1

                                                  Page 1 of 31 Total Pages      
                                                  Index to Schedules and
                                                  Exhibits are at Page 12 and 13

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-K

                     ANNUAL REPORT PURSUANT TO SECTION 13 OR
                  15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998        COMMISSION FILE NUMBER 1-2451

                        NATIONAL PRESTO INDUSTRIES, INC.
                        --------------------------------
             (Exact name of registrant as specified in its charter)

                    WISCONSIN                        39-0494170
                    --------------------------------------------
         (State or other jurisdiction of             (IRS Employer
          incorporation or organization)         Identification Number)

                             3925 NORTH HASTINGS WAY
                             -----------------------
                EAU CLAIRE, WISCONSIN                  54703-3703
                -------------------------------------------------
             (Address of principal executive offices)  (Zip Code)
             ----------------------------------------------------

       Registrant's telephone number, including area code: (715) 839-2121

           Securities registered pursuant to Section 12(b) of the Act:

                                              Name of each exchange on
          Title of each class                     which registered
          --------------------------------------------------------
       $1.00 par value common stock            New York Stock Exchange

          Securities registered pursuant to Section 12 (g) of the Act:

                                      NONE
                                      ----


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 (229.405 of this chapter) 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 the Form 10-K. _X_

The aggregate market value of the voting stock held by non-affiliates of the
registrant computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of February 26, 1999, was
$265,774,219.

The number of shares outstanding of each of the registrant's classes of common
stock, as of February 26, 1999, was 7,359,478.

<PAGE>


                                                                               2


                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference into that part of this
Form 10-K designated to the right of the document title.

                       TITLE                                  PART
                       -----                                  ----
        Proxy Statement dated April 2, 1999                 Part III

Except as specifically incorporated herein by reference, the foregoing Proxy
Statement is not deemed filed as part of this report.

<PAGE>


                                                                               3


                                     PART I

ITEM 1. BUSINESS

      A. DESCRIPTION OF BUSINESS

         The business of National Presto Industries, Inc., and its consolidated
         subsidiaries (the "Company") consists of a single business category.
         The Company manufactures and distributes small electrical appliances
         and housewares, including comfort appliances, pressure cookers and
         canners, private label and premium sales products.

         Electrical appliances and housewares sold by the Company include
         pressure cookers and canners; the Presto(R) Control Master(R) single
         thermostatic control line of fry pans in several sizes, griddles and
         combination griddle/warmers and multi-purpose cookers; deep fryers of
         various sizes; can openers, slicer/shredders, slicer/shredder/mixers;
         electric heaters; corn poppers (hot air and microwave); microwave bacon
         cookers; electronic toasters; coffeemakers; electric grills; electric
         tea kettles; electric knives; bread slicing systems; electric knife
         sharpeners; and timers.

         Pressure cookers and canners are available in various sizes and are
         fabricated of aluminum and, in the case of cookers, of stainless steel.
         The Company believes it is one of the principal manufacturers of
         pressure cookers in the United States.

         For the year ended December 31, 1998, approximately 59% of consolidated
         net sales were provided by cast products (fry pans, griddles, deep
         fryers and electric multi-cookers), approximately 13% by motorized
         nonthermal appliances (can openers, slicer/shredders, knife sharpeners,
         electric knives, and bread slicing systems), and approximately 25% by
         noncast/thermal appliances (stamped cookers and canners, stainless
         steel cookers, electronic toasters, corn poppers (hot air and
         microwave), coffeemakers, microwave bacon cookers, tea kettles, and
         heaters). For the year ended December 31, 1997, approximately 56% of
         consolidated net sales were provided by cast products, approximately
         15% by motorized nonthermal appliances and approximately 25% by
         noncast/thermal appliances. For the year ended December 31, 1996,
         approximately 52% of consolidated net sales were provided by cast
         products, approximately 15% by motorized nonthermal appliances and
         approximately 28% by noncast/thermal appliances.

         Wal-Mart Stores, Inc., accounted for 44%, 43% and 38% of consolidated
         net sales for the years ended December 31, 1998, 1997 and 1996.

         Products are sold directly to retailers throughout the United States
         and also through independent distributors. Although the Company has
         long established relationships with many of its customers, it does not
         have long-term supply contracts with them. The loss of, or material
         reduction in, business from any of the Company's major customers could
         adversely affect the Company's business.

<PAGE>


                                                                               4


         The Company has a sales force of approximately ten employees that sell
         to and service customers. In selected geographic areas sales are
         handled by manufacturers' representatives who may handle other product
         lines. Sales promotional activities include television, radio and
         newspaper. The Company's business is highly competitive and seasonal,
         with the normal peak sales period occurring in the fourth quarter of
         the year prior to the holiday season. Many companies compete for sales
         of housewares and small appliances, some of which are larger than the
         Company and others which are smaller. Product competition extends to
         special product features, product pricing, marketing programs, warranty
         provisions, service policies and other factors. New product
         introductions are an important part of the Company's sales to offset
         the morbidity rate of other products and/or the effect of lowered
         acceptance of seasonal products due to weather conditions. New products
         entail unusual risks. Engineering and tooling costs are increasingly
         expensive, as are components and finished goods that may not have a
         ready market or achieve widespread consumer acceptance. High-cost
         advertising commitments accompanying such new products or to maintain
         sales of existing products may not be fully absorbed by ultimate
         product sales. Initial production schedules, set in advance of
         introduction, carry the possibility of excess unsold inventories. New
         product introductions are further subject to delivery delays from
         supply sources, which can impact availability for the Company's most
         active selling periods.

         Research and development costs related to new product development for
         the years 1998, 1997 and 1996 were absorbed in operations for these
         years and were not a material element in the aggregate costs incurred
         by the Company.

         Company products are generally warranted to the original owner to be
         free from defects in material and workmanship for a period of two years
         from date of purchase. The Company allows a sixty-day over-the-counter
         initial return privilege through cooperating dealers. The Company
         services its products through independent service providers throughout
         the United States and the corporate service repair operation. The
         Company's service and warranty programs are competitive with those
         offered by other manufacturers in the industry.

         The Company's products are manufactured in plants located at Jackson,
         Mississippi and Alamogordo, New Mexico. The Company also purchases a
         portion (14% in 1998) of its products from nonaffiliated companies in
         the Pacific Rim countries.

