COMPANY PROFILE



Portec  is a  leading  manufacturer of  quality  engineered products  for  the
construction, materials handling  and railroad industries.   Founded in  1906,
Portec completed a successful restructuring in  the late 1980's.  Since  1990,
the  focus has been  on achieving above  average growth in  sales and earnings
through  new   product  development,   acquisitions  of   related  businesses,
continuous cost reduction and international market development.  Headquartered
near Chicago, Illinois, Portec's shares are traded on the New York and Chicago
stock exchanges under the symbol POR.

Principal product groups are:

                        MAJOR PRODUCTS           APPLICATIONS
CONSTRUCTION EQUIPMENT

                o  Aggregate Equipment      o  Produce and recycle crushed 
                                               stone, sand and gravel-
                                               the primary components
                                               of asphalt and concrete.
 
(Pie Chart Depicting 34% of Sales)

                o  Environmental Equipment  o  Treat contaminated  soils and
                                               sludges.  Process and recycle
                                               green yard waste, waste wood and
                                               demolition debris, reducing 
                                               landfill requirements.

MATERIALS HANDLING

                o  Specialty Belt Conveyors o  Automate handling of baggage, 
                                               packages, food and pharmaceutical
                                               products, newspaper, etc. to 
                                               lower material handling costs.

(Pie Chart Depicting 28 % of Sales)

                o  Recycling Conveyors and  o   Separate glass, plastics and 
                   Systems                      metals from municipal solid
                                                waste for recycling, also 
                                                reducing landfill requirements.

RAILROAD PRODUCTS

                o  Track Components         o   Fasten rails to rails and
                                                rails to ties in railroad
                                                and mass transit track 
                                                systems worldwide.

(Pie Chart Depicting 38% of Sales)                                             

                o  Railcar Components        o  Secure loads to railcars,
                                                including intermodal 
                                                container cars, lumber
                                                cars and automobile 
                                                rack cars.


                o  Jacking Systems           o  Lift locomotives and
                                                railcars for maintenance
                                                and service.



CONTENTS

Letter to Stockholders and Employees                                         2
Construction Equipment Segment  . . .                                        4
Materials Handling Segment  . . . . .                                        6
Railroad Products Segment   . . . . .                                        8
Business Segments   . . . . . . . . .                                       10
Geographic Areas  . . . . . . . . . .                                       11
Management's Discussion and Analysis                                        12 
Consolidated Statements of Income   .                                       17
Consolidated Balance Sheets   . . . .                                       18
Consolidated Statements of Cash Flows                                       19
Notes to Consolidated Financial Statements  .                               20
Report of Independent Accountants   .                                       33
Corporate Information   . . . . . . .                                       34
Stockholders' Information   . . . . .                                       36


FIVE-YEAR SUMMARY (1)
                      
    For Years Ended December 31
<TABLE>
<S><C>

                                                           1996         1995        1994         1993        1992    
INCOME AND OPERATING DATA
Net sales                                               $ 97,338     $ 97,072    $ 96,474     $ 76,324    $ 68,638 
Cost of products sold                                     68,409       68,539      65,681       51,387      46,232 
Selling, general and administrative expense               18,808       19,974      21,718       18,309      13,854 
Depreciation and amortization                              2,442        2,173       2,012        1,478       1,376 
Loss on impaired assets                                        -        2,372           -            -           - 
Other income, net                                            368          578       1,091          559         378 
Interest expense                                           1,095        1,680         829          750       1,220 
Income before income taxes                                 6,952        2,912       7,325        4,959       6,334 
Income tax provision                                          61           14         500          263         821 
Net income                                                 6,891        2,898       6,825        4,696       5,513 

FINANCIAL DATA
Working capital                                         $ 25,981     $ 19,375    $ 12,797     $  8,554    $  7,924 
Property, plant and equipment-net                         14,543       14,171      13,372       12,129       9,671 
Total assets                                              65,950       57,818      57,522       42,478      38,045 
Long-term debt                                            10,768       10,117       7,623        5,277       8,094 
Stockholders' equity                                      34,986       28,028      24,959       17,744      12,309 
Average common and common equivalent 
  shares outstanding                                   4,576,358    4,596,469   4,572,468    4,464,877   4,034,571 

PER SHARE OF COMMON STOCK (2)
Net income                                              $   1.50     $    .63    $   1.49     $   1.05    $   1.37 
Stockholders' equity-end of year                            8.00         6.47        5.83         4.19        3.03 

Number of employees                                          671          637         779          619         518 
Number of stockholders                                     1,168        1,262       1,335        1,412       1,473 

(1)  Dollars in  thousands except  per share  data, number of stockholders,  average
     number of shares outstanding and number of employees.
(2)  Adjusted retroactively for 10% stock dividends paid in  December 1992, 1993 and
     1994.
</TABLE>

(Bar Graph Depicting Last Five Years of Net Sales as itemized in above table.)
(Bar Graph Depicting Last Five Years of Net Income as itemized in above table,
 except for nonrecurring gain in 1992 of 3.3 million.)
(Bar Graph Depicting Last Five Years of Net Worth as itemized in above table.)


TO OUR STOCKHOLDERS AND EMPLOYEES:


Portec had a successful year in 1996.  Total sales were  up only slightly, but
net  income was more than double the prior year's level, and each of our three
business segments contributed to the improved profit picture.

SALES, EARNINGS AND NET WORTH UP
Our sales  in 1996  were $97.3  million, up slightly  from $97.1  million last
year.   Volume  in  our  Materials Handling  and  Railroad  Products  segments
increased, offsetting a decline in Construction Equipment segment sales.

Net  income in 1996 was $6.9 million, up 138% from $2.9 million in 1995.  Last
year's net income was reduced by a $2.4 million non-recurring charge resulting
from a write-down of certain inventories and goodwill related to the Innovator
product line. 

Stockholders' equity at December 31, 1996, was $35.0 million. This represents
an increase of 25% over the prior year's level of $28.0 million.

ALL SEGMENTS REPORT PROFIT INCREASES
Our foremost goal in 1996 was  to improve on the disappointing profit reported
for 1995.  We were able to achieve this by stronger performance in each of our
three  business segments.  In  the Construction Equipment  business, our focus
was on  regaining positive  momentum in  our  traditional aggregate  equipment
products.  These  had declined  approximately 8% in  1995 due to  distractions
from the acquisition of Innovator Manufacturing, Inc. in late 1994.   In 1996,
this  decline was reversed and  sales of crushers,  screens, washing equipment
and conveyors increased  by 5%.   Total sales for  the Construction  Equipment
segment  declined by 11% due  largely to lower  Innovator sales, but operating
profit rebounded  from a  loss of  $1.0  million in  1995 to  a positive  $1.3
million in 1996.

The  Materials Handling segment had another strong year, with sales increasing
nearly  10% to  $27.2 million,  and  operating profit  increasing 15%  to $4.6
million.   Our Flomaster  specialty conveyor  business was helped  by a  large
order for the U.S. Post Office, which added nearly $1.5 million to 1996 sales.
Pathfinder products for industrial  lift trucks were up nearly  8%, reflecting
continued strength in the lift truck industry and the growth  of new products.
Finally, sales of Countec conveyor and sorting systems for materials recycling
facilities were up 8%, although profitability was down by nearly 15% due to 
more  competitive  pricing.   Overall,  Materials Handling  segment  sales and
operating profit have grown by an  impressive 110% and 89%, respectively, over
the last five-year period.

Sales  in our  Railroad Products  segment increased  by 5%  in 1996,  to $37.1
million.    Operating profit  increased by  54% to  $2.2  million.   Our track
components business in the U.S. was strengthened by the acquisition of Moore &
Steele Corporation's rail lubrication  products at mid-year.  The  Company now
has the broadest product offering, by far, in  rail lubrication products world
wide.   In Canada, our track components  business improved slightly as the two
major Canadian railroads completed restructuring and reported record earnings.
Also, we saw a  major year to year improvement at Portec (U.K.) Ltd.  In 1995,
Portec  (U.K.) Ltd.  reported  a loss  resulting  from an  unprofitable  steel
fabrication business which we exited late in that year. 

OUTLOOK
While we are pleased with the rebound in earnings in 1996, we did not meet our
sales growth objective.  We realize  that sales growth is necessary to achieve
continuing  increases   in  shareholder   value  and  to   create  advancement
opportunities for our employees.  We are committed to a financial plan in 1997
with minimum sales  growth of 7%, assuming no acquisitions.   As always, there
are both opportunities  and challenges in  each of our  businesses which  will
affect our efforts to grow.

In  Railroad Products,  we believe  the railroad  industry is  in a  long-term
growth trend.   In the U.S., ton-miles  of freight carried by  railroads set a
new record in 1996 for the tenth straight year.  Relative to trucks, railroads
have advantages in  fuel efficiency,  lower pollution and  public safety,  and
their share of intercity freight has grown in recent years following a 50-year
decline.   Several mergers of large  U.S. railroads have occurred  in the last
two  years.  In the  short-term, these have had a  negative impact on our U.S.
track  components business as some initial confusion and project delays occur.
However, the improved efficiency and service capabilities of the new railroads
should ultimately boost rail traffic - the underlying source of demand for our
products.

In the  international  railroad market,  we  have significant  involvement  in
Mexico, Canada  and the United  Kingdom.  In  each country,  nationalized rail
systems have been privatized during the  last several years.  This has created
even more confusion and  delay than have the mergers in the U.S.  Also, in the
case of Mexico,  we have been  faced with  a severe downturn  in the  economy.
Although the short-term  impact on our business has been  negative, we believe
that  the privatization efforts  will result in much  stronger rail systems in 
each country,  and above average  growth rates in  rail traffic.   We saw some
improvement in the U.K. and Canadian markets during 1996, and we expect Mexico
to join the trend in 1997.

In our Construction Equipment  business, we expect to increase sales  in 1997,
following two years of  decline.  The Innovator Manufacturing  acquisition has
been a major challenge for us in 1995 and 1996.  During 1996, we established a
focused sales and dealer  network for Innovator products, refined  application
guidelines  and  improved  product  design.    Although  1996  sales  declined
substantially  from  the  prior  year,  these efforts  should  produce  higher
shipments in 1997.

The market for  our traditional aggregate processing equipment correlates with
the production of crushed stone, sand and gravel which, in turn, is determined
by construction activity.  The  outlook for 1997 is one of  continued optimism
by construction equipment dealers.  In a recent survey, nearly  90% of dealers
believe  that 1997  will  be as  good or  better  than 1996,  with nearly  50%
believing  it will be  better.  Overall  construction activity is  expected to
increase by roughly  4%, with  increases in public  works and  non-residential
construction  offsetting  a 7%  decline in  residential  housing starts.   One
uncertainty  in the  forecast is  the future  of the  federal highway  funding
program  known as ISTEA,  which expires in September  1997.  Current proposals
for renewal  of the  act project  yearly spending at  a relatively  strong $21
billion to $26 billion level.

Our Materials Handling  segment has shown excellent growth over  the last five
years, and  we expect this  to continue in  the coming year.   Airline baggage
handling is  a key market for  some of our traditional  conveyor products, and
activity continues to be strong as airline passenger seat-miles grow at twice 
the rate of  the general economy in the U.S. and even faster in international 
markets.  In addition, we were successful in supplying specialty conveyors to
the U.S. Post Office in 1996, and expect to expand this business in  1997.
The U.S.  Post Office is in  the process of  a $14 billion capital expenditure 
program to  increase efficiency and on-time performance, and this should provide
significant opportunities for us over the next several years.

On the challenge  list for Materials Handling is a  significant decline in the
market  for recyclables  sorting systems  produced  by our  Countec operation.
Countec had a  strong performance in 1996 due to a  large backlog entering the
year.   However, prices for  recycled materials dropped  precipitously in late
1995,  and capital expenditures  by municipalities  and private  waste haulers
followed suit.   Although material  prices have  bottomed out, they  remain at
historically low levels, and the timing of a complete recovery is uncertain.

