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 30, 1997

                           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 30, 1997: 3,711,826.
                   ---------


<PAGE>




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

Item 1.   Financial Statements
------    --------------------
SI Handling Systems, Inc.
Balance Sheets
     (In Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                           November      March
Assets                                                     30, 1997     2, 1997
------                                                    ---------    --------
<S>                                                       <C>          <C>  
Current assets:
   Cash and cash equivalents, principally
     time deposits                                        $  2,659       1,852
   Short-term investments                                     --         3,741
                                                            ------      ------
       Total cash, cash equivalents, and
         short-term investments                              2,659       5,593
                                                            ------      ------

   Receivables:
     Trade                                                   3,146       3,900
     Notes and other receivables                               156         719
                                                            ------      ------
       Total receivables                                     3,302       4,619
                                                            ------      ------

   Costs and estimated earnings in excess
     of billings                                             7,462       1,640

   Inventories:
     Raw materials                                             825         814
     Finished goods and work-in-process                      1,551       1,151
                                                            ------      ------
       Total inventories                                     2,376       1,965
                                                            ------      ------

   Deferred income tax benefits                                372         372
   Prepaid expenses and other current assets                   308         173
                                                            ------      ------
       Total current assets                                 16,479      14,362
                                                            ------      ------

Property, plant and equipment, at cost:
   Land                                                         27          27
   Buildings and improvements                                3,358       3,358
   Machinery and equipment                                   4,166       3,717
                                                            ------      ------
                                                             7,551       7,102
   Less:  accumulated depreciation                           6,060       5,801
                                                            ------      ------
       Net property, plant and equipment                     1,491       1,301
                                                            ------      ------

Deferred income tax benefits                                   214         214
Investment in joint venture                                    920         606
Other assets, at cost less accumulated
   amortization of $75 in 1998 and $67
   in 1997                                                      60          64
                                                            ------      ------
       Total assets                                       $ 19,164      16,547
                                                            ======      ======
</TABLE>  
               See accompanying notes to financial statements


                                      - 2 -

<PAGE>




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

                                                          November       March
Liabilities and Stockholders' Equity                      30, 1997      2, 1997
------------------------------------                      ---------    --------
<S>                                                       <C>          <C>  
Current liabilities:
   Current installments of long-term debt                 $     12          12
   Accounts payable                                          3,351       2,056
   Customers' deposits and billings in excess
     of costs and estimated earnings                         1,885       2,752
   Accrued salaries, wages, and commissions                  1,192         778
   Income taxes payable                                        633         442
   Accrued royalties payable                                   322         427
   Accrued other liabilities                                   847         870
                                                            ------      ------

     Total current liabilities                               8,242       7,337
                                                            ------      ------

Long-term liabilities:
   Long-term debt, excluding current installments:
     Mortgages payable                                          25          35
                                                            ------      ------
       Total long-term debt                                     25          35
   Deferred compensation                                       160         132
                                                            ------      ------
       Total long-term liabilities                             185         167
                                                            ------      ------

Stockholders' equity:
   Common stock, $1 par value; authorized
     20,000,000 shares; issued 3,711,826
     shares in 1998 and 2,460,306 shares
     in 1997                                                 3,712       2,460
   Additional paid-in capital                                2,645       3,752
   Retained earnings                                         4,380       2,831
                                                            ------      ------

       Total stockholders' equity                           10,737       9,043
                                                            ------      ------

       Total liabilities and stockholders' equity         $ 19,164      16,547
                                                            ======      ======
</TABLE>









                 See accompanying notes to financial statements.

                                      - 3 -

<PAGE>




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         Nine Months Ended
                                  November   December       November   December
                                  30, 1997    1, 1996       30, 1997    1, 1996
                                 ---------   --------      ---------   --------
<S>                              <C>         <C>            <C>        <C>

Net sales                        $ 12,422      4,929         32,371     15,982
Cost of sales                       9,665      3,430         25,134     11,271
                                   ------     ------         ------     ------

Gross profit on sales               2,757      1,499          7,237      4,711
                                   ------     ------         ------     ------

Selling, general and
   administrative
   expenses                         1,684      1,226          4,756      3,824
Product development
   costs                               53         59            161        165
Interest expense                        3          1              8          6
Interest income                       (23)       (80)          (115)      (175)
Equity in (income) loss
   of joint venture                   (33)        69           (314)        (8)
Other income, net                     (80)       (75)          (358)      (176)
                                   ------     ------         ------     ------
                                    1,604      1,200          4,138      3,636
                                   ------     ------         ------     ------

