##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

|    |  |                                                                                                    
|--- |  | ---------------------------------------------------------------------------------------------------
|[X] |  | ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended June 30, 2002

OR

|      |  |                                                                                                           
|----- |  | ----------------------------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ____to____

Commission file number 0-24802

EDELBROCK CORPORATION
(Exact name of Registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction
of incorporation or organization) |  | 33-0627520
(I.R.S. Employer Identification No.)

2700 California Street
Torrance, California 90503
(Address of principal executive offices, including Zip Code)
Registrants telephone number, including area code: (310) 781-2222

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value
(Title and Class)

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

Yes [X]          No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrants knowledge, in definitive proxy or information statements
incorporated by reference in part II of this Form 10-K or any amendments to
this Form 10-K. [   ]

The aggregate market value of voting stock held by non-affiliates of the
Registrant, as of September 20, 2002 was approximately $21,102,000 (based upon
the closing price for shares of the Registrants Common Stock as reported by
the NASDAQ Stock Market for that date). For purposes of the foregoing
calculation only, all directors and executive officers of the registrant and
each person who may be deemed to beneficially own more than 5% of the
registrants Common Stock have been deemed affiliates.

On September 20, 2002, 5,451,915 shares of the Registrants Common Stock, $.01
par value, were outstanding of which 1,935,974 were held by non-affiliates.

DOCUMENT INCORPORATED BY REFERENCE

Information required by Part III (Items 10, 11, 12 and 13) is incorporated by
reference to the Companys definitive proxy statement for its 2002 Annual
Meeting of Shareholders.

1



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TABLE OF CONTENTS



|              |                                                                                               |  |  |  |  |  |  | 
|------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I       
|              | Item 1. Business                                                                             
|              | Item 2. Properties                                                                           
|              | Item 3. Legal Proceedings                                                                    
|              | Item 4. Submission of Matters to a Vote of Security Holders.                                 
|              | Executive Officers of the Company                                                            
|Part II      
|              | Item 5. Market for Companys Common Stock and Related Shareholder Matters.                   
|              | Item 6. Selected Consolidated Financial Data.                                                
|              | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation.
|              | Item 7A. Quantitative and Qualitative Disclosure about Market Risk.                          
|              | Item 8. Financial Statements and Supplementary Data.                                         
|              | Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
|Part III     
|              | Item 10. Directors of the Company.                                                           
|              | Item 11. Executive Compensation.                                                             
|              | Item 12. Security Ownership of Certain Beneficial Owners and Management.                     
|              | Item 13. Certain Relationships and Related Transactions.                                     
|Part IV      
|              | Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.                   
|SIGNATURES   
|EXHIBIT 10.19
|EXHIBIT 23.1 
|EXHIBIT 24.1 
|EXHIBIT 99.1 
|EXHIBIT 99.2 



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##### Table of Contents



ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

|                   |  |                                                                                       |  |     
|------------------ |  | ------------------------------------------------------------------------------------- |  | ----
|                   |  |                                                                                       |  | Page
|                   |  |                                                                                       |  |     
|                  
|PART I            
|                  
|Item 1.            |  | Business                                                                              |  | 3   
|                  
|Item 2.            |  | Properties                                                                            |  | 6   
|                  
|Item 3.            |  | Legal Proceedings                                                                     |  | 6   
|                  
|Item 4.            |  | Submission of Matters To a Vote of Security Holders                                   |  | 6   
|                  
|Additional Item:   |  | Executive Officers of the Company                                                     |  | 7   
|                  
|PART II           
|                  
|Item 5.            |  | Market for the Companys Common Stock and Related
Shareholder Matters                 |  | 8   
|                  
|Item 6.            |  | Selected Consolidated Financial Data                                                  |  | 9   
|                  
|Item 7.            |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |  | 11  
|                  
|Item 7A.           |  | Quantitative and Qualitative Disclosure About Market Risk                             |  | 18  
|                  
|Item 8.            |  | Financial Statements and Supplementary Data                                           |  | 18  
|                  
|Item 9.            |  | Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure  |  | 18  
|                  
|PART III          
|                  
|Item 10.           |  | Directors of the Company                                                              |  | 19  
|                  
|Item 11.           |  | Executive Compensation                                                                |  | 19  
|                  
|Item 12.           |  | Security Ownership of Certain Beneficial
Owners and Management                        |  | 19  
|                  
|Item 13.           |  | Certain Relationships and Related Transactions                                        |  | 19  
|                  
|PART IV           
|                  
|Item 14.           |  | Exhibits, Financial Statement Schedules and
Reports on Form 8-K                       |  | 19  
|                  
|Signatures         |  |                                                                                       |  | 23  
|                  
|302 Certifications |  |                                                                                       |  | 24  

2



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##### Table of Contents






Part I




Item 1. Business

General

Edelbrock Corporation (the Company) is one of Americas leading
manufacturers and marketers of specialty performance automotive and motorcycle
aftermarket parts. The Company designs, manufactures, distributes and markets
a wide range of high quality performance products, including intake manifolds,
carburetors, cylinder heads, camshafts, exhaust systems, and other components
designed for most domestic V8 and selected V6 engines and sport compact 4
cylinder engines. The Company also manufactures shock absorbers utilizing the
RICOR patented Inertia Active System that offers both a comfortable ride and
superior handling. In addition to the above, the Companys product line
includes motorcycle brake rotors and plumbing type products such as fuel
filters, fuel lines, and brake lines for both automotive and motorcycle
applications. These products are designed to enhance street, off-road,
recreational and competition vehicle performance through increased horsepower,
torque and or drivability. The Company also designs and markets products to
enhance engine and vehicle appearance, such as chrome and polished aluminum air
cleaners, valve covers and breathers. In 1994, the Company introduced
performance aluminum cylinder heads and intake manifolds for the
Harley-Davidson Evolution engine. In 1995, the Company acquired substantially
all of the assets of QwikSilver II, Inc. of Apple Valley, California, a
manufacturer of aftermarket Harley-Davidson and other motorcycle carburetors
and air cleaners.

In 1998, the Company entered the performance shock absorber market for a
range of all aftermarket applications with certain restrictions utilizing RICOR
Racing and Development, L.P.s (RICOR) patented inertia active system. In
connection therewith, the Company entered into a licensing and royalty
agreement with RICOR and issued warrants to purchase common stock of the
Company. In September 2001, the Company converted its license agreement with
RICOR from exclusive to non-exclusive. With this conversion, the Company no
longer pays RICOR a minimum royalty of $62,500 a month but instead pays 6% of
net sales for those products that utilize the RICOR patent.

In November 1999, the Company paid its first cash dividend since going
public in October 1994. The amount of the cash dividend was $105,000. The
Company also paid cash dividends of $102,000, $105,000, $98,000, and $101,000
in June 2000, November 2000, June 2001, and November 2001, respectively. In
June 2002, the Company paid a 10% stock dividend in lieu of a cash dividend.

In June 2000, the Company entered into a Product Development and
Distribution Agreement with JG Engine Dynamics, Inc. (JG) and Automotive
Systems Group Inc. (collectively, the Licensor) whereby the Company pays the
Licensor a percentage of net revenues derived from the sale of internal engine,
exhaust, and suspension components for sub-compact aftermarket products under
the JG/Edelbrock name. The Company paid to the Licensor cash of $144,000 and
issued 8,000 shares of common stock and issued warrants to purchase 80,000
shares of the Companys common stock. In addition, the Licensor has the right
to purchase Licensed Products developed by the Company.

In late December 2000, the Company purchased certain assets of Russell
Performance Products, Inc. (Russell), a leading manufacturer of performance
plumbing and brake lines located in Daytona Beach, Florida. In May 2001, the
Company moved the Russell operations to Torrance, California. Russells
current product offering of over 3,800 parts includes street-legal brake lines,
oil lines, fuel lines, and filters for both automotive and motorcycle use.

In January 2002, the
Company had its first broad product line price increase to its customers
in approximately seven years. The price increase ranged from 0%-5% which
resulted in an effective price increase of approximately 3.5% overall.

The Companys business strategy is to capitalize on recognition of the
Edelbrock brand name and strong distribution network to expand its leading
position in the specialty performance automotive and motorcycle aftermarket
parts market. The Company plans to achieve its business objective by pursuing
the following business strategies:



| |  |  | Broaden application of core products                                                                                                            
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Expand market share in compatible product lines                                                                                                 
|
| |  |  | Expand presence in chain stores                                                                                                                 
|
| |  |  | Introduce new products                                                                                                                          
|
| |  |  | Expand production capacity                                                                                                                      
|
| |  |  | Reduce manufacturing costs through vertical integration and automation                                                                          
|
| |  |  | Acquire other companies whose products will complement the
Companys existing product offering and make use of its management
and infrastructure

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History

The Company was founded in 1938 in Los Angeles by O. Victor Edelbrock, Sr.
Mr. Edelbrock utilized his experience as a mechanic and a winning car racer to
design and produce manifolds and cylinder heads. Upon his fathers death in
1962, O. Victor Edelbrock, Jr., also a racing enthusiast who began designing
manifolds in the 1960s, assumed his fathers position as President and Chief
Executive Officer of the Company. In 1967, the Company moved its operations to
El Segundo, California. The Company continued designing and marketing new
generations of manifolds throughout the 1960s and 1970s. In the 1980s, the
Company expanded its product line to include camshaft kits, valvetrain parts,
exhaust systems and other performance components, thus developing the Total
Power Package line. In 1987, the Company moved to its present location in
Torrance, California and in 1990 built its own sand-cast aluminum foundry in
San Jacinto, California. In the 1990s, the Company continued to expand its
product lines to include carburetors, aluminum cylinder heads, aluminum water
pumps, fuel-injected manifolds and aftermarket performance parts for
Harley-Davidson motorcycles. In 1995, the Company completed the construction of
a 37,000 square foot building in Torrance, California to house its exhaust
products division and a 15,000 square foot facility to expand the Companys
Foundry warehouse space in San Jacinto, California. In late 1997, the Company
completed construction of a 45,000 square foot facility adjacent to its
existing exhaust facility, which is being utilized primarily for the
manufacture of shock absorbers, as well as to accommodate its Russell
Performance (Russell) division which was relocated from Daytona Beach,
Florida in May 2001. In May 1998, the Company began producing a new line of
performance aftermarket shock absorbers utilizing the patented RICOR inertia
active system. In June 2000, the Company acquired the exclusive rights to
manufacture and sell internal engine, exhaust, and suspension components to the
import aftermarket under the JG/Edelbrock name. In December 2000, the
Company purchased certain assets of the aforementioned Russell Performance
Products, Inc., a manufacturer of performance plumbing and brake lines.

In July 1997, the Company completed construction of two facilities on
Company-owned property at its Foundry location in San Jacinto, California. A
12,000 square foot facility is being utilized for additional Foundry warehouse
space and a 15,000 square foot facility houses the Companys
motorcycle carburetor parts
division, which was relocated from Apple Valley, California.

In October 1999, the Company completed construction of a 65,950 square
foot distribution facility on Company-owned property adjacent to its exhaust
system and shock absorber production facility in Torrance, California. The
Company is utilizing the 30,000 square foot former distribution area at its
Company headquarters in Torrance for additional manufacturing capacity.

In July 2001, the Company purchased approximately 4 acres of improved land
for $552,000. This property is adjacent to its aluminum foundry in San
Jacinto, California and will be utilized for future corporate expansion.

Research and Development

The Company seeks to develop new products to respond to consumer demand,
to increase performance characteristics of existing product lines and to enter
into new product lines. For the fiscal years ended June 30, 2000, 2001, and
2002 research and development expenditures totalled $3,688,000, $3,651,000, and
$3,852,000, respectively.

Products

The Company offers over 7,500 performance automotive and motorcycle
aftermarket parts for street, off-road, recreational and competition use. The
Companys products are designed to enhance the engines performance through
increased horsepower, torque and drivability primarily by improving induction
of fuel and air into and exhaust out of the engine. The Company also designs
and markets products to improve appearance or drivability of the vehicle.

The Companys present lines include, among other items, intake manifolds,
which accounted for 28% of the Companys revenues for fiscal year 2000, 25% for
fiscal year 2001, and 23% for fiscal year 2002; and carburetors, which
accounted for 41%, 40%, and 38% of the Companys revenues for fiscal years
2000, 2001, and 2002, respectively.

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Distribution, Sales and Marketing

The Company utilizes a balanced nationwide distribution network, which
encompasses most major channels of distribution. The Companys policy is to
offer its products at the same price and under the same terms and conditions in
each of its channels of distribution. The Companys products are sold in all
50 states and Canada, as well as to a lesser degree in Australia, Europe, New
Zealand and the Pacific Rim, and are primarily distributed through the following channels:



| |  |  | Retail Automotive Chain Stores.                          
| | - |  | ---------------------------------------------------------
|
| |  |  | Mail Order Catalog Houses.                               
|
| |  |  | Warehouse Distributors and Performance Specialty Dealers.

In addition to the foregoing channels of distribution, the Company
supplies select component parts to original equipment manufacturers, including
Ford Motor Company, Volvo-Penta of the Americas, Inc., General Motors
Corporation, and Mercruiser, Inc., a division of Brunswick Corporation. In
addition, the Companys aluminum foundry, located in San Jacinto, California,
casts components for a variety of third-party manufacturers.

One customer, Auto Sales, Inc., accounted for 14.8%, 14.5%, and 15.5% of
the Companys revenues for fiscal years 2000, 2001, and 2002 respectively.
Another customer, AutoZone, Inc. accounted for 10.2%, 10.5%, and 10.6% of the
Companys revenues for fiscal year 2000, 2001, and 2002.

Manufacturing

The Company conducts manufacturing operations in its Torrance facilities
and casting operations at its aluminum foundry in San Jacinto. The Company
manufactures products such as manifolds, cylinder heads, water pumps, shock
absorbers and exhaust systems. Approximately 50% of the Companys revenues for
fiscal year 2002 were attributable to products which were manufactured by
third-party suppliers. Magneti Marelli, U.S.A., Inc., pursuant to an agreement
with the Company, supplied the Company with all of the carburetors which it
marketed in fiscal year 2002, representing approximately 38% of the Companys
revenue for that fiscal year. The agreement extends through 2009 and is
renewable at the option of the parties. See Note 8 of Notes to Consolidated
Financial Statements.

Competition

There is significant competition in the manufacturing and sale of
performance automotive and motorcycle parts for both the domestic and import
industries. The Company competes with other companies and individuals in the
manufacture and sale of performance automotive and motorcycle parts. The
Company competes with, among others, Holley Performance Products, Inc.
(Holley) in the manifold market, Holley and Federal-Mogul Corporation in the
automotive carburetor market, Rancho Industries and Bilstein in the shock
absorber market, Crane Cams and Competition Cams in the camshaft market, World
Products and Trick Flow Specialties in the cylinder head market, Earls
Performance Products and Aeroquip Inc. in the performance plumbing lines, and
Mr. Gasket, TransDapt and Moroso in the specialty automotive accessories
market. The Company competes primarily with Harley-Davidson, Inc., S&S Cycle,
Incorporated, and Mikuni of America in the motorcycle aftermarket. The Company
competes primarily on the basis of product quality, brand name recognition,
service and price. Some of the Companys competitors are substantially larger
and have greater financial resources than the Company.

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Trademarks and Patents

The Company owns over 35 trademarks and patents used in connection with
the marketing of the Companys products, including Edelbrock®, Russell®,
Torker®, Torker II®, Tunnel Ram®, Signature Series®, Performer Series®,
QwikSilver II®, Performer IAS® and Edelbrock Total Power Package®. The Company
believes that its trademarks and patents and the associated recognition,
reputation and customer loyalty contribute to the success of the Companys
business operations. The Companys patents expire between 2005 and 2016.

Employees

As of June 30, 2002, the Company employed 679 persons in the operation of
its business. The Company believes that its ability to attract and retain
qualified management personnel, skilled production technicians, and marketing
and administrative employees will be a key determinant of the Companys
continued success. The Company has not entered into any collective bargaining
agreements with any unions and believes that its overall relations with its
employees are good.




Item 2. Properties

The Company owns its headquarters, distribution and manufacturing
facilities located in buildings of approximately 142,000, 65,590, 45,000 and
37,000 square feet, respectively, in Torrance, California, and three buildings
for its foundry operations located in approximately 73,000, 15,000, and 12,000
square feet as well as a 15,000 square foot facility for its
motorcycle carburetor parts division in San Jacinto, California. The Company also has 4 acres of improved
land adjacent to its foundry facility in San Jacinto, California and will be
utilized for future corporate expansion.

The Company believes that its existing facilities are adequate to meet its
current production requirements.




Item 3. Legal Proceedings

None.




Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted, during the fourth quarter of the fiscal year covered by this report, to a vote of shareholders.

