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 August 31, 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 August 31, 1997:  2,474,514.
                        ---------



<PAGE>




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

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

<TABLE>
<CAPTION>
                                                           August       March
Assets                                                    31, 1997     2, 1997
------                                                  -----------   ---------
<S>                                                       <C>          <C>
Current assets:
   Cash and cash equivalents, principally
     time deposits                                        $  1,264        1,852
   Short-term investments                                        -        3,741
                                                            ------       ------
       Total cash, cash equivalents, and
         short-term investments                              1,264        5,593
                                                            ------       ------

   Receivables:
     Trade                                                   6,405        3,900
     Notes and other receivables                               196          719
                                                            ------       ------
       Total receivables                                     6,601        4,619
                                                            ------       ------

   Costs and estimated earnings in excess
     of billings                                             5,362        1,640

   Inventories:
     Raw materials                                             694          814
     Finished goods and work-in-process                      1,350        1,151
                                                            ------       ------
       Total inventories                                     2,044        1,965
                                                            ------       ------

   Deferred income tax benefits                                372          372
   Prepaid expenses and other current assets                   242          173
                                                            ------       ------
       Total current assets                                 15,885       14,362
                                                            ------       ------

Property, plant and equipment, at cost:
   Land                                                         27           27
   Buildings and improvements                                3,358        3,358
   Machinery and equipment                                   4,015        3,717
                                                            ------       ------
                                                             7,400        7,102
   Less:  accumulated depreciation                           5,974        5,801
                                                            ------       ------
       Net property, plant and equipment                     1,426        1,301
                                                            ------       ------

Deferred income tax benefits                                   214          214
Investment in joint venture                                    887          606
Other assets, at cost less accumulated
   amortization of $72 in 1998 and $67
   in 1997                                                      64           64
                                                            ------       ------
       Total assets                                        $18,476       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>
                                                            August       March
Liabilities and Stockholders' Equity                       31, 1997     2, 1997
------------------------------------                      ----------   ---------
<S>                                                        <C>          <C> 
Current liabilities:
   Current installments of long-term debt                  $    12          12
   Accounts payable                                          2,752       2,056
   Customers' deposits and billings in excess
     of costs and estimated earnings                         2,726       2,752
   Accrued salaries, wages, and commissions                    909         778
   Income taxes payable                                        934         442
   Accrued royalties payable                                   209         427
   Accrued other liabilities                                   726         870
                                                            ------      ------

     Total current liabilities                               8,268       7,337
                                                            ------      ------

Long-term liabilities:
   Long-term debt, excluding current installments:
     Mortgages payable                                          27          35
                                                            ------      ------
       Total long-term debt                                     27          35
   Deferred compensation                                       142         132
                                                            ------      ------
       Total long-term liabilities                             169         167
                                                            ------      ------

Stockholders' equity:
   Common stock, $1 par value; authorized
     20,000,000 shares; issued 2,474,514
     shares in 1998 and 2,460,306 shares
     in 1997                                                 2,475       2,460
   Additional paid-in capital                                3,883       3,752
   Retained earnings                                         3,681       2,831
                                                            ------      ------

       Total stockholders' equity                           10,039       9,043
                                                            ------      ------

       Total liabilities and stockholders' equity          $18,476      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         Six Months Ended
                                ----------------------     -------------------- 
                                 August      September      August    September
                                31, 1997      1, 1996      31, 1997    1, 1996
                                --------     ---------     --------   ---------
<S>                             <C>           <C>          <C>          <C>
Net sales                       $ 10,407        5,422       19,949       11,053
Cost of sales                      8,147        3,900       15,469        7,841
                                  ------       ------       ------       ------

Gross profit on sales              2,260        1,522        4,480        3,212
                                  ------       ------       ------       ------

Selling, general and
   administrative
   expenses                        1,585        1,268        3,072        2,598
Product development
   costs                              26           26          108          106
Interest expense                       3            2            5            5
Interest income                      (25)         (50)         (92)         (95)
Equity in income of
   joint venture                    (177)         (47)        (281)         (77)
Other income, net                   (185)         (37)        (278)        (101)
                                  ------       ------       ------       ------
                                   1,227        1,162        2,534        2,436
                                  ------       ------       ------       ------

