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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



(Mark One)

|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | -------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



| |  | For the quarterly period ended March 30, 2003
| |  | ---------------------------------------------



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | --------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



| |  | For the transition period  to
| |  | -----------------------------



Commission File Number: 333-89061



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Holley Performance Products Inc.

(Exact name of Registrant as specified in its charter)



|Delaware                 |  | 61-1291482                          
|------------------------ |  | ------------------------------------
|(State of incorporation) |  | (I.R.S. Employer Identification No.)



1801 Russellville
Road, Post Office Box 10360

Bowling Green, Kentucky 42101-7360

(Address of principal executive offices)



270-782-2900

Registrants telephone number, including area code:



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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NONE



SECURITIES
REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

NONE



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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 ̈



There were 1,000 shares of Common Stock outstanding as of March 30, 2003.



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Index



|PART I Financial Information                                                                  |  | 1 
|--------------------------------------------------------------------------------------------- |  | --
|                                                                                              | 
|ITEM 1. Financial Statements                                                                  |  | 1 
|                                                                                              | 
|ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 15
|                                                                                              | 
|ITEM 3. Quantitative and Qualitative Disclosures about Market Risk                            |  | 19
|                                                                                              | 
|ITEM 4. Controls and Procedures                                                               |  | 19
|                                                                                              | 
|PART II Other Information                                                                     |  | 20
|                                                                                              | 
|ITEM 6. Exhibits and Reports on Form 8-K                                                      |  | 20





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PART I



|ITEM 1. |  | Financial Statements
|------- |  | --------------------



HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED
BALANCE SHEETS

(in thousands, except share data)

(unaudited)



|                                                                                             |  | December 31, 2002* |          |   | March 30, 2003 |  
|-------------------------------------------------------------------------------------------- |  | ------------------ | -------- | - | -------------- | -
|                                                                                             | 
|ASSETS                                                                                       |  |                    |          |   |                |  
|Cash and cash equivalents                                                                    |  | $                  | 602      |   |                | $
|Accounts receivable, less allowance for doubtful accounts of $1,089 and $1,118, respectively |  |                    | 16,915   |   |                |  
|Inventories                                                                                  |  |                    | 22,843   |   |                |  
|Deferred income taxes                                                                        |  |                    | 3,249    |   |                |  
|Income taxes receivable                                                                      |  |                    | 3,714    |   |                |  
|Other current assets                                                                         |  |                    | 1,233    |   |                |  
|                                                                                             |  |                    |          |   |                |  
|Total current assets                                                                         |  |                    | 48,556   |   |                |  
|Property, plant and equipment, net                                                           |  |                    | 18,143   |   |                |  
|Intangible assets, net                                                                       |  |                    | 61,008   |   |                |  
|                                                                                             |  |                    |          |   |                |  
|Total assets                                                                                 |  | $                  | 127,707  |   |                | $
|                                                                                             |  |                    |          |   |                |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                        |  |                    |          |   |                |  
|Current portion of long-term debt                                                            |  | $                  | 28,724   |   |                | $
|Accounts payable                                                                             |  |                    | 8,525    |   |                |  
|Accrued liabilities                                                                          |  |                    | 12,729   |   |                |  
|Accrued interest                                                                             |  |                    | 5,738    |   |                |  
|                                                                                             |  |                    |          |   |                |  
|Total current liabilities                                                                    |  |                    | 55,716   |   |                |  
|Long-term debt, net of current portion                                                       |  |                    | 155,568  |   |                |  
|Deferred income taxes                                                                        |  |                    | 15,841   |   |                |  
|                                                                                             |  |                    |          |   |                |  
|Total liabilities                                                                            |  |                    | 227,125  |   |                |  
|                                                                                             |  |                    |          |   |                |  
|Commitments and contingencies                                                                |  |                    |          |   |                |  
|Stockholders deficit:                                                                       |  |                    |          |   |                |  
|Preferred stock, $1.00 par value, 150,000 shares authorized, 75,000 issued and outstanding   |  |                    | 75       |   |                |  
|Common stock, $1.00 par value, 1,000 shares authorized, issued and outstanding               |  |                    | 1        |   |                |  
|Paid-in capital                                                                              |  |                    | 59,924   |   |                |  
|Accumulated deficit                                                                          |  |                    | (159,418 | ) |                |  
|                                                                                             |  |                    |          |   |                |  
|Stockholders deficit                                                                        |  |                    | (99,418  | ) |                |  
|                                                                                             |  |                    |          |   |                |  
|Total liabilities and stockholders deficit                                                  |  | $                  | 127,707  |   |                | $
|                                                                                             |  |                    |          |   |                |  



|*This |  | condensed consolidated balance sheet has been derived from the audited consolidated balance sheet as of December 31, 2002
|----- |  | -------------------------------------------------------------------------------------------------------------------------



See notes to condensed consolidated financial statements



1



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HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(unaudited)



|                                             |  | 3 Months EndedMarch 31, 2002 |        |   | 3 Months EndedMarch 30, 2003 |  
|-------------------------------------------- |  | ---------------------------- | ------ | - | ---------------------------- | -
|                                             | 
|Net sales                                    |  | $                            | 37,621 |   |                              | $
|Cost of goods sold                           |  |                              | 27,014 |   |                              |  
|                                             |  |                              |        |   |                              |  
|Gross profit                                 |  |                              | 10,607 |   |                              |  
|                                             |  |                              |        |   |                              |  
|Selling, general and administrative costs    |  |                              | 6,803  |   |                              |  
|Management fees                              |  |                              | 212    |   |                              |  
|Amortization expense                         |  |                              | 472    |   |                              |  
|Other expense                                |  |                              | 83     |   |                              |  
|                                             |  |                              |        |   |                              |  
|Total operating expenses                     |  |                              | 7,570  |   |                              |  
|                                             |  |                              |        |   |                              |  
|Operating income                             |  |                              | 3,037  |   |                              |  
|Interest expense                             |  |                              | 5,422  |   |                              |  
|                                             |  |                              |        |   |                              |  
|Loss before income taxes                     |  |                              | (2,385 | ) |                              |  
|Income tax expense (benefit)                 |  |                              | (600   | ) |                              |  
|                                             |  |                              |        |   |                              |  
|Net loss attributable to common stockholders |  | $                            | (1,785 | ) |                              | $
|                                             |  |                              |        |   |                              |  





