# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

# FORM 10-Q

| | [X] |  | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934  FOR THE QUARTERLY PERIOD ENDED  July 4, 2004
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------

| | [   ] |  | 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                      |  | (I.R.S. Employer    | 
|incorporation or organization)                       |  | Identification No.) | 
|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        | 

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 whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes  X  No

There were 6,821,494
shares of the Issuers Common Stock outstanding as of the close of the period covered
by this report.



---

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 4, 2004 and December 31, 2003
(Unaudited)
(Dollars in thousands)

|                                | 2004 |  | 2003
|------------------------------- | ---- |  | ----
|                                |      |  |     
|ASSETS                          |      |  |     
|CURRENT ASSETS:                 |      | 
|Cash and cash equivalents       |      |  |     
|                               
|Marketable securities           |      |  |     
|                               
|Accounts receivable, net        |      |  |     
|                               
|Inventories:                    |      | 
|Finished goods                  |      |  | $   
|                               
|Work in process                 |      |  |     
|                               
|Raw materials                   |      |  |     
|                                |      |  |     
|                               
|Other current assets            |      |  |     
|                                |      |  |     
|                               
|Total current assets            |      |  |     
|                               
|PROPERTY,  PLANT AND EQUIPMENT  |      |  |     
|                               
|Less allowance for depreciation |      |  |     
|                                |      |  |     
|                               
|OTHER ASSETS                    |      |  |     
|                               
|                                |      |  |     
|                                |      |  |     
|                                |      |  |     

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



---

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 4, 2004 and December 31, 2003
(Unaudited)
(Dollars in thousands)

|                                     | 2004 |  | 2003
|------------------------------------ | ---- |  | ----
|                                     |      |  |     
|LIABILITIES                          |      |  |     
|CURRENT LIABILITIES:                 |      | 
|Accounts payable                     |      |  |     
|                                    
|Federal and state income taxes       |      |  |     
|                                    
|Accrued liabilities                  |      |  |     
|                                     |      |  |     
|Total current liabilities            |      |  |     
|                                    
|COMMITMENTS AND CONTINGENCIES        |      | 
|                                    
|STOCKHOLDERS' EQUITY                 |      | 
|Common stock, $1 par value:          |      | 
|Authorized: 12,000,000 shares        |      | 
|Issued: 7,440,518 shares             |      |  | $   
|                                    
|Paid-in capital                      |      |  |     
|                                    
|Retained earnings                    |      |  |     
|                                    
|Accumulated other comprehensive loss |      |  |     
|                                     |      |  |     
|                                    
|                                     |      |  |     
|                                    
|Treasury stock, at cost              |      |  |     
|                                     |      |  |     
|                                    
|Total stockholders' equity           |      |  |     
|                                    
|                                     |      |  |     
|                                     |      |  |     
|                                     |      |  |     

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



---

NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months and Six Months ended July 4, 2004 and June 29, 2003
(Unaudited)
(In thousands except per share data)

|                                                  | Three Months Ended |  | Six Months Ended
|------------------------------------------------- | ------------------ |  | ----------------
|                                                  |                    |  |                 
|
|
|Net sales                                         |                    |  | $               
|                                                 
|Cost of sales                                     |                    |  |                 
|                                                  |                    |  |                 
|                                                 
|Gross profit                                      |                    |  |                 
|                                                 
|Selling and general expenses                      |                    |  |                 
|                                                  |                    |  |                 
|                                                 
|Operating profit                                  |                    |  |                 
|                                                 
|Other income, principally interest                |                    |  |                 
|                                                  |                    |  |                 
|                                                 
|Earnings before provision for income taxes        |                    |  |                 
|                                                 
|Income tax provision                              |                    |  |                 
|                                                  |                    |  |                 
|Net earnings                                      |                    |  | $               
|                                                  |                    |  |                 
|                                                 
|Weighted average shares outstanding:              |                    | 
|Basic                                             |                    |  |                 
|                                                  |                    |  |                 
|Diluted                                           |                    |  |                 
|                                                  |                    |  |                 
|                                                 
|Net earnings per share:                           |                    | 
|Basic                                             |                    |  | $               
|                                                  |                    |  |                 
|Diluted                                           |                    |  | $               
|                                                  |                    |  |                 
|                                                 
|Cash dividends declared and paid per common share |                    |  | $               
|                                                  |                    |  |                 