QUARTERLY DIVIDEND ANNOUNCED
During the fourth quarter of 1996,  the Company's Board of Directors  declared
an   $0.08  quarterly  cash  dividend.    This  action  reflects  the  Board's
satisfaction with the overall  performance of the Company in recent  years and
anticipated future progress.  The Company  last paid a cash dividend ten years
ago, prior to  a major restructuring.   As a result of that  restructuring and
improved  operating  results, the  Company has  reduced  bank debt  from $35.7
million  at  December  31, 1987,  to  $10.7  million  at  December  31,  1996.
Shareholders' equity of $2.9 million at  December 31, 1989, has increased more
than twelve-fold to $35.0 million at December 31, 1996.

We appreciate  the support from our  stockholders and Board of  Directors.  We
also thank our customers for their valued business and our employees for their
dedication and commitment to the Company's success.



Albert Fried, Jr.             Michael T. Yonker
Chairman of the Board         President and CEO



(3 photographs of equipment as described by captions.)







                                                           Portec designed
                                                           and built  this
                                                           large system for
                                                           the production of
                                                           stone and sand.














  A model 4030
  Recycler at work
  producing reclaimed
  aggregate from
  concrete demolition
  material.


















                                                          The new model 241
                                                          hydraulic screen
                                                          plant provides an
                                                          economical solution
                                                          to light duty
                                                          screening applications
                                                          such as top soil.








CONSTRUCTION EQUIPMENT SEGMENT

Portec's Construction Equipment Division is headquartered  in Yankton,  South
Dakota, and accounted for 34% of total Company sales in 1996.  Historically, the
division's product  lines have been used  by the construction  and road building
industries  for the production of crushed stone,  sand and  gravel -  the basic
raw  materials for  concrete and asphalt.  In  recent  years,  new  products  
have been added which have applications  in  environmental markets,  primarily  
soil  remediation, sludge treatment and green waste processing.

1996 FINANCIAL PERFORMANCE
Construction Equipment segment  sales declined  by 11% to  $33.0 million  from
$36.9 million  in 1995.  The sales decline occurred predominately in Innovator
green waste processing equipment.  The Innovator line is sold through dealers,
who, by and  large, were overstocked with these  products at the end  of 1995,
severely limiting new sales in 1996.  In addition, the major focus in 1996 was
on  establishing a  new sales and  dealer organization  and on  developing new
application  guidelines and product enhancements rather than on new sales.  We
expect to see increased shipments of Innovator products in 1997 as a result of
these efforts.

Sales of our traditional aggregate processing equipment increased by 5% during
1996, reversing an  8% decline in  the prior year.   Despite lower  shipments,
operating  profit  for the  Construction Equipment  segment  in 1996  was $1.3
million, compared to a  loss of $1.0 million in  the prior year which  was the
result  of the write-off of Innovator goodwill  and inventory.  Our backlog at
December 31, 1996, was $9.4 million,  71% greater than the year earlier level.
This  gives us a  strong start in  1997, and we  expect Construction Equipment
sales this year to reverse the declines of the last two years. 

NEW PRODUCTS INTRODUCED
Construction  Equipment sales  in 1997  should also  benefit from  several new
products  which were  introduced in  1996.   Our  model  4030 portable  impact
crusher  was introduced  to  recycle used  asphalt  and concrete  into  useful
aggregate products.   Growth in this market segment has  been above average in
recent  years.  We  also introduced the  model 1814 wash  plant as a portable,
cost efficient alternative  for small sand and gravel  producers.  Finally, we
shipped  the first model 241 hydraulic screen plant for topsoil, environmental
and light  duty sand and gravel applications.  This product addresses the cost
conscious  producer  and compliments  several larger  models in  our hydraulic
screen family.

OPERATIONS IMPROVED
During  the  year,  the  Construction  Equipment  Division  undertook  several
programs  to  improve  the  efficiency  and  customer  responsiveness  of  our
business.  Formal classes in continuous productivity improvement, process flow
and waste elimination were provided to half of the  divisions' employees, with
the remaining half scheduled for 1997.

Product quality is being  addressed through an overhaul of the quality system.
A new quality manual and procedures are being implemented according to the ISO
9001  standards.   The  emphasis  is  on  establishing  consistent  inspection
criteria, corrective action  feedback and  internal audits.   The payback  for
these efforts will be greater customer satisfaction and lower product warranty
costs. 
<TABLE>
<S><C>

LINE          PRODUCTS                APPLICATION                   MARKET               SALES CHANNELS
Pioneer  o Crushers               o Production, sizing, cleaning  o Construction    o Direct & through dealers
&        o Conveyors & stackers     & handling of bulk materials  o Mining            to end-users
Kolberg  o Screens & feeders      o Soil remediation              o Roadbuilding
         o Washers & classifiers  o Sludge treatment              o Recycling
         o Pugmills               o Environmental remediation

Innovator o Tumble grinders       o Size reduction for green waste,o Recycling      o Direct & through dealers
          o Tub grinders            wood waste & demolition debris o Composting       to end-users
          o Trommel screens       o Sizing & cleaning of wet, 
                                    sticky materials
</TABLE>


(3 photographs of equipment as described by captions)








                                                           Flomaster Division
                                                           is supplying these
                                                           conveyors and other  
                                                           equipment to postal
                                                           facilities
                                                           throughout the
                                                           United States (above
                                                           and center).
















  Glass sorting
  systems supplied
  by Countec
  produce saleable
  recycled materials
  while decreasing
  disposal costs (right).














                                                           This unmanned
                                                           ADS,or automatic
                                                           delivery system,
                                                           by Pathfinder
                                                           reduces material
                                                           handling cost in
                                                           a large warehouse
                                                           operation (left).









MATERIALS HANDLING SEGMENT


Portec's Materials Handling  segment consists  of three business  units -  the
Flomaster  Division  and  the  Pathfinder Division,  located  in  Canon  City,
Colorado, and the Countec  Division (formerly called Count  Recycling Systems)
in   Des  Moines,  Iowa.    Product  lines  include  specialty  belt  conveyor
components, electronic  wire guidance  packages for lift  trucks and  conveyor
systems for solid waste recycling.

1996 FINANCIAL PERFORMANCE
Sales  in our  Materials  Handling  segment in  1996  were  $27.2 million,  an
increase of  10% over  1995's $24.8  million.  This  continues the  pattern of
growth which has  brought this segment to 28%  of total company sales  in 1996
compared  to  just 17%  of  the  total five  years  ago.   Each  of  the three
businesses  in this  segment contributed  to the  growth in sales.   Operating
profit was  up 15%  to $4.6  million compared to  $4.0 million  in 1995,  with
increases at Flomaster and Pathfinder offsetting a decline at Countec.

NEW PRODUCTS DRIVE SALES
Sales  at Flomaster  increased  largely  because of  a  $3 million  order  for
specialty conveyors included in a new flat mail sorting system being installed
by  the U.S.  Post  Office.    Roughly  half of  the  initial  order  for  100
installations was  shipped in 1996, with  the balance scheduled for  1997.  We
expect that there  will be a continuation of this  program which would involve
at  least 200  additional  installations to  be  split between  1997  and 1998
shipments.  In  addition, we are involved with  a number of other  post office
projects which  look promising for  future years.   In order to  meet delivery
schedules  on these  contracts without  damaging our  service levels  to other
customers,  we added 22,000 square  feet of additional  manufacturing space in
early 1996. 

At Pathfinder, we  had good success in the second year of a new product called
the ADS, or Automatic Delivery System.  This product line utilizes some of the
wire guidance technology  from our  automatic steering units  for manned  fork
lift trucks and  applies it to unmanned  lift trucks.   An ADS can move  loads
from one place in a warehouse or factory to another, automatically and without
operators.  During 1996,  shipments of these labor saving  systems quadrupled,
providing the bulk of the 8% sales growth posted by Pathfinder.

COUNTEC BROADENS LINE
As  1996  progressed,  prices  for  recycled   materials  such  as  newsprint,
corrugated  paper and plastics weakened.  This dramatically reduced the number
of  new materials  recycling  facility  (MRF)  projects  and  the  demand  for
Countec's  traditional handling and sorting systems.  Although we believe this
condition is  temporary, Countec  broadened its product  line in late  1996 to
help weather  the storm.  A new glass  sorting system was introduced which has
appeal  to  existing MRF  operators.   The  system  allows a  MRF  operator to
automatically sort  broken glass in  the waste stream  by color and  to remove
ceramic  materials, providing  a  saleable product  while  reducing the  waste
tonnage which must be landfilled.   A typical glass sorting  system, including
screens,  conveyors and glass sorter, sells for between $200,000 and $500,000.
Countec installed three systems in 1996 and had additional bids outstanding as
we entered 1997.


<TABLE>
<S><C>

UNIT          PRODUCTS                      APPLICATION                       MARKET                       SALES CHANNELS
Flomaster   o Belt power turns          o Transportation of materials      o Baggage & package handling   o Direct & through
            o Spiral belt conveyors       through turns & from             o Warehousing & distribution     representatives to
            o Angle merge conveyors       one level to another             o Printing                       OEM's & end-users
                                        o Food & pharmaceutical

Pathfinder  o Electronic wire guidance  o Automatic steering for           o Warehousing & distribution   o Direct & through
              for lift trucks             manned lift trucks               o General industry               representatives to
                                        o Automatic control of             o Hospitals                      OEM's & end-users
                                          unmanned lift trucks

Countec     o Conveyor systems          o Handling & sortation             o Municipal & private materials o Direct & through
                                          of solid waste                     recycling facilities            representatives to
                                                                                                             end-users
</TABLE>



(3 photographs of equipment as described by captions)






                                                           This web strapping
                                                           system was  designed
                                                           by Shipping Systems
                                                           Division to secure
                                                           large paper rolls for
                                                           rail shipment.


















An automatic furnace
feeder helps reduce 
rail joint cost at
our Huntington,
West Virginia,
manufacturing plant.
























                                                         This Moore  & Steele
                                                         hi-rail lubricator is
                                                         often used on low
                                                         traffic lines or after
                                                         a rail grinding
                                                         operation.










RAILROAD PRODUCTS SEGMENT 


The  Railroad  Products segment  includes four  business  units:   The Railway
Maintenance  Products  Division  in  Pittsburgh,  Pennsylvania;  the  Shipping
Systems Division in Oak Brook, Illinois; Portec, Ltd. in Lachine,  Quebec; and
Portec  (U.K.) Ltd., our British subsidiary located  in North Wales.  In 1996,
Railroad Products  accounted for  38% of total  Company sales.   Product lines
include a broad range of track  components including rail joints, rail anchors
and lubricators, securement  devices for  holding loads on  railroad cars  and
jacking systems for railroad car repair facilities.

1996 FINANCIAL PERFORMANCE
In 1996, our Railroad Products segment increased sales by 5% to $37.1 million.
Approximately two-thirds  of the increase  resulted from an  acquisition, with
the remainder provided  by growth  at all operations  except Shipping  Systems
Division.  The U.S. market for track components was hurt by project delays and
uncertainties  associated with recent or pending mergers of our large railroad
customers.  However, Portec, Ltd. experienced a stronger market in 1996 as the
restructurings  at the  Canadian  National Railway  and Canadian Pacific
Railway were completed and both railroads  registered strong financial
performance.  Helped by  the additional  sales volume, operating profit of our
Railroad Products segment  increased  to $2.2  million  from  $1.5  million in
1995.  Also contributing to profit growth was a turnaround at Portec (U.K.) Ltd.
which had generated a loss in 1995. 

MOORE & STEELE ACQUISITION
In mid-1996,  we acquired  the rail  lubrication  products of  Moore &  Steele
Corporation, Owego,  New York.   Rail lubrication  involves placing a  film of
grease between the flanges of locomotive or railcar wheels and the head of the
rail.  This film can be  created by a fixed station  at the side of the  track
(wayside lubrication), by a specially equipped truck as it moves along the rails
(hi-rail lubrication), or by units  mounted on a locomotive or transit  car
(on-board lubrication).  The  purpose of the grease film, regardless of how it
is applied, is to reduce friction between the wheel flange and rail head, 
thereby reducing wear and fuel costs.  In some high wear areas  such as tight 
curves, effective lubrication  can roughly double flange and rail life and can 
reduce fuel usage by the locomotive by 7% to 8%.  As the trend to  heavier axle
loads and higher utilization of main lines by railroads continues, track 
lubrication becomes more and more important.