See notes to condensed consolidated financial statements



2



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HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



|                                                                         |  | 3 Months EndedMarch 31, 2002 |        |   | 3 Months EndedMarch 30, 2003 |  
|------------------------------------------------------------------------ |  | ---------------------------- | ------ | - | ---------------------------- | -
|                                                                         | 
|OPERATING ACTIVITIES                                                     |  |                              |        |   |                              |  
|Net loss                                                                 |  | $                            | (1,785 | ) |                              | $
|Adjustments to reconcile net loss to net cash from operating activities: |  |                              |        |   |                              |  
|Depreciation                                                             |  |                              | 1,682  |   |                              |  
|Amortization of intangibles                                              |  |                              | 472    |   |                              |  
|Amortization of deferred financing costs included in interest expense    |  |                              | 249    |   |                              |  
|Amortization of debt discount                                            |  |                              | 172    |   |                              |  
|Loss on disposal of business                                             |  |                              |       |   |                              |  
|Gain on disposal of fixed assets                                         |  |                              |       |   |                              |  
|Deferred income taxes                                                    |  |                              | (600   | ) |                              |  
|Change in operating assets and liabilities:                              |  |                              |        |   |                              |  
|Accounts receivable                                                      |  |                              | 672    |   |                              |  
|Inventories                                                              |  |                              | (455   | ) |                              |  
|Other assets                                                             |  |                              | 576    |   |                              |  
|Accounts payable                                                         |  |                              | (245   | ) |                              |  
|Accrued liabilities                                                      |  |                              | (5,025 | ) |                              |  
|Other liabilities                                                        |  |                              | (116   | ) |                              |  
|                                                                         |  |                              |        |   |                              |  
|Net cash from operating activities                                       |  |                              | (4,403 | ) |                              |  
|                                                                         |  |                              |        |   |                              |  
|INVESTING ACTIVITIES                                                     |  |                              |        |   |                              |  
|Capital expenditures                                                     |  |                              | (350   | ) |                              |  
|Proceeds from the disposal of business                                   |  |                              |       |   |                              |  
|Proceeds from the disposal of fixed assets                               |  |                              |       |   |                              |  
|                                                                         |  |                              |        |   |                              |  
|Net cash from investing activities                                       |  |                              | (350   | ) |                              |  
|                                                                         |  |                              |        |   |                              |  
|FINANCING ACTIVITIES                                                     |  |                              |        |   |                              |  
|Net proceeds from revolving credit line                                  |  |                              | 4,481  |   |                              |  
|Financing costs                                                          |  |                              | (12    | ) |                              |  
|Principal payments on long-term debt                                     |  |                              | (87    | ) |                              |  
|                                                                         |  |                              |        |   |                              |  
|Net cash from financing activities                                       |  |                              | 4,742  |   |                              |  
|                                                                         |  |                              |        |   |                              |  
|Net change in cash and cash equivalents                                  |  |                              | (11    | ) |                              |  
|Cash and cash equivalents:                                               |  |                              |        |   |                              |  
|Beginning of period                                                      |  |                              | 234    |   |                              |  
|                                                                         |  |                              |        |   |                              |  
|End of period                                                            |  | $                            | 223    |   |                              | $
|                                                                         |  |                              |        |   |                              |  
|Supplemental disclosures of cash flow information:                       |  |                              |        |   |                              |  
|Cash paid for interest                                                   |  | $                            | 9,627  |   |                              | $
|                                                                         |  |                              |        |   |                              |  
|Cash received for income taxes                                           |  | $                            | 103    |   |                              | $
|                                                                         |  |                              |        |   |                              |  



See notes to condensed
consolidated financial statements



3



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HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except as otherwise noted)

(unaudited)



1. Significant Accounting Policies



Basis of Presentation



Holley Performance Products Inc. (the Company or Holley), a Delaware corporation based in Bowling Green, Kentucky,
is a leading manufacturer of a diversified line of performance automotive products, including carburetors, fuel pumps, fuel injection systems, ignition systems, remanufactured carburetors, camshafts, crankshafts, pistons, superchargers, exhaust
headers, mufflers, engine plumbing products, and nitrous oxide systems. The products are designed to enhance street, off-road, recreational and competitive vehicle performance through increased horsepower, torque and driveability. In addition to its
automotive performance line, Holley manufactures performance products for the powersport, marine and motorcycle markets.



The Company is highly leveraged. As of March 30, 2003, indebtedness was $186.2 million and stockholders deficit was $103.5 million. Further, the Company has
experienced recurring net losses. Management is implementing actions designed to reduce working capital and improve operating results. If the improvements associated with these actions do not materialize in a timely manner, the Company may be
required to take additional measures to ensure the availability of sufficient cash to sustain operations. Such measures may include, among other things, reducing or delaying capital expenditures, selling assets, restructuring or refinancing
indebtedness, or seeking additional equity capital. There is no assurance that any of these measures can be effected on satisfactory terms, if at all.



The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the outcome of this uncertainty.



The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting
information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all material reclassifications and adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of the results of operations, financial position and cash flows
for each period shown have been included. Operating results for interim periods are not necessarily indicative of the results for the full year. The unaudited condensed consolidated financial statements and notes are presented as permitted by Form
10-Q and do not contain certain information included in the Companys annual consolidated financial statements and notes. For further information, refer to the consolidated financial statements and notes thereto included in the Companys
annual consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2002.



Accounting Period



The Companys first three quarters of the year are based on two four week months and one five week month Each of these quarters end on the Sunday of the fifth week in the third month. The fourth quarter and the
fiscal year always end on December 31.