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Executive Officers of the Company

Executive Officers

The following sets forth the name, age and business experience of the
executive officers of the Company as of June 30, 2002:

|                    |  |     |    |          |  |                                                                  |  | 
|------------------- |  | --- | -- | -------- |  | ---------------------------------------------------------------- |  | 
|Name                |  | Age |    | Position
|                    |  |     |    |         
|O. Victor Edelbrock |  |     | 65 |          |  | Chairman, President and Chief Executive Officer                 
|Jeffrey L. Thompson |  |     | 49 |          |  | Executive Vice-President, Chief Operating Officer and Director  
|Aristedes T. Feles  |  |     | 34 |          |  | Vice-President of Finance, Chief Financial Officer, and Director
|Steve Whipple       |  |     | 44 |          |  | Vice-President of Sales                                         
|Wayne P. Murray     |  |     | 50 |          |  | Vice-President of Manufacturing                                 
|Jack B. Mayberry    |  |     | 55 |          |  | Vice-President of Research & Development                        
|Cathleen Edelbrock  |  |     | 42 |          |  | Vice-President of Advertising, Secretary and Director           
|Christina Edelbrock |  |     | 41 |          |  | Vice-President of Purchasing                                    
|Nancy Edelbrock     |  |     | 65 |          |  | Treasurer                                                       
|Ronald L. Webb      |  |     | 68 |          |  | Executive Vice-President of Edelbrock Foundry Corp.             
|Rodney T. Teraishi  |  |     | 36 |          |  | Controller                                                      

O. Victor Edelbrockhas been Chairman, President and Chief Executive
Officer of the Company since 1962. Mr. Edelbrock is the husband of Nancy
Edelbrock and the father of Cathleen Edelbrock.

Jeffrey L. Thompsonhas been the Executive Vice-President/General Manager
and Chief Operating Officer of the Company since December 1988. He was also a
six year member of the board of directors of the Specialty Equipment Market
Association (SEMA) and was awarded the 1999 SEMA Person of the Year Award, the
automotive aftermarkets highest individual honor. Mr. Thompson has been a
director of the Company since 1994.

Aristedes T. Feleshas been the Vice President of Finance since July 1997
and was previously Controller for the Company (since 1992). Prior to 1992,
Mr. Feles was employed as a senior accountant at BDO Seidman, LLP (since 1989).
Mr. Feles has been a director of the Company since July 1997.

Steve Whippleserved as Vice-President of Sales for the Company since
September 2000. Mr. Whipple was previously the National Sales Manager for the
Company (since 2000). Prior to joining the Company, Mr. Whipple was the
Director of Sales & Marketing for Nitrous Oxide Systems, Inc. since 1998 and
previously worked for Super Shops, Inc. in various capacities for 22 years.

Wayne P. Murrayhas been employed in various positions by the Company
since 1969 and has been Vice-President of Manufacturing for the Company since
1984.

Jack B. Mayberryhas been the Vice President of Research & Development for
the Company since 1995. Prior to joining the Company, Mr. Mayberry was a
captain in the U.S. Navy where he served for 25 years.

Cathleen Edelbrockhas been Vice-President of Advertising for the Company
since 1993. Prior to 1993,
Ms. Edelbrock was Director of Advertising (since 1987), and has served in
various other capacities with the Company (since 1978). Ms. Edelbrock is a
director of the Company. Ms. Edelbrock is the daughter of O. Victor Edelbrock
Jr. and Nancy Edelbrock and the sister of Christina Edelbrock.

Christina Edelbrockhas been Vice-President of Purchasing for the Company
since 2001. Prior to 2001,
Ms. Edelbrock was Director of Purchasing (since 1998) and worked at the
Companys foundry division since 1991. Ms. Edelbrock is the daughter of
O. Victor Edelbrock Jr. and Nancy Edelbrock and the sister of Cathleen
Edelbrock.

Nancy Edelbrockhas been Treasurer of the Company since 1968 and has been
involved in all facets of the business since 1962. Mrs. Edelbrock is the wife
of O. Victor Edelbrock Jr. and the mother of Cathleen Edelbrock.

Ronald L. Webbhas been Executive Vice-President of Edelbrock Foundry
Corp. since 1989. Prior to 1989, Mr. Webb served as Vice-President, Operations
and in various other capacities for Buddy Bar Castings (since 1958).

Rodney T. Teraishihas been Controller of the Company since August 1998.
Mr. Teraishi is a Certified Public Accountant and was previously employed as a senior accountant at BDO Seidman, LLP and Deloitte & Touche, LLP (since 1990).

7



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Part II




Item 5. Market for Companys Common Stock and Related Shareholder Matters.

The Companys Common Stock is traded over-the-counter on the Nasdaq Stock
Market under the symbol EDEL. The following table sets forth the range of high
and low closing sales prices, as reported on the Nasdaq Stock Market for fiscal
years 2001 and 2002. On September 20, 2002, the Company had 103 holders of
record of its Common Stock with 5,451,915 shares outstanding and a closing
price of $10.90.

|                         |                |      |                              |       |  |  |   |       | 
|------------------------ | -------------- | ---- | ---------------------------- | ----- |  |  | - | ----- | 
|                         |                |      | Price Range of Common Stock*
|                         |                |      |                             
|Year Ended June 30, 2001 |                | High |                              | Low  
|                         |                |      |                              |       | 
|                         | First Quarter  |      | $                            | 10.91 |  |  | $ | 8.18  | 
|                         | Second Quarter |      | $                            | 10.68 |  |  | $ | 8.75  | 
|                         | Third Quarter  |      | $                            | 11.36 |  |  | $ | 9.09  | 
|                         | Fourth Quarter |      | $                            | 10.23 |  |  | $ | 8.05  | 
|                        
|Year Ended June 30, 2002 |                | High |                              | Low  
|                         |                |      |                              |       | 
|                         | First Quarter  |      | $                            | 10.14 |  |  | $ | 7.69  | 
|                         | Second Quarter |      | $                            | 9.36  |  |  | $ | 7.73  | 
|                         | Third Quarter  |      | $                            | 11.99 |  |  | $ | 8.86  | 
|                         | Fourth Quarter |      | $                            | 13.64 |  |  | $ | 11.36 | 

During fiscal year ended June 30, 2002, the Company paid a cash dividend in the
amount of $.02 per share on November 11, 2001 and 10% stock dividend on June
7, 2002. All references to share amounts, per share amounts, and stock prices
were adjusted to reflect this stock dividend. During fiscal year ended June
30, 2001, the Company paid a cash dividend in the amount of $.02 per share on
November 11, 2000 and on June 15, 2001. See Note 9 of Notes to Consolidated
Financial Statements of the Company.



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|* |  | All references to stock prices reflect a 10% stock dividend distributed in
June 2002.
|- |  | -------------------------------------------------------------------------------------

8



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Item 6. Selected Consolidated Financial Data.

The following Selected Consolidated Financial Data is qualified in its
entirety by, and should be read in conjunction with, the Consolidated Financial
Statements of the Company and the notes thereto and with Managements
Discussion and Analysis of Financial Condition and Results of Operations
contained elsewhere in this Form 10-K. The Balance Sheet Data at June 30, 2001
and 2002 and the Income Statement Data and the Other Data for each of the three
fiscal years in the period ended June 30, 2002 have been derived from the
audited Consolidated Financial Statements of the Company included elsewhere in
this Form 10-K. The Balance Sheet Data at June 30, 1998, 1999, and 2000 and
the Income Statement Data and the Other Data for each of the two fiscal years
in the period ended June 30, 1999 have been derived from audited financial
statements not included herein.

|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |            |  |  |            | 
|---------------------- | ------------------------------------- | ---- | ---------- | ------------------------ |  | ------------------- | ----------- | ---------- |  | ---- | ----------- | ---------- |  | - | ----------- | ---------- |  | - | ----------- | ---------- |  |  | ---------- | 
|                       |                                       |      |            |                          |  | Year Ended June 30,
|                       |                                       |      |            |                          |  |                    
|Income Statement Data: |                                       | 1998 |            | 1999                     |  | 2000                |             | 2001       |  | 2002
|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |  
|Revenues               |                                       | $    | 95,504,000 |                          |  | $                   | 108,943,000 |            |  | $    | 121,173,000 |            |  | $ | 115,630,000 |            |  | $ | 123,579,000 |           
|Cost of sales          |                                       |      | 57,410,000 |                          |  |                     | 65,881,000  |            |  |      | 74,315,000  |            |  |   | 72,734,000  |            |  |   | 78,074,000  |           
|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |           
|                       |                                       |      |            | Gross profit             |  |                     | 38,094,000  |            |  |      | 43,062,000  |            |  |   | 46,858,000  |            |  |   | 42,896,000  |            |  |  | 45,505,000 | 
|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |           
|Operating expenses     |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |           
|                       | Selling, general and administrative   |      |            | 24,281,000               |  |                     |             | 27,564,000 |  |      |             | 30,762,000 |  |   |             | 31,607,000 |  |   |             | 33,151,000 | 
|                       | Research and development              |      |            | 2,972,000                |  |                     |             | 3,237,000  |  |      |             | 3,688,000  |  |   |             | 3,651,000  |  |   |             | 3,852,000  | 
|                       | Write-off of uncollectible receivable |      |            | 1,878,000                |  |                     |             | 400,000    |  |      |             |           |  |   |             |           |  |   |             |           | 
|                       | Settlement expense                    |      |            |                         |  |                     |             | 190,000    |  |      |             |           |  |   |             |           |  |   |             |           | 
|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |           
|                       |                                       |      |            | Total operating expenses |  |                     | 29,131,000  |            |  |      | 31,391,000  |            |  |   | 34,450,000  |            |  |   | 35,258,000  |            |  |  | 37,003,000 | 
|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |           
|Operating income       |                                       |      | 8,963,000  |                          |  |                     | 11,671,000  |            |  |      | 12,408,000  |            |  |   | 7,638,000   |            |  |   | 8,502,000   |           
|Interest expense       |                                       |      | 269,000    |                          |  |                     | 203,000     |            |  |      | 196,000     |            |  |   | 283,000     |            |  |   | 96,000      |           
|Interest income        |                                       |      | 410,000    |                          |  |                     | 304,000     |            |  |      | 385,000     |            |  |   | 227,000     |            |  |   | 53,000      |           
|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |           
|Income before taxes    |                                       |      | 9,104,000  |                          |  |                     | 11,772,000  |            |  |      | 12,597,000  |            |  |   | 7,582,000   |            |  |   | 8,459,000   |           
|Taxes on income        |                                       |      | 3,304,000  |                          |  |                     | 4,344,000   |            |  |      | 4,549,000   |            |  |   | 2,790,000   |            |  |   | 3,099,000   |           
|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |           
|Net income             |                                       | $    | 5,800,000  |                          |  | $                   | 7,428,000   |            |  | $    | 8,048,000   |            |  | $ | 4,792,000   |            |  | $ | 5,360,000   |           
|                       |                                       |      |            |                          |  |                     |             |            |  |      |             |            |  |   |             |            |  |   |             |           

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|                                                |  |                     |           |      |  |      |           |      |  |      |            |  |  |   |           |    |  |   |           | 
|----------------------------------------------- |  | ------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | ---------- |  |  | - | --------- | -- |  | - | --------- | 
|                                                |  | Year Ended June 30,
|                                                |  |                    
|Per Share Data:                                 |  | 1998                |           | 1999 |  | 2000 |           | 2001 |  | 2002
|                                                |  |                     |           |      |  |      |           |      |  |     
|Basic net income per share*                     |  | $                   | 1.00      |      |  | $    | 1.29      |      |  | $    | 1.41       |  |  | $ | 0.86      |    |  | $ | 0.98      | 
|Diluted net income per share*                   |  | $                   | 0.98      |      |  | $    | 1.27      |      |  | $    | 1.41       |  |  | $ | 0.86      |    |  | $ | 0.98      | 
|Basic weighted average shares outstanding*      |  |                     | 5,777,000 |      |  |      | 5,776,000 |      |  |      | 5,697,000  |  |  |   | 5,585,000 |    |  |   | 5,492,000 | 
|Effect of dilutive stocks options and
warrants* |  |                     | 150,000   |      |  |      | 56,000    |      |  |      | 7,000      |  |  |   |          |    |  |   | 1,000     | 
|Diluted weighted average shares
outstanding*    |  |                     | 5,927,000 |      |  |      | 5,832,000 |      |  |      | 5,704,000  |  |  |   | 5,585,000 |    |  |   | 5,493,000 | 
|Other Data:                                     |  |                     |           |      |  |      |           |      |  |      |            |  |  |   |           |    |  |   |           | 
|Capital expenditures                            |  | $                   | 8,076,000 |      |  | $    | 5,760,000 |      |  | $    | 11,285,000 |  |  | $ | 7,595,000 | ** |  | $ | 3,998,000 | 
|Cash dividends                                  |  |                     |          |      |  |      |          |      |  | $    | 207,000    |  |  | $ | 203,000   |    |  | $ | 101,000   | 

|                     |  |          |        |      |  |      |        |      |  |      |         |  |  |   |         |  |  |   |         | 
|-------------------- |  | -------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                     |  | June 30,
|Balance Sheet Data:  |  |         
|(In thousands)       |  | 1998     |        | 1999 |  | 2000 |        | 2001 |  | 2002
|                     |  |          |        |      |  |      |        |      |  |     
|Working capital      |  | $        | 29,260 |      |  | $    | 35,423 |      |  | $    | 34,273  |  |  | $ | 39,581  |  |  | $ | 46,262  | 
|Total assets         |  |          | 84,975 |      |  |      | 94,252 |      |  |      | 100,247 |  |  |   | 101,918 |  |  |   | 107,562 | 
|Total long-term debt |  |          | 2,123  |      |  |      | 2,065  |      |  |      | 148     |  |  |   | 563     |  |  |   | 527     | 
|Shareholders equity |  |          | 61,731 |      |  |      | 68,651 |      |  |      | 75,443  |  |  |   | 80,024  |  |  |   | 84,177  | 



---

|*  |  | Earnings per share and share amounts have been retroactively adjusted to
account for the Companys 10% stock dividend. See Note 9 of Notes to
Consolidated Financial Statements.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|** |  | Includes approximately
$3.3 million for the purchase of certain assets of Russell Performance
Products, Inc.                                                                    

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##### Table of Contents






Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation.

The following is a discussion and analysis of the consolidated financial
condition and results of operations of the Company for the fiscal years ended
June 30, 2000, 2001, and 2002. The following should be read in conjunction
with the Consolidated Financial Statements and related notes appearing
elsewhere herein.

Overview

The Company was founded in 1938, and is one of Americas leading
manufacturers and marketers of specialty performance automotive and motorcycle
aftermarket parts. The Company designs, manufactures, packages and markets
performance automotive and motorcycle aftermarket parts, including intake
manifolds, carburetors, shock absorbers, camshafts, cylinder heads, exhaust
systems and other performance components for most domestic V8, selected V6, and
selected import engines. In addition, the Company offers performance
aftermarket manifolds, cylinder heads, camshafts, air cleaners, and carburetors
for Harley-Davidson and off road motorcycles. The Company currently offers over
7,500 performance automotive and motorcycle aftermarket parts for street,
off-road, recreational and competition use.

In late December 2000, the Company purchased certain assets of Russell
Performance Products, Inc. (Russell) and moved its operations to Torrance in
May 2001. Russell is a leading manufacturer of performance plumbing and brake
lines whose current product offering of over 3,800 parts includes street-legal
brake lines, oil lines, fuel lines, and filters for both automotive and
motorcycle use.

Manufacturing Capacity

The Company used substantially all of its manufacturing capability for
producing its specialty performance automotive and motorcycle aftermarket parts
for fiscal years ended June 30, 2000, 2001, and 2002.

Product Mix

The Company manufactures its own products and purchases other products
designed to the Companys specifications from third-party manufacturers for
subsequent packaging and distribution to the Companys customers. Generally,
the Company can achieve a higher margin on those products which it
manufactures, as compared to those purchased from third-party manufacturers.
Accordingly, the Companys results of operations in any given period are
affected by product mix.

Product Concentration

Historically, the Company has derived a substantial portion of its
revenues from the sale of intake manifolds and carburetors. For the fiscal
years ended June 30, 2000, 2001, and 2002 approximately 28%, 25%, and 23% of
revenues were derived from the sales of intake manifolds and 41%, 40%, and 38%
from the sales of carburetors, respectively. The Company sells automotive
carburetors which are purchased from a sole supplier (See Note 8 of Notes to
Consolidated Financial Statements).

Seasonality

The Companys sales are subject to seasonal variations. Customer orders
and sales are greatest in the second, third and fourth quarters of the
Companys fiscal year in anticipation of and during the spring and summer
months. Accordingly, revenues and operating income tend to be relatively
higher in these quarters. This seasonality typically
results in reduced earnings for the Companys first fiscal quarter
because a significant portion of operating expenses is fixed throughout the
fiscal year.