Portec  had  supplied   rail  lubrication  products  to  North   American  and
international  railroad  markets  for  decades prior  to  the  Moore  & Steele
acquisition.    However,  with  the  acquisition,  our  product lines  in  the
hydraulic wayside and hi-rail segments are considerably stronger, giving us 
clear leadership in the market.   We can  now offer  our U.S. and international
customers  the widest choice  of lubrication products  and field service 
capability for nearly anyapplication.

CONTINUOUS COST IMPROVEMENT
A challenge in all of our railroad businesses is strong  price competition and
the  continuing battle to  achieve acceptable  margins.  During  1996, Portec,
Ltd.  fully  implemented  a new  rail  anchor  forming  press  which had  been
installed in late 1995.   The new equipment reduced our labor  cost per anchor
by more than 25%,  decreased scrap rate  by two-thirds and increased  material
utilization.  At our U.S. track components plant in Huntington, West Virginia,
we installed  automation  equipment on  our rail  joint  bar processing  line.
Joint bar  blanks are  now loaded  automatically onto  a furnace  conveyor and
after heating  are  moved  automatically  through  a  two-stage  hot  punching
operation.  Additional cost reduction efforts are underway for 1997.



<TABLE>
<S><C>

UNIT                   PRODUCTS              APPLICATION                     MARKET                         SALES CHANNELS
Railway Main-        o Car repair systems  o Lift railcars for service    o Repair shops                 o Direct & through
tenance Products &   o Rail joints         o Join track sections          o Railroads worldwide            representatives to 
Portec (U.K.) Ltd.   o Rail lubricators    o Lubricate track for reduced  o Transit authorities            end-users
                                             wear & fuel usage            o Industrial track owners

Portec, Ltd.         o Rail anchors        o Transfer rail forces to ties o Railroads worldwide          o Direct

Shipping Systems     o Securement devices  o Secure loads to railcars     o Railroads & railcar lessors  o Direct



BUSINESS SEGMENTS


(Dollars in thousands)                                     1996         1995        1994         1993        1992     

NET SALES
Construction equipment                                  $ 32,986     $ 36,947    $ 38,806     $ 29,922    $ 25,203 
Materials handling                                        27,217       24,755      16,943       12,394      12,979 
Railroad                                                  37,135       35,370      40,725       34,008      30,456 

   Total                                                $ 97,338     $ 97,072    $ 96,474     $ 76,324    $ 68,638 

OPERATING PROFIT (LOSS)
Construction equipment                                  $  1,286     $ (1,015)   $  2,942     $  1,256    $     73 
Materials handling                                         4,622        4,019       2,472        1,703       2,451 
Railroad                                                   2,242        1,458       3,033        3,051       2,118 
   Total                                                   8,150        4,462       8,447        6,010       4,642 

General corporate and litigation expenses                   (471)        (448)     (1,384)        (860)      2,534 
Interest expense                                          (1,095)      (1,680)       (829)        (750)     (1,220)
Interest and other income                                    368          578       1,091          559         378 

Income before income taxes                              $  6,952     $  2,912    $  7,325     $  4,959    $  6,334 

IDENTIFIABLE ASSETS AT DECEMBER 31
Construction equipment                                  $ 22,410     $ 22,016    $ 26,251     $ 14,257    $ 13,274 
Materials handling                                        13,355       12,108       7,101        4,198       5,289 
Railroad                                                  21,374       18,186      16,881       17,348      11,894 
                                                          57,139       52,310      50,233       35,803      30,457 
Corporate                                                  8,811        5,508       7,289        6,675       7,588 

   Total                                                $ 65,950     $ 57,818    $ 57,522     $ 42,478    $ 38,045 




GEOGRAPHIC AREAS 

(Dollars in thousands)                                     1996         1995        1994         1993        1992     

NET SALES
United States                                           $ 84,530     $ 84,762    $ 81,852     $ 65,372    $ 55,593 
International(1)                                          12,808       12,310      14,622       10,952      13,045 

   Total                                                $ 97,338     $ 97,072    $ 96,474     $ 76,324    $ 68,638 

EXPORT SALES                                            $  8,943     $ 12,781    $ 13,121     $  7,787    $  8,592 


OPERATING PROFIT (LOSS)
United States                                           $  7,146     $  6,696    $  7,801     $  4,448    $  2,808 
International(1)                                           1,004       (2,234)        646        1,562       1,834 
   Total                                                   8,150        4,462       8,447        6,010       4,642 

General corporate and litigation 
  expenses                                                  (471)        (448)     (1,384)        (860)      2,534 
Interest expense                                          (1,095)      (1,680)       (829)        (750)     (1,220)
Interest and other income                                    368          578       1,091          559         378 

Income before income taxes                              $  6,952     $  2,912    $  7,325     $  4,959    $  6,334 

IDENTIFIABLE ASSETS AT DECEMBER 31
United States                                           $ 53,497     $ 46,500    $ 44,962     $ 32,497    $ 31,892 
International(1)                                          12,453       11,318      12,560        9,981       6,153 

   Total                                                $ 65,950     $ 57,818    $ 57,522     $ 42,478    $ 38,045 

(1) Sales  in Canada  were $6,287,000, $5,892,000,  $6,570,000, $7,789,000 and  $8,475,000 for 1996, 1995,  1994, 1993 and
    1992, respectively.   Sales  in Canada were  greater than  10% of total  sales for 1993  and 1992.   Operating profits
    (loss) in  Canada were  $521,000, $(1,623,000), $361,000, $1,251,000  and $1,345,000  for the  respective years.   The
    Canadian operating  profits do  not include  Corporate allocations.   Identifiable  assets in Canada were  $6,687,000,
    $6,782,000, $7,885,000, $5,842,000 and $4,135,000 for 1996, 1995, 1994, 1993 and 1992, respectively.
</TABLE>


MANAGEMENT'S DISCUSSION AND ANALYSIS


Management's discussion and analysis of the Company's  financial condition and
results of operations consists  of the Business Segments and  Geographic Areas
information  on pages  4 through  11, the  Company's Financial  Statements and
notes thereto  on pages  17 through 32,  Five-Year Summary  on page 1  and the
following information:

RESULTS OF OPERATIONS
1996 COMPARED WITH 1995
Net sales for the year ended  December 31, 1996, were $97,338,000, an increase
of $266,000 from the corresponding period of 1995.

Construction Equipment sales of $32,986,000 were down 11% from the $36,947,000
sold in 1995 due entirely  to the lack of Innovator product line sales.  Early
in  the year, new application guidelines and certain product enhancements were
undertaken  and  the  method  of  marketing  these  products was  reevaluated.
Progress in  these areas started to  produce results in late  1996.  Materials
Handling net sales  for 1996 were  $27,217,000, a 10%  increase over the  same
period of 1995.   Several new products contributed to the increase in sales of
this segment.  Sales of  the Railroad Products segment of $37,135,000  were 5%
above  those of last year.   The acquisition of Moore  & Steele Corporation in
July,  1996, contributed  approximately  70% of  the  overall increase  and  a
recovery in the Canadian railway  industry resulted in additional improvement.
Export sales  were down  30% to  $8,943,000 as  a result of  less activity  in
Canada and Mexico. <PAGE>
 For the year ended December 31, 1996, the Company's net
income was $6,891,000 compared with  net income of $2,898,000  for 1995.  The
1995 results included the recognition  of a loss  on impaired  assets of 
$2,372,000.   During  1996, selling, general and administrative expense and
interest expense were reduced. 

The  Construction Equipment segment reported  an operating profit  for 1996 of
$1,286,000 compared with a operating loss  of $1,015,000 in 1995.  The results
of  1995 included a loss on  impaired assets of $2,372,000.   During 1996, the
segment  experienced  significant costs  related  to the  redesign  of several
product  lines.    The operating  profit  of  the  Materials Handling  segment
increased from  $4,019,000 in 1995 to $4,622,000 in 1996.  Higher sales volume
and  greater  efficiency  resulted in  this  positive  change.   The  Railroad
Products segment had  operating profit  of $2,242,000 for  1996 compared  with
$1,458,000  in   1995.     The  foreign  operations   experienced  significant
improvement in operating profit during 1996.

Other income decreased from $316,000 in 1995 to $92,000 in 1996.  Other income
in 1995 included a  gain of $250,000 on the  sale of a portion of  assets held
for sale.

The  Company's  cost   of  products  sold,   exclusive  of  depreciation   and
amortization, was down from 71% of sales in 1995 to 70% in 1996 due to greater
operating  efficiency.    Selling,   general  and  administrative  expense  of
$18,808,000 was 19%  of sales  in 1996 compared  with 21% in  1995.  The  1995
selling,  general   and  administrative   expense  included  a   write-off  of
unamortized goodwill  of $1,216,000.  Depreciation  and amortization increased
$269,000 in 1996 compared with 1995.  Amortization of intangibles was $292,000
in 1996 compared with $219,000 in 1995.

Interest expense of $1,095,000 was down 35% from the prior year of 1995 due to
a reduction in  floor plan financing and a decrease  in interest rates granted
by a bank under the Company's credit agreement.

At December 31, 1996, a net deferred tax asset of  $2,066,000 was reflected on
the balance sheet after a reduction of  $3,133,000 in  the valuation allowance.
The  decrease in the valuation  allowance  for  1996 resulted  from the 
utilization  of tax loss carryforwards  and certain tax credits, the reversing
of temporary differences and a reevaluation of future taxable income potential.
At December 31, 1995, the  valuation  allowance  was  decreased $977,000  for
deferred  tax assets realized through reversing temporary differences.

Current assets  of the Company at  December 31, 1996, were  up $5,649,000 from
the  prior year.   The  increase in  cash and  cash equivalents  of $1,502,000
resulted  from operating  activities.   Accounts  receivable  were up  due  to
increased sales late  in 1996 compared with 1995 while  the current portion of
net deferred tax benefits increased  by $2,586,000 as a result of  a reduction
in the valuation allowance and a reclassification of tax attributes.

Intangible assets increased $1,887,000 for goodwill related  to an acquisition
and earnouts and a fee for a  license agreement entered into by the  Materials
Handling segment.  These were partially offset by normal  amortization.  Notes
receivable  and other assets increased  as a result  of additional non-current
receivables.

The decrease  in current  liabilities from $17,076,000  to $16,119,000  during
1996 reflects lower trade accounts payable and other  accrued expenses.  Long-
term debt at December 31, 1996,  was $10,768,000, an increase of $651,000 from
the prior year.  These  funds along with funds generated from  operations were
used primarily for capital expenditures of $2,300,000 and an acquisition.

The  Company's stockholders'  equity  increased $6,958,000  from December  31,
1995, to  December 31,  1996,  to a  level of  $34,986,000,  primarily due  to
earnings and the issuance of common stock upon the exercise of stock options.
Treasury stock, purchased at a cost of $241,000  under the Company's stock 
repurchase program, was partially used for the Company's contribution to
the Savings and  Investment Plan for Company  employees.  The  Company resumed
quarterly cash dividends during the fourth  quarter of 1996.  Accordingly, the
stockholders' equity was reduced by $350,000 for the stock dividend.

Inflation, which was comparable to 1995, did not adversely affect the  Company
in 1996 nor did the impact of foreign exchange adjustments.

Bookings  in 1996  of $97,498,000 were  up 2%  from the  $95,848,000 booked in
1995.   The increase in bookings was due to increased bookings late in 1996 by
the Construction Equipment segment.  The year-end order backlog of $20,885,000
was 3% below the backlog of December 31, 1995,  due primarily to a decrease in
demand  for  recycling  conveyor  equipment  in  response  to  temporary,  but
significant declines in the market price for recycled materials.