Recent Accounting Pronouncements



In June 2001, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards, or SFAS, No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143



4



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establishes accounting standards for recognition and measurement of an asset retirement obligation and an associated
asset retirement cost. This statement applies to all entities that have legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal use of the assets and is effective
for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a material impact on the consolidated financial position, results of operations or cash flows of the Company.



In July 2002, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities. It nullifies EITF Issue No. 94-3.
Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit on Activity (including Certain Costs Incurred in a Restructuring). The principal difference between SFAS No. 146 and Issue 94-3 relates to the
recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability be recognized for those costs only when the liability is incurred, that is, when it meets the definition of a liability in the
FASBs conceptual framework. In contrast, under Issue 94-3, a company recognized a liability for an exit cost when it committed to an exit plan. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31,
2002. The adoption of SFAS No. 146 did not have any impact on the consolidated financial position, results of operations or cash flows of the Company.



In December 2002, the FASB issued SFAS No. 148 Accounting for Stock-Based Compensation  Transition and Disclosure, an amendment of FASB Statement No. 123.
This Statement amends FASB Statement No. 123 Accounting for Stock-Based Compensation, to provide alternative methods of transition of voluntary change to the fair value method of accounting for stock-based employee compensation. In addition,
this Statement amends the disclosure requirements of Statement No. 123 to require prominent disclosures in both annual and interim financials statements about the method of accounting for stock-based employee compensation and the effect of the
method on reported results. The adoption of the disclosure provisions of SFAS No. 148 did not have a material effect on the Companys consolidated financial position, results of operations or cash flows of the Company.



In November 2002, the FASB issued Interpretation (FIN) No. 45 Guarantors Accounting
and Disclosure Requirements for Guarantees Including Indirect Guarantees of Indebtedness of others, which provides guidance on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under
certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and
measurement provisions of FIN No. 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantors fiscal year end. The adoption of FIN No. 45 did not have a material effect on
the Companys consolidated financial position, results of operations or cash flows of the Company.



In January 2003, the FASB issued Interpretation No. 46 Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.This Interpretation addresses the consolidation by business enterprises of
variable interest entities as defined in the Interpretation. The Interpretation applies immediately to variable interest entities created after January 31, 2003, and to variable interests in variable interest entities obtained after January 31,
2003. The application of this Interpretation did not have any impact on the Companys consolidated financial position, results of operations or cash flows of the Company.



Reclassifications



Certain 2002 amounts have been reclassified to conform with their 2003 presentation.



5



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2. Inventories



Inventories are comprised of the following:



|                |  | December 31,2002 |        | March 30,2003
|--------------- |  | ---------------- | ------ | -------------
|Raw materials   |  | $                | 11,224 |              
|Work-in-process |  |                  | 3,979  |              
|Finished goods  |  |                  | 7,640  |              
|                |  |                  |        |              
|                |  | $                | 22,843 |              
|                |  |                  |        |              



3. Segment Information



The Companys reportable segments are High Performance Parts and
Remanufactured Parts. The Company manufactures high performance aftermarket automotive parts through its High Performance Parts segment. Under its Remanufactured Parts segment, the Company refurbishes used automotive part cores and then resells the
parts as remanufactured products. Both segments sell primarily to automotive parts distributors throughout the United States.



Summarized financial information concerning the Companys operating measures for the reportable segments are shown in the following table:



|                      |  | Three MonthsEnded March 31,2002 |        | Three MonthsEnded March 30,2003
|--------------------- |  | ------------------------------- | ------ | -------------------------------
|Performance Parts:    |  |                                 |        |                                
|Net sales             |  | $                               | 32,681 |                                
|Gross profits         |  |                                 | 9,127  |                                
|Remanufactured Parts: |  |                                 |        |                                
|Net sales             |  | $                               | 4,940  |                                
|Gross profits         |  |                                 | 1,480  |                                
|Total:                |  |                                 |        |                                
|Net sales             |  | $                               | 37,621 |                                
|Gross profits         |  |                                 | 10,607 |                                



Summary balance sheet data for
inventories and property, plant and equipment, net for each of the Companys reportable segments as of December 31, 2002 and March 30, 2003 are shown in the following table:



|                              |  | December 31,2002 |        | March 30, 2003
|----------------------------- |  | ---------------- | ------ | --------------
|Performance Parts:            |  |                  |        |               
|Inventories                   |  | $                | 19,875 |               
|Property, plant and equipment |  |                  | 16,782 |               
|Remanufactured Parts:         |  |                  |        |               
|Inventories                   |  | $                | 2,968  |               
|Property, plant and equipment |  |                  | 1,361  |               
|Total:                        |  |                  |        |               
|Inventories                   |  | $                | 22,843 |               
|Property, plant and equipment |  |                  | 18,143 |               



6



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4. Intangible Assets



Financing costs are amortized over the term of the related outstanding debt using the effective interest method. In connection with acquisitions, the Company has entered
into various covenants not to compete with certain individuals. The estimated values allocated to such agreements are amortized on a straight-line basis over the terms of the respective agreements. A summary of these results is as follows:



|                             |  | December 31, 2002   |        | March 30, 2003         
|---------------------------- |  | ------------------- | ------ | -----------------------
|                             |  | GrossCarryingAmount |        | AccumulatedAmortization
|Amortized intangible Assets: |  |                     |        |                        
|Deferred financing costs     |  | $                   | 7,443  |                        
|Non-compete covenants        |  |                     | 8,164  |                        
|                             |  |                     |        |                        
|                             |  | $                   | 15,607 |                        
|                             |  |                     |        |                        



Amortization of deferred financing
costs and non-compete agreements totaled $209 and $471 for the three months ended March 31, 2002 and $306 and $471 for the three months ended March 30, 2003, respectively. Amortization of these costs over the next five years are estimated to be:
2003, $2,780; 2004, $1,851; 2005, $1,139; 2006, $1,139; and 2007, $725.



In
addition, included in the line item intangible assets, net were intangible assets not subject to amortization. Goodwill and tradenames had net carrying values of $16,110 and $37,264, respectively as of December 31, 2002 and March 30, 2003.



