1

                                                  Page 1 of 36 Total Pages
                                                  Index to Schedules and
                                                  Exhibits are at Page 15 and 16

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
For the fiscal year ended December 31, 2001

                                       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 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
          Title of each class                 on 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 the 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, as of
February 28, 2002, was $183,155,418.

The number of shares outstanding of each of the registrant's classes of common
stock, as of February 28, 2002, was 6,836,588.

<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 5, 2002           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 two business
            segments. The Housewares/Small Appliance segment manufactures and
            distributes small electrical appliances and housewares, including
            comfort appliances, pressure cookers and canners, and kitchen
            electrics. The Defense Products segment manufactures precision
            mechanical, electromechanical and electronic assembly components for
            the U.S. government and sub-contractors.

            1. HOUSEWARES/SMALL APPLIANCE SEGMENT

            Electrical appliances and housewares sold by the Company include
            pressure cookers and canners; the Presto Control Master(R) heat
            control single thermostatic control line of fry pans in several
            sizes, griddles and combination griddle/warmers and multi-purpose
            cookers; deep fryers of various sizes; pizza ovens, can openers,
            slicer/shredders; electric heaters; corn poppers (hot air and
            microwave); microwave bacon cookers; 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, as well. The Company believes it is one of the principal
            manufacturers of pressure cookers in the United States.

            For the year ended December 31, 2001, approximately 53% of
            consolidated net sales were provided by cast products (fry pans,
            griddles, grills, deep fryers and multi- cookers), approximately 5%
            by motorized nonthermal appliances (can openers, slicer/shredders,
            knife sharpeners, electric knives, and bread slicing systems), and
            approximately 31% by noncast/thermal appliances (stamped cookers and
            canners, stainless steel cookers, pizza ovens, corn poppers [hot air
            and microwave], coffeemakers, microwave bacon cookers, tea kettles,
            and heaters). For the year ended December 31, 2000, approximately
            58% of consolidated net sales were provided by cast products,
            approximately 6% by motorized nonthermal appliances and
            approximately 32% by noncast/thermal appliances. For the year ended
            December 31, 1999, approximately 61% of consolidated net sales were
            provided by cast products, approximately 9% by motorized nonthermal
            appliances and approximately 26% by noncast/thermal appliances.

            For the year ended December 31, 2001, Wal-Mart Stores, Inc.
            accounted for 37% and Costco Companies accounted for 11% of
            consolidated net sales. Wal-Mart Stores, Inc., accounted for 41% and
            Target, Inc. accounted for 11% of consolidated net sales in 2000.
            Wal-Mart Stores, Inc. accounted for 45% and Target, Inc. accounted
            for 12% of consolidated net sales for the year ended December 31,
            1999.

<PAGE>


                                                                               4

            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 (see
            Footnote J in the Notes to Consolidated Financial Statements).

            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 also sell
            other product lines. Sales promotional activities are conducted
            through the use of television, radio and newspaper advertising. 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 electrical 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 2001, 2000 and 1999 were absorbed in operations of
            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 a 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
            purchased a portion (13% in 2001) of its products from nonaffiliated
            companies in the Pacific Rim Countries. The Company plans to
            outsource all of its products by the end of 2002 (see Footnote M in
            the Notes to Consolidated Financial Statements).

            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 back- hauls scheduled on
            return trips carrying goods consigned for internal corporate use.

<PAGE>


                                                                               5

            The Company invests funds not currently required for business
            activities (see Footnote A (3) in the Notes to Consolidated
            Financial Statements). Income from invested funds 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, reacquisition of Company stock, acquisitions and
            newly identified business activities.

            2. DEFENSE PRODUCTS SEGMENT

            The defense products segment (AMTEC Corporation) was acquired on
            February 24, 2001; accordingly, net sales for this segment
            represents approximately ten months of activity. AMTEC manufactures
            precision mechanical, electromechanical and electronic assembly
            components for the U.S. government and sub-contractors. The Company
            believes that AMTEC has significant growth potential, which will
            come from two primary sources, new defense contracts and additional
            acquisitions that can be rolled up into AMTEC's operations.

         B. OTHER COMMENTS

                  1. Sources and Availability of Materials

            See Footnote J in the Notes to the Consolidated Financial
            Statements.

                  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 2001, all remediation projects at the Eau Claire,
            Wisconsin, site had been installed, were fully operational, and
            restoration activities had been completed.

<PAGE>


                                                                               6

            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 and spent for environmental matters. Based on
            factors known as of December 31, 2001, it is believed that the
            Company's existing environmental accrued liability reserve 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 the
            existing accrual could be inadequate.

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

                  4. Number of Employees of the Company

            As of December 31, 2001, the Company had 846 employees.

                  5. Industry Practices Related to Working Capital Requirements

            The major portion of the Company's sales were made with terms of 90
            days or shorter.

            Inventory levels increase in advance of the selling period for
            products that are seasonal, such as pressure canners, heaters, and
            major 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. Buying practices of the Company's
            customers require "just-in-time" delivery, necessitating that the
            Company carry large finished goods inventories. The Company
            purchases components and raw materials in advance of production
            requirements where such purchases are necessary to ensure supply or
            provide advantageous long-term pricing and/or costing.

                  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. PLANT CLOSINGS

            See Footnote M in the Notes to the Consolidated Financial
            Statements.

         D. 2001 ACQUISITIONS

            See Footnote L in the Notes to the Consolidated Financial
            Statements.

