SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                                FORM 10-K/A
                             (Amendment No. 1)

                    FOR ANNUAL AND TRANSITION REPORTS
                 PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934
  (Mark One)
 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

  For the fiscal year ended June 30, 1999
                                    OR
 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

  For the transition period from ________ to ________

                      Commission File Number 0-5214
                            PEERLESS MFG. CO.
          (Exact name of registrant as specified in its charter)

                   Texas                          75-0724417
      (State or Other Jurisdiction of           (IRS Employer
      Incorporation or Organization)         Identification No.)

   2819 Walnut Hill Lane, Dallas, Texas             75229
 (Address of Principal Executive Offices)         (Zip Code)

 Registrant's telephone number, including area code: (214) 357-6181

  Securities registered pursuant to Section 12(g) of the Act:
     Title of each class         Name of Each Exchange on Which Registered
 Common Stock, par value $1.00   The Nasdaq Stock Market's National Market

        Indicate by check  mark whether the  registrant:  (1) has  filed
  all reports  required  to be  filed  by  Section 13 or  15(d)  of  the
  Securities Exchange Act of 1934 during the preceding 12 months (or for
  such shorter  period that  the registrant  was required  to file  such
  reports), and (2) has been subject to such filing requirements for the
  past 90 days.                Yes [x]     No [ ]

       Indicate  by  check  mark  if  disclosure  of  delinquent  filers
  pursuant to Item 405  of Regulation S-K is  not contained herein,  and
  will not  be contained,  to the  best  of registrant's  knowledge,  in
  definitive proxy or information  statements incorporated by  reference
  in Part III of this Form 10-K or any amendment to this Form 10-K. [x]

       At September 21, 1999, Peerless Mfg. Co. had 1,452,492 shares  of
  common stock, $1.00 par value outstanding.  The aggregate market value
  of the registrant's common stock on September 21, 1999 (based upon the
  closing price of these  shares on Nasdaq)  held by non-affiliates  was
  approximately $13,200,000.

                   DOCUMENTS INCORPORATED BY REFERENCE
  Portions of the  Registrant's Proxy  Statement for  Annual Meeting  of
  Shareholders to be held  on or about November 18,  1999 (to be  filed)
  are incorporated by reference into Part III of this Form 10-K.
<PAGE>


   This amendment to the  Form 10-K  for the period ended June 30, 1999,
   is filed for the purpose  of revising ITEM 8, NOTE J-INDUSTRY SEGMENT
   AND  GEOGRAPHIC  INFORMATION  with  respect to the 1999 Revenues from
   customers and Segment profit (loss).

  **********************************************************************


  ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                    Index to Financial Statements

                                                               Page

  REPORT OF INDEPENDENT CERTIFIED PUBLIC
       ACCOUNTANTS ...........................................  17

  CONSOLIDATED BALANCE SHEETS AT JUNE 30, 1999 AND 1998.......  18

  CONSOLIDATED STATEMENTS OF EARNINGS FOR THE YEARS
       ENDED JUNE 30, 1999, 1998 AND 1997.....................  20

  CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
       EQUITY FOR THE YEARS ENDED JUNE 30, 1999,
       1998 AND 1997..........................................  21

  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS
       ENDED JUNE 30, 1999, 1998 AND 1997.....................  23

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE
       YEARS ENDED JUNE 30, 1999, 1998 AND 1997...............  25

  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
       ON SCHEDULE............................................  36

  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS.............  37

<PAGE>

            Report of Independent Certified Public Accountants




  Board of Directors
  Peerless Mfg. Co.


  We have  audited  the  accompanying  consolidated  balance  sheets  of
  Peerless Mfg. Co. and Subsidiaries as  of June 30, 1999 and 1998,  and
  the  related   consolidated  statements   of  earnings,   changes   in
  stockholders' equity, and cash  flows for each of  the three years  in
  the period ended June  30, 1999.  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 in accordance with generally accepted auditing
  standards.  Those standards 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.  An audit also includes assessing the accounting
  principles used and significant estimates made by management, as  well
  as evaluating  the  overall  financial  statement  presentation.    We
  believe our audits provide a reasonable basis for our opinion.

  In our opinion,  the financial statements  referred to above,  present
  fairly, in all material respects, the consolidated financial  position
  of Peerless Mfg. Co.  and Subsidiaries as of  June 30, 1999 and  1998,
  and  the   consolidated  results   of  their   operations  and   their
  consolidated cash flows  for each  of the  three years  in the  period
  ended June 30, 1999, in conformity with generally accepted  accounting
  principles.


  GRANT THORNTON LLP

  Dallas, Texas
  September 10, 1999

<PAGE>
<TABLE>
                 Peerless Mfg. Co. and Subsidiaries
                     CONSOLIDATED BALANCE SHEETS
                               June 30,




                      ASSETS                       1999         1998
                                               ----------   ----------
  <S>                                         <C>          <C>
  CURRENT ASSETS
   Cash and cash equivalents                  $   210,866  $   428,482
   Short-term investments                         273,343      268,065
   Accounts receivable - principally trade,
    net of allowance for uncollectible
    accounts of $685,330 and $806,200 in
    1999 and 1998, respectively                12,195,037   14,241,036
   Inventories                                  3,730,970    2,419,845
   Costs and earnings in excess of billings
    on uncompleted contracts                    3,268,181    1,838,641
   Deferred income taxes                              -        433,596
   Other                                          777,635      165,631
                                               ----------   ----------
                Total current assets           20,456,032   19,795,296