         The Company warehouses and distributes its products from a distribution
         center located in Canton, Mississippi. Selective use is made of leased
         tractors and trailers with backhauls scheduled on return trips carrying
         goods consigned for internal corporate use.

         The Company invests funds not currently required for business
         activities. (See Footnote B (3) in the Notes to Consolidated Financial
         Statements.) Income from financial management activities is included in
         Other Income in the accompanying financial statements.

         Earnings from investments may vary significantly from year to year
         depending on interest yields on instruments meeting the Company's
         investment criteria, and the extent to which funds may be needed for
         internal growth and newly identified business activities.

<PAGE>


                                                                               5


      B. OTHER COMMENTS

         1. SOURCES AND AVAILABILITY OF MATERIALS

         Production levels at the Company's manufacturing plants may be affected
         by vendor failure to deliver tooling, material and critical parts
         within commitments. While recent years have witnessed virtual
         elimination of these circumstances, there is no assurance against
         recurrence.

         Deliveries of new products, many of which have been sourced overseas,
         could be delayed by labor or supply problems at vendors or in
         transportation. As a consequence, these products may not be available
         in sufficient quantities during the prime selling period. While there
         has been no major incidence of such problems in recent years and the
         Company has made every reasonable effort to prevent occurrence, there
         is no assurance that such effort will be totally effective.

         2. TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS HELD

         In recent years, patents on new products have become more meaningful to
         operating results. Trademarks and know-how are considered significant.
         The Company's current and future success depends upon judicial
         protection of its intellectual property rights ( patents, trademarks
         and trade dress). Removal of that protection would expose the Company
         to competitors who seek to take advantage of the Company's innovations
         and proprietary rights. To date, the Company has vigorously protected
         its rights and enjoyed success in all its intellectual property suits.

         3. EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL AND OSHA REGULATIONS

         In May 1986, the Company's Eau Claire, Wisconsin, site was placed on
         the United States Environmental Protection Agency's (EPA) National
         Priorities List (NPL) under the Comprehensive Environmental Response,
         Compensation and Liability Act of 1980 (CERCLA) because of alleged
         hazardous waste deposited on the property. During July 1986, the
         Company entered into an agreement with the EPA and the Wisconsin
         Department of Natural Resources to conduct a remedial investigation and
         feasibility study at the site. The remedial investigation was completed
         in 1992, the feasibility study in 1994, and in May 1996 the final
         record of decision (ROD) was issued for the site by the EPA. At year
         end, all remaining remediation projects at the Eau Claire, Wisconsin
         site had been installed, were fully operational, and restoration
         activities had been completed.

         In February 1988, the Company entered into an agreement with the
         Department of the Army (the 1988 Agreement), pursuant to which the Army
         agreed to fund environmental restoration activities related to the
         site. As a result of the 1988 Agreement, a total of $27,000,000 has
         been appropriated for environmental matters. Based on factors known as
         of December 31, 1998, it is believed that the funds appropriated by the
         government will be adequate to satisfy on-going remediation operations
         and monitoring activities; however, should environmental agencies
         require additional studies or remediation projects, it is possible that
         existing funds could be inadequate.

         Management believes that in the absence of any unforeseen future
         developments, known environmental matters will not have any material
         affect on the results of operations or financial condition of the
         Company.

         4. NUMBER OF EMPLOYEES OF THE COMPANY

         As of December 31, 1998, the Company had 628 employees.

<PAGE>


                                                                               6


         5. INDUSTRY PRACTICES RELATED TO WORKING CAPITAL REQUIREMENTS

         The major portion of the Company's commercial sales were made with
         terms of 90 days or shorter. A small portion of the sales were made
         with seasonal dating provisions.

         Inventory levels increase in advance of the selling period for products
         that are seasonal, such as pressure canners, heaters, and in
         preparation for new product introductions. Inventory build-up also
         occurs to create stock levels required to support the higher sales that
         occur in the latter half of each year. With the buying practices of the
         Company's customers continuing towards "just-in-time" practices, the
         Company is required to carry larger finished goods inventories than
         previously maintained. The Company purchases components and raw
         materials in advance of production requirements where such purchases
         are required to ensure supply or provide advantageous long-term
         pricing.

         6. BACKLOG

         Shipment of most of the Company's products occurs within a relatively
         short time after receipt of the order and, therefore, there is usually
         no substantial order backlog. New product introductions may result in
         order backlogs that vary from product to product and as to timing of
         introduction.

      C. INDUSTRY SEGMENTS

         The Company operates in one business segment.

ITEM 2.  PROPERTIES (OWNED EXCEPT WHERE INDICATED)

         The Company's Eau Claire facility is approximately 560,000 square feet,
         of which 428,000 square feet was dedicated to ordnance activities prior
         to September 1993. Leases for 151,000 square feet of this area have
         been entered into with outside tenants. The Company's corporate office
         is also located in Eau Claire.

         The Company manufactures products in Jackson, Mississippi and
         Alamogordo, New Mexico.

         The Jackson plant contains 283,000 square feet, of which 119,600 square
         feet are used for warehousing.

         The facility at Alamogordo contains 163,200 square feet, of which
         24,800 square feet are used for warehousing. An additional 15,500
         square feet has been leased for warehousing.

         The Company has a 162,400 square foot building at Canton, Mississippi
         which is used primarily for warehousing and distribution and some
         activities for product service functions. An additional 72,000 square
         feet has been leased in adjacent buildings for storage area. During
         peak season, an additional 20,000 square feet has been leased.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is subject to various legal actions incidental to its
         normal business operations. In the opinion of management such actions
         will be resolved for amounts that in the aggregate will not be material
         to the results of operations or financial condition of the Company.

         See Item 1.B.3. for information regarding certain environmental
matters.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None

<PAGE>


                                                                               7


                      EXECUTIVE OFFICERS OF THE REGISTRANT

The following information is provided with regard to the executive officers of
the registrant: (All terms of office are for one year or until their respective
successors are duly elected and qualified.)