<PAGE>


                                                                               7

ITEM 2.  PROPERTIES (Owned Except Where Indicated)

         The Company's Eau Claire facility is approximately 560,000 square feet.
         Presto Absorbent Products, Inc. utilizes 59,000 square feet of this
         area. Leases for 135,000 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 also has manufacturing facilities in Jackson, Mississippi,
         Alamogordo, New Mexico and Janesville, Wisconsin. The Jackson and
         Alamogordo plants are scheduled to be closed as the Company is planning
         to outsource all of its housewares/small appliances by year end (see
         Note M in the Notes to the Consolidated Financial Statements).

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

         The facility at Alamogordo contains 170,700 square feet, of which
         24,800 square feet are used for warehousing. An additional 15,500
         square feet has been leased for warehousing.

         The Janesville facility contains 23,000 square feet and is leased.
         During the year, an additional 17,500 square foot building adjacent to
         the plant was leased for expansion.

         The Company has a 191,900 square foot building at Canton, Mississippi
         which is used primarily for warehousing and distribution and some
         activities for product service functions. An additional 72,200 square
         feet has been leased in adjacent buildings for warehousing. During the
         peak season, an additional 110,000 square feet has been leased.

ITEM 3.  LEGAL PROCEEDINGS

         See Footnote I in the Notes to the Consolidated Financial Statements.

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

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

         None

<PAGE>


                                                                               8

                      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.)

                      NAME                        TITLE                    AGE
               ------------------     ------------------------------     -------

               Melvin S. Cohen        Chairman, Emeritus                    84

               Maryjo Cohen           Chair of the Board, President         49
                                         and Chief Executive Officer

               James F. Bartl         Executive Vice President              61
                                         and Secretary

               Richard F. Anderl      Vice President, Engineering           58

               Neil L. Brown          Vice President, Manufacturing         58

               Larry R. Hoepner       Vice President, Purchasing            60

               Donald E. Hoeschen     Vice President, Sales                 54

               Randy F. Lieble        Chief Financial Officer               48
                                         and Treasurer


         Mr. Cohen became Chairman, Emeritus on January 1, 2002. Prior to that
         date he was Chairman of the Board, a position he was elected to 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 and has been associated with the registrant since 1944.

         Ms. Cohen became Chair of the Board on January 1, 2002. Prior to that
         date she had been 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.

<PAGE>


                                                                               9

         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 and the additional
         position of Chief Financial Officer in November 1999. He has been
         associated with the registrant since 1977. Prior to becoming an
         officer, he was Manager of Investments and Government Contracts.

<PAGE>


                                                                              10

                                     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>
                                   2001                                       2000
                  -------------------------------------    ---------------------------------------
                    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      $  34.30     $  29.60      $   2.10        $  35.81     $  31.00
Second Quarter            --         30.40        26.30            --           35.19        29.56
Third Quarter             --         29.97        25.80            --           31.19        29.63
Fourth Quarter            --         29.10        26.42            --           32.00        29.06
                  -------------------------------------    ---------------------------------------

Full Year           $   2.00      $  34.30     $  25.80      $   2.10        $  35.81     $  29.06
</TABLE>

         Common stock of National Presto Industries, Inc., is traded on the New
York Stock Exchange under the symbol NPK. As of December 31, 2001, there were
681 stockholders of record. There were 678 stockholders of record as of February
28, 2002, the latest practicable date.


ITEM 6.  SELECTED FINANCIAL DATA

(in thousands except per share data)

<TABLE>
<CAPTION>
For the years ended December 31,      2001          2000         1999         1998         1997
                                      ----          ----         ----         ----         ----
<S>                                <C>           <C>          <C>          <C>          <C>
Gross sales                        $ 119,757     $ 119,604    $ 116,405    $ 108,625    $ 111,037

Net earnings                           6,286*       15,158       20,822       19,733       16,982

Net earnings per share                  0.92          2.16         2.84         2.68         2.31

Total assets                         284,900       288,707      299,393      294,762      291,870

Dividends paid per common share
   applicable to current year           2.00          2.10         2.00         2.00         2.00
</TABLE>

   * Note: Net earnings for 2001 includes after tax charges relating to
           plant closings of $4,771,000

<PAGE>


                                                                              11

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

Forward-looking statements in this 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 herein. Investors are cautioned
that all forward-looking statements involve risks and uncertainty. In addition
to the factors discussed herein and in the notes to consolidated financial
statements, 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;
the benefit and risk of business acquisitions; competitive pressure on sales and
pricing; increases in material or production cost which cannot be recouped in
product pricing, and the impact of closing certain U.S. production facilities.
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.

2001 COMPARED TO 2000

Net sales increased by $153,000 from $119,604,000 to $119,757,000 or .1%. This
slight increase was primarily attributable to incremental sales of $6,999,000
associated with the 2001 AMTEC (defense) acquisition, offset by the shipment of
fewer units of housewares/small appliances at reduced prices.

Gross profit for 2001 decreased $10,309,000 from $35,680,000 to $25,371,000 or
30% versus 21% as a percentage of net sales. Gross profit contribution by the
defense segment was $1,767,000 or 25%. The reduction of gross profit percentage
was primarily due to the reduced prices demanded by housewares/small appliance
retailers and the inability to pass on the Company's increased manufacturing
costs for these goods. It is not anticipated that product pricing will increase
- further decreases are possible. The decision to outsource housewares/small
appliances (see Note M) is expected to ultimately decrease manufacturing costs.
However, those decreases are not expected to be realized until at least 2003,
given the need to continue domestic production at reduced rates (and hence
reduced burden absorption) while the new sources tool, manufacture and ship
product. Additional inventory may need to be carried to assure that customer
requirements are met.

Selling and general expenses decreased $6,252,000 largely due to decreased
advertising expenses. This decrease was primarily due to reduced television
advertisement of the Presto Pizzazz(TM) pizza oven which was introduced in 2000.
As a percentage of net sales, selling and general expenses decreased from 22% to
17%. Selling and general expense for defense was $520,000.

