Mail Stop 7010

      March 3, 2006


Mr. Henry G. Schopfer, III
Chief Financial Officer
Peerless Mfg. Co.
2819 Walnut Hill Lane
Dallas, Texas 75229

	RE:	Form 10-K for the year ended June 30, 2005
		Form 10-Q for the quarter ended December 31, 2005
		File No. 0-5214

Dear Mr. Schopfer:

      We have reviewed these filings and have the following
comments.
If you disagree with a comment, we will consider your explanation
as
to why our comment is inapplicable or a revision is unnecessary.
Please be as detailed as necessary in your explanation.  In some
of
our comments, we may ask you to provide us with information so we
may
better understand your disclosure.  After reviewing this
information,
we may or may not raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.


FORM 10-K FOR THE YEAR ENDED JUNE 30, 2005

General
1. Where a comment below requests additional disclosures or other
revisions to be made, please show us in your response what the
revisions will look like.  These revisions should be included in
your
future filings.

Item 7.  Management`s Discussion and Analysis

Results of Operations - Consolidated

Gross Profit Margin, page 12

2. Please disclose the types of expenses that you include in each
of
the following line items: cost of goods sold, sales and marketing,
engineering and project management, and general and
administrative.
Please disclose whether you include inbound freight charges,
purchasing and receiving costs, inspection costs, warehousing
costs,
internal transfer costs, and the other costs of your distribution
network in the cost of goods sold line item.  With the exception
of
warehousing costs, if you currently exclude a portion of these
costs
from cost of goods sold, please disclose:
* in a footnote the line items that these excluded costs are
included
in and the amounts included in each line item for each period
presented, and
* in MD&A that your gross margins may not be comparable to those
of
other entities, since some entities include all of the costs
related
to their distribution network in cost of goods sold and others
like
you exclude a portion of them from gross margin, including them
instead in another line item, such as general and administrative
expenses.

3. Given that selling margin excludes amounts that are included in
gross profit margin, which is calculated and presented in
accordance
with GAAP on your statements of operations, we would expect to see
all of the disclosures required by Item 10(e)(1)(i) of Regulation
S-
K.  Please provide these disclosures, or tell us how your
determined
they are not necessary.

Results of Operations - Segments

4. Please tell us more about the corrections associated with
control
deficiencies.  Specifically, please address the following:
* Tell us the nature of the corrections including the periods
impacted, the line items on your financial statements that were
impacted, and the amount of the corrections for each annual and
quarterly period in the last three years ended June 30, 2005; and
* It appears that you recorded a cumulative catch-up adjustment in
the quarter ended December 31, 2004.  Show us the analysis you
performed in determining prior periods did not need to be
restated.
Refer to SAB Topics 1:M and 5:F.

Segment Profit, page 16

5. In your tables of profit by reportable segment, it is not clear
why you have presented total segment profit.  Please revise your
presentation to remove the subtotal called total segment profit as
it
represents a non-GAAP measure when presented outside of the
segment
footnote.  For additional guidance, refer to Question 21 of our
Frequently Asked Questions Regarding the Use of Non-GAAP Financial
Measures, which was released on June 13, 2003.

Item 9A.  Controls and Procedures, page 54

6. You state that your disclosure controls and procedures were
effective in ensuring that all material information required to be
filed in the Form 10-K was made known to your Chief Executive
Officer
and Chief Financial Officer in a timely fashion.  This is an
incomplete definition of disclosure controls and procedures per
Rules
13a-15(e) and 15d-15(e) of the Exchange Act.  Please revise your
definition to also clarify, if true, that your disclosure controls
and procedures were effective to provide reasonable assurance that
information required to be disclosed in your filings under the
Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in the Securities
and
Exchange Commission rules and forms.  Please also confirm to us
that
your disclosure controls and procedures were effective as of June
30,
2005, September 30, 2005, and December 31, 2005 when evaluating
based
on the complete definition of disclosure controls and procedures.

Financial Statements

Consolidated Statements of Cash Flows, page 34

7. We remind you that footnote 10 to SFAS 95 states that separate
disclosure of cash flows pertaining to extraordinary items or
discontinued operations is not required.  Given that you have
chosen
to present these cash flows, please either separately identify
cash
flows from discontinued operations with each category of the cash
flow statement, or separately identify operating, investing, and
financing activities related to discontinued operations within a
separate section of the cash flow statement.  Please revise your
presentation and provide disclosures regarding your change in
presentation.  Refer to the AICPA Center for Public Company Audit
Firms Alert #90 dated February 15, 2006.

Notes to Financial Statements

Note A.  Nature of Operations and Summary of Significant
Accounting
Policies

Revenue Recognition, page 36

8. In Note I you state that you warrant your products will be free
from defects in materials and workmanship and will confirm to
agreed
upon specifications at the time of delivery and typically for a
period of 12 to 18 months from the date of customer acceptance.
Please disclose what consideration is given to customer acceptance
terms in determining when it is appropriate to recognize revenue.

9. Please disclose how you account for unapproved change orders,
including whether you assume a profit component prior to the
change
orders being approved by your customer.

Exhibit 31

10. Please confirm that the inclusion of your CEO and CFO`s title
was
not intended to limit the capacity in which such individual
provided
the certifications.  Please remove the reference to the CEO and
CFO`s
titles in the introductory paragraph of the certifications to
conform
to the format provided in Item 601(b)(31) of Regulation S-K.


FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2005

General

11. Please address the above comments in your interim filings as
well.

*    *    *    *

      Please respond to these comments within 10 business days, or
tell us when you will provide us with a response.  Please provide
us
with a response letter that keys your responses to our comments
and
provides any requested information.  Detailed letters greatly
facilitate our review.  Please file your supplemental response on
EDGAR as a correspondence file.  Please understand that we may
have
additional comments after reviewing your responses to our
comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information required under the
Securities Exchange Act of 1934 and that they have provided all
information investors require for an informed decision.  Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

		In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.

      If you have any questions regarding these comments, please
direct them to Nudrat Salik, Staff Accountant, at (202) 551-3692
or,
in her absence, to the undersigned at (202) 551-3769.

							Sincerely,





							Rufus Decker
							Accounting Branch Chief
Mr. Henry G. Schopfer, III
March 3, 2006
Page 1 of 5




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010

         DIVISION OF
CORPORATION FINANCE