Earnings before
   income taxes                     1,153        299          3,099      1,075
Income tax expense                    454         26          1,215         84
                                   ------     ------         ------     ------

Net earnings                     $    699        273          1,884        991
                                   ======     ======         ======     ======

Net earnings per common
   share and common
   share equivalents*            $    .19        .07            .50        .27
                                   ======     ======         ======     ======

Dividends per share**            $      -         -             .07        .07
                                   ======     ======         ======     ======
<FN>
*   On October 14, 1997, the Board of Directors  declared a three-for-two  stock
    split that was distributed on November 10, 1997 to shareholders of record on
    October 27, 1997. Net 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 3,754,000 and 3,688,000,  respectively,  at November 30, 1997 and
    December 1, 1996.
**  Dividends  per  share  for  all  periods  presented  were  adjusted  for the
    three-for-two  stock  split that was  distributed  on  November  10, 1997 to
    shareholders of record on October 27, 1997.
</FN>
</TABLE>

                 See accompanying notes to financial statements.

                                      - 4 -

<PAGE>




Item 1.   Financial Statements (Continued)
------    --------------------
SI Handling Systems, Inc.
Statements of Cash Flows
     (In Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                          ---------------------  
                                                           November    December
                                                           30, 1997     1, 1996
                                                          ---------    -------- 
<S>                                                       <C>          <C>
Cash flows from operating activities:
   Net earnings                                           $  1,884         991
   Adjustments to reconcile net earnings
     to net cash provided (used)
     by operating activities:
       Depreciation of plant and equipment                     259         238
       Amortization of intangibles                               8           8
       Equity in income of joint venture                      (314)         (8)
       Change in operating assets and liabilities:
         Receivables                                         1,317         568
         Costs and estimated earnings in
           excess of billings                               (5,822)         80
         Inventories                                          (411)       (110)
         Deferred income tax benefits                            -        (185)
         Prepaid expenses and other
           current assets                                     (135)        (52)
         Other noncurrent assets                                (4)          3
         Accounts payable                                    1,295        (399)
         Customers' deposits and billings
           in excess of costs and estimated
           earnings                                           (867)      1,432
         Accrued salaries, wages, and
           commissions                                         414        (217)
         Income taxes payable                                  191         274
         Accrued royalties payable                            (105)       (250)
         Accrued other liabilities                             (23)         56
         Deferred compensation                                  28          10
                                                            ------      ------
   Net cash provided (used) by
     operating activities                                   (2,285)      2,439
                                                            ------      ------

Cash flows from investing activities:
   Sales of short-term investments                           5,213       2,414
   Purchase of short-term investments                       (1,472)     (4,290)
   Additions to property, plant and equipment                 (449)       (250)
                                                            ------      ------
   Net cash provided (used) by
      investing activities                                   3,292      (2,126)
                                                            ------      ------

</TABLE>

                 See accompanying notes to financial statements.

                                      - 5 -

<PAGE>




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

<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                          ---------------------
                                                           November    December
                                                           30, 1997     1, 1996
                                                          ---------    --------
<S>                                                       <C>          <C>
Cash flows from financing activities:
   Sale of common shares in connection
     with employee incentive stock
     option plan                                               59           12
   Repayment of long-term debt                                (10)         (17)
   Dividends paid on common stock                            (247)        (244)
   Dividends paid to shareholders for
     fractional shares in connection with
     three-for-two split                                       (2)           -
                                                           ------       ------
     Net cash used by financing
     activities                                              (200)        (249)
                                                           ------       ------

   Increase in cash and cash equivalents                      807           64
   Cash and cash equivalents, beginning
     of period                                              1,852        1,335
                                                           ------       ------
   Cash and cash equivalents, end of period              $  2,659        1,399
                                                           ======       ======

   Supplemental disclosures of cash flow information:
     Cash paid during the period for:
       Interest                                          $      4            2
                                                           ======       ======
       Income taxes                                      $  1,024           (5)
                                                           ======       ======

   Supplemental disclosures of noncash
   financing activities:
     Issuance of 12,150 common shares in
       exchange for 5,376 common shares
       delivered to the Company by officers
       in connection with the employee
       incentive stock option plan                       $     88            -
                                                           ======       ======

     Issuance of 27,431 common shares in
       exchange  for 12,814 common shares
       delivered to the Company by officers
       in connection with the employee
       incentive stock option plan                       $      -          135
                                                           ======       ======
</TABLE>

                 See accompanying notes to financial statements.

