<PAGE>
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington,  D. C.  20549

                                 Form 10-Q

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

      For the Quarterly Period
      Ended December 31, 1995               Commission File Number 0-5214

                              Peerless Mfg. Co.
   ________________________________________________________________________

            (Exact name of registrant as specified in its charter)

            Texas                                        75-0724417
   ________________________________________________________________________

   (State or other jurisdiction of                  ( I.R.S. Employer
    incorporation or organization)                    identification No.)



            2819 Walnut Hill Lane      Dallas, Texas        75229
            P. O. Box 540667           Dallas, Texas        75354
   ________________________________________________________________________

   (Address of principal executive offices)                (Zip code)


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

            None
   ________________________________________________________________________

   Former name, former address and former fiscal year, if changed since
   last report.


   Indicate by a 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 preceeding 12 months (or for 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 the number of shares outstanding of each of the issuer's
   classes of common stock, as of the close of the period covered by
   this report.

              Class                       Outstanding at December 31, 1995
   _____________________________          _________________________________

   Common stock, $1.00 par value                 1,446,742 Shares
<PAGE>
                             PEERLESS MFG. CO.

                                  INDEX



                                                                    Page
                                                                   Number
  Part I:   Financial Information                                _________

            Condensed Consolidated Balance Sheets for the
            periods ended December 31, 1995 and June 30, 1995         3

            Condensed Consolidated Statements of Earnings
            for the three and six months ended December 31,
            1995 and 1994                                             4

            Condensed Consolidated Statement of Cash Flows for
            the six months ended December 31, 1995 and 1994           5

            Notes to the Condensed Consolidated Financial             6
            Statements

            Management's Discussion and Analysis of Financial
            Condition and Results of Operations                     7 & 8


  Part II:  Other Information                                         9   

                                      2 of 9
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<TABLE>
                           PEERLESS MFG. CO.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                                    <C>            <C>
                                                     DECEMBER 31,    JUNE 30,
                                                    -------------  -------------
                                                         1995          1995
<S>                                                 -------------  -------------
          ASSETS                                      (UNAUDITED)     (AUDITED)
Current assets:
   Cash and cash equivalents                               $7,259      $961,747
   Short term investments                                 833,073       821,968
   Accounts receivable                                 10,476,507     9,135,623
   Inventories:
      Raw materials                                       968,814       988,275
      Work in process                                   2,473,758     1,590,050
      Finished goods                                       61,371       238,449
   Deferred income taxes                                  232,554       232,554
   Other                                                  369,466       334,876
                                                      -----------   -----------
         Total current assets                          15,422,802    14,303,542

Property,plant and equipment-net                        1,178,766     1,282,275
Property held for investment-net                          922,625       952,823
Other assets                                              355,850       617,415
                                                      -----------   -----------
                                                      $17,880,043   $17,156,055
                                                      ===========   ===========
   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable                                               $0            $0
   Accounts payable-trade                               3,980,075     3,096,025
   Advance payments from customers                      1,173,297       600,957
   Commissions payable                                    389,934       509,512
   Accrued liabilities                                  1,001,564     1,065,878
                                                      -----------   -----------
      Total current liabilities                         6,544,870     5,272,372

Deferred income taxes                                      97,704        97,704

Stockholders' equity:
   Common stock-authorized 4,000,000 shares of $1 par
     value; issued and outstanding, 1,446,742 shares    1,446,742     1,446,742
   Additional paid-in capital                           2,493,428     2,493,428
   Unamortized value of restricted stock issue            (65,428)      (97,107)
   Cumulative foreign currency translation adjustmen       51,506        56,110
   Retained earnings                                    7,311,221     7,886,806
                                                      -----------   -----------
                                                       11,237,469    11,785,979
                                                      -----------   -----------
                                                      $17,880,043   $17,156,055
                                                      ===========   ===========
<FN>
The accompanying notes are an integral part of these statements.
                                         3 of 9
</TABLE>
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<TABLE>
                                                          PEERLESS MFG. CO.
                                                  CONDENSED STATEMENTS OF EARNINGS
                                                             (UNAUDITED)
                                                                                            
                                                                    Three Months Ended              Six Months Ended
                                                               --------------------------     --------------------------- 
                                                                      December 31,                    December 31,
                                                               --------------------------     ---------------------------
                                                               <C>             <C>            <C>             <C>                 
                                                                  1995            1994            1995            1994
<S>                                                            ----------      ----------     -----------     -----------
        Net sales                                              $9,206,547      $7,312,258     $15,307,009     $17,481,398
        Cost of goods sold                                      6,501,070       5,209,592      11,254,278      11,553,593
                                                               ----------      ----------     -----------     -----------
              Gross profit                                      2,705,477       2,102,666       4,052,731       5,927,805

        Operating expenses
          Marketing and engineering                             1,927,711       1,694,368       3,710,133       3,473,289
          General and administrative                              365,979         412,926         672,946         829,704
                                                               ----------      ----------     -----------     -----------
              Operating income(loss)                              411,787          (4,628)       (330,348)      1,624,812