1995 COMPARED WITH 1994
Net  sales  for  1995  were  $97,072,000, an  increase  of  1%  from  sales of
$96,474,000  in 1994.   Construction  Equipment sales  of $36,947,000  were 5%
below those of the  prior year due to weaker industry conditions in the market
for  aggregate and green waste  processing equipment.   Materials Handling net
sales  increased 46% to $24,755,000,  reflecting the impact  of an acquisition
and stronger market conditions for both our traditional belt conveyor products
and our automatic steering  products for lift trucks.   Railway Products sales
of  $35,370,000 were 13% below those  of last year.  The  lower sales were the
result of decreased demand for load securement systems for intermodal railcars
and declines in our  Canadian and U.K. rail business.   Both the Canadian  and
British railroads were  going through major restructuring programs.  These were
partially offset by a successful year in our  railroad track components 
business.  Export sales were down  3% to $12,781,000 as a result of decreased
construction activity in Mexico.

Net income  for 1995 was $2,898,000 compared with net income of $6,825,000 for
1994.   The net income for 1995  included a non-recurring charge of $2,372,000
associated  with the 1994 acquisition of Innovator Manufacturing, Inc.  During
the fourth quarter of 1995, management evaluated the progress of its Innovator
product line and a related research and development operation in  Canada.  The
overall market for grinding  equipment was below our expectations  and gaining
wide  market  acceptance for  the Innovator  designs  was more  difficult than
anticipated.  Based on these facts, a decision  was made to close the research
and  development  operation,  curtail  certain other  activities  and  revalue
finished  goods inventory acquired  in the initial  transaction.  Accordingly,
unamortized  goodwill  of $1,216,000  was written  off  and the  inventory was
written down by $1,156,000 to net realizable value.   Excluding these charges,
net income  in 1995 decreased  by $1,555,000  due to lower  gross margins  and
higher interest expense.

The  Construction  Equipment segment  reported an  operating  loss in  1995 of
$1,015,000  compared  with  operating profit  of  $2,942,000  in  1994.   This
decrease was due to the above Innovator charges and to lower margins resulting
from the start up of manufacturing of the Innovator product line  and a change
in  product mix.   The  operating  profit of  the  Materials Handling  segment
increased  from $2,472,000  in  1994  to  $4,019,000  in  1995.  The  improved
performance  resulted from higher volume.   The Railroad  Products segment had
operating profit of $1,458,000 in 1995 compared with $3,033,000 in 1994.  The
decline in operating profit reflected the lower sales volume and decreased
margins resulting from pricing pressure.

Other income  increased $551,000 in 1995.  During 1995, a gain of $250,000 was
recorded on the  sale of a portion of assets held  for sale.  Other expense in
1994 included a loss on disposal of fixed assets.

The cost of products sold, exclusive of depreciation and amortization, was 71%
of sales in 1995 and 68% of sales  in 1994.  This reflected the lower  margins
of  the Construction Equipment and Railway Product segments.  Selling, general
and  administrative  expense  decreased  $1,061,000  in  1995  due   to  lower
professional fees  and insurance expense.  This was 21% of sales compared with
22% in 1994.

Interest expense of $1,680,000 in  1995 was $851,000 above the prior  year due
to additional floor plan financing and to the increase in the Company's
borrowings.  Borrowings were up as a result  of two acquisitions made  in 1994.
Interest rates granted by a bank under the Company's credit agreement decreased
during the year.  

At December 31, 1994, a  net deferred tax asset  of $700,000 was reflected  on
the balance  sheet  after recording  a valuation  reserve of  $4,110,000.   At
Decem-ber  31, 1995, the valuation reserve was decreased $977,000 for deferred
tax  assets  realized  through  reversing  temporary  differences.   Based  on
management's  estimation  of   future  taxable  income  considering   budgeted
operating  results and  the uncertainty  in the  general economic  outlook, no
additional change was made to the valuation reserve.   Current  assets at 
December 31, 1995,  were up  $890,000 due  partially to an increase in other
current assets.  The change in other current assets resultedfrom  a higher  
income tax  receivable  related to  foreign  operations.   The reduction in
assets held for sale reflected the sale of the remaining property in  
Minneapolis, Minnesota.  Goodwill was decreased by $929,000 which resulted
from the write-off of the Innovator goodwill and normal amortization partially
offset by the recording of $400,000 additional goodwill related to an  earnout
provision for a business acquired in 1994.

Current  liabilities  decreased  from $22,764,000  at  December  31, 1994,  to
$17,076,000 at  December  31, 1995.   The  decrease reflected  the payment  of
$1,200,000  on a domestic  term loan and  $3,046,000 on a  Canadian term loan.
Accounts payable decreased $1,422,000 due to reduced inventory purchases.

Long-term  debt  at  December  31,  1995,  was  $10,117,000,  an  increase  of
$2,494,000 over the prior year.  Current term debt of $4,246,000 and long-term
debt of  $2,400,000 was paid  during 1995 using  a long term  revolving credit
facility.  These payments were partially offset by operating cash flow.

Total stockholders'  equity increased $3,069,000  from December  31, 1994,  to
December 31, 1995, primarily due to earnings and to the issuance of stock upon
the  exercise  of stock  options.   Treasury  stock,  purchased at  a  cost of
$486,000  under the Company's stock repurchase program, was partially used for
the  Company's contribution  to the  Savings and  Investment Plan  for Company
employees.    The remaining  treasury  stock reduced  stockholders'  equity by
$106,000.

Inflation, which was comparable to 1994, did not adversely  affect the Company
in 1995.  Bookings in 1995  were $95,848,000, a decrease of 5% from those of 
1994.  Both the Construction  Equipment and  Railroad Products segments  
experienced lower bookings  in 1995  while  the Materials  Handling  segment 
had a significant increase  in orders.  The year-end order  backlog of
$21,590,000 was 11% below the backlog at December 31, 1994.

LIQUIDITY
On  February 12, 1993, the Company entered into a credit agreement with a bank
which was amended on April 26, 1994, and June 13, 1995.  The amended agreement
provides up  to $15,300,000 of credit  available as either cash  or letters of
credit.   The  provisions  of  the  agreement  include  restrictive  covenants
relating  to minimum  net worth,  interest coverage,  net working  capital and
leverage ratio  requirements and limit  cash dividend payments  and additional
indebtedness.

On July  15, 1994, Portec,  Ltd., a  wholly-owned subsidiary  of the  Company,
entered into an unsecured agreement with a bank for a term loan of $4,000,000.
The term loan was paid in full during 1995.

The Company does not have  available lines of credit beyond its  existing bank
agreement and is prohibited by the agreement from making other borrowings.

The Company presently has a facility for sale or lease in Troy, New York.  Due
to economic conditions  and other factors, the  efforts to sell  this property
have  not been  successful.   Property in  Pittsburgh, Pennsylvania,  has been
leased  on a long-term  lease with an  option to  buy and the  option has been
exercised.   The  proceeds  of these  properties  will improve  the  Company's
liquidity position.  Due to the seasonal fluctuation in the Company's working 
capital needs and the limitations  on  borrowing,  the  Company continues to  
exert  careful  cash controls.   However,  management  believes its  existing  
line of  credit andanticipated  operating results will provide  the Company with
sufficient funds for  working  capital,  capital   expenditures and acquisitions
to support anticipated growth.   The Company's  working capital ratios were 2.6,
2.1 and 1.6 to 1 at December 31, 1996, 1995 and 1994,  respectively.  At
December 31, 1996,  the Company had available $4,350,000  of unused credit under
its loan agreement, plus  cash  and  cash  equivalents  of  $4,979,000  compared
with $5,274,000 of  unused credit and  $3,477,000 of  cash and cash  equivalents
at December 31, 1995.

CAPITAL RESOURCES
The Company does not  have any material commitments for  capital expenditures.
Management estimates that capital expenditures for 1997 will be $3,000,000. 

ENVIRONMENTAL
During  1989,  each  of   the  Company's  domestic  manufacturing  facilities,
including  those former manufacturing facilities included in the balance sheet
as  Assets Held For Sale, were reviewed  for compliance with local and federal
environmental  regulations.   As  a  result  of  these  reviews,  the  Company
initiated the remedial actions  necessary to comply with such  regulations and
these  remedial actions have  been completed.   We continue to  review several
sites for possible future actions and  a reserve has been established to cover
management's estimate of the  maximum cost to remediate  these sites, if  any.
The most significant site  is a former manufacturing facility  in Pennsylvania
which is now leased as  a warehouse.  The Company has been  in discussion with
the  Pennsylvania  Department of  Environmental  Resources  for several  years
concerning  soil  and  groundwater  contamination  at  this  site,  and  these
discussions  continued during  1996.   The  Company  is cooperating  with  the
Pennsylvania Department of Environmental Resources and is currently monitoring
groundwater quality at  the site.   Remedial actions may  be required at  some
time  in  the  future.   The  Company  believes  that  the continuation  of  a
monitoring program, without remediation, is the appropriate course of action. <PAGE>
 


CONSOLIDATED STATEMENTS OF INCOME

    For the Years Ended December 31
<TABLE>
<S><C>

(Dollars in thousands except per share data)                                        1996         1995        1994    

REVENUES
   Net sales  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 97,338     $ 97,072    $ 96,474 
   Interest income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         276          262       1,326 
   Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . .          92          316        (235)
     Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      97,706       97,650      97,565 

COSTS AND EXPENSES
   Cost of products sold (exclusive of depreciation
     and amortization)  . . . . . . . . . . . . . . . . . . . . . . . . . . .      68,409       68,539      65,681 
   Selling, general and administrative  . . . . . . . . . . . . . . . . . . .      18,808       19,974      21,035 
   Depreciation and amortization  . . . . . . . . . . . . . . . . . . . . . .       2,442        2,173       2,012 
   Loss on impaired assets  . . . . . . . . . . . . . . . . . . . . . . . . .           -        2,372           - 
   Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       1,095        1,680         829 
   Other expenses   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           -            -         683 
     Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      90,754       94,738      90,240 

INCOME BEFORE INCOME TAXES  . . . . . . . . . . . . . . . . . . . . . . . . .       6,952        2,912       7,325 
INCOME TAX PROVISION  . . . . . . . . . . . . . . . . . . . . . . . . . . . .          61           14         500 

NET INCOME  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  6,891     $  2,898    $  6,825 


EARNINGS PER COMMON SHARE

NET INCOME  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $   1.50     $    .63    $   1.49 

<FN>
The accompanying notes are an integral part of these financial statements.


CONSOLIDATED BALANCE SHEETS

    December 31

(Dollars in thousands)                                                                           1996        1995    

ASSETS
CURRENT ASSETS
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $  4,979    $  3,477 
  Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       14,816      13,130 
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       18,038      17,977 
  Other current assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          981       1,167 
  Deferred income tax benefits  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3,286         700 
    Total current assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       42,100      36,451 

PROPERTY, PLANT AND EQUIPMENT, AT COST
  Land  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          220         220 
  Buildings and improvements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       10,964      10,824 
  Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       23,010      20,884 
                                                                                                34,194      31,928 
  Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (19,651)    (17,757)
    Total property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . .       14,543      14,171 
ASSETS HELD FOR SALE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,070       2,070 
INTANGIBLE ASSETS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4,922       3,035 
NOTES RECEIVABLE AND OTHER ASSETS   . . . . . . . . . . . . . . . . . . . . . . . . . . .        2,315       2,091 
    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 65,950    $ 57,818  <PAGE>
 


LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . .     $     46    $     46 
  Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        7,015       7,578 
  Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        9,058       9,452 
    Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       16,119      17,076 

LONG-TERM DEBT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       10,768      10,117 
OTHER LONG-TERM LIABILITIES
  Pensions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,868       1,923 
  Deferred income tax   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,365         125 
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          844         549 
    Total other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .        4,077       2,597 

COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 12)

STOCKHOLDERS' EQUITY
  Common stock, $1 par value; authorized - 10,000,000 
     shares; issued - 4,373,596 and 4,333,176 shares  . . . . . . . . . . . . . . . . . .        4,374       4,333 
  Additional capital  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       46,841      46,649 
  Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . .          (99)       (359)
  Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (15,968)    (22,489)
                                                                                                35,148      28,134 
  Treasury stock, 16,421 and 9,562 shares, at cost  . . . . . . . . . . . . . . . . . . .         (162)       (106)

    Total stockholders' equity  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       34,986      28,028 

    Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 65,950    $ 57,818 

<f><n>
The accompanying notes are an integral part of these financial statements.


CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the Years Ended December 31


(Dollars in thousands)                                                              1996         1995        1994    

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  6,891     $  2,898    $  6,825 
  Adjustments to reconcile net income
    to net cash provided by operating activities:
      Depreciation and amortization . . . . . . . . . . . . . . . . . . . . .       2,442        2,173       2,012 
      Loss on impaired assets   . . . . . . . . . . . . . . . . . . . . . . .           -        2,372           - 
      Gain on sales of property, plant and equipment
        and assets held for sale  . . . . . . . . . . . . . . . . . . . . . .          (1)        (334)        (25)
      Deferred income taxes   . . . . . . . . . . . . . . . . . . . . . . . .      (1,346)          48        (140)
      Changes in other balance sheet accounts:
        Decrease (increase) in receivables  . . . . . . . . . . . . . . . . .      (1,686)          94      (3,974)
        Decrease (increase) in inventories  . . . . . . . . . . . . . . . . .         638       (1,660)     (1,573)
        Decrease (increase) in other current assets . . . . . . . . . . . . .         186         (162)       (124)
        Decrease in accounts payable and accruals   . . . . . . . . . . . . .        (793)      (1,101)       (333)
        Decrease (increase) in other assets net of other liabilities  . . . .        (282)         331         985 
          Net cash provided by operating activities . . . . . . . . . . . . .       6,049        4,659       3,653 

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisitions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (2,930)        (400)     (3,908)
  Capital expenditures  . . . . . . . . . . . . . . . . . . . . . . . . . . .      (2,300)      (3,059)     (3,601)
  Proceeds from disposal of property, plant and equipment
    and assets held for sale  . . . . . . . . . . . . . . . . . . . . . . . .          22          801         168 
      Net cash used by investing activities   . . . . . . . . . . . . . . . .      (5,208)      (2,658)     (7,341)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from revolving credit agreement  . . . . . . . . . . . . . . . . .         700        4,832       3,550 
  Principal payments of term debt   . . . . . . . . . . . . . . . . . . . . .           -       (6,645)     (2,060)
  Proceeds from (repayment of) other long-term debt . . . . . . . . . . . . .         252          100         (73)
  Issuance of common stock  . . . . . . . . . . . . . . . . . . . . . . . . .         233          181         401  
  Purchase of treasury stock  . . . . . . . . . . . . . . . . . . . . . . . .        (241)        (486)          - 
  Cash dividends paid   . . . . . . . . . . . . . . . . . . . . . . . . . . .        (350)           -           - 
     Net cash provided (used) by financing activities . . . . . . . . . . . .         594       (2,018)      1,818 

EFFECT OF EXCHANGE RATE CHANGE  . . . . . . . . . . . . . . . . . . . . . . .          67           96         (11)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  . . . . . . . . . . . .       1,502           79      (1,881)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR  . . . . . . . . . . . . . . .       3,477        3,398       5,279 

CASH AND CASH EQUIVALENTS AT END OF YEAR  . . . . . . . . . . . . . . . . . .    $  4,979     $  3,477    $  3,398 

SUPPLEMENTAL DISCLOSURES:
  Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  1,078     $  1,623    $    792 
  Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         661          482         952 
  Non-cash transaction-10% stock dividend . . . . . . . . . . . . . . . . . .           -            -       5,708 

<f><n>
The accompanying notes are an integral part of these financial statements.
</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SIGNIFICANT ACCOUNTING POLICIES

Portec, Inc. is  a leading manufacturer  of quality engineered products.   The
Company's principal  lines of  business are construction  equipment, materials
handling  equipment and  railroad  products.   The  principal market  for  all
product lines is North America.

The preparation of financial statements in  conformity with generally accepted
accounting principals  requires management  to make estimates  and assumptions
that affect the reported amounts  of assets and liabilities and  disclosure of
contingent assets and liabilities  at the date of the financial statements and
the reported amounts  of revenues  and expenses during  the reporting  period.
Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Portec, Inc. and
all  of its subsidiaries.  All material intercompany transactions and balances
have been eliminated in the consolidation.

CASH EQUIVALENTS
Short-term and  highly liquid investments with  a maturity of  three months or
less at the date of purchase are considered to be cash equivalents.

ACCOUNTS RECEIVABLE
As  of  December  31,  1996,  approximately  21%  of  the  Company's  accounts
receivable  were  concentrated  with   companies  in  the  railroad  industry.
Economic  and other factors impacting the railroad industry could hinder these
customers' ability to satisfy their obligations.  The Company does not require
collateral  for most  of its credit  sales which  are typically  due within 30
days.

INVENTORIES
Inventories  are stated at the lower of cost or market.  Cost is determined on
the last-in,  first-out (LIFO)  method for domestic  inventories, representing
86%  of total inventories,  and on the  first-in, first-out  (FIFO) method for
foreign inventories.

PROPERTY, PLANT AND EQUIPMENT
Depreciation is  computed using  the straight-line  method over  the estimated
useful  lives  of the  assets,  ranging  generally from  10  to  25 years  for
buildings and  from 5 to 18  years for machinery and  equipment.  Maintenance,
repairs,  minor renewals and betterments  are charged to  expense as incurred;
major  renewals and  betterments  are  capitalized.    The  cost  and  related
accumulated depreciation of assets replaced, retired  or otherwise disposed of
are eliminated from  the property accounts, and any gain  or loss is reflected
in  income.    If  the  carrying  value  of  an  asset,  including  associated
intangibles, exceeds the sum of estimated undiscounted future cash flows, then
an impairment loss  is recognized  for the difference  between estimated  fair
value and carrying value.

INTANGIBLE ASSETS
Goodwill in the amount of  $3,631,000 at December 31, 1996, and  $2,283,000 at
December 31, 1995, is  amortized on a  straight-line basis over fifteen  years
and is recorded net of  accumulated amortization of $543,000 and  $330,000 for
1996 and  1995, respectively.   Costs  of patents  and license agreements  are
amortized on a straight-line basis over the shorter of the  legal or estimated
useful life  of  the asset.   Amortization  expense on  intangible assets  was
$292,000 for 1996, $219,000 for 1995 and $203,000 for 1994.

RESEARCH EXPENDITURES
Expenditures for research and  development are charged to expense  as incurred
and  amounted  to  approximately $784,000  for  1996,  $900,000  for 1995  and
$510,000 for 1994.


NET INCOME PER SHARE
Income  per common  and  common  equivalent share  is  computed  based on  the
weighted  average number  of common  shares outstanding  during the  year plus
outstanding  common  stock equivalent  shares  subject  to stock  options,  if
dilutive.   Share and per share amounts have been restated to give retroactive
effect to a 10% stock  dividend paid December 15, 1994, as if  paid on January
1, 1994.
                                                  1996       1995       1994
  
AVERAGE SHARES OF COMMON STOCK AND EQUIVALENTS OUTSTANDING
Primary   . . . . . . . . . . . . . . . . . . . 4,576,358  4,596,469  4,572,468 


FAIR VALUE OF FINANCIAL INSTRUMENTS
The  carrying amounts  of  cash  and  cash  equivalents,  accounts  and  notes
receivable, accounts payable and borrowings approximated  their fair values at
December  31,  1996,  and  1995,  because  of  the  short  maturity  of  those
instruments or their insignificance.

NOTE 2.  ACCOUNTS AND NOTES RECEIVABLE

The components  of accounts  and notes  receivable at  December 31,  1996, and
1995, were as follows:

(Dollars in thousands)                                      1996       1995

Trade receivables net of allowance for doubtful
  accounts of $357 and $463, respectively   . . . . . . . $14,724    $13,026 

Current portion of notes receivable   . . . . . . . . . .      92        104 

  Total   . . . . . . . . . . . . . . . . . . . . . . . . $14,816    $13,130 


Notes  receivable   and  other  assets  include   notes  receivable  totalling
$1,076,000 and $1,126,000 for 1996 and 1995, respectively, related to the sale
of property in Minneapolis, Minnesota.   The notes require monthly payments of
principal and interest at rates ranging from 9% to  11% with maturities in the
years 2007 and 2010.


NOTE 3.  INVENTORIES

The difference between LIFO value and approximate replacement cost of the LIFO
inventories  was $7,927,000  and $7,685,000  at December  31, 1996,  and 1995, 
respectively.

The components of inventories at December 31, 1996, and 1995, were as follows:

(Dollars in thousands)                                      1996       1995
  

Raw material and supplies   . . . . . . . . . . . . . . . $ 6,361    $ 5,923 
Work-in-process   . . . . . . . . . . . . . . . . . . . .   3,468      5,313 
Finished goods  . . . . . . . . . . . . . . . . . . . . .   8,209      6,741 

  Total   . . . . . . . . . . . . . . . . . . . . . . . . $18,038    $17,977 


NOTE 4.  INCOME TAXES

Effective  January  1,  1992,  the  Company  adopted  Statement  of  Financial
Accounting Standards  (SFAS)  No.  109,  "Accounting for  Income  Taxes"  and,
accordingly,  deferred  income taxes  represent  the  tax  effect, at  current
statutory  rates,  of  temporary  differences  in  the  bases  of  assets  and
liabilities for financial reporting and income tax purposes.

The provision for income taxes charged to operations was as follows:

(Dollars in thousands)                           1996      1995      1994    

Current expense (benefit):
  Federal   . . . . . . . . . . . . . . . . . $   621     $    80    $  309

  State and Foreign   . . . . . . . . . . . . .   786        (114)      331 
    Total Current   . . . . . . . . . . . . .   1,407         (34)      640 

Deferred tax expense (benefit):
  Federal   . . . . . . . . . . . . . . . . . .(1,339)          -      (196)
  State and Foreign   . . . . . . . . . . . . .    (7)         48        56 
    Total Deferred  . . . . . . . . . . . . . .(1,346)         48      (140)

Total provision   . . . . . . . . . . . . . . .$   61     $    14    $  500



Domestic deferred tax  liabilities (assets)  at December 31,  1996, and  1995,
include the following:

(Dollars in thousands)                                       1996       1995
  

Depreciation  . . . . . . . . . . . . . . . . . . . . . . .$ 1,760    $ 1,747 
Plant closing costs   . . . . . . . . . . . . . . . . . . .    983        955 
  Gross deferred tax liabilities  . . . . . . . . . . . . .  2,743      2,702 

Net operating loss carryforward   . . . . . . . . . . . . .      -       (719)
Accrued liabilities   . . . . . . . . . . . . . . . . . . .   (946)      (923)
Inventory   . . . . . . . . . . . . . . . . . . . . . . . .   (801)    (1,195)
Employee benefits   . . . . . . . . . . . . . . . . . . . .   (794)      (938)
Product liability and warranty  . . . . . . . . . . . . . .   (854)    (1,070)
Tax credit carryforwards  . . . . . . . . . . . . . . . . .   (937)    (1,163)
Other   . . . . . . . . . . . . . . . . . . . . . . . . . .   (477)      (527)
  Gross deferred tax assets   . . . . . . . . . . . . . . . (4,809)    (6,535)
Net deferred tax assets before valuation allowance  . . . . (2,066)    (3,833)
Deferred tax assets valuation allowance   . . . . . . . . .      -      3,133 
Net deferred tax assets   . . . . . . . . . . . . . . . . .$(2,066)   $  (700)


In  determining the  amount  of any  valuation  allowance required  to  offset
deferred  tax assets, the Company  assesses the likelihood  of realizing those
assets based  on anticipated  future taxable  income and other  factors.   The
change in the valuation  allowance of $3,133,000 related to the utilization of
$1,965,000 of net operating  loss carryforward and $352,000 of  investment tax
credits and  to a reevaluation of  the ability to realize  deferred tax assets
based on future taxable income potential.  Foreign tax losses  carryforward of
$749,000 expiring in 2001-2002  are available to offset future  taxable income
for foreign income tax purposes.

