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

FORM 10-Q

|(Mark One)                                            
|------------------------------------------------------
|                                                      
|x                                                     
|                                                      
|For the quarterly period ended June 29, 2003          
|                                                      
|OR                                                    
|                                                      
|o                                                     
|                                                      
|For the transition period            
to              
|                                                      
|Commission File Number: 333-89061                     
|                                                      
|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)                         
|                                                                 
|Registrants telephone number, including area code:  270-782-2900

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days:

|Yes x | No o
|----- | ----

Indicate by check mark whether the registrant
is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

|Yes o | No o
|----- | ----

There were 1,000 shares of Common Stock
outstanding as of June 29, 2003.

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Index

|PART I     
Financial Information | 1      
|--------------------------------- | -------
|                                  | ITEM 1.
|                                  | ITEM 2.
|                                  | ITEM 3.
|                                  | ITEM 4.
|PART II     
Other Information    | 22     
|                                  | ITEM 6.



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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* |          | June 29, 2003 |  
|-------------------------------------------------------------------------------------------- |  | ------------------ | -------- | ------------- | -
|                                                                                             |  |                    |          |               |  
|ASSETS                                                                                       |  |                    |          |               |  
|Cash and cash equivalents                                                                    |  | $                  | 602      |               | $
|Accounts receivable, less allowance for doubtful accounts of $1,089 and $1,198, 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                                                           |  |                    | 18,210   |               |  
|Intangible assets, net                                                                       |  |                    | 61,008   |               |  
|                                                                                             |  |                    |          |               |  
|Total assets                                                                                 |  | $                  | 127,774  |               | $
|                                                                                             |  |                    |          |               |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                        |  |                    |          |               |  
|Current portion of long-term debt                                                            |  | $                  | 28,724   |               | $
|Accounts payable                                                                             |  |                    | 8,408    |               |  
|Accrued liabilities                                                                          |  |                    | 13,195   |               |  
|Accrued interest                                                                             |  |                    | 5,913    |               |  
|                                                                                             |  |                    |          |               |  
|Total current liabilities                                                                    |  |                    | 56,240   |               |  
|Long-term debt, net of current portion                                                       |  |                    | 155,111  |               |  
|Deferred income taxes                                                                        |  |                    | 15,841   |               |  
|                                                                                             |  |                    |          |               |  
|Total liabilities                                                                            |  |                    | 227,192  |               |  
|                                                                                             |  |                    |          |               |  
|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                                                  |  | $                  | 127,774  |               | $
|                                                                                             |  |                    |          |               |  

*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

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HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands) (unaudited)

|                                                                                               |  | 3 Months Ended June 30,  2002 |         | 3 Months Ended  June 29, 2003 |   | 6 Months Ended June 30, 2002 |   | 6 Months Ended  June 29,  2003 |        
|---------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | ----------------------------- | - | ---------------------------- | - | ------------------------------ | -------
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        
|Net sales                                                                                      |  | $                             | 38,567  |                               | $ | 36,747                       |   | $                              | 75,155 
|Cost of goods sold                                                                             |  |                               | 35,953  |                               |   | 24,536                       |   |                                | 62,967 
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        
|Gross profit                                                                                   |  |                               | 2,614   |                               |   | 12,211                       |   |                                | 12,188 
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        
|Selling, general and administrative costs                                                      |  |                               | 7,567   |                               |   | 5,852                        |   |                                | 13,337 
|Management fees                                                                                |  |                               | 213     |                               |   | 221                          |   |                                | 425    
|Amortization expense                                                                           |  |                               | 472     |                               |   | 472                          |   |                                | 944    
|Other expense (income)                                                                         |  |                               | 288     |                               |   | (2                           | ) |                                | 371    
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        
|Total operating expenses                                                                       |  |                               | 8,540   |                               |   | 6,543                        |   |                                | 15,077 
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        
|Operating income (loss)                                                                        |  |                               | (5,926  | )                             |   | 5,668                        |   |                                | (2,889 
|Interest expense                                                                               |  |                               | 5,466   |                               |   | 6,020                        |   |                                | 10,888 
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        
|Loss before income taxes and cumulative effect of accounting change                            |  |                               | (11,392 | )                             |   | (352                         | ) |                                | (13,777
|Income tax expense (benefit)                                                                   |  |                               | (644    | )                             |   | 22                           |   |                                | (1,244 
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        
|Loss before cumulative effect of accounting change                                             |  |                               | (10,748 | )                             |   | (374                         | ) |                                | (12,533
|Cumulative effect of accounting change for intangible asset impairment, net of taxes of $1,292 |  |                               |        |                               |   |                             |   |                                | (2,114 
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        
|Net  loss                                                                                      |  | $                             | (10,748 | )                             | $ | (374                         | ) | $                              | (14,647
|                                                                                               |  |                               |         |                               |   |                              |   |                                |        