  PROPERTY, PLANT AND EQUIPMENT - AT COST,
      less accumulated depreciation             2,102,546    2,268,405

  DEFERRED INCOME TAXES                            59,613          -

  OTHER ASSETS                                    860,581      692,520
                                               ----------   ----------
                                              $23,478,772  $22,756,221
                                               ==========   ==========

</TABLE>
<PAGE>
<TABLE>
                 Peerless Mfg. Co. and Subsidiaries
               CONSOLIDATED BALANCE SHEETS - CONTINUED
                              June 30,




     LIABILITIES AND STOCKHOLDERS' EQUITY          1999         1998
                                               ----------   ----------
  <S>                                         <C>          <C>
  CURRENT LIABILITIES
      Accounts payable - trade                $ 5,626,058  $ 5,566,068
      Notes payable                                   -        200,000
      Billings in excess of costs and
       earnings on uncompleted contracts          572,970       49,977
      Commissions payable                       1,204,584    1,205,391
      Accrued expenses
          Compensation                          1,188,165    1,499,443
          Warranty reserve                        313,773      434,588
          Deferred income taxes                    42,736          -
          Other                                    38,669      366,408
                                               ----------   ----------
                Total current liabilities       8,986,955    9,321,875

  DEFERRED INCOME TAXES                               -         38,543

  COMMITMENTS                                         -            -

  STOCKHOLDERS' EQUITY
   Common stock - authorized, 10,000,000
    shares of $1 par value; issued and
    outstanding, 1,452,492 and 1,457,492
    shares in 1999 and 1998, respectively       1,452,492    1,457,492
      Additional paid-in capital                2,539,951    2,583,701
      Unamortized value of restricted
       stock grants                                (4,719)     (51,385)
      Accumulated other comprehensive
       income (loss)                             (103,824)     (79,849)
      Retained earnings                        10,607,917    9,485,844
                                               ----------   ----------
                                               14,491,817   13,395,803
                                               ----------   ----------
                                              $23,478,772  $22,756,221
                                               ==========   ==========


     The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>

                 Peerless Mfg. Co. and Subsidiaries
                 CONSOLIDATED STATEMENTS OF EARNINGS
                         Year ended June 30,



                                         1999         1998         1997
                                     ----------   ----------   ----------
  <S>                               <C>          <C>          <C>
  Net sales                         $40,568,443  $43,455,136  $41,486,492

  Cost of goods sold                 26,296,724   28,215,330   29,961,203
                                     ----------   ----------   ----------
            Gross profit             14,271,719   15,239,806   11,525,289

  Operating expenses
   Marketing and engineering          8,630,962    8,932,180    9,129,347
   General and administrative         2,662,289    2,662,725    1,988,618
                                     ----------   ----------   ----------
                                     11,293,251   11,594,905   11,117,965
                                     ----------   ----------   ----------
            Operating profit          2,978,468    3,644,901      407,324

  Other income (expense)
   Interest income                       58,987       34,055       24,687
   Interest expense                     (23,696)     (27,430)     (55,475)
   Foreign exchange gains (losses)     (118,866)     (90,050)     103,583
   Other, net                           (49,323)     (39,338)      57,877
                                     ----------   ----------   ----------
                                       (132,898)    (122,763)     130,672
                                     ----------   ----------   ----------
       Earnings before income taxes   2,845,570    3,522,138      537,996

  Income tax expense (benefit)
   Current                              617,824    1,262,998       65,766
   Deferred                             378,176     (190,421)     (65,186)
                                     ----------   ----------   ----------
                                        996,000    1,072,577          580
                                     ----------   ----------   ----------
            NET EARNINGS            $ 1,849,570  $ 2,449,561  $   537,416
                                     ==========   ==========   ==========
  Earnings per common share - basic
   and diluted                            $1.27        $1.68         $.37
                                           ====         ====          ===


     The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
<TABLE>
                            Peerless Mfg. Co. and Subsidiaries
                 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                                                          Unamortized   Accumulated
                                              Additional    value of      other
                                     Common    paid-in     restricted  comprehensive     Retained
                                      stock    capital    stock grants income (loss)     earnings      Total
                                    ---------  ---------     -------     ---------     -----------   ----------
  <S>                               <C>       <C>           <C>         <C>           <C>           <C>
  Balances as of July 1, 1996       1,446,742 $2,489,879    $(33,750)   $   23,842    $  7,953,143  $11,879,856

  Comprehensive income
   Net earnings                           -          -           -             -           537,416      537,416
   Foreign currency translation
    adjustment                            -          -           -        (117,786)            -       (117,786)

       Total comprehensive income                                                          419,630

  Issuance of 8,000 shares of
   common stock                         8,000     72,250     (80,250)          -               -            -
  Forfeiture of 4,000 shares of
   common stock                        (4,000)   (38,750)     42,750           -               -            -
  Stock options exercised               1,250     10,312         -             -               -         11,562
  Cash dividends paid
   ($.50 per share)                       -          -           -             -          (727,149)    (727,149)
  Cash dividends declared
   ($.125 per share)                      -          -           -             -          (182,624)    (182,624)
  Amortization of restricted
   stock grants                           -          -        26,625           -              -          26,625
  Income tax benefit related to
   restricted stock plans                 -        1,530        -              -              -           1,530
                                    ---------  ---------     -------     ---------     -----------   ----------
  Balances as of June 30, 1997      1,451,992  2,535,221     (44,625)      (93,944)      7,580,786   11,429,430

