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 September 1, 1996

                           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
September 1, 1996: 2,450,927.
                   ---------


<PAGE>


                                      - 2 -

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

ITEM 1.       FINANCIAL STATEMENTS
-------       --------------------
SI HANDLING SYSTEMS, INC.
Balance Sheets
     (In Thousands, Except Share Data)
<TABLE>
<CAPTION>

                                                 September 1,        March 3,
Assets                                               1996              1996
------                                           ------------        --------
<S>                                                 <C>             <C>   
Current assets:
   Cash and cash equivalents, principally
     time deposits                                  $ 3,885          1,335
   Short-term investments                               500          2,414
                                                    -------        -------
       Total cash, cash equivalents, and
         short-term investments                       4,385          3,749
                                                    -------        -------

   Receivables:
     Trade                                            3,641          2,505
     Notes and other receivables                        113            528
                                                    -------        -------
       Total receivables                              3,754          3,033
                                                    -------        -------

   Costs and estimated earnings in excess
     of billings                                        797          1,803

   Inventories:
     Raw materials                                      871            963
     Finished goods and work-in-process                 932            799
                                                    -------        -------
       Total inventories                              1,803          1,762
                                                    -------        -------

   Deferred income tax benefits                         214            229
   Prepaid expenses and other current assets            148            141
                                                    -------        -------
       Total current assets                          11,101         10,717
                                                    -------        -------

Property, plant and equipment, at cost:
   Land                                                  27             27
   Buildings and improvements                         3,276          3,276
   Machinery and equipment                            3,494          3,331
                                                    -------        -------
                                                      6,797          6,634
   Less:  accumulated depreciation                    5,620          5,461
                                                    -------        -------
       Net property, plant and equipment              1,177          1,173
                                                    -------        -------

Deferred income tax benefits                             71             71
Investment in joint venture                             607            530
Other assets, at cost less accumulated
   amortization of $62 in 1997 and $57
   in 1996                                               72             79
                                                    -------        -------
       Total assets                                 $13,028         12,570
                                                    =======        =======

</TABLE>

                 See Accompanying Notes To Financial Statements.


<PAGE>


                                      - 3 -

ITEM 1.       FINANCIAL STATEMENTS (CONTINUED)
-------       --------------------
SI HANDLING SYSTEMS, INC.
Balance Sheets
     (In Thousands, Except Share Data)
<TABLE>
<CAPTION>

                                                   September 1,     March 3,
Liabilities and Stockholders' Equity                   1996           1996
------------------------------------               ------------     --------
<S>                                                 <C>             <C>
Current liabilities:
   Current installments of long-term debt            $    20             20
   Accounts payable                                    1,386          1,542
   Customers' deposits and billings in excess
     of costs and estimated earnings                   1,628          1,112
   Accrued salaries, wages, and commissions              659            929
   Income taxes payable                                  279            275
   Accrued royalties payable                             327            593
   Liabilities and deferred credits associated
     with the AGV Asset Purchase Agreement                67             80
   Accrued other liabilities                             827            659
                                                     -------        -------

     Total current liabilities                         5,193          5,210
                                                     -------        -------

Long-term liabilities:
   Long-term debt, excluding current installments:
     Mortgages payable                                    38             49
                                                     -------        -------

       Total long-term debt                               38             49
                                                     -------        -------

   Deferred compensation                                 101            101
                                                     -------        -------

       Total long-term liabilities                       139            150
                                                     -------        -------

Commitments and contingencies

Stockholders' equity:
   Common stock, $1 par value; authorized
     5,000,000 shares; issued 2,450,927 shares
     in 1997 and 2,441,341 shares in 1996              2,451          2,441
   Additional paid-in capital                          3,645          3,613
   Retained earnings                                   1,600          1,156
                                                     -------        -------

       Total stockholders' equity                      7,696          7,210
                                                     -------        -------

       Total liabilities and stockholders' equity    $13,028         12,570
                                                     =======        =======
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                                      - 4 -

ITEM 1.       FINANCIAL STATEMENTS (CONTINUED)
-------       --------------------
SI HANDLING SYSTEMS, INC.
Statements of Operations
     (In Thousands, Except Share And Per Share Data)
<TABLE>
<CAPTION>
                               Three Months Ended         Six Months Ended
                              --------------------      --------------------
                              September    August       September    August
                               1, 1996    27, 1995       1, 1996    27, 1995
                              ---------   --------      ---------   --------
<S>                           <C>         <C>            <C>        <C>
Net sales                      $ 5,422      6,884         11,053     12,981
Cost of sales                    3,900      5,253          7,841      9,757
                               -------    -------        -------    -------