Earnings before
   income taxes                    1,033          360        1,946          776
Income tax expense                   404           27          761           58
                                  ------       ------       ------       ------

Net earnings                    $    629          333        1,185          718
                                  ======       ======       ======       ======

Net earnings per common
   share and common
   share equivalents*           $    .25          .13          .47          .29
                                  ======       ======       ======       ======

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

<FN>
* Net  earnings  per share are based on the  weighted  average  number of shares
  outstanding  and  equivalent shares from  dilutive stock  options, which  were
  2,498,000 and 2,459,000 at August 31, 1997 and September 1, 1996,
  respectively.
</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>
                                                             Six Months Ended
                                                          ----------------------  
                                                           August      September
                                                          31, 1997      1, 1996
                                                          --------     --------- 
<S>                                                        <C>          <C> 
Cash flows from operating activities:
   Net earnings                                            $ 1,185          718
   Adjustments to reconcile net earnings
     to net cash provided (used)
     by operating activities:
       Depreciation of plant and equipment                     173          159
       Amortization of intangibles                               5            5
       Equity in income of joint venture                      (281)         (77)
       Change in operating assets and liabilities:
         Receivables                                        (1,982)        (721)
         Costs and estimated earnings in
           excess of billings                               (3,722)       1,006
         Inventories                                           (79)         (41)
         Deferred income tax benefits                            -           15
         Prepaid expenses and other
           current assets                                      (69)          (7)
         Other noncurrent assets                                (5)           2
         Accounts payable                                      696         (156)
         Customers' deposits and billings
           in excess of costs and estimated
           earnings                                            (26)         516
         Accrued salaries, wages, and
           commissions                                         131         (270)
         Income taxes payable                                  492            4
         Accrued royalties payable                            (218)        (266)
         Accrued other liabilities                            (144)         155
         Deferred compensation                                  10            -
                                                            ------       ------
   Net cash provided (used) by
     operating activities                                   (3,834)       1,042
                                                            ------       ------

Cash flows from investing activities:
   Sales of short-term investments                           5,213        1,914
   Purchase of short-term investments                       (1,472)           -
   Additions to property, plant and equipment                 (298)        (163)
                                                            ------       ------
   Net cash provided by investing activities                 3,443        1,751
                                                            ------       ------
</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>
                                                           Six Months Ended
                                                       -------------------------
                                                        August         September
                                                       31, 1997         1, 1996
                                                       --------        ---------
<S>                                                    <C>               <C>
Cash flows from financing activities:
   Sale of common shares in connection
     with employee incentive stock
     option plan                                            58               12
   Repayment of long-term debt                             ( 8)             (11)
   Dividends paid on common stock                         (247)            (244)
                                                        ------           ------
   Net cash used by financing
     activities                                           (197)            (243)
                                                        ------           ------

   Increase (decrease) in cash and
     cash equivalents                                     (588)           2,550
   Cash and cash equivalents, beginning
     of period                                           1,852            1,335
                                                        ------           ------
   Cash and cash equivalents, end of
     period                                           $  1,264            3,885
                                                        ======           ======

   Supplemental disclosures of cash flow
   information:
     Cash paid during the period for:
       Interest                                       $      2                2
                                                        ======           ======
       Income taxes                                   $    269               39
                                                        ======           ======

   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 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.

                                      - 6 -

<PAGE>




Item 1.   Financial Statements (Continued)
------    --------------------
SI Handling Systems, Inc.
Notes To Financial Statements
Six Months Ended August 31, 1997 and September 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  decreased to $1,264,000 during the
first six months of fiscal 1998 from  $1,852,000 at the end of fiscal 1997.  The
decrease resulted from cash used by operating  activities  totaling  $3,834,000,
repayments  of  long-term  debt of $8,000,  purchases  of capital  equipment  of
$298,000,  and the  payment  of  $247,000  in cash  dividends  to  shareholders.
Offsetting  the decrease in cash and cash  equivalents  from these uses were net
sales of short-term  investments  of $3,741,000 and proceeds of $58,000 from the
sale of common  stock in  connection  with the employee  incentive  stock option
plan.  Funds  provided by  operating  activities  during the first six months of
fiscal 1997 were $1,042,000.