  Comprehensive income
   Net earnings                           -          -           -             -         2,449,561    2,449,561
   Foreign currency translation
    adjustment                            -          -           -          14,095             -         14,095
                                                                                                     ----------
     Total comprehensive income                                                                       2,463,656

  Issuance of 3,000 shares of
   common stock                         3,000     28,875     (31,875)          -               -            -
  Stock options exercised               2,500     20,625         -             -               -         23,125
  Cash dividends ($.375 per share)        -          -           -             -          (544,503)    (544,503)
  Amortization of restricted
   stock grants                           -          -        25,115           -               -         25,115
  Income tax expense related to
   restricted stock plans                 -       (1,020)        -             -               -         (1,020)
                                    ---------  ---------     -------     ---------     -----------   ----------
  Balances as of June 30, 1998      1,457,492  2,583,701     (51,385)      (79,849)      9,485,844   13,395,803


</TABLE>
<PAGE>
<TABLE>

                             Peerless Mfg. Co. and Subsidiaries
              CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - CONTINUED


                                                          Unamortized   Accumulated
                                              Additional    value of      other
                                     Common    paid-in     restricted  comprehensive     Retained
                                      stock    capital    stock grants income (loss)     earnings      Total
                                    ---------  ---------     -------     ---------     -----------   ----------
  <S>                               <C>       <C>           <C>         <C>           <C>           <C>
  Comprehensive income
   Net earnings                           -   $     -       $    -      $      -      $  1,849,570  $ 1,849,570
   Foreign currency translation
    adjustment                            -         -            -         (23,975)                     (23,975)
                                                                                                     ----------
        Total comprehensive income                                                                    1,825,595

  Cash dividends paid
   ($.50 per share)                       -         -            -             -          (727,497)    (727,497)
  Forfeiture of restricted
   stock grant                         (5,000)  (43,750)      29,250           -               -        (19,500)
  Amortization of restricted
   stock grants                           -         -         17,416           -               -         17,416
                                    ---------  ---------     -------     ---------     -----------   ----------
  Balance at June 30, 1999          1,452,492 $2,539,951    $ (4,719)   $ (103,824)   $ 10,607,917  $14,491,817
                                    =========  =========     =======     =========     ===========   ==========



             The accompanying notes are an integral part of this statement.

</TABLE>
<PAGE>
<TABLE>

                 Peerless Mfg. Co. and Subsidiaries
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                         Year ended June 30,


                                             1999         1998         1997
                                         ----------   ----------   ----------
  <S>                                   <C>          <C>          <C>
  Cash flows from operating activities
   Net earnings                         $ 1,849,570  $ 2,449,561  $   537,416
   Adjustments to reconcile net
    earnings to net cash provided by
    (used in) operating activities
       Depreciation and amortization        413,026      379,752      370,526
       Deferred income taxes                378,176     (190,421)     (65,186)
       Foreign exchange loss (gain)         118,886       90,050     (103,583)
       Other                                (34,160)      (1,020)       1,530
       Changes in operating assets
        and liabilities
         Accounts receivable              1,949,880   (4,703,504)  (1,586,991)
         Inventories                     (1,301,720)     544,993      (11,463)
         Cost and earnings in excess
          of billings on uncompleted
          contracts                      (1,429,540)      33,176     (468,618)
         Other current assets              (612,004)     132,974      (59,501)
         Other assets                      (186,421)    (231,004)     (40,466)
         Accounts payable                    59,008      837,205      791,364
         Billings in excess of costs
          and earnings on uncompleted
          contracts                         522,993     (353,174)     363,257
        Commissions payable                    (807)     425,917      212,708
        Accrued expenses                   (788,479)     985,395       22,497
                                         ----------   ----------   ----------
                                           (911,162)  (2,049,661)    (573,926)
                                         ----------   ----------   ----------
  Net cash provided by (used in)
   operating activities                     938,408      399,900      (36,510)

  Cash flows from investing activities
   Net purchases of short-term
    investments                              (5,278)      (9,058)     (12,348)
   Proceeds from sale of property
    and equipment                            30,850          -            -
   Purchase of property and equipment      (233,323)    (262,362)    (596,395)
                                         ----------   ----------   ----------
  Net cash used in investing activities    (207,751)    (271,420)    (608,743)

</TABLE>
<PAGE>
<TABLE>

                 Peerless Mfg. Co. and Subsidiaries
          CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                         Year ended June 30,


                                             1999         1998         1997
                                         ----------   ----------   ----------
  <S>                                   <C>          <C>          <C>
  Cash flows from financing activities
   Sale of common stock                 $       -    $    23,125  $    11,562
   Advances on short-term borrowings            -        200,000          -
   Net payments on short-term borrowings   (200,000)         -            -
   Dividends paid                          (727,497)    (727,127)    (727,149)
                                         ----------   ----------   ----------
  Net cash used in financing activities    (927,497)    (504,002)    (715,587)

  Effect of exchange rate changes on
   cash and cash equivalents                (20,776)      31,451       51,064
                                         ----------   ----------   ----------
  Net decrease in cash and cash
   equivalents                             (217,616)    (344,071)  (1,309,776)