See notes to condensed consolidated financial statements

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HOLLEY PERFORMANCE PRODUCTS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) (unaudited)

|                                                                         |  | 6 Months Ended  June 30,  2002 |         | 6 Months Ended  June 29, 2003 |  
|------------------------------------------------------------------------ |  | ------------------------------ | ------- | ----------------------------- | -
|                                                                         |  |                                |         |                               |  
|OPERATING ACTIVITIES                                                     |  |                                |         |                               |  
|Net loss                                                                 |  | $                              | (14,647 | )                             | $
|Adjustments to reconcile net loss to net cash from operating activities: |  |                                |         |                               |  
|Depreciation                                                             |  |                                | 3,554   |                               |  
|Amortization of intangibles                                              |  |                                | 944     |                               |  
|Amortization of deferred financing costs included in interest expense    |  |                                | 443     |                               |  
|Amortization of debt discount                                            |  |                                | 343     |                               |  
|Loss on disposal of business                                             |  |                                |        |                               |  
|Gain on disposal of fixed assets                                         |  |                                |        |                               |  
|Deferred income taxes                                                    |  |                                | (1,307  | )                             |  
|Cumulative effect of accounting change                                   |  |                                | 2,114   |                               |  
|Change in operating assets and liabilities:                              |  |                                |         |                               |  
|Accounts receivable                                                      |  |                                | (1,067  | )                             |  
|Inventories                                                              |  |                                | 3,412   |                               |  
|Other assets                                                             |  |                                | (179    | )                             |  
|Accounts payable                                                         |  |                                | 6,669   |                               |  
|Accrued liabilities                                                      |  |                                | 12      |                               |  
|                                                                         |  |                                |         |                               |  
|Net cash from operating activities                                       |  |                                | 291     |                               |  
|                                                                         |  |                                |         |                               |  
|INVESTING ACTIVITIES                                                     |  |                                |         |                               |  
|Capital expenditures                                                     |  |                                | (941    | )                             |  
|Proceeds from the disposal of business                                   |  |                                |        |                               |  
|Proceeds from the disposal of fixed assets                               |  |                                | 46      |                               |  
|                                                                         |  |                                |         |                               |  
|Net cash from investing activities                                       |  |                                | (895    | )                             |  
|                                                                         |  |                                |         |                               |  
|FINANCING ACTIVITIES                                                     |  |                                |         |                               |  
|Net proceeds (repayments) from revolving credit line                     |  |                                | 1,126   |                               |  
|Financing costs                                                          |  |                                | (191    | )                             |  
|Principal payments on long-term debt                                     |  |                                | (198    | )                             |  
|                                                                         |  |                                |         |                               |  
|Net cash from financing activities                                       |  |                                | 737     |                               |  
|                                                                         |  |                                |         |                               |  
|Net change in cash and cash equivalents                                  |  |                                | 133     |                               |  
|Cash and cash equivalents:                                               |  |                                |         |                               |  
|Beginning of period                                                      |  |                                | 234     |                               |  
|                                                                         |  |                                |         |                               |  
|End of period                                                            |  | $                              | 367     |                               | $
|Supplemental disclosures of cash flow information:                       |  |                                |         |                               |  
|Cash paid for interest                                                   |  | $                              | 10,105  |                               | $
|                                                                         |  |                                |         |                               |  
|Cash received for income taxes                                           |  | $                              |        |                               | $
|                                                                         |  |                                |         |                               |  

See notes to condensed consolidated financial statements

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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 June 29, 2003, indebtedness was $182.7 million and stockholders deficit was $103.8 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 are presented as permitted by Form 10-Q and do not contain certain information included in the Companys annual consolidated financial statements.  For further information, refer to the
consolidated financial statements 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 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

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use of the assets and was 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 FASB issued SFAS 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 Emerging Issues Task Force 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 No. 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 No. 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 prospective 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 SFAS 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 SFAS 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 Company has determined that it does not have any interest in a variable
interest entity that would require the variable interest entity to be consolidated or disclosed by the Company.

In April 2003, the FASB issued SFAS No. 149, Amendments of Statement 133 on
Derivative instruments and Hedging Activities.This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.  This Statement is effective for contracts entered into or modified after June 30, 2003, except as
stated below and for hedging relationships designated after June 30, 2003.  In addition, except as stated below, all provisions of this Statement should be applied prospectively.  The provisions of this Statement that relate to SFAS 133
Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates.  In addition, paragraphs 7(a) and 23(a), which relate to
forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after June 30, 2003.    The Company does not expect the
adoption of SFAS No. 149, which will be effective for contracts entered into or modified after June 30, 2003, to have a material effect on its consolidated financial statements.

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In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.  This Statement
establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or
an asset in some circumstances). Many of those instruments were previously classified as equity.   This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003.  It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement
and still existing at the beginning of the interim period of adoption. Restatement is not permitted.  The adoption of SFAS No. 150 did not have a material impact on the 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.