                                      - 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 six months of
fiscal  1998.  Currently,   the  committed  revolving  credit  facility  has  an
expiration date of August 31, 1999.  During the first six 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 $2,500,000 Line of Credit Facility
(the  "Facility")  with its  principal  bank (the  "Bank").  Under  terms of the
Facility,  SI/BAKER's parent companies,  SI Handling Systems, Inc. and Automated
Prescription Systems, Inc., have each provided a limited guarantee and surety in
an amount not to exceed $1,000,000 for a combined guarantee of $2,000,000 to the
Bank for the payment and performance of the related note,  including any further
renewals or modifications of the Facility.  As of August 31, 1997,  SI/BAKER did
not have any debt outstanding under the Facility. The Facility has an expiration
date of October 31, 1997.
     On October 14,  1997,  the Board of  Directors  of the  Company  declared a
three-for-two  stock  split  to be  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.

Results Of Operations
---------------------
(a)  Six Months Ended August 31, 1997 versus Six Months Ended
     --------------------------------------------------------
     September 1, 1996
     -----------------
     The  Company's  net  earnings  for the first six months of fiscal 1998 were
$1,185,000  compared to net  earnings  of  $718,000  for the first six months of
fiscal 1997.
     Backlog at the end of the first half of fiscal  1998 was  $31,078,000  with
the  majority of the  backlog  pertaining  to  Switch-Cart  and  Dispen-SI-matic
contracts.  During the first half of fiscal 1998,  the Company was the recipient


                                      - 8 -

<PAGE>




Item 2.   Management's Discussion and Analysis of Financial
          -------------------------------------------------
          Condition and Results of Operations
          -----------------------------------
SI Handling Systems, Inc.

(a)  Six Months Ended August 31, 1997 versus Six Months Ended
     --------------------------------------------------------
     September 1, 1996 (Continued)
     -----------------
of orders totaling approximately $20 million with the largest order taken by the
Company's  Production & Assembly  Systems  Business Unit. The Defense  Logistics
Agency of the United States  government  procured an addition of $6.7 million 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 is the largest in the Company's
history and totals approximately $23.4 million.
     Net sales of $19,949,000  for the first six months of fiscal 1998 increased
80.5%  compared to net sales of  $11,053,000  for the first six months of fiscal
1997.  The sales  increase in the first six 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.  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 six months of fiscal  1998 was  primarily  attributable  to a  significant
amount of progress  relating to several large  contracts  received  prior to the
start of fiscal  1998.  Contributing  to the lower  backlog at the  beginning of
fiscal 1997, and hence sales in the first six 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.
     Gross profit as a percentage of sales was 22.5% for the first six months of
fiscal  1998  compared  to 29.1% for the first six  months of fiscal  1997.  The
decrease in the gross profit  percentage for the first six 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 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 then in progress of proprietary product.
     Selling,  general, and administrative expenses of $3,072,000 were higher by
$474,000  in the first six months of fiscal 1998 than in the  comparable  fiscal
1997 period. The increase in selling,  general,  and administrative  expenses is
attributable  to  inflationary  trends and to higher  charges for those 

                                      - 9 -

<PAGE>




Item 2.   Management's Discussion and Analysis of Financial
------    -------------------------------------------------
          Condition and Results of Operations
          -----------------------------------
SI Handling Systems, Inc.