  Cash and cash equivalents at
   beginning of year                        428,482      772,553    2,082,329
                                         ----------   ----------   ----------
  Cash and cash equivalents at
   end of year                          $   210,866  $   428,482  $   772,553
                                         ==========   ==========   ==========

  Supplemental information on cash flows:

  Interest paid                         $   21,170   $    29,956  $    55,475
  Income taxes paid                     $  900,814   $   957,860  $   379,347



     The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE>
                 Peerless Mfg. Co. and Subsidiaries
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    June 30, 1999, 1998 and 1997



  NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
           POLICIES

   Nature of Operations
   --------------------
   Peerless  Mfg. Co. designs,  engineers, and manufactures  specialized
   products for the  removal of contaminants from gases and liquids  and
   for   air  pollution   abatement.     The  Company's   products   are
   manufactured principally at  plants located in Dallas, Texas and  are
   sold  worldwide with  the  principal markets  located in  the  United
   States  and Europe.  Primary  customers are equipment  manufacturers,
   engineering contractors and operators of power plants.

   A  summary  of  the  significant  accounting  policies   consistently
   applied   in  the  preparation   of  the  accompanying   consolidated
   financial statements follows.

   Consolidation
   -------------
   The   Company  consolidates   the   accounts  of   its   wholly-owned
   subsidiaries,   all   of   which  are   foreign.    All   significant
   intercompany  accounts  and  transactions  have  been  eliminated  in
   consolidation.

   Cash Equivalents
   ----------------
   For purposes  of the statement of  cash flows, the Company  considers
   all highly liquid investments purchased with an original maturity  of
   three months or less to be cash equivalents.

   Inventories
   -----------
   Inventories are stated at the lower of cost (first-in, first-out)  or
   market.

   Depreciable Assets
   ------------------
   Depreciation  is provided  for in  amounts sufficient  to relate  the
   cost  of  depreciable  assets  to  operations  over  their  estimated
   service lives, principally by the straight-line method.

   Revenue Recognition
   -------------------
   The Company generally recognizes sales of custom-contracted  products
   at the completion  of the manufacturing process.  The  percentage-of-
   completion  method  is  used  for  significant  long-term  contracts.
   Percentage-of-completion   is   generally   determined   based   upon
   engineering  work performed,  materials purchased  and  manufacturing
   labor hours incurred.

<PAGE>

  NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES - Continued

   Stock-Based Compensation
   ------------------------
   Statement  of  Financial Accounting  Standards  No. 123  (SFAS  123),
   Accounting  for Stock-Based  Compensation, encourages,  but does  not
   require,  companies  to  record  compensation  cost  for  stock-based
   employee compensation  plans at fair value.   The Company has  chosen
   to  account for stock-based  compensation using  the intrinsic  value
   method prescribed in Accounting Principles Board Opinion No. 25  (APB
   25),   Accounting  for  Stock  Issued   to  Employees,  and   related
   interpretations.

   Earnings Per Common Share
   -------------------------
   Basic earnings per common share is computed by dividing net  earnings
   by  the weighted average number  of common shares outstanding  during
   each year presented.   Diluted earnings per common share give  effect
   to  the assumed  issuance  of shares  pursuant to  outstanding  stock
   option plans, when dilutive.

   Foreign Currency
   ----------------
   All balance sheet accounts of foreign operations are translated  into
   U.S.  dollars at  the year-end  rate of  exchange and  statements  of
   earnings items are translated at the weighted average exchange  rates
   for  the  year.   The  resulting  translation  adjustments  are  made
   directly to a separate component of stockholders' equity.  Gains  and
   losses  from foreign currency transactions,  such as those  resulting
   from the settlement of foreign receivables or payables, are  included
   in the consolidated statements of earnings.

   From  time  to  time,  the  Company  enters  into  forward   exchange
   contracts  in anticipation  of future  movements in  certain  foreign
   exchange  rates and to hedge  against foreign currency  fluctuations.
   Realized  and unrealized  gains  and losses  on these  contracts  are
   included in net income, except that gains and losses on contracts  to
   hedge  specific   foreign  currency  commitments  are  deferred   and
   accounted for as part of the underlying transaction.

   Financial Instruments
   ---------------------
   The  carrying amounts  of cash  and cash  equivalents and  short-term
   investments approximate  fair value because of the short-term  nature
   of these items.

   Use of Estimates
   ----------------
   The preparation of financial statements in conformity with  generally
   accepted accounting principles 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.

<PAGE>

  NOTE A - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES - Continued

   Reclassification
   ----------------
   Certain  reclassifications of prior  year amounts have  been made  to
   conform to the current year presentation.


  NOTE B - CONCENTRATIONS OF CREDIT RISK

   A significant portion  of the Company's sales are to customers  whose
   activities are  related to the oil  and gas industry, including  some
   who are located in foreign countries.  The Company generally  extends
   credit to these  customers.  Its exposure to credit risk is  affected
   by conditions  within the oil and gas  industry.  Also, with  respect
   to foreign sales, collection may be more difficult in the event of  a
   default.

   However,  the Company closely monitors  extensions of credit and  has
   never  experienced  significant  credit losses.    Substantially  all
   foreign  sales are made  to large, well-established  companies.   The
   Company generally requires collateral or guarantees on foreign  sales
   to smaller companies.

   No  single customer accounted for  more than 10%  of revenues in  the
   years ended June  30, 1999 or 1998.  Sales to one customer  accounted
   for  approximately 12.3%  of  revenues for  the year  ended  June 30,
   1997.