The fiscal 2001 fourth quarter includes a $7,653,000 charge related to closing
the Company's manufacturing operations in Jackson, Mississippi and Alamogordo,
New Mexico, and transferring all production of PRESTO brand housewares/small
appliances to manufacturers in the Pacific Rim.

Other income, principally interest, decreased $2,363,000 from $10,328,000 to
$7,965,000. The average daily investment decreased from $209,736,000 to
$197,719,000 primarily as a result of business acquisitions and the purchase of
treasury stock.

<PAGE>


                                                                              12

Earnings before provision for income taxes decreased $13,193,000 from
$19,328,000 to $6,135,000. The provision for income taxes decreased from
$4,170,000 to a benefit of $151,000, which resulted in an effective income tax
rate decrease from 22% to a tax benefit of 3%, as a result of decreased earnings
subject to tax. Net earnings decreased $8,872,000 from $15,158,000 to
$6,286,000, or 59%.


2000 COMPARED TO 1999

Net sales increased by $3,199,000 from $116,405,000 to $119,604,000 or 3%. The
increase was due primarily to the sale of new products offset in part by
decreased unit volume.

Gross profit for 2000 decreased $1,151,000 from $36,831,000 to $35,680,000 or
30% versus 32% as a percentage of net sales. The reduction of gross profit
percentage was largely caused by less favorable manufacturing efficiencies at
the Company's manufacturing facilities.

Selling and general expenses increased $9,613,000 largely due to increased
advertising expenses related to the introduction of the Pizzaz(R) pizza oven. As
a percentage of net sales, selling and general expenses increased from 15% to
22%.

Earnings before provision for income taxes decreased $9,849,000 from $29,177,000
to $19,328,000. The provision for income taxes decreased from $8,355,000 to
$4,170,000, which resulted in an effective income tax rate decrease from 29% to
22%, as a result of decreased earnings subject to tax. Net earnings decreased
$5,664,000 from $20,822,000 to $15,158,000, or 27%.


LIQUIDITY AND CAPITAL RESOURCES

Working capital decreased by $12,803,000 to $207,856,000 at December 31, 2001.
The Company's current ratio was 5.3 to 1.0 at fiscal 2001 year-end, compared to
6.1 to 1.0 at the end of fiscal 2000. The decrease is primarily due to business
acquisitions (see Note L), the repurchase of treasury stock, and the payment of
dividends in excess of current year earnings. In 2000, the Company introduced
its Presto Pizzazz(R) pizza oven. The Company experienced disappointing sales of
this product in 2000 which accounted for lower than normal accounts receivable
and higher than normal finished goods inventory. During 2001, sales of the oven
occurred primarily in the fourth quarter at reduced prices in selected test
markets supported by new television commercials. Given the success of this
program, the Company plans to expand it in 2002. Although advertising
expenditures will increase in 2002 to support the pizza oven program, overall
the program is not expected to have a material impact on the Company's
consolidated financial statements.

The Company expects to continue to evaluate acquisition opportunities that align
with its business segments and will make further acquisitions or capital
investments in these segments if the appropriate return on investment for the
associated risk is projected.

In connection with the plant closing discussed above, the Company expects to
make further investments in tooling and incur other costs to initiate the
outsourced manufacturing of products for the housewares/small appliance segment
during 2002.

The Company has substantial liquidity in the form of cash and marketable
securities to meet all of its anticipated capital requirements, to make dividend
payments, and to fund growth through acquisitions and other means. Further, it
has the ability to fund losses, should they occur, in connection with the
transition to outsourced foreign manufacturing of products for the
housewares/small appliance segment. As of December 31, 2001 there were no
material capital commitments outstanding.

<PAGE>


                                                                              13

ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's interest income on cash equivalents and investments is affected by
changes in interest rates in the United States. The Company's investments are
held primarily in municipal bonds, a majority of which earn a fixed rate of
interest, while the remaining bonds earn a variable interest rate. The Company
uses sensitivity analysis to determine its exposure to changes in interest
rates. Through December 31, 2001, changes in these rates have not had a material
effect on the Company, and the Company does not anticipate that future exposure
to interest rate market risk will be material.

The Company has no history of, and does not anticipate in the future, investing
in derivative financial instruments. Most transactions with international
customers are entered into in U.S. dollars, precluding the need for foreign
currency hedges. Any transactions that are currently entered into in foreign
currency are not deemed material to the financial statements. Thus, the exposure
to foreign exchange market risk is not material.


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-15
            of this report.

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


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

            None

<PAGE>


                                                                              14

                                    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, 2001, 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 by reference from the Proxy.

<PAGE>


                                                                              15

                                     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, 2001
                 and 2000                                            F-1 & F-2

            2. Consolidated Statements of Earnings -
                 Years ended December 31, 2001, 2000 and 1999           F-3

            3. Consolidated Statements of Cash Flows -
                 Years ended December 31, 2001, 2000 and 1999           F-4

            4. Consolidated Statements of Stockholders' Equity -
                 Years ended December 31, 2001, 2000 and 1999           F-5

            5. Notes to Consolidated Financial Statements          F-6 thru F-14

            6. Report of Independent Certified Public Accountants       F-15


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

               Schedule II - Valuation and Qualifying Accounts          F-16

               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 October 3, 1999

               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

<PAGE>


                                                                              16

               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

               Exhibit 11    - Statement Re Computaton of Per Share
                               Earnings                                 F-17

               Exhibit 21    - Parent and Subsidiaries                  F-18

               Exhibit 23.1  - Consent of Grant Thornton LLP            F-19



            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:

            On November 30, 2001 a Form 8-K was filed for Item 9 - Regulation FD
            Disclosure.