5. Related Party Transactions



Pursuant to a management agreement, Kohlberg and Company, LLC (Kohlberg)
provides the Company with general corporate administrative services. Kohlberg receives a management fee to recover its operating expenses based upon an allocation of time devoted to the Company. Management fee expense was approximately $213 for the
three months ended March 31, 2002 and the three months ended March 30, 2003.



6. Financial Information for Guarantors of the Companys Debt



The Senior Notes are guaranteed by substantially all existing and future directly or indirectly wholly owned domestic restricted subsidiaries of the Company (the Guarantors). The Guarantors irrevocably and unconditionally,
fully, jointly and severally guarantee the performance and payment, when due, of all obligations under the Senior Notes.



The information that follows presents condensed consolidating financial information as of March 30, 2003 and for the year ended December 31, 2002 for: a) Holley
Performance Products Inc. (as the Issuer), b) the Guarantors, c) elimination entries and d) the Company on a consolidated basis.



The condensed consolidating financial information includes certain allocations of revenues and expenses based on managements best estimates which is not necessarily
indicative of the financial position, results of operations and cash flows that these entities would have achieved on a stand-alone basis and should be read in connection with the condensed consolidated financial statements of the Company.



7



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|                                                                                           |  | Condensed Consolidating Balance Sheet December 31, 2002 |         
|------------------------------------------------------------------------------------------ |  | ------------------------------------------------------- | --------
|                                                                                           |  | HolleyPerformanceProducts Inc.(Parent CompanyOnly)      |         
|ASSETS                                                                                     |  |                                                         |         
|Cash and cash equivalents                                                                  |  | $                                                       | 421     
|Accounts receivable, net                                                                   |  |                                                         | 15,837  
|Inventories                                                                                |  |                                                         | 11,813  
|Income taxes receivable                                                                    |  |                                                         | 3,677   
|Deferred income taxes                                                                      |  |                                                         | 1,835   
|Intercompany receivable                                                                    |  |                                                         | 12,936  
|Other current assets                                                                       |  |                                                         | 705     
|                                                                                           |  |                                                         |         
|Total current assets                                                                       |  |                                                         | 47,224  
|Property, plant and equipment, net                                                         |  |                                                         | 13,673  
|Investment in subsidiaries                                                                 |  |                                                         | 19,450  
|Intangible assets, net                                                                     |  |                                                         | 36,999  
|                                                                                           |  |                                                         |         
|Total assets                                                                               |  | $                                                       | 117,346 
|                                                                                           |  |                                                         |         
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                      |  |                                                         |         
|Current portion of long-term debt                                                          |  | $                                                       | 28,679  
|Accounts payable                                                                           |  |                                                         | 7,997   
|Accrued liabilities                                                                        |  |                                                         | 10,840  
|Accrued interest                                                                           |  |                                                         | 5,738   
|Intercompany payable                                                                       |  |                                                         |        
|                                                                                           |  |                                                         |         
|Total current liabilities                                                                  |  |                                                         | 53,254  
|Long-term debt, net of current portion                                                     |  |                                                         | 155,450 
|Deferred income taxes                                                                      |  |                                                         | 8,060   
|Total liabilities                                                                          |  |                                                         | 216,764 
|Commitments and contingencies                                                              |  |                                                         |         
|Stockholders deficit:                                                                     |  |                                                         |         
|Preferred stock, $1.00 par value, 150,000 shares authorized, 75,000 issued and outstanding |  |                                                         | 75      
|Common stock, $1.00 par value, 1,000 shares authorized, issued and outstanding             |  |                                                         | 1       
|Paid-in capital                                                                            |  |                                                         | 59,924  
|Accumulated deficit                                                                        |  |                                                         | (159,418
|                                                                                           |  |                                                         |         
|Stockholders deficit                                                                      |  |                                                         | (99,418 
|                                                                                           |  |                                                         |         
|Total liabilities and stockholders deficit                                                |  | $                                                       | 117,346 
|                                                                                           |  |                                                         |         



8



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|                                                                                           |  | Condensed Consolidating Balance Sheet March 30, 2003 |         
|------------------------------------------------------------------------------------------ |  | ---------------------------------------------------- | --------
|                                                                                           |  | HolleyPerformanceProducts Inc.(Parent CompanyOnly)   |         
|ASSETS                                                                                     |  |                                                      |         
|Cash and cash equivalents                                                                  |  | $                                                    | 177     
|Accounts receivable, net                                                                   |  |                                                      | 20,280  
|Inventories                                                                                |  |                                                      | 10,543  
|Deferred income taxes                                                                      |  |                                                      | 3,250   
|Income taxes receivable                                                                    |  |                                                      | 603     
|Intercompany receivable                                                                    |  |                                                      | 11,018  
|Other current assets                                                                       |  |                                                      | 845     
|                                                                                           |  |                                                      |         
|Total current assets                                                                       |  |                                                      | 46,716  
|Property, plant and equipment, net                                                         |  |                                                      | 12,665  
|Investment in subsidiaries                                                                 |  |                                                      | 19,198  
|Intangible assets, net                                                                     |  |                                                      | 37,629  
|                                                                                           |  |                                                      |         
|Total assets                                                                               |  | $                                                    | 116,208 
|                                                                                           |  |                                                      |         
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                      |  |                                                      |         
|Current portion of long-term debt                                                          |  | $                                                    | 30,859  
|Accounts payable                                                                           |  |                                                      | 9,978   
|Accrued liabilities                                                                        |  |                                                      | 11,967  
|Accrued interest                                                                           |  |                                                      | 1,336   
|Intercompany payable                                                                       |  |                                                      |        
|                                                                                           |  |                                                      |         
|Total current liabilities                                                                  |  |                                                      | 54,321  
|Long-term debt, net of current portion                                                     |  |                                                      | 155,112 
|Deferred income taxes                                                                      |  |                                                      | 10,420  
|Total liabilities                                                                          |  |                                                      | 219,672 
|Commitments and contingencies                                                              |  |                                                      |         
|Stockholders deficit:                                                                     |  |                                                      |         
|Preferred stock, $1.00 par value, 150,000 shares authorized, 75,000 issued and outstanding |  |                                                      | 75      
|Common stock, $1.00 par value, 1,000 shares authorized, issued and outstanding             |  |                                                      | 1       
|Paid-in capital                                                                            |  |                                                      | 59,924  
|Accumulated deficit                                                                        |  |                                                      | (163,464
|                                                                                           |  |                                                      |         
|Stockholders deficit                                                                      |  |                                                      | (103,464
|                                                                                           |  |                                                      |         
|Total liabilities and stockholders deficit                                                |  | $                                                    | 116,208 
|                                                                                           |  |                                                      |         