2.   Inventories

Inventories are comprised of the following:

|                |  | December 31, 2002 |        | June 29, 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 Performance Parts and Remanufactured Parts. The Company manufactures high performance aftermarket automotive parts through its 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  Months Ended June 30,  2002 |        | Three  Months Ended  June 29,  2003 |   | Six Months  Ended June 30,  2002 |  | Six Months  Ended June 29,  2003 |       
|--------------------- |  | ---------------------------------- | ------ | ----------------------------------- | - | -------------------------------- |  | -------------------------------- | ------
|                      |  |                                    |        |                                     |   |                                  |  |                                  |       
|Performance Parts:    |  |                                    |        |                                     |   |                                  |  |                                  |       
|Net sales             |  | $                                  | 35,388 |                                     | $ | 33,162                           |  | $                                | 67,036
|Gross profits         |  |                                    | 3,345  |                                     |   | 11,745                           |  |                                  | 11,439
|Remanufactured Parts: |  |                                    |        |                                     |   |                                  |  |                                  |       
|Net sales             |  | $                                  | 3,179  |                                     | $ | 3,585                            |  | $                                | 8,119 
|Gross profits (loss)  |  |                                    | (731   | )                                   |   | 466                              |  |                                  | 749   
|Total:                |  |                                    |        |                                     |   |                                  |  |                                  |       
|Net sales             |  | $                                  | 38,567 |                                     | $ | 36,747                           |  | $                                | 75,155
|Gross profits         |  |                                    | 2,614  |                                     |   | 12,211                           |  |                                  | 12,188

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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 June 29, 2003
are shown in the following table:

|                              |  | December 31, 2002 |        | June 29, 2003 |  
|----------------------------- |  | ----------------- | ------ | ------------- | -
|                              |  |                   |        |               |  
|Performance Parts:            |  |                   |        |               |  
|Inventories                   |  | $                 | 19,875 |               | $
|Property, plant and equipment |  |                   | 16,849 |               |  
|Remanufactured Parts:         |  |                   |        |               |  
|Inventories                   |  | $                 | 2,968  |               | $
|Property, plant and equipment |  |                   | 1,361  |               |  
|Total:                        |  |                   |        |               |  
|Inventories                   |  | $                 | 22,843 |               | $
|Property, plant and equipment |  |                   | 18,210 |               |  

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        |        | June 29, 2003             |  
|---------------------------- |  | ------------------------ | ------ | ------------------------- | -
|                             |  |                          |        |                           |  
|                             |  | Gross  Carrying   Amount |        | Accumulated  Amortization |  
|                             |  |                          |        |                           |  
|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 $443 and $944 for the six
months ended June 30, 2002 and $587 and $944 for the six months ended June 29, 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 are intangible assets not subject to amortization.   Goodwill and tradenames have a net carrying value of $16,110 and
$37,264, respectively as of December 31, 2002 and June 29, 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 $213 and $425 for the three and six months ended June 30, 2002, respectively and $221 and $434 for the three and six months ended June 29, 2003, respectively. Kohlberg has deferred cash payments with
respect to the management fees charged the Company since January 1, 2002; however, such fees are accruing in connection with the aforementioned management agreement.

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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 June 29, 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.

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|                                                                                           |  | Condensed Consolidating Balance Sheet  December 31, 2002   |         
|------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------- | --------
|                                                                                           |  |                                                            |         
|                                                                                           |  | Holley  Performance  Products Inc.  (Parent Company  Only) |         
|                                                                                           |  |                                                            |         
|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                                                                           |  |                                                            | 7,813   
|Accrued liabilities                                                                        |  |                                                            | 11,306  
|Accrued interest                                                                           |  |                                                            | 5,913   
|Intercompany payable                                                                       |  |                                                            |        
|                                                                                           |  |                                                            |         
|Total current liabilities                                                                  |  |                                                            | 53,711  
|Long - term debt, net of current portion                                                   |  |                                                            | 154,993 
|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 
|                                                                                           |  |                                                            |         

