---

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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

---

FORM 10Q

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(MARK ONE)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period
ended October 2, 2005o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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 incorporation or organization)

(I.R.S. Employer Identification No.)


3925 NORTH HASTINGS WAYEAU CLAIRE, WISCONSIN

54703-3703(Address of principal executive offices)

(Zip Code)


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

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 o

Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o

Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

There were 6,827,420 shares of the Issuers Common
Stock outstanding as of the close of the period covered by this report.

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PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS



NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSOctober
2, 2005 and December 31, 2004(Unaudited)(Dollars in thousands)

2005

 2004ASSETSCURRENT ASSETS:Cash and cash equivalents







$
80,652






$
104,724Marketable securities








66,239







76,096Accounts receivable, net








29,039







33,561Inventories:Finished goods



$
40,663






$
17,632Work in process




8,139







8,798Raw materials




6,915



55,717



7,697



34,127Other current assets








9,348







8,991Total current assets








240,995







257,499PROPERTY, PLANT AND EQUIPMENT




63,559







54,752Less allowance for depreciation




16,641



46,918



13,527



41,225OTHER ASSETS








7,104







7,104$
295,017






$
305,828


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

Page 3

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NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSOctober
2, 2005 and December 31, 2004(Unaudited)(Dollars in thousands)

2005

 2004LIABILITIESCURRENT LIABILITIES:Accounts payable







$
17,063






$
18,439Federal and state income taxes








2,426







5,804Accrued liabilities








24,203







24,484Total current liabilities








43,692







48,727DEFERRED INCOME TAXES








1,626







1,626COMMITMENTS AND CONTINGENCIES
















STOCKHOLDERS EQUITYCommon stock, $1 par value:Authorized: 12,000,000 sharesIssued: 7,440,518 shares



$
7,441






$
7,441Paid-in capital




1,115







1,050Retained earnings




260,084







265,970Accumulated other comprehensive income (loss)




28







93268,668







274,554Treasury stock, at cost




18,969







19,079Total stockholders equity








249,699







255,475$
295,017






$
305,828


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

Page 4

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NATIONAL PRESTO INDUSTRIES, INC.CONSOLIDATED STATEMENTS OF EARNINGSThree
Months and Nine Months Ended October 2, 2005 and October 3, 2004(Unaudited)(In thousands except per share data)

Three Months Ended


Nine Months Ended2005


2004


2005


2004Net sales



$
39,545


$
38,798


$
109,573


$
89,502Cost of sales




32,484



28,925



92,441



70,844Gross profit




7,061



9,873



17,132



18,658Selling and general expenses




4,350



4,469



13,427



11,634Pension plan termination expense








3,509







3,509Operating profit




2,711



1,895



3,705



3,515Other income, principally interest




1,014



882



3,359



2,992Earnings before provision for income taxes




3,725



2,777



7,064



6,507Income tax provision




1,068



788



1,557



1,630Net earnings



$
2,657


$
1,989


$
5,507


$
4,877Weighted average shares outstanding:Basic




6,826



6,822



6,825



6,820Diluted




6,828



6,823



6,827



6,821Net earnings per share:Basic



$
0.39


$
0.29


$
0.81


$
0.72Diluted



$
0.39


$
0.29


$
0.81


$
0.71Cash dividends declared and paid per common share



$



$



$
1.67


$
1.17


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

Page 5

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NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWSNine Months Ended October 2, 2005 and October 3, 2004(Unaudited)(Dollars in thousands)

2005

 2004Cash flows from operating activities:Net earnings



$
5,507


$
4,877Adjustments to reconcile net earnings to net cash provided by operating activities:Provision for depreciation




3,117



2,766Deferred Taxes








1,484Pension Charges








3,636Other




248



185Changes in:Accounts receivable




4,522



3,029Inventories




(21,590
)


(23,365
)Other current assets




(322
)


(160
)Accounts payable and accrued liabilities




(1,657
)


(10,256
)Federal and state income taxes




(3,378
)


(2,752
)Net cash used in operating activities




(13,553
)


(20,556
)Cash flows from investing activities:Marketable securities purchased




(30,670
)


(33,432
)Marketable securities - maturities and sales




40,427



31,420Acquisition of property, plant and equipment




(8,819
)