<PAGE>


                                                                              17

                                    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
                                            Chief Financial Officer
                                            and Treasurer
                                            (Principal Accounting Officer)



     By:     /S/ Richard N. Cardozo      By:     /S/ Melvin S. Cohen
     --------------------------------    -------------------------------------
        Richard N. Cardozo                  Melvin S. Cohen
        Director                            Director



     By:     /S/ Patrick J. Quinn        By:     /S/ James F. Bartl
     --------------------------------    -------------------------------------
        Patrick J. Quinn                    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                            Chair of the Board, President,
                                            Chief Executive Officer and Director



Date: March 22, 2002
---------------------

<PAGE>


                                                                             F-1

NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except share and per share data)

<TABLE>
<CAPTION>
                                                                          DECEMBER 31, 2001                 DECEMBER 31, 2000
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>           <C>                  <C>          <C>
ASSETS

         CURRENT ASSETS:

                     Cash and cash equivalents                                     $ 83,877                          $ 75,246

                     Marketable securities                                          106,992                           147,583

                     Accounts receivable                             $ 31,674                           $ 10,473

                        Less allowance for doubtful accounts              480        31,194                  450       10,023
                                                                   -----------                        -----------

                     Inventories:

                        Finished goods                                 19,505                             21,056

                        Work in process                                 5,349                              2,416

                        Raw materials                                   8,262                              6,968

                        Supplies                                          881        33,997                  867       31,307
                                                                   -----------                        -----------

                     Prepaid expenses                                                    93                                47
                                                                                 -----------                       -----------

                        Total current assets                                        256,153                           264,206

         PROPERTY, PLANT AND EQUIPMENT:

                     Land and land improvements                           212                                212

                     Buildings                                          8,369                              8,052

                     Machinery and equipment                           10,747                             18,014
                                                                   -----------                        -----------

                                                                       19,328                             26,278

                        Less allowance for depreciation                 7,483        11,845               12,984       13,294
                                                                   -----------                        -----------

         OTHER ASSETS                                                                16,902                            11,207
                                                                                 -----------                       -----------

                                                                                   $284,900                          $288,707
                                                                                 ===========                       ===========
</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, 2001                 DECEMBER 31, 2000
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>           <C>                  <C>          <C>
LIABILITIES
         CURRENT LIABILITIES:

                     Accounts payable                                              $ 18,194                          $ 16,014

                     Federal and state income taxes                                   3,055                             3,108

                     Accrued liabilities                                             27,048                            24,425
                                                                                 -----------                       -----------

                        Total current liabilities                                    48,297                            43,547

         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                                                1,011                              1,027

         Retained earnings                                            246,913                            254,381
                                                                   -----------                        -----------

                                                                      255,365                            262,849

         Treasury stock, at cost, 603,654 shares
                     in 2001 and 562,798 shares in 2000                18,762                             17,689
                                                                   -----------                        -----------

                        Total stockholders' equity                                  236,603                           245,160
                                                                                 -----------                       -----------

                                                                                   $284,900                          $288,707
                                                                                 ===========                       ===========
</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,             2001            2000           1999
-------------------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>            <C>
Net sales                                                    $  119,757      $  119,604     $  116,405

Cost of sales                                                    94,386          83,924         79,574
                                                            -------------------------------------------

Gross profit                                                     25,371          35,680         36,831

Selling and general expenses                                     20,428          26,680         17,067

Plant closing costs                                               6,773              --             --
                                                            -------------------------------------------

Operating profit (loss)                                          (1,830)          9,000         19,764

Other income, principally interest                                7,965          10,328          9,413
                                                            -------------------------------------------

              Earnings before provision for income taxes          6,135          19,328         29,177

Provision (benefit) for income taxes                               (151)          4,170          8,355

                                                            -------------------------------------------
              Net earnings                                   $    6,286      $   15,158     $   20,822
                                                            ===========================================

Weighted average shares outstanding:
              Basic                                               6,856           7,014          7,343
                                                            ===========================================
              Diluted                                             6,857           7,015          7,344
                                                            ===========================================

Net earnings per share:
              Basic                                          $     0.92      $     2.16     $     2.84
                                                            ===========================================
              Diluted                                        $     0.92      $     2.16     $     2.84
                                                            ===========================================
</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,                               2001            2000            1999
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>             <C>             <C>
Cash flows from operating activities:
              Net earnings                                                     $    6,286      $   15,158      $   20,822
              Adjustments to reconcile net earnings to net cash
              provided by (used in) operating activities:
                 Provision for depreciation                                         3,436           2,786           2,296
                 Deferred income taxes                                             (2,343)            198             202
                 Plant closing and asset impairment charges                         7,653              --              --
                 Other                                                                212             209             187
                 Changes in:
                    Accounts receivable                                           (18,887)          9,993          (4,176)
                    Inventories                                                       605         (13,980)         (1,354)
                    Prepaid expenses                                                   67              25             185
                    Accounts payable and accrued liabilities                       (2,619)          2,442           3,856
                    Federal and state income taxes                                    (53)         (2,956)           (152)
                                                                              --------------------------------------------
                       Net cash provided by (used in) operating activities         (5,643)         13,875          21,866
                                                                              --------------------------------------------

Cash flows from investing activities:
              Marketable securities purchased                                     (63,553)        (55,125)        (92,665)
              Marketable securities - maturities and sales                        104,144          57,997          68,876
              Acquisition of property, plant and equipment                         (2,038)         (3,843)         (4,151)
              Acquisition of businesses                                            (3,593)             --              --
              Other                                                                  (388)           (194)           (334)
                                                                              --------------------------------------------
                       Net cash provided by (used in) investing activities         34,572          (1,165)        (28,274)
                                                                              --------------------------------------------