Pre-tax income (loss) was taxed under the following jurisdictions:

(Dollars in thousands)                            1996       1995       1994
  

Domestic  . . . . . . . . . . . . . . . . . . . $ 5,535    $ 4,909    $ 6,999 
Foreign   . . . . . . . . . . . . . . . . . . .   1,417     (1,997)       326 

    Total   . . . . . . . . . . . . . . . . . . $ 6,952    $ 2,912    $ 7,325 


The difference between the statutory federal income tax rate and the effective
income tax rate was as follows:

                                                  1996       1995        1994 

Statutory federal income tax rate   . . . . . .    34.0%     34.0%       34.0%
Difference resulting from:
  Realization of deferred tax assets
  not previously recognized   . . . . . . . . .   (45.0)    (54.6)     (30.9)
  Foreign operations  . . . . . . . . . . . . .     7.1      17.3        3.6  

  State income taxes, net   . . . . . . . . . .     2.7       3.8         .1   

  Other   . . . . . . . . . . . . . . . . . . .     2.1         -          -   

                                                    0.9%      0.5%       6.8%


NOTE 5.  ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

Accounts payable and other accrued liabilities at December 31, 1996, and 1995,
were as follows:

(Dollars in thousands)                                        1996        1995  
Accounts payable  . . . . . . . . . . . . . . . . . . . . . $ 7,015     $ 7,578 
Accrual for estimated product liabilities   . . . . . . . .   1,318       1,613 
Accrued salaries and wages  . . . . . . . . . . . . . . . .   1,012         884 
Customer deposits   . . . . . . . . . . . . . . . . . . . .     962       1,884 
Other accrued liabilities   . . . . . . . . . . . . . . . .   5,766       5,071 

  Total accounts payable and other accrued liabilities      $16,073     $17,030 



NOTE 6.  DEBT

The components of debt at December 31, 1996, and 1995, were as follows:

(Dollars in thousands)                                        1996        1995 

Revolving loan  . . . . . . . . . . . . . . . . . . . . . . $10,700     $10,000 
Other   . . . . . . . . . . . . . . . . . . . . . . . . . .     114         163 
                                                             10,814      10,163 
Less current maturities   . . . . . . . . . . . . . . . . .      46          46 
  Total long-term debt  . . . . . . . . . . . . . . . . . . $10,768     $10,117 


On February 12, 1993, the  Company entered into a three-year unsecured  credit
agreement with a  bank which was  amended on    April 26,  1994, and June  13,
1995.  Under  the amended agreement, the Company can  borrow up to $15,300,000
in cash  or under  letters of  credit on  a revolving  line of  credit through
April, 1998.  The interest rate currently applicable to the  revolving line of
credit is the bank's prime interest rate or, at the Company's election, 1.125%
over  the London Interbank  Offered Rate (LIBOR).   At December  31, 1996, the
average interest  rate  on LIBOR  borrowings  of $10,000,000  was  6.7%.   The
interest rate can vary from  prime to .25% over the bank's prime interest rate
or, at the Company's election,  from 1.125% to 1.875% over LIBOR  depending on
the Company's performance.   The  provisions of the  credit agreement  include
minimum  net worth,  interest  coverage, working  capital  and leverage  ratio
requirements,  and limit  additional indebtedness  and cash  dividend payments
during the term of the agreement.

On July  15, 1994,  Portec, Ltd.,  a wholly-owned  Canadian subsidiary  of the
Company, entered into  an unsecured credit  agreement with a  bank for a  term
loan  of $4,000,000 which was  due June 30,  1995.  The term  loan was paid in
full during 1995.


NOTE 7.  PENSION PLANS

The  Company  has  one  noncontributory  defined   benefit  plan  that  covers
substantially all  domestic employees.  Benefits under  this plan are based on
years   of  service  and,  for  salaried  employees,  the  employee's  average
compensation  during defined periods of service.  The Company's funding policy
is  to   make  the  minimum   annual  contributions  required   by  applicable
regulations.   In addition, the  Company has an  unfunded supplemental pension
plan and plans at two foreign operations.

Net pension cost for the pension plans in 1996, 1995 and 1994 is summarized as
follows:

(Dollars in thousands)                           1996        1995       1994  
Service cost  . . . . . . . . . . . . . . .    $   811     $   560    $   609

Interest cost   . . . . . . . . . . . . . .      1,262       1,128      1,148 
Actual return on assets   . . . . . . . . .     (2,585)     (3,951)      (515)
Net amortization and deferral   . . . . . .      1,311       2,925       (614)

Net pension cost  . . . . . . . . . . . . .    $   799     $   662    $   628



Plan assets  are stated at fair value and consist primarily of cash, corporate
equity and debt securities.  The following table sets forth  the funded status
of  the plans  and amounts  recognized in  the Company's  consolidated balance
sheets  at December 31, 1996, and  1995.  As a result  of the restructuring of
the Railway Maintenance Products Division (Note 18), certain predecessor plans
were curtailed and increased benefit obligations incurred.  The amount of such
charges  were  deferred together  with the  other  costs of  consolidating the
Railway Maintenance Products Division.

The assumptions  used in 1995 and  1996 to develop the  periodic pension costs
were as follows:  the unit credit  cost actuarial method;  a discount rate  of
7.5%; the expected long-term rate of return on assets of 8.0%; and the rate of
increase in compensation levels of 4.5%.

<TABLE>
<S><C>

(Dollars in thousands)
                                                                                 Accumulated Benefit
                                                     Current Plan Assets             Obligations
                                                     Exceed Accumulated            Exceed Current
                                                     Benefit Obligation              Plan Assets       

                                                    1996           1995          1996           1995    
Actuarial present value of benefit obligation:

  Vested benefit obligation   . . . . . . . . .  $ 16,205       $ 15,610       $   540         $  566  
  Non-vested benefit obligation   . . . . . . .       245            190             -              - 
  Accumulated benefit obligation  . . . . . . .    16,450         15,800           540            566 
  Excess of projected benefit obligation
    over accumulated benefit obligation   . . .     2,174          2,050             -              - 
  Projected benefit obligation  . . . . . . . .    18,624         17,850           540            566 
  Plan assets at fair value   . . . . . . . . .    19,282         17,300             -              - 
  Projected benefit obligation
    (in excess of) less than plan assets  . . .       658           (550)         (540)          (566)
  Unrecognized net loss   . . . . . . . . . . .    (2,764)        (1,622)            -              - 
  Unrecognized prior service cost   . . . . . .        28             30             -              - 
  Unrecognized net asset  . . . . . . . . . . .      (112)          (170)            -              - 
  Unfunded accrued pension cost   . . . . . . .  $ (2,190)      $ (2,312)      $  (540)        $ (566)
</TABLE>


NOTE 8.  SAVINGS AND INVESTMENT PLAN

Under  the  Company's Savings  and  Investment Plan,  qualified  under Section
401(k)  of  the Internal  Revenue Code,  generally  all domestic  salaried and
hourly  employees, including officers, may  elect to defer  a portion of their
compensation to  a trust established under  the plan.  Depending  on its sales
and net income for the year, the Company may contribute up  to an amount equal
to  the participating  employees'  contributions, but  not  in excess  of  six
percent of the participating employees' earnings.  Contributions of  $484,000,
$165,000 and  $371,000 were made for  the years ended December  31, 1996, 1995
and 1994, respectively, representing  80%, 30% and 80% of  eligible employees'
contributions.   The plan  permits the  Company's contribution  to be made  in
shares of the Company's common stock.

NOTE 9.  OTHER POST-RETIREMENT BENEFIT PLANS 
The Company has  defined benefit  post-retirement medical  and life  insurance
plans  covering most  full-time  salaried and  hourly  employees.   The  post-
retirement  health  care  plan  is contributory,  with  retiree  contributions
adjusted  annually,   and  contains   other  cost-sharing  features   such  as
deductibles and coinsurance.  The life insurance plan is non-contributory.

The Company's  current  policy is  to  fund the  cost  of the  post-retirement
medical and  life insurance  benefits on  a pay-as-you-go basis,  as in  prior
years.  The following  table presents the status of the plans  at December 31,
1996, and 1995:

(Dollars in thousands)                                      1996       1995
    

Accumulated post-retirement benefit obligation (APBO):
  Retirees  . . . . . . . . . . . . . . . . . . . . .    $  1,062   $  1,554 
  Actives   . . . . . . . . . . . . . . . . . . . . .         255      1,017 
    Total   . . . . . . . . . . . . . . . . . . . . .       1,317      2,571 

Plan assets at fair value   . . . . . . . . . . . . .           -          - 
APBO in excess of plan assets   . . . . . . . . . . .      (1,317)    (2,571)
Unrecognized transition obligation  . . . . . . . . .         602      1,258 
Unrecognized prior service costs  . . . . . . . . . .           -        104 
Unrecognized actuarial loss   . . . . . . . . . . . .         494        983 
Accrued post-retirement benefit costs   . . . . . . .    $   (221)   $  (226)


Net  periodic post-retirement benefit expense for 1996, 1995 and 1994 included
the following components:

(Dollars in thousands)                              1996       1995       1994
    

Service cost  . . . . . . . . . . . . . . . .    $     13    $    89    $    58 
Interest cost   . . . . . . . . . . . . . . .         101        178        123 
Amortization of transition obligation over 20 years    40         78        100 
Unrecognized prior service cost   . . . . . .           -          -        (43)
Gain/(loss)   . . . . . . . . . . . . . . . .          29         42          - 
Net periodic post-retirement benefit expense     $    183    $   387    $   238


For  measurement purposes, the assumed  trend rate for post-retirement medical
benefits during 1996 and 1995 was 11.0% and 11.8%, respectively, for employees
less than age-65 and 9.5% and 10.2%, respectively, for employees 65 and older.
These  rates decrease  gradually to 7.0%  and 6.0%, respectively,  by 2001 and
remain at that  level thereafter.  The health care  cost trend rate assumption
has a significant effect on the amounts reported.  For example, increasing the
assumed  health care  cost trend rates  by one  percentage point  in each year
would  increase  the  accumulated  post-retirement benefit  obligation  as  of
December  31,  1996,   and  1995,  by  approximately  $71,000   and  $324,000,
respectively, and the aggregate of the service and interest cost components of
net periodic  post-retirement benefit cost  for 1996 by  approximately $17,000
and for 1995 by approximately $44,000.

The discount  rate used in determining the accumulated post-retirement benefit
obligation was 7.5% at December 31, 1996, and at December 31, 1995.
NOTE 10.  STOCKHOLDERS' EQUITY

Changes in components of stockholders' equity for the  years 1994 through 1996 
follow:

<TABLE>
<S><C>

(Dollars in thousands except share data)
                                                                               Cumulative         No. of Shares
                             Common     Additional    Treasury     Accum.      Translation        Common Stock
                             Stock        Capital       Stock      Deficit     Adjustment           Issued      

Balance at
  December 31, 1993       $   3,845      $  40,847     $    -    $ (26,504)   $   (444)            3,845,652 

Net income                        -              -          -        6,825           -                  - 
Company's 1993 Investment
  Plan contribution              25            297          -            -           -                24,591 
Exercise of stock options        24             55          -            -           -                23,630 
Stock dividend-10%              389          5,319          -       (5,708)          -               389,387 
Current year translation 
 adjustment                       -              -          -            -         (11)                    -  
Balance at
  December 31, 1994           4,283         46,518          -      (25,387)       (455)            4,283,260 

Net income                        -              -          -        2,898           -                     - 
Purchase of Treasury Stock        -              -       (486)           -           -                     - 
Company's 1994 Investment
  Plan contribution               -              -        380            -           -                     - 
Exercise of stock options        50            131          -            -           -                49,916 
Current year translation 
 adjustment                       -              -          -            -          96                     - 
Balance at
  December 31, 1995       $   4,333      $  46,649     $ (106)   $ (22,489)   $   (359)            4,333,176 

Net income                        -              -          -        6,891           -                     - 
Cash dividends ($.08 per share)   -              -          -         (350)          -                     - 
Purchase of Treasury Stock        -              -       (241)           -           -                     - 
Company's 1995 Investment
  Plan contribution               -              -        185          (20)          -                     - 
Exercise of stock options        41            192          -            -           -                40,420 
Current year translation 
 adjustment                       -              -          -            -         260                     - 
Balance at
  December 31, 1996       $   4,374      $  46,841      $ (162)  $ (15,968)   $    (99)            4,373,596 
</TABLE>


On  October 26,  1994, the  Company declared  a 10  percent stock  dividend to
shareholders  of record  November 9,  1994, paid  on December  15, 1994.   The
transaction was  valued based  on the  closing market  price of the  Company's
stock on  October 25, 1994.   Accumulated deficit was charged  $5,708,000 as a
result of the issuance of 389,387 shares of the Company's common stock.