9



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|                                          |  | Condensed Consolidating Statement of Operations Three Months Ended March 31, 2002 |       
|----------------------------------------- |  | --------------------------------------------------------------------------------- | ------
|                                          |  | HolleyPerformanceProducts Inc.(Parent CompanyOnly)                                |       
|Net sales                                 |  | $                                                                                 | 21,487
|Cost of goods sold                        |  |                                                                                   | 14,851
|                                          |  |                                                                                   |       
|Gross profit                              |  |                                                                                   | 6,636 
|Selling, general and administrative costs |  |                                                                                   | 1,182 
|Management fees                           |  |                                                                                   | 212   
|Amortization of intangibles               |  |                                                                                   |      
|Other expense                             |  |                                                                                   | 58    
|Equity in loss of subsidiaries            |  |                                                                                   | 1,623 
|                                          |  |                                                                                   |       
|Total operating expenses                  |  |                                                                                   | 3,075 
|                                          |  |                                                                                   |       
|Operating income (loss)                   |  |                                                                                   | 3,561 
|Interest expense                          |  |                                                                                   | 5,401 
|                                          |  |                                                                                   |       
|Loss before income taxes                  |  |                                                                                   | (1,840
|Income tax benefit                        |  |                                                                                   | (55   
|                                          |  |                                                                                   |       
|Net loss                                  |  | $                                                                                 | (1,785
|                                          |  |                                                                                   |       



10



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|                                          |  | Condensed Consolidating Statement of Operations Three Months Ended March 30, 2003 |       
|----------------------------------------- |  | --------------------------------------------------------------------------------- | ------
|                                          |  | HolleyPerformanceProducts Inc.(Parent CompanyOnly)                                |       
|Net sales                                 |  | $                                                                                 | 15,699
|Cost of goods sold                        |  |                                                                                   | 10,988
|                                          |  |                                                                                   |       
|Gross profit                              |  |                                                                                   | 4,711 
|Selling, general and administrative costs |  |                                                                                   | 1,799 
|Management fees                           |  |                                                                                   | 213   
|Amortization of intangibles               |  |                                                                                   | 285   
|Other expense                             |  |                                                                                   | 200   
|Loss in equity of subsidiaries            |  |                                                                                   | 252   
|                                          |  |                                                                                   |       
|Total operating expenses                  |  |                                                                                   | 2,749 
|                                          |  |                                                                                   |       
|Operating income (loss)                   |  |                                                                                   | 1,962 
|Interest expense                          |  |                                                                                   | 5,978 
|                                          |  |                                                                                   |       
|Loss before income taxes                  |  |                                                                                   | (4,016
|Income tax expense                        |  |                                                                                   | 30    
|                                          |  |                                                                                   |       
|Net loss                                  |  | $                                                                                 | (4,046
|                                          |  |                                                                                   |       



11



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|                                         |  | Consolidating Statement of Cash Flows Three Months Ended March 31, 2002 |       
|---------------------------------------- |  | ----------------------------------------------------------------------- | ------
|                                         |  | HolleyPerformanceProducts Inc.(Parent CompanyOnly)                      |       
|OPERATING ACTIVITIES:                    |  |                                                                         |       
|Net cash from operating activities       |  | $                                                                       | (4,642
|INVESTING ACTIVITIES:                    |  |                                                                         |       
|Capital expenditures                     |  |                                                                         | (91   
|                                         |  |                                                                         |       
|Net cash from investing activities       |  |                                                                         | (91   
|                                         |  |                                                                         |       
|FINANCING ACTIVITIES                     |  |                                                                         |       
|Proceeds from long-term borrowings       |  |                                                                         | 4,481 
|Principal payments on long-term debt     |  |                                                                         | (75   
|Financing costs                          |  |                                                                         | (12   
|                                         |  |                                                                         |       
|Net cash from financing activities       |  |                                                                         | 4,754 
|                                         |  |                                                                         |       
|Net changes in cash and cash equivalents |  |                                                                         | 21    
|Cash and cash equivalents:               |  |                                                                         |       
|Beginning of period                      |  |                                                                         | 72    
|                                         |  |                                                                         |       
|End of period                            |  | $                                                                       | 93    
|                                         |  |                                                                         |       



12



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|                                           |  | Consolidating Statement of Cash Flows Three Months Ended March 30, 2003 |       
|------------------------------------------ |  | ----------------------------------------------------------------------- | ------
|                                           |  | HolleyPerformanceProducts Inc. (Parent CompanyOnly)                     |       
|OPERATING ACTIVITIES:                      |  |                                                                         |       
|Net cash from operating activities         |  | $                                                                       | (3,604
|INVESTING ACTIVITIES:                      |  |                                                                         |       
|Capital expenditures                       |  |                                                                         | (261  
|Proceeds from the disposal of business     |  |                                                                         | 1,185 
|Proceeds from the disposal of fixed assets |  |                                                                         | 160   
|                                           |  |                                                                         |       
|Net cash from investing activities         |  |                                                                         | 1,084 
|                                           |  |                                                                         |       
|FINANCING ACTIVITIES                       |  |                                                                         |       
|Net proceeds from revolving credit line    |  |                                                                         | 2,789 
|Principal payments on long-term debt       |  |                                                                         | (513  
|                                           |  |                                                                         |       
|Net cash from financing activities         |  |                                                                         | 2,276 
|                                           |  |                                                                         |       
|Net change in cash and cash equivalents    |  |                                                                         | (244  
|Cash and cash equivalents:                 |  |                                                                         |       
|Beginning of period                        |  |                                                                         | 421   
|                                           |  |                                                                         |       
|End of period                              |  | $                                                                       | 177   
|                                           |  |                                                                         |       