                       NAME                    TITLE                      AGE
                  -----------------------------------------------------------
                  Melvin S. Cohen        Chairman of the Board             81

                  Maryjo Cohen           President and Chief Executive     46
                                         Officer

                  James F. Bartl         Executive Vice President          58
                                         and Secretary

                  Richard F. Anderl      Vice-President, Engineering       55

                  Neil L. Brown          Vice President, Manufacturing     55

                  Larry R. Hoepner       Vice President, Purchasing        57

                  Donald E. Hoeschen     Vice-President, Sales             51

                  Randy F. Lieble        Treasurer                         45


         Mr. Cohen was elected Chairman of the Board in May 1975. Prior to that
         date he was President, a position that he again held from November 1986
         to May 1989. Mr. Cohen is the father of Maryjo Cohen.

         Ms. Cohen was elected Treasurer in September 1983, to the additional
         positions of Vice-President in May 1986, President in May 1989 and
         Chief Executive Officer in May 1994. She has been associated with the
         registrant since 1976. Prior to becoming an officer, she was Associate
         Resident Counsel and Assistant to the Treasurer. Ms. Cohen is the
         Daughter of Melvin S. Cohen.

         Mr. Bartl was elected Secretary in May 1978 and the additional position
         of Executive Vice President in November 1998. He has been associated
         with the registrant since 1969. Prior to becoming an officer, he was
         Resident Counsel and Director of Industrial Relations, positions he
         continues to hold.

         Mr. Anderl was elected Vice-President in May 1989. He has been
         associated with the registrant since 1963 and prior to becoming an
         officer, he was Director of Engineering.

         Mr. Brown was elected Vice-President in November 1997. He has been
         associated with the registrant since 1966. Prior to becoming an
         officer, he was Director of Manufacturing.

         Mr. Hoepner was elected Vice-President in November 1998. He has been
         associated with the registrant since 1966. Prior to becoming an
         officer, he was Director of Purchasing.

         Mr. Hoeschen was elected Vice President in May 1997. He has been
         associated with the registrant since 1971. Prior to becoming an
         officer, he was Director of Sales.

         Mr. Lieble was elected Treasurer in November 1995. He has been
         associated with the registrant since 1977. Prior to becoming an
         officer, he was Manager of Investments and Government Contracts.

<PAGE>


                                                                               8


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED 
         STOCKHOLDER MATTERS

            RECORD OF DIVIDENDS PAID AND MARKET PRICE OF COMMON STOCK

<TABLE>
<CAPTION>
                                 1998                                        1997
                    ------------------------------------------------------------------------------
                     Applicable         Market Price             Applicable         Market Price
                    Dividends Paid  ---------------------     Dividends Paid    ---------------------
                      per Share       High         Low           per Share        High         Low
                    -------------------------------------     ---------------------------------------
<S>                    <C>          <C>          <C>               <C>          <C>          <C>     
First Quarter          $2.00        $43.5000     $38.7500          $2.00        $40.5000     $35.8750
Second Quarter            -          43.3125      37.7500             -          40.3750      35.8750
Third Quarter             -          41.6250      36.1250             -          43.0000      36.7500
Fourth Quarter            -          43.3125      36.0625             -          44.1875      36.5000
                    -------------------------------------     ---------------------------------------

Full Year              $2.00        $43.5000     $36.0625          $2.00        $44.1875     $35.8750

</TABLE>

         Common stock of National Presto Industries, Inc., is traded on the New
York Stock Exchange under the symbol NPK. As of December 31, 1998, there were
868 stockholders of record. There were 866 stockholders of record as of February
26, 1999, the latest practicable date.


ITEM 6.  SELECTED FINANCIAL DATA

(In thousands except per share data)

<TABLE>
<CAPTION>

For the years ended December 31,      1998       1997         1996        1995       1994
                                      ----       ----         ----        ----       ----
<S>                                <C>         <C>         <C>         <C>         <C>     
Net sales                          $107,073    $109,540    $106,008    $120,172    $128,070

Net earnings                         19,733      16,982      14,720      18,969      21,455

Net earnings per share                 2.68        2.31        2.00        2.61        2.92

Total assets                        294,762     291,870     285,385     284,927     291,036

Long-term debt                           --          --          --          --       5,103

Dividends paid per common share
   Applicable to current year          2.00        2.00        2.00        2.15        1.90
</TABLE>

<PAGE>


                                                                               9

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND   
         RESULTS OF OPERATION

1998 COMPARED TO 1997

Net sales decreased by $2,467,000 from $109,540,000 to $107,073,000 or 2%.

Gross margins for 1998 increased $679,000 from $35,541,000 to $36,220,000 or 34%
versus 32% as a percentage of sales in 1998 and 1997. This increase was
primarily the result of increased operating efficiencies and cost savings.

Selling and general expenses decreased $5,436,000 largely due to reduced
advertising expense. As a percentage of net sales, selling and general expenses
decreased from 21% to 17%.

Earnings before provision for income taxes increased $5,406,000 from $21,990,000
to $27,396,000. The provision for income taxes increased from $5,008,000 to
$7,663,000, which resulted in an effective income tax rate increase from 23% to
28%, as a result of increased earnings subject to tax. Net earnings increased
$2,751,000 from $16,982,000 to $19,733,000, or 16%.

The Company maintains adequate liquidity for all of its anticipated capital
requirements and dividend payments. As of year-end 1998, there were no material
capital commitments outstanding.

Forward-looking statements in this Annual Report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. There
are certain important factors that could cause results to differ materially from
those anticipated by some of the statements made above. Investors are cautioned
that all forward-looking statements involve risks and uncertainty. In addition
to the factors discussed above, among the other factors that could cause actual
results to differ materially are the following: consumer spending and debt
levels; interest rates; continuity of relationships with and purchases by major
customers; product mix; competitive pressure on sales and pricing, and increases
in material or production cost which cannot be recouped in product pricing.
Additional information concerning those and other factors is contained in the
Company's Securities and Exchange Commission filings, including but not limited
to the Form 10-K, copies of which are available from the Company without charge.

1997 COMPARED TO 1996

Net sales increased by $3,532,000 from $106,008,000 to $109,540,000 due to
increased unit volume primarily as a result of new product introductions.

Gross margins for 1997 increased $1,886,000 from $33,621,000 to $35,507,000 due
to the volume increase. As a percentage of sales, gross margins were 32% in both
years.

Selling and general expenses were relatively unchanged.

Other income, principally interest, increased from the 1996 level primarily as a
result of a higher rate of return on a higher level of invested funds in the
Company's portfolio of short-term marketable securities.