  NOTE C - INVENTORIES

   Principal components of inventories are as follows:

                                                      June 30,
                                                1999          1998
                                            ----------    ----------
     Raw materials                         $   961,450   $   973,906
     Work in process                         2,522,182     1,114,524
     Finished goods                            247,338       331,415
                                            ----------    ----------
                                           $ 3,730,970   $ 2,419,845
                                            ==========    ==========

    At June  30, 1999  and 1998,  progress  payments of  $1,237,771  and
    $100,472, respectively,  have been  offset against  inventories  and
    costs of uncompleted contracts.

<PAGE>

  NOTE D - PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment is summarized as follows:

                                                    June 30,
                                                1999          1998
                                            ----------    ----------

     Buildings                             $ 3,096,993   $ 3,029,175
     Equipment                               2,670,878     2,842,401
     Furniture and fixtures                  1,815,592     1,587,383
                                            ----------    ----------
                                             7,583,463     7,458,959
       Less accumulated depreciation        (6,201,643)   (5,911,280)
                                            ----------    ----------
                                             1,381,820     1,547,679
     Land                                      720,726       720,726
                                            ----------    ----------
                                           $ 2,102,546   $ 2,268,405
                                            ==========    ==========

  NOTE E - CREDIT ARRANGEMENT

    The Company has banking agreements for unsecured revolving lines  of
    credit in the combined  amount of $7,000,000  due upon demand,  with
    interest at the banks' prime lending rate (7.75% at June 30,  1999),
    payable monthly.  The banks charge  usage fees at an annual rate  of
    .25% of the average  daily unused portion of  the line.  No  amounts
    were borrowed  under  these  arrangements at  June  30,  1999.    At
    June 30, 1998, $200,000 was outstanding  under the lines of  credit.
    The  Company  had  letters  of  credit  outstanding  under  separate
    arrangements of $3,246,567 and $3,027,911 at June 30, 1999 and 1998,
    respectively.  Other  assets with a  cost of approximately  $635,000
    and $526,000 were pledged against the letters of credit  outstanding
    at June 30, 1999 and 1998, respectively.


  NOTE F - STOCKHOLDERS' EQUITY

    The Company has a 1985 restricted  stock plan (the 1985 Plan)  under
    which 75,000  shares of  common stock  were reserved  for awards  to
    employees.   Restricted  stock  grants  made  under  the  1985  Plan
    generally vest  ratably  over  a three-year  period.    The  Company
    awarded 8,000 shares  (fair value at  date of grant  of $80,250)  in
    fiscal 1997,  of  which 5,000  and  3,000 shares  were  subsequently
    forfeited, in fiscal 1999 and 1997, respectively, and awarded  3,000
    shares (fair value  at date  of grant  of $31,875)  in fiscal  1998.
    Compensation expense for  stock grants is  charged to earnings  over
    the restriction period and amounted to $17,416, $25,115, and $26,625
    in fiscal 1999,  1998, and 1997,  respectively.  The  tax effect  of
    differences between compensation expense for financial statement and
    income tax purposes  is charged  or credited  to additional  paid-in
    capital.

<PAGE>

  NOTE F - STOCKHOLDERS' EQUITY - Continued

    In December 1995, the Company adopted a stock option and  restricted
    stock plan (the 1995 Plan), which provides for a maximum of  100,000
    shares of common stock to be  issued.  Stock options are granted  at
    market value, generally vest ratably over four years, and expire ten
    years from date of grant.

    At June 30, 1999, 36,250 shares  of common stock were available  for
    issuance under the 1995 Plan, and 1,750 shares were available  under
    the 1985 Plan.

    The Company has adopted the disclosure  provisions of SFAS 123.   It
    applies APB 25 and related  interpretations in accounting for  stock
    options issued  and,  therefore,  does  not  recognize  compensation
    expense for stock options granted at  or greater than market  value.
    If the Company had elected  to recognize compensation expense  based
    upon the fair  value at the  grant date for  awards under this  plan
    consistent with the methodology prescribed  by SFAS 123, the  effect
    on net earnings and earnings per share would have been as follows:

                                             Year ended June 30,
                                         1999        1998      1997
                                      ---------   ---------   -------
     Net earnings - as reported      $1,849,570  $2,449,561  $537,416
     Net earnings - pro forma         1,813,141   2,440,327   527,012

     Basic earnings per share
     As reported                           1.27        1.68       .37
     Pro forma                             1.25        1.68       .36

     Diluted earnings per share
     As reported                           1.27        1.68       .37
     Pro forma                             1.24        1.67       .36

    The fair value of these options  was estimated at the date of  grant
    using the  Black-Scholes option  pricing  model with  the  following
    weighted-average assumptions:  expected volatility of 43% for fiscal
    1999, 41%  for  fiscal  1998 and  45%  for  fiscal  1997;  risk-free
    interest rates ranging from  4.6% to 5.6%;  dividend yield of  3.7%,
    5.6%, and  3.8% in  fiscal 1999,  1998 and  1997, respectively;  and
    expected lives of five to seven years.