(a)  Six Months Ended August 31, 1997 versus Six Months Ended
     --------------------------------------------------------
     September 1, 1996 (Continued)
     -----------------
expenses based on revenue and profit performance,  including expenses related to
the Company's incentive-based  compensation plan which provides for gain sharing
as a means of promoting performance excellence.
     Product  development  costs for the first  six  months of fiscal  1998 were
relatively the same as costs for the comparable fiscal 1997 period.  Development
programs in the first six 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 six  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 $92,000  was lower by $3,000 in the first six 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 six months of fiscal 1998.
     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 for the first six months of fiscal 1998 in
the equity in income of joint venture was  attributable to SI/BAKER's  growth in
revenues,  as  compared to the  comparable  fiscal  1997  period,  as well as to
reductions in product development costs and 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. Based upon SI/BAKER's  current backlog position and the pace, size,
and timing of potential new orders  expected to be received during the remainder
of the  current  fiscal  year,  the  company  believes  that the rate of revenue
recognition for the second half of fiscal 1998 may decrease.  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 was increased  revenue based royalty costs due to the parent
companies and an increase in interest expense related to bank borrowings to fund
short-term working capital requirements.
     The favorable variance in other income,  net, is primarily  attributable to
an increase in royalty income related to the SI/BAKER joint venture, income 


                                     - 10 -

<PAGE>




Item 2.       Management's Discussion and Analysis of Financial
-------       -------------------------------------------------
              Condition and Results of Operations
              -----------------------------------
SI Handling Systems, Inc.

(a)  Six Months Ended August 31, 1997 versus Six Months Ended
     --------------------------------------------------------
     September 1, 1996 (Continued)
     -----------------
from foreign exchange transactions, and an increase in purchase discounts earned
by the Company due to increased purchasing requirements. In addition, the second
quarter of fiscal 1997  contained a charge in  connection  with the write-off of
the  balance  of  a  customer  receivable  due  to  its  filing  for  bankruptcy
protection.
     The Company  incurred  income tax expense of $761,000  during the first six
months of  fiscal  1998  compared  to  income  tax  expense  of  $58,000  in the
comparable  fiscal 1997  period.  Income tax expense for the first six 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 six
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 August 31, 1997 versus Three Months 
     ------------------------------------------------------
     Ended September 1, 1996
     -----------------------
     Changes in the second  quarter of the current fiscal year compared to prior
year were consistent with those previously noted above for the six month-period.

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.



                          
                                     - 11 -

<PAGE>




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 16,
1997 with the following items being submitted to a vote by shareholders:

     1.  The election of five directors.
     2.  The approval of the amendment to the Company's Articles to increase the
         amount of the Company's  authorized Common Stock, par value,  $1.00 per
         share, from 5,000,000 to 20,000,000 shares.
     3. The approval of the 1997 Equity Compensation Plan.

     Details of the proposals  noted above were provided to  shareholders in the
form of a Notice of Annual Meeting and Proxy  Statement  dated June 13, 1997 and
mailed  on June 17,  1997,  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 to the
Company's  Articles to increase the amount of the  Company's  authorized  Common
Stock,  par value,  $1.00 per share,  from  5,000,000 to  20,000,000  shares and
Proposal  Number 3 for the  approval of the 1997 Equity  Compensation  Plan were
duly approved by the shareholders.                  
     The  voting  results  on the  three  matters  noted  above are set forth as
follows:

     1.  Election of Directors:

         Name of Nominee        Votes For     Votes Withheld       Non-Voting
         ---------------        ---------     --------------       ----------
         L. Jack Bradt          2,059,099          17,154            389,425
         Edward J. Fahey        2,059,728          16,525            389,425
         Elmer D. Gates         1,952,982         123,271            389,425
         Michael J. Gausling    1,952,982         123,271            389,425
         Leonard S. Yurkovic    2,059,728          16,525            389,425

     2.  Approval of the  amendment  to the  Company's  Articles to increase the
         amount of the Company's  authorized Common Stock, par value,  $1.00 per
         share, from 5,000,000 to 20,000,000 shares:

         Votes For      Votes Against         Abstentions          Non-Voting
         ---------      -------------         -----------          ----------
         1,685,445         381,510               9,298               389,425

     3. Approval of the 1997 Equity Compensation Plan:

         Votes For      Votes Against         Abstentions          Non-Voting
         ---------      -------------         -----------          ----------
         1,292,994         233,886               9,597              929,201



                                     - 12 -

<PAGE>




SI Handling Systems, Inc.