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##### Table of Contents



Results of Operations

The following table sets forth, for the periods indicated, the percentage
of revenues of certain items in the Companys consolidated statements of income
and the percentage change in each item from the prior period.

|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |     |     |     | 
|----------------------------- | ----------------------------------- | ------------ | ------------------------ | ---- | ----------------- | ---- | ------------- | ---- | ----------------- | ---- | ------------- | ---- | ---------- | --- | ------------- | ---- | ---- | ---- | ----- | ---- | ---- | ---- | ---------- | --- | --- | --- | 
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      | Year Ended |     |               |      |      |      |       |      |      |      | Year Ended
|                              |                                     |              |                          |      | Percentage of     |      | June 30, 2001 |      | Percentage of     |      | June 30, 2002
|                              |                                     |              |                          |      | Revenues for Year |      | As Compared   |      | Revenues for Year |      | As Compared  
|                              |                                     |              |                          |      | Ended June 30,    |      | To Year       |      | Ended June 30,    |      | To Year      
|                              |                                     |              |                          |      |                   |      | Ended         |      |                   |      | Ended        
|                              |                                     |              |                          |      | 2000              |      | 2001          |      | June 30, 2001     |      | 2001          |      | 2002       |     | June 30, 2001
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |              
|Revenues                      |                                     |              | 100.0                    | %    |                   |      | 100.0         | %    |                   |      | (4.6          | )%   |            |     | 100.0         | %    |      |      | 100.0 | %    |      |      | 6.9        | %  
|Cost of sales                 |                                     |              | 61.3                     |      |                   |      | 62.9          |      |                   |      | (2.1          | )    |            |     | 62.9          |      |      |      | 63.2  |      |      |      | 7.3        |    
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |    
|                              |                                     | Gross profit |                          |      | 38.7              |      |               |      | 37.1              |      |               |      | (8.5       | )   |               |      | 37.1 |      |       |      | 36.8 |      |            |     | 6.1 |    
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |    
|Operating expenses            |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |    
|                              | Selling, general and administrative |              |                          | 25.4 |                   |      |               | 27.3 |                   |      |               | 2.7  |            |     |               | 27.3 |      |      |       | 26.8 |      |      |            | 4.9 |    
|                              | Research and development            |              |                          | 3.0  |                   |      |               | 3.2  |                   |      |               | (1.0 | )          |     |               | 3.2  |      |      |       | 3.1  |      |      |            | 5.5 |    
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |    
|                              |                                     |              | Total operating expenses |      |                   | 28.4 |               |      |                   | 30.5 |               |      |            | 2.3 |               |      |      | 30.5 |       |      |      | 29.9 |            |     |     | 4.9 | 
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |    
|Operating income              |                                     |              | 10.2                     |      |                   |      | 6.6           |      |                   |      | (38.4         | )    |            |     | 6.6           |      |      |      | 6.9   |      |      |      | 11.3       |    
|Interest expense              |                                     |              | 0.2                      |      |                   |      | 0.2           |      |                   |      | 44.4          |      |            |     | 0.2           |      |      |      | 0.1   |      |      |      | (66.1      | )  
|Interest income               |                                     |              | 0.3                      |      |                   |      | 0.2           |      |                   |      | (41.0         | )    |            |     | 0.2           |      |      |      | 0.0   |      |      |      | (76.7      | )  
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |    
|Income before taxes on income |                                     |              | 10.4                     |      |                   |      | 6.6           |      |                   |      | (39.8         | )    |            |     | 6.6           |      |      |      | 6.8   |      |      |      | 11.6       |    
|Taxes on income               |                                     |              | 3.8                      |      |                   |      | 2.4           |      |                   |      | (38.7         | )    |            |     | 2.4           |      |      |      | 2.5   |      |      |      | 11.1       |    
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |    
|Net Income                    |                                     |              | 6.6                      | %    |                   |      | 4.1           | %    |                   |      | (40.5         | )%   |            |     | 4.1           | %    |      |      | 4.3   | %    |      |      | 11.9       | %  
|                              |                                     |              |                          |      |                   |      |               |      |                   |      |               |      |            |     |               |      |      |      |       |      |      |      |            |    

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##### Table of Contents



Fiscal Year 2002 Compared to Fiscal Year 2001

Revenues

Revenues increased 6.9% to $123.6 million in fiscal year 2002 from $115.6
million in fiscal year 2001. The increase was primarily the result of an
increase of approximately $860,000, or 1.9%, in the sale of carburetors; an
increase of $2.0 million, or 15.1%, in the sale of aluminum cylinder heads; and
an increase of approximately $3.4 million, or 126.3%, in the sale of
performance plumbing and brakes lines manufactured by its Russell division.

Cost of Sales

Cost of sales increased 7.3% to $78.1 million in fiscal year 2002 from
$72.7 million in fiscal year 2001. As a percent of revenues, cost of sales
increased to 63.2% in fiscal year 2002 from 62.9% in fiscal year 2001. The
increase in cost of sales was primarily due to an increase in sales. The
increase in cost of sales as a percentage of sales was primarily due to
increased labor rates and higher medical costs associated with the Companys
self-funded medical plan.

Selling, General and Administrative Expense

Selling, general and administrative expenses increased 4.9% to $33.2
million in fiscal year 2002 from $31.6 million in fiscal year 2001. This
increase resulted primarily from an increase in salaries mainly from increased
sales commissions and advertising expenses associated with increased sales. As
a percentage of revenues, selling, general and administrative expenses
decreased to 26.8% in fiscal year 2002 from 27.3% in fiscal year 2001.

Research and Development Expense

Research and development expense increased
5.5% to $3.9 million in fiscal 2002 from $3.7 million in fiscal year 2001. The
Company attributes this increase to its continued efforts to develop new
applications for existing and emerging product lines. As a percent of revenue,
research and development expense decreased slightly to 3.1% in fiscal year 2002
versus 3.2% in fiscal year 2001.

Operating Income

Operating income increased 11.3% to $8.5 million in fiscal year 2002 from
$7.6 million in fiscal year 2001. This increase was mainly a result of
increased revenues and lower operating expenses as a percentage of revenues.

Interest Expense

Interest expense decreased 66.1% to $96,000 in fiscal year 2002 from
$283,000 in fiscal year 2001. This decrease was primarily due to a decrease in
the principal amount of average debt outstanding combined with a decrease in
interest rates.

Interest Income

Interest income decreased 76.7% to $53,000 in fiscal year 2002 from
$227,000 in fiscal year 2001. This decrease was the result of a decrease in
interest earned on invested cash due to lower interest rates and lower amounts
of invested excess working capital during the year.

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##### Table of Contents



Fiscal Year 2002 Compared to Fiscal Year 2001 (concluded)

Taxes on Income

The provision for income taxes increased 11.1% to $3,099,000 in fiscal
year 2002 from $2,790,000 in fiscal year 2001. The effective tax rates were
36.6% and 36.8% for fiscal years 2002 and 2001, respectively. The decrease in
the effective tax rate resulted primarily from increases in research and
development tax credits.

Net Income

The Companys net income increased 11.9% for fiscal year 2002 to $5.4
million in fiscal 2002 from $4.8 million in fiscal year 2001. This decrease
was primarily due to the items mentioned above.

Fiscal Year 2001 Compared to Fiscal Year 2000

Revenues

Revenues decreased 4.6% to $115.6 million in fiscal year 2001 from $121.2
million in fiscal year 2000. The decrease was primarily the result of a
decrease in volume of approximately $3.5 million, or 7.1%, in the sale of
carburetors and a decrease of $4.0 million, or 12.2%, in the sale of intake
manifolds, offset by sales from the newly acquired Russell division which
totaled approximately $2.7 million. Management attributes the decrease in
revenues to a general economic slow down and a prolonged period of inclement
weather.

Cost of Sales

Cost of sales decreased 2.1% to $72.7 million in fiscal year 2001 from
$74.3 million in fiscal year 2000. As a percent of revenues, cost of sales
increased to 62.9% in fiscal year 2001 from 61.3% in fiscal year 2000. The
decrease in cost of sales was primarily due to a decrease in sales. The
increase in cost of sales as a percentage of sales was primarily due to a
change in product mix toward lower margin products, and higher labor and energy
costs.

Selling, General and Administrative Expense

Selling, general and administrative expenses increased 2.7% to $31.6
million in fiscal year 2001 from $30.8 million in fiscal year 2000. This
increase resulted primarily from the increase in salaries mainly from the
Russell acquisition and an increase in utilities due to the energy crisis in
California as well as increases in medical and workers compensation costs. In
addition, the Companys depreciation and maintenance type expenditures for its
state-of-the-art distribution facility incurred costs for a full year in fiscal
2001 versus only a partial year for fiscal year 2000. As a percent of
revenues, selling, general and administrative expenses increased to 27.3% in
fiscal year 2001 from 25.4% in fiscal year 2000. This increase is mainly
attributed to the above in addition to revenues being down for the current year
versus prior year.

Research and Development Expense

Research and development expense remained relatively unchanged in fiscal
year 2001 versus 2000. As a percent of revenue, research and development
expense was 3.2% in fiscal year 2001 versus 3.0% in fiscal year 2000. The
Company plans on continuing to expand its research and development program, but
through improved efficiency, expenditures may decrease as a percent of revenue
in the future.

Operating Income

Operating income decreased 38.4% to $7.6 million in fiscal year 2001 from
$12.4 million in fiscal year 2000. This decrease was mainly a result of
decreased revenues, higher operating expenses as a percent of revenues, and
higher cost of goods sold as a percentage of revenues.

14



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##### Table of Contents



Fiscal Year 2001 Compared to Fiscal Year 2000 (concluded)

Interest Expense

Interest expense increased 44.4% to $283,000 in fiscal year 2001 from
$196,000 in fiscal year 2000. This increase was primarily due to an increase
in the principal amount of average debt outstanding mainly due to the Company
utilizing its line of credit to partially fund the purchase of Russell assets
as well as the Company incurring interest on the assumption of capital leases
in connection with the Russell purchase.

Interest Income

Interest income decreased 41.1% to $227,000 in fiscal year 2001 from
$385,000 in fiscal year 2000. This decrease was the result of a decrease in
interest earned on invested cash due to lower interest rates and lower amounts
of invested excess working capital.

Taxes on Income

The provision for income taxes decreased $1,759,000 to $2,790,000 in
fiscal year 2001 from $4,549,000 in fiscal year 2000. The effective tax rates
were 36.8% and 36.1% for fiscal years 2001 and 2000, respectively. The
increase in the effective tax rate resulted primarily from decreases in the
utilization of state and federal tax credits resulting from decreased capital
equipment acquisitions and decreased research and development credits.

Net Income

The Companys net income decreased 40.5% for fiscal year 2001 to $4.8
million in fiscal 2001 from $8.0 million in fiscal year 2000. This decrease
was primarily due to the items mentioned above.

15



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##### Table of Contents



Quarterly Results

The following table sets forth unaudited operating data for each of the
specified quarters of fiscal years 2001 and 2002. This quarterly information
has been prepared on the same basis as the annual consolidated financial
statements and, in the opinion of management, contains all adjustments
necessary to state fairly the information set forth herein. The sum of the
four quarters earnings per share may not agree to the fiscal year earnings per
share due to rounding.

|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |        |        | 
|------------------------------------------------------ | ----------------------------------- | ------------------------ | ------ | ----------------------------------------------- | ----- | ----------------------------------------------- | ------ | ------- | ----- | ------- | ------ | ------- | ----- | ------- | ------ | ------- | ------ | ------ | ------ | ----- | ----- | - | ------ | ------ | ----- | - | ------ | ------ | ----- | - | ------ | ------ | ------ | 
|                                                       |                                     |                          |        | For the Fiscal Year Ended
        June 30, 2001 |       | For the Fiscal Year Ended
        June 30, 2002
|                                                       |                                     |                          |        |                                                 |       |                                                
|                                                       |                                     |                          |        | First                                           |       | Second                                          |        | Third   |       | Fourth  |        | First   |       | Second  |        | Third   |        | Fourth
|(In thousands except per share data)                   |                                     | Quarter                  |        | Quarter                                         |       | Quarter                                         |        | Quarter |       | Quarter |        | Quarter |       | Quarter |        | Quarter
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |       
|Revenues                                               |                                     | $                        | 25,682 |                                                 |       | $                                               | 27,687 |         |       | $       | 25,968 |         |       | $       | 36,293 |         |        | $      | 25,425 |       |       | $ | 30,642 |        |       | $ | 28,194 |        |       | $ | 39,318 |       
|Cost of sales                                          |                                     |                          | 15,687 |                                                 |       |                                                 | 17,452 |         |       |         | 16,955 |         |       |         | 22,640 |         |        |        | 16,282 |       |       |   | 19,716 |        |       |   | 17,783 |        |       |   | 24,293 |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|                                                       | Gross profit                        |                          |        | 9,995                                           |       |                                                 |        | 10,235  |       |         |        | 9,013   |       |         |        | 13,653  |        |        |        | 9,143 |       |   |        | 10,926 |       |   |        | 10,411 |       |   |        | 15,025 |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|Operating expenses                                     |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|                                                       | Selling, general and administrative |                          |        | 7,114                                           |       |                                                 |        | 7,496   |       |         |        | 7,959   |       |         |        | 9,038   |        |        |        | 7,254 |       |   |        | 8,021  |       |   |        | 7,674  |       |   |        | 10,202 |       
|                                                       | Research and development            |                          |        | 782                                             |       |                                                 |        | 802     |       |         |        | 867     |       |         |        | 1,200   |        |        |        | 813   |       |   |        | 852    |       |   |        | 912    |       |   |        | 1,275  |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|                                                       |                                     | Total operating expenses |        |                                                 | 7,896 |                                                 |        |         | 8,298 |         |        |         | 8,826 |         |        |         | 10,238 |        |        |       | 8,067 |   |        |        | 8,873 |   |        |        | 8,586 |   |        |        | 11,477 | 
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|Operating income                                       |                                     |                          | 2,099  |                                                 |       |                                                 | 1,937  |         |       |         | 187    |         |       |         | 3,415  |         |        |        | 1,076  |       |       |   | 2,053  |        |       |   | 1,825  |        |       |   | 3,548  |       
|Interest expense                                       |                                     |                          | 48     |                                                 |       |                                                 | 47     |         |       |         | 111    |         |       |         | 77     |         |        |        | 9      |       |       |   | 11     |        |       |   | 31     |        |       |   | 45     |       
|Interest income                                        |                                     |                          | 121    |                                                 |       |                                                 | 89     |         |       |         | 9      |         |       |         | 8      |         |        |        | 33     |       |       |   | 3      |        |       |   | 2      |        |       |   | 15     |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|Income before taxes on income                          |                                     |                          | 2,172  |                                                 |       |                                                 | 1,979  |         |       |         | 85     |         |       |         | 3,346  |         |        |        | 1,100  |       |       |   | 2,045  |        |       |   | 1,796  |        |       |   | 3,518  |       
|Taxes on income                                        |                                     |                          | 804    |                                                 |       |                                                 | 732    |         |       |         | 31     |         |       |         | 1,223  |         |        |        | 407    |       |       |   | 757    |        |       |   | 664    |        |       |   | 1,271  |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|Net income                                             |                                     | $                        | 1,368  |                                                 |       | $                                               | 1,247  |         |       | $       | 54     |         |       | $       | 2,123  |         |        | $      | 693    |       |       | $ | 1,288  |        |       | $ | 1,132  |        |       | $ | 2,247  |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|Basic net income per share*                            |                                     | $                        | 0.24   |                                                 |       | $                                               | 0.22   |         |       | $       | 0.01   |         |       | $       | 0.38   |         |        | $      | 0.12   |       |       | $ | 0.23   |        |       | $ | 0.21   |        |       | $ | 0.41   |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|Diluted net income
per share*                          |                                     | $                        | 0.24   |                                                 |       | $                                               | 0.22   |         |       | $       | 0.01   |         |       | $       | 0.38   |         |        | $      | 0.12   |       |       | $ | 0.23   |        |       | $ | 0.21   |        |       | $ | 0.41   |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|Basic weighted average
number of shares outstanding*   |                                     |                          | 5,585  |                                                 |       |                                                 | 5,585  |         |       |         | 5,585  |         |       |         | 5,585  |         |        |        | 5,584  |       |       |   | 5,492  |        |       |   | 5,450  |        |       |   | 5,451  |       
|Effect of dilutive stock options
and warrants*         |                                     |                          |       |                                                 |       |                                                 |       |         |       |         |       |         |       |         |       |         |        |        |       |       |       |   |       |        |       |   |       |        |       |   | 46     |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       
|Diluted weighted average
number of shares outstanding* |                                     |                          | 5,585  |                                                 |       |                                                 | 5,585  |         |       |         | 5,585  |         |       |         | 5,585  |         |        |        | 5,584  |       |       |   | 5,492  |        |       |   | 5,450  |        |       |   | 5,497  |       
|                                                       |                                     |                          |        |                                                 |       |                                                 |        |         |       |         |        |         |       |         |        |         |        |        |        |       |       |   |        |        |       |   |        |        |       |   |        |       



---

|* |  | Earnings per share and share amounts have been retroactively adjusted to
account for the Companys 10% stock dividend. See Note 9 of Notes to
Consolidated Financial Statements.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents



Liquidity and Capital Resources

The Companys liquidity requirements arise primarily from the funding of
its seasonal working capital needs and capital expenditures. Historically, the
Company has met these liquidity requirements through cash flow generated from
operating activities and with borrowed funds under the Companys $8.0 million
revolving credit facility (Revolving Credit Facility). Due to the seasonal
demand for the Companys products, the Company builds inventory during the
Companys first fiscal quarter in advance of the typically stronger selling
periods during the Companys second, third and fourth fiscal quarters.

The Revolving Credit Facility consists of an unsecured line of credit
agreement with one bank, which provides a total loan commitment not to exceed
$8.0 million, all of which was available to the Company as of September 23,
2002. The line of credit borrowings are at the banks prime rate (4.75% at
June 30, 2002 and as of September 23, 2002). The line of credit agreement
expires on February 1, 2003. Under the Revolving Credit Facility, the Company
is subject to certain customary restrictive financial requirements. For all
periods presented and as of September 23, 2002, the Company is in compliance
with all such financial covenants.