                                      - 6 -

<PAGE>




Item 1.   Financial Statements (Continued)
------    --------------------
SI Handling Systems, Inc.
Notes To Financial Statements
Nine Months Ended November 30, 1997 and December 1, 1996

(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 $2,659,000 during the
first nine months of fiscal 1998 from  $1,852,000 at the end of fiscal 1997. The
increase  resulted  from  proceeds of  $3,741,000  from net sales of  short-term
investments  and proceeds of $59,000 from the sale of common stock in connection
with the employee  incentive stock option plan.  Offsetting the increase in cash
and cash equivalents  from these sources were cash used by operating  activities
totaling  $2,285,000,  repayments  of  long-term  debt of $10,000,  purchases of
capital equipment of $449,000,  and the payment of $247,000 in cash dividends to
shareholders.  Funds  provided  by  operating  activities  during the first nine
months of fiscal 1997 were $2,439,000.

                                      - 7 -

<PAGE>




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

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 nine months of
fiscal  1998.  Currently,   the  committed  revolving  credit  facility  has  an
expiration date of August 31, 2000. During the first nine months of fiscal 1998,
the Company did not have any  borrowings  under the committed  revolving  credit
facility.
     On March 4,  1996,  SI/BAKER  established  a Line of Credit  Facility  (the
"Facility")  with its principal bank (the "Bank").  Effective  December 1, 1997,
the  Bank  modified  the  Facility  by  increasing  the  borrowing  capacity  to
$3,000,000  and  extending  the  expiration  date.  Under terms of the Facility,
SI/BAKER's   parent  companies,   SI  Handling   Systems,   Inc.  and  Automated
Prescriptions  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.  As of November 30, 1997,
SI/BAKER's related debt outstanding under the Facility was $2,000,000.  SI/BAKER
intends to satisfy the note and thereby  release the parent  company  guarantees
during the first half of calendar  year 1998.  Currently,  the  Facility  has an
expiration date of August 31, 1998.
     On October 14,  1997,  the Board of  Directors  of the  Company  declared a
three-for-two  stock  split that was  distributed  on  November  10, 1997 to the
shareholders  of record on October 27, 1997.  The purpose of the stock split was
to  increase  the  number  of  outstanding  shares  and  broaden  ownership  and
availability of the Company's common stock.
     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.



                                      - 8 -

<PAGE>




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

Results Of Operations
---------------------
(a)  Nine Months Ended  November  30, 1997 versus Nine Months Ended  December 1,
     ---------------------------------------------------------------------------
     1996
     ----
     The  Company's  net  earnings for the first nine months of fiscal 1998 were
$1,884,000  compared to net  earnings  of $991,000  for the first nine months of
fiscal  1997.  Backlog  at the end of the first nine  months of fiscal  1998 was
$25,073,000
with  approximately 95% of the backlog pertaining to Switch-Cart,  Cartrac,  and
Dispen-SI-matic  contracts.  During the first nine  months of fiscal  1998,  the
Company was the recipient of orders  totaling  approximately  $26.4 million with
the largest  single order taken by the Company's  Production & Assembly  Systems
Business  Unit.  The Defense  Logistics  Agency of the United States  government
exercised  an option  for a $6.6  million  addition  to the prime  mechanization
contract it awarded the Company in September  1996.  The  contract  options were
exercised to expand the scope of the material handling and storage system at the
Distribution  Operations Center of the Defense Distribution Depot located in Red
River, Texas. The contract,  which is expected to be completed during the second
half of  fiscal  1999,  is the  largest  in the  Company's  history  and  totals
approximately $23.2 million.
     Net sales of $32,371,000 for the first nine months of fiscal 1998 increased
102.5%  compared to net sales of $15,982,000 for the first nine months of fiscal
1997.  The sales  increase in the first nine months of fiscal 1998 is attributed
primarily to a larger backlog of orders entering fiscal 1998 ($31,029,000 versus
a $10,488,000  backlog  beginning fiscal 1997).  The largest  increases in sales
occurred in the Switch-Cart and Order Selection product lines. Switch-Cart sales
rose  approximately  $8.2 million to $12.3 million,  while Order Selection sales
rose $8.1 million to $10.8 million. The increase in the Switch-Cart product line
was  primarily  attributable  to progress  made on the contract with the Defense
Logistics Agency of the United States  government.  The increase  experienced in
the  Company's  Order  Selection  product  line  during the first nine months of
fiscal 1998 was  primarily  attributable  to progress  relating to several large
contracts  received prior to the start of fiscal 1998, with approximately 60% of
the current fiscal year Order Selection revenues attributable to such contracts.
Contributing  to the lower  backlog at the  beginning of fiscal 1997,  and hence
sales in the first  nine  months  of fiscal  1997,  were  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 occurring in a targeted market.