9



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##### Table of Contents

|                                                                                           |  | Condensed Consolidating Balance Sheet  June 29, 2003       |         
|------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------- | --------
|                                                                                           |  |                                                            |         
|                                                                                           |  | Holley  Performance  Products Inc.  (Parent Company  Only) |         
|                                                                                           |  |                                                            |         
|ASSETS                                                                                     |  |                                                            |         
|Cash and cash equivalents                                                                  |  | $                                                          |        
|Accounts receivable, net                                                                   |  |                                                            | 23,090  
|Inventories                                                                                |  |                                                            | 9,966   
|Deferred income taxes                                                                      |  |                                                            | 3,250   
|Income taxes receivable                                                                    |  |                                                            | 603     
|Intercompany receivable                                                                    |  |                                                            | 8,889   
|Other current assets                                                                       |  |                                                            | 712     
|                                                                                           |  |                                                            |         
|Total current assets                                                                       |  |                                                            | 46,510  
|Property, plant and equipment, net                                                         |  |                                                            | 12,337  
|Investment in subsidiaries                                                                 |  |                                                            | 20,836  
|Intangible assets, net                                                                     |  |                                                            | 37,032  
|                                                                                           |  |                                                            |         
|Total assets                                                                               |  | $                                                          | 116,715 
|                                                                                           |  |                                                            |         
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                      |  |                                                            |         
|Current portion of long-term debt                                                          |  | $                                                          | 27,198  
|Accounts payable                                                                           |  |                                                            | 9,662   
|Accrued liabilities                                                                        |  |                                                            | 11,695  
|Accrued interest                                                                           |  |                                                            | 6,108   
|Intercompany payable                                                                       |  |                                                            |        
|                                                                                           |  |                                                            |         
|Total current liabilities                                                                  |  |                                                            | 54,663  
|Long-term debt, net of current portion                                                     |  |                                                            | 155,470 
|Deferred income taxes                                                                      |  |                                                            | 10,420  
|Total liabilities                                                                          |  |                                                            | 220,553 
|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                                                                        |  |                                                            | (163,838
|                                                                                           |  |                                                            |         
|Stockholders deficit                                                                      |  |                                                            | (103,838
|                                                                                           |  |                                                            |         
|Total liabilities and stockholders deficit                                                |  | $                                                          | 116,715 
|                                                                                           |  |                                                            |         

10



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|                                          |  | Condensed Consolidating Statement of Operations  Three Months Ended June 30, 2002 |        
|----------------------------------------- |  | --------------------------------------------------------------------------------- | -------
|                                          |  |                                                                                   |        
|                                          |  | Holley  Performance  Products Inc.  (Parent Company  Only)                        |        
|                                          |  |                                                                                   |        
|Net sales                                 |  | $                                                                                 | 12,635 
|Cost of goods sold                        |  |                                                                                   | 11,330 
|                                          |  |                                                                                   |        
|Gross profit                              |  |                                                                                   | 1,305  
|Selling, general and administrative costs |  |                                                                                   | 3,046  
|Management fees                           |  |                                                                                   | 213    
|Amortization of intangibles               |  |                                                                                   |       
|Other expense                             |  |                                                                                   | 288    
|Equity in loss of subsidiaries            |  |                                                                                   | 3,741  
|                                          |  |                                                                                   |        
|Total operating expenses                  |  |                                                                                   | 7,288  
|                                          |  |                                                                                   |        
|Operating loss                            |  |                                                                                   | (5,983 
|Interest expense                          |  |                                                                                   | 5,445  
|                                          |  |                                                                                   |        
|Loss before income taxes                  |  |                                                                                   | (11,428
|Income tax expense (benefit)              |  |                                                                                   | (680   
|                                          |  |                                                                                   |        
|Net loss                                  |  | $                                                                                 | (10,748
|                                          |  |                                                                                   |        



|                                                                    |  | Condensed Consolidating Statement of Operations Six Months Ended June 30, 2002 |        
|------------------------------------------------------------------- |  | ------------------------------------------------------------------------------ | -------
|                                                                    |  |                                                                                |        
|                                                                    |  | Holley  Performance  Products Inc. (Parent Company  Only)                      |        
|                                                                    |  |                                                                                |        
|Net sales                                                           |  | $                                                                              | 33,089 
|Cost of goods sold                                                  |  |                                                                                | 26,181 
|                                                                    |  |                                                                                |        
|Gross profit                                                        |  |                                                                                | 6,908  
|Selling, general and administrative costs                           |  |                                                                                | 3,195  
|Management fees                                                     |  |                                                                                | 425    
|Amortization of intangibles                                         |  |                                                                                |       
|Other expense                                                       |  |                                                                                | 346    
|Equity in loss of subsidiaries                                      |  |                                                                                | 6,970  
|                                                                    |  |                                                                                |        
|Total operating expenses                                            |  |                                                                                | 10,936 
|                                                                    |  |                                                                                |        
|Operating income (loss)                                             |  |                                                                                | (4,028 
|Interest expense                                                    |  |                                                                                | 10,846 
|                                                                    |  |                                                                                |        
|Loss before income taxes and cumulative effect of accounting change |  |                                                                                | (14,874
|Income tax benefit                                                  |  |                                                                                | (735   
|                                                                    |  |                                                                                |        
|Loss before cumulative effect of accounting change                  |  |                                                                                | (14,139
|Cumulative effect of accounting change                              |  |                                                                                | (508   
|                                                                    |  |                                                                                |        
|Net loss                                                            |  | $                                                                              | (14,647
|                                                                    |  |                                                                                |        