                    PART II - OTHER INFORMATION (Continued)
                    ---------------------------


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

     (a)  Exhibit 3.1 - Amended and Restated Articles of SI Handling
          Systems, Inc.

          Exhibit 10.4 - 1992 Incentive Stock Option Plan, Amended and
          Restated, Effective as of July 16, 1997.

          Exhibit 27 - Financial Data Schedule

     (b)  No reports on Form 8-K were filed during the quarter ended
          August 31, 1997.














                                     - 13 -
<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.

                                             /s/ Barry V. Mack
                                             
                                             Barry V. Mack
                                             Vice President - Finance

Dated:     October 15, 1997
           ----------------

















                                     - 14 -

<PAGE>




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











                                 SI/BAKER, INC.

                              Financial Statements
                                 August 31, 1997
























                                     - 15 -

<PAGE>




SI/BAKER, INC.
Balance Sheets
August 31, 1997 and February 28, 1997
  (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                                                            August    February
                                                           31, 1997   28, 1997
                                                          ---------   --------
<S>                                                       <C>          <C>  
Assets
Current assets:
   Cash and cash equivalents, principally
     time deposits                                        $    658         484

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

   Costs and estimated earnings in
     excess of billings                                      4,768       4,111
   Inventories                                                  13          36
   Deferred income tax benefits                                367         367
   Prepaid expenses and other current
     assets                                                     69          87
                                                            ------      ------

       Total current assets                                  7,615       6,825
                                                            ------      ------

   Machinery and equipment, at cost                            121         106
     Less:  accumulated depreciation                            51          41
                                                            ------      ------
   Net machinery and equipment                                  70          65
                                                            ------      ------

   Equipment leased to customer                                487         487
   Less:  accumulated depreciation                             188         127
                                                            ------      ------
     Net equipment leased to customer                          299         360
                                                            ------      ------
  Deferred income tax benefits                                   6           6
                                                            ------      ------

       Total assets                                        $ 7,990       7,256
                                                            ======      ======
</TABLE>



                                     - 16 -

<PAGE>




SI/BAKER, INC.
Balance Sheets
August 31, 1997 and February 28, 1997
  (In Thousands, Except Share Data)

<TABLE>
<CAPTION>

                                                            August    February
                                                           31, 1997   28, 1997
                                                          ---------   --------
<S>                                                       <C>         <C>  
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
   Note payable to bank                                   $      -      1,750
   Accounts payable:
     Trade                                                   2,991      1,920
     Affiliated companies                                        8        356
                                                            ------     ------
       Total accounts payable                                2,999      2,276
                                                            ------     ------

   Customers' deposits and billings in
     excess of costs and estimated
     earnings                                                1,828        779
   Accrued salaries, wages, and
     commissions                                               280        307
   Income taxes payable                                         45          -
   Accrued royalties payable                                   616        319
   Accrued product warranties                                  409        463
   Accrued other liabilities                                    39        151
                                                            ------     ------
       Total current liabilities                             6,216      6,045
                                                            ------     ------

Stockholders' equity:
   Common stock, $1 par value; authorized
     1,000 shares; issued 200 shares                             -          -
   Additional paid-in capital                                  200        200
   Retained earnings                                         1,574      1,011
                                                            ------     ------
       Total stockholders' equity                            1,774      1,211
                                                            ------     ------

       Total liabilities and stockholders'
         equity                                           $  7,990      7,256
                                                            ======     ======
</TABLE>


                                     - 17 -

<PAGE>




SI/BAKER, INC.
Statements of Operations
Six Months Ended August 31, 1997 and 1996
  (In Thousands)
<TABLE>
<CAPTION>