                                      - 9 -

<PAGE>




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

Results Of Operations
---------------------
(a)  Nine Months Ended  November  30, 1997 Versus Nine Months Ended  December 1,
     ---------------------------------------------------------------------------
     1996 (Continued)
     ----
     Gross profit as a  percentage  of sales was 22.4% for the first nine months
of fiscal 1998  compared to 29.5% for the first nine months of fiscal 1997.  The
decrease in the gross profit percentage for the first nine months of fiscal 1998
was  primarily  attributable  to a higher  content  in  contracts  currently  in
progress of ancillary  products with lower margins than  contracts  containing a
high degree of proprietary products. The attainment of the elevated gross profit
percentage   during  the  first  nine  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 nine months of fiscal
1997 as well as to a higher content in contracts then in progress of proprietary
product.
     Selling,  general, and administrative expenses of $4,756,000 were higher by
$932,000 in the first nine months of fiscal 1998 than in the  comparable  fiscal
1997 period. The increase in selling,  general,  and administrative  expenses is
attributable to (1) increases of approximately $750,000 for those expenses based
on  revenue  and  profit   performance,   including  salary  rate   adjustments,
commissions,  and costs  related to the Company's  incentive-based  compensation
plan  which  provides  for  gain  sharing  as a means of  promoting  performance
excellence  and (2)  increases  of  approximately  $125,000  in  consulting  and
shareholder relations expenditures  associated with increasing the visibility of
the Company and exploring business opportunities and strategic alliances.
     Product  development  costs for the first nine  months of fiscal  1998 were
relatively  the  same as such  costs  for the  comparable  fiscal  1997  period.
Development  programs in the first nine months of fiscal 1998  included  efforts
directed at improvements across various product lines, and to efforts associated
with the introduction of the Henke light-duty overhead  transportation  product,
for which the Company is in the process of becoming an exclusive  North American
distributor.  Development  programs  in the first  nine  months  of fiscal  1997
included  enhancements  to the  Company's  product  controls  and  features  and
improvements to the Sortation and Order Selection product lines, with particular
emphasis aimed at Dispen-SI-matic and Pick-to-Light Systems.
     Interest  income of $115,000  was lower by $60,000 in the first nine months
of fiscal  1998 than in the  comparable  fiscal  1997  period.  The  decrease in
interest income is primarily  attributable to the lower level of funds available
for short-term investments during the first nine months of fiscal 1998, with the
majority of the decline experienced during the third quarter of fiscal 1998.

                                     - 10 -

<PAGE>




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

Results Of Operations
---------------------
(a)  Nine Months Ended  November  30, 1997 versus Nine Months Ended  December 1,
     ---------------------------------------------------------------------------
     1996 (Continued)
     ----
     Equity in income of joint venture  represented the Company's  proportionate
share of its  investment  in  SI/BAKER  which is being  accounted  for under the
equity method.  The favorable  variance of $306,000 for the first nine months of
fiscal  1998 in the  equity in  income  of joint  venture  was  attributable  to
SI/BAKER's  growth in revenues to $17.3  million,  as compared to the comparable
fiscal 1997 period of $11.5 million, as well as to reductions of (1) $221,000 in
product   development   costs  and  (2)   $93,000  in  selling,   general,   and
administrative  expenses.  The  substantial  increase in  revenues is  primarily
attributable  to SI/BAKER's  larger backlog of orders  entering  fiscal 1998 and
customer  requirements  for job  completion  during  the early part of the third
quarter  of fiscal  1998.  SI/BAKER's  fiscal  1997  comparable  period  product
development  costs were  associated  with the BK2000  automated  pharmacy system
product line, while selling,  general, and administrative expenses were impacted
unfavorably by legal costs associated with the since settled patent infringement
litigation.  Partially  offsetting the favorable  variance were increases of (1)
$231,000 in revenue  based  royalty  costs due to the parent  companies  and (2)
$84,000 in  interest  expense  related  to bank  borrowings  to fund  short-term
working  capital  requirements.  The  favorable  variance  of  $182,000 in other
income,  net, is  primarily  attributable  to an increase of $115,000 in royalty
income related to the SI/BAKER joint venture.
     The Company incurred income tax expense of $1,215,000 during the first nine
months of  fiscal  1998  compared  to  income  tax  expense  of  $84,000  in the
comparable  fiscal 1997 period.  Income tax expense for the first nine months of
fiscal 1998 was recorded at the statutory  federal and state tax rates  expected
to apply for the  current  fiscal  year.  Income tax  expense for the first nine
months of fiscal 1997 was less than  statutory  rates 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  November 30, 1997 versus Three Months Ended December 1,
     --------------------------------------------------------------------------
     1996
     ----
     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, with the exception of the following area:
     The  increase in other  income,  net for the nine month  period noted above
occurred  primarily in the first half of fiscal 1998,  while third quarter other
income,  net for fiscal 1998 increased  slightly from the comparable  prior year
period.