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##### Table of Contents

|                                         |  | Consolidating Statement of Cash Flows  Six Months Ended June 30, 2002 |      
|---------------------------------------- |  | --------------------------------------------------------------------- | -----
|                                         |  |                                                                       |      
|                                         |  | Holley  Performance  Products Inc.  (Parent Company  Only)            |      
|                                         |  |                                                                       |      
|OPERATING ACTIVITIES:                    |  |                                                                       |      
|Net cash from operating activities       |  | $                                                                     | (161 
|INVESTING ACTIVITIES:                    |  |                                                                       |      
|Capital expenditures                     |  |                                                                       | (572 
|Proceeds on disposal of fixed assets     |  |                                                                       |     
|                                         |  |                                                                       |      
|Net cash from investing activities       |  |                                                                       | (572 
|                                         |  |                                                                       |      
|FINANCING ACTIVITIES:                    |  |                                                                       |      
|Proceeds from long-term borrowings       |  |                                                                       | 1,126
|Principal payments on long-term debt     |  |                                                                       | (148 
|Financing costs                          |  |                                                                       | (191 
|                                         |  |                                                                       |      
|Net cash from financing activities       |  |                                                                       | 787  
|                                         |  |                                                                       |      
|Net changes in cash and cash equivalents |  |                                                                       | 54   
|Cash and cash equivalents:               |  |                                                                       |      
|Beginning of period                      |  |                                                                       | 72   
|                                         |  |                                                                       |      
|End of period                            |  | $                                                                     | 126  
|                                         |  |                                                                       |      



|                                          |  | Condensed Consolidating Statement of Operations  Three Months Ended June 29, 2003 |       
|----------------------------------------- |  | --------------------------------------------------------------------------------- | ------
|                                          |  |                                                                                   |       
|                                          |  | Holley  Performance  Products Inc.  (Parent Company  Only)                        |       
|                                          |  |                                                                                   |       
|Net sales                                 |  | $                                                                                 | 17,658
|Cost of goods sold                        |  |                                                                                   | 11,361
|                                          |  |                                                                                   |       
|Gross profit                              |  |                                                                                   | 6,297 
|Selling, general and administrative costs |  |                                                                                   | 1,776 
|Management fees                           |  |                                                                                   | 221   
|Amortization of intangibles               |  |                                                                                   | 283   
|Other income                              |  |                                                                                   | (2    
|Equity in income of subsidiaries          |  |                                                                                   | (1,640
|                                          |  |                                                                                   |       
|Total operating expenses                  |  |                                                                                   | 638   
|                                          |  |                                                                                   |       
|Operating income (loss)                   |  |                                                                                   | 5,659 
|Interest expense                          |  |                                                                                   | 6,020 
|                                          |  |                                                                                   |       
|Income (loss) before income taxes         |  |                                                                                   | (361  
|Income tax expense                        |  |                                                                                   | 13    
|                                          |  |                                                                                   |       
|Net income (loss)                         |  | $                                                                                 | (374  
|                                          |  |                                                                                   |       

12



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##### Table of Contents

|                                          |  | Condensed Consolidating Statement of Operations  Six Months Ended June 29, 2003 |       
|----------------------------------------- |  | ------------------------------------------------------------------------------- | ------
|                                          |  |                                                                                 |       
|                                          |  | Holley  Performance  Products Inc. (Parent Company  Only)                       |       
|                                          |  |                                                                                 |       
|Net sales                                 |  | $                                                                               | 33,357
|Cost of goods sold                        |  |                                                                                 | 22,349
|                                          |  |                                                                                 |       
|Gross profit                              |  |                                                                                 | 11,008
|Selling, general and administrative costs |  |                                                                                 | 3,575 
|Management fees                           |  |                                                                                 | 434   
|Amortization of intangibles               |  |                                                                                 | 566   
|Other expense                             |  |                                                                                 | 198   
|Equity in income of subsidiaries          |  |                                                                                 | (1,386
|                                          |  |                                                                                 |       
|Total operating expenses                  |  |                                                                                 | 3,387 
|                                          |  |                                                                                 |       
|Operating income (loss)                   |  |                                                                                 | 7,621 
|Interest expense                          |  |                                                                                 | 11,998
|                                          |  |                                                                                 |       
|Income (loss) before income taxes         |  |                                                                                 | (4,377
|Income tax expense                        |  |                                                                                 | 43    
|                                          |  |                                                                                 |       
|Net income (loss)                         |  | $                                                                               | (4,420
|                                          |  |                                                                                 |       