Gross profit on sales            1,522      1,631          3,212      3,224
                               -------    -------        -------    -------

Selling, general and
   administrative
   expenses                      1,268      1,274          2,598      2,433
Product development
   costs                            26         78            106        183
Interest expense                     2          4              5          8
Interest income                    (50)       (43)           (95)       (68)
Equity in income of 
  joint venture                    (47)      (117)           (77)      (141)
Other expense
   (income), net                   (37)       (57)          (101)       (98)
                               -------    -------        -------    -------
                                 1,162      1,139          2,436      2,317
                               -------    -------        -------    -------

Earnings before
   income taxes                    360        492            776        907
Income tax expense                  27         71             58        136
                               -------    -------        -------    -------

Net earnings                   $   333        421            718        771
                               =======    =======        =======    =======

Net earnings per common
   share and common
   share equivalent*           $   .13        .17            .29        .31
                               =======    =======        =======    =======

Dividends per share**          $    --         --            .10        .07
                               =======    =======        =======    =======

<FN>
*   On July 18, 1995,  the Board of  Directors  declared a  three-for-two  stock
    split that was  distributed on August 11, 1995 to  stockholders of record on
    July 31,  1995.  Earnings  per share for all periods  presented  reflect the
    three-for-two  stock split and are based on the weighted  average  number of
    shares outstanding and equivalent shares from dilutive stock options,  which
    were 2,459,000 and 2,479,000,  respectively, at September 1, 1996 and August
    27, 1995.

**  Dividends  per share for the six months ended August 27, 1995 were  adjusted
    for the three-for-two stock split that was distributed on August 11, 1995 to
    stockholders of record on July 31, 1995.
</FN>
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                                      - 5 -

ITEM 1.       FINANCIAL STATEMENTS (CONTINUED)
-------       --------------------
SI HANDLING SYSTEMS, INC.
Statements of Cash Flows
     (In Thousands)
<TABLE>
<CAPTION>
                                                        Six Months Ended
                                                    -------------------------
                                                    September         August
                                                     1, 1996         27, 1995
                                                    ---------       ---------
<S>                                                 <C>              <C>
Cash flows from operating activities:
   Net earnings                                      $   718             771
   Adjustments to reconcile net earnings
     to net cash provided by operating
     activities:
       Depreciation of plant and equipment               159             223
       Amortization of intangibles                         5               5
       Equity in income of joint venture                 (77)           (141)
       Change in operating assets and liabilities:
         Receivables                                    (721)          2,654
         Costs and estimated earnings in
           excess of billings                          1,006            (713)
         Inventories                                     (41)            127
         Deferred income tax benefits                     15             (80)
         Prepaid expenses and other
           current assets                                 (7)            187
         Other noncurrent assets                           2              --
         Accounts payable                               (156)         (1,253)
         Customers' deposits and billings
           in excess of costs and estimated
           earnings                                      516             637
         Accrued salaries, wages, and
           commissions                                  (270)             (5)
         Income taxes payable                              4             216
         Accrued royalties payable                      (266)           (189)
         Liabilities and deferred credits
           associated with the AGV
           Asset Purchase Agreement                      (13)           (124)
         Accrued other liabilities                       168             208
         Deferred compensation                            --              (5)
                                                     -------         -------
   Net cash provided by operating activities           1,042           2,518
                                                     -------         -------

Cash flows from investing activities:
   Sales of short-term investments                     1,914              --
   Additions to property, plant and equipment           (163)           (133)
                                                     -------         -------
   Net cash provided by (used in) investing
     activities                                        1,751            (133)
                                                     -------         -------
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                                      - 6 -