<PAGE>


  NOTE F - STOCKHOLDERS' EQUITY - Continued

    Additional information with respect to options outstanding under the
    plan is as follows:

                                                Number of    Weighted
                                                 shares      average
                                               underlying    exercise
          Stock options                          options      price
                                                  ------      ------
     Outstanding at July 1, 1996                  34,000     $  9.25
     Granted                                       2,500       13.33
     Exercised                                    (1,250)       9.25
     Canceled/forfeited                           (3,750)       9.25
                                                  ------
     Outstanding at June 30, 1997                 31,500        9.57
     Granted                                      24,000       10.73
     Exercised                                    (2,500)       9.25
                                                  ------
     Outstanding at June 30, 1998                 53,000       10.11
     Granted                                       7,000       13.64
                                                  ------
     Outstanding at June 30, 1999                 60,000       10.52
                                                  ======

   Options exercisable at June 30, 1997            9,250       10.14
                                                  ======
   Options exercisable at June 30, 1998           16,125       10.12
                                                  ======
   Options exercisable at June 30, 1999           31,000       10.15
                                                  ======
   Weighted average fair value of options granted:

       Year ended  June 30, 1997                   $3.22
       Year ended June 30, 1998                    $3.24
       Year ended June 30, 1999                    $4.72



<PAGE>


  NOTE F - STOCKHOLDERS' EQUITY - Continued

   The  following table summarizes  information about  the Plan's  stock
   options at June 30, 1999:

                                      Options outstanding
                         ---------------------------------------------------
                                        Weighted average
        Range of           Number    remaining contractual  Weighted average
     Exercise Prices     outstanding    life (in years)      exercise price
     ---------------     -----------    ---------------      --------------
     $9.25                   26,500          6.6               $    9.25
     $10.625-$11.875         24,000          8.6                   10.73
     $12.125-$14.25           9,500          8.7                   13.56
                             ------
                             60,000
                             ======
                                               Options exercisable
                                        -----------------------------------
          Range of                         Number          Weighted average
     Exercise Prices                     exercisable        exercise price
     ---------------                    ---------------     ---------------
     $9.25                                  19,250              $    9.25
     $10.625-$11.875                         7,500                  10.96
     $12.125-$14.25                          4,250                  12.77
                                            ------
                                            31,000
                                            ======

   On May  21, 1997, the Board of Directors  declared a dividend of  one
   common  share purchase  right for  each outstanding  share of  common
   stock to shareholders  of record at the close of business on June  2,
   1997.   Each Right  entitles the registered  holder to purchase  from
   the  Company  one common  share  at a  price  of $30.00,  subject  to
   adjustment, as more  fully set forth in a Rights Agreement dated  May
   22, 1997.

   The Rights will become exercisable only in the event that any  person
   or  group of  affiliated persons acquires,  or obtains  the right  to
   acquire,  beneficial ownership  of  20% or  more of  the  outstanding
   common  shares  or   commences  a  tender  or  exchange  offer,   the
   consummation of which  would result in the beneficial ownership by  a
   person  or group of 20%  or more of  such outstanding common  shares.
   The  rights are redeemable under  certain circumstances at $.01  each
   and expire in May 2007.

<PAGE>


  NOTE G - EMPLOYEE BENEFIT PLANS

    The Company has a 401(k) Plan  to provide eligible employees with  a
    retirement savings plan.  All employees are eligible to  participate
    in  the  plan  upon  completing  90   days  of  service.     Company
    contributions are voluntary and  at the discretion  of the Board  of
    Directors of the  Company.  The  Company's contribution expense  for
    the years  ended June  30, 1999,  1998  and 1997  was  approximately
    $157,000, $128,000, and $119,500, respectively.


  NOTE H - INCOME TAXES

    Deferred taxes are  provided for the  temporary differences  between
    the financial reporting  bases and the  tax bases  of the  Company's
    assets and liabilities.  The temporary differences that give rise to
    the deferred tax assets or liabilities are as follows:

                                                      June 30,
                                                   1999       1998
                                                 --------   --------
     Deferred tax assets
       Restricted stock grants                  $   6,083  $  10,760
       Inventories                                 80,597     22,349
       Foreign subsidiaries' net
        operating loss carryforwards              232,122    115,473
       Accrued expenses                           164,317    253,012
       Accounts receivable                        108,285    148,983
       Other                                       29,461        -
                                                 --------   --------
                                                  620,865    550,577

     Deferred tax liabilities
       Property, plant and equipment             (100,088)  (111,762)
       Uncompleted contracts                     (500,396)   (40,258)
       Other                                       (3,504)    (3,504)
                                                 --------   --------
                                                 (603,988)  (155,524)
                                                 --------   --------
             Net deferred tax asset             $  16,877  $ 395,053
                                                 ========   ========

    Deferred tax assets  and liabilities included  in the balance  sheet
    are as follows:

                                                       June 30,
                                                   1999      1998
                                                 --------   --------
    Current deferred tax asset (liability)      $ (42,736) $ 433,596
    Noncurrent deferred tax asset (liability)      59,613    (38,543)
                                                 --------   --------
                                                 $ 16,877  $ 395,053
                                                 ========   ========

<PAGE>

  NOTE H - INCOME TAXES - Continued

    The provision for income taxes consisted of the following:

                                            Years  ended June 30,
                                       1999         1998         1997
                                      -------    ---------     --------
     Federal
       Current                       $552,824   $1,157,345    $  41,765
       Deferred                       378,176     (190,421)     (65,185)
     State                             65,000      105,653       24,000
                                      -------    ---------     --------
                                     $996,000   $1,072,577    $     580
                                      =======    =========     ========

   The  Company had  provided a  valuation allowance  at June  30,  1997
   related  to  deferred tax  assets  of foreign  subsidiaries.    These
   assets  are recoverable  only from  future income  of the  respective
   foreign   subsidiaries.    Because  of   a  recapitalization  and   a
   reorganization of European operations, the Company concluded at  June
   30,  1997 that  it  was more  likely than  not  that certain  of  the
   deferred  tax assets are  recoverable.  The  valuation allowance  was
   reduced in 1997  and eliminated in 1998.  Utilization of foreign  net
   operating carryforwards  reduced income tax expense by  approximately
   $12,000 and $130,000 for 1998 and 1997, respectively.