<PAGE>


                                                                              10


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND   
         RESULTS OF OPERATION (CONTINUED)

Both years were favorably impacted by litigation judgments/settlements of a
nonrecurring nature.

Earnings before provision for income taxes increased $2,816,000 from $19,174,000
to $21,990,000. The provision for income taxes increased from $4,454,000 to
$5,008,000 as a result of increased earnings subject to tax. The effective
income tax rate was 23% in both years. Net earnings increased $2,262,000 from
$14,720,000 to $16,982,000, or 15%.


YEAR 2000

The year 2000 (Y2K) issue is the result of computer programs using a two-digit
format to indicate the year in any date. Computer systems with such software
will be unable to interpret dates beyond the year 1999, thus causing computer
errors which could lead to disruptions in operations. In 1997 the Company began
the work necessary to address its Y2K exposure and focused primarily on two
areas:

INTERNAL SYSTEMS: During 1997, the Company began upgrading or replacing its
affected programs or systems to become Y2K compliant, and expects this effort to
be completed by March 31, 1999. Additionally, the Company is in the process of
conducting full scale year 2000 et seq. simulations of mission critical systems
to verify the efficacy of the upgrades and replacements. Those simulations
should be completed by September 30, 1999. The conversion costs have been
expensed as incurred, and are not considered material. At this time, the Company
believes it is unnecessary to adopt a contingency plan.

EXTERNAL (SUPPLIER) SYSTEMS: The Company has contacted suppliers of products and
services to assess whether the suppliers are Y2K compliant or to monitor their
progress toward Y2K compliance. The vast majority of the Company's key suppliers
have responded that they either are or will be Y2K compliant prior to the year
2000. However, there can be no absolute assurance that suppliers and others will
timely resolve their own Y2K compliance issues. Additionally, a small number of
the Company's suppliers have provided inadequate responses as to their Y2K
readiness, and as a result, the Company is implementing a contingency plan to
address potential interruption of supplied products or services. The contingency
plan includes use of alternate suppliers and/or stockpiling of certain supplied
items. Costs-to-date for the external compliance program have also been
immaterial.


ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's interest income is affected by changes in the general level of
U.S. interest rates. Changes in U.S. interest rates could affect the interest
earned on the Company's cash equivalents and investments. Currently, changes in
U.S. interest rates would not have a material affect on the interest earned on
the Company's cash equivalents and investments. A majority of these cash
equivalents and investments earn a fixed rate of interest while the remaining
portion earn interest at a variable rate. The Company uses sensitivity analysis
to determine its exposure to changes in interest rates. The Company does not
anticipate that exposure to interest rate market risk will have a material
impact on the Company due to the nature of the Company's investments.

<PAGE>


                                                                              11


ITEM 8 . FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         A.       The consolidated financial statements of National Presto
                  Industries, Inc. and its subsidiaries and the related Report
                  of Independent Certified Public Accountants are contained on
                  pages F-1 through F-12 of this report.

         B.       Quarterly financial data is contained in Note L in Notes to
                  Consolidated Financial Statements.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         A listing of the Executive Officers of the Registrant is included in
         Part I. See Note following Item 13 for information relating to
         Directors of the Company.

ITEM 11. EXECUTIVE COMPENSATION

         See Note following Item 13.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         See Note following Item 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         See Note following.

NOTE: Within 120 days after the close of the registrant's fiscal year ended
December 31, 1998, the registrant intends to file a definitive proxy statement
pursuant to regulation 14A. Pursuant to the Rules and Regulations of the
Securities Exchange Act of 1934, the information required for Items 10, 11, 12
and 13 has been omitted and is incorporated herein from the Proxy by reference.

<PAGE>


                                                                              12


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         A.    The following consolidated financial statements of National
               Presto Industries, Inc., and its subsidiaries and the related
               Report of Independent Certified Public Accountants are included
               in this report:

                                                                    Form 10-K
                                                                  Page Reference
                                                                  --------------

         1.    Consolidated Balance Sheets - December 31, 
                 1998 and 1997                                      F-1 & F-2

         2.    Consolidated Statements of Earnings - 
                 Years ended December 31, 1998, 1997 and 1996          F-3

         3.    Consolidated Statements of Cash Flows -
                 Years ended December 31, 1998, 1997 and 1996          F-4

         4.    Consolidated Statements of Stockholders' Equity -
                 Years ended December 31, 1998, 1997 and 1996          F-5

         5.    Notes to Consolidated Financial Statements          F-6 thru F-11

         6.    Report of Independent Certified Public Accountants      F-12


         B.    The following Schedules and Exhibits are included
               in this report:

         Schedule II - Valuation and Qualifying Accounts              F-13

         Exhibit 3 (i) - Restated Articles of Incorporation -
                           incorporated by reference from Exhibit 3 (i) of the
                           Company's quarterly report on Form 10-Q for the
                           quarter ended July 6, 1997

                  (ii) - By-Laws - incorporated by reference from
                           Exhibit 3 (ii) of the Company's quarterly report on
                           Form 10-Q for the quarter ended July 6, 1997

         Exhibit 9 -     Voting Trust Agreement - incorporated by reference
                           from Exhibit 9 of the Company's quarterly report on
                           Form 10-Q for the quarter ended July 6, 1997

         Exhibit 10.1 -  1988 Stock Option Plan - incorporated by reference
                           from Exhibit 10.1 of the Company's quarterly report
                           on Form 10-Q for the quarter ended July 6, 1997

         Exhibit 10.2 - Form of Incentive Stock Option Agreement under the
                           1988 Stock Option Plan - Incorporated by reference
                           from Exhibit 10.2 of the Company's quarterly report
                           on Form 10-Q for the quarter ended July 6, 1997

<PAGE>


                                                                              13


         Exhibit 11 - Statement Re Computation of Per Share 
                         Earnings                                     F-14

         Exhibit 21 - Parent and Subsidiaries                         F-15

         Exhibit 23.1 - Consent of Grant Thornton LLP                 F-16

         Exhibit 27 - Financial Data Schedule                         F-17

         All other Schedules and Exhibits for which provision is made in the
         applicable accounting regulations of the Securities and Exchange
         Commission are not required under the related instructions or are
         inapplicable, and therefore have been omitted. Columns omitted from
         schedules filed have been omitted because the information is not
         applicable.


         C.    Reports on Form 8-K:

               No reports on Form 8-K were filed during the last quarter of the
               period covered by this Form 10-K.

