

                                                       November       February
                                                       28, 1999       28, 1999
                                                       --------       --------
<S>                                                    <C>             <C>

Assets
------

Current assets:
   Cash and cash equivalents, principally
     time deposits                                     $  3,935         1,829
                                                         ------        ------

   Receivables:
     Trade                                               11,106         7,603
     Notes and other receivables                            450            51
                                                         ------        ------
       Total receivables                                 11,556         7,654
                                                         ------        ------

   Costs and estimated earnings in excess
     of billings                                          1,986         7,709

   Inventories:
     Raw materials                                        1,407         1,002
     Finished goods and work-in-process                   1,660         1,613
                                                         ------        ------
       Total inventories                                  3,067         2,615
                                                         ------        ------

   Deferred income tax benefits                             937           600
   Prepaid expenses and other current assets                824           199
                                                         ------        ------
       Total current assets                              22,305        20,606
                                                         ------        ------

Property, plant and equipment, at cost:
   Land                                                      56            27
   Buildings and improvements                             4,025         3,485
   Machinery and equipment                                7,227         4,544
                                                         ------        ------
                                                         11,308         8,056
   Less:  accumulated depreciation                        8,515         6,426
                                                         ------        ------
       Net property, plant and equipment                  2,793         1,630
                                                         ------        ------

Deferred income tax benefits                                276           175
Investments in joint ventures                             1,328         1,041
Excess of cost over fair value of net assets
   acquired, less amortization of $162 as of November
   28, 1999 and $0 as of February 28, 1999               19,634             -
Other assets, at cost less accumulated
   amortization of $127 as of November 28, 1999
   and $90 as of February 28, 1999                          302           128
                                                         ------        ------
       Total assets                                    $ 46,638        23,580
                                                         ======        ======
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 2 -

<PAGE>




Item 1.  Financial Statements (Continued)
------   --------------------
SI Handling Systems, Inc. and Subsidiary
Consolidated Balance Sheets (Unaudited)
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                       November       February
                                                       28, 1999       28, 1999
                                                       --------       --------
<S>                                                    <C>             <C>
Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
   Current installments of long-term debt              $  1,265             9
   Accounts payable                                       4,987         4,079
   Customers' deposits and billings in excess
     of costs and estimated earnings                      3,854         4,173
   Accrued salaries, wages, and commissions               1,117           761
   Income taxes payable                                     729           410
   Accrued royalties payable                                265           357
   Accrued product warranties                               711           486
   Accrued pension and retirement savings
     plan liabilities                                       575           556
   Accrued other liabilities                              1,183           374
                                                         ------        ------

     Total current liabilities                           14,686        11,205
                                                         ------        ------

Long-term liabilities:
   Long-term debt, excluding current installments:
     Capital lease obligations                               15             -
     Mortgage payable                                         -            16
     Term loan                                           12,750             -
     Subordinated notes payable                           3,000             -
                                                         ------        ------
     Total long-term debt                                15,765            16
   Deferred compensation                                    473           212
                                                         ------        ------
       Total long-term liabilities                       16,238           228
                                                         ------        ------

Stockholders' equity:
   Common stock, $1 par value; authorized
     20,000,000 shares; issued 4,184,878
     shares as of November 28, 1999 and
     3,705,048 shares as of February 28, 1999             4,185         3,705
   Additional paid-in capital                             6,817         2,767
   Retained earnings                                      4,712         5,675
                                                         ------        ------

       Total stockholders' equity                        15,714        12,147
                                                         ------        ------

       Total liabilities and stockholders' equity      $ 46,638        23,580
                                                         ======        ======
</TABLE>





          See accompanying notes to consolidated financial statements.

                                      - 3 -

<PAGE>




Item 1.  Financial Statements (Continued)
------   --------------------
SI Handling Systems, Inc. and Subsidiary
Consolidated Statements of Operations (Unaudited)
     (In Thousands, Except Share And Per Share Data)

<TABLE>
<CAPTION>
                                 Three Months Ended        Nine Months Ended
                              ------------------------  -----------------------
                                November    November      November    November
                                28, 1999    29, 1998      28, 1999    29, 1998
                              ------------ ----------   ----------- -----------

<S>                           <C>           <C>          <C>         <C>

Net sales                     $    16,089      11,349       37,658      30,091
Cost of sales                      13,230       9,074       31,986      23,223
                                ---------   ---------    ---------   ---------
Gross profit on sales               2,859       2,275        5,672       6,868
                                ---------   ---------    ---------   ---------
Selling, general and
   administrative expenses          2,618       1,549        6,074       4,811
Product development costs              27         115          287         361
Interest expense                      281           6          291          10
Interest income                       (45)        (37)         (91)       (117)
Equity in (income) loss
   of joint ventures                   40          (6)         (59)        (17)
Amortization of goodwill              124           -          162           -
Other income, net                     (54)        (67)        (172)       (138)
                                ---------   ---------    ---------   ---------
                                    2,991       1,560        6,492       4,910
                                ---------   ---------    ---------   ---------
Earnings (loss) before
   income taxes                      (132)        715         (820)      1,958
Income tax expense
   (benefit)                          (68)        270         (329)        748
                                ---------   ---------    ---------   ---------
Net earnings (loss)                   (64)        445         (491)      1,210
                                =========   =========     =========  =========
Basic earnings (loss)
   per share                   $     (.02)        .12         (.13)        .33
                                =========   =========     =========  =========
Diluted earnings (loss)
   per share                   $     (.02)        .12         (.14)        .32
                                =========   =========     =========  =========
Cash dividends
   per share                   $        -           -          .10         .10
                                =========   =========     =========  =========

Average shares
   outstanding                  3,992,500   3,722,554    3,800,802   3,721,558
Dilutive effect of
   stock options                        -      24,566            -      29,258
Dilutive effect of
   phantom stock units             18,333      11,920       16,161      10,714
                                ---------   ---------    ---------   ---------
Average shares
   outstanding
   assuming dilution            4,010,833   3,759,040     3,816,963  3,761,530
                                =========   =========     =========  =========
</TABLE>






          See accompanying notes to consolidated financial statements.