Net cash provided by operating activities was $9.4 million, $5.7 million
and $6.7 million in fiscal years 2000, 2001, and 2002, respectively. Because
of the seasonality of the Companys business, more funds from operating
activities are generated in its third and fourth fiscal quarters.

Accounts payable increased $539,000 for fiscal year 2002 compared to
fiscal year 2001 primarily as a result of timing of receipt of goods from a
principal supplier.

Accounts receivable increased by $5.0 million for fiscal year 2002
compared to fiscal year 2001, while sales increased $7.9 million for fiscal
year 2002 compared to fiscal year 2001. The increase in accounts receivable in
fiscal year 2002 was primarily due to the timing of payments from customers and
increased sales.

Inventories increased by $460,000 for fiscal year 2002 compared to fiscal
year 2001 while cost of sales increased $5.3 million for fiscal year 2002
compared to fiscal year 2001. The increase in inventories from fiscal year
2002 versus fiscal year 2001 was primarily due to an increase in inventories
related to Russell Performance Products.

The Companys total capital expenditures were $11.3 million in fiscal year
2000; $7.6 million, which included $3.3 million for the acquisition of Russell
Performance Products, in fiscal year 2001; and $4.0 million in fiscal year
2002. The Company anticipates making capital expenditures of $4.5  $6.0
million in fiscal year 2003 primarily for additional capital equipment to
increase the Companys production capacity.

The Company believes that funds generated from operations and funds
available under the Revolving Credit Facility will be adequate to meet its
working capital, debt service and capital expenditure requirements through
fiscal year 2003.

17



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##### Table of Contents



Inflation

General inflation over the last three years has not had a material effect
on the Companys cost of doing business and it is not expected to have a
material effect in the foreseeable future.

"Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Any statements set forth above which are not historical facts are
forward-looking statements that involve known and unknown risks and
uncertainties that could cause actual results to differ materially from those
in the forward-looking statements. Potential risks and uncertainties include
such factors as the financial strength and competitive pricing environment of
the automotive and motorcycle aftermarket industries, product demand, market
acceptance, manufacturing efficiencies, new product development, the success of
planned advertising, marketing and promotional campaigns, and other risks
identified herein and in other documents filed by the Company with the
Securities and Exchange Commission.




Item 7A. Quantitative and Qualitative Disclosure about Market Risk.

The Companys exposure to interest rate changes is primarily related to
its variable rate debt which may be outstanding from time to time under the
Companys Revolving Credit Facility with Bank of America, NT&SA. The Companys
Revolving Credit Facility is an $8 million line of credit with an interest rate
based on the banks prime rate (currently 4.75%). It expires on February 1,
2003. Because the interest rate on the Revolving Credit Facility is variable,
the Companys cash flow may be affected by increases in the prime rate.
Management does not, however, believe that any risk inherent in the
variable-rate nature of the loan is likely to have a material effect on the
Company. As of fiscal year ended June 30, 2002 and as of September 20, 2002,
the Companys outstanding balance on the Revolving Credit Facility was zero.
Even if the Company were to draw down on the line prior to its expiration and
an unpredicted increase in the prime rate occurred, it would not be likely to
have a material effect.




Item 8. Financial Statements and Supplementary Data.

See Item 14 for an index to the consolidated financial statements and
supplementary financial information which are included herewith.




Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

18



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##### Table of Contents






Part III




Item 10. Directors of the Company.

The information required by Item 10 will be set forth in the Proxy
Statement under the caption Directors of the Company and is incorporated
herein by reference.




Item 11. Executive Compensation.

The information required by Item 11 will be set forth on the Proxy
Statement under the caption Executive Compensation and is incorporated herein
by reference.




Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information required by Item 12 will be set forth on the Proxy
Statement under the caption Security Ownership of Certain Beneficial Owners
and Management and is incorporated herein by reference.




Item 13. Certain Relationships and Related Transactions.

The information required by this Item is incorporated herein by reference
from the information provided under the heading Transactions and Legal Actions
Involving Management of its Proxy Statement.




Part IV




Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

Financial Statements and Schedules.See Index to Financial Statements which appears on page 24 hereof.

Other Financial Data.See Summary of Selected Financial Data, which appears in Item 6. Selected Financial Data.

Reports on Form 8-K.

The Company filed no Reports on Form 8-K during the last quarter of the 2002 fiscal year.

Exhibits.The exhibits listed on the Exhibit Index following the
signature page hereof are filed herewith in response to this Item.

19



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##### Table of Contents



EDELBROCK CORPORATION
EXHIBIT INDEX

|               |  |                                                                                                                                                                                                                                                                   |  |           
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|Number and     |  |                                                                                                                                                                                                                                                                   |  | Sequential
|Description of |  |                                                                                                                                                                                                                                                                   |  | Page      
|Exhibit        |  |                                                                                                                                                                                                                                                                   |  | Number    
|               |  |                                                                                                                                                                                                                                                                   |  |           
|3(i).1         |  | Form of Amended and Restated Certificate of
Incorporation of the Company (filed as Exhibit
3(i).1 to the Companys Registration Statement on
Form S-1 (File No. 33-83258) and incorporated herein
by reference)                                                   |  |           
|3(ii).1        |  | Form of Amended and Restated Bylaws of the Company
(filed as Exhibit 3(ii).1 to the Companys
Registration Statement on Form S-1 (File No.
33-83258) and incorporated herein by reference)                                                                        |  |           
|4.1            |  | Specimen Common Stock Certificate (filed as Exhibit
4.1 to the Companys Registration Statement on Form
S-1 (File No. 33-83258) and incorporated herein by
reference)                                                                                             |  |           
|4.2            |  | Form of Edelbrock Corporation 401(k) Plan (filed as Exhibit 4.2 to the Companys Registration
Statement on Form S-8 (File No. 33-83258) and
incorporated herein by reference)                                                                                     |  |           
|10.1           |  | Form of Indemnification Agreement entered into with
officers and directors of the Company (filed as
Exhibit 10.1 to the Companys Registration
Statement on Form S-1 (File No. 33-83258) and
incorporated herein by reference)                                    |  |           
|10.2           |  | Amendment to Employment Agreement with O. Victor
Edelbrock, Jr. (filed as Exhibit 10.18 to the
Companys Annual Report on Form 10-K for the fiscal year
ended June 30, 1999 (File
No. 33-83258) and incorporated herein by reference)*                            |  |           
|10.3           |  | Amendment to Employment Agreement with Jeffrey L.
Thompson (filed as Exhibit 10.18 to the Companys
Annual Report on Form 10-K for the fiscal year
ended June 30, 1999 (File No.
33-83258) and incorporated herein by reference)*                                 |  |           
|10.4           |  | Amendment to Employment Agreement with Ronald L. Webb
(filed as Exhibit 10.18 to the Companys Annual
Report on Form 10-K for the fiscal year
ended June 30, 1999 (File No. 33-83258) and
incorporated herein by reference)*                                      |  |           
|10.5           |  | Form of Benefit Plans
- 1994 Incentive Equity Plan
- 1994 Stock Option Plan for Non-Employee Directors
(filed as Exhibit 10.7 to the Companys Registration
Statement on Form S-1 (File No. 33-83258) and
incorporated herein by reference)                       |  |           
|10.6           |  | Business Loan Agreement between Edelbrock
Corporation and Bank of America, NT&SA (filed as
Exhibit 10.9 to the Companys Registration Statement
on Form S-1 (File No. 33-83258) and incorporated
herein by reference)                                             |  |           
|10.7           |  | Business Loan Agreement between Edelbrock Foundry
Corp. and Bank of America NT&SA (filed as Exhibit
10.10 to the Companys Registration Statement on
Form S-1 (File No. 33-83258) and incorporated herein
by reference)                                           |  |           
|10.8           |  | License Agreement dated February 2, 1997 between
Edelbrock Corporation and RICOR Racing and
Development, L.P. (filed as Exhibit 10.1 to the
Companys Quarterly Report on Form 10-Q for the
Quarter Ended December 25, 1995 and incorporated
herein by reference) |  |           
|10.9           |  | Warrant Agreement dated February 2, 1997 between
Edelbrock Corporation and RICOR Racing and
Development L.P. (filed as Exhibit 10.2 to the
Companys Quarterly Report on Form 10-Q for the
Quarter Ended December 25, 1995 and incorporated
herein by reference)  |  |           

20



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##### Table of Contents



EDELBROCK CORPORATION
EXHIBIT INDEX

|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |           
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------
|Number and     |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Sequential
|Description of |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Page      
|Exhibit        |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Number    
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                          |  |           
|10.10          |  | Amendment No. 1 to License
Agreement, dated February 21,
1998 by and between Edelbrock
Corporation and RICOR Racing
and Development, L.P. (filed as
Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q
for the Quarter Ended March 25,
1998)                                                                                                                                                                    |  |           
|10.11          |  | Purchasing Agreement between
Edelbrock Corporation and
Magneti Marelli, USA, Inc.
(filed as Exhibit 10.2 to the
Companys Quarterly Report on
Form 10-Q for the Quarter ended
December 25, 1998)                                                                                                                                                                                                                         |  |           
|10.12          |  | Amendment No. 4 to License
Agreement between Edelbrock
Corporation, RICOR Racing and
Development L.P., Ricor, Inc.
and Mr. Don Richardson
and Amendment to Warrant
Agreement dated February 2,
1996 between Edelbrock
Corporation and RICOR Racing
and Development L.P. (filed as
Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q
for the Quarter ended March 25,
1999 and incorporated herein by
reference) |  |           
|10.13          |  | Product Development and
Distribution Agreement dated
June 1, 2000 between Edelbrock
Corporation, JG Engine
Dynamics, Inc., and Automotive
Systems Group Inc. (filed as
Exhibit 10.19 to the Companys
Annual Report on Form 10-K for
the fiscal year ended June 30,
2000 and incorporated herein by
reference)                                                                                                           |  |           
|10.14          |  | Warrant Agreement dated June 1,
2000 between Edelbrock
Corporation, JG Engine
Dynamics, Inc. and Automotive
Systems Group Inc. (filed as
Exhibit 10.20 to the Companys
Annual Report on Form 10-K for
the fiscal year ended June 30,
2000 and incorporated herein by
reference)                                                                                                                                         |  |           
|10.15          |  | Amendment to Product and
Distribution Agreement dated
June 26, 2000 between Edelbrock
Corporation, JG Engine
Dynamics, Inc., and Automotive
Systems Group Inc. (filed as
Exhibit 10.21 to the Companys
Annual Report on Form 10-K for
the fiscal year ended June 30,
2000 and incorporated herein by
reference)                                                                                                         |  |           
|10.16          |  | Form of Employment Agreement
with Aristedes T. Feles (filed
as Exhibit 10.6 to the
Companys Quarterly Report on
Form 10-Q for the Quarter ended
December 25, 2000 and incorporated herein by
reference)*                                                                                                                                                                                                                |  |           
|10.17          |  | Letter to RICOR Racing LLP
dated August 20, 2001 stating
Edelbrock informed RICOR its
intention to convert its
license to a non-exclusive
nature (filed as Exhibit 10.22
to the Companys Annual Report
on Form 10-K for the fiscal
year ended June 30, 2001 and
incorporated herein by
reference)                                                                                                                       |  |           
|10.18          |  | Amendment to Purchasing
Agreement between Edelbrock
Corporation and Magneti
Marelli, USA, Inc. dated May
20, 2002                                                                                                                                                                                                                                                                                                        |  |           

21



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##### Table of Contents



EDELBROCK CORPORATION
EXHIBIT INDEX

|               |  |                                                                                                                                                                  |  |           
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|Number and     |  |                                                                                                                                                                  |  | Sequential
|Description of |  |                                                                                                                                                                  |  | Page      
|Exhibit        |  |                                                                                                                                                                  |  | Number    
|               |  |                                                                                                                                                                  |  |           
|21.1           |  | Subsidiaries of the Company (filed as Exhibit 21.1
to the Companys Registration Statement on Form S-1
(File No. 33-83258) and incorporated herein by
reference) |  |           
|23.1           |  | Consent of Grant Thornton LLP                                                                                                                                    |  |           
|24.1           |  | Powers of Attorney                                                                                                                                               |  |           
|99.1           |  | Section 902 Certifications by Chief Executive Officer                                                                                                            |  |           
|99.2           |  | Section 902 Certifications by Chief Financial Officer                                                                                                            |  |           



---

|* |  | Management Contract or compensatory plan or arrangement which is separately
identified in accordance with Item 14(a)(3) of Form 10-K.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------

22



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on it behalf by the undersigned, thereunto duly authorized.

|                   |  |                       |  |                                                                   
|------------------ |  | --------------------- |  | ------------------------------------------------------------------
|September 26, 2002 |  | EDELBROCK CORPORATION
|                  
|                   |  | By:                   |  | ARISTEDES T. FELES                                                
|                   |  |                       |  | Aristedes T. Feles
Vice President Finance, Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|                                                            |  |                                                                                                     |  |                   
|----------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------- |  | ------------------
|Signature                                                   |  | Title                                                                                               |  | Date              
|                                                            |  |                                                                                                     |  |                   
|                                                           
|*O. Victor  Edelbrock                                       |  | President, Chief Executive
Officer and Chairman of the
Board (Principal Executive Officer)          |  | September 26, 2002
|                                                           
|*Jeffrey L. Thompson                                        |  | Executive Vice President, Chief
Operating Officer and Director                                      |  | September 26, 2002
|                                                           
|ARISTEDES T. FELESAristedes T. Feles                        |  | Vice-President, Finance and Director
(Principal Financial Officer and
Principal Accounting Officer) |  | September 26, 2002
|                                                           
|*Cathleen Edelbrock                                         |  | Vice President of Advertising,
and Director                                                         |  | September 26, 2002
|                                                           
|*Timothy D. Pettit                                          |  | Director                                                                                            |  | September 26, 2002
|                                                           
|*Dr. Cornelius J. Pings                                     |  | Director                                                                                            |  | September 26, 2002
|                                                           
|*Jerry Herbst                                               |  | Director                                                                                            |  | September 26, 2002
|                                                           
|*Richard Wilbur                                             |  | Director                                                                                            |  | September 26, 2002
|                                                           
|ARISTEDES T. FELES*By:  Aristedes T. Feles
Attorney-in-fact |  |                                                                                                     |  | September 26, 2002

23



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##### Table of Contents



SECTION 302 CERTIFICATIONS

I, O. Victor Edelbrock, Chairman, President and Chief Executive Officer of
Edelbrock Corporation, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K of Edelbrock
Corporation;                                                                                                                                                                                                                                               
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this annual report.                   

Date: September 26, 2002

| |  |                                                                                  |  |                    
| |  | -------------------------------------------------------------------------------- |  | -------------------
| |  | By:                                                                              |  | O. VICTOR EDELBROCK
| |  | Name: O. Victor Edelbrock
Title: Chairman, President and Chief Executive Officer

I, Aristedes T. Feles, Vice-President of Finance and Chief Financial
Officer of Edelbrock Corporation, certify that:



| | 1. |  | I have reviewed this annual report on Form 10-K of Edelbrock
Corporation;                                                                                                                                                                                                                                               
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present
in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this annual report.                   

Date:
September 26, 2002

| |  |                                                                                       |  |                   
| |  | ------------------------------------------------------------------------------------- |  | ------------------
| |  | By:                                                                                   |  | ARISTEDES T. FELES
| |  | Name: Aristedes T. Feles
Title: Vice-President of Finance and Chief Financial Officer

24



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##### Table of Contents



EDELBROCK CORPORATION

INDEX TO FINANCIAL STATEMENTS

|                                                    |                                            |  |      |    | 
|--------------------------------------------------- | ------------------------------------------ |  | ---- | -- | 
|                                                    |                                            |  | Page
|                                                    |                                            |  |     
|                                                   
|Reports of independent certified public accountants |                                            |  | 26   |   
|                                                   
|Consolidated financial statements                   |                                            |  |      |   
|                                                   
|                                                    | Balance sheets                             |  |      | 27 | 
|                                                   
|                                                    | Statements of income                       |  |      | 29 | 
|                                                   
|                                                    | Statements of shareholders equity         |  |      | 30 | 
|                                                   
|                                                    | Statements of cash flows                   |  |      | 31 | 
|                                                   
|                                                    | Notes to consolidated financial statements |  |      | 33 | 
|                                                   
|Schedule II  Valuation and qualifying accounts     |                                            |  | 48   |   

25



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##### Table of Contents



Report of Independent Certified Public Accountants

To the Board of Directors
and Shareholders of
Edelbrock Corporation

We have audited the accompanying consolidated balance sheets of Edelbrock
Corporation as of June 30, 2001 and 2002, and the related consolidated
statements of income, shareholders equity, and cash flows for each of the
three years in the period ended June 30, 2002. These financial statements are
the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Edelbrock
Corporation as of June 30, 2001 and 2002, and the consolidated results of its
operations and its consolidated cash flows for each of the three years in the
period ended June 30, 2002, in conformity with accounting principles generally
accepted in the United States of America.