<PAGE>


                                                                              14


                                    SIGNATURE


Pursuant to the Requirements of Section 13 or 14 (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.


                        NATIONAL PRESTO INDUSTRIES, INC.
                        --------------------------------
                                  (registrant)




                                    By: /S/ Randy F. Lieble
                                            ---------------
                                            Randy F. Lieble
                                            Treasurer
                                            (Principal Accounting Officer)


  By: /S/ Richard N. Cardozo        By: /S/ Melvin S. Cohen
          ------------------                ---------------
          Richard N. Cardozo                Melvin S. Cohen
          Director                          Chairman of the Board


  By: /S/ John M. Sirianni          By: /S/ James F. Bartl
          ------------------                --------------
          John M. Sirianni                  James F. Bartl
          Director                          Executive Vice President,
                                            Secretary and Director


  By: /S/ Michael J. O'Meara        By: /S/ Maryjo Cohen
          ------------------                ---------------
          Michael J. O'Meara                Maryjo Cohen
          Director                          President and Chief Executive
                                            Officer and Director



Date: March 24, 1999

<PAGE>


                                                                             F-1


NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                    DECEMBER 31, 1998              DECEMBER 31, 1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>      <C>                    <C>       <C>
ASSETS

        CURRENT ASSETS:

                    Cash and cash equivalents                               $114,565                         $ 91,639

                    Marketable securities                                    126,666                          140,651

                    Accounts receivable                            $ 16,290                        $ 20,692

                       Less allowance for doubtful accounts             450   15,840                    450    20,242
                                                                   --------                        --------

                    Inventories:

                       Finished goods                                 7,407                           9,058

                       Work in process                                1,822                           1,675

                       Raw materials                                  5,860                           6,900

                       Supplies                                         884   15,973                  1,000    18,633
                                                                   --------                        --------

                    Prepaid expenses                                             257                              918
                                                                            --------                         --------
                       Total current assets                                  273,301                          272,083

        PROPERTY, PLANT AND EQUIPMENT:

                    Land and land improvements                          172                             172

                    Buildings                                         6,791                           6,796

                    Machinery and equipment                          15,012                          13,040
                                                                   --------                        --------

                                                                     21,975                          20,008

                       Less allowance for depreciation               11,411   10,564                 11,002     9,006
                                                                   --------                        --------

        OTHER ASSETS                                                          10,897                           10,781
                                                                            --------                         --------

                                                                            $294,762                         $291,870
                                                                            ========                         ========
</TABLE>


The accompanying notes are an integral part of the financial statements.

<PAGE>


                                                                             F-2


NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                         DECEMBER 31, 1998                DECEMBER 31, 1997
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>      <C>                     <C>      <C>
LIABILITIES
              CURRENT LIABILITIES:

                          Accounts payable                                        $ 11,447                         $ 15,958

                          Federal and state income taxes                             6,216                            4,923

                          Accrued liabilities                                       22,694                           21,791
                                                                                  --------                         --------
                             Total current liabilities                              40,357                           42,672

              COMMITMENTS AND CONTINGENCIES                                             --                               --


STOCKHOLDERS' EQUITY

              Common stock, $1 par value:
                          Authorized: 12,000,000 shares
                          Issued: 7,440,518 shares                       $  7,441                        $  7,441

              Paid-in capital                                                 990                             925

              Retained earnings                                           248,115                         243,092
                                                                         --------                        --------
                                                                          256,546                         251,458

              Treasury stock, at cost, 81,040 shares
                          in 1998 and 85,537 shares in 1997                 2,141                           2,260
                                                                         --------                        --------
                             Total stockholders' equity                            254,405                          249,198
                                                                                  --------                         --------
                                                                                  $294,762                         $291,870
                                                                                  ========                         ========
</TABLE>


The accompanying notes are an integral part of the financial statements.

<PAGE>


                                                                             F-3


NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except per share data)

<TABLE>
<CAPTION>
              For the years ended December 31,                1998        1997         1996
---------------------------------------------------------------------------------------------
<S>                                                        <C>         <C>          <C>      
Gross sales                                                $ 108,861   $ 111,423    $ 107,878

              Less freight, discounts, etc                     1,788       1,883        1,870
                                                          -----------------------------------

Net sales                                                    107,073     109,540      106,008

Cost of sales                                                 70,853      73,999       72,387
                                                          -----------------------------------

Gross profit                                                  36,220      35,541       33,621

Selling and general expenses                                  17,901      23,337       23,263
                                                          -----------------------------------

Operating profit                                              18,319      12,204       10,358

Other income, principally interest                             9,077       9,244        8,341

Other, principally litigation judgments                          -           550          476

Interest expense                                                 -            (8)          (1)
                                                          -----------------------------------

              Earnings before provision for income taxes      27,396      21,990       19,174

Provision for income taxes                                     7,663       5,008        4,454

                                                          -----------------------------------
                 Net earnings                              $  19,733   $  16,982    $  14,720
                                                          ===================================

Weighted average shares outstanding:
              Basic                                            7,357       7,354        7,352
                                                          ===================================
              Diluted                                          7,358       7,355        7,353
                                                          ===================================

Net earnings per share:
              Basic                                        $    2.68   $    2.31    $    2.00
                                                          ===================================
              Diluted                                      $    2.68   $    2.31    $    2.00
                                                          ===================================
</TABLE>


The accompanying notes are an integral part of the financial statements.