Cash flows from financing activities:
              Dividends paid                                                      (13,754)        (14,995)        (14,719)
              Payment of debt acquired in acquisition                              (5,243)             --              --
              Purchase of treasury stock                                           (1,301)        (10,544)         (5,363)
                                                                              --------------------------------------------
                       Net cash used in financing activities                      (20,298)        (25,539)        (20,082)
                                                                              --------------------------------------------

Net increase (decrease) in cash and cash equivalents                                8,631         (12,829)        (26,490)
Cash and cash equivalents at beginning of year                                     75,246          88,075         114,565
                                                                              --------------------------------------------
Cash and cash equivalents at end of year                                       $   83,877      $   75,246      $   88,075
                                                                              ============================================

Supplemental disclosures of cash flow information:
              Cash paid during the year for:
                 Income taxes                                                  $    2,423      $    6,930      $    8,305
                                                                              ============================================
</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 share and per share data)

<TABLE>
<CAPTION>
           For the years ended December 31, 2001, 2000, 1999
--------------------------------------------------------------------------------------------------------------------------
                                                   Common        Paid-in        Retained        Treasury
                                                   Stock         Capital        Earnings          Stock           Total
                                                   -----         -------        --------          -----           -----
<S>                                             <C>            <C>             <C>             <C>             <C>
Balance January 1, 1999                         $    7,441     $      990      $  248,115      $   (2,141)     $  254,405

Net earnings                                            --             --          20,822              --      $   20,822

Dividends paid, $2.00 per share                         --             --         (14,719)             --      $  (14,719)

Purchase of treasury stock - 155,000 shares             --             --              --          (5,363)     $   (5,363)

Other                                                   --             43              --             144      $      187
                                               ---------------------------------------------------------------------------

Balance December 31, 1999                            7,441          1,033         254,218          (7,360)        255,332

Net earnings                                            --             --          15,158              --          15,158

Dividends paid, $2.10 per share                         --             --         (14,995)             --         (14,995)

Purchase of treasury stock - 338,600 shares             --             --              --         (10,544)        (10,544)

Other                                                   --             (6)             --             215             209

                                               ---------------------------------------------------------------------------
Balance December 31, 2000                            7,441          1,027         254,381         (17,689)        245,160

Net earnings                                            --             --           6,286              --           6,286

Dividends paid, $2.00 per share                         --             --         (13,754)             --         (13,754)

Purchase of treasury stock - 48,200 shares              --             --              --          (1,301)         (1,301)

Other                                                   --            (16)             --             228             212

                                               ---------------------------------------------------------------------------
Balance December 31, 2001                       $    7,441     $    1,011      $  246,913      $  (18,762)     $  236,603
                                               ===========================================================================
</TABLE>

<PAGE>


                                                                             F-6

NATIONAL PRESTO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
     (1)  USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: In
          preparation of the Company's consolidated financial statements in
          conformity with accounting principles generally accepted in the United
          States, management is required to make estimates and assumptions that
          affect the reported amounts of assets and liabilities and related
          revenues and expenses. Actual results could 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 an original
          maturity of one week or less to be cash equivalents. Cash equivalent
          securities totaled $83,632,000 and $75,853,000 at December 31, 2001
          and 2000. The Company's cash equivalents and marketable securities are
          diversely invested, principally in A-rated or higher tax exempt bonds
          issued by governmental 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, 2001 and
          2000, cost approximated market value for all securities using the
          specific identification method. The contractual maturities of the
          marketable securities held at December 31, 2001 were $53,942,000 in
          2002, $18,031,000 in 2003, $7,762,000 in 2004, $25,866,000 beyond 2004
          and $1,391,000 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 which 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 revenue when product is
          shipped. The Company provides for its 60-day over-the-counter return
          privilege and warranties at the time of shipment for housewares/small
          appliance sales. Early payment discounts are deducted in arriving at
          net sales.

     (7)  ADVERTISING: The Company's policy is to expense advertising as
          incurred for the year. Advertising expense was $9,605,000, $15,195,000
          and $6,876,000 in 2001, 2000 and 1999.

     (8)  STOCK OPTIONS: The intrinsic value method is used for valuing stock
          options issued.

     (9)  RECLASSIFICATIONS: Certain reclassifications have been made to the
          2000 and 1999 financial statements to conform with the 2001 financial
          statement presentation. These reclassifications did not effect net
          earnings or stockholders' equity as previously reported.

<PAGE>


                                                                             F-7

B.   INVENTORIES:
     The amount of inventories valued on the LIFO basis was $27,759,000 and
     $30,440,000 as of December 31, 2001 and 2000. Under LIFO, inventories are
     valued at approximately $10,979,000 and $11,244,000 below current cost
     determined on a first-in, first-out (FIFO) basis at December 31, 2001 and
     2000. The Company uses the LIFO method of inventory accounting to improve
     the 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
                 ----         -----         --------       ---------
                 2001       $ 266,000      $ (164,920)      $ (0.02)
                 2000        (368,000)       228,000           0.03
                 1999        (286,000)        177,000          0.02

     This information is provided for comparison with companies using the FIFO
     basis. Inventory for defense and absorbent products are valued under the
     first-in-first-out method and total $5,481,000 at December 31, 2001. This
     total is comprised of $1,030,000 of finished goods, $3,443,000 of work in
     process, and $1,008,000 of raw material and supplies.