(19,463
)Acquisition of business








(150
)Sale of property, plant and equipment




9



Net cash provided by (used in) investing activities




947



(21,625
)Cash flows from financing activities:Dividends paid




(11,393
)


(7,977
)Purchase of treasury stock




(73
)


(15
)Net cash used in financing activities




(11,466
)


(7,992
)Net decrease in cash and cash equivalents




(24,072
)


(50,173
)Cash and cash equivalents at beginning of period




104,724



143,765Cash and cash equivalents at end of period



$
80,652


$
93,592


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

Page 6

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NATIONAL PRESTO INDUSTRIES, INC., AND SUBSIDIARIESNOTES TO
CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

NOTE A  EARNINGS PER SHARE

The Companys basic net earnings per share amounts
have been computed by dividing net earnings by the weighted average number of outstanding common shares. The Companys
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.

NOTE B  BUSINESS SEGMENTS

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

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.

(in thousands)Housewares/SmallAppliances


DefenseProducts


AbsorbentProducts


TotalQuarter ended October 2, 2005External net sales



$
22,666


$
8,709


$
8,170


$
39,545Gross profit (loss)




6,005



2,224



(1,168
)


7,061Operating profit (loss)




2,756



1,345



(1,390
)


2,711Total assets




221,764



24,775



48,478



295,017Depreciation




236



77



707



1,020Capital expenditures




197



387



3,009



3,593Quarter ended October 3, 2004External net sales



$
25,115


$
6,368


$
7,315


$
38,798Gross profit




7,726



2,014



133



9,873Operating profit




353



1,471



71



1,895Total assets




251,361



15,503



20,247



287,111Depreciation




584



56



447



1,087Capital expenditures




914



696



4,514



6,124


Page 7

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(in thousands)Housewares/SmallAppliances


DefenseProducts


AbsorbentProducts


TotalNine Months ended October 2, 2005External net sales



$
58,022


$
25,559


$
25,992


$
109,573Gross profit (loss)




13,250



6,142



(2,260
)


17,132Operating profit (loss)




3,069



3,527



(2,891
)


3,705Total assets




221,764



24,775



48,478



295,017Depreciation




809



220



2,088



3,117Capital expenditures




526



887



7,406



8,819Nine Months ended October 3, 2004External net sales



$
57,726


$
11,561


$
20,215


$
89,502Gross profit




14,476



2,936



1,246



18,658Operating profit




1,003



1,444



1,068



3,515Total assets




251,361



15,503



20,247



287,111Depreciation




1,232



156



1,378



2,766Capital expenditures




3,416



1,296



14,751



19,463


NOTE C  PRODUCT WARRANTY

Company housewares/small appliance products are generally
warranted to the original owner to be free from defects in material and workmanship for a period of 1 to 12 years from date
of purchase. The Company allows a 60-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 determines its product warranty liability based on historical percentages which have remained relatively consistent
over the years.

The following table shows the changes in product warranty
liability for the period:

(in thousands)2005

 2004Beginning balance January 1



$
1,698


$
2,115Accruals during the period




1,694



2,067Charges / payments made under the warranties




(1,584)



(1,758)Balance end of period



$
1,808


$
2,424


NOTE D  PENSION PLAN

During the third quarter of 2003, the Company announced
its decision to terminate its defined benefit pension plan and provide enhancements to its 401(k) plan. As a result, the plan
was amended effective December 31, 2003, to freeze benefit accruals. The amendment eliminated the accrual of future defined
benefits for all employees. A $3,528,000 settlement charge was recorded in the last half of 2004 when final distributions from
the plan were made or annuities purchased in exchange for participants rights to receive benefits under the plan.

Page 8

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Components of net periodic pension cost for the three
and nine months ended October 2, 2005 and October 3, 2004 are as follows:

(in thousands)Three Months

 Nine Months2005



2004



2005



2004Service cost



$



$
12


$



$
36Interest cost








128







384Expected return on assets








(123
)






(369
)Net loss amortization








25







75$



$
42


$



$
126


Weighted-average assumptions usedto determine benefit obligationfor the years ended December 31:2005



2004Discount rate




N/A



6.00%Expected return on plan assets




N/A



6.50%


NOTE E  PLANT CLOSING

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 most products from the Orient. This transition from U.S. plant production to the Orient
was completed during late 2002. The Company closed its manufacturing facilities in Alamogordo, New Mexico, during the third
quarter of 2002 and donated the facility to the Otero County Economic Development Council during the fourth quarter of 2004.
The Company effectively closed its Jackson, Mississippi, plant during the fourth quarter of 2002 and has modified this plant
to serve as a warehousing and shipping facility.