<PAGE>


                                                                             F-4


NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)

<TABLE>
<CAPTION>
                          For the years ended December 31,               1998          1997          1996
------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>            <C>            <C>       
Cash flows from operating activities:
              Net earnings                                          $   19,733     $   16,982     $   14,720
              Adjustments to reconcile net earnings to net cash
              provided by operating activities:
                 Provision for depreciation                              2,098          2,051          1,967
                 Deferred income taxes                                     (42)        (1,143)        (1,772)
                 Stock compensation expense                                184             72             85
                 Changes in:
                    Accounts receivable                                  4,402          1,584         16,290
                    Inventories                                          2,660           (813)         7,785
                    Prepaid expenses                                       661            (30)           865
                    Accounts payable and accrued liabilities            (3,608)         4,100            687
                    Federal and state income taxes                       1,293             36           (337)
                                                                   -----------------------------------------
                       Net cash provided by operating activities        27,381         22,839         40,290
                                                                   -----------------------------------------

Cash flows from investing activities:
              Marketable securities purchased                          (51,471)      (183,921)      (117,868)
              Marketable securities - maturities and sales              65,456        179,429         94,292
              Acquisition of property, plant and equipment              (3,656)        (4,021)        (2,003)
              Changes in other assets                                      (74)           140            421
                                                                   -----------------------------------------
                       Net cash used in investing activities            10,255         (8,373)       (25,158)
                                                                   -----------------------------------------

Cash flows from financing activities:
              Dividends paid                                           (14,710)       (14,705)       (14,702)

Net increase (decrease) in cash and cash equivalents                    22,926           (239)           430
Cash and cash equivalents at beginning of year                          91,639         91,878         91,448
                                                                   -----------------------------------------
Cash and cash equivalents at end of year                            $  114,565     $   91,639     $   91,878
                                                                   =========================================

Supplemental disclosures of cash flow information:
              Cash paid during the year for:
                 Interest                                           $       --     $        8     $        1
                                                                   =========================================
                 Income taxes                                       $    5,914     $    6,103     $    6,565
                                                                   =========================================
</TABLE>


The accompanying notes are an integral part of the financial statements.


<PAGE>


                                                                             F-5


NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands except per share data)

<TABLE>
<CAPTION>
           For the years ended December 31, 1998, 1997, 1996
-------------------------------------------------------------------------------------------------------

                                     Common        Paid-in      Retained       Treasury
                                     Stock         Capital      Earnings         Stock          Total
                                   ----------    ----------    ----------     ----------     ----------
<S>                                <C>           <C>           <C>            <C>            <C>       
Balance January 1, 1996            $    7,441    $      848    $  240,797     $   (2,345)    $  246,741

Net earnings                               --            --        14,720             --         14,720

Dividends paid, $2.00 per share            --            --       (14,702)            --        (14,702)

Other                                      --            55             0             35             90
                                  ---------------------------------------------------------------------

Balance December 31, 1996               7,441           903       240,815         (2,310)       246,849

Net earnings                               --            --        16,982             --         16,982

Dividends paid, $2.00 per share            --            --       (14,705)            --        (14,705)

Other                                      --            22            --             50             72
                                  ---------------------------------------------------------------------

Balance December 31, 1997               7,441           925       243,092         (2,260)       249,198

Net earnings                               --            --        19,733             --         19,733

Dividends paid, $2.00 per share            --            --       (14,710)            --        (14,710)

Other                                      --            65            --            119            184
                                  ---------------------------------------------------------------------

Balance December 31, 1998          $    7,441    $      990    $  248,115     $   (2,141)    $  254,405
                                  =====================================================================
</TABLE>


The accompanying notes are an integral part of the financial statements.

<PAGE>


                                                                             F-6


NATIONAL PRESTO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.   NATURE OF OPERATIONS:
     The Company manufactures and distributes small electrical appliances and
     housewares. Products are sold directly to retail outlets throughout the
     United States and also through independent distributors. These products are
     manufactured in plants located at Jackson, Mississippi; Alamogordo, New
     Mexico; and a portion of its products are imported from nonaffiliated
     companies in the Pacific Rim countries.

B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
     (1)  USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:
          In preparation of the Company's consolidated financial statements,
          management is required to make estimates and assumptions that affect
          the reported amounts of assets and liabilities and related revenues
          and expenses. Actual results may differ from the estimates used by
          management.

     (2)  PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
          include the accounts of National Presto Industries, Inc. and its
          subsidiaries, all of which are wholly-owned. All material intercompany
          accounts and transactions are eliminated.

     (3)  CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES: The Company
          considers all highly liquid marketable securities with a maturity of
          one week or less to be cash equivalents. Cash equivalent securities
          totaled $114,345,000 and $92,418,000 at December 31, 1998 and 1997.
          The Company's cash equivalents and marketable securities are diversely
          invested, principally in A-rated or higher tax exempt bonds issued by
          entities throughout the United States.

          The Company has classified all cash equivalents and marketable
          securities as available for sale, which requires the securities to be
          reported at fair value, with unrealized gains and losses reported as a
          separate component of stockholders' equity. At December 31, 1998 and
          1997, cost approximated market value for all securities using the
          specific identification method. The contractual maturities of the
          marketable securities held at December 31, 1998 were $49,236,000 in
          1999, $49,041,000 in 2000, $23,961,000 in 2001, $1,116,000 in 2002,
          $1,871,000 in 2003 and $1,441,000 with indeterminate maturities.

     (4)  INVENTORIES: Inventories are stated at the lower of cost or market
          with cost being determined principally on the last-in, first-out
          (LIFO) method.

     (5)  PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are
          stated at cost. For machinery and equipment, all amounts that are
          fully depreciated have been eliminated from both the asset and
          allowance accounts. Depreciation is provided in amounts sufficient to
          relate the costs of depreciable assets to operations over their
          service lives, which are estimated at fifteen to forty years for
          buildings and three to seven years for machinery and equipment.

     (6)  REVENUE RECOGNITION: The Company recognizes revenues when product is
          shipped. The Company provides for its 60-day over-the-counter return
          privilege and warranties at the time of shipment.

<PAGE>


                                                                             F-7


     (7)  ADVERTISING: The Company's policy is to expense advertising as
          incurred for the year. Advertising expense was $6,856,000, $12,998,000
          and $11,956,000 in 1998, 1997 and 1996.

     (8)  STOCK OPTIONS: The intrinsic value method is used for valuing stock
          options issued, which means compensation expense is recognized for
          options issued to employees when the option price is less than the
          market price of the stock on the date the option is issued.

C.   INVENTORIES:
     The amount of inventories valued on the LIFO basis is $15,089,000 and
     $17,633,000 as of December 31, 1998 and 1997. Under LIFO, inventories are
     valued at approximately $10,590,000 and $11,943,000 below current cost
     determined on a first-in, first-out (FIFO) basis at December 31, 1998 and
     1997. The Company uses the LIFO method of inventory accounting to improve
     matching of costs and revenues.