We have also audited Schedule II for each of the three years in the period
ended June 30, 2002. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.



| | GRANT THORNTON LLP
| | ------------------

Los Angeles, California
August 23, 2002

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##### Table of Contents



EDELBROCK CORPORATION

CONSOLIDATED BALANCE SHEETS

|                                                                                                   |                                                                                              |   |             |            |      |   |             |            | 
|-------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | - | ----------- | ---------- | ---- | - | ----------- | ---------- | 
|                                                                                                   |                                                                                              |   | June 30,   
|                                                                                                   |                                                                                              |   |            
|                                                                                                   |                                                                                              |   | 2001        |            | 2002
|                                                                                                   |                                                                                              |   |             |            |     
|Assets                                                                                             |                                                                                              |   |             |            |      |   |             |           
|                                                                                                   | Cash and cash equivalents                                                                    |   | $           | 5,995,000  |      |   | $           | 7,682,000  | 
|                                                                                                   | Accounts receivable, net of reserves of $500,000
and $800,000 at 2001 and 2002, respectively |   |             | 26,928,000 |      |   |             | 31,892,000 | 
|                                                                                                   | Inventories (Note 2)                                                                         |   |             | 22,899,000 |      |   |             | 23,359,000 | 
|                                                                                                   | Deferred income taxes (Note 5)                                                               |   |             | 1,158,000  |      |   |             | 1,855,000  | 
|                                                                                                   | Prepaid expenses and other                                                                   |   |             | 810,000    |      |   |             | 1,014,000  | 
|                                                                                                   |                                                                                              |   |             |            |      |   |             |           
|Total current assets                                                                               |                                                                                              |   | 57,790,000  |            |      |   | 65,802,000  |           
|                                                                                                   |                                                                                              |   |             |            |      |   |             |           
|Property, plant and equipment (Note 3)                                                             |                                                                                              |   |             |            |      |   |             |           
|                                                                                                   | Land                                                                                         |   |             | 6,242,000  |      |   |             | 6,794,000  | 
|                                                                                                   | Buildings and improvements                                                                   |   |             | 17,584,000 |      |   |             | 17,513,000 | 
|                                                                                                   | Machinery and equipment                                                                      |   |             | 41,854,000 |      |   |             | 43,614,000 | 
|                                                                                                   | Office equipment                                                                             |   |             | 4,926,000  |      |   |             | 5,331,000  | 
|                                                                                                   | Furniture and fixtures                                                                       |   |             | 1,653,000  |      |   |             | 1,837,000  | 
|                                                                                                   | Transportation equipment                                                                     |   |             | 6,199,000  |      |   |             | 6,906,000  | 
|                                                                                                   |                                                                                              |   |             |            |      |   |             |           
|                                                                                                   |                                                                                              |   | 78,458,000  |            |      |   | 81,995,000  |           
|                                                                                                   | Less accumulated depreciation and amortization                                               |   |             | 37,545,000 |      |   |             | 43,431,000 | 
|                                                                                                   |                                                                                              |   |             |            |      |   |             |           
|Property, plant and equipment, net                                                                 |                                                                                              |   | 40,913,000  |            |      |   | 38,564,000  |           
|Real estate properties and partnerships                                                            |                                                                                              |   | 412,000     |            |      |   | 303,000     |           
|Goodwill, net of accumulated amortization of
$56,000 at 2001 and 2002 (Note 4)                     |                                                                                              |   | 1,172,000   |            |      |   | 1,172,000   |           
|License agreement, net of accumulated amortization of
$84,000 at 2001 and 2002 (Notes 4, 6, and 9) |                                                                                              |   | 758,000     |            |      |   | 758,000     |           
|Other                                                                                              |                                                                                              |   | 873,000     |            |      |   | 963,000     |           
|                                                                                                   |                                                                                              |   |             |            |      |   |             |           
|Total assets                                                                                       |                                                                                              | $ | 101,918,000 |            |      | $ | 107,562,000 |           
|                                                                                                   |                                                                                              |   |             |            |      |   |             |           

See accompanying notes to consolidated financial statements.

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EDELBROCK CORPORATION

CONSOLIDATED BALANCE SHEETS

|                                              |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |            |           | 
|--------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ----------- | ---------- | --------- | ---- | ----------- | ---------- | --------- | 
|                                              |                                                                                                                                                                                                                                                                                                |                           |             | June 30,  
|                                              |                                                                                                                                                                                                                                                                                                |                           |             |           
|                                              |                                                                                                                                                                                                                                                                                                |                           |             | 2001       |           | 2002
|                                              |                                                                                                                                                                                                                                                                                                |                           |             |            |           |     
|Liabilities and shareholders equity          |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|Current liabilities                           |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|                                              | Accounts payable                                                                                                                                                                                                                                                                               |                           | $           | 13,981,000 |           |      | $           | 14,519,000 |          
|                                              | Accrued expenses                                                                                                                                                                                                                                                                               |                           |             |            |           |      |             |            |          
|                                              |                                                                                                                                                                                                                                                                                                | Payroll and bonuses       |             |            | 2,010,000 |      |             |            | 2,159,000 | 
|                                              |                                                                                                                                                                                                                                                                                                | Retirement plans (Note 6) |             |            | 605,000   |      |             |            | 577,000   | 
|                                              |                                                                                                                                                                                                                                                                                                | Commissions               |             |            | 1,134,000 |      |             |            | 1,171,000 | 
|                                              |                                                                                                                                                                                                                                                                                                | Income taxes payable      |             |            | 365,000   |      |             |            | 803,000   | 
|                                              |                                                                                                                                                                                                                                                                                                | Other                     |             |            | 51,000    |      |             |            | 244,000   | 
|                                              | Current portion of long-term debt and capital lease
obligation (Note 3)                                                                                                                                                                                                                        |                           |             | 63,000     |           |      |             | 67,000     |          
|                                              |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|Total current liabilities                     |                                                                                                                                                                                                                                                                                                |                           | 18,209,000  |            |           |      | 19,540,000  |           
|Long-term debt, less current portion (Note 3) |                                                                                                                                                                                                                                                                                                |                           | 455,000     |            |           |      | 463,000     |           
|Capital lease obligation (Note 3)             |                                                                                                                                                                                                                                                                                                |                           | 108,000     |            |           |      | 64,000      |           
|Deferred income taxes (Note 5)                |                                                                                                                                                                                                                                                                                                |                           | 3,122,000   |            |           |      | 3,318,000   |           
|                                              |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|Total liabilities                             |                                                                                                                                                                                                                                                                                                |                           | 21,894,000  |            |           |      | 23,385,000  |           
|                                              |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|Commitments and contingencies (Notes 6 and 8) |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|Shareholders equity (Note 9)                 |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|                                              | Common stock, par value $.01 per share;
15,000,000 shares authorized; 5,790,710 shares issued,
5,583,810 outstanding, and 198,900 treasury shares in 2001;
5,804,800 shares issued, 5,451,951 outstanding, and 320,806
treasury shares in 2002 (2001 and 2002
adjusted for 10% stock dividend) |                           |             | 50,690     |           |      |             | 54,470     |          
|                                              | Paid-in capital                                                                                                                                                                                                                                                                                |                           |             | 15,744,810 |           |      |             | 21,239,530 |          
|                                              | Retained earnings                                                                                                                                                                                                                                                                              |                           |             | 64,228,500 |           |      |             | 62,883,000 |          
|                                              |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|Total shareholders equity                    |                                                                                                                                                                                                                                                                                                |                           | 80,024,000  |            |           |      | 84,177,000  |           
|                                              |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           
|Total liabilities and shareholders equity    |                                                                                                                                                                                                                                                                                                | $                         | 101,918,000 |            |           | $    | 107,562,000 |           
|                                              |                                                                                                                                                                                                                                                                                                |                           |             |            |           |      |             |           

See accompanying notes to consolidated financial statements.

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EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |            |            | 
|------------------------------------------------------ | ----------------------------------- | ------------------------ | ----------- | ------------------- | ---------- | ---- | ----------- | ---------- | ---------- | - | ----------- | ---------- | ---------- | 
|                                                       |                                     |                          |             | Year Ended June 30,
|                                                       |                                     |                          |             |                    
|                                                       |                                     |                          |             | 2000                |            | 2001 |             | 2002      
|                                                       |                                     |                          |             |                     |            |      |             |           
|Revenues (Note 7)                                      |                                     | $                        | 121,173,000 |                     |            | $    | 115,630,000 |            |            | $ | 123,579,000 |           
|Cost of sales                                          |                                     |                          | 74,315,000  |                     |            |      | 72,734,000  |            |            |   | 78,074,000  |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|                                                       |                                     | Gross profit             |             |                     | 46,858,000 |      |             |            | 42,896,000 |   |             |            | 45,505,000 | 
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Operating expenses                                     |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|                                                       | Selling, general and administrative |                          |             | 30,762,000          |            |      |             | 31,607,000 |            |   |             | 33,351,000 |           
|                                                       | Research and development            |                          |             | 3,688,000           |            |      |             | 3,651,000  |            |   |             | 3,852,000  |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|                                                       |                                     | Total operating expenses |             |                     | 34,450,000 |      |             |            | 35,258,000 |   |             |            | 37,003,000 | 
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Operating income                                       |                                     |                          | 12,408,000  |                     |            |      | 7,638,000   |            |            |   | 8,502,000   |           
|Interest expense                                       |                                     |                          | 196,000     |                     |            |      | 283,000     |            |            |   | 96,000      |           
|Interest income                                        |                                     |                          | 385,000     |                     |            |      | 227,000     |            |            |   | 53,000      |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Income before taxes on income                          |                                     |                          | 12,597,000  |                     |            |      | 7,582,000   |            |            |   | 8,459,000   |           
|Taxes on income (Note 5)                               |                                     |                          | 4,549,000   |                     |            |      | 2,790,000   |            |            |   | 3,099,000   |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Net income                                             |                                     | $                        | 8,048,000   |                     |            | $    | 4,792,000   |            |            | $ | 5,360,000   |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Net income per share (Note 9):                         |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Basic net income per share*                            |                                     | $                        | 1.41        |                     |            | $    | 0.86        |            |            | $ | 0.98        |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Diluted net income per share*                          |                                     | $                        | 1.41        |                     |            | $    | 0.86        |            |            | $ | 0.98        |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Basic weighted average number of shares
outstanding*   |                                     |                          | 5,697,000   |                     |            |      | 5,585,000   |            |            |   | 5,492,000   |           
|Effect of dilutive stock options and warrants*         |                                     |                          | 7,000       |                     |            |      |            |            |            |   | 1,000       |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           
|Diluted weighted average number of shares
outstanding* |                                     |                          | 5,704,000   |                     |            |      | 5,585,000   |            |            |   | 5,493,000   |           
|                                                       |                                     |                          |             |                     |            |      |             |            |            |   |             |           



---

|* |  | Earnings per share and share amounts have been retroactively
adjusted to account for the Companys 10% stock dividend.
See Note 9 of Notes to Consolidated Financial Statements.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

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EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
Years Ended June 30, 2000, 2001, and 2002

|                                                           |  |              |           |         |  |          |        |               |  |        |            |       |  |   |            |   |  |   |            |  
|---------------------------------------------------------- |  | ------------ | --------- | ------- |  | -------- | ------ | ------------- |  | ------ | ---------- | ----- |  | - | ---------- | - |  | - | ---------- | -
|                                                           |  | Common Stock |           |         |  |          |        |               |  |        |            | Total
|                                                           |  |              |           | Paid-in |  | Retained |        | Shareholders'
|                                                           |  | Shares       |           | Amount  |  | Capital  |        | Earnings      |  | Equity
|                                                           |  |              |           |         |  |          |        |               |  |       
|Balance July 1, 1999                                       |  |              | 5,221,939 |         |  | $        | 52,200 |               |  | $      | 16,800,300 |       |  | $ | 51,798,500 |   |  | $ | 68,651,000 |  
|Net income for year                                        |  |              |          |         |  |          |       |               |  |        |           |       |  |   | 8,048,000  |   |  |   | 8,048,000  |  
|Cash dividends                                             |  |              |          |         |  |          |       |               |  |        |           |       |  |   | (207,000   | ) |  |   | (207,000   | )
|Stock repurchase                                           |  |              | (155,300  | )       |  |          | (1,600 | )             |  |        | (1,842,400 | )     |  |   |           |   |  |   | (1,844,000 | )
|Stock issued for license
agreement through
treasury shares |  |              | 8,000     |         |  |          | 80     |               |  |        | 80,920     |       |  |   |           |   |  |   | 81,000     |  
|Fair value of stock
warrants issued for
license agreement  |  |              |          |         |  |          |       |               |  |        | 617,000    |       |  |   |           |   |  |   | 617,000    |  
|Fair value of stock
warrants granted                       |  |              |          |         |  |          |       |               |  |        | 65,000     |       |  |   |           |   |  |   | 65,000     |  
|Stock options exercised                                    |  |              | 2,400     |         |  |          | 20     |               |  |        | 31,980     |       |  |   |           |   |  |   | 32,000     |  
|                                                           |  |              |           |         |  |          |        |               |  |        |            |       |  |   |            |   |  |   |            |  
|Balance June 30, 2000                                      |  |              | 5,077,039 |         |  |          | 50,700 |               |  |        | 15,752,800 |       |  |   | 59,639,500 |   |  |   | 75,443,000 |  
|Net income for year                                        |  |              |          |         |  |          |       |               |  |        |           |       |  |   | 4,792,000  |   |  |   | 4,792,000  |  
|Cash dividends                                             |  |              |          |         |  |          |       |               |  |        |           |       |  |   | (203,000   | ) |  |   | (203,000   | )
|Stock repurchase                                           |  |              | (800      | )       |  |          | (10    | )             |  |        | (7,990     | )     |  |   |           |   |  |   | (8,000     | )
|                                                           |  |              |           |         |  |          |        |               |  |        |            |       |  |   |            |   |  |   |            |  
|Balance June 30, 2001                                      |  |              | 5,076,239 |         |  |          | 50,690 |               |  |        | 15,744,810 |       |  |   | 64,228,500 |   |  |   | 80,024,000 |  
|Net income for year                                        |  |              |          |         |  |          |       |               |  |        |           |       |  |   | 5,360,000  |   |  |   | 5,360,000  |  
|Stock options exercised                                    |  |              | 2,000     |         |  |          | 20     |               |  |        | 24,980     |       |  |   |           |   |  |   | 25,000     |  
|Cash dividends                                             |  |              |          |         |  |          |       |               |  |        |           |       |  |   | (101,000   | ) |  |   | (101,000   | )
|Stock dividend                                             |  |              | 495,582   |         |  |          | 4,960  |               |  |        | 6,599,540  |       |  |   | (6,604,500 | ) |  |   |           |  
|Stock repurchase                                           |  |              | (121,906  | )       |  |          | (1,200 | )             |  |        | (1,129,800 | )     |  |   |           |   |  |   | (1,131,000 | )
|                                                           |  |              |           |         |  |          |        |               |  |        |            |       |  |   |            |   |  |   |            |  
|Balance June 30, 2002                                      |  |              | 5,451,915 |         |  | $        | 54,470 |               |  | $      | 21,239,530 |       |  | $ | 62,883,000 |   |  | $ | 84,177,000 |  
|                                                           |  |              |           |         |  |          |        |               |  |        |            |       |  |   |            |   |  |   |            |  

See accompanying notes to consolidated financial statements.