                                      - 4 -

<PAGE>




Item 1.  Financial Statements (Continued)
------   --------------------
SI Handling Systems, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                          Nine Months Ended
                                                       -----------------------
                                                       November       November
                                                       28, 1999       29, 1998
                                                       --------       --------
<S>                                                    <C>             <C>


Cash flows from operating activities:
   Net earnings (loss)                                 $  (491)         1,210
   Adjustments to reconcile net earnings (loss)
     to net cash provided
     by operating activities:
       Depreciation of plant and equipment                 327            301
       Amortization of intangibles                         199              7
       Gain on disposition of equipment                     (3)             -
       Equity in income of joint ventures                  (59)           (17)
       Change in operating assets and liabilities,
         net of effects of the acquisition of Modular
         Automation Corp. and Ermanco Incorporated:
           Receivables                                     972            923
           Costs and estimated earnings in
              excess of billings                         6,948           (555)
           Inventories                                     554             43
           Deferred income tax benefits                   (324)             -
           Prepaid expenses and other current assets        30            (80)
           Other noncurrent assets                          39              -
           Accounts payable                             (1,829)            (6)
           Customers' deposits and billings in excess
              of costs and estimated earnings             (822)         2,101
           Accrued salaries, wages, and
              commissions                                   97           (772)
           Income taxes payable                           (194)             8
           Accrued royalties payable                       (92)          (110)
           Accrued pension and retirement
              savings plan liabilities                      (7)            (5)
           Accrued product warranties                      175            277
           Accrued other liabilities                       452            (60)
           Deferred compensation                             6             25
                                                        ------         ------
   Net cash provided by operating activities             5,978          3,290
                                                        ------         ------

Cash flows from investing activities:
   Investment in joint venture                            (228)             -
   Proceeds from the disposition of equipment                3              -
   Acquisition of Modular Automation Corp.,
     net of cash acquired                                 (928)             -
   Acquisition of Ermanco Incorporated,
     net of cash acquired                               (1,980)             -
   Additions to property, plant and equipment             (268)          (329)
                                                        -------        ------
   Net cash used by investing activities                (3,401)          (329)
                                                        -------        ------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 5 -

<PAGE>




Item 1.  Financial Statements (Continued)
------   --------------------
SI Handling Systems, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited) (Continued)
     (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                          Nine Months Ended
                                                       -----------------------
                                                       November       November
                                                       28, 1999       29, 1998
                                                       --------       --------
<S>                                                    <C>             <C>

Cash flows from financing activities:
   Sale of common shares in connection
     with employee incentive stock option plan              34            60
   Repayment of long-term debt                             (29)           (6)
   Dividends paid on common stock                         (371)         (372)
   Repurchase and retirement of common stock              (105)         (157)
   Repayment of revolving credit loan payable to bank        -        (1,000)
                                                        ------        ------
     Net cash used by financing activities                (471)       (1,475)
                                                        ------        ------

   Increase in cash and cash equivalents                 2,106         1,486
   Cash and cash equivalents, beginning
     of period                                           1,829           752
                                                        ------        ------
   Cash and cash equivalents, end of period           $  3,935         2,238
                                                        ======        ======

   Supplemental disclosures of cash flow information:
     Cash paid during the period for:
       Interest                                       $      2             9
                                                        ======        ======
       Income taxes                                   $    464           740
                                                        ======        ======

   Supplemental disclosures of noncash
   investing and financing activities:
     Issuance of 2,850 common shares
      in exchange for 1,493 common shares
      delivered to the Company by an officer
      in connection with the employee
      incentive stock option.                         $     15             -
                                                        ======        ======

     Issuance of 14,886 common shares in
      exchange for 5,978 common shares
      delivered to the Company by officers
      in connection with the employee
      incentive stock option plan                     $      -            84
                                                        ======        ======

     Issuance of 481,284 common shares
      for Ermanco acquisition                         $  4,500             -
                                                        ======        ======

     Issuance of $14,000 of term debt for
      Ermanco acquisition                             $ 14,000             -
                                                        ======        ======

     Issuance of subordinated notes payable
      for Ermanco acquisition                         $  3,000             -
                                                        ======        ======

     Additional consideration payable in
      connection with the Ermanco acquisition         $    186             -
                                                        ======        ======
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 6 -

<PAGE>




Item 1.  Financial Statements (Continued)
------   --------------------
SI Handling Systems, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Nine Months Ended November 28, 1999 and November 29, 1998

(1)  The  information  contained in this 10-Q report is unaudited and is subject
     to year-end  adjustments and audit.  However, in the opinion of management,
     the interim  financial  statements  furnished  reflect all  adjustments and
     accruals which are necessary to a fair statement of results for the interim
     periods  presented.   Results  for  interim  periods  are  not  necessarily
     indicative of results  expected for the fiscal year. Refer to the Company's
     10-K for the year  ended  February  28,  1999 for more  complete  financial
     information.

     On September  30, 1999,  the Board of Directors of the Company  approved an
     amendment to Article I, Section 1.03 of the Company's  Bylaws to change the
     fiscal year end of the Company  from the Sunday  nearest to the last day of
     February  to December  31. The Company  will file a report on Form 10-K for
     the  10-month  period  ending  December  31,  1999 to cover the  transition
     period.

(2)  SI Handling  Systems,  Inc. ("SI" or the "Company") and McKesson  Automated
     Prescription  Systems,  Inc. ("McKesson APS"),  formerly known as Automated
     Prescription  Systems,  Inc.,  are  co-venturers  in a joint  venture named
     SI/BAKER,  INC. ("SI/BAKER" or the "joint venture"). On September 29, 1998,
     McKesson  Corporation  [NYSE:MCK],  a healthcare supply management company,
     announced  the  completion  of its  acquisition  of Automated  Prescription
     Systems,  Inc. Automated  Prescription  Systems,  Inc. was renamed McKesson
     Automated  Prescription Systems, Inc. The SI/BAKER joint venture draws upon
     the automated materials handling systems experience of SI and the automated
     pill counting and dispensing  products of McKesson APS to provide automated
     pharmacy systems.  Each member company  contributed  $100,000 in capital to
     fund the joint venture.

     The  joint  venture  designs  and  installs  computer   controlled,   fully
     automated,  integrated  systems for managed care pharmacy  operations.  The
     joint  venture's  systems are viewed as labor saving  devices which address
     the issues of  improved  productivity  and cost  reduction.  Systems can be
     expanded as customers'  operations  grow and they may be integrated  with a
     wide variety of components to meet specific customer needs.