ITEM 1.    FINANCIAL STATEMENTS (CONTINUED)
-------    --------------------
SI HANDLING SYSTEMS, INC.
Statements of Cash Flows (Continued)
     (In Thousands)
<TABLE>
<CAPTION>
                                                          Six Months Ended
                                                     -------------------------
                                                     September         August
                                                      1, 1996         27, 1995
                                                     ---------        --------
<S>                                                   <C>             <C>
Cash flows from financing activities:
   Sale of treasury stock in connection with
     employee stock option plan                           --              23
   Sale of common shares in connection
     with employee stock option plan                      12              --
   Repayment of long-term debt, including
     current portion                                     (11)            (11)
   Increase in (repayment of) loan
     payable to bank                                      --            (500)
   Dividends paid on common stock                       (244)           (164)
   Dividends paid to stockholders for
     fractional shares in connection
     with three-for-two stock split                       --              (1)
                                                     -------         -------
   Net cash used by financing
     activities                                         (243)           (653)
                                                     -------         -------

   Increase in cash and cash equivalents               2,550           1,732
   Cash and cash equivalents, beginning
     of period                                         1,335             571
                                                     -------         -------
   Cash and cash equivalents, end of
     period                                          $ 3,885           2,303
                                                     =======         =======

   Supplemental disclosures of cash flow
   information:
     Cash paid during the period for:
       Interest                                      $     2               8
                                                     =======         =======
       Income taxes                                  $    39              --
                                                     =======         =======

   Supplemental disclosure of noncash
   financing activities:
     Issuance of 10,603 common shares
       in exchange for 3,865 common shares
       delivered to the Company by officers
       in connection with the
       employee incentive stock option plan          $    30              --
                                                     =======         =======
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                                      - 7 -

ITEM 1.       FINANCIAL STATEMENTS (CONTINUED)
-------       --------------------
SI HANDLING SYSTEMS, INC.
Notes To Financial Statements
Six Months Ended September 1, 1996 and August 27, 1995

(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.

     SI  Handling   Systems,   Inc.   ("SI"  or  the  "Company")  and  Automated
Prescription  Systems,  Inc.  ("APS") are  co-venturers in a joint venture named
SI/BAKER, INC. ("SI/BAKER" or the "joint venture"). The joint venture draws upon
the automated materials handling systems experience of SI and the automated pill
counting and dispensing  products of 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.


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 $3,885,000 during the
first six months of fiscal 1997 from  $1,335,000 at the end of fiscal 1996.  The
increase resulted from cash provided by operating activities totaling $1,042,000
and proceeds of $1,914,000  from the sale of short-term  investments and $12,000
from the sale of common stock in connection with the employee stock option plan.
Partially  offsetting the increase in cash and cash  equivalents were repayments
of long-term  debt of $11,000,  purchases  of  equipment  of  $163,000,  and the
payment of  $244,000  in cash  dividends  to  stockholders.  Funds  provided  by
operating activities during the first six months of fiscal 1996 were $2,518,000.


<PAGE>


                                      - 8 -

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------       -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
              -----------------------------------
SI HANDLING SYSTEMS, INC.

Liquidity and Capital Resources (Continued)
-------------------------------
     The Company has a $5,000,000  committed  revolving credit facility which is
secured by a lien  position on accounts  receivable,  land,  and  buildings  and
contains  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 first six months of
fiscal 1997.  The term of the original  arrangement  was for three years with an
expiration  date of July  31,  1996;  however,  effective  March  1,  1996,  the
Company's  principal bank amended certain covenants to allow the Company greater
operating  flexibility and extended the expiration date of the revolving  credit
facility.  Currently,  the committed revolving credit facility has an expiration
date of August 31, 1999. During the first six months of fiscal 1997, the Company
did not have any borrowings under the committed revolving credit facility.
     On May 15, 1996, SI/BAKER,  INC.  ("SI/BAKER") borrowed $2,000,000 from its
principal bank to fund short-term working capital requirements.  The Company and
its joint venture partner,  Automated  Prescription Systems,  Inc.("APS"),  each
guaranteed fifty percent (50%) of the borrowing.  SI/BAKER repaid the $2,000,000
short-term  debt on June 4, 1996.  Also, on August 15, 1996,  SI/BAKER  borrowed
$300,000  from  its  principal   bank  to  fund   short-term   working   capital
requirements. The $300,000 of short-term debt, guaranteed equally by both parent
companies,  was repaid on August 26,  1996.  The Company  and APS may  guarantee
future borrowings of its joint venture company if the circumstances  surrounding
the borrowing transaction warrant the guarantee.
     The Company  anticipates  that its  financial  resources  consisting of its
current  assets,  anticipated  cash flow,  and the  available  revolving  credit
facility will adequately  finance its operating  requirements in the foreseeable
future.
     The  Company  plans to  consider  expansion  opportunities  as they  arise,
although  ongoing  operating  results  of  the  Company,  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.