        Other income(expense)
           Interest                                                15,531          24,827          30,112          25,965
           Sundry                                                 (36,649)        (29,494)        (31,239)        (89,805)
                                                               ----------      ----------     -----------     -----------
                                                                  (21,118)         (4,667)         (1,127)        (63,840)
                                                               ----------      ----------     -----------     -----------
        Earnings(loss) from operations
           before Federal income tax                              390,669          (9,295)       (331,475)      1,560,972

        Federal income tax
           Current                                                111,324          17,614        (117,586)        547,801
           Deferred                                                     0               0               0               0
                                                               ----------      ----------     -----------     -----------
                                                                  111,324          17,614        (117,586)        547,801
                                                               ----------      ----------     -----------     -----------
        Net earnings(loss)                                        279,345         (26,909)       (213,889)      1,013,171
                                                               ==========      ==========      ==========      ==========

        Net earnings per common share                               $0.19          ($0.02)         ($0.15)          $0.70
                                                               ==========      ==========      ==========      ==========

        Weighted average number of common
           shares outstanding                                   1,446,742       1,437,192       1,446,742       1,437,192
                                                               ==========      ==========      ==========      ==========

        Cash dividend per common share                             $0.125          $0.125          $0.250          $0.250
                                                               ==========      ==========      ==========      ==========


<FN>
        The accompanying notes are an integral part of these statements.
                                                  4 of 9
</TABLE>
<PAGE>        
<TABLE>
                                  PEERLESS MFG. CO.
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)

                                                      For the six months ended
                                                            December 31,
                                                     --------------------------
                                                     <C>          <C>
                                                          1995         1994
<S>                                                  ------------ ------------- 
 Cash flows from operating activities:
 Net earnings(loss) from operating activities          ($213,889)  $1,013,171
    Adjustments to reconcile net earnings to net
       cash provided (used) by operating activities:
          Depreciation and amortization                  167,121      188,045
          Other                                           31,679       17,103
          Changes in assets and liabilities
             (Increase) decrease in:
                Accounts receivable                   (1,340,884)   3,727,891
                Inventories                             (687,169)   2,317,618
                Other current assets                     (34,590)     165,721
                Other assets                             256,349        1,542
             Increase (decrease) in:
                Accounts payable                         884,050   (1,234,062)
                Commissions payable                     (119,578)     205,645
                Advance payments from customers          572,340   (1,537,564)
                Income taxes payable                           0       18,228
                Accrued liabilities                      (64,314)      (3,281)
                                                      ----------   ----------
                                                        (334,996)   3,866,886
                                                      ----------   ----------
 Net cash (used in) provided by continuing operations   (548,885)   4,880,057

 Cash flows from investing activities:
    Net purchases of short term investments              (11,105)  (2,949,649)
    Purchase of equipment net of disposals               (28,198)    (222,285)
                                                      ----------   ----------
 Net cash used in investing activities                   (39,303)  (3,171,934)

 Cash flows from financing activities:
    Dividends paid                                      (361,696)    (359,186)
    Net borrowing                                              0     (260,400)
                                                      ----------   ----------
 Net cash used in financing activities                  (361,696)    (619,586)

 Effect of exchange rate on cash                          (4,604)      16,859
                                                      ----------   ----------
                Net increase (decrease) in cash
                   and cash equivalents                 (954,488)   1,105,396

 Cash and cash equivalents at beginning of period        961,747      619,990
                                                      ----------   ----------
 Cash and cash equivalents at end period                  $7,259   $1,725,386
                                                      ==========   ==========

                                      5 of 9
</TABLE>
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                             PEERLESS MFG. CO.

           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.   In the opinion of the Company, the accompanying unaudited
     consolidated financial statements contain all adjustments,
     consisting of only the normal recurring accruals, necessary
     to present fairly its financial position as of December 31,
     1995 and 1994, the results of operations for the three and
     six month periods ended December 31, 1995 and 1994 and the
     cash flows for the six months ended December 31, 1995 and
     1994.

2.   The results for the interim periods are not necessarily
     indicative of the results to be expected for the full year.
     Peerless Mfg. Co. designs and manufactures pressure vessels
     to customer specifications, sales of which are obtained by
     competitive bids and may result in material sales and
     profitability increases or decreases when comparing interim
     periods between years.  The Company recognizes sales of
     custom-contracted products at the completion of the
     manufacturing process, which normally is less than one year.

3.   The adjusted backlog of unshipped orders and letters of
     intent at December 31, 1995 was approximately $19,000,000 as
     compared to a December 31, 1994 backlog of approximately
     $15,263,000.  Of the $19,000,000 backlog at December 31,
     1995, approximately 92% is scheduled to be shipped in the
     current fiscal year.

4.   The Company has a formal agreement with a bank for a
     $5,000,000 continuing line of credit, renewable annually.
     Under the terms of this agreement, the loans bear interest
     at the prevailing prime rate and the Company is required to
     pay 1/4 of 1% per annum on the unused portion of the
     facility.  As of December 31, 1995 and 1994, the Company had
     no loans outstanding.

5.   The Company consolidates the accounts of its wholly-owned
     foreign subsidiaries, Peerless Europe Limited, Peerless
     International N.V. and its wholly-owned foreign subsidiary,
     Peerless Europe B.V.  All significant intercompany accounts
     and transactions have been eliminated in consolidation.