     Schedule  A  contains  the  SI/BAKER,   INC.  financial   statements.   The
     information  contained  in  the  SI/BAKER,  INC.  financial  statements  is
     unaudited and is subject to year-end adjustments and audit. However, in the
     opinion of management,  the interim financial  statements furnished reflect
     all  adjustments  and accruals  which are necessary to a fair  statement of
     results for the interim periods presented.

     On  November  4, 1999,  the Board of  Directors  of  SI/BAKER  approved  an
     amendment  to  Article  VII,  Section 5, of the Bylaws to change the fiscal
     year end of the  Company  from the last day of  February  to  December  31.
     SI/BAKER's financial statements for the 10-month period ending December 31,
     1999 will be included in SI's report on Form 10-K for the  10-month  period
     ending December 31, 1999.



                                     - 7 -

<PAGE>




Item 1.  Financial Statements (Continued)
------   --------------------
SI Handling Systems, Inc. and Subsidiary
Notes To Consolidated Financial Statements
Nine Months Ended November 28, 1999 and November 29, 1998

(3)  On April 13,  1999,  the Company  acquired all of the  outstanding  capital
     stock of Modular Automation Corp. of Greene,  New York for $1,957,000.  The
     purchase  price of the  acquisition  was  allocated to the assets  acquired
     based on fair value with the remainder  representing  goodwill. The effects
     of the acquisition are immaterial.

(4)  On  September  30,  1999,  the Company  acquired  Ermanco  Incorporated  as
     described  in  the   Liquidity  and  Capital   Resources   Section  of  the
     Management's  Discussion and Analysis of Financial Condition and Results of
     Operations,  which was financed by the issuance of additional common stock,
     new subordinated debt, and a term loan described therein.

     For the nine months ended  November 28, 1999, pro forma  financial  results
     are as followings (in thousands, except per share amounts):

         Net sales                                   $   56,718
                                                       ========
         Net earnings                                $      574
                                                       ========
         Basic earnings per share                    $      .14
                                                       ========
         Diluted earnings per share                  $      .13
                                                       ========


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

Liquidity And Capital Resources
-------------------------------
     The Company's cash and cash equivalents  increased to $3,935,000 during the
nine months ended  November 28, 1999 from  $1,829,000 at the year ended February
28,  1999.  The increase  resulted  from cash  provided by operating  activities
totaling  $5,978,000  and  proceeds of $34,000  from the sale of common stock in
connection with the employee incentive stock option plan.  Partially  offsetting
the increase in cash and cash  equivalents  from these sources was the repayment
of long-term debt of $29,000,  purchases of capital  equipment of $268,000,  the
acquisition of Modular Automation Corp., net of cash acquired for $928,000,  the
acquisition of Ermanco  Incorporated,  net of cash acquired for $1,980,000,  the
investment of $228,000 in the SI-Egemin  joint venture,  the payment of $371,000
in cash  dividends to  stockholders,  and the payment of $105,000 in  connection
with the purchase and retirement of the Company's  common stock.  Funds provided
by  operating  activities  during the nine months  ended  November 29, 1998 were
$3,290,000.
     On April 13,  1999,  the Company  acquired all of the  outstanding  capital
stock of Modular  Automation Corp.  ("MAC") of Greene,  New York for $1,957,000.
The purchase price of the acquisition was allocated to the assets acquired based
on fair value with the remainder representing  goodwill.  Since its formation in
1981, MAC was a respected  supplier of Automated Guided Vehicle ("AGV") Systems.
The acquisition of the AGV technology  complements and expands the Company's AGV
product offerings.  The acquired AGV products and personnel have been integrated
into the Company's existing Easton, Pennsylvania facility.


                                      - 8 -

<PAGE>




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

Liquidity And Capital Resources (Continued)
-------------------------------
     On September 30, 1999, the Company  completed the acquisition of all of the
outstanding  capital  stock  of  Ermanco  Incorporated   ("Ermanco").   Ermanco,
headquartered in Spring Lake,  Michigan designs and installs complete  conveying
systems for a variety of manufacturing and warehousing  applications.  Under the
terms of the Stock Purchase Agreement and based on Ermanco's  definitive Closing
Balance  Sheet,  the Company  acquired all of the  outstanding  capital stock of
Ermanco for a purchase price of  $22,801,000  consisting of $15,301,000 in cash,
of which $1,551,000 is held in escrow, $3,000,000 in promissory notes payable to
the fourteen stockholders of Ermanco, and 481,284 shares of the Company's common
stock with a value of $4,500,000  based on the average closing price of $9.35 of
the Company's common stock for the five trading days  immediately  preceding the
date of the Stock Purchase Agreement, August 6, 1999.
     On the  Closing  Date of the  acquisition,  under  the  terms of the  Stock
Purchase  Agreement the purchase  price was increased by $615,000 to $22,615,000
based  upon  Ermanco's  projected  net  working  capital  for the  period  ended
September  30,  1999.  Under  the terms of the Stock  Purchase  Agreement,  upon
receipt of the  definitive  Closing  Balance Sheet,  any difference  between the
guaranteed  working capital amount of $2,700,000  would increase or decrease the
cash  portion of the  purchase  price paid  effective  as of the  Closing  Date.
Subsequent  to  the  Closing  Date  of the  acquisition,  the  Company  received
Ermanco's  definitive Closing Balance Sheet and the purchase price was increased
by $186,000 to $22,801,000  based on the actual net working  capital.  The total
working  capital  adjustment  of $801,000  has been added to the escrow and this
amount  will  be paid to the  Sellers  upon  completion  and  acceptance  of the
Post-Closing  Audit.  Therefore,  the  purchase  price  is  subject  to  further
adjustment  pending  the  acceptance  by the  Company  and  the  Sellers  of the
Post-Closing  Audit. Any funds remaining in escrow eighteen months following the
Closing will be distributed to the selling stockholders of Ermanco.
     The  acquisition  of the  Ermanco  technology  complements  and expands the
Company's current product offerings.  Ermanco's products,  property,  equipment,
and  personnel  will be  continued  to be located in Spring  Lake,  Michigan and
operate  as a wholly  owned  subsidiary  of the  Company.  For  purposes  of the
purchase  price  allocation,  the Company has not yet  received an  appraisal on
Ermanco's  property,  plant and  equipment,  and it will  continue to review the
allocation of the purchase price.
     On the Closing Date of the acquisition, the Company entered into employment
agreements with four employees,  Leon C.  Kirschner,  Thomas C. Hubbell,  Lee F.
Schomberg,  and Gordon A. Hellberg.  Mr.  Kirschner and Steven Shulman,  another
principal stockholder of Ermanco,  joined the Board of Directors of the Company.
In order to complete the acquisition of Ermanco,  the Company obtained financing
from its principal bank, First Union National Bank ("First Union").  The Company
entered into a new three-year  line of credit  facility which may not exceed the
lesser of  $6,000,000  or an  amount  based on a  borrowing  base  formula  tied
principally  to  accounts  receivable,  inventory,  fair  market  value  of  the
Company's property and plant, and liquidation value of equipment, plus an amount
equal to  $2,500,000.  This amount shall be reduced by $625,000 every six months
during  the first two years of the line of credit  facility  until  such  amount
reaches  zero,  minus the unpaid  principal  balance of the term loan  described
below.  The line of credit  facility is to be used primarily for working capital
purposes  and  closing  costs  associated  with the Ermanco  acquisition.  As of
November 28, 1999, the Company did not have any borrowings