<PAGE>


                                      - 9 -

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------       -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
              -----------------------------------
SI HANDLING SYSTEMS, INC.

Results of Operations
---------------------
(a)  Six Months Ended  September 1, 1996 Versus Six Months Ended August 27, 1995
     ---------------------------------------------------------------------------
     The  Company's  net  earnings  for the first six months of fiscal  1997 was
$718,000 compared to net earnings of $771,000 for the first six months of fiscal
1996.
     Backlog at the end of the second quarter of fiscal 1997 was $8,308,000 with
the  majority  of  the  backlog   pertaining  to   Switch-Cart,   Cartrac,   and
Dispen-SI-matic contracts. Subsequent to the end of the second quarter of fiscal
1997,  the Company was the  recipient of  a $16.9  million  prime  mechanization
contract with the Defense  Logistics Agency for the Army  Distribution  Depot in
Red River,  Texas. This contract,  one of the largest in the Company's  history,
will take  approximately  two years to complete.
     Net sales of $11,053,000  for the first six months of fiscal 1997 decreased
14.9%  compared to net sales of  $12,981,000  for the first six months of fiscal
1996.  The sales  decrease in the first six months of fiscal 1997 is  attributed
primarily  to a smaller  backlog of orders  entering  fiscal  1997  ($10,488,000
versus a  $16,665,000  backlog  beginning  fiscal  1996).  The  largest  decline
occurred  in the Cartrac  product  line  whereby  during the first six months of
fiscal 1996 a significant  amount of progress  relating to two large  automotive
contracts,  subsequently  completed  by the  end of  fiscal  1996,  resulted  in
substantial  revenues.  Also,  the Company's  AGVS and Order  Selection  Systems
product lines  experienced  declines in sales for the first six months of fiscal
1997 when  compared  to the prior year  comparable  period.  The decline in AGVS
sales for the first six months of fiscal  1997 is due to the  Company's  reduced
emphasis on the AGVS product line,  with selling  efforts related to the product
currently confined to the parts and service business.  Contributing to the lower
beginning backlog,  and hence sales in the first half of fiscal 1997, are delays
by  prospective  customers,  particularly  those  interested in Order  Selection
Systems,  in signing  contracts due to expanding project scope and to merger and
acquisition interference.  Partially offsetting the declines mentioned above was
an increase in sales of the Company's Switch-Cart product,  principally relating
to  performance on contracts  received  during the fourth quarter of fiscal 1996
and the first quarter of fiscal 1997.


<PAGE>


                                     - 10 -

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------       -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
              -----------------------------------
SI HANDLING SYSTEMS, INC.

Results of Operations
---------------------
(a) Six Months Ended September 1, 1996 Versus Six Months Ended
    August 27, 1995 (Continued)
    ---------------
     Gross profit as a percentage of sales was 29.1% for the first six months of
fiscal  1997  compared  to 24.8% for the first six  months of fiscal  1996.  The
increase in the gross profit  percentage for the first six months of fiscal 1997
was primarily  attributable  to the favorable  performance on several  contracts
initiated in prior fiscal years that were completed  during the first six months
of fiscal 1997 as well as to a higher content in contracts currently in progress
of proprietary  product wherein  margins are higher than contracts  containing a
high degree of ancillary  products.  Also contributing to the lower gross profit
percentage  in the fiscal 1996  comparable  period were  primarily  two factors:
difficulties  in executing and  concluding  several AGVS contracts as additional
costs  became   necessary  to  meet   contractual   throughput   and  durability
requirements and higher costs associated with first-time  design  inefficiencies
relating  to  the  Company's  new  small  parcel   sortation   system  aimed  at
improvements to mail order distribution operations.
     Selling,  general and administrative  expenses of $2,598,000 were higher by
$165,000  in the first six months of fiscal 1997 than in the  comparable  fiscal
1996 period. The increase in selling,  general,  and administrative  expenses is
due primarily to costs  associated  with product  promotion and sales efforts in
response to increased  quoting  activities  and aimed at expanding the Company's
customer base of business.
     Product  development  costs of $106,000  were lower by $77,000 in the first
six months of fiscal 1997 than in the comparable fiscal 1996 period. Development
programs in the first six months of fiscal  1997  included  improvements  to the
Sortation and Order Selection product lines,  with particular  emphasis aimed at
Dispen-SI-matic and Pick-to-Light Systems. Development programs in the first six
months of fiscal 1996 included improvements to the Order Selection and Sortation
product lines, with particular  emphasis aimed at Pick-to-Light and Small Parcel
Sortation Systems.
     Interest income of $95,000 was higher by $27,000 in the first six months of
fiscal 1997 than in the comparable fiscal 1996 period.  The increase in interest
income is  primarily  attributable  to the higher level of funds  available  for
short-term investments during the first six months of fiscal 1997.
     Equity in income of joint venture  represented the Company's  proportionate
share of its investment in SI/BAKER, INC. which is being accounted for under the
equity  method.  Despite  the growth in  SI/BAKER's  revenues,  the  unfavorable
variance  for the first six  months  of fiscal  1997 in the  equity in income of
joint venture was  attributable  to a combination of several  factors  including
competitively  restrained  prices  which  produced a decline in the gross profit
percentage along with increased royalty costs,  product  development  costs, and
selling, general, and administrative