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



---

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months ended July 4, 2004 and June 29, 2003
(Unaudited)
(Dollars in thousands)

|                                                     | 2004 |  | 2003
|---------------------------------------------------- | ---- |  | ----
|                                                     |     
|Cash flows from operating activities:                |      |  |     
|Net earnings                                         |      |  | $   
|Adjustments to reconcile net earnings to net         |      | 
|cash provided by operating activities:               |      | 
|Provision for depreciation                           |      |  |     
|Deferred Tax                                         |      |  |     
|Other                                                |      |  |     
|Changes in:                                          |      | 
|Accounts receivable                                  |      |  |     
|Inventories                                          |      |  |     
|Other current assets                                 |      |  |     
|Accounts payable and accrued liabilities             |      |  |     
|Federal and state income taxes                       |      |  |     
|                                                     |      |  |     
|Net cash provided by (used in) operating activities  |      |  |     
|                                                     |      |  |     
|                                                    
|Cash flows from investing activities:                |      | 
|Marketable securities purchased                      |      |  |     
|Marketable securities - maturities and sales         |      |  |     
|Acquisition of property, plant and equipment         |      |  |     
|Acquisition of business                              |      |  |     
|Sale of property, plant and equipment                |      |  |     
|                                                     |      |  |     
|Net cash provided by (used in) investing activities  |      |  |     
|                                                     |      |  |     
|                                                    
|Cash flows from financing activities:                |      | 
|Dividends paid                                       |      |  |     
|Purchase of treasury stock                           |      |  |     
|Sale of treasury stock                               |      |  |     
|                                                     |      |  |     
|Net cash used in financing activities                |      |  |     
|                                                     |      |  |     
|Net increase (decrease) in cash and cash equivalents |      |  |     
|Cash and cash equivalents at beginning of period     |      |  |     
|                                                     |      |  |     
|Cash and cash equivalents at end of period           |      |  | $   
|                                                     |      |  |     

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



---

NATIONAL PRESTO
INDUSTRIES, INC., AND SUBSIDIARIES

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE A  EARNINGS
PER SHARE

The Companys basic
net earnings (loss) per share amounts have been computed by dividing net earnings (loss)
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)
|--------------------------- | --------------
|                            |               
|
|                            |               
|Quarter ended July 4, 2004  |               
|External net sales          |               
|Gross profit                |               
|Operating profit            |               
|Total assets                |               
|Depreciation                |               
|Capital expenditures        |               
|                           
|Quarter ended June 29, 2003 |               
|External net sales          |               
|Gross profit                |               
|Operating profit            |               
|Total assets                |               
|Depreciation                |               
|Capital expenditures        |               



---

|                               | (in thousands)
|------------------------------ | --------------
|                               |               
|
|                               |               
|Six Months ended July 4, 2004  |               
|External net sales             |               
|Gross profit                   |               
|Operating profit (loss)        |               
|Total assets                   |               
|Depreciation                   |               
|Capital expenditures           |               
|                              
|Six Months ended June 29, 2003 |               
|External net sales             |               
|Gross profit                   |               
|Operating profit               |               
|Total assets                   |               
|Depreciation                   |               
|Capital expenditures           |               

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 2 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.

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

|                            | 2004 |  | 2003
|--------------------------- | ---- |  | ----
|                            |      |  |     
|Beginning balance January 1 |      |  | $   
|Accruals during the period  |      |  |     
|Charges / payments made     |      | 
|under the warranties        |      |  |     
|                            |      |  |     
|Balance end of period       |      |  | $   
|                            |      |  |     



---

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 resulting in a curtailment charge, which was
recorded in 2003. An additional estimated $3,500,000 settlement charge is expected in the
third quarter of 2004 when final distributions from the plan are made or annuities are
purchased in exchange for participants rights to receive benefits under the plan.
Employer contributions to the plan are expected to total $1,500,000 in 2004.

Components of net
periodic pension cost for the three and six months ended July 4, 2004 and June 29, 2003
are as follows:

|                                | Three Months |  | Six Months
|------------------------------- | ------------ |  | ----------
|                                |              |  |           
|
|                                |              |  |           
|Service cost                    |              |  | $         
|Interest cost                   |              |  |           
|Expected return on assets       |              |  |           
|Prior service cost amortization |              |  |           
|Net loss amortization           |              |  |           
|                                |              |  |           
|                                |              |  | $         
|                                |              |  |           

|                               | Weighted-average assumptions used
to determine benefit obligation
for the years ended December 31:
|------------------------------ | --------------------------------------------------------------------------------------------------
|                               |                                                                                                   
|
|                               |                                                                                                   
|Discount rate                  |                                                                                                   
|Expected return on plan assets |                                                                                                   
|Rate of compensation increase  |                                                                                                   

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 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
is continuing its efforts to sell the facility. The Company closed its Jackson,
Mississippi, plant during the fourth quarter of 2002 and has decided to modify this plant
to serve as a warehousing and shipping facility. Modification to the Jackson plant should
be completed during 2004.