The following table summarizes the plant closing accrual
activities for the periods presented:

(in thousands)EmployeeTerminationBenefits

 OtherExitCosts

 TotalBalance January 1, 2005



$
470


$
60


$
530Charges in 2005




(67
)


(60
)


(127
)Balance October 2, 2005



$
403


$



$
403Balance January 1, 2004



$
836


$
685


$
1,521Charges in 2004




(360
)


(389
)


(749
)Balance October 3, 2004



$
476


$
296


$
772


The remaining employee termination benefits are for
health care costs for workers who accepted early retirement at the time of the plant closing and will be extinguished over
approximately the next three years.

The total outsourcing of all Company housewares/small
appliance product manufacturing resulted in the creation of a new LIFO inventory category for the outsourced products. During
the three and nine months ended October 3, 2004, the Company recognized a $69,000 and $398,000 (or $.01 and $.06 per share),
net of tax, respectively, partial liquidation of the Manufactured LIFO Reserve. The remaining Manufactured LIFO Reserve of
$45,000 was liquidated during the last quarter of 2004.

Page 9

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NOTE F  COMMITMENTS AND CONTINGENCIES

On July 16, 2002, the Securities and Exchange Commission
filed a lawsuit against National Presto Industries, Inc. alleging the company operated as an unregistered investment company.
The case does not involve fraud, deceptive practices or accounting methods, and the Company plans to vigorously defend itself.
The Company and the SEC filed cross motions for summary judgment. On October 31, 2005, the U.S. District Court for the Northern
District of Illinois granted the SECs pretrial motion for summary judgment, concluding that the Company was an inadvertent
investment company under the 1940 Investment Act. The Company intends to appeal the ruling. If the appeal is unsuccessful,
the Company may have to reallocate invested assets which will result in reduced yields, or it might be required to register
as an investment company. In the latter situation, it would be prohibited from engaging in business in interstate commerce
until registration occurred. The obligations upon registration are many and could include: 1) possible imposition of significant
additional reporting requirements (a burden which would not be imposed upon its competitors); 2) potential regard in the market
as a closed end mutual fund which could result in a trading price sharply discounted from net asset value; 3) possible limitations
on the use of capital and earnings which could inhibit or terminate commercial business growth. Management is unable to make
a meaningful estimate of the overall impact on the Companys operations, if any, that would result from an unfavorable
final determination of this matter.

In addition, the Company is involved in other routine
litigation incidental to its business. Management believes the ultimate outcome of this litigation will not have a material
affect on the Companys consolidated financial position, liquidity, or results of operations.

NOTE G  ACCUMULATED OTHER COMPREHENSIVE INCOME

The $28,000 of accumulated comprehensive income at
October 2, 2005 reflects the unrealized loss, net of tax, of available-for-sale marketable security investments. Total comprehensive
income was $2,764,000 and $4,120,000 for the three month periods ended October 2, 2005 and October 3, 2004, respectively, and
$5,689,000 and $6,533,000 for the nine months ended October 2, 2005 and October 3, 2004, respectively.

NOTE H  ADOPTION OF NEW ACCOUNTING STANDARDS

In November 2004, the FASB issued SFAS 151, Inventory
Costs. The provisions of this statement become effective for the Company in fiscal 2006. SFAS 151 amends the existing guidance
on the recognition of inventory costs to clarify the accounting for abnormal amounts of idle expense, freight, handling costs,
and wasted material (spoilage). Existing rules indicate that under some circumstances, items such as idle facility expense,
excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges.
SFAS 151 requires that those items be recognized as current period charges regardless of whether they meet the criterion of
so abnormal. In addition, SFAS 151 requires that allocation of fixed production overheads to the costs of conversion be based
on the normal capacity of the production facilities. The Companys existing policies with regard to inventory accounting
are consistent with the provisions of SFAS 151 and the adoption of this Statement is not expected to have a material impact
on the valuation of inventory or operating results.