     The following table describes that which would have occurred if LIFO
     inventories had been valued at current cost determined on a FIFO basis:

                                          Increase (Decrease)
                                          -------------------
                                 Cost of            Net          Earnings
                   Year           Sales          Earnings       Per Share
                   ----           -----          --------       ---------
                   1998        $ 1,353,000      $(838,000)      $ (0.11)
                   1997         (1,345,000)       834,000          0.11
                   1996            926,000       (574,000)        (0.08)

     This information is provided for comparison with companies using the FIFO
     basis.

D.   ACCRUED LIABILITIES:
     At December 31, 1998 accrued liabilities consisted of payroll $2,467,000,
     insurance $13,304,000, environmental $3,646,000 and other $3,277,000. At
     December 31, 1997 accrued liabilities consisted of payroll $2,291,000,
     insurance $12,285,000, environmental $3,641,000 and other $3,574,000.

E.   TREASURY STOCK:
     The Board of Directors has authorized corporate reacquisition of up to
     750,000 common shares of the Company stock. No shares were reacquired in
     1998, 1997, or 1996. Treasury shares have been used for the exercise of
     stock options and to fund the Company's 401(K) contributions (see note H).

F.   NET EARNINGS PER COMMON SHARE:
     Basic net earnings per share amounts have been computed by dividing net
     earnings by the weighted average number of outstanding common shares.
     Diluted net earnings per share is computed by dividing net earnings by the
     weighted average number of outstanding common shares and common share
     equivalents relating to stock options, when dilutive. Options to purchase
     11,500; 7,500; and 3,000 shares of common stock with a weighted average
     exercise price of $39.45, $39.54 and $41.28 were outstanding at December
     31, 1998, 1997 and 1996, but were excluded from the computation of common
     share equivalents because their exercise prices were greater than the
     average market price of the common shares.

<PAGE>


                                                                             F-8


G.   STOCK OPTION PLAN:
     The National Presto Industries, Inc. Stock Option Plan reserves 100,000
     shares of common stock for key employees. Stock options for 11,500 shares
     at a weighted average price of $39.45 per share were outstanding at
     December 31, 1998. Stock options for 7,500 shares at a weighted average
     price of $39.54 per share were outstanding at December 31, 1997. There were
     1500 shares exercisable at $39.45 at December 31, 1998 and 1000 shares
     exercisable at $39.54 at December 31, 1997. The pro forma effect of
     accounting for stock options using the fair value method is immaterial.

H.   RETIREMENT PLANS:
     PENSION PLANS:
     The Company has pension plans which cover the majority of employees.
     Pension benefits are based on an employee's years of service and
     compensation near the end of those years of service. The Company's funding
     policy has been to contribute such amounts as necessary, computed on an
     actuarial basis, to provide the plans with assets sufficient to meet the
     benefits to be paid to plan members. Plan assets consist primarily (66%) of
     interest bearing securities with the balance in corporate stocks,
     principally National Presto Industries, Inc. common stock.

<TABLE>
<CAPTION>
                                                                              (In thousands)
                                                                             Pension Benefits
                                                               -------------------------------------------
                                                                    1998           1997            1996
                                                               -------------------------------------------
<S>                                                             <C>             <C>             <C>       
         NET PERIODIC COST:
              Service cost                                      $      290      $      264      $      276
              Interest cost                                            603             564             623
              Expected return on assets                               (616)           (604)           (711)
              Amortization of transition amount                       (211)           (210)           (244)
              Amortization of prior service cost                       228             227             218
              Actuarial loss                                            98              28              70
              Settlement charge                                         --              --              21
                                                               -------------------------------------------
                   Net periodic benefit cost                    $      392      $      269      $      253
                                                               ===========================================

         CHANGE IN BENEFIT OBLIGATION:
              Benefit obligation at beginning of year           $    8,333      $    7,338
              Service cost                                             290             264
              Interest cost                                            603             564
              Special termination benefits                              18              35
              Actuarial loss                                           481             634
              Benefits and expenses paid                              (515)           (502)
                                                               ------------------------------
                   Benefit obligation at end of year                 9,210           8,333
                                                               ------------------------------

         CHANGE IN PLAN ASSETS:
              Fair value of plan assets at beginning of year         7,527           7,664
              Employer contributions                                   438              --
              Actual return on plan assets                             504             365
              Benefits and expenses paid                              (515)           (502)
                                                               ------------------------------
                   Fair value of plan assets at end of year          7,954           7,527
                                                               ------------------------------
</TABLE>

<PAGE>


                                                                             F-9

<TABLE>
<CAPTION>
                                                                    1998            1997
                                                                    ----            ----
         RECONCILIATION OF FUNDED STATUS:
<S>                                                             <C>             <C>        
              Funded status                                     $   (1,256)     $     (806)
              Unrecognized actuarial loss                            2,490           1,994
              Unrecognized prior service cost                        1,494           1,722
              Unrecognized net transition obligation                  (395)           (606)
                                                               ------------------------------
                   Prepaid benefit cost                         $    2,333      $    2,304
                                                               ==============================
</TABLE>

<TABLE>
<CAPTION>
         WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
<S>                                                                 <C>             <C>  
              Discount rate                                         6.75%           7.00%
              Expected return on plan assets                        8.00%           8.00%
              Rate of compensation increase                         4.63%           4.50%
</TABLE>

     401(k) PLAN:
     The 401(k) retirement plan covers substantially all employees. At its
     discretion, the Company will match up to 50% (25% prior to 1998) of the
     first 4% contributed by employees to the plan. The matching contribution
     can be made with either cash or common stock. Contributions made from the
     treasury stock, including the Company's cash dividends, totaled $184,000 in
     1998, $72,000 in 1997, and $85,000 in 1996.