                                      - 9 -

<PAGE>




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

Liquidity And Capital Resources (Continued)
-------------------------------
under the line of credit  facility.  The line of credit  facility  replaced  the
Company's  former  $5,000,000  committed  revolving  credit  facility with First
Union.
     The Company also received $14,000,000 in the form of a seven-year term loan
from First Union to finance  the  acquisition  of Ermanco.  During the first two
years of the term loan,  the  Company  will repay  equal  quarterly  payments of
$312,500 plus accrued  interest.  After the second  anniversary of the September
30,  1999  Closing  Date,  the  Company  will make equal  quarterly  payments of
$575,000  plus  accrued  interest.  The  interest  rate on the term  loan is the
three-month  LIBOR Market Index Rate plus two and  three-quarters  percent.  The
Company  entered into an interest  rate swap  agreement for fifty percent of the
term loan to hedge the  floating  interest  rate.  The  Company  entered  into a
seven-year interest rate swap for $7,000,000 of the term loan at a fixed rate of
9.38%.
     In order to obtain the line of credit and term loan,  the  Company  granted
First Union a security  interest in all personal  property,  including,  without
limitation,  all accounts,  deposits,  documents,  equipment,  fixtures, general
intangibles,   goods,   instruments,   inventory,   letters  of  credit,  money,
securities,  and a first  mortgage on all real  estate  owned by the Company and
Ermanco.  The line of credit facility and term loan contain various  restrictive
covenants   relating  to  additional   indebtedness,   asset   acquisitions   or
dispositions,  investments, guarantees, payment of dividends, and maintenance of
certain financial ratios. The Company was in compliance with all covenants as of
November 28, 1999.
     The promissory  notes issued to the fourteen  stockholders of Ermanco total
$3,000,000,  have a term of seven years,  and bear interest at an annual rate of
ten percent in years one through  three,  twelve percent in years four and five,
and fourteen  percent in years six and seven.  Interest on the promissory  notes
shall  be  payable  quarterly,  in  cash or  under  certain  conditions,  in the
Company's  common stock upon approval of the Company's  Board of Directors.  The
promissory  notes may be prepaid prior to the end of the seven-year term as long
as the Company has no debt  outstanding  under its line of credit  facility  and
term loan.
     Prior to the acquisition of Ermanco, the Company had a $5,000,000 committed
revolving  credit  facility  which was  secured by a lien  position  on accounts
receivable,  land,  and buildings and contained  various  restrictive  covenants
relating to additional  indebtedness,  asset  acquisitions or dispositions,  and
maintenance of certain financial ratios.  The Company was in compliance with all
covenants  during  the six  months  ended  August  29,  1999  and  prior  to the
acquisition  of  Ermanco.  The  Company  did not have any  borrowings  under the
committed revolving credit facility during the six months ended August 29, 1999;
however, borrowings which occurred after the six months ended August 29, 1999 or
contemporaneous  with the  acquisition  of Ermanco  were repaid as of October 6,
1999. As noted above, this facility was replaced by a new $6,000,000  three-year
line of credit facility with the Company's principal bank.
     On March 4, 1996, SI/BAKER established a $2,500,000 Line of Credit Facility
(the  "Facility")  with its principal bank (the "Bank").  Under the terms of the
Facility,  SI/BAKER's parent companies,  SI Handling Systems,  Inc. and McKesson
Automated Prescription Systems, Inc., have each provided a limited guarantee and
surety in an  amount  not to  exceed  $1,000,000  for a  combined  guarantee  of
$2,000,000  to the Bank for the payment  and  performance  of the related  note,
including any further renewals or  modifications of the Facility.  During fiscal
1998, the Bank increased the borrowing  availability  to $3,000,000 and extended
the  expiration  date of the Facility.  On March 18, 1999,  SI/BAKER  repaid its
outstanding debt under the Facility of

                                     - 10 -

<PAGE>




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

Liquidity And Capital Resources (Continued)
-------------------------------
$500,000.  As of November 30, 1999, SI/BAKER did not have any borrowings under
the Facility.  The Facility has an expiration date of February 29, 2000.
     On  June  7,  1999,  the  Board  of  Directors  of the  Company  authorized
management to purchase up to 10,000 shares of the Company's common stock through
open market  transactions  or  negotiated  transactions  at prices not to exceed
prevailing  market prices.  During the second quarter ended August 29, 1999, the
Company spent $105,000 on purchases of 10,000 shares of its common stock through
open market transactions as part of the stock purchase program.
     On October 14,  1998,  the Board of  Directors  of the  Company  authorized
management to purchase up to $400,000 of the Company's common stock through open
market  transactions  or  negotiated   transactions  at  prices  not  to  exceed
prevailing  market prices.  During the year ended February 28, 1999, the Company
spent $399,000 on purchases of its common stock through open market transactions
as part of the stock purchase program.
     The Company believes that its financial resources consisting of its current
assets,  anticipated  cash flow, and the available line of credit  facility will
adequately finance its operating requirements for the foreseeable future.
     The  Company  plans to  consider  expansion  opportunities  as they  arise,
although ongoing  operating  results of the Company,  the restrictive  covenants
associated with the recent financing obtained from the Company's  principal bank
to complete the acquisition of Ermanco, the economics of the expansion,  and the
circumstances  justifying the expansion  will be key factors in determining  the
amount of resources the Company will devote to further expansion.  At this time,
the Company does not have any material capital commitments.