In the  fourth quarter of 1996,  the Company resumed the  payment of quarterly
cash dividends and  the accumulated deficit was charged $350,000 for the first
quarterly dividend of  8 cents per  share.  Cash  dividends had not  been paid
since 1986.

During the  first two months of  1997, the Company purchased  25,200 shares of
its common stock on the open market for contribution to  the Company's Savings
and Investment Plan.

The Company has 1,000,000 authorized, but unissued, shares of no par preferred
stock.

NOTE 11.  INCENTIVE PROGRAM

The  1982  PORTEC,  Inc.   Employees'  Stock  Benefit  Plan  was   adopted  by
stockholders in 1982  and amended in  1984, and provided  for the granting  of
awards thereunder to key employees.  There were no options, SAR's,  restricted
stock awards or performance units  outstanding under the plan at  December 31,
1996, or 1995.   No additional awards could be made under this plan, and there
were no shares reserved for issuance under this plan at December 31, 1995. 

The  1988  PORTEC,  Inc.   Employees'  Stock  Benefit  Plan  was   adopted  by
stockholders in 1988 and amended in 1994 and 1995.  This plan provides for the
granting   of  incentive   and  nonqualified   stock  options;   tandem  Stock
Appreciation  Rights  (SARs) in  relation  to such  options,  restricted stock
awards  and  performance units.    SARs entitle  the optionee  to  receive the
appreciation in value of the shares (i.e. the difference  between market value
price of a  share at time  of exercise of  the SARs and  the option price)  in
cash, shares or a combination thereof.   SARs utilize the same shares reserved
for  issuance of options, and the exercise of a SAR or an option automatically
cancels the related option  or SAR.  Options and related  SARs were granted at
prices  which were not less than  the fair market value of  such shares on the
date the option  was granted.  Options and related SARs may be exercisable for
periods of up  to 10 years from  the date of grant.   This plan permitted  the
Company's Board of  Directors to make restricted stock awards to key employees
whereby designated employees  would have  shares issued in  their names  which
would be  restricted as  to  the right  of sale  and  other disposition  until
certain predetermined  performance and/or time  requirements were met.   Also,
the Board could contract with key employees to issue shares to them upon their
accomplishment  of predetermined performance targets.  The plan was amended in
1994 to increase by  440,000 the shares available for grant under the plan and
to allow an annual grant of 1,000 shares to  non-employee directors.  The plan
was amended  again  in 1995  to  increase  the annual  grant  to  non-employee
directors to 2,000 shares, to grant a one-time option for 7,000 shares to non-
employee directors and to allow certain stock options and SARs to be exercised
within five years of termination of employment or service if such is by death,
disability  or retirement or until the option expires, whichever first occurs.
Options may be granted  at prices not less than the greater of 50% of the fair
market value of the  shares or the par value  of the shares.  The  granting of
awards under  this plan may  be made until June  2, 1998.   All options become
exercisable  commencing on a  date no earlier  than six months  nor later than
three  years from  the  date  of  grant.   By  prior  agreement,  all  137,700
outstanding SARs under this plan are exercisable only at the discretion of the
Company.  There were 795,215  shares reserved for issuance under this  plan at
December 31, 1996, after adjustment for 10% stock dividends in  1992, 1993 and
1994.

<TABLE>
<S><C>
                                          1996                    1995   
               
                                   Option     Average       Option     Average
                                   Shares   Option Price    Shares  Option Price
STOCK OPTIONS:
  Outstanding beginning of year    651,276    $  6.92        598,291    $  5.87 
  Granted   . . . . . . . . . . .   81,500       9.93        104,000      11.50 
  Exercised   . . . . . . . . . .  (40,420)      3.26        (49,915)      3.64
  Forfeited   . . . . . . . . . .   (2,100)     13.34         (1,100)     14.77 

  Outstanding end of year   . . .  690,256    $  7.21        651,276    $  6.92 

  Exercisable end of year   . . .  609,089    $  7.02        601,275    $  6.65 
  Available for grant   . . . . .  104,959          -        186,459          -
</TABLE>

The Company applies APB  Opinion 25 and related interpretations  in accounting
for its plan.  The exercise price of all options granted in 1996 and  1995 was
equal to the  fair market value of the stock on  the grant date.  Accordingly,
no compensation cost has been recognized for its fixed stock option plan.  Had
compensation cost for the Company's compensation plan been determined based on
the fair value at  the grant dates for awards  under the plan consistent  with 
the method of FASB Statement 123, the compensation cost for employees and non-
employee directors  would have been  $595,000 and $342,000  in 1996 and  1995,
respectively, and net income and earnings per share would have been reduced to
the pro forma amounts indicated below:

<TABLE>
<S><C>
(Dollars in thousands)                        1996                    1995
    

Net income
  As reported   . . . . . . . . . . . . .  $  6,891                $  2,898 
  Pro forma   . . . . . . . . . . . . . .     6,634                   2,556 
Earnings per share 
  As reported   . . . . . . . . . . . . .  $   1.50                $    .63
  Pro forma   . . . . . . . . . . . . . .      1.45                     .55 
</TABLE>

The   weighted-average  grant-date fair  value of  options granted  during the
years 1996 and 1995 was $4.02 and $4.91, respectively.  The fair value of each
option  granted was estimated  on the  date of  grant using  the Black-Scholes
option-pricing model with the  following weighted-average assumptions used for
grants in 1996 and 1995, respectively: expected volatility 44% for both years;
expected lives of seven years for both years; dividend yield of 3.3% and 2.7%;
and  risk-free interest rate of  6.7% and 6.6%.  The  pro forma net income and
earnings per  share are not indicative  of the effects on  reported net income
for future years when all outstanding, nonvested awards will be included.

Options for 82,500 shares of stock granted in 1994 at $12.33 were repriced for
$10.09,  the  fair market  value  on December  17,  1996, the  date  they were
repriced.  These  options were recorded as though cancelled  and reissued.  No
other changes were made to the option terms.

The  following table  summarizes  additional information  about stock  options
outstanding at December 31, 1996:


<TABLE>
<S><C>
                                       Options Outstanding                          Options Exercisable  

      Range of          Outstanding         Remaining            Weighted-Average    Exercisable      Weighted-Average
   Exercise Prices      at 12/31/96       Contractual Life        Exercise Price     at 12/31/96       Exercise Price

   $ 2.90 - $ 4.50       325,683           2.9 years                 $  3.12           325,683            $ 3.12
   $ 8.40 - $14.80       364,573           8.6 years                 $ 10.86           283,407            $11.07
</TABLE>



NOTE 12.  COMMITMENTS AND CONTINGENT LIABILITIES

There are various  lawsuits and claims  pending against the  Company.  In  the
opinion of management, any  liabilities that may result from such lawsuits and
claims will not materially  affect the consolidated financial position  of the
Company.   The Company  has  provided for  the estimated  costs  of any  known
losses.

The  Company leases  the  Shipping Systems  Division  facility in  Oak  Brook,
Illinois, the  Railway Maintenance  Products Division facility  in Huntington,
West  Virginia,  the  corporate  headquarters in  Lake  Forest,  Illinois, the
PORTEC, Ltd. (Canada) offices in Lachine, Quebec, several other properties and
various transportation and data processing equipment.

Future minimum rent  payments for  major operating leases  as of December  31,
1996, which expire on or after December 31, 1997, are as follows: 

(Dollars in thousands)

Year ending December 31,
  1997  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $381
  1998  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      274
  1999  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      214
  2000  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       29
  2001  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        6


Net rent expense of $469,000, $538,000 and $618,000 was recorded in 1996, 1995
and 1994, respectively.


NOTE 13.  FINANCIAL INFORMATION BY BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

Pages  10  and 11  of  this  Annual  Report  to Stockholders  contain  certain
information  by  business segments  and geographic  areas  for the  years 1992
through 1996.

The following  table summarizes  additional financial information  by business
segments for the years 1996, 1995 and 1994:

(Dollars in thousands)                            1996      1995       1994    
DEPRECIATION AND AMORTIZATION
Construction Equipment  . . . . . . . . . . .   $ 1,136   $ 1,118    $ 1,022 
Materials Handling  . . . . . . . . . . . . .       566       449        337 
Railroad  . . . . . . . . . . . . . . . . . .       700       586        601 
Corporate   . . . . . . . . . . . . . . . . .        40        20         52 
  Total   . . . . . . . . . . . . . . . . . .   $ 2,442   $ 2,173    $ 2,012 

CAPITAL EXPENDITURES
Construction Equipment  . . . . . . . . . . .   $   848   $   608    $ 2,231 
Materials Handling  . . . . . . . . . . . . .       744     1,699        397 
Railroad  . . . . . . . . . . . . . . . . . .       670       745        938 
Corporate   . . . . . . . . . . . . . . . . .        38         7         35 
  Total   . . . . . . . . . . . . . . . . . .   $ 2,300   $ 3,059    $ 3,601 


NOTE 14.  UNAUDITED QUARTERLY FINANCIAL INFORMATION

The interim results of operations were impacted by the effect  of reducing the
valuation  allowance  against  deferred   tax  assets  based  on  management's
judgement about the Company's ability to realize such assets in the future.

The  results of  operations for  the  three months  ended  December 31,  1995,
include an expense of $1,156,000 for  inventory revaluation and a write-off of
$1,216,000 of goodwill.   Both adjustments relate  to assets purchased in  the
acquisition of Innovator Manufacturing, Inc. in July of 1994.

(Dollars in thousands except per share data)

                                  First      Second      Third     Fourth
                                 Quarter     Quarter    Quarter    Quarter
1996
Net Sales   . . . . . . . . .   $ 27,284    $ 28,592   $ 21,006    $ 20,456

Gross Margin  . . . . . . . .      7,668       8,282      5,888       5,949 
Income before income taxes  .      2,037       2,551        817       1,547 
Income tax provision (benefit)        64         630       (191)       (442)
Net Income  . . . . . . . . .      1,973       1,921      1,008       1,989 

Earnings per common share   .   $    .43    $    .42   $    .22    $    .43  

(Dollars in thousands except per share data)     

                                  First      Second      Third      Fourth
                                 Quarter     Quarter    Quarter     Quarter
1995
Net Sales   . . . . . . . .     $  26,659   $ 28,929   $ 21,918     $ 19,566 

Gross Margin  . . . . . . .         7,810      8,230      6,470        3,605 
Income before income taxes          2,007      2,281        982       (2,358)
Income tax provision (benefit)         88         24         28         (126)
Net Income  . . . . . . . .         1,919      2,257        954       (2,232)

Earnings per common share       $     .42   $    .49   $    .21     $   (.49)


NOTE 15.  IMPAIRED ASSETS

During the fourth  quarter of 1995,  the Company decided  to close a  Canadian
research and development facility acquired as a part of Innovator Holdings due
to the overall market for grinders  being below expectations and to difficulty
gaining market acceptance for the Innovator design.   The Company also severed
employment agreements  with two former  principals of Innovator  and cancelled
their related earnout agreements.  Unamortized goodwill  of $1,216,000 related
to this acquisition was determined to be permanently impaired due  to the lack
of future cash flows and, accordingly, was charged to operations.