                                     - 11 -

<PAGE>




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

Year 2000
---------
     The  Year  2000  issue  relates  to  the  inability  of  computer  systems,
microprocessors,  and other electronic  devices to deal appropriately with dates
on or after  January 1, 2000.  The  Company is in the process of  assessing  its
compliance  with the Year 2000 issue;  however,  management has not assessed the
Year 2000  compliance  expense and  related  potential  effect on the  Company's
earnings.

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).  Among other things,  they regard the Company's
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  likely,"  "are
expected  to,"  "continues,"  "projects,"  and similar  expressions  that denote
uncertainty,  are intended to identify such forward-looking  statements.  Actual
results  may  differ  materially:  (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 factors over which the Company has no control,  including the
strength of domestic  and  foreign  economies,  sales  growth  competition,  and
certain cost increases; or (3) if the factors on which the Company's conclusions
are based do not conform to the Company's expectations.



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


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 November 30,
         1997.

                                     - 12 -

<PAGE>




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:         January 14, 1998
               ----------------  


                                     - 13 -

<PAGE>




                                                                      Schedule A
                                                                      ----------











                                 SI/BAKER, INC.

                              Financial Statements
                                November 30, 1997


                                     - 14 -

<PAGE>




SI/BAKER, INC.
Balance Sheets
November 30, 1997 and February 28, 1997
  (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                           November    February
                                                           30, 1997    28, 1997
                                                          ---------    --------
<S>                                                       <C>          <C>  
Assets
------
Current assets:
   Cash and cash equivalents, principally
     time deposits                                        $    597         484

Receivables:
   Trade                                                     3,487       1,618
   Other receivables                                            --         122
                                                            ------      ------
     Total receivables                                       3,487       1,740
                                                            ------      ------

   Costs and estimated earnings in
     excess of billings                                      3,454       4,111
   Inventories                                                --            36
   Deferred income tax benefits                                367         367
   Prepaid expenses and other current
     assets                                                     82          87
                                                            ------      ------

       Total current assets                                  7,987       6,825
                                                            ------      ------

   Machinery and equipment, at cost                            125         106
     Less:  accumulated depreciation                            58          41
                                                            ------      ------
   Net machinery and equipment                                  67          65
                                                            ------      ------

   Equipment leased to customer                                487         487
   Less:  accumulated depreciation                             218         127
                                                            ------      ------
     Net equipment leased to customer                          269         360
                                                            ------      ------

   Deferred income tax benefits                                  6           6
                                                            ------      ------

       Total assets                                       $  8,329       7,256
                                                            ======      ======
</TABLE>



                                     - 15 -

<PAGE>




SI/BAKER, INC.
Balance Sheets
November 30, 1997 and February 28, 1997
  (In Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                           November    February
                                                           30, 1997    28, 1997
                                                          ---------    --------  
<S>                                                       <C>          <C>
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
   Note payable to bank                                   $  2,000       1,750
   Accounts payable:
     Trade                                                   1,758       1,920
     Affiliated companies                                      250         356
                                                            ------      ------
       Total accounts payable                                2,008       2,276
                                                            ------      ------

   Customers' deposits and billings in
     excess of costs and estimated
     earnings                                                  953         779
   Accrued salaries, wages, and
     commissions                                               323         307
   Income taxes payable                                         80           -
   Accrued royalties payable                                   342         319
   Accrued product warranties                                  728         463
   Accrued other liabilities                                    55         151
                                                            ------      ------
       Total current liabilities                             6,489       6,045
                                                            ------      ------

Stockholders' equity:
   Common stock, $1 par value; authorized
     1,000 shares; issued 200 shares                             -           -
   Additional paid-in capital                                  200         200
   Retained earnings                                         1,640       1,011
                                                            ------      ------
       Total stockholders' equity                            1,840       1,211
                                                            ------      ------