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EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                          |                                                                                  |                                                                |             |                     |            |      |            |            |            |   |            |            |            |  
|----------------------------------------- | -------------------------------------------------------------------------------- | -------------------------------------------------------------- | ----------- | ------------------- | ---------- | ---- | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | -
|                                          |                                                                                  |                                                                |             | Year Ended June 30,
|                                          |                                                                                  |                                                                |             |                    
|                                          |                                                                                  |                                                                |             | 2000                |            | 2001 |            | 2002      
|                                          |                                                                                  |                                                                |             |                     |            |      |            |           
|Cash flows from operating activities      |                                                                                  |                                                                |             |                     |            |      |            |            |            |   |            |           
|                                          | Net income                                                                       |                                                                | $           | 8,048,000           |            |      | $          | 4,792,000  |            |   | $          | 5,360,000  |           
|                                          | Adjustments to reconcile net income to
net cash provided by operating activities |                                                                |             |                     |            |      |            |            |            |   |            |            |           
|                                          |                                                                                  | Inventory reserve                                              |             |                     | 200,000    |      |            |            | 150,000    |   |            |            | (50,000    | )
|                                          |                                                                                  | Accounts receivable reserve                                    |             |                     |           |      |            |            |           |   |            |            | 300,000    |  
|                                          |                                                                                  | Depreciation and amortization of
property, plant and equipment |             |                     | 5,481,000  |      |            |            | 6,368,000  |   |            |            | 6,237,000  |  
|                                          |                                                                                  | (Gain) loss from sale of property,
plant and equipment         |             |                     | 140,000    |      |            |            | (7,000     | ) |            |            | 37,000     |  
|                                          |                                                                                  | Depreciation and amortization of
real estate properties        |             |                     | 28,000     |      |            |            | 31,000     |   |            |            | 32,000     |  
|                                          |                                                                                  | Fair value of stock warrants granted                           |             |                     | 65,000     |      |            |            |           |   |            |            |           |  
|                                          |                                                                                  | Deferred income taxes                                          |             |                     | (42,000    | )    |            |            | (74,000    | ) |            |            | (501,000   | )
|                                          |                                                                                  | Equity in net income of partnerships                           |             |                     | (94,000    | )    |            |            | (72,000    | ) |            |            | (91,000    | )
|                                          | Changes in assets and liabilities, net of effect of
acquisition:                 |                                                                |             |                     |            |      |            |            |            |   |            |            |           
|                                          |                                                                                  | Accounts receivable                                            |             |                     | (3,252,000 | )    |            |            | 854,000    |   |            |            | (5,264,000 | )
|                                          |                                                                                  | Inventories                                                    |             |                     | (202,000   | )    |            |            | (4,548,000 | ) |            |            | (410,000   | )
|                                          |                                                                                  | Prepaid expenses and other assets                              |             |                     | (70,000    | )    |            |            | (280,000   | ) |            |            | (204,000   | )
|                                          |                                                                                  | Other assets                                                   |             |                     | 17,000     |      |            |            | 56,000     |   |            |            | (90,000    | )
|                                          |                                                                                  | Accounts payable                                               |             |                     | (961,000   | )    |            |            | (1,123,000 | ) |            |            | 538,000    |  
|                                          |                                                                                  | Accrued expenses                                               |             |                     | 26,000     |      |            |            | (409,000   | ) |            |            | 789,000    |  
|                                          |                                                                                  |                                                                |             |                     |            |      |            |            |            |   |            |           
|Net cash provided by operating activities |                                                                                  |                                                                | 9,384,000   |                     |            |      | 5,738,000  |            |            |   | 6,683,000  |           
|                                          |                                                                                  |                                                                |             |                     |            |      |            |            |            |   |            |           
|Cash flows from investing activities      |                                                                                  |                                                                |             |                     |            |      |            |            |            |   |            |           
|                                          | Acquisition of property, plant and equipment                                     |                                                                |             | (11,141,000         | )          |      |            | (4,260,000 | )          |   |            | (3,998,000 | )         
|                                          | Purchase of license agreement                                                    |                                                                |             | (144,000            | )          |      |            |           |            |   |            |           |           
|                                          | Purchase of assets of Russell Performance                                        |                                                                |             |                    |            |      |            | (3,335,000 | )          |   |            |           |           
|                                          | Proceeds from sale of property, plant
and equipment                              |                                                                |             | 72,000              |            |      |            | 34,000     |            |   |            | 73,000     |           
|                                          | Acquisition of real estate properties                                            |                                                                |             | (64,000             | )          |      |            | (3,000     | )          |   |            | (7,000     | )         
|                                          | Distributions from partnerships                                                  |                                                                |             | 175,000             |            |      |            | 70,000     |            |   |            | 175,000    |           
|                                          |                                                                                  |                                                                |             |                     |            |      |            |            |            |   |            |           
|Net cash used in investing activities     |                                                                                  |                                                                | (11,102,000 | )                   |            |      | (7,494,000 | )          |            |   | (3,757,000 | )         
|                                          |                                                                                  |                                                                |             |                     |            |      |            |            |            |   |            |           

See accompanying notes to consolidated financial statements.

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EDELBROCK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                     |                                            |   |                     |            |      |   |            |            |   |   |            |            |  
|---------------------------------------------------- | ------------------------------------------ | - | ------------------- | ---------- | ---- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                                                     |                                            |   | Year Ended June 30,
|                                                     |                                            |   |                    
|                                                     |                                            |   | 2000                |            | 2001 |   | 2002      
|                                                     |                                            |   |                     |            |      |   |           
|Cash flows from financing activities                 |                                            |   |                     |            |      |   |            |            |   |   |            |           
|                                                     | Net proceeds from issuance of
common stock |   | $                   | 32,000     |      |   | $          |           |   |   | $          | 25,000     |  
|                                                     | Dividends paid                             |   |                     | (207,000   | )    |   |            | (203,000   | ) |   |            | (101,000   | )
|                                                     | Payments to acquire treasury stock         |   |                     | (1,844,000 | )    |   |            | (8,000     | ) |   |            | (1,131,000 | )
|                                                     | Proceeds from long-term debt financing     |   |                     | 4,000      |      |   |            |           |   |   |            |           |  
|                                                     | Principal payments on long-term debt       |   |                     | (69,000    | )    |   |            | (1,921,000 | ) |   |            | (32,000    | )
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |            |           
|Net cash used in financing activities                |                                            |   | (2,084,000          | )          |      |   | (2,132,000 | )          |   |   | (1,239,000 | )         
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |            |           
|Net increase (decrease) in cash and
cash equivalents |                                            |   | (3,802,000          | )          |      |   | (3,888,000 | )          |   |   | 1,687,000  |           
|Cash and cash equivalents, beginning of year         |                                            |   | 13,685,000          |            |      |   | 9,883,000  |            |   |   | 5,995,000  |           
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |            |           
|Cash and cash equivalents, end of year               |                                            | $ | 9,883,000           |            |      | $ | 5,995,000  |            |   | $ | 7,682,000  |           
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |            |           
|Supplemental disclosure of cash flow information:    |                                            |   |                     |            |      |   |            |            |   |   |            |           
|Cash paid during the year for:                       |                                            |   |                     |            |      |   |            |            |   |   |            |           
|                                                     | Interest                                   |   | $                   | 195,000    |      |   | $          | 296,000    |   |   | $          | 94,000     |  
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |            |           
|                                                     | Income taxes                               |   | $                   | 4,719,000  |      |   | $          | 3,076,000  |   |   | $          | 3,300,000  |  
|                                                     |                                            |   |                     |            |      |   |            |            |   |   |            |           

See accompanying notes to consolidated financial statements.

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EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1  Business and Summary of Significant Accounting Policies

Business

Edelbrock Corporation and its wholly-owned subsidiaries, Edelbrock Foundry
Corp. and Edelbrock II, Inc. (collectively the Company) are engaged in the
design, manufacture, distribution and marketing of performance automotive and
motorcycle aftermarket parts.

Basis of Presentation

The consolidated financial statements include the accounts of Edelbrock
Corporation and its wholly-owned subsidiaries. All material intercompany
accounts and transactions have been eliminated. The Company also has
investments in two real estate partnerships. These investments are accounted
for using the equity method of accounting.

Accounting Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, contingent liabilities, revenues, and expenses at the
date and for the periods that the financial statements are prepared. Actual
results could differ from those estimates.

Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an initial
maturity of three months or less to be cash equivalents.

Accounts Receivable

The Company maintains reserves for cash and other discounts, returns and
potential credit losses. Accounts receivable reserve is based on (i) our
estimate of the rate on which customers take credit discounts allowed and,
(ii) our specific assessment of the collectibility of all past due accounts.

Inventories

Inventories, which consist of raw materials, work in process, and finished
goods, are stated at the lower of cost (first-in, first-out method) or
market.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of temporary cash investments and trade
accounts receivable.

The Company places its temporary cash investments with various financial
institutions and, by policy, limits the amount of credit exposure to any one
financial institution. The Company believes that no significant credit risk
exists as these investments are made with high-credit-quality financial
institutions.

The Companys business activities and accounts receivable are with customers
in the automotive and motorcycle industries located primarily throughout the
United States. The Company performs ongoing credit evaluations of its
customers and maintains allowances for potential credit losses, returns and
potential cash and other discounts taken.

33



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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1  Business and Summary of Significant Accounting Policies (Continued)

Property, Plant, Equipment and Depreciation, Goodwill, and License
Agreement

Property, plant and equipment, Goodwill, and License Agreement are stated at
cost. Depreciation and amortization are computed, primarily utilizing the
straight-line method, over the estimated useful lives of the assets as
follows:

|                               |  |            |      | 
|------------------------------ |  | ---------- | ---- | 
|                               |  | Estimated 
|                               |  | Useful    
|                               |  | Life      
|                               |  | (in years)
|                               |  |           
|Buildings and improvements     |  |            | 7-40 | 
|Machinery and equipment        |  |            | 3-7  | 
|Office equipment               |  |            | 5    | 
|Furniture and fixtures         |  |            | 7    | 
|Transportation equipment       |  |            | 3-10 | 
|Goodwill and License agreement |  |            | 10*  | 



---

|* |  | The Company elected to early adopt Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Intangible Assets and accordingly,
effective July 1, 2001, no longer amortizes its Goodwill and License Agreement
(see Note 4).
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revenue Recognition

Revenue is recognized upon shipment of the products.

Taxes on Income

Deferred tax assets and liabilities are recorded for differences between the
financial statement and tax bases of the assets and liabilities that will
result in taxable or deductible amounts in the future based on enacted tax laws
and rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized. Income tax
expense is recorded for the amount of income tax payable or refundable for the
period increased or decreased by the change in deferred tax assets and
liabilities during the period.

Fair Value

The Company has cash and cash equivalents, receivables, accounts payable,
accrued expenses, and short-term borrowings for which the carrying value
approximates fair value due to the short-term nature of these instruments.

The fair value of the Companys long-term debt is estimated based on the market
values of financial instruments with similar terms. Management believes that
the fair value of the long-term debt approximates its carrying value.

Stock-Based Compensation

The Company accounts for stock-based employee compensation as prescribed by APB
Opinion No. 25, Accounting for Stock Issued to Employees, and has adopted the
disclosure provisions of Statement of Financial Accounting Standards 123,
Accounting for Stock-based Compensation (SFAS 123). SFAS 123 requires pro
forma disclosures of net income and net income per share as if the fair value
based method of accounting for stock-based awards had been applied. Under the
fair value based method, compensation cost is recorded based on the value of
the award at the grant date and is recognized over the service period.

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EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1  Business and Summary of Significant Accounting Policies (Continued)

Long-Lived Assets

The Financial Accounting Standards Board (FASB) recently issued Statement
of Financial Accounting Standards No. 144 Accounting for the Impairment or
Disposal of Long-Lived Assets(SFAS 144). SFAS 144 requires the
recognition of an impairment loss on long-lived assets if the carrying amount
exceeds its fair value, as determined using undiscounted cash flows expected
to result from the use and eventual disposition of the asset. SFAS 144 is
effective for the Companys fiscal year beginning on July 1, 2002.
Management does not believe the adoption of this standard will have a
material impact on the Companys consolidated financial statements. No
impairment losses have been recorded through June 30, 2002.

Basic and Diluted Net Income Per Share Information

Basic net income per share is based upon the weighted average number of
common shares outstanding which have been retroactively adjusted to reflect
the Companys 10% stock dividend issued in June 2002. Diluted net income per
share is based on the assumption that options and warrants are included in
the calculation of diluted net income per share, except when their effect
would be anti-dilutive. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised
at the beginning of the period (or at the time of issuance, if later), and as
if funds obtained thereby were used to purchase common stock at the average
market price during the period. Below is the calculation of basic and
diluted net income per share for each of the past three fiscal years:

|                                               |         |   |                                       |      |               |   |               |      |  |   |       |      | 
|---------------------------------------------- | ------- | - | ------------------------------------- | ---- | ------------- | - | ------------- | ---- |  | - | ----- | ---- | 
|                                               |         |   | Fiscal Year Ended                    
|                                               |         |   |                                      
|                                               |         |   | June 30, 2000                         |      | June 30, 2001 |   | June 30, 2002
|                                               |         |   |                                       |      |               |   |              
|                                               |         |   | (In Thousands, Except per Share Data)
|Net income                                     |         | $ | 8,048                                 |      |               | $ | 4,792         |      |  | $ | 5,360 |     
|                                               |         |   |                                       |      |               |   |               |      |  |   |       |     
|Weighted average shares outstanding  Basic*   |         |   | 5,697                                 |      |               |   | 5,585         |      |  |   | 5,492 |     
|Employee stock options and warrants*           |         |   | 7                                     |      |               |   |              |      |  |   | 1     |     
|                                               |         |   |                                       |      |               |   |               |      |  |   |       |     
|Weighted average shares outstanding  Diluted* |         |   | 5,704                                 |      |               |   | 5,585         |      |  |   | 5,493 |     
|                                               |         |   |                                       |      |               |   |               |      |  |   |       |     
|Earnings per common share:*                    |         |   |                                       |      |               |   |               |      |  |   |       |     
|                                               | Basic   |   | $                                     | 1.41 |               |   | $             | 0.86 |  |   | $     | 0.98 | 
|                                               |         |   |                                       |      |               |   |               |      |  |   |       |     
|                                               | Diluted |   | $                                     | 1.41 |               |   | $             | 0.86 |  |   | $     | 0.98 | 
|                                               |         |   |                                       |      |               |   |               |      |  |   |       |     

The following options and warrants were excluded from the computation of
diluted net income per share as a result of the exercise price exceeding the
average market price of the common shares.

|                                                         |  |                   |              |               |  |               |             |  |  |   |              | 
|-------------------------------------------------------- |  | ----------------- | ------------ | ------------- |  | ------------- | ----------- |  |  | - | ------------ | 
|                                                         |  | Fiscal Year Ended
|                                                         |  |                  
|                                                         |  | June 30, 2000     |              | June 30, 2001 |  | June 30, 2002
|                                                         |  |                   |              |               |  |              
|Options and warrants to purchase shares of common stock* |  |                   | 195,596      |               |  |               | 167,464     |  |  |   | 120,947      | 
|Exercise prices*                                         |  | $                 | 12.27-$20.00 |               |  | $             | 9.60-$20.00 |  |  | $ | 10.23-$20.00 | 
|                                                         |  |                   |              |               |  |               |             |  |  |   |              | 



---

|* |  | References to share amounts, earnings per share, and exercise prices
above reflect a 10% stock dividend distributed in June 2002.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------

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EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1  Business and Summary of Significant Accounting Policies (Concluded)

Advertising Costs and Customer Sales Incentives

In November 2001, the Emerging Issues Task Force (EITF) released its
consensus on Issue 00-14, Accounting for Certain Sales Incentives and Issue
No. 00-25, Vendor Income Statement Characterization of Consideration Paid to
a Reseller of the Vendors Products. These consensuses provided guidance on
the classification of expenses related to customer rebate, sales discounts
and cooperative advertising programs. The adoption of these consensuses by
the Company did not result in any reclassification of expense or net sales.
Sales incentives provided take the form of sales discounts generally treated
as a reduction of net sales. The Company also maintains a cooperative
advertising program with its customers and provides sales incentives to the
extent of the estimated value of advertising provided by the customer on
behalf of the Company. Costs incurred for advertising, including costs under
cooperative advertising programs with customers, are expensed as incurred and
are included in selling, general and administrative expense.

Advertising costs are expensed as incurred and are included in selling,
general and administrative expenses. Advertising expenses amounted to
$10,555,000, $10,113,000 and $10,555,000 for fiscal years ended June 30,
2000, 2001, and 2002, respectively.

Segment Reporting

The Company is centrally managed and operates in one business segment:
specialty performance automotive and motorcycle aftermarket parts.

Reclassifications

Certain prior period amounts have been reclassified for comparison with the
2002 presentation.

Note 2  Inventories

Inventories consist of the following:

|                |  |          |            |      |  |   |            | 
|--------------- |  | -------- | ---------- | ---- |  | - | ---------- | 
|                |  | June 30,
|                |  |         
|                |  | 2001     |            | 2002
|                |  |          |            |     
|Raw materials   |  | $        | 12,232,000 |      |  | $ | 13,306,000 | 
|Work in process |  |          | 1,837,000  |      |  |   | 2,056,000  | 
|Finished goods  |  |          | 8,830,000  |      |  |   | 7,997,000  | 
|                |  |          |            |      |  |   |            | 
|                |  | $        | 22,899,000 |      |  | $ | 23,359,000 | 
|                |  |          |            |      |  |   |            | 

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EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3  Long-Term Debt, Capital Lease Obligation, and Revolving Line of Credit

The Companys long-term debt consists of the following:

|                 |                      |   |          |         |      |   |         |         | 
|---------------- | -------------------- | - | -------- | ------- | ---- | - | ------- | ------- | 
|                 |                      |   | June 30,
|                 |                      |   |         
|                 |                      |   | 2001     |         | 2002
|                 |                      |   |          |         |     
|Mortgage note(a) |                      | $ | 255,000  |         |      | $ | 254,000 |        
|Mortgage note(b) |                      |   | 54,000   |         |      |   | 53,000  |        
|Note payable(c)  |                      |   |         |         |      |   | 18,000  |        
|                 | Other                |   |          | 149,000 |      |   |         | 149,000 | 
|                 |                      |   |          |         |      |   |         |        
|                 |                      |   | 458,000  |         |      |   | 474,000 |        
|                 | Less current portion |   |          | 3,000   |      |   |         | 11,000  | 
|                 |                      |   |          |         |      |   |         |        
|                 |                      | $ | 455,000  |         |      | $ | 463,000 |        
|                 |                      |   |          |         |      |   |         |        



---

|(a) |  | Mortgage note, collateralized by a trust deed on real estate with a net
book value of $300,000 and $296,000 at June 30, 2001 and 2002, respectively,
payable in monthly principal and interest payments at an interest rate of 7.0%
due March 2031.       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Mortgage note, collateralized by a second trust deed on real estate with a
net book value of $300,000 and $296,000 at June 30, 2001 and 2002,
respectively, payable in monthly principal and interest payments at an interest
rate of 7.5% due March 2016.
|   
|   
|   
|   
|(c) |  | Loan, collateralized by an asset with a net book value of $21,000 at June
30, 2002, payable in monthly principal payments at a zero percent interest rate
due November 2004.                                                                              

Principal payments are due on long-term debt as follows:

|                      |  |        |         | 
|--------------------- |  | ------ | ------- | 
|Years ending June 30, |  | Amount
|                      |  |       
|2003                  |  | $      | 11,000  | 
|2004                  |  |        | 11,000  | 
|2005                  |  |        | 7,000   | 
|2006                  |  |        | 4,000   | 
|2007                  |  |        | 4,000   | 
|Thereafter            |  |        | 437,000 | 
|                      |  |        |         | 
|                      |  | $      | 474,000 | 
|                      |  |        |         | 

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EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3  Long-Term Debt, Capital Lease Obligation, and Revolving Line of Credit (continued)

The Company has one unsecured line of credit agreement with a bank, which
provides total loan commitment not to exceed $8,000,000. All line of
credit financing is at the banks prime rate (4.75% at June 30, 2002).
This agreement expires in February 2003. There were no borrowings on the
line as of June 30, 2001 and 2002. This obligation contains covenants,
among other items, relating to various financial ratios. The Company was
in compliance with all such covenants at June 30, 2002.