                                  6 of 9
<PAGE>
                             PEERLESS MFG. CO.
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Capital Resources and Liquidity
-------------------------------
As a general policy, the Company maintains corporate liquidity at
a level adequate to support existing operations and planned
internal growth, and to allow continued operations through
periods of unanticipated adversity.

Cash and equivalents decreased $954,488 from June 30, 1995.
Company operations used $548,885 of cash during the six months
ended December 31, 1995.  Additional cash distributions for the
period were composed of fixed asset acquisitions amounting to
$28,198, dividend distributions of $361,696, and additional
short-term investments of $11,105.

As indicated, operations used $548,885 of cash in the six months
ended December 31, 1995.  Primarily, this decrease of funds
resulted from (a) an increase in accounts receivable of
$1,340,884, increased inventories for continued and new projects
of $687,169, and a decrease in commissions payable of $119,578;
offset by (b) an increase in accounts payable of $884,050,
increased customer advances of $572,340 and a decrease in other
assets of $256,349.

The Company has historically financed and continues to finance
plant expansion, equipment purchases, acquisitions and working
capital requirements primarily through the retention of earnings,
which is reflected by the absence of long-term debt.  In addition
to retained earnings, the Company has from time to time used a
short-term bank credit line of $5,000,000 to supplement working
capital.  The Company has no material commitments for capital
expenditures other than those required to maintain existing plant
and equipment.


                           Results Of Operations
                           ---------------------
                              Dollar and Percentage Variance

Comparison of 1994   Three Months Ended   Six Months Ended
and 1995 for the       Dec. 31, 1995       Dec. 31, 1995
Relevant Periods         1995-1996           1995-1996
-------------------  -------------------  -------------------

Sales                   $1,894,289          ($2,174,389)
                           25.9%               (12.4%)

The increase of current quarter sales compared to the same
quarter of the previous year is the result of sales increases
from the United Kingdom Subsidiary and the Pressure Products
Division of approximately $1,600,000 and $850,000 respectively,
offset by decreased shipments from the SCR Systems Division of
approximately $400,000.  Additionally, sales for the six months
ended December 31, 1994 were augmented by two large deliveries
which totaled approximately $5,000,000.
                                  7 of 9
<PAGE>
                              Dollar and Percentage Variance

                     Three Months Ended   Six Months Ended
                       Dec. 31, 1995       Dec. 31, 1995
                         1995-1996           1995-1996
-------------------  -------------------  --------------------

Gross Profit              $602,811          ($1,875,074)
                           28.7%               (31.6%)

In the second quarter, gross profit as a percentage of sales was
29.4% for the three months ended December 31, 1995 vs. 28.8% for
the three months ended December 31, 1994.  The increase in gross
profit percentages in the current quarter was primarily due to
the higher profits available on the mix of products shipped
during this period which included more value added engineering
when compared to the same period for 1994.  The decline in gross
profit percentages for the six month period was primarily due to
lower profit margins available on the mix of products shipped in
the current six month period ended December 31, 1995 compared to
higher margins on products shipped for the six month period ended
December 1994.


-------------------  -------------------  ---------------------

Operating Expenses        $186,396              $80,086
                            8.8%                 1.9%

The second quarter increase in operating expenses is primarily
attributable to an increase in sales expenses of approximately
$300,000 offset by decreases in commission and engineering
expenses.


-------------------  -------------------  ---------------------

Other Income(Expense)    ($16,451)              $62,713

In the quarter ended December 31, 1995, the Company incurred
additional expenses related to foreign currency losses of
approximately $28,000 offset by decreases in certain rental
property costs as compared to the quarter ended December 31,
1994.


-------------------  -------------------  ---------------------

Net Earnings (Loss)       $306,254          ($1,227,060)

The increase in net earnings for the three months ended December
31, 1995, when compared to the preceding fiscal year, is directly
attributable to the increased sales volume of $1,894,289.

                                  8 of 9
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                             PEERLESS MFG. CO.

                                  PART II

                             OTHER INFORMATION


Item 1 -- Legal proceedings
---------------------------

     On November 13, 1995, the Company filed a complaint with the
     United States District Court for the Northern District of
     Texas, Dallas Division, against Senior Engineering Company.
     The complaint seeks to enjoin Senior Engineering from using
     or marketing Peerless' P8X vane or similar moisture
     separation technology.  The Company alleges that Senior
     Engineering, through its joint venture with Peerless,
     obtained valuable trade secret information.  The complaint
     states claims for misappropriation of trade secrets and
     breach of contract.


Item 6 -- Exhibits and Reports on Form 8-K
------------------------------------------

     There were no reports on Form 8-K for the six months ended
     December 31, 1995.




                                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 thereto duly authorized.



                                PEERLESS MFG. CO. -- Registrant

Dated: February 7, 1996


                              Sherrill Stone
                              Chairman, President and
                              Chief Executive Officer




                              Kent J. Van Houten
                              Secretary - Treasurer and
                              Chief Financial Officer



                                  9 of 9