    The effective income tax rate varies from the statutory rate due  to
    the following:

                                                   As a percentage
                                                  of pretax earnings
                                                 1999   1998   1997
                                                 -----  -----  -----
     Income tax expense at statutory rate        34.0%  34.0%  34.0%
     Increase (decrease) in income taxes
      resulting from
       State tax, net of federal benefits         1.5    2.0    2.9
       Foreign sales corporation exclusions       (2.9) (6.7) (10.2)
       Change in valuation allowance               -    (0.8) (24.3)
       Other                                      2.4    2.0   (2.3)
                                                 -----  -----  -----
     Income tax expense at effective rate        35.0%  30.5%   0.1%
                                                 =====  =====  =====
<PAGE>


  NOTE I - EARNINGS PER SHARE

<TABLE>

    Summarized basic and diluted earnings per  common share for each  of
    the three years ended June 30, 1999 is as follows:

                                1999                           1998                           1997
                  ----------------------------    ---------------------------    -------------------------
                                          Per                            Per                          Per
                    Net                  share      Net                 share     Net                share
                  earnings     Shares    amount   earnings    Shares    amount  earnings    Shares   amount
                  ---------   ---------   ----    ---------  ---------   ----    -------  ---------    ---
 <S>             <C>          <C>        <C>     <C>         <C>        <C>     <C>       <C>         <C>
 Basic earnings
  per share      $1,849,570   1,455,396  $1.27   $2,449,561  1,454,277  $1.68   $537,416  1,454,045   $.37
 Effect of
  dilutive
  options               -         4,751    -            -        2,698    -          -        1,034    -
                  ---------   ---------   ----    ---------  ---------   ----    -------  ---------    ---
 Diluted earnings
  per share      $1,849,570   1,460,147  $1.27   $2,449,561  1,456,975  $1.68   $537,416  1,455,079   $.37
                  =========   =========   ====    =========  =========   ====    =======  =========    ===
</TABLE>

  For fiscal 1999, 1998 and 1997, stock options covering 11,500,  2,500,
  and 2,500 shares,  respectively were excluded  in the computations  of
  diluted earnings per share because their effect was antidilutive.


  NOTE J - INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION

   The  Company  identifies  reportable  segments  based  on  management
   responsibility within the  corporate structure.  The Company has  two
   reportable  industry segments:   gas/liquid filtration and  catalytic
   reduction  systems.    The  gas/liquid  filtration  segment  produces
   various  types of separators  and filters used  for removing  liquids
   and  solids  from   gases  and  air.    The  segment  also   provides
   engineering  design and  services, pulsation  dampeners, natural  gas
   odorizers,  quick-opening closures and parts  for its products.   The
   catalytic  reduction  systems segment  produces  selective  catalytic
   reduction  systems  used  for  air  pollution  abatement  to   reduce
   nitrogen oxide emissions.


<PAGE>

  NOTE J - INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION - Continued

   Segment profit and loss is based on revenue less direct costs of  the
   segment  before allocation of  general, administrative, research  and
   development  costs.    There  were  no  sales  or  transfers  between
   segments.   Segment  information and  a reconciliation  to  operating
   profit  for  the  years  ended  June 30,  1999,  1998  and  1997  are
   presented  below.   Note  that the Company  does not allocate assets,
   expenditures  for assets or  depreciation  expense on a segment basis
   for internal management reporting, and  therefore such information is
   not presented.

<TABLE>
                                       Catalytic     Unallocated
                          Gas/liquid   reduction      corporate
                          Filtration    Systems       overhead   Consolidated
                           ----------   ----------   ----------    ----------
 <S>                      <C>          <C>          <C>           <C>
 1999

 Revenues from customers  $34,436,000  $ 6,132,000  $       -     $40,568,000
 Segment profit (loss)      5,580,000      849,000   (3,451,000)    2,978,000

 1998

 Revenues from customers   39,234,000    4,221,000          -      43,455,000
 Segment profit (loss)      6,708,000       84,000   (3,147,000)    3,645,000

 1997

 Revenues from customers   31,854,000    9,632,000          -      41,486,000
 Segment profit (loss)      4,207,000   (1,038,000)  (2,762,000)      407,000

   The   Company  attributes   revenues  from   external  customers   to
   individual geographic  areas based on the  country where the sale  is
   originated.  Information about the Company's operations in  different
   geographic areas  as of and for the  years ended June 30, 1999,  1998
   and 1997 is as follows:

                             United
                             States       Europe    Eliminations  Consolidated
                           ----------    ---------   ----------    ----------
 1999
 Net sales to unaffiliated
   customers              $34,707,000   $5,861,000  $       -     $40,568,000
 Transfers between
   geographic areas           726,000          -       (726,000)          -
                           ----------    ---------   ----------    ----------
 Total                    $35,433,000   $5,861,000  $  (726,000)  $40,568,000
                           ==========    =========   ==========    ==========
 Identifiable assets      $21,723,000   $4,285,000  $(2,529,000)  $23,479,000
                           ==========    =========   ==========    ==========
</TABLE>