In December 2004, the FASB issued SFAS 123R, Share-Based
Payment. This revised standard addresses the accounting for share-based payment transactions in which a company receives employee
services in exchange for either equity instruments of the company or that are based on the fair value of the companys
equity instruments or that may be settled by the issuance of such equity instruments. Under the new standard, companies will
no longer be able to account for share-based compensation transactions using the intrinsic method in accordance with APB 25.
Instead, companies will be required to account for such transactions using a fair-value method and recognize the expense in
the consolidated statement of income. SFAS 123R will be effective for annual periods beginning after June 15, 2005. The Company
will adopt this standard January 1, 2006 and it is not expected to have a material impact on our operating results.

Page 10

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In December 2004, the FASB issued SFAS 153, Exchanges
of Nonmonetary Assets. This statement addresses the fair value concepts contained in Opinion 29, Accounting for Nonmonetary
Transactions which included certain exceptions to the concept that exchanges of similar productive assets should be recorded
at the carrying value of the asset relinquished. SFAS 153 eliminates that exception and replaces it with a general exception
for exchanges of nonmonetary assets that lack commercial substance. Only nonmonetary exchanges in which an entitys future
cash flows are expected to significantly change as a result of the exchange will be considered to have commercial substance.
SFAS 153 must be applied to nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption
of this Statement is not expected to have a material impact on our operating results.

NOTE I  INCOME TAXES

On October 22, 2004, Congress passed the American
Jobs Creation Act of 2004 (the Act). The Act provides a deduction for income from qualified domestic production activities,
which will be phased in from 2005 through 2010, as well as other tax implications. The domestic production deduction will be
accounted for as a special deduction and as such, will have no effect on deferred tax assets and liabilities existing at the
date of enactment. Management does not expect the Act to have a material impact on our financial statements.

NOTE J  RECLASSIFICATIONS

Certain reclassifications have been made to the prior
periods financial statements to conform with the 2005 financial statement presentation. These reclassifications did not
affect net earnings or stockholders equity as previously reported.



---

The foregoing information for the periods ended October
2, 2005, and October 3, 2004, is unaudited; however, in the opinion of management of the Registrant, it reflects all the adjustments,
which were of a normal recurring nature, necessary for a fair statement of the results for the interim periods. The condensed
consolidated balance sheet as of December 31, 2004, is summarized from audited consolidated financial statements, but does
not include all the disclosures contained therein and should be read in conjunction with the 2004 Annual Report. Interim results
for the period are not indicative of those for the year.

Page 11

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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Forward-looking statements in this Managements
Discussion and Analysis of Financial Condition and Results of Operations, elsewhere in this Form 10-Q, in the Companys
2004 Annual Report to Shareholders, in the Proxy Statement for the annual meeting held October 18, 2005, and in the Companys
press releases and oral statements made with the approval of an authorized executive officer 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, freight/shipping,
or production cost which cannot be recouped in product pricing; delays or interruptions in shipping; cut backs by the US government
in defense spending, and the efficient start-up and utilization of capital equipment investments. Additional information concerning
those and other factors is contained in the Companys Securities and Exchange Commission filings, copies of which are
available from the Company without charge. The Company does not undertake any obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.

Comparison Third Quarter 2005 and 2004

Readers are directed to Note B, Business Segments
for data on the financial results of the Companys three business segments for the Quarters ended October 2, 2005 and
October 3, 2004.

On a consolidated basis, sales increased by $747,000
(2%), gross margins decreased by $2,812,000 (29%), selling and general expense decreased by $119,000 (3%), and other income,
principally interest, increased by $132,000 (15%). Earnings before the provision for income taxes increased by $948,000 (34%),
as did net earnings by $668,000 (34%). Details concerning these changes can be found in the comments by segment below.

Housewares/small appliance net sales decreased $2,449,000
from $25,115,000 to $22,666,000, or 10%, largely the result of a decrease in shipments. Defense net sales increased by $2,341,000
from $6,368,000 to $8,709,000, or 37%, primarily reflecting a unit volume increase stemming from partial fulfillment of an
augmented backlog. Absorbent products net sales increased by $855,000 from $7,315,000 to $8,170,000, or 12%, primarily reflecting
increased sales from the adult incontinence line of products.