<PAGE>


                                     - 11 -

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------       -------------------------------------------------
              CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
              -----------------------------------
SI HANDLING SYSTEMS, INC.

Results of Operations
---------------------
(a)  Six Months Ended September 1, 1996 Versus Six Months Ended
     ----------------------------------------------------------
     August 27, 1995 (Continued)
     ---------------
expenses,  including accrued legal costs associated with the patent infringement
litigation.
     The  favorable  variance  in other  expense  (income),  net,  is  primarily
attributable  to an increase in royalty  income  related to the  SI/BAKER,  INC.
joint  venture.  Partially  offsetting  the increase was a reduction in purchase
discounts available to the Company due to the lower volume of purchases eligible
for cash  discounts in the current  period and the write-off of the balance of a
customer receivable due to its filing for bankruptcy protection.
     The Company  incurred  income tax  expense of $58,000  during the first six
months of fiscal  1997  compared  to  income  tax  expense  of  $136,000  in the
comparable  fiscal 1996  period.  Income tax expense for the first six months of
fiscal  1997 and  1996  were  less  than  the  statutory  rate of 34% due to the
recognition of previously unrecognized deferred tax assets which are anticipated
to be realizable due to the current and projected profitability of the Company.

(b)  Three Months  Ended  September 1, 1996 versus Three Months Ended
     ----------------------------------------------------------------
     August 27, 1995
     ---------------
     Changes in the second  quarter of the current  fiscal year  compared to the
prior  year  were  consistent  with  those  previously  noted  above for the six
month-period, except for the following areas:
     Selling,  general,  and  administrative  expenses for the second quarter of
fiscal 1997  decreased  slightly  from the  comparable  fiscal 1996 period.  The
increase in selling,  general,  and  administrative  expenses  for the six month
period noted above  occurred  primarily in the first  quarter of fiscal 1997 and
thus second  quarter  expenses  for fiscal 1997 were  similar to the  comparable
prior year period.
     The  unfavorable  variance in other  expense  (income),  net, is  primarily
attributable to a reduction in purchase  discounts  available to the Company due
to the lower  volume of  purchases  eligible  for cash  discounts in the current
period and the  write-off  of the  balance of a customer  receivable  due to its
filing for  bankruptcy  protection.  Partially  offsetting  the  decrease was an
increase in royalty income related to the SI/BAKER, INC. joint venture.


<PAGE>


                                     - 12 -

SI HANDLING SYSTEMS, INC.


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

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------  ---------------------------------------------------
     The Company's Annual Meeting of Shareholders was held on July 17, 1996 with
the following items being submitted to a vote by shareholders:

     1.  The election of five directors.
     2.  The approval of the amendment and restatement of the Company's
         Articles.
     3.  The approval of the amendment and restatement of the Company's
         Bylaws.