---

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

|                               | Employee
Termination
Benefits |  | Other
Exit
Costs |           | Total
|------------------------------ | ----------------------------- |  | ---------------- | --------- | -----
|                               |                               |  |                  |           |      
|Balance January 1, 2004        |                               |  | $                | 836,000   |      
|Additions in 2004              |                               |  |                  |          |      
|Charges in 2004                |                               |  |                  | (320,000  | )    
|                               |                               |  |                  |           |      
|Balance July 4, 2004           |                               |  | $                | 516,000   |      
|                               |                               |  |                  |           |      
|                              
|Balance January 1, 2003        |                               |  | $                | 2,148,000 |      
|Additions (reductions) in 2003 |                               |  |                  | (261,000  | )    
|Charges in 2003                |                               |  |                  | (725,000  | )    
|                               |                               |  |                  |           |      
|Balance June 29, 2003          |                               |  | $                | 1,162,000 |      
|                               |                               |  |                  |           |      

The total outsourcing of
all Company housewares/small appliance product manufacturing results in the creation of a
new LIFO inventory category for the outsourced products. During the three and six months
ended July 4, 2004, the Company recognized a $183,000 and $531,000 (or $.02 and $.05 per
share, net of tax), respectively, partial liquidation of the Manufactured LIFO Reserve.
This compares with the three and six months ended June 29, 2003 liquidation of $1,067,000
and $2,314,000 (or $.10 and $.21 per share, net of tax), respectively. At July 4, 2004,
$157,000 of Manufacturing LIFO Reserve remains which is expected to be recognized in 2004
as the remaining manufactured inventory is sold.

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. If 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 $1,914,000 of
accumulated comprehensive loss at July 4, 2004, reflects the fair value gain adjustment of
$89,000, net of tax, of available-for-sale marketable security investments offset by the
additional net periodic pension liability related to the Companys defined benefit
pension plan in the amount of $2,003,000, net of tax. Total comprehensive income was
$1,046,000 and $1,939,000 for the three month periods ended July 4, 2004 and June 29,
2003, respectively, and $2,413,000 and $3,840,000 for the six months ended July 4, 2004
and June 29, 2003, respectively.

NOTE H  BUSINESS
ACQUISITION

In October, 2003, the
Company acquired the assets and operations of an absorbent products manufacturer. During
the three and six months ended July 4, 2004, this operation had net sales of $4,256,000
and $8,891,000.

NOTE I  ADOPTION OF
NEW ACCOUNTING STANDARDS

In December 2003, the
FASB revised and reissued Statement 132, Employers Disclosures about Pensions
and Other Postretirement Benefits (SFAS 132 (R)). This statement retains all of the
disclosures that are required by the original FASB Statement 132, Employers
Disclosures about Pensions and Other Postretirement Benefits, and includes several
additional disclosures. It also requires certain disclosures about pension and other
postretirement benefit plans in interim financial statements. The annual disclosures in
SFAS 132 (R) were adopted in fiscal year ended December 31, 2003. The interim disclosure
provisions of SFAS 132 (R) have been adopted in the first quarter of fiscal 2004.

---

The foregoing
information for the periods ended July 4, 2004, and June 29, 2003, 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, 2003, is
summarized from audited consolidated financial statements, but does not include all the
disclosures contained therein and should be read in conjunction with the 2003 Annual
Report. Interim results for the period are not indicative of those for the year.



---

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 2003 Annual
Report to Shareholders, 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, and the impact of
foreign sourcing of houseware products. 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.

Comparison Second Quarter
2004 and 2003 
        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 July 4, 2004 and June
29, 2003.

Housewares/small
appliance net sales decreased $593,000 from $16,616,000 to $16,023,000, or 4%, reflecting
decreased pricing partially offset by increased unit volume. Defense net sales increased
by $1,409,000 from $1,862,000 to $3,271,000, or 76% reflecting a unit volume increase and
a change in the mix of products shipped. Absorbent products net sales increased by
$3,234,000 from $2,974,000 to $6,208,000, or 109%, primarily reflecting the addition of
revenues stemming from the October 2003 acquisition of the assets of NCN Hygienic
Products, Inc.