Housewares/small appliance gross profits decreased
$1,721,000 from $7,726,000 (31% of sales) to $6,005,000 (27% of sales) as a result of the reduced volume noted above and increased
material costs. Defense gross profits increased $210,000 from $2,014,000 (32% of sales) from the prior years quarter
to $2,224,000 (26% of sales). The dollar increase reflected the increased sales referenced above, while the percentage of sales
decrease reflected a less favorable product mix. Absorbent products gross profit dropped $1,301,000 to a negative $1,168,000.
The decline stemmed primarily from cost inefficiencies of a startup/learning curve nature related to the installation of new
state-of-the-art machinery.

Page 12

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The Company accrues for unexpended selling and advertising
costs, primarily for housewares/small appliances, budgeted for the year against each quarters sales. Selling and advertising
charges included in selling expense in each quarter represent that percentage of the annual sales and advertising budget associated
with that quarters shipments. Revisions to this budget result in periodic changes to the accrued liability for committed
selling and advertising expenditures. Housewares/small appliance selling and general expenses decreased $615,000, largely attributable
to decreases in the aforementioned accrual. Defense segment selling and general expenses increased by $336,000, reflecting
increased compensation and staffing commensurate with the segments increased sales and earnings levels. Absorbent segment
selling and general expenses increased by $160,000, reflecting an increase in administrative costs related to the expansion
of the segment.

In the third quarter of 2003, the Company announced
its decision to terminate its defined benefit pension plan (see Note D). As a result, the Company recorded a charge or $3,509,000
in the third quarter of 2004 when the defined benefit pension plan termination was completed.

The above items were responsible for the change in
operating profit.

Other income increased $132,000 or 15% as a result
of higher interest income of $214,000, resulting from increased yields on reduced dollars invested (due to the use of funds
for expansion of the defense and absorbent products segments). The increase was offset primarily by reduced outside rental
income of the Eau Claire facility, which has largely been converted to the production of absorbent products.

Earnings before provision for income taxes increased
$948,000 from $2,777,000 to $3,725,000. The provision for income taxes increased from $788,000 to $1,068,000, which resulted
in an effective income tax rate increase from 28% to 29% as a result of a slight increase in earnings subject to tax. Net earnings
increased $668,000 from $1,989,000 to $2,657,000, or 34%.

Comparison of First Nine Months 2005 and 2004

Readers are directed to Note B, Business Segments
for data on the financial results of the Companys three business segments for the Nine Months ended October 2, 2005 and
October 3, 2004.

On a consolidated basis, sales increased by $20,071,000
(22%), gross margins decreased by $1,526,000 (8%), selling and general expense increased by $1,793,000 (15%), and other income,
principally interest, increased by $367,000 (12%). Earnings before the provision for income taxes increased by $557,000 (9%),
as did net earnings by $630,000 (13%). Details concerning these changes can be found in the comments by segment below.

Housewares/small appliance net sales were relatively
flat at $57,726,000 v. $58,022,000 during the prior years period. Defense net sales increased by $13,998,000 from $11,561,000
to $25,559,000, or 121%, primarily reflecting a unit volume increase stemming from partial fulfillment of an augmented backlog.
Absorbent products net sales increased by $5,777,000 from $20,215,000 to $25,992,000, or 29%, primarily reflecting increased
sales from the adult incontinence line of products.

Page 13

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Housewares/small appliance gross profits for 2005
decreased $1,226,000 from $14,476,000 (25% of sales) to $13,250,000 (23% of sales) primarily as a result of increased material
costs. Defense gross profits increased $3,206,000 from $2,936,000 (25% of sales) from the prior year to $6,142,000 (24% of
sales). The dollar increase reflected the increased sales referenced above, while the percentage of sales decrease reflected
a less favorable product mix. Absorbent products gross profit dropped $3,506,000 to a negative $2,260,000. The decline stemmed
from the combination of two factors which had an approximately comparable impact on margins: increased raw material costs and
cost inefficiencies primarily of a startup/learning curve nature related to the installation of new state-of-the-art machinery.