|                                           |  | Consolidating Statement of Cash Flows  Six Months Ended June 29, 2003 |       
|------------------------------------------ |  | --------------------------------------------------------------------- | ------
|                                           |  |                                                                       |       
|                                           |  | Holley  Performance  Products Inc.  (Parent Company  Only)            |       
|                                           |  |                                                                       |       
|OPERATING ACTIVITIES:                      |  |                                                                       |       
|Net cash from operating activities         |  | $                                                                     | 380   
|INVESTING ACTIVITIES:                      |  |                                                                       |       
|Capital expenditures                       |  |                                                                       | (747  
|Proceeds from the disposal of business     |  |                                                                       | 1,185 
|Proceeds from the disposal of fixed assets |  |                                                                       | 162   
|                                           |  |                                                                       |       
|Net cash from investing activities         |  |                                                                       | 600   
|                                           |  |                                                                       |       
|FINANCING ACTIVITIES:                      |  |                                                                       |       
|Net proceeds from revolving credit line    |  |                                                                       | (375  
|Principal payments on long-term debt       |  |                                                                       | (1,026
|                                           |  |                                                                       |       
|Net cash from financing activities         |  |                                                                       | (1,401
|                                           |  |                                                                       |       
|Net change in cash and cash equivalents    |  |                                                                       | (421  
|Cash and cash equivalents:                 |  |                                                                       |       
|Beginning of period                        |  |                                                                       | 421   
|                                           |  |                                                                       |       
|End of period                              |  | $                                                                     |      
|                                           |  |                                                                       |       

13



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##### Table of Contents

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 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 |        | Six Months Ended |  
|------------------------------- |  | ------------------ | ------ | ---------------- | -
|                                |  |                    |        |                  |  
|                                |  | June 30,  2002     |        | June 29, 2003    |  
|                                |  |                    |        |                  |  
|Beginning Balance               |  | $                  | 5,400  |                  | $
|Accrued for current year claims |  |                    | 4,281  |                  |  
|Settlement of warranty claims   |  |                    | (6,590 | )                |  
|                                |  |                    |        |                  |  
|Ending Balance                  |  | $                  | 3,091  |                  | $
|                                |  |                    |        |                  |  

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##### Table of Contents

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 included in this report as well as the consolidated financial statements for the year ended December 31, 2002 included in
the Companys 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. The Companys 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

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

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 |       | Six months ended | 
|----------------------- |  | ------------------ | ----- | ---------------- | 
|                        |  |                    |       |                  | 
|                        |  | June 30,  2002     |       | June 29,  2003   | 
|                        |  |                    |       |                  | 
|                        |  |                    |       |                  | 
|Net sales               |  | $                  | 38.6  |                  | 
|Gross profit            |  |                    | 2.6   |                  | 
|SG&A                    |  |                    | 7.6   |                  | 
|Operating income (loss) |  |                    | (5.9  | )                | 
|Net loss                |  |                    | (10.7 | )                | 

Net Sales

Net sales equal gross revenues less
provisions for volume rebates, credits, product returns, and other sales allowances. Net sales for the quarter ended June 29, 2003 totaled $36.7 million compared to $38.6 million for the same period in 2002, a decrease of $1.9 million or
4.9%.   Net sales for the six months ended June 29, 2003 were $69.6 million compared to $75.2 million for the six months ended June 30, 2002, a decrease of $5.6 million or 7.4%.

Net
sales in the performance segment for the second quarter of 2003 were $33.2 million compared to $35.4 million in the second quarter of 2002, a decrease of $2.2 million or 6.2%.   Net sales in the performance segment for the six
months ended June 29, 2003 were $62.2 million compared to $67.0 million for the six months ended June 30, 2002, a decrease of $4.8 million or 7.2%.   The decline in sales for the quarter and six month periods is generally
attributable to weak consumer confidence resulting in soft end-user demand, unfavorable weather conditions, uncertainty over the war in Iraq and prevailing economic conditions.  In addition, the Company has eliminated poorly performing product
lines which, while reducing net sales, has resulted in improvement at the gross profit level.

Net sales in the remanufacturing segment were $3.6 million in the second quarter of 2003 compared to
$3.2 million in the second quarter of 2002, an increase of $0.4 million or 12.5%.  The increase in net sales

15



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##### Table of Contents

for the second quarter of 2003 is due to a lower level of sales returns, credits and allowances during 2003.  Net sales in the remanufacturing segment for the six months
ended June 29, 2003 were $7.3 million compared to $8.1 million for the six months ended June 30, 2002, a decrease of $0.8 million or 9.9%.   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.

Gross Profit

Gross profit for the second quarter of 2003 totaled $12.2 million or 33.2% of net sales compared to gross profits of $2.6 million or 6.7% of net
sales for the same quarter in 2002.  This represents an increase of $9.6 million or 369.2%.  Gross profit for the six months ended June 29, 2003 was $21.3 million compared to $12.2 million for the six months ended June 30, 2002, an
increase of $9.1 million or 74.6%.