Results Of Operations
---------------------

(a)  Nine Months Ended  November 28, 1999 Versus Nine Months Ended  November 29,
     ---------------------------------------------------------------------------
     1998
     ----
     On September 30, 1999, the Company concluded the acquisition of all of the
outstanding capital stock of Ermanco Incorporated.  Ermanco operates as a wholly
owned  subsidiary  of SI and the results for the nine months ended  November 28,
1999 include the operations of Ermanco from October 1, 1999.
     The  Company's  net loss for the nine months  ended  November  28, 1999 was
$491,000  compared to net  earnings  of  $1,210,000  for the nine  months  ended
November 29, 1998.
     Backlog  at the  end  of the  nine  months  ended  November  28,  1999  was
approximately  $19,800,000.  During the nine months ended November 28, 1999, the
Company received orders totaling approximately $31,650,000. Two orders, totaling
approximately  $10,450,000,  engage  the  Company  to  modernize  and expand two
distribution  facilities for a major government  agency.  These  contracts,  won
under a competitive bidding process,  are scheduled to be completed by September
2000.
     Net sales of  $37,658,000  for the nine  months  ended  November  28,  1999
increased  25.1% compared to net sales of $30,091,000  for the nine months ended
November 29, 1998.  The sales  increase of  $7,567,000 is comprised of Ermanco's
contribution  to product  sales  approximating  $5,525,000  and SI's increase in
sales  of  approximately  $2,042,000  when  compared  to the nine  months  ended
November  29,  1998.  The  largest  increase  in  SI's  sales  occurred  in  the
Switch-Cart product line.

                                     - 11 -

<PAGE>




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

Results Of Operations
---------------------

(a)  Nine Months Ended November 28, 1999 Versus Nine Months Ended November
     ---------------------------------------------------------------------
     29, 1998 (Continued)
     --------
During  the  nine  months  ended  November  28,  1999,   Switch-Cart   sales  of
approximately  $14,200,000  rose  approximately  $7,175,000 when compared to the
nine months ended  November 29, 1998 due primarily to progress made on contracts
with a major government agency.  Partially  offsetting the impact of Ermanco and
Switch-Cart  sales during the nine months ended November 28, 1999 was a decrease
in sales of approximately  $5,125,000 across SI's other products lines, with the
majority of the decrease relating to sales of the Company's Cartrac,  Sortation,
and Automated Guided Vehicle product lines.
     Gross profit as a  percentage  of sales was 15.1% for the nine months ended
November 28, 1999 compared to 22.8% for the nine months ended November 29, 1998.
The decrease in the gross profit  percentage  for the nine months ended November
28, 1999 was  primarily  attributable  to  competitive  pressures  as well as to
first-time  inefficiencies  associated with the development of enhanced products
related to contracts in process.  The  inefficiencies  associated with one major
systems  integration  contract  accounted  for a  second  quarter  cost  overrun
resulting in an unfavorable  impact on gross profit of approximately  $1,100,000
in the second quarter. Although the full effect of the cost overrun was provided
for in the second quarter, third quarter revenue of approximately $2,240,000 was
attributable  to this contract at no gross profit.  However,  in the process the
Company has developed an additional  proprietary  product and service to sell in
various marketplaces. Also contributing to the higher gross profit percentage in
the nine months ended November 29, 1998 was the favorable performance on several
contracts,  principally for the Company's  higher margin  proprietary  products,
initiated in the prior fiscal year,  that were  completed or nearing  completion
during the nine months ended November 29, 1998.
     Selling,  general and administrative  expenses of $6,074,000 were higher by
$1,263,000  in the nine months  ended  November 28, 1999 than in the nine months
ended November 29, 1998. The majority of the increase,  approximately  $725,000,
is  attributable  to  Ermanco.  Also  contributing  to the  increase in selling,
general and  administrative  expenses  was  approximately  $300,000 in severance
costs  and  $300,000  in  costs  associated  with (1) the  appointment  of a new
President and CEO; (2) the addition of corporate  purchasing  resources aimed at
establishing   global   procurement    capabilities   which   develop   supplier
relationships  that provide a competitive  advantage;  and (3) expenses based on
revenue performance.  Partially offsetting the increase in selling, general, and
administrative  expenses  was a larger  amount of costs  during the nine  months
ended  November 29, 1998  associated  with product  promotion  and sales efforts
aimed at expanding the customer base.
     Product  development  costs of $287,000  were lower by $74,000 for the nine
months ended  November 28, 1999 than in the nine months ended November 29, 1998.
Development  programs  in the nine  months  ended  November  28,  1999  included
enhancements to the  Switch-Cart and Order Selection  product lines with efforts
directed towards unit picking techniques and automated replenishment.