       Total liabilities and stockholders'
         equity                                           $  8,329       7,256
                                                            ======      ======
</TABLE>


                                     - 16 -

<PAGE>




SI/BAKER, INC.
Statements of Operations
Nine Months Ended November 30, 1997 and 1996
  (In Thousands)

<TABLE>
<CAPTION>
                                  Three Months Ended         Nine Months Ended
                                 --------------------      -------------------- 
                                  November   November       November   November
                                  30, 1997   30, 1996       30, 1997   30, 1996
                                 ---------   --------      ---------   --------
<S>                              <C>         <C>            <C>        <C>

Net sales                        $  4,530      4,353         17,253     11,480
Cost of sales                       4,036      4,147         14,750      9,988
                                   ------     ------         ------     ------

Gross profit on sales                 494        206          2,503      1,492
                                   ------     ------         ------     ------

Selling, general and
   administrative
   expenses                           204        219            730        823
Product development
   costs                                -         74              3        224
Royalty expense
   to parent companies                179        186            690        459
Interest income                        (6)       (24)           (21)       (35)
Interest expense                       33          1             93          9
Other income, net                     (25)       (15)           (51)       (13)
                                   ------     ------        -------     ------
                                      385        441          1,444      1,467
                                   ------     ------        -------     ------

Earnings (loss) before
   income taxes                       109       (235)         1,059         25
Income tax expense
   (benefit)                           43        (96)           430          9
                                   ------     ------         ------     ------

Net earnings (loss)              $     66       (139)           629         16
                                   ======     ======         ======     ======
</TABLE>



                                     - 17 -

<PAGE>




SI/BAKER, INC.
Statements of Cash Flows
Nine Months Ended November 30, 1997 and 1996
  (In Thousands)

<TABLE>
<CAPTION>
                                                             Nine Months Ended
                                                          ---------------------  
                                                           November    November
                                                           30, 1997    30, 1996
                                                          ---------    --------
<S>                                                       <C>          <C>  
Cash flow from operating activities:
   Net earnings                                           $    629          16
   Adjustments to reconcile net earnings
     to net cash provided (used) by
     operating activities:
       Depreciation of machinery and
         equipment and leased equipment                        108         111
       Changes in operating assets and
         liabilities:
           Receivables                                      (1,747)     (1,177)
           Costs and estimated earnings
              in excess of billings                            657       1,622
           Inventories                                          36         (54)
           Prepaid income taxes                                  -        (336)
           Prepaid expenses and other
              current assets                                     5         (99)
           Accounts payable                                   (268)       (637)
           Customers' deposits and
              billings in excess of costs
              and estimated earnings                           174         766
           Accrued salaries, wages, and
              commissions                                       16        (113)
           Income taxes payable                                 80        (194)
           Accrued royalties payable                            23         399
           Accrued product warranties                          265         218
           Accrued other liabilities                           (96)         51
                                                            ------      ------
Net cash provided (used)
   by operating activities                                    (118)        573
                                                            ------      ------

Cash flows used in investing activities:
   Additions to machinery and equipment                        (19)        (25)
   Equipment leased to customer                                  -          (9)
                                                            ------      ------
     Net cash used by investing activities                     (19)        (34)
                                                            ------      ------

Cash flows provided by financing activities:
   Increase in note payable to bank                            250           -
                                                            ------      ------
</TABLE>


                                     - 18 -

<PAGE>




SI/BAKER, INC.
Statements of Cash Flows (Continued)
Nine Months Ended November 30, 1997 and 1996
  (In Thousands)

<TABLE>
<CAPTION>
                                                             Nine Months Ended
                                                          ---------------------  
                                                           November    November
                                                           30, 1997    30, 1996
                                                          ---------    --------
<S>                                                       <C>          <C>  

Increase in cash and cash equivalents                          113         539
Cash and cash equivalents,
   beginning of period                                         484         327
                                                            ------      ------
Cash and cash equivalents, end of period                  $    597         866
                                                            ======      ======

Supplemental disclosure of cash flow information:
     Cash paid during the period for:
       Income taxes                                       $    350         539
                                                            ======      ======
       Interest                                           $     88           9
                                                            ======      ======
</TABLE>


                                     - 19 -

<PAGE>




                            SI HANDLING SYSTEMS, INC.

                                    FORM 10-Q

                                  EXHIBIT INDEX
                                  -------------



Exhibit No.
----------

27         Financial Data Schedule.

          



























                                     - 20 -