The  realizable  value of  finished  goods inventory  initially  acquired from
Innovator was  below the recorded  value of $1,939,000  due to the age  of the
equipment,  design  changes required  and  logged  demonstration  hours.   The
Company analyzed realizable  value by  individual unit and  determined that  a
write-down of  $1,156,000 was required.   Both the goodwill write-off  and the
inventory write-down  are  recorded as  Loss on  Impaired Assets  in the  1995
Consolidated Statement  of Income  and  are charged  against the  Construction
Equipment segment.

NOTE 16.  LITIGATION SETTLEMENT

On  November 16, 1994,  the Company entered  into a settlement  agreement in a
case entitled  Northern Engineering  Industries plc, Parsons  Pebbles Electric
Products Inc. and NEI Cranes, Ltd. vs. Portec, Inc. (RMC Division).  The terms
of the agreement resulted  in the recognition of $1,102,000 in interest income
in  1994.   Other expense in  1994 reflects  legal and  other related expenses
associated with this case.

NOTE 17.  ACQUISITIONS

In  July  1996,  the  Company  acquired  certain  assets  of  Moore  &  Steele
Corporation,  a supplier  of  rail lubricator  equipment.   The  business  was
acquired for cash  of approximately  $2,100,000 plus possible  earnouts to  be
based on defined  sales performance.  Goodwill of  $1,350,000 acquired in this
transaction  will  be amortized  over  fifteen years  using  the straight-line
method.

In  April 1994, the Company acquired substantially  all of the assets of Count
Recycling Systems,  Inc. (renamed Countec),  a supplier of  materials recovery
facilities  in the sorting and  recycling of residential  and commercial solid
waste.   In July  1994, certain assets  of Innovator Manufacturing,  Inc. were
acquired  and Portec, Ltd., a wholly-owned Canadian subsidiary of the Company,
acquired   the  outstanding   shares   of  Innovator   Holdings.     Innovator
Manufacturing, Inc. is a leading producer of equipment used for the processing
of green yard waste, wood waste  and demolition debris.  These businesses were
acquired for  cash of approximately $3,908,000  and earnouts to  be based upon
the future profitability of the respective businesses.

All earnouts are  payable annually over a period of three  years.  During 1996 
and  1995,  $237,000  and  $400,000,  respectively, were  paid  under  earnout
agreements and goodwill was increased by these amounts.  One earnout agreement
was cancelled in the fourth quarter of 1995.

All  of  the acquisitions  were  accounted for  as purchases.    The operating
results of each acquisition  have been included in the  Company's consolidated
statements of income since the date of acquisition.

NOTE 18.  ASSETS HELD FOR SALE

In 1989, the  Company sold the operations of its  track machinery business and
consolidated  its  former  domestic  manufacturing facilities  into  a  single
manufacturing  facility  in  Huntington,  West Virginia.    Excess  properties
located in Troy, New York, and  Pittsburgh, Pennsylvania, are included in  the
balance sheet under  the caption Assets Held  For Sale at  the lower of  their
cost or estimated net realizable value.

Management estimates  that  the gain  from  the sale  of  the Company's  track
machinery business  combined with the anticipated  gains from the  sale of the
related Assets  Held For Sale  will offset the  costs of consolidation  of the
Railway  Maintenance Products Division.  Accordingly, the Company has deferred
the  costs of consolidation  of the Railway Maintenance  Products Division.  A
net deferred charge of $828,000 and $868,000 is reflected in the balance sheet
as  a part  of Notes Receivables  and Other  Assets at December  31, 1996, and
1995, respectively.



REPORT OF INDEPENDENT ACCOUNTANTS

February 18, 1997



To the Stockholders and
Board of Directors of
PORTEC, Inc.


In our opinion, the  accompanying consolidated balance sheets and  the related
consolidated  statements of income and  accumulated deficit and  of cash flows
present  fairly, in all material  respects, the financial  position of PORTEC,
Inc. and its  subsidiaries at December 31, 1996, and 1995,  and the results of
their operations  and their  cash flows  for each  of the  three years in  the
period  ended  December  31,  1996,  in  conformity  with  generally  accepted
accounting  principles.  These financial statements  are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements  based on our audits.   We conducted our  audits of these
statements  in accordance  with  generally accepted  auditing standards  which
require that we  plan and  perform the  audit to  obtain reasonable  assurance
about whether the financial statements are free of material  misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in  the financial statements, assessing  the accounting principles
used  and significant estimates made by management, and evaluating the overall
financial  statement presentation.    We believe  that  our audits  provide  a
reasonable basis for the opinion expressed above.




CORPORATE INFORMATION

BOARD OF DIRECTORS


J. GRANT BEADLE, 64, has been a director since 1984.  From October 1991 to
June 1993, he served as Associate Director at The Institute for the Learning
Sciences at Northwestern University in Chicago, involved in educational
research.  Prior to this, Mr. Beadle was Chairman and Chief Executive Officer
of Union Special Corporation, a Chicago-based manufacturer of industrial
sewing machines.  He held this position from 1984 through 1991 and spent over
30 years with the firm.  Mr. Beadle also serves as a director for Woodward
Governor Company, Batts, Inc. and Oliver Products . * o

ALBERT FRIED, JR., 67, has been a director since 1988 and Chairman of the
Board since October 1989.  For more than 10 years, Mr. Fried has been Managing
Partner of Albert Fried & Company, LLC, a New York-based investment banking
firm.  He also is the Managing Partner of Buttonwood Specialists, L.P.,
specialists on the New York Stock Exchange.  In addition, Mr. Fried is a
member of the New York Stock Exchange, Inc. and the New York Futures Exchange,
Inc.  He is a director of EMCOR Group, Inc., a worldwide leader in
mechanical/electrical construction and facilities management.  He is also a
director of various civic and philanthropic organizations. o

FRANK T. MACINNIS, 50, has been a director since 1996.  Mr. MacInnis is
Chairman and Chief Executive Officer of EMCOR Group, Inc. and has held that
position with that company and its predecessor company, JWP, Inc., since 1994. 
Prior to this he was Chairman of Comstock Group, Inc. (New York based
construction group) and before that  was Chairman and Chief Executive Officer
of H.C. Price Construction (builder of large diameter oil and gas pipelines). 
Mr. MacInnis is a director of EMCOR Group, Inc. and MAPCO, Inc. * !

FREDERICK J. MANCHESKI, 70, has been a director since 1990.  Prior to his
retirement in 1997, Mr. Mancheski was Chairman and Chief Executive Officer of
Echlin, Inc., a Branford, Connecticut, manufacturer of products that improve
motor vehicle safety and efficiency.  He had held this position since 1969. 
Mr. Mancheski is a director of Echlin, Inc. and RB&W Corporation. * !

JOHN F. MCKEON, 71, has been a director since 1987.  Prior to his retirement
in 1989, he served as President of Link-Belt Construction Equipment Company,
owned by FMC Corporation and Sumitomo Heavy Industries Ltd.  In addition, Mr.
McKeon was Group Vice President of FMC Corporation, which manufactured
construction equipment, a position he held for more than 10 years.  He serves
on the boards of Link-Belt Construction Equipment Company, LBS-Spa, Anderson
Industries and Dumore Corporation.* !

ARTHUR MCSORLEY, JR., 68, has been a director since 1977.  He is President and
a Director of Casey Company, a Pittsburgh-based construction management firm. 
Mr. McSorley has held this position with Casey and its predecessor company for
more than 10 years. o !

L. L. WHITE, JR., 69, has been a director since 1988.  Mr. White served as
Portec's Chairman of the Board from 1988 through 1989 and was acting Chief
Executive Officer in December 1988.  Prior to his retirement in 1984, Mr.
White held a number of executive positions with Portec, most recently as
Senior Vice President -- Commercial and Government Relations.  Since then, he
has been a private investor. o !

MICHAEL T. YONKER, 54, has been a director since 1989.  He has served as
Portec's President and Chief Executive Officer since December 1988.  From 1981
through 1988, Mr. Yonker was Vice President and Drive Division Manager of P. 
T. Components, Inc., a Philadelphia-based manufacturer of industrial gear
drives.  Prior to P. T. Components, Mr. Yonker held several Division Manager
positions with FMC Corporation.  He also is a director for Modine
Manufacturing Company and Woodward Governor Company. o



CODES
*   Member of the Audit Committee
o   Member of the Nominating Committee
!   Member of the Stock Option and
    Compensation Committee 


OFFICERS


ALBERT FRIED, JR.
Chairman of the Board

MICHAEL T. YONKER
President and Chief Executive Officer

JOHN S. COOPER
Senior Vice President<PAGE>
NANCY A. KINDL
Vice President, Secretary, Treasurer and 
Chief Financial Officer

KEVIN C. RORKE
Vice President


GENERAL MANAGERS


JOHN S. COOPER
General Manager
Railway Maintenance Products Division
900 Freeport Road
Pittsburgh, Pennsylvania  15238
(412) 782-6000
(412) 782-1037-Fax

JERRY L. DEEL
President and General Manager
Construction Equipment Division
700 West 21st Street
Yankton, South Dakota  57078
(605) 665-9311
(605) 665-2623-Fax

JOHN F. O'BRIEN
President
PORTEC, Ltd.
2044 - 32nd Avenue
Lachine, Quebec  H8T 3H7
Canada
(514) 636-5590
(514) 636-5747-Fax 

KEVIN C. RORKE
President and General Manager
Materials Handling Group
One Forge Road
Canon City, Colorado  81212
(719) 275-7471
(719) 269-3750-Fax

L. J. "COOK" SIEJA
President and General Manager
Shipping Systems Division
122 West 22nd Street, Suite 100
Oak Brook, Illinois  60521
(630) 573-4778
(630) 573-4659-Fax

GRAHAM TARBUCK
Managing Director 
PORTEC (U.K.) Ltd.
Vauxhall Industrial Estate
Ruabon, Wrexham, Clwyd LL14 6UY
United Kingdom
44-1-978-820820
44-1-978-821439-Fax


STOCKHOLDERS' INFORMATION


STOCK TRANSFER AGENT AND REGISTRAR
   (Communications concerning:
   o  stock transfer,
   o  dividend disbursement, 
   o  change of address,
   o  loss of a stock certificate, or 
   o  nonreceipt or loss of a dividend
      check 
   should be directed to:)

Harris Trust and Savings Bank
Shareholders' Services Division - 11th Floor
311 W. Monroe St.
Chicago, Illinois  60606
(312) 461-6001

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
Chicago, Illinois


ANNUAL MEETING
The Annual Meeting will be held at 9:30 A.M. on 
Wednesday, April 23, 1997, in the East Auditorium of the 
American National Bank and Trust Company of Chicago, 
1 North LaSalle Street, Chicago, Illinois. 

COUNSEL
Schiff Hardin & Waite
Chicago, Illinois

STOCK LISTING
New York Stock Exchange
Chicago Stock Exchange
Trading Symbol: POR

EXECUTIVE OFFICES
PORTEC, Inc.
One Hundred Field Drive, Suite 120
Lake Forest, Illinois  60045
(847) 735-2800
(847) 735-2828-Fax




FORM 10-K
A copy of Form 10-K for 1996, as filed with the Securities and Exchange
Commission will be available to stockholders at no charge (except for
exhibits) after March 31, 1997, by writing to the:
   Secretary, PORTEC, Inc., One Hundred Field Drive, 
   Suite 120, Lake Forest, Illinois  60045.


QUARTERLY STOCK & DIVIDEND INFORMATION

                                        First    Second    Third     Fourth
Common Stock Prices(1)                 Quarter   Quarter  Quarter   Quarter

1996 Common Stock Prices
  High  . . . . . . . . . . . . . .   $ 10.00   $ 11.13   $ 10.50  $ 10.88
  Low   . . . . . . . . . . . . . .      8.88      9.25      9.25     9.50
  Cash dividends per share  . . . .         -         -         -      .08


1995 Common Stock Prices
  High  . . . . . . . . . . . . . .   $ 14.00   $ 13.75   $ 12.88  $ 11.88
  Low   . . . . . . . . . . . . . .     11.63     10.88     11.50     9.50

(1)   The high and low prices are based on prices as reported on the Composite
      Tape.





                               PORTEC, Inc.
                          One Hundred Field Drive
                                Suite 120
                        Lake Forest, Illinois 60045