C.   ACCRUED LIABILITIES:
     At December 31, 2001 accrued liabilities consisted of payroll $3,143,000,
     insurance $17,230,000, environmental $2,915,000, plant closing costs
     $1,399,000, employee termination $637,000 and other $1,724,000. At December
     31, 2000 accrued liabilities consisted of payroll $2,767,000, insurance
     $15,923,000, environmental $3,320,000 and other $2,415,000.

D.   TREASURY STOCK:
     As of December 31, 2001, the Company has authority from the Board of
     Directors to reacquire an additional 521,000 shares. During 2001 and 2000,
     48,200 and 338,600 shares were reacquired. Treasury shares have been used
     for the exercise of stock options and to fund the Company's 401(k)
     contributions.

E.   NET EARNINGS PER 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
     7,500; 8,750; and 10,000 shares of common stock with a weighted average
     exercise price of $39.39, $39.41 and $39.43 were outstanding at December
     31, 2001, 2000 and 1999, 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.

F.   STOCK OPTION PLAN:
     The National Presto Industries, Inc. Stock Option Plan reserves 100,000
     shares of common stock for key employees. Stock options for 7,500 shares at
     a weighted average price of $39.39 per share were outstanding at December
     31, 2001. Stock options for 8,750 shares at a weighted average price of
     $39.41 per share were outstanding at December 31, 2000. There were 1,250
     shares exercisable at $39.39 at December 31, 2001 and 1,250 shares
     exercisable at $39.41 at December 31, 2000. The pro forma effect of
     accounting for stock options using the fair value method is not material.

<PAGE>


                                                                             F-8

G.   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 (74%) of
     interest bearing securities with the balance in corporate stocks,
     principally National Presto Industries, Inc. common stock.

<TABLE>
<CAPTION>
                                                                       (In Thousands)
                                                                      Pension benefits
                                                            ------------------------------------
                                                               2001         2000         1999
                                                               ----         ----         ----
<S>                                                          <C>          <C>          <C>
                   Net periodic benefit cost                 $    736     $    529     $    713
                                                            ====================================

                   Fair value of plan assets                 $ 10,132     $  8,656
                   Benefit obligation                          10,755        9,683
                                                            -----------------------
                   Funded status                                 (623)      (1,027)
                   Unrecognized actuarial loss                  3,829        2,941
                   Unrecognized prior service cost                743        1,039
                   Unrecognized net transition obligation         (83)        (187)
                                                            -----------------------
                   Prepaid benefit                           $  3,866     $  2,766
                                                            =======================

         WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
              Discount rate                                      7.25%        7.50%
              Expected return on plan assets                     8.00%        8.00%
              Rate of compensation increase                      5.00%        5.00%
</TABLE>

     401(k) PLAN:
     The Company sponsors a 401(k) retirement plan that covers substantially all
     employees. At its discretion, the Company will match up to 50% 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 $212,000 in 2001,
     $209,000 in 2000, and $187,000 in 1999.

<PAGE>


                                                                             F-9
H.   INCOME TAXES:
     The following table summarizes the provision for income taxes:

                                                         (In thousands)
                                                --------------------------------
                                                   2001        2000       1999
                                                   ----        ----       ----
             Current:
                  Federal                        $ 1,790     $ 3,345    $ 6,817
                  State                              402         627      1,336
                                                --------------------------------
                                                   2,192       3,972      8,153
                                                --------------------------------
             Deferred:
                  Federal                         (2,013)        170        169
                  State                             (330)         28         33
                                                --------------------------------
                                                  (2,343)        198        202
                                                --------------------------------
             Total tax provision (benefit)       $  (151)    $ 4,170    $ 8,355
                                                ================================

     The effective rate of the provision (benefit) for income taxes as shown in
     the consolidated statements of earnings differs from the applicable
     statutory federal income tax rate for the following reasons:

                                                    Percent of Pre-tax Income
                                                --------------------------------
                                                  2001        2000        1999
                                                  ----        ----        ----
             Statutory rate                       35.0%       35.0%       35.0%
             State tax                             0.8%        2.2%        3.0%
             Tax exempt interest and dividends   -37.3%      -14.9%       -9.2%
             Other                                -1.0%       -0.7%       -0.2%
                                                --------------------------------
             Effective rate                       -2.5%       21.6%       28.6%
                                                ================================

     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 net deferred tax asset are as follows
     at December 31:

                                                    (In thousands)
                                                ---------------------
                                                  2001         2000
                                                  ----         ----
             Insurance                           $ 6,616     $ 6,114
             Environmental                         1,119       1,275
             Pension                              (1,521)     (1,368)
             Plant Closing                         2,939          --
             Other                                   734       1,474
                                                ---------------------
                                                 $ 9,887     $ 7,495
                                                =====================

I.   COMMITMENTS AND CONTINGENCIES
     The Company has been investigated by the SEC regarding its status under the
     Investment Company Act of 1940. The matter is currently pending before the
     SEC's Commissioners for final determination. In addition, the Company is
     involved in other routine litigation incidental to its business. Management
     believes the ultimate outcome of these matters will not have a material
     affect on the Company's consolidated financial position.

<PAGE>


                                                                            F-10

J.   CONCENTRATIONS:
     For the year ended December 31, 2001, two customers accounted for 37% and
     11% of net sales. Two customers accounted for 41% and 11% of net sales for
     the year ended December 31, 2000. Two customers accounted for 45% and 12%
     of net sales for the year ended December 31, 1999. The preceding
     concentrations related to housewares/small appliance sales.