The accrual for unexpended advertising costs discussed
in the Third Quarter comparison also applies to the first nine months. Readers are also directed to Note E, Plant Closing for
a comparison of the first nine months. Housewares/small appliance selling and general expenses increased $217,000, largely
attributable to increases in the aforementioned accrual. Defense segment selling and general expenses increased by $1,123,000,
reflecting increased compensation and staffing commensurate with the segments increased sales and earnings levels. Absorbent
segment selling and general expenses increased by $453,000, reflecting an increase in administrative costs related to the expansion
of the segment.

In the third quarter of 2003, the Company announced
its decision to terminate its defined benefit pension plan (see Note D). As a result, the Company recorded a charge or $3,509,000
in the third quarter of 2004 when the defined benefit pension plan termination was completed.

The above items were responsible for the change in
operating profit.

Other income increased $367,000 or 12% as a result
of higher interest income of $691,000 resulting from increased yields on reduced dollars invested (due to the use of funds
for expansion of the defense and absorbent products segments). The increase was offset primarily by reduced outside rental
income of the Eau Claire facility, which has largely been converted to the production of absorbent products.

Earnings before provision for income taxes increased
$557,000 from $6,507,000 to $7,064,000. The provision for income taxes decreased from $1,630,000 to $1,557,000, which resulted
in an effective income tax rate decrease from 25% to 22% as a result of decreased earnings subject to tax. Net earnings increased
$630,000 from $4,877,000 to $5,507,000, or 13%.

Liquidity and Capital Resources

Cash used in operating activities was $13,553,000
during the first nine months of 2005, as compared to $20,556,000 used during the first nine months of 2004. The principal factors
behind the increase in cash used can be found in the changes in the components of working capital within the Consolidated Statement
of Cash Flows.

Net cash flows from investing activities during the
first nine months of 2005 increased by $22,572,000 over the prior period. The increase is attributable to two factors. First,
more instruments matured and were placed in cash equivalents during the review period than in the prior years period,
and second, payments for fixed asset additions were higher during the first nine months of 2004 than in the comparable 2005
period, reflecting the timing of payments for the equipment for the absorbent product expansion and the modification of the
Jackson, Mississippi plant to a warehousing and shipping facility.

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Cash flows from financing activities for the first
nine months of 2005 and 2004 primarily differed as a result of the $.50 per share increase in the extra dividend paid during
those periods.

Working capital decreased by $11,469,000 to $197,303,000
at October 2, 2005. The Companys current ratio was 5.5 to 1.0 at October 2, 2005, as compared to 5.3 to 1.0 at December
31, 2004.

As of October 2, 2005, there were approximately $3,400,000
of open equipment purchase commitments to expand the product line in its absorbent products segment. The Company expects to
continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions as
well as continue to make capital investments in these segments if the appropriate return on investment is projected.

The Company has substantial liquidity in the form
of cash and short-term maturity marketable securities to meet all of its anticipated capital requirements, to make dividend
payments, and to fund growth through acquisitions and other means. The company intends to continue its investment strategy
of safety and short-term liquidity throughout its investment holdings. The interest rate environment is a function of national
and international monetary policies as well as the growth and inflation rates of the U.S. and foreign economies and is not
controllable by the Company.

The Company may have additional plant closing costs
but is not aware of any such costs. However, plant closing activities of this nature are unique and infrequent for the Company;
therefore, these activities possess inherent risk that errors in the estimation process could occur. Subject to the foregoing
estimation risk, no major plant closing related expenses are expected in 2005.

CRITICAL ACCOUNTING POLICIES

The preparation of the consolidated financial statements
in accordance with accounting principles generally accepted in the United States requires management to make certain estimates
and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results
may differ from those estimates. The Company reviewed the development and selection of the critical accounting policies and
believes the following are the most critical accounting policies that could have an effect on the Companys reported results.
These critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors.

Inventories: New housewares/small appliance
product introductions are an important part of the Companys sales to offset the morbidity rate of other housewares/small
appliance products and/or the effect of lowered acceptance of seasonal products due to weather conditions. New products entail
unusual risks and have occasionally in the past resulted in losses related to obsolete inventory as a result of low or diminishing
demand for a product. The Company did not have any major new product introductions or morbidity issues in the current period
and, accordingly, did not record a reserve for obsolete product. In the future should product demand issues arise, the Company
may incur losses related to the obsolescence of the related inventory.