The Companys capital lease obligations are summarized as follows:

|                                                                                                        |  |          |         |      |  |   |         | 
|------------------------------------------------------------------------------------------------------- |  | -------- | ------- | ---- |  | - | ------- | 
|                                                                                                        |  | June 30,
|                                                                                                        |  |         
|                                                                                                        |  | 2001     |         | 2002
|                                                                                                        |  |          |         |     
|Leases of capital equipment with lease periods expiring
at various dates through 2006; Interest at 9.0% |  | $        | 168,000 |      |  | $ | 120,000 | 
|Less current installments                                                                               |  |          | 60,000  |      |  |   | 56,000  | 
|                                                                                                        |  |          |         |      |  |   |         | 
|                                                                                                        |  | $        | 108,000 |      |  | $ | 64,000  | 
|                                                                                                        |  |          |         |      |  |   |         | 

Minimum lease payments under capital lease obligations are as follows:

|                                            |  |        |         | 
|------------------------------------------- |  | ------ | ------- | 
|Years ending June 30,                       |  | Amount
|                                            |  |       
|2003                                        |  | $      | 59,000  | 
|2004                                        |  |        | 37,000  | 
|2005                                        |  |        | 31,000  | 
|2006                                        |  |        | 6,000   | 
|2007                                        |  |        |        | 
|                                            |  |        |         | 
|Total minimum lease payments                |  |        | 133,000 | 
|Less amount representing interest           |  |        | 13,000  | 
|                                            |  |        |         | 
|Present value of net minimum lease payments |  | $      | 120,000 | 
|                                            |  |        |         | 

| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | Included in property, plant and equipment in the accompanying consolidated
balance sheets are the following assets held under capital leases:

|                              |  |          |         |      |  |   |         | 
|----------------------------- |  | -------- | ------- | ---- |  | - | ------- | 
|                              |  | June 30,
|                              |  |         
|                              |  | 2001     |         | 2002
|                              |  |          |         |     
|Assets under capital lease    |  | $        | 214,000 |      |  | $ | 211,000 | 
|Less accumulated amortization |  |          | 15,000  |      |  |   | 45,000  | 
|                              |  |          |         |      |  |   |         | 
|                              |  | $        | 199,000 |      |  | $ | 166,000 | 
|                              |  |          |         |      |  |   |         | 

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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4  Goodwill and Intangible Assets

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and
Intangible Assets which supersedes APB Opinion No. 17, Intangible Assets. SFAS
142 eliminates the current requirement to amortize goodwill and
indefinite-lived intangible assets, addresses the amortization of intangible
assets with a defined life and addresses the impairment testing and recognition
for goodwill and intangible assets. SFAS 142 will apply to goodwill and
intangible assets arising from transactions completed before and after the
Statements effective date. SFAS 142 is effective for fiscal year 2003;
however, early adoption is allowed in fiscal year 2002. The Company had elected
to early adopt this Standard as of July 1, 2001. In applying SFAS 142, the
Company has performed the transitional reassessment and impairment tests
required as of July 1, 2001, and determined the goodwill and license agreement
have indefinite lives and that there were no impairment on these assets. The
Company discontinued amortizing these assets on July 1, 2001. At the time of
adoption, the Company had accumulated amortization pertaining to goodwill and
license agreement of $140,000. Below are the calculations of reported net
income and reported basic and diluted net income per share adjusted for the
effect of amortization expense for the June 30, 2001 periods:

|                                                    |  |                     |           |      |  |   |           | 
|--------------------------------------------------- |  | ------------------- | --------- | ---- |  | - | --------- | 
|                                                    |  | Year Ended June 30,
|                                                    |  |                    
|                                                    |  | 2001                |           | 2002
|                                                    |  |                     |           |     
|Reported net income                                 |  | $                   | 4,792,000 |      |  | $ | 5,360,000 | 
|Effect of amortization expense of license agreement |  |                     | 84,000    |      |  |   |          | 
|Effect of amortization expense of goodwill          |  |                     | 56,000    |      |  |   |          | 
|                                                    |  |                     |           |      |  |   |           | 
|Adjusted net income                                 |  | $                   | 4,932,000 |      |  | $ | 5,360,000 | 
|                                                    |  |                     |           |      |  |   |           | 
|Basic earnings per share:*                          |  |                     |           |      |  |   |           | 
|Reported basic earnings per share                   |  | $                   | 0.86      |      |  | $ | 0.98      | 
|Effect of amortization expense of license agreement |  |                     | 0.02      |      |  |   |          | 
|Effect of amortization expense of goodwill          |  |                     | 0.01      |      |  |   |          | 
|                                                    |  |                     |           |      |  |   |           | 
|Adjusted basic earnings per share                   |  | $                   | 0.89      |      |  | $ | 0.98      | 
|                                                    |  |                     |           |      |  |   |           | 
|Diluted earnings per share:*                        |  |                     |           |      |  |   |           | 
|Reported diluted earnings per share                 |  | $                   | 0.86      |      |  | $ | 0.98      | 
|Effect of amortization expense of license agreement |  |                     | 0.02      |      |  |   |          | 
|Effect of amortization expense of goodwill          |  |                     | 0.01      |      |  |   |          | 
|                                                    |  |                     |           |      |  |   |           | 
|Adjusted diluted earnings per share                 |  | $                   | 0.89      |      |  | $ | 0.98      | 
|                                                    |  |                     |           |      |  |   |           | 



---

|* |  | Earnings per share amounts have been retroactively adjusted to account for
the Companys 10% stock dividend. See Note 9.
|- |  | ------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5  Taxes on Income

The provision for taxes on income consists of the following:

|         |         |   |                     |           |      |   |           |           |   |   |           |           |  
|-------- | ------- | - | ------------------- | --------- | ---- | - | --------- | --------- | - | - | --------- | --------- | -
|         |         |   | Year Ended June 30,
|         |         |   |                    
|         |         |   | 2000                |           | 2001 |   | 2002     
|         |         |   |                     |           |      |   |          
|Current  |         |   |                     |           |      |   |           |           |   |   |           |          
|         | Federal |   | $                   | 3,884,000 |      |   | $         | 2,308,000 |   |   | $         | 2,965,000 |  
|         | State   |   |                     | 707,000   |      |   |           | 556,000   |   |   |           | 635,000   |  
|         |         |   |                     |           |      |   |           |           |   |   |           |          
|         |         |   | 4,591,000           |           |      |   | 2,864,000 |           |   |   | 3,600,000 |          
|         |         |   |                     |           |      |   |           |           |   |   |           |          
|Deferred |         |   |                     |           |      |   |           |           |   |   |           |          
|         | Federal |   |                     | (244,000  | )    |   |           | (2,000    | ) |   |           | (429,000  | )
|         | State   |   |                     | 202,000   |      |   |           | (72,000   | ) |   |           | (72,000   | )
|         |         |   |                     |           |      |   |           |           |   |   |           |          
|         |         |   | (42,000             | )         |      |   | (74,000   | )         |   |   | (501,000  | )        
|         |         |   |                     |           |      |   |           |           |   |   |           |          
|         |         | $ | 4,549,000           |           |      | $ | 2,790,000 |           |   | $ | 3,099,000 |          
|         |         |   |                     |           |      |   |           |           |   |   |           |          

The differences between the U.S. federal statutory tax rate and the Companys
effective rate are as follows:

|                                             |                    |  |                     |      |      |  |      |      |   |  |      |      |  
|-------------------------------------------- | ------------------ |  | ------------------- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                                             |                    |  | Year Ended June 30,
|                                             |                    |  |                    
|                                             |                    |  | 2000                |      | 2001 |  | 2002
|                                             |                    |  |                     |      |      |  |     
|U.S. federal statutory tax rate              |                    |  | 35.0                | %    |      |  | 34.0 | %    |   |  | 34.0 | %   
|State income taxes (net of federal benefits) |                    |  | 6.0                 |      |      |  | 6.0  |      |   |  | 6.0  |     
|State income tax credits                     |                    |  | (2.4                | )    |      |  | (1.6 | )    |   |  | (1.7 | )   
|Federal income tax credits                   |                    |  | (2.5                | )    |      |  | (1.6 | )    |   |  | (1.8 | )   
|Other                                        |                    |  |                    |      |      |  | 0.1  |      |   |  | 0.1  |     
|                                             |                    |  |                     |      |      |  |      |      |   |  |      |     
|                                             | Effective tax rate |  |                     | 36.1 | %    |  |      | 36.8 | % |  |      | 36.6 | %
|                                             |                    |  |                     |      |      |  |      |      |   |  |      |     

The components of deferred taxes at June 30, 2001 and 2002 are as follows:

|                           |                               |   |           |           |      |   |           |           | 
|-------------------------- | ----------------------------- | - | --------- | --------- | ---- | - | --------- | --------- | 
|                           |                               |   | 2001      |           | 2002
|                           |                               |   |           |           |     
|Deferred tax assets        |                               |   |           |           |      |   |           |          
|                           | State income taxes            |   | $         | 199,000   |      |   | $         | 166,000   | 
|                           | Advertising accrual           |   |           | 179,000   |      |   |           | 433,000   | 
|                           | Uniform capitalization rule   |   |           | 336,000   |      |   |           | 355,000   | 
|                           | Accrued vacation              |   |           | 263,000   |      |   |           | 284,000   | 
|                           | Deferred gains                |   |           | 15,000    |      |   |           | 15,000    | 
|                           | Accounts receivable reserve   |   |           | 170,000   |      |   |           | 272,000   | 
|                           | Inventory reserve             |   |           | 119,000   |      |   |           | 102,000   | 
|                           | Other                         |   |           | 73,000    |      |   |           | 105,000   | 
|                           |                               |   |           |           |      |   |           |          
|                           |                               |   | 1,354,000 |           |      |   | 1,732,000 |          
|                           |                               |   |           |           |      |   |           |          
|Deferred tax liabilities:  |                               |   |           |           |      |   |           |          
|                           | Depreciation and amortization |   |           | 1,735,000 |      |   |           | 1,652,000 | 
|                           | Like kind exchange            |   |           | 1,543,000 |      |   |           | 1,543,000 | 
|                           | State tax deferred items      |   |           | 40,000    |      |   |           |          | 
|                           |                               |   |           |           |      |   |           |          
|                           |                               |   | 3,318,000 |           |      |   | 3,195,000 |          
|                           |                               |   |           |           |      |   |           |          
|Net deferred tax liability |                               | $ | 1,964,000 |           |      | $ | 1,463,000 |          
|                           |                               |   |           |           |      |   |           |          

40



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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5  Taxes on Income (continued)

The classification of the net deferred tax liability between current and
non-current is as follows:

|                        |                            |   |           |           |      |   |           |           | 
|----------------------- | -------------------------- | - | --------- | --------- | ---- | - | --------- | --------- | 
|                        |                            |   | June 30, 
|                        |                            |   |          
|                        |                            |   | 2001      |           | 2002
|                        |                            |   |           |           |     
|Net current asset       |                            | $ | 1,158,000 |           |      | $ | 1,855,000 |          
|Net long-term liability |                            |   | 3,122,000 |           |      |   | 3,318,000 |          
|                        |                            |   |           |           |      |   |           |          
|                        | Net deferred tax liability |   | $         | 1,964,000 |      |   | $         | 1,463,000 | 
|                        |                            |   |           |           |      |   |           |          

Note 6  Commitments and Contingencies

Royalty and Development Fee Agreements

In February 1996, the Company entered into a Royalty Agreement with RICOR
Racing and Development L.P. (RICOR) whereby the Company would pay RICOR
a percentage of revenue derived from the sale of shock absorbers based on
the following:

|                              |  |         |   |  
|----------------------------- |  | ------- | - | -
|Aggregate Net Sales Volume    |  | Royalty
|                              |  |        
|Up to $4,000,000              |  |         | 8 | %
|From $4,000,001 to $8,000,000 |  |         | 7 | %
|$8,000,001 and above          |  |         | 6 | %

On February 19, 1999, the Royalty Agreement was amended where the Company
will pay RICOR 6% of all licensed sales with a minimum royalty amount of
$62,500 per month (see Note 9). In September 2001, the Company converted
its license agreement with RICOR from exclusive to non-exclusive. In
connection therewith, the Company now pays 6% of net sales as opposed to
the minimum royalty amount. Royalty expense under this agreement amounted
to $750,000, $750,000, and $319,000 for fiscal year ended June 30, 2000,
2001, and 2002, respectively.

In June 2000, the Company entered into a Product Development and
Distribution Agreement (License Agreement) with JG Engine Dynamics, Inc.
(JG) and Automotive Systems Group Inc. (collectively the Licensor) whereby
the Company will pay the Licensor 5% of net revenues derived from the sale
of internal engine, exhaust, and suspension components for import
aftermarket products. In connection with this agreement, the Company paid
to the Licensor cash of $144,000 and issued common stock and warrants with
a fair value of $81,000 and $617,000, respectively (see Note 9). The
Company capitalized the total $842,000 cost of this License Agreement.

41



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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6  Commitments and Contingencies (continued)

Retirement Plans

An employee stock ownership plan (ESOP) was established July 1, 1979 covering
substantially all employees of Edelbrock Corporation who have attained one year
of service. The minimum annual contribution is 1% of the total salaries or
wages of plan participants and may be supplemented with additional amounts at
the discretion of the Board of Directors. During fiscal year 1998, Edelbrock
Corporation established a 401(k) defined contribution plan to enhance the
existing ESOP for participating employees. During fiscal year 2001, the
Company combined all of its retirement plans for Edelbrock Corporation into one
all inclusive 401(k) defined contribution plan. In all previous years, plan
expenses were paid by the respective plans. Beginning in fiscal year 2002, the
Company has elected to pay for the plans expenses on a go forward basis. At
the discretion of the Board of Directors, Edelbrock Corporation can match
participant directed contributions and provide discretionary contributions.
Edelbrock Corporation currently matches 50% up to 4% of a participants
contribution to this plan.

Contributions to the Edelbrock Corporation Plan amounted to $636,000 and
$577,000 for the years ended June 30, 2000 and 2001, respectively. For the
year ended June 30, 2002, Edelbrock Corporation expensed
$614,000 which included plan expenses of $88,000 and a contribution of $526,000 to the
401(k) plan which first funds the match with the remaining balance utilized as
a discretionary contribution.

Edelbrock Foundry Corp. maintains a defined contribution profit sharing plan
(the Plan) covering substantially all employees who have attained one year of
service. Contributions to the Plan are at the discretion of the Companys
Board of Directors; however, contributions cannot exceed 15% of the total
salaries or wages of the plan participants. During fiscal year 1998, Edelbrock
Foundry Corp. established a 401(k) defined contribution plan to enhance the
existing plan for participating employees. During fiscal year 2001, the
Edelbrock Foundry Corp. combined all of its retirement plans into one all
inclusive 401(k) defined contribution plan. In all previous years, plan
expenses were paid by the respective plans. Beginning in fiscal year 2002,
Edelbrock Foundry Corp. has elected to pay for the plans expenses incurred on
a go forward basis. At the discretion of the Board of Directors, Edelbrock
Foundry Corp. can match participant directed contributions and provide
discretionary contributions. Edelbrock Foundry Corp. currently matches 50% up
to 4% of a participants contribution to this plan.

Contributions to the Edelbrock Foundry Corp. Plan amounted to $65,000 and
$55,000 for the years ended June 30, 2000 and 2001, respectively. For the year
ended June 30, 2002, Edelbrock Foundry Corp. expensed $59,000
which included plan expenses of $9,000 and a contribution of $50,000 which first
funds the match with the remaining balance utilized as a discretionary
contribution.

Federal law limits the maximum annual contribution to the lesser of $35,000 or
25% of the total salaries or wages of a plan participant. The Company had
accrued contributions of $605,000 and $577,000 at June 30, 2001 and 2002,
respectively.

42



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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6  Commitments and Contingencies (continued)

Employment Agreements

The Company has an employment agreement with its President and Chief
Executive Officer for a term expiring on June 30, 2004. The agreement
provides for a base salary of $300,000 per year, with an annual raise and
bonus to be determined by the Compensation Committee of the Board of
Directors based on such factors as the performance of the officer and the
financial results of the Company. Upon termination of the officers
employment during the term of the agreement for any reason other than
cause, death or voluntary termination, the Company will be obligated to
make a lump sum severance payment in an amount equal to the then current
annual base compensation plus an amount equal to the bonus paid the year
prior to such termination.

The Company also has similar employment agreements with three other
officers, two of which have a term expiring on June 30, 2004 and the third
expiring on October 31, 2005. Pursuant to these employment agreements,
the officers are entitled to an aggregate base salary of $545,000. Each
officer is entitled to an annual bonus to be determined by the
Compensation Committee of the Board of Directors based on such factors as
the performance of the officer and the financial results of the Company.