<PAGE>


  NOTE J - INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION - Continued

<TABLE>

                             United
                             States       Europe    Eliminations  Consolidated
                           ----------    ---------   ----------    ----------
 <S>                      <C>           <C>          <C>          <C>
 1998
 Net sales to unaffiliated
   customers              $37,357,000   $6,098,000   $     -      $43,455,000
 Transfers between
   geographic areas         1,847,000        1,000   (1,848,000)         -
                           ----------    ---------   ----------    ----------
     Total                $39,204,000   $6,099,000  $(1,848,000)  $43,455,000
                           ==========    =========   ==========    ==========
 Identifiable assets      $20,736,000   $4,521,000  $(2,501,000)  $22,756,000
                           ==========    =========   ==========    ==========

                             United
                             States       Europe    Eliminations  Consolidated
                           ----------    ---------   ----------    ----------
 1997
 Net sales to unaffiliated
   customers              $35,553,000   $5,933,000  $       -     $41,486,000
 Transfers between
   geographic areas           889,000        4,000     (893,000)          -
                           ----------    ---------   ----------    ----------
 Total                    $36,442,000   $5,937,000  $  (893,000)  $41,486,000
                           ==========    =========   ==========    ==========
 Identifiable assets      $17,374,000   $3,817,000  $(2,144,000)  $19,047,000
                           ==========    =========   ==========    ==========

</TABLE>

   Transfers   between   the  geographic   areas   primarily   represent
   intercompany export sales and are accounted for based on  established
   sales prices between the related companies.

   Identifiable assets of  geographic areas are those assets related  to
   the Company's operations in each area.  United States assets  consist
   of all other operating assets of the Company.

<PAGE>



   Report of Independent Certified Public Accountants on Schedules



  Board of Directors
  Peerless Mfg. Co.

  In connection with our audit of the consolidated financial  statements
  of Peerless Mfg. Co. and Subsidiaries referred to in our report  dated
  September 10, 1999, which is included in Part II of this form, we have
  also audited Schedule  II for each  of the three  years in the  period
  ended June 30, 1999.  In  our opinion, this schedule presents  fairly,
  in all material  respects, the information  required to  be set  forth
  therein.




  GRANT THORNTON LLP

  Dallas, Texas
  September 10, 1999

<PAGE>
<TABLE>

                              Peerless Mfg. Co. and Subsidiaries
                       SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                           June 30,


                                    Balance at          Additions
                                   beginning of  Charged to    Charged to                          Balance at
     Description                      period      expenses   other accounts (1)   Deductions (2)  end of period
     -----------                      -------     --------   --------------       ----------      -------------
  <S>                                <C>          <C>            <C>               <C>              <C>
  1999

  Allowance for uncollectible
    accounts                         $806,200     $184,471       $   -             $305,341         $685,330
                                      =======      =======        =====             =======          =======
  1998

  Allowance for uncollectible
    accounts                         $312,450     $621,560       $   -             $127,810 (2)     $806,200
                                      =======      =======        =====             =======          =======
  Deferred tax valuation allowance   $ 29,710     $    -         $   -             $ 29,710 (3)     $    -
                                      =======      =======        =====             =======          =======
  1997

  Allowance for uncollectible
    accounts                         $100,000     $249,612       $   -             $ 37,162 (2)     $312,450
                                      =======      =======        =====             =======          =======
  Deferred tax valuation allowance   $160,405     $    -         $   -             $130,695 (3)     $ 29,710
                                      =======      =======        =====             =======          =======


  (1) Collections on accounts previously written off.

  (2) Write offs.

  (3) Utilization and/or revaluation of deferred tax assets.

</TABLE>
<PAGE>

<PAGE>

                               SIGNATURES

       Pursuant to  the  requirements of  Section  13 or  15(d)  of  the
  Securities Exchange Act of 1934, the  registrant has duly caused  this
  report to be signed on its  behalf by the undersigned, thereunto  duly
  authorized.

                                     PEERLESS MFG. CO.
                                     (Registrant)

                                     By: /s/ Sherrill Stone
                                         Sherrill Stone, Chairman,
                                         President, and Chief
                                         Executive Officer

  Date: October 19, 1999


       Pursuant to the  requirements of the  Securities Exchange Act  of
  1934, this report has  been signed below by  the following persons  on
  behalf of  the registrant  and  in the  capacities  and on  the  dates
  indicated.

  Date:

  October 19, 1999                       /s/ Sherrill Stone
                                         Sherrill Stone, Chairman of the
                                         Board, President, Director and
                                         Chief Executive Officer

  October 19, 1999                       /s/ Paul W. Willey
                                         Paul W. Willey,
                                         Principal Financial Officer,

  October 19, 1999                       /s/ Kent J. Van Houten
                                         Kent J. Van Houten,
                                         Principal Accounting Officer

  October 19, 1999                       /s/ Donald A. Sillers, Jr.
                                         Donald A. Sillers, Jr., Director

  October 19, 1999                       /s/ Bernard S. Lee
                                         Bernard S. Lee, Director

  October 19, 1999                       /s/ D. D. Battershell
                                         D. D. Battershell, Director
<PAGE>