In the performance segment, gross profit was $11.7 million for the second quarter of 2003 compared to $3.3 million for the second quarter of 2002, an
increase of $8.4 million or 255%.  Gross profit in the performance segment for the six months ended June 29, 2003 was $20.3 million compared to $11.4 million for the six months ended June 30, 2002, an increase of $8.9 million or
78.1%.   The second quarter and six months of 2003 showed continued improvement in gross profit dollars and percentages as the Company realized improved results from the implementation of strategies to improve manufacturing performance and
control manufacturing costs.  These strategies include the outsourcing of non-core processes and more efficient layout of the shop floor.

In the remanufacturing segment, gross profit was $0.5
million in the second quarter of 2003 compared to a gross loss of $0.7 million for the same period in 2002.  Gross profit in the remanufacturing segment for the six months ended June 29, 2003 was $1.0 million compared to
$0.7 million for the six months ended June 30, 2002, an increase of $0.3 million or 42.9%. The increase in gross profit for the quarter and six months ended June 29, 2003 was caused primarily by a decline in sales returns, credits and
allowances.  This increase was offset by the continued decline in demand for remanufactured products.

Selling, General and Administrative Costs

Selling, general and administrative costs for the three months ended June 29, 2003 totaled $5.9 million or 16.1% of net sales compared to $7.6 million or 19.7% of net sales in the same period in 2002, a decrease of
$1.7 million or 22.4%.  Selling, general and administrative costs decreased to $12.1 million for the six months ended June 29, 2003 from $13.3 million for the six months ended June 30, 2002, a decrease of $1.2 million or 9.0%. 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 second quarter and first six months of 2003.

Other Expense

Other expense was $0.2 million for the six months ended June 29, 2003 compared to $0.4 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 June 29, 2003 was $5.7 million or 15.5% of net sales compared to an operating loss of $5.9 million
or 15.3% of net sales for the same period in 2002, an increase of $11.6 million or 196.6%. Operating income for the six months ended June 29, 2003 was $7.6 million or 10.9% of net sales compared to an operating loss of $2.9 million or 3.9%
of net sales for the six months ended June 30, 2002, an increase of $10.5 million or 362.1%. The increase in operating income for the quarter and six months ended June 29, 2003 resulted from the aforementioned improvements in manufacturing
performance and manufacturing spending.

16



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##### Table of Contents

Interest Expense

Interest expense was $6.0 million for the three months ended June 29, 2003 compared to
$5.5 million for the same period in 2002, an increase of $0.5 million or 9.1%.   Interest expense was $12.0 million for the six months ended June 29, 2003 compared to $10.9 million for the six months ended June 30, 2002, an
increase of $1.1 million or 10.1%.  These increases were a result of 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 tax benefit of $0.6 million and $1.2 for the three and six month periods ended June 29, 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. No further opportunities for carry back are available.

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.

The credit agreement provides for a total credit limit of $45.0 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 June 29, 2003 borrowings under the credit agreement were $27.1 million and unused borrowing capacity under the
revolving credit facility was $9.3 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 its indebtedness as of June
30, 2003.

The Company is highly leveraged.  As of June 29, 2003, the Companys indebtedness was $182.7 million and its stockholders deficit was $103.8 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 provided by operating activities decreased to $0.2 million for the six months ended June 29, 2003 from $0.3 million for the six months ended June 30, 2002.  Operating
activities for 2003 were primarily affected by the net loss of $4.4 million and the increase in trade accounts receivable of $7.1 million, offset by depreciation and amortization of $4.3 million, a decrease in inventories of $2.1 million, the
receipt of a tax refund of $3.0 million and the increase in accounts payable of $1.6 million.   Operating activities for 2002 were primarily affected by the net loss of $14.6 million, offset by depreciation and amortization of $5.3
million, a decrease in inventories of $3.4 million, and the increase in accounts payable of $6.7 million.

17



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##### Table of Contents

Investing Activities

Net cash provided by investing activities was $0.6 million for the six months ended June
29, 2003 compared to net cash used in investing activities of $0.9 million for the six months ended June 30, 2002.  For 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 $0.7 million.  For the six months ended June 30, 2002, capital expenditures were $0.9 million.

Financing Activities

Net cash used in financing activities for the six months ended June 29, 2003 was $1.4 million compared to net cash provided by financing activities of 2002 of $0.7 million.   In 2003, cash was used to pay
down the revolving credit facility and make principal payments on long-term debt.  In 2002, cash provided was principally a result of net borrowings under the Companys revolving credit facility partially offset by principal payments on
long-term debt.