     Details of the proposals  noted above were provided to  shareholders in the
form of a Notice of Annual Meeting and Proxy  Statement  dated June 17, 1996 and
mailed  on June 21,  1996,  with  such  solicitation  being in  accordance  with
Regulation 14 of the Securities and Exchange Act of 1934.
     There was no solicitation in opposition to the management's nominees listed
in the Proxy Statement, and all management's nominees were elected.
     Furthermore,  Proposal  Number  2 for the  approval  of the  amendment  and
restatement of the Company's  Articles and Proposal Number 3 for the approval of
the amendment and restatement of the Company's  Bylaws were duly approved by the
shareholders.
     The  voting  results  on the  three  matters  noted  above are set forth as
follows:
<TABLE>
<CAPTION>

     1.  Election of Directors:

         Name of Nominee         Votes For       Votes Withheld     Non-Voting
         ---------------         ---------       --------------     ----------
        <S>                     <C>                 <C>              <C>  
         L. Jack Bradt           2,258,720             5,242          184,734
         Edward J. Fahey         2,258,720             5,242          184,734
         Elmer D. Gates          2,244,544            19,418          184,734
         Michael J. Gausling     2,258,720             5,242          184,734
         Leonard S. Yurkovic     2,258,720             5,242          184,734

     2.  Approval of the amendment and restatement of the Company's Articles:

         Votes For       Votes Against        Abstentions           Non-Voting
         ---------       -------------        -----------           ----------
        <S>                <C>                  <C>                  <C>
         1,382,349          355,171              4,885                706,291

     3.  Approval of the amendment and restatement of the Company's Bylaws:

         Votes For       Votes Against        Abstentions           Non-Voting
         ---------       -------------        -----------           ----------
        <S>                <C>                  <C>                  <C>
         1,316,277          440,484               4,885               687,050
</TABLE>


<PAGE>


                                     - 13 -

SI HANDLING SYSTEMS, INC.


                     PART II - OTHER INFORMATION (CONTINUED)
                     ---------------------------

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-------  --------------------------------

     (a) Exhibit 27 - Financial Data Schedule

     (b) No reports on Form 8-K were filed during the quarter ended September 1,
         1996.


<PAGE>


                                     - 14 -

SI HANDLING SYSTEMS, INC.







                                    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.



                                                     Barry V. Mack
                                                     Vice President - Finance

Dated:        October 15, 1996
        ---------------------------
 

<PAGE>


                                     - 15 -

                                                                    SCHEDULE A












                                 SI/BAKER, INC.

                              FINANCIAL STATEMENTS
                                 AUGUST 31, 1996


<PAGE>


                                     - 16 -

SI/BAKER, INC.
Balance Sheets
August 31, 1996 and February 29, 1996
  (In Thousands, Except Share Data)
<TABLE>
<CAPTION>

                                                      August       February
                                                     31, 1996      29, 1996
                                                     --------      --------
<S>                                                  <C>           <C>
Assets
Current assets:
   Cash and cash equivalents, principally
     time deposits                                    $2,658            327

Receivables:
   Trade                                                544            523
   Other receivables                                     12             --
                                                     ------         ------
     Total receivables                                  556            523
                                                     ------         ------

   Costs and estimated earnings in
     excess of billings                               1,253          3,413
   Inventories - purchased parts                        121             16
   Deferred income tax benefits                         161            161
   Prepaid income taxes                                 157             --
   Prepaid expenses and other current
     assets                                             124              5
                                                     ------         ------

       Total current assets                           5,030          4,445
                                                     ------         ------

   Machinery and equipment, at cost                      97             75
     Less:  accumulated depreciation                     32             23
                                                     ------         ------
   Net machinery and equipment                           65             52
                                                     ------         ------

   Equipment leased to customer                         487            478
   Less:  accumulated depreciation                       66             --
                                                     ------         ------
     Net equipment leased to customer                   421            478
                                                     ------         ------

       Total assets                                  $5,516          4,975
                                                     ======         ======
</TABLE>




<PAGE>


                                     - 17 -

SI/BAKER, INC.
Balance Sheets
August 31, 1996 and February 29, 1996
  (In Thousands, Except Share Data)
<TABLE>
<CAPTION>

                                                      August        February
                                                     31, 1996       29, 1996
                                                     --------       --------
<S>                                                  <C>            <C>    
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable:
     Trade                                               796           798
     Affiliated companies                                 26         1,080
                                                      ------        ------
       Total accounts payable                            822         1,878
                                                      ------        ------