     As discussed in Note M, the Company has decided to cease manufacturing
     housewares/small appliances in its U.S. plants, close those facilities, and
     purchase products from overseas sources. This decision could have an
     adverse effect on production of the balance of the products scheduled to be
     produced in the U.S. due to possible difficulties with continuity of the
     workforce and material supplies. Similarly, deliveries from overseas
     sources could be disrupted by labor or supply problems at the vendors, or
     transportation delays. As a consequence, products may not be available in
     sufficient quantities during the prime selling period. The company has made
     and will continue to make every reasonable effort to prevent these
     problems; however, there is no assurance that its efforts will be totally
     effective.

K.   RISKS AND UNCERTAINTIES:
     ENVIRONMENTAL:
     As of December 31, 1998, all remediation projects required at the Company's
     Eau Claire, Wisconsin, site had been installed, were fully operational, and
     restoration activities had been completed. Based on factors known as of
     December 31, 2001, it is believed that the Company's existing environmental
     accrued liability reserve, 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 the existing accrual 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.

L.   BUSINESS ACQUISITIONS:
     On February 24, 2001 the Company acquired the outstanding stock of AMTEC
     Corporation, a supplier to the defense industry, for cash. The acquisition
     was accounted for as a purchase with all assets and liabilities recorded at
     fair market value. At the date of the acquisition, total assets were
     approximately $8,500,000. An additional $650,000 of purchase consideration
     is contingently payable to the previous shareholders of AMTEC based on
     meeting certain "Earn-Out Amounts" during each of the two (2) remaining
     Earn-Out Measurement Periods as defined in the Purchase Agreement.

     On November 19, 2001 the Company purchased two state-of-the-art high speed
     diaper machines and assumed other liabilities in the acquisition of the
     existing customer base of RMED International, Inc. The acquisition was
     accounted for as a purchase with no goodwill recognized. At the date of the
     acquisition, total assets were approximately $7,300,000.

<PAGE>


                                                                            F-11

M.   PLANT CLOSING:
     Throughout 2001, the Company continued to experience pricing pressure and
     was unable to achieve adequate selling margins. Consequently, the Company
     determined it would need to lower its product costs in order to remain
     competitive. In November 2001, the Company announced that continued erosion
     of product pricing resulted in its decision to cease manufacturing
     housewares/small appliances in its U.S. plants, close those facilities, and
     purchase products from overseas sources. The Company will close its
     manufacturing facilities in Alamogordo, New Mexico and Jackson, Mississippi
     during the third and fourth quarters of 2002 as the newly sourced products
     are initially received. Accordingly, the Company does not expect to see any
     significant gross margin improvement until at least fiscal 2003. See Note
     J.

     During the fourth quarter of 2001, the Company completed the development of
     its exit plan to outsource the U.S. manufacturing of its housewares/small
     appliances. In connection with the exit plan the Company recorded total
     charges in the fourth quarter in the amount of $7,653,000 or $.70 per
     share, net of tax. The charge includes $5,617,000 for impairment of
     principally machinery and equipment, $880,000 for the write down of
     inventory recorded in cost of sales, $637,000 for involuntary employee
     termination benefits and other exit costs of $519,000. In the first quarter
     of 2002, the Company expects to record an additional charge of
     approximately $4,000,000 related primarily to involuntary termination
     benefits. There may be additional charges later in the year. The
     outsourcing of product may also have an impact on the Company's method of
     accounting for inventory. A study of the possible impact is ongoing.

N.   RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
     On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards (SFAS) 141, "Business
     Combinations", and SFAS 142, "Goodwill and Intangible Assets". SFAS 141 is
     effective for all business combinations completed after June 30, 2001. SFAS
     142 is effective for fiscal years beginning after December 15, 2001.

     SFAS 141 requires all business combinations to be accounted for under the
     purchase method and certain intangible assets acquired in business
     combinations to be recorded separately from goodwill if certain
     requirements are met. The Company does not expect SFAS 141 to effect the
     Company's consolidated financial statements.

     SFAS 142 becomes effective for the Company beginning in January 2002, after
     which goodwill will no longer be amortized and will be tested for
     impairment annually or whenever an impairment indicator arises. The
     statement also requires the Company to complete a transitional goodwill
     impairment test six months from the date of adoption. The Company does not
     expect this statement to have a significant impact on its consolidated
     financial statements, other than the cessation of goodwill amortization.
     The amount of goodwill amortization for the year ended December 31, 2001
     was $210,000, based on an estimated 15 year life. There was no goodwill
     amortization in 2000 or 1999.

     In September 2001, the FASB issued SFAS 144, "Accounting for the Impairment
     or Disposal of Long-Lived Assets". SFAS 144 combines the two accounting
     models for disposals of long-lived assets from SFAS 121 and APB 30. This
     statement is effective for financial statements issued for fiscal years
     beginning after December 15, 2001, and interim periods within those fiscal
     years. The Company recorded an impairment of certain long-lived assets
     associated with its plant closings discussed in Note M, under the provision
     of SFAS 121. The Company has reviewed the provisions of SFAS 144 and does
     not believe the adoption of this standard on January 1, 2002 will have a
     material impact on the Company's consolidated financial statements.

<PAGE>


                                                                            F-12

     The Emerging Issues Task Force ("EITF") reached a consensus on EITF Issue
     No. 00-25, "Vendor Income Statement Characterization of Consideration to a
     Reseller on the Vendor's Products". This Consensus provides guidance on the
     recognition and accounting for vendor consideration such as buydowns, and
     cooperative advertising. The Company does engage in cooperative advertising
     programs and accounts for its cooperative advertising as two separate
     transactions (revenue and advertising expense) as the Company receives an
     identifiable benefit in return for the consideration, and the Company can
     reasonably estimate the fair value of the benefit received. As a result,
     EITF 00-25 which is being adopted by the Company on January 1, 2002 is not
     anticipated to have a material affect on its consolidated financial
     statements.