EBITDA

EBITDA was $11.2 million for the six months ended June 29, 2003 compared to $2.0 million for the six months
ended June 30, 2002, an increase of $9.2 million.  This increase in EBITDA is the result of the increase in gross profit and reduced selling, general and administrative costs in 2003.

|                                                                       |  | Six Months Ended |        
|---------------------------------------------------------------------- |  | ---------------- | -------
|                                                                       |  |                  |        
|                                                                       |  | June 30 2002     |        
|                                                                       |  |                  |        
|Net loss                                                               |  | $                | (14,647
|Cumulative effect of accounting change for intangible asset impairment |  |                  | 2,114  
|Income tax expense (benefit)                                           |  |                  | (1,244 
|Interest expense                                                       |  |                  | 10,888 
|Other expense                                                          |  |                  | 371    
|Amortization of intangibles                                            |  |                  | 944    
|Depreciation                                                           |  |                  | 3,554  
|                                                                       |  |                  |        
|EBITDA                                                                 |  | $                | 1,980  
|                                                                       |  |                  |        

EBITDA is a required component of the financial covenant contained in the Companys credit
agreement.  EBITDA, as defined by the Companys credit agreement, 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).

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Contractual Obligations and Commitments

The table below sets forth a summary of the Companys contractual
obligations and commitments as of June 29, 2003 that will have an impact on the Companys future liquidity:

|                              |  | Years Ending December 31, |      
|----------------------------- |  | ------------------------- | -----
|                              |  |                           |      
|Contractual Obligations       |  | 2003                      |      
|                              |  |                           |      
|Loan and security agreement   |  | $                         | 1,002
|Senior notes                  |  |                           |     
|Convertible promissory note   |  |                           |     
|Other long term debt          |  |                           | 23   
|Operating leases              |  |                           | 421  
|                              |  |                           |      
|Total contractual obligations |  | $                         | 1,446
|                              |  |                           |      
|                              |  |                           |      

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 was 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 FASB issued SFAS 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 Emerging Issues Task Force 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 No. 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 No. 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 prospective
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 SFAS 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 SFAS 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

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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.

In April
2003, the FASB issued SFAS No. 149, Amendments of Statement 133 on Derivative instruments and Hedging Activities.This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.  This Statement is effective for
contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003.  In addition, except as stated below, all provisions of this Statement should be applied
prospectively.  The provisions of this Statement that relate to SFAS 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective
effective dates.  In addition, paragraphs 7(a) and 23(a), which relate to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered
into after June 30, 2003.    The Company does not expect the adoption of SFAS No. 149, which will be effective for contracts entered into or modified after June 30, 2003, to have a material effect on its consolidated financial
statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.  This Statement
establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or
an asset in some circumstances). Many of those instruments were previously classified as equity.   This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003.  It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement
and still existing at the beginning of the interim period of adoption. Restatement is not permitted.  The adoption of SFAS No. 150 did not have a material impact on the 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

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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 15a-15(b) under the Securities Exchange Act of 1934,
as amended (the Exchange Act), the Company carried out an evaluation of the effectiveness of the Companys disclosure controls and procedures (as defined under Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end
of the period covered by this report. 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 in timely
alerting them to material information relating to Holley (including its consolidated subsidiaries) required to be included in Holleys periodic SEC filings.

There has been no change in
Holleys internal control over financial reporting during the quarter ended June 30, 2003 that has materially affected, or is reasonably likely to materially affect, Holleys internal control over financial reporting.  However, in
connection with the Companys ongoing evaluation of internal control over financial reporting, certain internal control matters were noted that require corrective actions.  These internal control matters relate to deficiencies in staffing,
systems, and processes.  The Company began implementation of a plan to strengthen internal control over financial reporting 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.

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PART II

ITEM 6.     Exhibits and Reports on Form 8-K

(a)   Exhibits

|Exhibit No. |  | Item                                                                                                                                                          
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                               
|31(a)       |  | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 15a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|31(b)       |  | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 15a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|32(a)       |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002             
|32(b)       |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002             

(b)   Reports on Form 8-K

|Current Report on Form 8-K dated April 18, 2003 announcing changes in the Companys certifying accountants.
|-----------------------------------------------------------------------------------------------------------
|Current Report on Form 8-KA dated June 6, 2003 announcing changes in the Companys certifying accountants. 
|Current Report on Form 8-KA dated June 9, 2003 announcing changes in the Companys certifying accountants. 

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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 PRODUCTSINC.       |  |                
|----------------------- |  | ------------------------------------- |  | ---------------
|                        |  |                                       |  |                
|                        |  | (Registrant)                          |  |                
|                        |  |                                       |  |                
|Signature               |  | Title                                 |  | Date           
|                        |  |                                       |  |                
|                        |  |                                       |  |                
|                        |  |                                       |  |                
|/s/ JAMES D. WIGGINS    |  | President and Chief Executive Officer |  | August 13, 2003
|                        |  |                                       |  |                
|James D. Wiggins        |  |                                       |  |                
|                        |  |                                       |  |                
|                        |  |                                       |  |                
|/s/ THOMAS W. TOMLINSON |  | Chief Financial Officer               |  | August 13, 2003
|                        |  |                                       |  |                
|Thomas W. Tomlinson     |  |                                       |  |                
|                        |  |                                       |  |                

23