   Customers' deposits and billings in
     excess of costs and estimated
     earnings                                          2,369         1,007
   Accrued salaries, wages, and
     commissions                                         273           272
   Income taxes payable                                   --           194
   Accrued royalties payable                             138           134
   Accrued audit and legal fees                          365           271
   Accrued other liabilities                             328           153
                                                      ------        ------
       Total current liabilities                       4,295         3,909
                                                      ------        ------

Deferred income tax liability                              6             6
                                                      ------        ------

Contingencies

Stockholders' equity:
   Common stock, $1 par value; authorized
     1,000 shares; issued 200 shares                      --            --
   Additional paid-in capital                            200           200
   Retained earnings                                   1,015           860
                                                      ------        ------
       Total stockholders' equity                      1,215         1,060
                                                      ------        ------

       Total liabilities and stockholders'
         equity                                       $5,516         4,975
                                                      ======        ======
</TABLE>


<PAGE>


                                     - 18 -

SI/BAKER, INC.
Statements of Operations
Six Months Ended August 31, 1996 and 1995
  (In Thousands)
<TABLE>
<CAPTION>

                                    Three Months Ended       Six Months Ended
                                    ------------------      ------------------
                                     August     August       August    August
                                    31, 1996   31, 1995     31, 1996  31, 1995
                                    --------   --------     --------  --------

<S>                                 <C>       <C>            <C>       <C>    
Net sales                           $ 3,457      2,268         7,127     4,225
Cost of sales                         2,872      1,459         5,841     3,050
                                    -------    -------       -------   -------

Gross profit on sales                   585        809         1,286     1,175
                                    -------    -------       -------   -------

Selling, general and
administrative
   expenses                             290        258           604      443
Product development
   costs                                 14         55           150       91
Royalty expense, net                    126         88           273      166
Interest income                          (5)       (24)          (11)     (48)
Interest expense                          1         --             8       --
Other expense
  (income), net                         (1)        (2)            2         1
                                    -------    -------       -------   ------
                                        425        375         1,026      653
                                    -------    -------       -------   ------

Earnings before
   income taxes                         160        434           260      522
Income tax expense                       65        201           105      241
                                    -------    -------       -------   ------

Net earnings                        $    95        233           155      281
                                    =======    =======       =======   ======
</TABLE>





<PAGE>


                                     - 19 -

SI/BAKER, INC.
Statements of Cash Flows
Six Months Ended August 31, 1996 and 1995
  (In Thousands)
<TABLE>
<CAPTION>

                                                           Six Months Ended
                                                        ----------------------
                                                         August          August
                                                        31, 1996       31, 1995
                                                        --------       --------
<S>                                                      <C>           <C>

Cash flow from operating activities:
   Net earnings                                          $   155           281
   Adjustments to reconcile net earnings to
     net cash provided by operating activities:
       Depreciation of machinery and
         equipment                                            75             5
       Changes in operating assets and
         liabilities:
           Trade receivables                                 (33)          485
           Costs and estimated earnings
              in excess of billings                        2,160            28
           Inventories - purchased parts                    (105)           --
           Prepaid income taxes                             (157)           --
           Prepaid expenses and other
              current assets                                (119)           (8)
           Accounts payable                               (1,056)          (30)
           Customers' deposits and
              billings in excess of costs
              and estimated earnings                       1,362          (497)
           Accrued salaries, wages, and
              commissions                                      1             5
           Income taxes payable                             (194)          201
           Accrued royalties payable                           4          (169)
           Accrued audit and legal fees                       94             6
           Accrued other liabilities                         175            22
                                                         -------       -------
Net cash provided by operating activities                  2,362           329
                                                         -------       -------

Cash flows used in investing activities:
   Additions to machinery and equipment                      (22)           (5)
   Equipment leased to customer                               (9)           --
                                                         -------       -------
     Net cash used by investing activities                   (31)           (5)
                                                         -------       -------

Increase in cash and cash equivalents                      2,331           324
Cash and cash equivalents, beginning of period               327         1,830
                                                         -------       -------
Cash and cash equivalents, end of period                 $ 2,658         2,154
                                                         =======       =======

Supplemental disclosure of cash flow information:
     Cash paid during the period for:
       Income taxes                                      $   457           40
                                                         =======      =======
       Interest                                          $     8           --
                                                         =======      =======
</TABLE>