                                     - 12 -

<PAGE>




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

Results Of Operations
---------------------

(a)  Nine Months Ended November 28, 1999 Versus Nine Months Ended November
     ---------------------------------------------------------------------
     29, 1998 (Continued)
     --------
Development  programs  in the nine  months  ended  November  29,  1998  included
enhancements to the Company's  product controls,  and improvements  primarily to
the Order Selection product line, with particular emphasis aimed at the controls
platform for Dispen-SI-matic  Systems,  unit-picking  techniques,  and automated
replenishment.
     Interest  income of $91,000 was lower by $26,000 in the nine  months  ended
November  28, 1999  compared to the nine months ended  November  29,  1998.  The
decrease  in  interest  income  was  attributable  to the  lower  level of funds
available  for  short-term  investments  primarily  during the six months  ended
August 29, 1999.
     Interest  expense of  $291,000  was higher by  $281,000  in the nine months
ended  November  28, 1999 than in the nine months ended  November 29, 1998.  The
increase in interest  expense was  primarily  attributable  to the term debt and
subordinated notes issued in connection with the Ermanco  acquisition during the
third quarter ended November 28, 1999.
     Equity  in  (income)  loss  of  joint  ventures  represents  the  Company's
proportionate  share of its  investments  in the  SI-Egemin  and SI/BAKER  joint
ventures that are being accounted for under the equity method. The net favorable
variance of $59,000 for the nine months ended November 28, 1999 in the equity in
(income)  loss of joint  ventures  was  comprised  of a  favorable  variance  of
$166,000  attributable to the SI/BAKER joint venture and an unfavorable variance
of $107,000  attributable to the SI-Egemin joint venture. The favorable variance
of  $166,000  for the nine  months  ended  November  28,  1999 in the  equity in
(income) loss of the SI/BAKER joint venture was  attributable to increased sales
of approximately  $8,945,000,  as compared to the comparable prior fiscal period
of approximately $5,993,000, plus a reduction of $137,000 in product development
expenses, and an increase of $92,000 in interest income, net. The sales increase
was primarily  attributable  to a larger backlog of orders  entering the current
fiscal year versus a smaller  backlog of orders at the beginning of prior fiscal
year.  During the third quarter of the  comparable  prior fiscal year,  SI/BAKER
increased  development  expenses  for software  and  controls  capabilities  for
various new products  addressing  changing  market  requirements.  The favorable
variance in interest income, net was primarily  attributable to the higher level
of working  capital and short-term  investments  during the first nine months of
current fiscal year. Partially offsetting the favorable variance were SI/BAKER's
increases  of (1)  $118,000  in  revenue-based  royalty  costs due to the parent
companies, and (2) $186,000 in selling, general and administrative expenses. The
increase  in  selling,   general  and  administrative   expenses  was  primarily
attributable  to an increase of $140,000 in expenses based on revenue and profit
performance  and an  increase  of  $30,000  in costs  associated  with sales and
administrative efforts aimed at expanding the customer base.
     The unfavorable variance of $107,000 for the nine months ended November 28,
1999  in the  equity  in  (income)  loss  of the  SI-Egemin  joint  venture  was
attributable  to start up costs,  primarily in the third quarter ended  November
28, 1999. The SI-Egemin joint venture was initiated in July 1999.
     The  favorable  variance  of  $34  in  other  income,  net,  was  primarily
attributable to an increase in the  revenue-based  royalty income related to the
SI/BAKER joint venture.


                                     - 13 -

<PAGE>




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

Results Of Operations
---------------------

(a)  Nine Months Ended  November 28, 1999 Versus Nine Months Ended  November 29,
     ---------------------------------------------------------------------------
     1998 (Continued)
     ----
     Amortization of goodwill represented amortization,  using the straight-line
method over a period of five years,  associated  with the acquisition of Modular
Automation Corp. and amortization,  using the straight-line method over a period
of forty years,  associated with the recent acquisition of Ermanco Incorporated.
Goodwill  amortization  expense  associated  with the  acquisitions  of  Modular
Automation Corp. and Ermanco Incorporated totaled approximately $80,000 each.
     The Company  recognized  an income tax benefit of $329,000  during the nine
months ended  November 28, 1999 compared to the incurrence of income tax expense
of $748,000 in the nine months ended  November 29, 1998.  The income tax benefit
recognized for the nine months ended November 28, 1999 represented the carryback
of current fiscal year losses against prior year income.  Income tax expense for
the nine months  ended  November  29, 1998 was  generally  recorded at statutory
federal and state tax rates expected to apply for that fiscal year.

(b)  Three Months Ended November 28, 1999 Versus Three Months Ended November 29,
     ---------------------------------------------------------------------------
     1998
     ----
     With the  exception of the following  Statements  of  Operations  captions,
changes in the third  quarter of the current  fiscal year  compared to the prior
year were  consistent  with  those  previously  noted  above for the  nine-month
period.
     Net sales of  $16,089,000  for the third  quarter  ended  November 28, 1999
increased 41.8% compared to net sales of $11,349,000 for the third quarter ended
November 29, 1998.  The sales  increase of  $4,740,000 is comprised of Ermanco's
contribution  to product  sales  approximating  $5,525,000  and SI's decrease in
sales of  approximately  $785,000  when  compared  to the  third  quarter  ended
November 29, 1998. With the exception of Switch-Cart sales, the decrease in SI's
sales was experienced across the Company's other product lines with the majority
of the decrease relating to sales of the Company's Cartrac, Order Selection, and
Automated Guided Vehicle product lines.
     Gross profit as a percentage of sales was 17.8% for the third quarter ended
November 28, 1999  compared to 20.0% for the third  quarter  ended  November 29,
1998.  The decrease in the gross profit  percentage  for the third quarter ended
November 28, 1999 was primarily attributable to competitive pressures as well as
to first-time  inefficiencies  associated with the development of enhanced Order
Selection products related to contracts in process.  Although the full effect of
the cost overrun on a major systems integration contract was provided for in the
second  quarter,   third  quarter  revenue  of   approximately   $2,240,000  was
attributable to this contract at no gross profit.
     Selling,  general and administrative  expenses of $2,618,000 were higher by
$1,069,000  in the  third  quarter  ended  November  28,  1999 than in the third
quarter ended  November 29, 1998.  The majority of the  increase,  approximately
$725,000,  is  attributable  to Ermanco.  Also  contributing  to the increase in
selling,  general and  administrative  expenses  was  approximately  $300,000 in
severance costs.




                                     - 14 -

<PAGE>




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

Year 2000
---------
     The  Year  2000  issue   relates  to  the  ability  of  computer   systems,
microprocessors,  and other electronic  devices to deal appropriately with dates
on or after  January  1,  2000 and other  dates  used for  special  programmatic
functions (i.e.  9999).  The effect of the Year 2000 issue may include  computer
failures and business interruption.
     The  Company has  assembled a team of internal  staff to oversee the matter
and has completed its Year 2000 assessment. Internally, the Company has upgraded
its business system to address the Year 2000 issue. Externally,  the Company has
and will continue to survey its  suppliers,  financial  institutions,  and other
organizations  to ensure that those parties have remediated or have  appropriate
plans to remediate  Year 2000 issues where their systems or business  activities
may impact  the  Company's  operations.  However,  many  suppliers  have  either
declined to provide the requested Year 2000 assurances or have limited the scope
of  assurances  to which they are  willing to  commit;  therefore,  based on the
response of its survey to date, the Company cannot presently estimate the impact
of the failure of third parties to be Year 2000 compliant.  Also,  customers may
utilize the services, on a fee basis, of the Company's customer support group to
assess and upgrade their materials  handling systems  purchased from the Company
for Year 2000  compliance.  If a  significant  number of suppliers and customers
were to experience  business  disruptions as a result of their lack of Year 2000
readiness,  their problems could have a material adverse effect on the financial
position,  liquidity,  and results of  operations  of the  Company.  In order to
address this situation, the Company has formulated contingency plans intended to
deal  with  the  impact  on the  Company  of  Year  2000  problems  that  may be
experienced by suppliers and customers. In any event, even where the Company has
contingency  plans,  there can be no assurance  that such plans will address all
the problems that may arise, or that such plans,  even if  implemented,  will be
successful.  Notwithstanding the foregoing, the Company has no reason to believe
that its exposure to the risks of supplier and customer  Year 2000  readiness is
any  greater  than the  exposure  to such  risk  that  affects  its  competitors
generally. Costs incurred to date to complete the Company's Year 2000 compliance
efforts have not been material.
     The outline of the general  phases of the Company's Year 2000 project is as
follows:  (1) Year 2000  methodology and compliance  training for key personnel;
(2)  inventorying  Year 2000 items,  internally  and  externally;  (3) assigning
priorities to identified Year 2000 items; (4) assessing the Year 2000 compliance
of items determined to be material to the Company;  (5) remediating or replacing
material items that are determined  not to be Year 2000  compliant;  (6) testing
material  items for Year 2000  compliance;  and (7) designing  and  implementing
contingency plans to the extent deemed necessary.  The Company has substantially
completed  phases (1)  through  (7)  relating  to  existing  internal  hardware,
software,  facilities  and equipment;  however,  testing is ongoing as hardware,
software,  and  equipment  are upgraded or replaced.  Additionally,  the Company
continues to assess and test newly engaged suppliers and their products for Year
2000 compliance as part of the Company's normal business operations. The Company
will  continue  to monitor  its Year 2000  compliance  program  and  address any
material issues.