7. Contingent Liabilities



In May 1999, Union Pacific Railroad Company filed an action against
Weiand Automotive and others in the United States District Court for the Central District of California, alleging that certain soil and groundwater contamination discovered on Union Pacific property in Los Angeles had migrated from an adjacent
Weiand Automotive facility. Holley subsequently became a defendant, as did the owner of the property on which the Weiand Automotive business had been operated. In December 2000, a global settlement of claims was reached with Weiands insurers
paying the bulk of the settlement and Holley and Weiand Automotives attorneys fees. In addition, $550 was put into a Site Source Control Account to cover costs incurred by Holley and Weiand Automotive and the property owner to investigate and
remediate any contamination of the Weiand property which may be required by the State of California. In July 2001, Weiand Automotive entered into a Voluntary Cleanup Agreement with the State of California Environmental Protection Agency Department
of Toxic Substances Control (DTSC) to investigate and, if necessary, remediate the contamination on the Weiand property. Consultants for Holley and Weiand Automotive have submitted a workplan to DTSC, which is pending approval. Although Holley
estimates that the Site Source Control Account will be sufficient to cover Holleys costs for investigation and remediation of the site, there can be no assurances that the final costs will not exceed such amount. Holley and Weiand Automotive
are working vigorously to address regulatory issues arising from the discovered contamination.



The Company is a party to various lawsuits and claims in the normal course of business. While the lawsuits and claims against the Company cannot be predicted with certainty, management believes that the ultimate
resolution of the matters will not have a material effect on the financial position or results of operations of the Company.



The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending
on the nature of the product. The accrued





13



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product warranty costs are based primarily on historical experience of actual warranty claims. The following table
provides the changes in the Companys product warranties:



|                                |  | Three Months Ended |      
|------------------------------- |  | ------------------ | -----
|                                |  | March 31,2002      |      
|Beginning Balance               |  | $                  | 5,356
|Accrued for current year claims |  |                    | 309  
|Settlement of warranty claims   |  |                    | (265 
|                                |  |                    |      
|Ending Balance                  |  | $                  | 5,400
|                                |  |                    |      



14



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ITEM 2: Managements Discussion and Analysis of Financial Condition and Results of Operations



The following discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes included in this report as
well as the financial statements and notes for the year ended December 31, 2002 included in our Form 10-K. This discussion and other portions of this report may contain forward-looking statements.



OVERVIEW



Founded in 1903, Holley is a leading manufacturer and marketer of specialty products for the performance automotive, marine and motorcycle
aftermarkets. Holley designs, manufactures and markets a diversified line of automotive performance and racing products that are designed to enhance vehicle performance through generating increased horsepower, and torque. Products include but are
not limited to performance and remanufactured carburetors, nitrous oxide systems, fuel injection systems, super chargers, intake manifolds, cylinder heads, camshafts, pistons, connecting rods, crankshafts, headers and other exhaust system
components, fuel pumps, water pumps, and performance automotive plumbing products.



SEASONALITY



Operations experience slight seasonal trends,
which generally affect the overall automotive aftermarket industry. Historically, revenues are highest in the spring, during our second fiscal quarter, which marks the beginning of the racing season and when the weather is better suited for outdoor
automotive repair activity.



COMPARISON OF THE THREE MONTHS ENDED MARCH 30,
2003 AND MARCH 31, 2002



The following table sets forth for the periods
shown, net sales, gross profit, selling, general and administrative costs (SG&A), operating income, and net loss in millions of dollars and as a percentage of sales.



|                 |  | Three Months Ended |     
|---------------- |  | ------------------ | ----
|                 |  | March 31, 2002     |     
|                 |  |                    |     
|Net sales        |  | $                  | 37.6
|Gross profit     |  |                    | 10.6
|SG&A             |  |                    | 6.8 
|Operating income |  |                    | 3.0 
|Net loss         |  |                    | (1.8



Net Sales



Net sales equal gross revenues less provisions for volume rebates, credits, product returns,
co-op advertising, and other sales allowances. Net sales for the quarter ended March 30, 2003 totaled $32.8 million compared to $37.6 million for the same period in 2002, a decrease of $4.8 million or 12.8%.



Net sales in the performance segment for the first quarter of 2003 were $29.1 million
compared to $32.7 million in the first quarter of 2002, a decrease of $3.6 million or 11.0%. The decline in net sales is generally attributable to unfavorable weather conditions, uncertainty over the war in Iraq, prevailing economic conditions and a
change in the Companys sales strategy to focus more closely on end-user demand.



Net sales in the remanufacturing segment were $3.7 million in the first quarter of 2003 compared to $4.9 million in the first quarter of 2002, a decrease of $1.2 million or 24.5%. The decreased sales in the remanufacturing segment are the
result of weak demand in the repair market and the fact that new cars have not been produced with carburetors since approximately 1992, which has led to a continuing decline in the demand for remanufactured carburetors.



15



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Gross Profit



Gross profit for the first quarter of 2003 totaled $9.1 million or 27.7% of net sales compared to gross profits of $10.6 million or 28.2% of net sales for the same
quarter in 2002. This represents a decrease of $1.5 million or 14.2%, which resulted primarily from the decrease in sales.



In the performance segment, gross profit was $8.6 million for the first quarter of 2003 compared to $9.1 million for the first quarter of 2002, a decrease of $0.5 million
or 5.5%. Although the gross profit dollars decreased due to lower sales, gross profit as a percentage of net sales improved from 28.2% in the first quarter of 2002 to 29.6% in the first quarter of 2003 from implementation of strategies to improve
manufacturing performance and control costs.



In the remanufacturing segment,
gross profit was $0.5 million in the first quarter of 2003 compared to $1.5 million for the same period in 2002, a decrease of $1.0 million or 66.7%. The decrease in the remanufacturing segment is due to the aforementioned decline in demand for
remanufactured products.