Housewares/small
appliance gross profit for 2004 decreased $598,000 from $4,579,000 to $3,981,000, or 25%
versus 28% as a percentage of sales. This gross profit percentage decrease is largely due
to comparatively smaller liquidation of the Manufactured Product LIFO reserve stemming
from the sourcing of products overseas (see Note E). Defense gross profit increased
$170,000 from $444,000 to $614,000 as a result of increased unit volume and as a
percentage of sales declined from 24% to 19% primarily due to a less favorable product
mix. Absorbent products gross profit increased $161,000 from $280,000 to $441,000
primarily because of the addition of the acquisition noted in the previous paragraph.



---

The
Company accrues for unexpended advertising cost, primarily for housewares / small
appliances, budgeted for the year against each quarters sales. Major advertising
commitments are incurred in advance of the expenditures, and the timing of sales through
dealers and distributors to the ultimate customer does not permit specific identification
of the customers purchase to the actual time an advertisement appears. Advertising
charges included in selling expense in each quarter represent that percentage of the
annual advertising budget associated with that quarters shipments. Revisions to this
budget result in periodic changes to the accrued liability for committed advertising
expenditures. Housewares/small appliance selling and general expenses decreased $57,000,
largely attributable to decreases in the aforementioned accrual. Defense selling and
general expenses increased $218,000 largely reflecting costs associated with the
operations of Spectra Technologies LLC, a startup company acquired in August 2003.

Other
income, principally interest, decreased $370,000 from $1,356,000 to $986,000 significantly
impacted by a lower rate of return on a lower level of invested funds.

Earnings
before provision for income taxes decreased $777,000 from $2,539,000 to $1,762,000. The
provision for income taxes decreased from $621,000 to $369,000, which resulted in an
effective income tax rate decrease from 24% to 21% as a result of decreased earnings
subject to tax. Net earnings decreased $525,000 from $1,918,000 to $1,393,000, or 27%.

Comparison First Six
Months 2004 and 2003 
        Readers
are directed to Note B, Business Segments for data on the financial results of
the Companys three business segments for the Six Months ended July 4, 2004 and June
29, 2003.

Housewares/small
appliance net sales were relatively unchanged from the prior year increasing $104,000 from
$34,093,000 to $34,197,000 reflecting a combination of increased volume offset by
decreased pricing. Defense net sales increased by $1,471,000 from $3,722,000 to
$5,193,000, or 40% reflecting a volume increase and a change in the mix of products
shipped. Absorbent products net sales increased by $7,209,000 from $5,691,000 to
$12,900,000, or 127%, primarily reflecting the addition of revenues stemming from the
October 2003 acquisition of the assets of NCN Hygienic Products, Inc.

Housewares/small
appliance gross profit for 2004 decreased $1,532,000 from $9,868,000 to $8,336,000, or 24%
verses 29% as a percentage of sales. This gross profit percentage decrease is largely due
to comparatively smaller liquidation of the Manufactured Product LIFO reserve stemming
from the sourcing of products overseas (see Note E). Defense gross profit decreased
$78,000 from $1,000,000 to $922,000, or 18% versus 27% as a percentage of sales primarily
due to the mix of products shipped. Absorbent products gross profit increased $451,000
from $662,000 to $1,113,000 primarily because of the addition of the acquisition noted in
the previous paragraph.



---

The
accrual for unexpended advertising costs discussed in the Second Quarter comparison also
applies to the first six months. Readers are also directed to Note E, Plant Closing for a
comparison of the first six months.

Other
income, principally interest, decreased $354,000 from $2,464,000 to $2,110,000 largely as
a result of a lower rate of return on a lower level of invested funds.

Earnings
before provision for income taxes decreased $1,565,000 from $5,295,000 to $3,730,000. The
provision for income taxes decreased from $1,324,000 to $842,000, which resulted in an
effective income tax rate decrease from 25% to 23% as a result of decreased earnings
subject to tax. Net earnings decreased $1,083,000 from $3,971,000 to $2,888,000, or 27%.

Liquidity and Capital Resources 
        For
year-to-date 2004, $4,563,000 of cash and cash equivalents were used in operating
activities versus the $8,017,000 provided in the comparable 2003 period. A summary of the
sources of operating cash can be found in the changes in the components of working capital
in the statement of cash flows. Of note is the significant change in the inventory line
item reflecting relative increases in defense segment and housewares/small appliance
segment inventories since the beginning of the year. The defense segment increase is in
response to a larger contract backlog during 2004, while the housewares/small appliance
increase reflects the relatively lean inventory levels as of January 1, 2004 in comparison
to the relatively high levels as of January 1, 2003. The higher levels on January 1, 2003
resulted from the Companys transition to off shore product sourcing.