                                     - 15 -

<PAGE>




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

Year 2000 (Continued)
---------
     The  failure to  identify  or correct a material  Year 2000  problem  could
result in an interruption  in, or a failure of, certain  business  activities or
operations such as the Company's ability to service its customers. Such failures
could  materially  and  adversely  affect the Company's  results of  operations,
liquidity,  and financial condition.  The Company's Year 2000 assessment process
has significantly reduced the Company's level of uncertainty about the Year 2000
problem and, in particular,  about the Year 2000 compliance and readiness of its
material  suppliers  and  customers.  However,  due to the  general  uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of the
Year 2000  readiness  of  suppliers  and  customers,  the  Company  is unable to
determine at this time whether the  consequences of Year 2000 failures will have
a  material  impact on the  Company's  results  of  operations,  liquidity,  and
financial condition.
     As of the date of this filing,  the Company has not  experienced nor has it
been informed by any third parties of any material  events  associated  with the
Year 2000 issue.

Cautionary Statement
--------------------
     Certain  statements  contained  herein are not based on historical fact and
are  "forward-looking  statements"  within the meaning of the Private Securities
Litigation  Reform  Act of 1995 or by the  Securities  and  Exchange  Commission
rules, regulations,  and releases. The Company intends that such forward-looking
statements be subject to the safe harbors created  thereby.  Among other things,
they regard the Company's acquisition activities, earnings, liquidity, financial
condition,  and  certain  operational  matters.  Words or phrases  denoting  the
anticipated  results  of  future  events,   such  as  "anticipate,"   "believe,"
"estimate,"  "expect,"  "may,"  "will," "will  likely," "are expected to," "will
continue," "should," "project," and similar expressions that denote uncertainty,
are intended to identify such forward-looking  statements.  The Company's actual
results,  performance,  or achievements could differ materially from the results
expressed in, or implied by, such "forward-looking  statements": (1) as a result
of risks and uncertainties  identified in connection with those  forward-looking
statements,  including  those factors  identified  herein,  and in the Company's
other  publicly  filed  reports;  (2) as a  result  of risks  and  uncertainties
associated  with the  Ermanco  acquisition,  including  the  failure  to realize
anticipated  benefits  of such  acquisition,  the failure to  integrate  Ermanco
successfully with the Company, and any unforeseen  complications  related to the
Ermanco  acquisition;  (3) as a result of risks  associated  with the  Company's
restructuring,  including the failure to achieve anticipated  operating savings,
and  the  possibility  that  the  restructuring  charges  will be  greater  than
anticipated;  (4) as a result of factors  over which the Company has no control,
including  the  strength  of  domestic  and  foreign  economies,  sales  growth,
competition,  certain costs increases,  and any potential  exposures relating to
Year 2000 matters; or (5) if the factors on which the Company's  conclusions are
based do not conform to the Company's expectations.

Quantitative and Qualitative Disclosures about Market Risk
----------------------------------------------------------
     The Company  does not believe that its  exposures to interest  rate risk or
foreign currency exchange risks, risks from commodity prices,  equity prices and
other market  changes that affect market risk sensitive  instruments,  including
the  interest  rate swap  agreement  incurred  in  connection  with the  Ermanco
acquisition, are material to its results of operations.

                                     - 16 -

<PAGE>




                           PART II - OTHER INFORMATION
                           ---------------------------


Item 5.  Other Information
------   -----------------

     Effective  October 25,  1999,  William F. Moffitt  became Vice  President -
Finance of the Company.

     Effective  November 10, 1999, William J. Casey was named to the position of
Executive Vice President of the Company.

     Effective December 13, 1999, Thomas M. Pinkin became Vice President - Sales
of the Company.


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

     (a) Exhibit 27 - Financial Data Schedule.

     (b) A Form 8-K was filed on October 15,  1999.  The filing  pertained to SI
Handling  Systems'  completion  of the  acquisition  of  all of the  outstanding
capital stock of Ermanco.  Closing of the acquisition  occurred on September 30,
1999.


                                     - 17 -

<PAGE>




SI Handling Systems, Inc. and Subsidiary





                                    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 thereunto duly authorized.

                                                 SI HANDLING SYSTEMS, INC.

                                                 /S/ William F. Moffitt

                                                 William F. Moffitt
                                                 Vice President - Finance
                                                   (Principal Financial Officer)

Dated:       January 12, 2000
             ----------------
























                                     - 18 -

<PAGE>




                                                                      Schedule A











                                 SI/BAKER, INC.