Note 7  Major Customers

During the fiscal years ended June 30, 2000, 2001, and 2002, one customer
accounted for 14.8%, 14.5%, and 15.5% of revenues, respectively; another
customer accounted for 10.2%, 10.5%, and 10.6% of revenues, respectively.

Note 8  Dependence on Key Supplier

The Company has entered into an agreement with a
key supplier expiring
in December 2009 that requires, among other things, that (i) the Company sell
only carburetors manufactured by the supplier, (ii) the Company purchase a
minimum number of carburetors from the supplier and (iii) the Company
prices the carburetors so as to remain market competitive. The Companys
minimum obligation under this agreement aggregates $127,661,000, or
$23,211,000 in calendar 2003 and $17,408,000 in each calendar year
through 2009. Sales of these automotive carburetors
accounted for 41%, 40%, and 38% of the Companys revenues for the years
ended June 30, 2000, 2001, and 2002. Any failure of the supplier to
supply carburetors to the Company would have a material adverse effect on
the Companys results of operations, since alternative sources for
obtaining the types of automotive carburetors marketed by the Company are
not readily available. The Companys inability to source supply with
other manufacturers, the Companys failure to sell automotive carburetors
in excess of the minimum purchase requirement or the contractual
limitations on the Companys pricing of automotive carburetors could have
a material adverse effect on the Company.

Note 9  Shareholders Equity

Treasury Stock

At June 30, 2001 and 2002, the Company held 198,900 and 320,806 shares of
its common stock in treasury, respectively. The excess of the purchase
price over the par value of the common stock has been reflected as a
reduction of paid-in capital.

43



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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9  Shareholders Equity (continued)

1994 Incentive Equity Plan

The Company adopted the Edelbrock Corporation 1994 Incentive Equity Plan (the
Plan) that authorizes the granting of options to purchase shares of Common
Stock, stock appreciation rights, restricted shares, deferred shares,
performance shares and performance units. The maximum number of shares of
Common Stock transferred, plus the number of shares of Common Stock covered by
outstanding awards granted under the Plan, shall not, in the aggregate exceed
618,750 *. The stock options have been granted at the current quoted market
price at the date of grant.

A summary of changes common stock options for employees during 2000, 2001, and
2002 are as follows:

|                                              |  |           |         |                |  |                  |       |  |  |   |           | 
|--------------------------------------------- |  | --------- | ------- | -------------- |  | ---------------- | ----- |  |  | - | --------- | 
|                                              |  |           |         |                |  | Weighted Average |       |  |  |  
|                                              |  | Number of |         | Exercise Price |  | Aggregate       
|                                              |  | Shares*   |         | Per
Share*     |  | Exercise Price* 
|                                              |  |           |         |                |  |                 
|Outstanding at July 1, 1999                   |  |           | 379,279 |                |  | $                | 12.00 |  |  | $ | 4,550,003 | 
|Granted                                       |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Exercised                                     |  |           | 2,640   |                |  |                  | 12.27 |  |  |   | 32,400    | 
|Cancelled                                     |  |           | 8,647   |                |  |                  | 13.78 |  |  |   | 119,128   | 
|                                              |  |           |         |                |  |                  |       |  |  |   |           | 
|Outstanding at June 30, 2000                  |  |           | 367,992 |                |  |                  | 11.95 |  |  |   | 4,398,475 | 
|Granted                                       |  |           | 49,672  |                |  |                  | 10.29 |  |  |   | 511,275   | 
|Exercised                                     |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Cancelled                                     |  |           | 47,229  |                |  |                  | 13.23 |  |  |   | 624,888   | 
|                                              |  |           |         |                |  |                  |       |  |  |   |           | 
|Outstanding at June 30, 2001                  |  |           | 370,435 |                |  |                  | 11.57 |  |  |   | 4,284,862 | 
|Granted                                       |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Exercised                                     |  |           | 2,200   |                |  |                  | 11.36 |  |  |   | 25,000    | 
|Cancelled                                     |  |           | 5,746   |                |  |                  | 11.37 |  |  |   | 65,313    | 
|                                              |  |           |         |                |  |                  |       |  |  |   |           | 
|Outstanding at June 30, 2002                  |  |           | 362,489 |                |  |                  | 12.62 |  |  | $ | 4,575,900 | 
|                                              |  |           |         |                |  |                  |       |  |  |   |           | 
|Options exercisable (vested)
at June 30, 2002 |  |           | 331,551 |                |  | $                | 12.70 |  |  | $ | 4,209,639 | 
|                                              |  |           |         |                |  |                  |       |  |  |   |           | 



---

|* |  | On June 7, 2002, the
Company paid a 10% stock dividend; accordingly, the number of shares, weighted average exercise price per share, and
aggregate exercise price have been retroactively adjusted.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

1994 Stock Option Plan For Non-Employee Directors and Common Stock Warrants
Issued to Third Parties

Additionally, the Company adopted the Edelbrock Corporation 1994 Stock Option
Plan for Non-Employee Directors (Director Plan), which authorizes the
granting of non-qualified stock options to certain non-employee directors of
the Company. The maximum number of shares granted under the Director Plan
shall not exceed 25,000 shares of Common Stock. Initial grants of options
under the Director Plan totaled 14,000. Three grants of 3,500 shares each were
made at the initial offering price of $12.50 per share and one grant of 3,500
shares was granted at a price of $12.75 per share. In November 1998, one
director resigned and exercised his vested options; the Company then elected a
new director and granted 3,500 shares at a price of $16.375 per share. In
November 2000, one director resigned and forfeited his vested options. In
March 2001, the Company elected a new director and granted 3,500 shares at a
price of $10.56 per share.

On February 2, 1996, the Company issued warrants to purchase 100,000 shares of
common stock at $14.75 per share to RICOR Racing and Development L.P.
(RICOR). The warrants were granted at the current quoted market price at the
date of grant. The warrants originally vested 20% on December 31 of each year
for a period of five years with the first 20% vesting on December 31, 1996.

44



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EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9  Shareholders Equity (continued)

On February 19, 1999, for consideration of Amendment No. 4 to the
Licensing Agreement (see Note 6), the Company accelerated the vesting
allowing the Warrants to purchase 100,000 shares to become fully
exercisable at the date of the amendment. In addition, the Company
issued two sets of Warrants to purchase 22,414 and 11,501 shares of common
stock at $18.00 and $22.00 per share, respectively, to RICOR. The
Warrants were granted at a price higher than the current quoted market
price at the date of grant. The first set of warrants vest at 33.3% on
December 31 of each year for a period of three years. The second set of
warrants vest at 20% on December 31 of each year for a period of 5 years.
The first set of warrants expired on February 18, 2002. The second set of
warrants expire on February 18, 2006.

On June 26, 2000, the Company issued 8,000 shares of common stock at
$10.125 per share to Automotive Systems Group Inc. and issued warrants to
purchase 80,000 shares of the Companys common stock at an exercise price
of $11.00 to JG Engine Dynamics, Inc. The warrants vest annually on June
1st of each year through a period of 4 years with the first 25% vesting on
June 1, 2001. The exercise term starts June 1, 2001 and expires on May
31, 2010 (see Note 6).

A summary of changes in options for non-employee directors and common
stock warrants during 2000, 2001, and 2002 are as follows:

|                                               |  |           |         |                |  |                  |       |  |  |   |           | 
|---------------------------------------------- |  | --------- | ------- | -------------- |  | ---------------- | ----- |  |  | - | --------- | 
|                                               |  |           |         |                |  | Weighted Average |       |  |  |  
|                                               |  | Number of |         | Exercise Price |  | Aggregate       
|                                               |  | Shares*   |         | Per Share*     |  | Exercise Price* 
|                                               |  |           |         |                |  |                 
|Outstanding at July 1, 1999                    |  |           | 158,856 |                |  | $                | 14.33 |  |  | $ | 2,277,144 | 
|Granted                                        |  |           | 88,000  |                |  |                  | 10.00 |  |  |   | 880,000   | 
|Exercised                                      |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Cancelled                                      |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|                                               |  |           |         |                |  |                  |       |  |  |   |           | 
|Outstanding at June 30, 2000                   |  |           | 246,856 |                |  |                  | 12.79 |  |  |   | 3,157,144 | 
|Granted                                        |  |           | 3,850   |                |  |                  | 9.60  |  |  |   | 36,960    | 
|Exercised                                      |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Cancelled                                      |  |           | 3,850   |                |  |                  | 11.59 |  |  |   | 44,625    | 
|                                               |  |           |         |                |  |                  |       |  |  |   |           | 
|Outstanding at June 30, 2001                   |  |           | 246,856 |                |  |                  | 12.76 |  |  |   | 3,149,479 | 
|Granted                                        |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Exercised                                      |  |           | 0       |                |  |                  |      |  |  |   | 0         | 
|Cancelled                                      |  |           | 24,655  |                |  |                  | 16.36 |  |  |   | 403,452   | 
|                                               |  |           |         |                |  |                  |       |  |  |   |           | 
|Outstanding at June 30, 2002                   |  |           | 222,201 |                |  | $                | 13.48 |  |  | $ | 2,995,663 | 
|                                               |  |           |         |                |  |                  |       |  |  |   |           | 
|Warrants exercisable (vested)
at June 30, 2002 |  |           | 159,721 |                |  | $                | 14.10 |  |  | $ | 2,251,996 | 
|                                               |  |           |         |                |  |                  |       |  |  |   |           | 



---

|* |  | On June 7, 2002, the Company paid a 10% stock dividend;
accordingly, the number of shares, weighted average exercise price per
share, and aggregate exercise prices have been retroactively adjusted.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

45



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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9  Shareholders Equity (continued)

Stock-Based Compensation

FASB Statement 123, Accounting for Stock-Based Compensation, requires the
Company to provide pro forma information regarding net income and income per
share as if compensation cost for the Companys stock option plans had been
determined in accordance with the fair value based method prescribed in FASB
Statement 123. The Company estimates the fair value of each stock option at
the grant date by using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in fiscal 2000, 2001,
and fiscal 2002: dividend yield of zero percent, risk-free interest rate of 6
percent, expected lives of ten years, and expected volatility of 64%, 65%, and
65%, respectively. Under the accounting provisions of FASB Statement 123, the
Companys net income and income per share for 2000, 2001, and 2002 would have
been reduced to the pro forma amounts indicated below:

|                     |                       |  |                     |           |      |  |      |           |  |  |   |           | 
|-------------------- | --------------------- |  | ------------------- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                     |                       |  | Year Ended June 30,
|                     |                       |  |                    
|                     |                       |  | 2000                |           | 2001 |  | 2002
|                     |                       |  |                     |           |      |  |     
|Net income:          |                       |  |                     |           |      |  |      |           |  |  |   |          
|                     | As reported           |  | $                   | 8,048,000 |      |  | $    | 4,792,000 |  |  | $ | 5,360,000 | 
|                     | Pro forma             |  | $                   | 7,953,000 |      |  | $    | 4,675,000 |  |  | $ | 5,303,000 | 
|Earnings per share:* |                       |  |                     |           |      |  |      |           |  |  |   |          
|                     | As reported  Basic   |  | $                   | 1.41      |      |  | $    | 0.86      |  |  | $ | 0.98      | 
|                     | As reported  Diluted |  | $                   | 1.41      |      |  | $    | 0.86      |  |  | $ | 0.98      | 
|                     | Pro forma  Basic     |  | $                   | 1.40      |      |  | $    | 0.84      |  |  | $ | 0.97      | 
|                     | Pro forma  Diluted   |  | $                   | 1.39      |      |  | $    | 0.84      |  |  | $ | 0.97      | 



---

|* |  | Earnings per share have been adjusted to account for the
Companys 10% stock dividend.
|- |  | --------------------------------------------------------------------------------------

46



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##### Table of Contents



EDELBROCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9  Shareholders Equity (concluded)

The following table summarizes information about stock options and warrants
outstanding at June 30, 2002:

Employee Stock Options:

|              |        |                |         |                  |  |                |      |                |                  |                  |        |       |  |  |         |       |  |   |       |       | 
|------------- | ------ | -------------- | ------- | ---------------- |  | -------------- | ---- | -------------- | ---------------- | ---------------- | ------ | ----- |  |  | ------- | ----- |  | - | ----- | ----- | 
|              |        |                | Number  |                  |  |                |      |                | Weighted-Average |                  | Number |       |  |  |        
|Range of      |        | of Shares      |         | Weighted-Average |  | Exercise Price |      | of Shares      |                  | Exercisable     
|Exercise      |        | Outstanding at |         | Remaining        |  | for Shares     |      | Exercisable at |                  | Weighted-Average
|Prices*       |        | June 30, 2002* |         | Contractual Life |  | Outstanding*   |      | June 30, 2002* |                  | Exercise Price* 
|              |        |                |         |                  |  |                |      |                |                  |                 
|$10.00-$11.36 |        |                | 336,089 |                  |  |                | 3.82 |                |                  | $                | 12.28  |       |  |  | 307,351 |       |  | $ | 12.37 |      
|              | $12.27 |                |         | 1,100            |  |                |      | 3.86           |                  |                  | $      | 13.39 |  |  |         | 1,100 |  |   | $     | 13.39 | 
|$14.55-$17.73 |        |                | 25,300  |                  |  |                | 6.24 |                |                  | $                | 17.16  |       |  |  | 23,100  |       |  | $ | 17.00 |      
|              |        |                |         |                  |  |                |      |                |                  |                  |        |       |  |  |         |       |  |   |       |      
|$10.00-$17.73 |        |                | 362,489 |                  |  |                | 3.56 |                |                  | $                | 12.62  |       |  |  | 331,551 |       |  | $ | 12.70 |      
|              |        |                |         |                  |  |                |      |                |                  |                  |        |       |  |  |         |       |  |   |       |      

The weighted average fair value of options granted during the year ended June
30, 2001 was $5.29. No options were granted during the year ended June 30,
2002.

Non-employee options and Warrants:

|                  |  |                |         |                  |  |                |      |                  |  |                  |       |  |  |  |         |  |  |   |       | 
|----------------- |  | -------------- | ------- | ---------------- |  | -------------- | ---- | ---------------- |  | ---------------- | ----- |  |  |  | ------- |  |  | - | ----- | 
|                  |  | Number         |         |                  |  |                |      | Weighted-Average |  | Number           |       |  |  | 
|                  |  | of Shares      |         | Weighted-Average |  | Exercise Price |      | of Shares        |  | Exercisable     
|Range of Exercise |  | Outstanding at |         | Remaining        |  | for Shares     |      | Exercisable at   |  | Weighted-Average
|Prices*           |  | June 30, 2002* |         | Contractual Life |  | Outstanding*   |      | June 30, 2002*   |  | Exercise Price* 
|                  |  |                |         |                  |  |                |      |                  |  |                 
|$9.60-$20.00      |  |                | 222,201 |                  |  |                | 6.35 |                  |  | $                | 13.48 |  |  |  | 159,721 |  |  | $ | 14.10 | 
|                  |  |                |         |                  |  |                |      |                  |  |                  |       |  |  |  |         |  |  |   |       | 

The weighted average fair value of warrants granted during the year ended June
30, 2001 was $5.20. No warrants were granted during the year ended June 30,
2002.



---

|* |  | - The number of shares outstanding and exercisable and the weighted
average exercise price for shares outstanding and exercisable for both
common stock options and non-employee options and warrants have been
adjusted to reflect to Companys 10% stock dividend issued on June 7,
2002.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

47



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##### Table of Contents



EDELBROCK CORPORATION

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

|                            |  |                   |         |           |  |            |         |             |  |            |        |  |  |   |         | 
|--------------------------- |  | ----------------- | ------- | --------- |  | ---------- | ------- | ----------- |  | ---------- | ------ |  |  | - | ------- | 
|                            |  |                   |         |           |  | Charged to |         |             |  |            |        |  |  |  
|                            |  | Balance at        |         | Costs and |  |            |         |             |  | Balance at
|                            |  | Beginning of Year |         | Expenses  |  | Deductions |         | End of Year
|                            |  |                   |         |           |  |            |         |            
|Year ended June 30, 2002:   |  |                   |         |           |  |            |         |             |  |            |        |  |  |   |         | 
|Accounts receivable reserve |  | $                 | 500,000 |           |  | $          | 300,000 |             |  | $          |       |  |  | $ | 800,000 | 
|Inventory reserves          |  | $                 | 350,000 |           |  | $          |        |             |  | $          | 50,000 |  |  | $ | 300,000 | 
|Year ended June 30, 2001:   |  |                   |         |           |  |            |         |             |  |            |        |  |  |   |         | 
|Accounts receivable reserve |  | $                 | 500,000 |           |  | $          |        |             |  | $          |       |  |  | $ | 500,000 | 
|Inventory reserves          |  | $                 | 200,000 |           |  | $          | 150,000 |             |  | $          |       |  |  | $ | 350,000 | 
|Year ended June 30, 2000:   |  |                   |         |           |  |            |         |             |  |            |        |  |  |   |         | 
|Accounts receivable reserve |  | $                 | 500,000 |           |  | $          |        |             |  | $          |       |  |  | $ | 500,000 | 
|Inventory reserves          |  | $                 |        |           |  | $          | 200,000 |             |  | $          |       |  |  | $ | 200,000 | 

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