Cash
used in investing activities increased $26.3 million, with the majority of the increase
stemming from the expansion in the absorbent product segment, and the modification of the
Companys Jackson, Mississippi manufacturing plant to serve as a warehousing and
shipping facility.

Working
capital decreased by $17,497,000 to $195,239,000 at July 4, 2004. The Companys
current ratio was 5.6 to 1.0 at July 4, 2004, compared to 4.9 to 1.0 at December 31, 2003.

In
January 2004, the Company entered into an agreement to purchase approximately $12,000,000
in equipment to expand the product line in its absorbent products segment. Also, in June
2004, the Company entered into agreement to purchase approximately $14,400,000 of
additional equipment to further expand the absorbent products segment. To date, the
Company has deposited approximately $9,900,000 towards the purchase of this equipment
leaving approximately $16,500,000 of capital commitment outstanding as of July 4, 2004.
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 is projected.

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. The interest rate declines over the past several
years coupled with the extremely low interest rate environment currently has resulted in
reduced levels of interest income for the Company. There can be no assurance when interest
rates will begin to move towards more historically normal levels. 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.



---

In
connection with the Companys plant closing activity during 2004, the Company could
incur additional losses upon the disposition of property associated with the operations
being closed. In addition, the Company may have additional plant closing costs. The
Company 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 2004.

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.

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
health care costs, 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.



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Plant Closing
Costs: 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 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 is continuing its efforts to sell the facility. The Company closed its
Jackson, Mississippi, plant during the fourth quarter of 2002 and has begun to modify this
plant to serve as a warehousing and shipping facility. Modification to the Jackson plant
should be completed during 2004. (See Note E for a description of plant closing activity.)
The estimated accruals for plant closing costs may be subject to adjustment in the future.
Potential cost items include the Companys success and the length of time required to
sell the Alamogordo building, larger than expected health care claims for separated
employees, and changes in other estimated costs to complete the plant closings.

NEW ACCOUNTING
PRONOUNCEMENTS

Please refer to Note I
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. 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 short term
affect 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. Any transactions
that are currently entered into for settlement in foreign currency are not deemed material
to the financial statements.



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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 July 4, 2004, 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.    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

| | There were no
purchases or sales of securities during the quarter ended July 4, 2004.
| | -------------------------------------------------------------------------------------

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, 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                                                    | 
|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 regarding computation of per share earnings                                                                                                                                                     | 
|Exhibit 31.1                                                                                                                                           |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                   | 
|Exhibit 31.2                                                                                                                                           |  | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                   | 
|Exhibit 32.1                                                                                                                                           |  | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                   | 
|Exhibit 32.2                                                                                                                                           |  | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                   | 
|(b)     Reports on Form 8-K:                                                                                                                            | 
|On May 4, 2004, the registrant filed a current report under item 12 to furnish its earnings                     press release issued on April 30, 2004.

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:   August 10, 2004 |  | /s/   M.J. Cohen                                                                                   | 
|                        |  |                                                                                                   
|                        |  | M. J. Cohen, Chair of the Board, ChiefExecutive Officer and President(Principal executive officer) | 
|                       
|Date:   August 10, 2004 |  | /s/   R. F. Lieble                                                                                 | 
|                        |  |                                                                                                   
|                        |  | R. F. Lieble, Chief Financial Officer andTreasurer  (Principal accounting officer)                 | 



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# National Presto Industries, Inc.
Exhibit Index

| |  | ExhibitNumber |  | Exhibit Description
| |  | ------------- |  | -------------------

| |  | 11 |  | Computation
of Earnings per Share
| |  | -- |  | ---------------------------------

| |  | 31.1 |  | Chief Executive
Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| |  | ---- |  | -----------------------------------------------------------------------------------------------

| |  | 31.2 |  | Chief Financial
Officer Certification pursuant to Section 302 of the Sarvanes-Oxley Act of 2002
| |  | ---- |  | -----------------------------------------------------------------------------------------------

| |  | 32.1 |  | Chief Executive
Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |  | ---- |  | -----------------------------------------------------------------------------------------------

| |  | 32.2 |  | Chief Financial
Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |  | ---- |  | -----------------------------------------------------------------------------------------------

---