                              Financial Statements
                                November 30, 1999






















                                     - 19 -

<PAGE>




SI/BAKER, INC.
Balance Sheets (Unaudited)
November 30, 1999 and February 28, 1999
  (In Thousands, Except Share Data)


<TABLE>
<CAPTION>
                                                       November       February
                                                       30, 1999       28, 1999
                                                       --------       --------
<S>                                                    <C>             <C>


Assets
------

Current assets:
   Cash and cash equivalents, principally
     time deposits                                     $    747           154
                                                         ------        ------

Receivables:
   Trade                                                  5,600         1,658
   Other receivables                                          4           238
                                                         ------        ------
     Total receivables                                    5,604         1,896
                                                         ------        ------

   Costs and estimated earnings in
     excess of billings                                   1,190         2,516
   Inventories                                               62             -
   Deferred income tax benefits                             276           258
   Prepaid expenses and other current
     assets                                                 104           136
                                                         ------        ------

       Total current assets                               7,983         4,960
                                                         ------        ------

   Machinery and equipment, at cost                         194           176
     Less:  accumulated depreciation                        122            95
                                                         ------        ------
   Net machinery and equipment                               72            81
                                                         ------        ------

   Equipment leased to customer                             487           487
   Less:  accumulated depreciation                          470           370
                                                         ------        ------
     Net equipment leased to customer                        17           117
                                                         ------        ------

   Deferred income tax benefits                              33            51
                                                         ------        ------

   Other assets                                               -            95
                                                         ------        ------

       Total assets                                    $  8,105         5,304
                                                         ======        ======
</TABLE>



                                     - 20 -

<PAGE>




SI/BAKER, INC.
Balance Sheets (Unaudited)
November 30, 1999 and February 28, 1999
  (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                       November       February
                                                       30, 1999       28, 1999
                                                       --------       --------
<S>                                                    <C>             <C>


Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
   Note payable to bank                                $      -           500
                                                         ------        ------

   Accounts payable:
     Trade                                                  944           510
     Affiliated companies                                     -            15
                                                         ------        ------
       Total accounts payable                               944           525
                                                         ------        ------

   Customers' deposits and billings in
     excess of costs and estimated
     earnings                                             3,362         1,104
   Accrued salaries, wages, and
     commissions                                            197            91
   Income taxes payable                                       3             -
   Accrued royalties payable                                394           209
   Accrued product warranties                               738           660
   Accrued other liabilities                                 52            10
                                                         ------        ------
       Total current liabilities                          5,690         3,099
                                                         ------        ------

Deferred compensation                                         -           123
                                                         ------        ------

Stockholders' equity:
   Common stock, $1 par value; authorized
     1,000 shares; issued 200 shares                          -             -
   Additional paid-in capital                               200           200
   Retained earnings                                      2,215         1,882
                                                         ------        ------
       Total stockholders' equity                         2,415         2,082
                                                         ------        ------

       Total liabilities and stockholders'
         equity                                        $  8,105         5,304
                                                         ======        ======
</TABLE>


                                     - 21 -

<PAGE>




SI/BAKER, INC.
Statements of Operations (Unaudited)
Nine Months Ended November 30, 1999 and 1998
  (In Thousands)

<TABLE>
<CAPTION>
                                Three Months Ended         Nine Months Ended
                              ---------------------      ---------------------
                              November     November      November     November
                              30, 1999     30, 1998      30, 1999     30, 1998
                              --------     --------      --------     --------
<S>                           <C>            <C>           <C>          <C>

Net sales                     $ 2,960        2,132         8,945        5,993
Cost of sales                   2,293        1,497         7,042        4,656
                                -----        -----         -----        -----

Gross profit on sales             667          635         1,903        1,337
                                -----        -----         -----        -----

Selling, general and
   administrative
   expenses                       304          238           861          675
Product development
   costs                           44          266           200          337
Royalty expense
   to parent companies            119           86           358          240
Interest income                   (21)          (1)          (42)          (6)
Interest expense                    -           25             4           60
Other income, net                   -            -           (42)         (25)
                                -----        -----         -----        -----
                                  446          614         1,339        1,281
                                -----        -----         -----        -----

Earnings before
   income taxes                   221           21           564           56
Income tax expense                 87            8           231           22
                                -----        -----         -----        -----

Net earnings                  $   134           13           333           34
                                =====        =====         =====        =====

</TABLE>


                                     - 22 -

<PAGE>




SI/BAKER, INC.
Statements of Cash Flows (Unaudited)
Nine Months Ended November 30, 1999 and 1998
  (In Thousands)

<TABLE>
<CAPTION>
                                                          Nine Months Ended
                                                       -----------------------
                                                       November       November
                                                       30, 1999       30, 1998
                                                       --------       --------
<S>                                                    <C>             <C>

Cash flow from operating activities:
   Net earnings                                        $   333             34
   Adjustments to reconcile net earnings to net
     cash provided by operating activities:
       Depreciation of machinery and
         equipment and leased equipment                    127            113
       Changes in operating assets and
         liabilities:
           Receivables                                  (3,708)         2,374
           Costs and estimated earnings
              in excess of billings                      1,326            899
           Inventories                                     (62)           118
           Prepaid expenses and other
              current assets                                32           (294)
           Other assets                                     95            (29)
           Accounts payable                                419           (522)
           Customers' deposits and
              billings in excess of costs
              and estimated earnings                     2,258           (990)
           Accrued salaries, wages, and
              commissions                                  106           (362)
           Income taxes payable                              3            (44)
           Accrued royalties payable                       185           (133)
           Accrued product warranties                       78           (184)
           Accrued other liabilities                        42            (32)
           Deferred compensation                          (123)             -
                                                        ------         ------
Net cash provided
   by operating activities                               1,111            948
                                                        ------         ------

Cash flows from investing activities:
   Additions to machinery and equipment                    (18)           (48)
                                                        ------         ------
     Net cash used by investing activities                 (18)           (48)
                                                        ------         ------

Cash flows from financing activities:
   Repayment of note payable to bank                      (500)          (900)
                                                        ------         ------
     Net cash used by financing activities                (500)          (900)
                                                        ------         ------

Increase in cash and cash equivalents                      593              -
Cash and cash equivalents,
   beginning of period                                     154            388
                                                        ------         ------
Cash and cash equivalents, end of period              $    747            388
                                                        ======         ======

Supplemental disclosure of cash flow information:
     Cash paid (received) during the period for:
       Income taxes                                   $    (43)           325
                                                        ======         ======
       Interest                                       $      3             71
                                                        ======         ======
</TABLE>

                                     - 23 -

<PAGE>




                            SI HANDLING SYSTEMS, INC.

                                    FORM 10-Q

                                  EXHIBIT INDEX



Exhibit No.

27     Financial Data Schedule.

                                     - 24 -