I.   INCOME TAXES:
     The following table summarizes the provision for income taxes:

<TABLE>
<CAPTION>
                    (Dollars in thousands)               1998            1997           1996
                                                         ----            ----           ----
<S>                                                    <C>              <C>            <C>   
                    Current:                       
                         Federal                       $ 6,355         $ 5,201        $ 5,306
                         State                           1,350             950            920
                                                      ----------------------------------------
                                                         7,705           6,151          6,226
                                                      ----------------------------------------
                    Deferred:                      
                         Federal                           (39)           (979)        (1,620)
                         State                              (3)           (164)          (152)
                                                      ----------------------------------------
                                                           (42)         (1,143)        (1,772)
                                                      ----------------------------------------
                    Total tax provision                $ 7,663         $ 5,008        $ 4,454
                                                      ========================================
</TABLE>                                      

     The effective rate of the provision for income taxes as shown in the
     Consolidated Statements of Earnings differs from the applicable statutory
     federal income tax rate for the following reasons:

<TABLE>
<CAPTION>
                                                               Percent of Pre-tax Income
                                                               -------------------------
                                                          1998           1997           1996
                                                          ----           ----           ----
<S>                                                       <C>            <C>            <C>  
                    Statutory rate                        35.0%          35.0%          35.0%
                    State tax                              3.2%           2.3%           2.6%
                    Tax exempt interest and dividends    -10.8%         -13.8%         -14.1%
                    Other                                  0.6%          -0.7%          -0.3%
                                                        --------------------------------------
                    Effective rate                        28.0%          22.8%          23.2%
                                                        ======================================
</TABLE>

<PAGE>


                                                                            F-10


     Deferred tax assets and liabilities are recorded based on the differences
     between the tax basis of assets and liabilities and their carrying amounts
     for financial reporting purposes. The tax effects of the cumulative
     temporary differences resulting in a deferred tax asset are as follows at
     December 31:

                                                  (In thousands)
                                                  --------------
                                               1998            1997
                                               ----            ----
                    Insurance                $ 5,109         $ 4,717
                    Environmental              1,373           1,360
                    Pension                   (1,095)         (1,067)
                    Other                      2,508           2,843
                                            -------------------------
                                             $ 7,895         $ 7,853
                                            =========================

J.   CONCENTRATIONS:
     One customer accounts for 44%, 43% and 38% of net sales for the years ended
     December 31, 1998, 1997 and 1996.

     Production levels at commercial plants may be affected by vendor failure to
     deliver tooling, material, and critical parts within commitments. While
     recent years have witnessed virtual elimination of these circumstances,
     there is no assurance against recurrence. Deliveries of new products, some
     of which have been sourced overseas, could be delayed by labor or supply
     problems at the vendors or in transportation. As a consequence, these
     products may not be available in sufficient quantities during the prime
     selling period. While there has been no major incidence of such problems
     and the Company has made every reasonable effort to prevent occurrence,
     there is no assurance that such effort will be totally effective.

K.   RISKS AND UNCERTAINTIES:
     ENVIRONMENTAL:
     At year end, all remaining remediation projects at the Eau Claire,
     Wisconsin site had been installed, were fully operational, and restoration
     activities had been completed. Based on factors known as of December 31,
     1998, it is believed that funds previously appropriated by the government
     will be adequate to satisfy on-going remediation operations and monitoring
     activities; however, should environmental agencies require additional
     studies or remediation projects, it is possible that existing funds could
     be inadequate. Management believes that in the absence of any unforeseen
     future developments, known environmental matters will not have any material
     affect on the results of operations or financial condition of the Company.

     YEAR 2000:
     The Year 2000 (Y2K) issue relates to limitations in computer systems and
     applications that may prevent proper recognition of the year 2000. The
     potential effect of the Year 2000 issue on the Company and its business
     partners will not be fully determinable until the year 2000 and thereafter.
     If Year 2000 modifications are not properly completed either by the Company
     or entities with whom the Company conducts business, the Company's revenues
     and financial condition could be adversely impacted.

<PAGE>


                                                                            F-11


L.   INTERIM FINANCIAL INFORMATION (UNAUDITED):

     The following represents unaudited financial information for 1998, 1997,
     and 1996:

                                     (In thousands)
                                     --------------
                            Net           Gross        Net         Earnings
          Quarter          Sales         Profit      Earnings      Per Share
                           -----         ------      --------      ---------

         1998
            First       $   18,965    $    4,922    $    2,810    $     0.38
            Second          16,294         4,710         2,760          0.38
            Third           24,306         8,181         3,735          0.50
            Fourth          47,508        18,407        10,428          1.42
                       -----------------------------------------------------
               Total    $  107,073    $   36,220    $   19,733    $     2.68
                       =====================================================
         1997
            First       $   17,947    $    3,931    $    2,579    $     0.35
            Second          16,870         4,932         2,640          0.36
            Third           24,917         8,271         3,503          0.48
            Fourth          49,806        18,407         8,260          1.12
                       -----------------------------------------------------
               Total    $  109,540    $   35,541    $   16,982    $     2.31
                       =====================================================
         1996
            First       $   17,109    $    3,637    $    1,930    $     0.26
            Second          16,970         4,338         2,236          0.31
            Third           23,001         6,936         2,821          0.38
            Fourth          48,928        18,710         7,733          1.05
                       -----------------------------------------------------
               Total    $  106,008    $   33,621    $   14,720    $     2.00
                       =====================================================


     The Company's operations are in one industry segment.

<PAGE>


                                                                            F-12


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Stockholders and Board of Directors
National Presto Industries, Inc.

         We have audited the accompanying consolidated balance sheets of
National Presto Industries, Inc. and subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1998. 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 that 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
National Presto Industries, Inc. and subsidiaries as of December 31, 1998 and
1997, and the consolidated results of their operations and their consolidated
cash flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.

         We have also audited Schedule II of National Presto Industries, Inc.
and subsidiaries for each of the three years in the period ended December 31,
1998. In our opinion, this schedule presents fairly, in all material respects,
the information required to be set forth therein.


/S/ Grant Thornton LLP
Minneapolis, Minnesota
February 19, 1999

<PAGE>


                                                                            F-13


               NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

              For the Years Ended December 31, 1998, 1997 and 1996


<TABLE>
<CAPTION>
                                                                (In thousands)
                                                                --------------
              Column A                         Column B     Column C        Column D        Column E
                                              Balance at                                   Balance at
                                              Beginning                                       End
            Description                       of Period   Additions(A)    Deductions(B)    of Period
            -----------                       ---------   ------------    -------------    ---------

Deducted from assets:
   Allowance for doubtful accounts:

<S>                                        <C>            <C>             <C>             <C>        
      Year ended December 31, 1998         $       450    $     1,536     $     1,536     $       450
                                          ===========================================================

      Year ended December 31, 1997         $       450    $       148     $       148     $       450
                                          ===========================================================

      Year ended December 31, 1996         $       450    $       (46)    $       (46)    $       450
                                          ===========================================================
</TABLE>



Notes:
   (A)  Amounts charged (credited) to selling and general expenses

   (B)  Principally bad debts written off, net of recoveries