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Insurance: The Company is subject to product
liability claims in the normal course of business and is self-insured for health care costs. The Company insures for product
liability claims and retains a self-insured retention insurance accrual in the Companys financial statements. The Company
utilizes historical trends and other analysis to assist in determining the appropriate accrual. An increase in the number or
magnitude of claims could have a material impact on the Companys financial condition.

Environmental: In May 1986, the Companys
Eau Claire, Wisconsin, site was placed on the United States Environmental Protection Agencys National Priorities List
under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 because of hazardous waste deposited
on the property. By December 31, 1998, all remediation projects had been installed, were fully operational, and restoration
activities had been completed and accrued liabilities established for the expected cost of the activity. The Company believes
its accrued liability reserve will be adequate to satisfy ongoing remediation operations and monitoring activities; however,
should environmental agencies require additional studies or remediation projects, it is possible the existing accrual could
be inadequate. The Companys current environmental liability is based upon estimates of the future costs to maintain and
operate remediation projects and monitor their results based upon historical costs incurred for such activities.

NEW ACCOUNTING PRONOUNCEMENTS

Please refer to Note H for information related to
the effect of adopting new accounting pronouncements on the Companys consolidated financial statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys interest income on cash equivalents
and marketable securities is affected by changes in interest rates in the United States. Cash equivalents include money market
funds and 7-day variable rate demand notes which are highly liquid instruments with interest rates set every 7 days that can
be tendered to the remarketer upon 7 days notice for payment of principal and accrued interest amounts. The 7 day tender feature
of these variable rate demand notes are further supported by an irrevocable letter of credit from highly rated U.S. banks.
To the extent a bond is not remarketed at par plus accrued interest, the difference is drawn from the banks letter of
credit. The Companys investments are held primarily in fixed and variable rate municipal bonds with an average life of
less than one year. Accordingly, changes in interest 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 uses sensitivity analysis to
determine its exposure to changes in interest rates.

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 cash flow hedges. The Companys manufacturing contracts with
its foreign suppliers contain provisions to share the impact of fluctuations in the exchange rate between the U.S. dollar and
the Hong Kong dollar above and below a fixed range contained in the contracts. All transactions with the foreign suppliers
were within the exchange rate range specified in the contracts during 2005, 2004, and 2003. The impact of the revaluation of
the Chinese yuan is not known at this point in time; however, the revaluation could result in a cost increase on future product
purchases.

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Item 4. CONTROLS AND PROCEDURES

The Companys management, including the Chief
Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the design and operation
of the Companys disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934
(the 1934 Act) as of the end of the period covered by this report. Based on that evaluation, the Companys Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective in ensuring
that information required to be disclosed by the Company in the reports it files or submits under the 1934 Act is recorded,
processed, summarized, and reported within the time periods specified in the SECs rules and forms.

There have been no changes in internal controls over
financial reporting during the fiscal quarter ended October 2, 2005, that have materially affected, or are reasonably likely
to materially affect, the Companys internal control over financial reporting.

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PART II  OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

See Note F in the Notes to Consolidated Financial
Statements set forth under Part I - Item 1 above.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no purchases or sales of securities during
the quarter ended October 2, 2005.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

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, 1997Exhibit 3 (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, 1999Exhibit 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, 1997Exhibit 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, 1997Exhibit 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, 1997Exhibit 11

Statement regarding computation of per share earningsExhibit 31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Exhibit 32.1

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002Exhibit 32.2

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


SIGNATURES

Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NATIONAL PRESTO INDUSTRIES, INC.


Date: November 11, 2005

/s/ M. J. Cohen  M. J. Cohen, Chair of the Board, ChiefExecutive Officer and President(Principal executive
officer)


Date: November 11, 2005

/s/ R. F. Lieble  R. F. Lieble, Vice President andTreasurer/Chief Financial Officer(Principal accounting officer)


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National Presto Industries, Inc.Exhibit Index

ExhibitNumber

Exhibit Description11

Computation of Earnings per Share31.1

Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2

Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


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