Selling, General and Administrative Costs



Selling, general and administrative costs for the three months ended
March 30, 2003 totaled $6.2 million or 18.9% of net sales compared to $6.8 million or 18.1% of net sales in the same period in 2002, a decrease of $0.6 million or 8.8%. The Company has focused its spending strategy on receiving maximum value for
each dollar spent, which resulted in lower spending for promotions, advertising and commissions during the first quarter of 2003.



Other Expense



Other expense was $0.2 million for the three months ended March 30, 2003 compared to $0.1 million in the same period in 2002. The 2003 amount includes $0.2 million related to a loss on the sale of So-Cal Speed Shops,
Inc. (So-Cal) effective February 24, 2003. Cash proceeds of $1.2 million were received in connection with this sale.



Operating Income



Operating income for the three months ended March 30, 2003 was $2.0 million or 6.1% of net sales compared to $3.0 million or 8.0% of net sales for the same period in 2002, a decrease of $1.0 million or 33.3%. The
decrease resulted from the aforementioned decrease in net sales offset by cost cutting in the first quarter of 2003.



Interest Expense



Interest expense was $6.0 million for the three months ended March 30, 2003 compared to $5.4 million for the same period in 2002, an increase of $0.6 million or 11.1%. This increase was a result of higher overall
borrowings and higher interest rates under the revolving credit agreement as well as interest associated with the promissory notes issued in the third quarter of 2002.



Tax Expense



The income tax expense for the three months ended March 30, 2003 was $0.03 million compared with a benefit of $0.6 million for the three months ended March 31, 2002. The
tax benefit for 2002 resulted from a tax sharing agreement that the Company entered into in 2002 with its prior owner, Coltec Industries, Inc. (Coltec). Pursuant to this agreement, the Company was able to carry back net operating losses
to years it was a member of Coltecs consolidated tax group.



LIQUIDITY
AND CAPITAL RESOURCES



The Companys primary sources of liquidity are
cash flows from operations and borrowings under the revolving credit facility. As part of its operating strategy, the Company maintains minimal cash balances and is substantially dependent upon the availability of adequate working capital financing
to support accounts receivable and inventories.



16



---

The credit agreement provides for a total credit limit of $45 million, which includes a $25.0 million revolving credit
facility, subject to a borrowing base formula, of which $1.0 million is reserved for irrevocable standby letters of credit. As of March 30, 2003, borrowings under the credit agreement were $30.8 million and unused borrowing capacity under the
revolving credit facility was $4.0 million.



The credit agreement contains
financial covenants which require the maintenance of certain fixed charge coverage ratios beginning with the twelve-month period ended June 30, 2003. The Companys ability to operate within these financial covenants is dependent on its ability
to improve earnings. The Company was in compliance with the terms of our indebtedness as of March 30, 2003.



The Company is highly leveraged. As of March 30, 2003, our indebtedness was $186.2 million and our stockholders deficit was $103.5 million. Further, the Company has incurred recurring net losses. Management is
implementing actions designed to reduce working capital and improve operating results. If the improvements associated with these actions do not materialize in a timely manner, the Company may be required to take additional measures to ensure the
availability of sufficient cash to sustain operations. Such measures may include, among other things, reducing or delaying capital expenditures, selling assets, restructuring or refinancing indebtedness, or seeking additional equity capital. There
is no assurance that any of these measures can be affected on satisfactory terms, if at all.



Operating Activities



Net cash used in
operating activities decreased to $3.7 million for the three months ended March 30, 2003 from $4.4 million for the three months ended March 31, 2002. This decrease in cash used is attributable to reduced cash requirements for working capital
partially offset by the increased net loss for the first quarter of 2003 relative to the first quarter of 2002.



Investing Activities



Net cash provided by investing activities was $1.1 million for the three months ended March 30, 2003 compared to net cash used in investing activities of $0.4 million for the three months ended March 31, 2002. In the
first quarter of 2003, proceeds from the sale of So-Cal of $1.2 million and proceeds from the disposal of fixed assets of $0.2 million were partially offset by capital expenditures of $0.3 million. For the three months ended March 31, 2002, capital
expenditures were $0.4 million.



Financing Activities



Net cash provided by financing activities for the first quarter of 2003 and 2002 were $2.3
million and $4.7 million, respectively. This cash provided was principally a result of net borrowings under our revolving credit facility partially offset by principal payments on long-term debt.



EBITDA



EBITDA was $4.0 million for the three months ended March 30, 2003 compared to $5.3 million for the three months ended March 31, 2002, a
decrease of $1.3 million or 24.5%. This decrease in EBITDA is primarily the result of the aforementioned reduction in sales.



|                            |  | Three Months Ended
|--------------------------- |  | ------------------
|                            |  | March 31,2002     
|Operating income            |  | $                 
|Other expense               |  |                   
|Amortization of intangibles |  |                   
|Depreciation                |  |                   
|                            |  |                   
|EBITDA                      |  | $                 
|                            |  |                   



17



---

EBITDA is presented and discussed because the Company believes that investors regard EBITDA as a key measure of a
leveraged companys performance. EBITDA is defined as net income or loss (excluding extraordinary gains or losses, gains or losses from asset dispositions and minority interest) before interest, income taxes, depreciation and amortization.
However, EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America. EBITDA does not represent cash available to service debt and should not be considered in isolation or as a
substitute for net income or cash flows from operating activities (or any other measure of performance determined in accordance with generally accepted accounting principles).



Contractual Obligations and Commitments



The table below sets forth a summary of our contractual obligations and commitments as of March 30, 2003 that will have an impact on our future liquidity:



|                              |  | Years Ending December 31, |       |     
|----------------------------- |  | ------------------------- | ----- | ----
|Contractual Obligations       |  | 2003                      |       | 2004
|Loan and security agreement   |  | $                         | 1,503 |     
|Senior notes                  |  |                           |      |     
|Convertible promissory note   |  |                           |      |     
|Other long term debt          |  |                           | 35    |     
|Operating leases              |  |                           | 632   |     
|                              |  |                           |       |     
|Total contractual obligations |  | $                         | 2,170 |     
|                              |  |                           |       |     



Impact of Inflation



Management does not believe that inflation has had a significant affect on the results of
operations over the periods presented.