O.   BUSINESS SEGMENTS:
     Historically the Company has operated in one business segment,
     housewares/small appliances. As described in Note L, the Company completed
     two acquisitions during 2001 with one acquisition achieving the level of a
     reportable segment. The Company identifies its segments based on the
     Company's organization structure, which is primarily by principal products.
     The principal product groups are housewares/small appliances and defense.

     Housewares/small appliances is the Company's main product line which has
     historically manufactured and distributed small electrical appliances and
     housewares. These products are sold directly to retail outlets throughout
     the United States and also through independent distributors. Many of the
     products have been manufactured in Alamogordo, New Mexico and Jackson,
     Mississippi while other products are imported from nonaffiliated companies
     in the Pacific Rim countries. As more fully described in Note M, the
     Company intends to exit U.S. manufacturing and source all housewares/small
     appliance products from foreign sources.

     The defense segment was acquired in February 2001 and manufactures
     precision mechanical, electromechanical and electronic assembly components
     for the U.S. government and sub-contractors. The defense segment
     manufacturing plant is located in Janesville, Wisconsin.

     The absorbent product line was acquired on November 19, 2001. This segment
     manufactures diapers at the Company's facilities in Eau Claire, Wisconsin.
     The products are sold to retail outlets and distributors. This segment
     operated for approximately one month and its minor operating activity and
     assets were included with the housewares/small appliance segment in 2001.

     In the following summary, operating profit represents earnings before other
     income, principally interest income and income taxes.

<PAGE>


                                                                            F-13

     The Company's segments operate discretely from each other with no shared
     manufacturing facilities. Costs associated with corporate activities (such
     as cash and marketable securities management) are included within
     housewares/small appliances for all periods presented.

<TABLE>
<CAPTION>
                                                         (IN THOUSANDS)
                                          --------------------------------------------
                                          HOUSEWARES/
                                             SMALL           DEFENSE
                                           APPLIANCES        PRODUCTS          TOTAL
                                           ----------        --------          -----
<S>                                         <C>              <C>             <C>
     YEAR ENDED DECEMBER 31, 2001
     External net sales                     $ 112,758        $  6,999 (2)    $ 119,757
     Operating profit (loss)                   (3,077)(1)       1,247           (1,830)
     Total assets                             274,713          10,187          284,900
     Depreciation and amortization              3,156             280            3,436
     Capital expenditures                       1,968              70            2,038

     YEAR ENDED DECEMBER 31, 2000
     External net sales                     $ 119,604        $     --       $ 119,604
     Operating profit                           9,000              --           9,000
     Total assets                             288,707              --         288,707
     Depreciation and amortization              2,786              --           2,786
     Capital expenditures                       3,843              --           3,843

     YEAR ENDED DECEMBER 31, 1999
     External net sales                     $ 116,405        $     --       $ 116,405
     Operating profit                          19,764              --          19,764
     Total assets                             299,393              --         299,393
     Depreciation and amortization              2,296              --           2,296
     Capital expenditures                       4,151              --           4,151
</TABLE>

     (1)  The operating loss in housewares/small appliances is after recording a
          charge for plant closing costs of $7,653,000 which is more fully
          described in Note M.

     (2)  The defense product segment was acquired on February 24, 2001.
          Accordingly, external net sales represents approximately ten months of
          activity.

<PAGE>


                                                                            F-14

P.   INTERIM FINANCIAL INFORMATION (UNAUDITED):
     The following represents unaudited financial information for 2001 and 2000:

                                       (In thousands)
                                       --------------
                              Net           Gross          Net        Earnings
            Quarter          Sales          Profit       Earnings     Per Share
                             -----          ------       --------     ---------
         2001
            First          $  20,010      $   2,866     $   1,250     $   0.18
            Second            17,594          3,162         1,379         0.20
            Third             27,081          6,339         2,137         0.31
            Fourth (1)        55,072         13,004         1,520         0.23
                          -----------------------------------------------------
               Total       $ 119,757      $  25,371     $   6,286     $   0.92
                          =====================================================
         2000
            First          $  18,855      $   4,687     $   3,018     $   0.42
            Second            20,734          5,658         2,848         0.40
            Third             31,241         10,041         3,600         0.52
            Fourth            48,774         15,294         5,692         0.82
                          -----------------------------------------------------
               Total       $ 119,604      $  35,680     $  15,158     $   2.16
                          =====================================================

         (1) Includes the effect of the plant closing charge, see Note M.

<PAGE>


                                                                            F-15


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, 2001 and
2000, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
2001. 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 auditing standards
generally accepted in the United States of America. 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, 2001 and
2000, and the consolidated results of their operations and their consolidated
cash flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.

              We have also audited Schedule II for each of the three years in
the period ended December 31, 2001. In our opinion, this schedule, when
considered in relation to the basic financial statements taken as a whole,
represents fairly, in all material respects, the information therein.


/S/ Grant Thornton LLP
Minneapolis, Minnesota
February 15, 2002

<PAGE>


                                                                            F-16

                NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

              For the Years Ended December 31, 2001, 2000 and 1999


<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
               -----------                  ---------      -------------    --------------    ---------
<S>                                         <C>              <C>              <C>             <C>
Deducted from assets:
   Allowance for doubtful accounts:

      Year ended December 31, 2001          $     450        $     226        $     196       $     480
                                           =============================================================

      Year ended December 31, 2000          $     450        $     (41)       $     (41)      $     450
                                           =============================================================

      Year ended December 31, 1999          $     450        $    (283)       $    (283)      $     450
                                           =============================================================
</TABLE>




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

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