                                     Three Months Ended       Six Months Ended
                                   ---------------------    --------------------
                                    August       August      August      August                                    
                                   31, 1997     31, 1996    31, 1997    31, 1996
                                   --------     --------    --------    --------
<S>                                <C>          <C>         <C>         <C>
Net sales                          $  8,019       3,457      12,723       7,127
Cost of sales                         6,818       2,872      10,714       5,841
                                     ------      ------      ------      ------

Gross profit on sales                 1,201         585       2,009       1,286
                                     ------      ------      ------      ------

Selling, general and
   administrative
   expenses                             265         290         526         604
Product development
   costs                                  -          14           3         150
Royalty expense
   to parent companies                  323         126         511         273
Interest income                          (8)         (5)        (15)        (11)
Interest expense                         27           1          60           8
Other expense
   (income), net                         (6)         (1)        (26)          2
                                     ------      ------      ------      ------
                                        601         425       1,059       1,026
                                     ------      ------      ------      ------

Earnings before
   income taxes                         600         160         950         260
Income tax expense                      245          65         387         105
                                     ------      ------      ------      ------

Net earnings                       $    355          95         563         155
                                     ======      ======      ======      ======
</TABLE>



                                     - 18 -

<PAGE>




SI/BAKER, INC.
Statements of Cash Flows
Six Months Ended August 31, 1997 and 1996
  (In Thousands)
<TABLE>
<CAPTION>

                                                           Six Months Ended
                                                        ----------------------
                                                          August       August
                                                         31, 1997     31, 1996
                                                        ---------     --------
<S>                                                     <C>           <C>
Cash flow from operating activities:
   Net earnings                                         $    563          155
   Adjustments to reconcile net earnings
     to net cash provided (used) by
     operating activities:
       Depreciation of machinery and
         equipment and leased equipment                       71           75
       Changes in operating assets and
         liabilities:
           Receivables                                         -          (33)
           Costs and estimated earnings
              in excess of billings                         (657)       2,160
           Inventories                                        23         (105)
           Prepaid income taxes                                -         (157)
           Prepaid expenses and other
              current assets                                  18         (119)
           Accounts payable                                  723       (1,056)
           Customers' deposits and
              billings in excess of costs
              and estimated earnings                       1,049        1,362
           Accrued salaries, wages, and
              commissions                                    (27)           1
           Income taxes payable                               45         (194)
           Accrued royalties payable                         297            4
           Accrued product warranties                        (54)           -
           Accrued other liabilities                        (112)         269
                                                          ------       ------
Net cash provided by operating
   activities                                              1,939        2,362
                                                          ------       ------

Cash flows used in investing activities:
   Additions to machinery and equipment                      (15)         (22)
   Equipment leased to customer                                -           (9)
                                                           ------      ------
     Net cash used by investing activities                   (15)         (31)
                                                           ------      ------

Cash flows used by financing activities:
   Repayment of note payable to bank                      (1,750)           -
                                                          -------      ------
</TABLE>




                                     - 19 -

<PAGE>




SI/BAKER, INC.
Statements of Cash Flows (Continued)
Six Months Ended August 31, 1997 and 1996
  (In Thousands)

<TABLE>
<CAPTION>
                                                           Six Months Ended
                                                        ----------------------
                                                          August       August
                                                         31, 1997     31, 1996
                                                        ---------     --------
<S>                                                     <C>           <C>
Increase in cash and cash equivalents                        174        2,331
Cash and cash equivalents,
   beginning of period                                       484          327
                                                          ------       ------
Cash and cash equivalents, end of period                $    658        2,658
                                                          ======       ======

Supplemental disclosure of cash flow information:
     Cash paid during the period for:
       Income taxes                                     $    342          457
                                                          ======       ======
       Interest                                         $     64            8
                                                          ======       ======
</TABLE>

























                                     - 20 -

<PAGE>




                            SI HANDLING SYSTEMS, INC.

                                    FORM 10-Q

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



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

3.1        Amended and Restated Articles of SI Handling Systems, Inc.

10.4       SI Handling Systems, Inc. 1992 Incentive Stock Option Plan,
           Amended and Restated, Effective as of July 16, 1997.

27         Financial Data Schedule.






                                     - 21 -