Recent Accounting Pronouncements



In June 2001, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards, or SFAS, No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 establishes accounting standards for recognition and measurement of an asset retirement obligation and an associated
asset retirement cost. This statement applies to all entities that have legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal use of the assets and is effective
for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a material impact on the consolidated financial position, results of operations or cash flows of the Company.



In July 2002, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities. It nullifies EITF Issue No. 94-3.
Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit on Activity (including Certain Costs Incurred in a Restructuring). The principal difference between SFAS No. 146 and Issue 94-3 relates to the
recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability be recognized for those costs only when the liability is incurred, that is, when it meets the definition of a liability in the
FASBs conceptual framework. In contrast, under Issue 94-3, a company recognized a liability for an exit cost when it committed to an exit plan. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31,
2002. The adoption of SFAS No. 146 did not have any impact on the consolidated financial position, results of operations or cash flows of the Company.



In December 2002, the FASB issued SFAS No. 148 Accounting for Stock-Based CompensationTransition and Disclosure, an amendment of FASB Statement No. 123. This
Statement amends FASB Statement No. 123 Accounting for Stock-Based Compensation, to provide alternative methods of transition of voluntary change to the fair value method of accounting for stock-based employee compensation. In



18



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addition, this Statement amends the disclosure requirements of Statement No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method on reported results. The adoption of the disclosure provisions of SFAS No. 148 did not have a material effect
on the Companys consolidated financial position, results of operations or cash flows of the Company.



In November 2002, the FASB issued Interpretation (FIN) No. 45 Guarantors Accounting and Disclosure Requirements for Guarantees Including Indirect Guarantees of Indebtedness of others, which provides
guidance on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of
a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of FIN No. 45 are applicable on a prospective basis to guarantees issued or modified after December
31, 2002, irrespective of the guarantors fiscal year end. The adoption of FIN No. 45 did not have a material effect on the Companys consolidated financial position, results of operations or cash flows of the Company.



In January 2003, the FASB issued Interpretation No. 46 Consolidation of Variable Interest
Entities, an interpretation of ARB No. 51.This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation applies immediately to variable interest
entities created after January 31, 2003, and to variable interests in variable interest entities obtained after January 31, 2003. The application of this Interpretation did not have any impact on the Companys consolidated financial position,
results of operations or cash flows of the Company.



Forward-Looking
Statements



This report may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company intends that the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 apply to any
forward-looking statements. Forward-looking statements are not statements of historical fact but rather reflect the Companys current expectations, estimates and predictions about future results and events. These statements may use words such
as anticipate, believe, estimate, expect, intend, predict, project and similar expressions as they relate to the Company or the Companys management. When the
Company makes forward-looking statements, it is basing them on managements beliefs and assumptions, using information currently available to it. These forward-looking statements are subject to risks, uncertainties and assumptions. Information
on significant risks, uncertainties and assumptions not discussed herein may be found in the Companys filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise. If one or more risks or uncertainties materialize, or if the Companys underlying assumptions prove to be incorrect, actual results may vary materially from what
the Company projected. Any forward-looking statements in this report reflect the Companys current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Companys
operations, results of operations and liquidity. All subsequent written and oral forward-looking statements attributable to the Company or individuals acting on the Companys behalf are expressly qualified in their entirety by this paragraph.



|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk
|------- |  | ----------------------------------------------------------



Certain borrowings under the revolving credit facility bear interest at fluctuating market rates. An analysis of the impact of an increase or decrease in the interest
rate of 100 basis points on the Companys interest-rate-sensitive financial instruments shows an impact on expected annual interest expense of approximately $200,000.



|Item 4. |  | Controls and Procedures
|------- |  | -----------------------



As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the Exchange Act), within the 90 days prior to the filing date of this
report, the Company carried out an evaluation of the



19



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effectiveness of the design and operation of the Companys disclosure controls and procedures. This evaluation was
carried out under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer along with the Companys Chief Financial Officer. Based upon that evaluation, the Companys
Chief Executive Officer along with the Companys Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective.



Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed
in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Companys Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.



In connection with our evaluation of internal controls, we noted that certain internal control matters existed that required corrective actions. These internal control
matters related to deficiencies in staffing, systems, and processes. The Company began implementation of a plan to strengthen internal controls during 2002. The plan, which has been designed to address the identified internal control matters, was an
on-going project throughout 2002 and continues into 2003.



PART II



|ITEM 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



(a) Exhibits



|Exhibit No. |  | Item                                    
|----------- |  | ----------------------------------------
|            | 
|99.1        |  | Certification of Chief Executive Officer
|            | 
|99.2        |  | Certification of Chief Financial Officer



(b) Reports on Form 8-K



None



20



---

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.



Holley Performance Products Inc.

(Registrant)



|Signature                                     |  | Title                                 |  | Date        
|--------------------------------------------- |  | ------------------------------------- |  | ------------
|                                              |  |                                      
|/s/    JAMES D. WIGGINSJames D. Wiggins       |  | President and Chief Executive Officer |  | July 2, 2003
|                                              |  |                                      
|/s/    THOMAS W. TOMLINSONThomas W. Tomlinson |  | Chief Financial Officer               |  | July 2, 2003



21



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CERTIFICATIONS



I, James D. Wiggins, President and Chief Executive Officer of Holley Performance Products Inc., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Holley Performance Products Inc.;
|-- |  | ---------------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others
within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date:  July 2, 2003



/s/    JAMES D. WIGGINSJames D. Wiggins, President and Chief Executive Officer




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---

I, Thomas W. Tomlinson, Chief Financial Officer of Holley Performance Products Inc., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Holley Performance Products Inc.;
|-- |  | ---------------------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others
within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of the
registrants board of directors (or persons performing the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Date: July 2, 2003



/s/    THOMAS W. TOMLINSONThomas W. Tomlinson, Chief Financial Officer




23